EXHIBIT 4.12
AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDED AND RESTATED CREDIT AGREEMENT is made and entered into
as of August 1, 1997, by and among CLIFFWOOD OIL & GAS CORP., a Texas
corporation, CLIFFWOOD ENERGY COMPANY, a California corporation, CLIFFWOOD
PRODUCTION CO., a Texas corporation (each individually, a "Borrower" and
collectively, the "Borrowers"), each of the banks or other financial
institutions which is or which may from time to time become a signatory hereto
or any successor or assignee thereof (each individually a "Lender" and
collectively, the "Lenders"), and COMERICA BANK - TEXAS, a Texas banking
association, as agent for itself and the other Lenders (in such capacity,
together with its successors and assigns in such capacity, the "Agent").
W I T N E S S E T H:
In consideration of the mutual covenants and agreements herein
contained, the Borrowers, jointly and severally, and the Lender hereby agree as
follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1 TERMS DEFINED ABOVE. As used in this Credit Agreement, the terms
"AGENT," "BORROWER," "BORROWERS," "LENDER," and "LENDERS," shall have the
meaning assigned to them hereinabove.
2 ADDITIONAL DEFINED TERMS. As used in this Credit Agreement, each
of the following terms shall have the meaning assigned thereto in this Section,
unless the context otherwise requires:
"AFFILIATE" shall mean any Person directly or indirectly
controlling, or under common control with, any Borrower and includes any
"affiliate" of any Borrower within the meaning of Reg. ss.240.12b-2 of the
Securities Exchange Act of 1934, as amended, with "control," as used in
this definition, meaning possession, directly or indirectly, of the power
to direct or cause the direction of management, policies or action through
ownership of voting securities, contract, voting trust, or membership in
management or in the group appointing or electing management or otherwise
through formal or informal arrangements or business relationships.
"AGREEMENT" shall mean this Amended and Restated Credit Agreement,
as it may be amended, supplemented, or restated from time to time.
"APPLICABLE LAWS" has the meaning assigned to it in Section 2.17(a)
hereof.
a\credit.agr
-1-
"APPLICABLE LENDING OFFICE" means for each Lender, the Lending
Office of such Lender (or of an Affiliate of such Lender) designated below
its name on the signature pages hereof or such other office of such Lender
(or of an Affiliate of such Lender) as such Lender may from time to time
specify to the Borrowers and the Agent as the office by which its Loans
are to be made and maintained.
"ASSIGNEE" has the meaning assigned to it in Section 9.1(b) hereof.
"ASSIGNING LENDER" has the meaning assigned to it in Section 9.1(b)
hereof.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance
entered into by an Assigning Lender and its Assignee and accepted by the
Agent pursuant to Section 9.1(b), in substantially the form of Exhibit VI
hereto, or such other form as to which all of the parties hereto shall
consent in writing.
"AVAILABLE COMMITMENT" shall mean, at any time, an amount equal to
the remainder, if any, of (a) the lesser of the Commitment Amounts of all
Lenders or the Borrowing Base in effect at such time MINUS (b) the Loan
Balance at such time PLUS the L/C Exposure at such time.
"BASE RATE" shall mean the interest rate announced or published by
the Agent from time to time as its prime rate of interest, which Base Rate
shall change upon any change in such announced or published general
reference interest rate and which Base Rate may not be the lowest interest
rate charged by the Agent or equal or similar to any interest rate charged
by any other lender.
"BELLEVIEW ACQUISITION" shall mean the acquisition described in Part
One of Exhibit V.
"BORROWING BASE" shall mean, at any time, the amount most recently
determined by the Agent with the concurrence of the Lenders in accordance
with Section 2.8 and then in effect.
"BUSINESS DAY" shall mean a day other than a Saturday, Sunday, legal
holiday for commercial banks under the laws of the State of Texas, or any
other day when banking is suspended in the State of Texas.
"CASH FLOW" shall mean, for any period, Net Income of the Borrowers
for such period, plus depreciation, amortization, depletion, and other
non-cash expenses of the Borrowers for such period.
"CAUSE" shall mean (1) gross negligence, (2) willful misconduct, (3)
failure to substantially perform the duties of the corporate position or
positions held or (4) death.
"CLOSING DATE" shall mean the effective date of this Agreement.
a\credit.agr
-2-
"CODE" shall mean the United States Internal Revenue Code of 1986,
as amended from time to time.
"COLLATERAL" shall mean the Mortgaged Properties and any other
Property now or at any time assigned as collateral security for the
payment or performance of all or any portion of the Obligations.
"COMERICA" shall mean Comerica Bank-Texas, a Texas banking
association.
"COMMITMENT" shall mean the obligation of a Lender, subject to
applicable provisions of the Agreement, to make Loans to or for the
benefit of Borrowers pursuant to Section 2.1 and to issue or acquire an
interest in Letters of Credit pursuant to Section 2.4.
"COMMITMENT AMOUNT" shall mean (i) as to all Lenders, the lesser of
initial amount of $13,500,000 or (b) subject to Section 2.10 of this
Agreement, the amount irrevocably designated by the Borrowers in a writing
received by the Agent as the Borrowers' desired Commitment Amount and (ii)
as to each Lender, the lesser of (a) the initial amount set forth beside
its name on the signature pages hereof under the heading "Commitment
Amount," or (b) its pro rata share of the amount irrevocably designated by
the Borrowers in writing to the Agent as their desired Commitment Amount.
"COMMITMENT FEE" shall mean each fee payable to the Agent for the
benefit of Lenders by the Borrowers pursuant to Section 2.11.
"COMMITMENT PERIOD" shall mean the period from and including the
Closing Date to but not including the Commitment Termination Date.
"COMMITMENT REDUCTION SCHEDULE" shall have the meaning assigned to
it in Section 2.8 hereof.
"COMMITMENT TERMINATION DATE" shall mean August 4, 2000.
"COMMONLY CONTROLLED ENTITY" shall mean any Person which is under
common control with any of the Borrowers within the meaning of Section
4001 of ERISA.
"COMPLIANCE CERTIFICATE" shall mean each certificate, substantially
in the form attached hereto as Exhibit II, executed by a Responsible
Officer of each Borrower and furnished to the Agent and the Lenders from
time to time in accordance with Sections 5.2 and 5.3.
"CONTINGENT OBLIGATION" shall mean, as to any Person, any obligation
of such Person guaranteeing or in effect guaranteeing any Indebtedness,
leases, dividends, or other obligations of any other Person (for purposes
of this definition, a "PRIMARY
a\credit.agr
-3-
OBLIGATION") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, regardless of whether
such obligation is contingent, (a) to purchase any primary obligation or
any Property constituting direct or indirect security therefor, (b) to
advance or supply funds (i) for the purchase or payment of any primary
obligation, or (ii) to maintain working or equity capital of any other
Person in respect of any primary obligation, or otherwise to maintain the
net worth or solvency of any other Person, (c) to purchase Property,
securities or services primarily for the purpose of assuring the owner of
any primary obligation of the ability of the Person primarily liable for
such primary obligation to make payment thereof, or (d) otherwise to
assure or hold harmless the owner of any such primary obligation against
loss in respect thereof, with the amount of any Contingent Obligation
being deemed to be equal to the stated or determinable amount of such
Contingent Obligation or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as determined by such
Person in good faith.
"CURRENT ASSETS" shall mean (a) all assets which would, in
accordance with GAAP, be included as current assets on a combined balance
sheet of the Borrowers after eliminating any intercompany items in
accordance with GAAP, as of the date of calculation, after deducting
adequate reserves in each case in which a reserve is proper in accordance
with GAAP plus (b) an amount equal to the Available Commitment.
"CURRENT LIABILITIES" shall mean all liabilities which would, in
accordance with GAAP, be included as current liabilities on a combined
balance sheet of the Borrowers after eliminating any intercompany items in
accordance with GAAP, as of the date of calculation, but excluding current
maturities in respect of the Notes, both principal and interest.
"DEFAULT" shall mean any event or occurrence which with the lapse of
time or the giving of notice or both would become an Event of Default.
"DEFAULT RATE" shall mean a per annum interest rate equal to the
Base Rate plus five percent, but in no event exceeding the Highest Lawful
Rate.
"DOLLARS" and "$" shall mean dollars in lawful currency of the
United States of America.
"ELIGIBLE ASSIGNEE" means any commercial bank, savings and loan
association, savings bank, financial company, insurance company, pension
fund, mutual fund, or other financial institution (whether a corporation,
limited liability company, partnership or other entity) approved by the
Agent, which approval shall not be withheld or delayed unreasonably.
"ENGINEERING FEE" shall mean each fee payable by the Borrowers
pursuant to Section 2.12.
a\credit.agr
-4-
"ENVIRONMENTAL COMPLAINT" shall mean any written complaint, order,
directive, claim, citation, notice of environmental report or
investigation, or other notice by any Governmental Authority or any other
Person with respect to (a) air emissions, (b) spills, releases, or
discharges to soils, any improvements located thereon, surface water,
groundwater, or the sewer, septic, waste treatment, storage, or disposal
systems servicing any Property of any of the Borrowers, (c) solid or
liquid waste disposal, (d) the use, generation, storage, transportation,
or disposal of any Hazardous Substance, or (e) other environmental,
health, or safety matters affecting any Property of any of the Borrowers
or the business conducted thereon.
"ENVIRONMENTAL LAWS" shall mean (a) the following federal laws as
they may be amended from time to time: the Clean Air Act, the Clean Water
Act, the Safe Drinking Water Act, the Comprehensive Environmental
Response, Compensation and Liability Act, the Endangered Species Act, the
Occupational Safety and Health Act, the Oil Pollution Act of 1990, the
Hazardous Materials Transportation Act, the Resource Conservation and
Recovery Act of 1976, the Superfund Amendments and Reauthorization Act,
and the Toxic Substances Control Act; (b) any and all equivalent
environmental statutes of any state in which Property of any of the
Borrowers is situated, as they may be amended from time to time; (c) any
rules or regulations promulgated under or adopted pursuant to the above
federal and state laws; and (d) any other equivalent federal, state, or
local statute or any requirement, rule, regulation, code, ordinance, or
order applicable to the Borrowers adopted pursuant thereto, including,
without limitation, those relating to the generation, transportation,
treatment, storage, recycling, disposal, handling, or release of Hazardous
Substances.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations thereunder.
"EVENT OF DEFAULT" shall mean any of the events specified in Section
7.1.
"FACILITY FEE" shall mean the fee payable to the Agent for the
account of the Lenders by the Borrowers pursuant to Section 2.13.
"FINANCIAL STATEMENTS" shall mean statements of the financial
condition of any Person as at the point in time and for the period
indicated and consisting of at least a balance sheet and related
statements of operations, common stock and other stockholders' equity, and
cash flows for such Person and, when required by applicable provisions of
this Agreement to be audited, accompanied by the unqualified certification
of a nationally-recognized firm of independent certified public
accountants or other independent certified public accountants reasonably
acceptable to the Agent and footnotes to any of the foregoing, all of
which shall be prepared in accordance with GAAP consistently applied and
in comparative form with respect to the corresponding period of the
preceding fiscal period.
"FIRST UNION" shall mean First Union National Bank.
a\credit.agr
-5-
"FLOATING RATE" shall mean an interest rate per annum equal to the
Base Rate from time to time in effect plus one-half of one percent, but in
no event exceeding the Highest Lawful Rate.
"GAAP" shall mean generally accepted accounting principles
established by the Financial Accounting Standards Board or the American
Institute of Certified Public Accountants and in effect in the United
States from time to time.
"GOVERNMENTAL AUTHORITY" shall mean any nation, country,
commonwealth, territory, government, state, county, parish, municipality,
or other political subdivision and any Person or entity exercising
executive, legislative, judicial, regulatory, or administrative functions
of or pertaining to government.
"HAZARDOUS SUBSTANCES" shall mean flammables, explosives,
radioactive materials, hazardous wastes, asbestos, or any material
containing asbestos, polychlorinated biphenyls (PCBs), toxic substances or
related materials, petroleum, petroleum products, associated oil or
natural gas exploration, production, and development wastes, or any
substances defined as "hazardous substances," "hazardous materials,"
"hazardous wastes," or "toxic substances" under the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, the
Superfund Amendments and Reauthorization Act, as amended, the Hazardous
Materials Transportation Act, as amended, the Resource Conservation and
Recovery Act, as amended, the Toxic Substances Control Act, as amended, or
any other law or regulation now or hereafter enacted or promulgated by any
Governmental Authority.
"HYDROCARBONS" shall mean all oil, gas, casinghead gas, drip
gasoline, natural gasoline, condensate, distillate, carbon-dioxide, liquid
hydrocarbons, gaseous hydrocarbons, and all other minerals and all
products obtained, refined or processed therefrom.
"HIGHEST LAWFUL RATE" shall mean the maximum non-usurious interest
rate, if any (or, if the context so requires, an amount calculated at such
rate), that at any time or from time to time may be contracted for, taken,
reserved, charged, or received under applicable laws of the State of Texas
or the United States of America, as such laws are presently in effect or,
to the extent allowed by applicable law, as such laws may hereafter be in
effect and which allow a higher maximum non-usurious interest rate than
such laws now allow.
"INDEBTEDNESS" shall mean, as to any Person, without duplication,
(a) all liabilities (excluding reserves for deferred income taxes,
deferred compensation liabilities, and other deferred liabilities and
credits) which in accordance with GAAP would be included in determining
total liabilities as shown on the liability side of a balance sheet, (b)
all obligations of such Person evidenced by bonds, debentures, promissory
notes, or similar evidences of indebtedness, (c) all other indebtedness of
such Person for borrowed money, and (d) all obligations of others, to the
extent any
a\credit.agr
-6-
such obligation is secured by a Lien on the assets of such Person (whether
or not such Person has assumed or become liable for the obligation secured
by such Lien).
"INDEMNIFIED PARTY" has the meaning assigned to it in Section 5.19
hereof.
"INSOLVENCY PROCEEDING" shall mean an application (whether voluntary
or instituted by another Person) for or the consent to the appointment of
a receiver, trustee, conservator, custodian, or liquidator of any Person
or of all or a substantial part of the Property of such Person, or the
filing of a petition (whether voluntary or instituted by another Person)
commencing a case under Title 11 of the United States Code, seeking
liquidation, reorganization, or rearrangement or taking advantage of any
bankruptcy, insolvency, debtor's relief, or other similar law of the
United States, the State of Texas, or any other jurisdiction.
"INSOLVENT" or "INSOLVENCY" shall mean, with respect to any
Multiemployer Plan, that such Plan is insolvent within the meaning of such
term as used in Section 4245 of ERISA.
"INTELLECTUAL PROPERTY" shall mean patents, patent applications,
trademarks, tradenames, copyrights, technology, know-how, and processes.
"INVESTMENT" in any Person shall mean any stock, bond, note, or
other evidence of Indebtedness, or any other security (other than current
trade and customer accounts) of, investment or partnership interest in or
loan to, such Person.
"L/C EXPOSURE" shall mean, with respect to the Borrowers, at any
time, the aggregate maximum amount available to be drawn under outstanding
Letters of Credit at such time.
"LETTER OF CREDIT" shall mean any standby letter of credit issued by
the Agent for the account of any Borrower pursuant to Section 2.4.
"LETTER OF CREDIT APPLICATION" shall mean the standard letter of
credit application employed by the Agent from time to time in connection
with letters of credit.
"LETTER OF CREDIT FEE" shall mean each fee payable to the Agent by
the Borrowers pursuant to Section 2.14 upon or in connection with the
issuance of a Letter of Credit.
"LIEN" shall mean any interest in Property securing an obligation
owed to, or a claim by, a Person other than the owner of such Property,
whether such interest is based on common law, statute, or contract, and
including, but not limited to, the lien or security interest arising from
a mortgage, ship mortgage, encumbrance, pledge, security agreement,
conditional sale or trust receipt, or a lease, consignment, or bailment
for security purposes (other than true leases or true consignments), liens
of
a\credit.agr
-7-
mechanics, materialmen, and artisans, maritime liens and reservations,
exceptions, encroachments, easements, rights of way, covenants,
conditions, restrictions, leases, and other title exceptions and
encumbrances affecting Property which secure an obligation owed to, or a
claim by, a Person other than the owner of such Property (for the purpose
of this Agreement, each Borrower shall be deemed to be the owner of any
Property which it has acquired or holds subject to a conditional sale
agreement, financing lease, or other arrangement pursuant to which title
to the Property has been retained by or vested in some other Person for
security purposes), and the filing or recording of any financing statement
or other security instrument in any public office.
"LIMITATION PERIOD" shall mean any period while (a) any amount
remains owing on the Notes and (b) interest on such amount, calculated at
the applicable interest rate, plus any fees or other sums otherwise
payable under any Loan Document except for the provisions of Section 2.17
and which are deemed to be interest under applicable law, would exceed the
amount of interest which would accrue at the Highest Lawful Rate.
"LOAN" shall mean any loan made by a Lender to or for the benefit of
the Borrowers or any of them pursuant to this Agreement, including any
Loan to reimburse the Agent for any draw under a Letter of Credit made
pursuant to Section 2.4(b).
"LOAN BALANCE" shall mean, at any time, the outstanding principal
balance of the Notes at such time.
"LOAN DOCUMENTS" shall mean this Agreement, the Notes, the Security
Instruments, and all other documents and instruments now or hereafter
delivered by or on behalf of the Borrowers pursuant to the terms of or in
connection with this Agreement, the Notes, the Letters of Credit, the
Letter of Credit Applications or the Security Instruments, and all
renewals and extensions of, amendments and supplements to, and
restatements of, any or all of the foregoing from time to time in effect.
"MATERIAL ADVERSE EFFECT" shall mean, with respect to a Borrower,
any material adverse effect on the business, operations, Properties,
condition (financial or otherwise), or prospects of such Borrower taken
as
a whole.
"MORTGAGED PROPERTIES" shall mean all Properties of the Borrowers
subject to a Lien in favor of the Agent for the benefit of the Lenders, as
security for the Obligations, which Liens are intended to be first
priority perfected Liens, subject only to Permitted Liens.
"MULTIEMPLOYER PLAN" shall mean a Plan which is a multiemployer plan
as defined in Section 4001(a)(3) of ERISA.
a\credit.agr
-8-
"NET INCOME" shall mean, for any period, the net income of the
Borrowers for such period, on a combined basis, determined in accordance
with GAAP.
"NOTE" shall mean one of the Notes.
"NOTES" shall mean the master promissory notes of the Borrowers
payable to the order of the Lenders, in the form attached hereto as
Exhibit I (with the amount completed as $15,000,000 in the case of
Comerica and $10,000,000 in the case of First Union, the initial Lenders
hereunder), together with all renewals, extensions for any period,
increases, and rearrangements thereof.
"OBLIGATIONS" shall mean, without duplication, (a) all Indebtedness
evidenced by the Notes, (b) the obligation of the Borrowers for the
payment of Commitment Fees, Letter of Credit Fees, Facility Fees and
Engineering Fees, (c) Swap Obligations, (d) the obligation of the
Borrowers to provide to the Agent or to reimburse the Agent for any
amounts payable, paid, or incurred by the Agent with respect to Letters of
Credit issued on their behalf pursuant to Section 2.4, (e) the undrawn,
unexpired amount of all outstanding Letters of Credit issued on any
Borrower's behalf and (f) all other obligations and liabilities of the
Borrowers to the Agent, any Lender, the Lenders, or any combination of the
foregoing, now existing or hereafter incurred, in each case under, arising
out of or in connection with any Loan Document or Obligations, and to the
extent that any of the foregoing includes or refers to the payment of
amounts deemed or constituting interest, only so much thereof as shall
have accrued, been earned and which remains unpaid at each relevant time
of determination.
"PAYOR" shall have the meaning assigned to it in Section 2.3 hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA or any entity
succeeding to any or all of its functions under ERISA.
"PERMITTED LIENS" shall mean (a) Liens for taxes, assessments, or
other governmental charges or levies not yet due or which (if foreclosure,
distraint, sale, or other similar proceedings shall not have been
initiated) are being contested in good faith by appropriate proceedings,
and such reserve as may be required by GAAP shall have been made therefor,
(b) Liens in connection with workers' compensation, unemployment insurance
or other social security (other than Liens created by Section 4068 of
ERISA), old-age pension, or public liability obligations which are not yet
due or which are being contested in good faith by appropriate proceedings,
if such reserve as may be required by GAAP shall have been made therefor,
(c) Liens in favor of vendors, carriers, warehousemen, repairmen,
mechanics, workmen, materialmen, construction, or similar Liens arising by
operation of law in the ordinary course of business in respect of
obligations which are not yet due or which are being contested in good
faith by appropriate proceedings, if such reserve as may be required by
GAAP shall have been made therefor, (d) Liens in favor of operators and
non-operators
a\credit.agr
-9-
under joint operating agreements or similar contractual arrangements
arising in the ordinary course of the business of the Borrowers to secure
amounts owing, which amounts are not yet due or are being contested in
good faith by appropriate proceedings, if such reserve as may be required
by GAAP shall have been made therefor, (e) Liens under production sales
agreements, division orders, operating agreements, and other agreements
customary in the oil and gas business for processing, producing, and
selling hydrocarbons securing obligations not constituting Indebtedness
and provided that such Liens do not secure obligations to deliver
hydrocarbons at some future date without receiving full payment therefor
within 90 days of delivery, (f) easements, rights of way, restrictions,
and other similar encumbrances, and minor defects in the chain of title
which are customarily accepted in the oil and gas financing industry, none
of which interfere with the ordinary conduct of the business of the
Borrowers or materially detract from the value or use of the Property to
which they apply, and (g) Liens in favor of the Agent for the benefit of
the Lenders, or any, some or all of them, and other Liens expressly
permitted under the Security Instruments.
"PERSON" shall mean an individual, corporation, partnership, trust,
unincorporated organization, government, any agency or political
subdivision of any government, or any other form of entity.
"PLAN" shall mean, at any time, any employee benefit plan which is
covered by ERISA and in respect of which any Borrower or any Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"PRINCIPAL OFFICE" shall mean the principal office of the Agent in
Dallas, Texas, which is presently located at 0000 Xxx Xxxxxx, Xxxxxx
Xxxxx, xx such other office or location as the Agent shall designate as
its principal office by written notice to the Borrowers.
"PROHIBITED TRANSACTION" shall have the meaning assigned to such
term in Section 406 of ERISA or Section 4975 of the Code.
"PROPERTY" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, tangible or intangible.
"REGULATION D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System, as the same may be amended or supplemented
from time to time.
"REGISTER" has the meaning assigned to it in Section 9.1(d) hereof.
"REGULATORY CHANGE" shall mean the passage, adoption, institution,
or amendment of any federal, state, local, or foreign Requirement of Law
(including, without limitation, Regulation D), or any interpretation,
directive, or request (whether
a\credit.agr
-10-
or not having the force of law) of any Governmental Authority or monetary
authority charged with the enforcement, interpretation, or administration
thereof, occurring after the Closing Date and applying to a class of banks
including the Agent or any Lender.
"RELEASE OF HAZARDOUS SUBSTANCES" shall mean any emission, spill,
release, disposal, or discharge, except in accordance with Requirements of
Law or the terms of a valid permit, license, certificate, or approval of
the relevant Governmental Authority, of any Hazardous Substance into or
upon (a) the air, (b) soils or any improvements located thereon, (c)
surface water or groundwater, or (d) the sewer or septic system, or the
waste treatment, storage, or disposal system servicing any Property of any
Borrower.
"REORGANIZATION" shall mean, with respect to any Multiemployer Plan,
that such Plan is in reorganization within the meaning of such term in
Section 4241 of ERISA.
"REPORTABLE EVENT" shall mean any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty-day
notice period is waived under subsections .13, .14, .16, .18, .19 or .20
of PBGC Reg. ss.2615.
"REQUIRED LENDERS" shall mean at any time while no Loans are
outstanding, Lenders having at least 66-2/3% of the aggregate Commitment
Amount and, at any time while Loans are outstanding, Lenders holding at
least 66-2/3% of the outstanding aggregate principal amount of the Loans;
provided, however, that in the event there are only two Lenders, then
Required Lenders shall mean both of the Lenders.
"REQUIRED PAYMENT" shall have the meaning assigned to it in Section
2.3 hereof.
"REQUIREMENT OF LAW" shall mean, as to any Person, the certificate
or articles of incorporation and by-laws or other organizational or
governing documents of such Person, and any applicable law, treaty,
ordinance, order, judgment, rule, decree, regulation, or determination of
an arbitrator, court, or other Governmental Authority, including, without
limitation, rules, regulations, orders, and requirements for permits,
licenses, registrations, approvals, or authorizations, in each case as
such now exist or may be hereafter amended and are applicable to such
Person or any of its Property or to which such Person or any of its
Property is subject.
"RESERVE REPORT" shall mean each report delivered to the Lender
pursuant to Section 5.4.
"RESPONSIBLE OFFICER" shall mean, in the case of each Borrower, the
President, Chief Executive Officer, Chief Financial Officer or other
officer of such Borrower knowledgeable about the affairs of such
Borrower.
a\credit.agr
-11-
"SECURITY INSTRUMENTS" shall mean the security instruments executed
and delivered in satisfaction of the condition set forth in Section
3.1(f), and all other documents and instruments at any time executed as
security for all or any portion of the Obligations, as such instruments
may be amended, restated, or supplemented from time to time.
"SINGLE EMPLOYER PLAN" shall mean any Plan which is covered by Title
IV of ERISA, but which is not a Multiemployer Plan.
"SUPERFUND SITE" shall mean those sites listed on the Environmental
Protection Agency National Priority List and eligible for remedial action
or any comparable state registries or list in any state of the United
States.
"SWAP OBLIGATIONS" shall mean any indebtedness, obligations and
liabilities owed by a Borrower to any Lender arising under financial
interest rate swap agreements entered into by such Borrower to lock in
interest rates payable under this Agreement or commodity swap agreements
or similar contractual arrangements intended to help hedge market price
fluctuations and interest rates applicable to this Agreement or crude oil,
natural gas or other Hydrocarbons, subject, however, to the agreements of
such Borrower set out in Section 6.14 of this Agreement.
"UCC" shall mean the Uniform Commercial Code as from time to time in
effect in the State of Texas.
3 UNDEFINED FINANCIAL ACCOUNTING TERMS. Undefined financial
accounting terms used in this Agreement shall be defined according to GAAP at
the time in effect.
4 REFERENCES. References in this Agreement to Exhibit, Article, or
Section numbers shall be to Exhibits, Articles, or Sections of this Agreement,
unless expressly stated to the contrary. References in this Agreement to
"hereby," "herein," "hereinafter," "hereinabove," "hereinbelow," "hereof,"
"hereunder" and words of similar import shall be to this Agreement in its
entirety and not only to the particular Exhibit, Article, or Section in which
such reference appears.
5 ARTICLES AND SECTIONS. This Agreement, for convenience only, has
been divided into Articles and Sections; and it is understood that the rights
and other legal relations of the parties hereto shall be determined from this
instrument as an entirety and without regard to the aforesaid division into
Articles and Sections and without regard to headings prefixed to such Articles
or Sections.
6 NUMBER AND GENDER. Whenever the context requires, reference
herein made to the single number shall be understood to include the plural; and
likewise, the plural shall be understood to include the singular. Definitions of
terms defined in the singular or plural shall be equally applicable to the
plural or singular, as the case may be, unless otherwise indicated. Words
denoting gender shall be construed to include the masculine, feminine and
neuter, when such construction is appropriate; and the word "including" (and
with the correlative meaning "include") shall mean including, without limiting
the generality of any description preceding such term.
a\credit.agr
-12-
7 INCORPORATION OF EXHIBITS. The exhibits attached to this
Agreement are incorporated herein and shall be considered a part of this
Agreement for all purposes.
ARTICLE II
TERMS OF FACILITY
1 REVOLVING LINE OF CREDIT. Upon the terms and conditions
(including, without limitation, the right of the Lenders to decline to make any
Loan so long as any Default or Event of Default exists) and relying on the
representations and warranties contained in this Agreement, each Lender
severally agrees, during the Commitment Period, to make Loans not to exceed such
Lender's Commitment Amount, in immediately available funds at the Principal
Office, to or for the benefit of the Borrowers, from time to time on any
Business Day designated by the Borrowers following receipt by the Agent of a
written request for such Loan; provided, however, no Loan shall exceed the
aggregate amount of the then existing Available Commitment for such Lender as
then in effect and the Borrowers agree to immediately repay any Loan amounts
outstanding in excess of the aggregate amount of the Available Commitment
(including those necessary to meet the Commitment Reduction Schedule). The
Borrowers jointly and severally agree to repay to the Lenders the Obligations
pursuant to the terms hereof.
(a) Subject to the terms of this Agreement, during the Commitment
Period, the Borrowers may borrow, repay, and reborrow. Except for prepayments
made pursuant to Section 2.9, each borrowing and prepayment of principal of
Loans shall be in an amount at least equal to $50,000 or integral multiple
thereof.
(b) The Loans shall be made and maintained at each Lender's
Applicable Lending Office and shall be evidenced by the Notes.
2 USE OF LOAN PROCEEDS AND LETTERS OF CREDIT. Proceeds of all Loans
shall be used by the Borrowers solely to acquire and develop oil and gas
properties and for working capital and related corporate purposes.
(a) Letters of Credit shall be solely to support business
operations of the Borrower in the ordinary course of business; provided,
however, no Letter of Credit may be used in lieu or in support of stay or appeal
bonds without the written consent of the Agent and the Lenders.
3 INTEREST. Subject to the terms of this Agreement (including,
without limitation, Section 2.17), interest on the Loans shall accrue and be
payable at a rate per annum equal to the Floating Rate. Interest on the Loans
shall be computed on the basis of a year of 365 or 366 days, as the case may be,
and actual days elapsed (including the first day but excluding the last day)
during the period for which payable. Notwithstanding the foregoing, interest on
past-due principal and, to the extent permitted by applicable law, past-due
interest shall accrue at the Default Rate, computed on the basis of a year of
365 or 366 days, as the case may be, and actual days elapsed (including the
first day but excluding the last day) during the period for which payable, and
shall be payable upon
a\credit.agr
-13-
demand by the Agent at any time as to all or any portion of such interest.
Interest provided for herein shall be calculated on unpaid sums actually
advanced and outstanding pursuant to the terms of this Agreement and only for
the period from the date or dates of such advances until repayment.
4 LETTER OF CREDIT FACILITY. Upon the terms and conditions
(including, without limitation, the right of the Agent to decline to issue any
Letter of Credit so long as any Default or Event of Default exists) and relying
upon the representations and warranties contained in this Agreement, the Agent
agrees, during the Commitment Period, to issue Letters of Credit following the
receipt not less than two Business Days prior to the requested date for issuance
of the relevant Letter of Credit of a Letter of Credit Application executed by a
Borrower; provided, however, (i) no Letter of Credit shall have an expiration
date which is subsequent to the Commitment Termination Date, and (ii) the Agent
shall not be obligated to issue any Letter of Credit if (A) the face amount
thereof would exceed the Available Commitment, (B) the L/C Exposure would exceed
$500,000, or (C) after giving effect to the issuance thereof, the L/C Exposure
when added to the Loan Balance then outstanding, would exceed the lesser of the
Commitment Amount or the Borrowing Base then in effect.
(a) Should the Agent be called upon by the beneficiary of any
Letter of Credit to honor all or any portion of the commitment thereunder,
whether upon presentation of drafts or otherwise, such payment by the Agent on
account of such Letter of Credit shall be treated for all purposes as a Loan and
a Borrowing on the Notes and each Lender agrees to advance its proportionate
share thereof, and if a Default or an Event of Default then exists, the
Borrowers shall pay to the Agent for the account of the Lenders on demand the
amount of such Borrowing.
5 REPAYMENT OF LOANS AND INTEREST. Accrued and unpaid interest on
each outstanding Loan shall be due and payable monthly commencing on the first
day of September, 1997, and continuing on the first day of each calendar month
thereafter while any Loan remains outstanding, the payment in each instance to
be the amount of interest which has accrued and remains unpaid in respect of the
relevant Loan. The Loan Balance, together with all accrued and unpaid interest
thereon, shall be due and payable on the Commitment Termination Date. At the
time of making each payment hereunder or under the Notes, the Borrowers shall
specify to the Agent the Loans or other amounts payable, jointly and severally,
by the Borrowers hereunder to which such payment is to be applied. In the event
the Borrowers fail to so specify, or if an Event of Default has occurred and is
continuing, the Agent may apply such payment as it may elect in its sole
discretion.
6 OUTSTANDING AMOUNTS. The outstanding principal balance of the
Notes reflected by the notations by the Agent on its records shall be deemed
rebuttably presumptive evidence of the principal amount owing on the Notes. The
liability for payment of principal and interest evidenced by the Notes shall be
limited to principal amounts actually advanced and outstanding pursuant to this
Agreement and interest on such amounts calculated in accordance with this
Agreement.
7 TIME, PLACE, AND METHOD OF PAYMENTS. All payments required
pursuant to this Agreement or the Notes shall be made in lawful money of the
United States of America and in immediately available funds, shall be deemed
received by the Agent on the next Business Day following receipt if such receipt
is after 2:00 p.m. Central Standard or Central Daylight Savings Time,
a\credit.agr
-14-
as the case may be, on any Business Day, and shall be made to the Agent at the
Principal Office for the account of each Lender. The Borrowers shall, at the
time of making each such payment, specify to the Agent the sums payable by the
Borrowers under this Agreement and the other Loan Documents to which such
payment is to be applied (and in the event that the Borrowers fail to so
specify, or if an Event of Default has occurred and is continuing, the Agent may
apply such payment to the Obligations in such order and manner as it may elect
in its sole discretion. Each payment received by the Agent under this Agreement
or any other Loan Document for the account of a Lender shall be paid promptly to
such Lender, in immediately available funds, for the account of such Lender at
such Lender's Applicable Lending Office. Except as provided to the contrary
herein, if the due date of any payment hereunder or under the Notes would
otherwise fall on a day which is not a Business Day, such date shall be extended
to the next succeeding Business Day, and interest shall be payable for any
principal so extended for the period of such extension.
8 BORROWING BASE DETERMINATIONS; REDUCTION OF BORROWING BASE. The
Borrowing Base as of August 4, 1997 is acknowledged by the Borrowers, the Agent
and the Lenders to be $13,500,000 (giving effect to the closing of the Belleview
Acquisition on August 4, 1997). Commencing on September 1, 1997 and continuing
thereafter on the first day of each month until the next determination of the
Borrowing Base and the amount by which the Borrowing Base shall be reduced are
orally communicated to the Borrowers pursuant to Section 2.8(c), the amount of
the Borrowing Base shall be reduced by $225,000 ("Commitment Reduction
Schedule").
(a) The Borrowing Base and the amount by which the Borrowing Base
shall be reduced shall be redetermined semi-annually, commencing on April 1,
1998 and continuing on each October 1 and April 1 thereafter, on the basis of
information supplied by the Borrowers in compliance with the provisions of this
Agreement, including, without limitation, Reserve Reports, and all other
information available to the Agent and the Lenders. In addition, the Agent
shall, in the normal course of business following a request from the Borrowers
and receipt of an Engineering Fee and a Reserve Report, together with all other
information reasonably requested by the Agent and the Lenders, redetermine the
Borrowing Base at any other time. Notwithstanding the foregoing, the Agent and
the Lenders may at their discretion redetermine the Borrowing Base and the
Commitment Reduction Schedule at any time and from time to time.
(b) Within 30 days of its receipt of the Reserve Reports, the Agent
shall provide such redetermined Borrowing Base in writing to the Lenders. Within
15 days after their receipt of such information, the Lenders shall give the
Agent written notice of whether the Lenders approve of the Agent's proposed
Borrowing Base. If, for any reason, all of the Lenders do not approve of the
proposed Borrowing Base, the Agent and the Lenders shall consult with one
another to determine the Borrowing Base that will be approved by all of the
Lenders. Upon each determination of the Borrowing Base by the Agent and approved
by the Lenders, the Agent shall notify the Borrowers orally (confirming such
notice promptly in writing) of such determination, and the Borrowing Base and
the Commitment Reduction Schedule, together with any increase in the Commitment
Amount, so communicated to the Borrowers shall become effective upon such oral
notification and shall remain in effect until the next subsequent
redetermination of the Borrowing Base and the Commitment Reduction Schedule is
orally communicated to the Borrowers.
a\credit.agr
-15-
(c) The Borrowing Base shall represent the determination by the
Agent and the Lenders, in accordance with the applicable definitions and
provisions herein contained and their customary lending practices then in effect
for loans of this nature, of the value, for loan purposes, of the Mortgaged
Properties, subject, in the case of any increase in the Borrowing Base or the
Commitment Amount to the credit approval processes of the Lenders, which
processes shall be conducted on a basis consistent with each Lender's
engineering and credit standards and assumptions then in effect for Loans of
this type and borrowers similarly situated. The Borrowers acknowledge that no
Lender has any obligation to increase its Commitment Amount or to agree to any
increase in the Borrowing Base. Furthermore, each Borrower acknowledges that the
determination of the Borrowing Base contains an equity cushion (market value in
excess of loan value), which is acknowledged by the Borrowers to be essential
for the adequate protection of the Lenders.
9 MANDATORY PREPAYMENTS. If at any time the Loan Balance and the
L/C Exposure exceeds the lesser of the Commitment Amount or the Borrowing Base
then in effect, the Borrowers shall, jointly and severally, within 30 days of
notice from the Agent of such occurrence, (a) prepay, or make arrangements
acceptable to the Agent and the Lenders for the prepayment of, the amount of
such excess for application on the Loan Balance, (b) provide additional
collateral, of character and value satisfactory to the Agent and the Lenders in
their reasonable business judgment, to secure the Obligations by the execution
and delivery to the Agent of Security Instruments in form and substance
satisfactory to the Agent and the Lenders, or (c) effect any combination of the
alternatives described in clauses (a) and (b) of this Section and acceptable to
the Agent and the Lenders in their reasonable business judgment. In the event
that a mandatory prepayment is required under this Section and the Loan Balance
is less than the amount required to be prepaid, the Borrowers jointly and
severally shall repay the entire Loan Balance and, in accordance with the
provisions of the relevant Letter of Credit Applications executed by the
Borrowers or otherwise to the satisfaction of the Agent and the Lenders, deposit
with the Agent, as additional Collateral securing the Obligations, an amount of
cash, in immediately available funds, equal to the L/C Exposure minus the lesser
of the Commitment Amount or the Borrowing Base. Cash deposited with the Agent in
satisfaction with the requirements provided in this section may be invested by
the Agent, but only at the express direction of the Borrowers as to the
investment vehicle and maturity (which shall be no later than the last
expiration date of any then outstanding Letter of Credit), for the account of
the Borrowers in cash or cash equivalent investments offered by or through the
Agent.
10 VOLUNTARY PREPAYMENTS OF LOANS. Subject to applicable provisions
of this Agreement, the Borrowers shall have the right at any time or from time
to time to prepay Loans; provided, however, that (a) the Borrowers shall pay all
accrued and unpaid interest on the amounts prepaid, and (b) no such prepayment
shall serve to postpone the repayment when due of any Obligation. The Borrowers
shall have the right, upon notice to the Agent, at any time or from time to time
to reduce the Commitment Amount or terminate the Commitment; provided, however,
that on the date of such permanent reduction or termination the Borrowers, being
jointly and severally obligated, shall pay the amount necessary, if any, to
reduce the Loan Balance to (and as applicable provide cash collateral for L/C
Exposure that equals) an amount equal to or less than the amount specified in
such notice plus accrued but unpaid interest, if any, to the date of such
payment together with all other fees and charges then owing pursuant to this
Agreement.
a\credit.agr
-16-
11 COMMITMENT FEE. In addition to interest on the Notes as provided
herein and the Engineering Fees, Facility Fees and Letter of Credit Fees payable
hereunder and to compensate the Lenders for maintaining funds available, the
Borrowers shall pay to the Agents for the pro rata benefit of the Lenders, in
immediately available funds, on the first day of October 1997 and on the first
day of each third calendar month thereafter during the Commitment Period, a fee
in the amount of one-quarter of one percent per annum, calculated on the basis
of a year of 360 days and for the actual days elapsed (including the first day
but excluding the last day), on the average daily amount of the Available
Commitment during the preceding quarterly period.
12 ENGINEERING FEE. The Borrowers jointly and severally agree to
pay, or reimburse the Agent, for paying, reasonable and customary fees and
expenses of the independent consulting petroleum engineers engaged by the Agent
in consultation with the Lenders, from time to time, to evaluate the Mortgaged
Properties and review the Reserve Reports.
13 FACILITY FEE. In addition to interest on the Notes as provided
herein and the Engineering Fees payable hereunder and to compensate the Agent
and the Lenders for the costs of the extension of credit hereunder, the
Borrowers jointly and severally shall pay to the Agent for the pro rata account
of the Lenders on the Closing Date, in immediately available funds, a facility
fee in the amount of $67,535; and on the date of each Borrowing Base increase
which is accompanied by a like increase in the Commitment Amount, a fee shall
be paid by the Borrowers to the Agent for the pro rata account of the Lenders in
the amount of three-fourths of one percent of the excess, if any, of the new
Borrowing Base over the highest Borrowing Base theretofore in effect.
14 LETTER OF CREDIT FEE. In addition to interest on the Notes as
provided herein, and the Commitment Fees, Engineering Fees and Facility Fees
payable hereunder, the Borrowers agree to pay to the Agent for the benefit of
the Lenders, on the date of issuance of each Letter of Credit, a fee equal to
the greater of (a) one and one-quarter percent per annum, calculated on the
basis of a year of 360 days and the actual days elapsed (including the first day
but excluding the last day), on the face amount of such Letter of Credit during
the period for which such Letter of Credit is issued, or (b) $350. In addition,
the Borrowers agree to pay to the Agent, for its own account, on the date of
issuance of each Letter of Credit, a fee equal to one-quarter of one percent per
annum, calculated on the basis of a year of 360 days and the actual days elapsed
(including the first day, but excluding the last day) on the face amount of each
such Letter of Credit for the period for which such Letter of Credit is issued
pursuant to Section 2.4. The Borrower shall also agree to pay to the Agent on
demand its customary letter of credit transactional fees, including, without
limitation, amendment fees, payable with respect to each Letter of Credit.
15 LOANS TO SATISFY OBLIGATIONS OF BORROWERS. After an Event of
Default, the Lenders may, but shall not be obligated to, make Loans for the
benefit of the Borrowers and apply proceeds thereof to the satisfaction of any
condition, warranty, representation, or covenant of the Borrowers contained in
this Agreement or any other Loan Document. Any such Loan shall be evidenced by
the Notes.
16 SECURITY INTEREST IN ACCOUNTS; RIGHT OF OFFSET. As security for
the payment and performance of the Obligations, each Borrower hereby
collaterally transfers, assigns, and pledges to the Agent and each Lender and
grants to the Agent and each Lender a security interest in all funds
a\credit.agr
-17-
of such Borrower now or hereafter or from time to time on deposit with the Agent
or each Lender, with such interest of the Agent and each Lender to be
retransferred, reassigned, and/or released to the Borrowers, as the case may be,
at the expense of the Borrowers upon payment in full and complete performance by
the Borrowers of all Obligations. All remedies as secured party or assignee of
such funds shall be exercisable by the Agent and each Lender, as applicable,
upon the occurrence of any Event of Default, regardless of whether the exercise
of any such remedy would result in any penalty or loss of interest or profit
with respect to any withdrawal of funds deposited in a time deposit account
prior to the maturity thereof. Furthermore, each Borrower hereby grants to the
Agent and each Lender the right, exercisable at such time as any Obligation
shall mature, whether by acceleration of maturity or otherwise, of offset or
banker's lien against all funds of such Borrower now or hereafter or from time
to time on deposit with the Agent or any Lender, regardless of whether the
exercise of any such remedy would result in any penalty or loss of interest or
profit with respect to any withdrawal of funds deposited in a time deposit
account prior to the maturity thereof. Notwithstanding the foregoing, the Agent
and the Lenders acknowledge that certain accounts of the Borrowers styled as
production proceed accounts will contain funds which are subject to the rights
of Persons other than any Borrower pursuant to Section 9.319 of the Texas
Business and Commerce Code and that certain accounts of the Borrowers styled as
revenue distribution accounts will contain funds which are subject to the rights
of third parties (other than any Borrower). In connection with each such
account, the Borrowers jointly and severally agree to provide to the Agent and
each Lender, promptly upon request of the Agent or any Lender, a list of such
third parties and the monies owed to each such third party contained at that
time in such account and the Borrowers acknowledge and agree that the Agent and
the Lenders may rely and will rely on such disclosures of the Borrowers in
exercising their remedies under this Section.
17 GENERAL PROVISIONS RELATING TO INTEREST. It is the intention of
the parties hereto to comply strictly with the usury laws of the State of Texas
and the United States of America. In this connection, there shall never be
collected, charged, or received on the sums advanced hereunder interest in
excess of that which would accrue at the Highest Lawful Rate. For purposes of
Article 5069-1.04, Vernon's TEXAS CIVIL STATUTES, as amended, the Borrowers
agree that the Highest Lawful Rate shall be the "indicated (weekly) rate
ceiling" as defined in such Article, provided that each Lender may also rely,
to the extent permitted by applicable laws of the State of Texas, other States
applicable to a Lender, or the United States of America ("Applicable Laws"), on
alternative maximum rates of interest under other Applicable Laws, if greater.
(a) Notwithstanding anything herein or in the Notes to the contrary,
during any Limitation Period, the interest rate to be charged on amounts
evidenced by the Notes shall be the Highest Lawful Rate, and the obligation, if
any, of the Borrowers for the payment of fees or other charges deemed to be
interest under applicable law shall be suspended. During any period or periods
of time following a Limitation Period, to the extent permitted by Applicable
Laws, the interest rate to be charged hereunder shall remain at the Highest
Lawful Rate until such time as there has been paid to the Lenders (i) the amount
of interest in excess of that accruing at the Highest Lawful Rate that the
Lenders would have received during the Limitation Period had the interest rate
remained at the otherwise applicable rate, and (ii) all fees otherwise payable
to the Lenders but for the effect of such Limitation Period.
a\credit.agr
-18-
(b) If, under any circumstances, the aggregate amounts paid on the
Notes or under this Agreement or any other Loan Document include amounts which
by law are deemed interest and which would exceed the amount permitted if the
Highest Lawful Rate were in effect, the Borrowers stipulate that such payment
and collection will have been and will be deemed to have been, to the extent
permitted by Applicable Laws, the result of mathematical error on the part of
the Borrowers and the Lenders; and each Lender shall promptly refund the amount
of such excess (to the extent only of such interest payments in excess of that
which would have accrued and have been payable on the basis of the Highest
Lawful Rate) upon discovery of such error by such Lender or notice thereof from
the Borrowers. In the event that the maturity of any Obligation is accelerated,
by reason of an election by the Lenders or otherwise, or in the event of any
required or permitted prepayment, then the consideration constituting interest
under applicable laws may never exceed the Highest Lawful Rate; and excess
amounts paid which by law are deemed interest, if any, shall be credited by the
Lender on the principal amount of the Obligations, or if the principal amount of
the Obligations shall have been paid in full, refunded to the Borrowers.
(c) All sums paid, or agreed to be paid, to the Lenders for the use,
forbearance and detention of the proceeds of any advance hereunder shall, to the
extent permitted by Applicable Laws, be amortized, prorated, allocated, and
spread throughout the full term hereof until paid in full so that the actual
rate of interest is uniform but does not exceed the Highest Lawful Rate
throughout the full term hereof.
18 YIELD PROTECTION. Without limiting the effect of the other
provisions of this Section (but without duplication), the Borrowers shall pay to
the Agent from time to time on request such amounts as the Agent may determine
are necessary to compensate a Lender or some or all of the Lenders for any costs
attributable to the maintenance by such Lender or Lenders, pursuant to any
Regulatory Change, of capital in respect of the Commitment, such compensation to
include, without limitation, an amount equal to any reduction of the rate of
return on assets or equity of such Lender or Lenders to a level below that which
such Lender or Lenders could have achieved but for such Regulatory Change.
(a) Determinations by such Lender for purposes of this Section of
the effect of any Regulatory Change on (i) capital maintained, (ii) its costs or
rate of return, (iii) maintaining Loans, (iv) its obligation to make Loans, or
(v) amounts receivable by it in respect of Loans or such obligations, and the
additional amounts required to compensate a Lender under this Section shall be
conclusive, absent manifest error, provided that such determinations are made on
a reasonable basis. Such Lender shall furnish the Borrowers with a certificate
setting forth in reasonable detail the basis and amount of increased costs
incurred or reduced amounts receivable as a result of any such event, and the
statements set forth therein shall be conclusive, absent manifest error,
provided that such determinations are made on a reasonable basis. The Agent
shall notify the Borrowers, as promptly as practicable after the Agent obtains
notice from such Lender of any sums payable pursuant to this Section and request
for compensation therefor. Any compensation requested by any Lender pursuant to
this Section shall be due and payable to the Agent (on account of such Lender)
within five days of delivery of any such notice by the Agent to the Borrowers.
19 LETTERS IN LIEU OF TRANSFER ORDERS. The Agent and the Lenders
agree that none of the letters in lieu of transfer or division orders provided
by the Borrowers pursuant to Section
a\credit.agr
-19-
3.1(g)(iii) or Section 5.7 will be sent to the addressees thereof prior to the
occurrence of an Event of Default, at which time the Agent may, at its option
and in addition to the exercise of any other rights and remedies, send any or
all of such letters.
20 POWER OF ATTORNEY. Each Borrower hereby designates the Agent as
its agent and attorney-in-fact, to act in its name, place, and stead for the
purpose of completing and, upon the occurrence of an Event of Default,
delivering any and all of the letters in lieu of transfer orders delivered by
the Borrowers to the Agent pursuant to Section 3.1(g)(iii) or Section 5.7,
including, without limitation, completing any blanks contained in such letters
and attaching exhibits thereto describing the relevant Collateral. Each Borrower
hereby ratifies and confirms all that the Agent shall lawfully do or cause to be
done by virtue of this power of attorney and the rights granted with respect to
such power of attorney. This power of attorney is coupled with the interests of
the Agent in the Collateral, shall commence and be in full force and effect as
of the Closing Date and shall remain in full force and effect and shall be
irrevocable so long as any Obligation remains outstanding or unpaid or any
Commitment exists. The powers conferred on the Agent by this appointment are
solely to protect the interests of the Agent and the Lenders under the Loan
Documents and shall not impose any duty upon the Agent to exercise any such
powers. The Agent and the Lenders shall be accountable only for amounts actually
received as a result of the exercise of such powers and shall not be responsible
to the Borrowers or any other Person for any act or failure to act with respect
to such powers, except for gross negligence or willful misconduct.
21 JOINT BORROWER PROVISIONS.
(a) Any Loan made hereunder shall be made jointly to the
Borrowers and shall be charged to the Borrowers, jointly and severally.
Any payments received by the Agent for the account of the Lenders
hereunder likewise shall be credited, jointly and severally, for the
account of the Borrowers.
(b) For the purpose of implementing the joint borrower
provisions of the Loan Documents, each Borrower hereby irrevocably
appoints each other Borrower as its agent and attorney-in-fact, coupled
with an interest, for all purposes of the Loan Documents, including the
making of requests for Loans, the execution and delivery of certificates
and the receiving and allocating of disbursements from the Agent. All
Advances are to be made for the collective account of Borrowers.
(c) It is understood and agreed that the handling of the
Loans on a joint borrowing basis as set forth in this Agreement is solely
as an accommodation to the Borrowers and at their request, and that the
Agent and the Lenders shall incur no liability to the Borrowers as a
result thereof. To induce the Agent and the Lenders to do so, and in
consideration thereof, each of the Borrowers hereby agrees to indemnify
each of the Agent and the Lenders and hold each such Person harmless from
and against any and all liabilities, expenses, losses, damages or claims
of damage or injury asserted against any such Person by any of the
Borrowers or by any other Person arising form or incurred by reason of the
handling by any of the Agent or the Lenders of the financing arrangement
of the Borrowers as herein provided, reliance by any of the Agent or the
Lenders on any requests or instructions
a\credit.agr
-20-
from any Borrower, or any other related action taken by any of the Agent
or the Lenders hereunder in the absence of gross negligence or willful
misconduct.
(d) Each Borrower represents and warrants to the Agent and
the Lenders that the request for joint handling of the Loans and other
financial accommodations to be made by the Agent and the Lenders hereunder
was made because the Borrowers are engaged in an integrated operation that
requires financing on a basis permitting the availability of credit from
time to time to each of the Borrowers. Each of the Borrowers expects to
derive benefit, directly or indirectly, from such availability because the
successful operation of the Borrowers is dependent on the continued
successful performance of the functions of the integrated group.
(e) Each of the Borrowers represents and warrants to the
Agent and the Lenders that (i) such Borrower has established adequate
means of obtaining from the other Borrowers on a continuing basis
financial and other information pertaining to the business, operations,
and condition (financial and otherwise) of the other Borrowers, and their
property, and (ii) such Borrower now is and hereafter will be completely
familiar with the business, operations and condition (financial and
otherwise) of the other Borrowers, and their Property. Each of the
Borrowers hereby waives and relinquishes any duty on the part of the
Lender to disclose to such Borrower any matter, fact or thing relating to
the business, operations or condition (financial or otherwise) of any
other Borrower, or the Property of any other Borrower, whether now or
hereafter known by any of the Agent or the Lenders during the term of this
Agreement.
(f) Each Borrower acknowledges that the obligations of such
Borrower undertaken herein might be construed to consist, at least in
part, of the guaranty of obligations of Persons or entities other than
such Borrower (including the other Borrowers) and, in full recognition of
that fact, each Borrower consents and agrees that the Agent and the
Lenders may, at any time and from time to time, without notice or demand,
except as otherwise required herein, whether before or after any actual or
purported termination, repudiation or revocation of this Agreement by any
one or more Borrowers, and without affecting the enforceability or
continuing effectiveness hereof as to each Borrower, agree with the other
Borrower to: (i) supplement, restate, modify, amend, increase, decrease,
extend, renew, accelerate or otherwise change the time for payment or the
terms of the Obligations or any part thereof, including any increase or
decrease of the rate(s) of interest thereon; (ii) supplement, restate,
modify, amend, increase, decrease or waive, or enter into or give any
agreement, approval or consent with respect to, the Obligations or any
part thereof, or any of the Loan Documents or any additional security or
guarantees, or any condition, covenant, default, remedy, right,
representation or term thereof or thereunder; (iii) accept new or
additional instruments, documents or agreements in exchange for or
relative to any of the Loan Documents or the Obligations or any part
thereof; (iv) accept partial payments on the Obligations; (v) receive and
hold additional security or guarantees for the Obligations or any part
hereof; (vi) release, reconvey, terminate, waive, abandon, fail to
perfect, subordinate, exchange, substitute, transfer or enforce any
security or guarantees, and apply any security and direct the order or
manner of the sale thereof as the Agent in its sole and absolute
discretion may determine; (vii) release any Person from any personal
liability with respect to
a\credit.agr
-21-
the Obligations or any part thereof; (viii) settle, release on terms
satisfactory to the Agent or by operation of applicable laws or otherwise
liquidate or enforce any Obligations and any security therefor in any
manner, consent to the transfer of any security and bid and purchase at
any sale; or (ix) consent to the merger, change or any other restructuring
or termination of the corporate or partnership existence of any Borrower
or any other Person, and correspondingly restructure the Obligations, and
any such merger, change, restructuring or termination shall not affect the
liability of any Borrower or the continuing effectiveness hereof, or the
enforceability hereof with respect to all or any part of the Obligations.
(g) Upon the occurrence and during the continuance of any
Event of Default, the Agent may enforce this Agreement independently as to
each Borrower and independently of any other remedy or security the Agent
at any time may have or hold in connection with the Obligations, and it
shall not be necessary for the Agent to marshal assets in favor of any
Borrower or any other person or to proceed upon or against or exhaust any
security or remedy before proceeding to enforce this Agreement. Each
Borrower expressly waives any right to require the Agent to marshal assets
in favor of any Borrower or any other Person or to proceed against the
other Borrower or any collateral provided by any Person, and agrees that
the Agent may proceed against Borrowers or any Collateral in such order as
it shall determine in its sole and absolute discretion.
(h) The Agent and any Lender may file a separate action or
actions against any Borrower, whether such action is brought or prosecuted
with respect to any security or against any other Person, or whether any
other Person is joined in any such action or actions. Each Borrower agrees
that the Agent and any Borrower and any Affiliate of any Borrower may deal
with each other in connection with the Obligations or otherwise, or alter
any contracts or agreements now or hereafter existing between any of them,
in any manner whatsoever, all without in any way altering or affecting the
continuing efficacy of this Agreement. Each Borrower expressly waives the
benefit of any statute of limitations affecting its liability hereunder or
the enforcement of the Obligations or any rights of the Agent and the
Lenders created or granted herein.
(i) The Agent's and the Lenders' rights hereunder shall be
reinstated and revived, and the enforceability of this Agreement shall
continue, with respect to any amount at any time paid on account of the
Obligations which thereafter shall be required to be restored or returned
by any Lender, all as though such amount had not been paid. The rights of
the Agent and the Lenders created or granted herein and the enforceability
of this Agreement at all times shall remain effective to cover the full
amount of all the Obligations even though the Obligations, including any
part thereof or any other security therefor, may be or hereafter may
become invalid or otherwise unenforceable as against any Borrower and
whether or not the other Borrowers shall have any personal liability with
respect thereto.
(j) To the maximum extent permitted by applicable law, each
Borrower expressly waives any and all defenses now or hereafter arising or
asserted by reason of (i) any disability or other defense of any other
Borrower with respect to the Obligations, (ii) the unenforceability or
invalidity of any security for the Obligations or the lack of perfection
or continuing perfection or failure of priority of any security for the
Obligations, (iii) the
a\credit.agr
-22-
cessation for any cause whatsoever of the liability of any other Borrower
(other than by reason of the full payment and performance of all
Obligations), (iv) any failure of the Agent to marshal assets in favor of
any Borrower or any other Person, (v) any failure of the Agent to give
notice of sale or other disposition of collateral to any Borrower or any
other Person or any defect in any notice that may be given in connection
with any sale or disposition of collateral, (vi) any failure of the Agent
to comply with applicable law in connection with the sale or other
disposition of any Collateral or other security for any Obligation,
including any failure of the Agent to conduct a commercially reasonable
sale or other disposition of any Collateral or other security for any
Obligation, (vii) any act or omission of or others that directly or
indirectly results in or aids the discharge or release of any of any
Borrower or the Obligations or any security therefor by operation of law
or otherwise, (viii) any failure of the Agent to file or enforce a claim
in any bankruptcy or other proceeding with respect to any Person, (ix) the
election by the Agent of the application or non-application of Section
1111(b)(2) of the Bankruptcy Code, (x) any extension of credit or the
grant of any lien under Section 364 of the Bankruptcy Code, (xi) any use
of cash collateral under Section 363 of the Bankruptcy Code, (xii) any
agreement or stipulation with respect to the provision of adequate
protection in any bankruptcy proceeding of any Person, (xiii) the
avoidance of any lien in favor of the Agent for any reason, or (xiv) any
action taken by the Agent or any Lender that is authorized by this Section
or any other provision of any Loan Document. Until such time, if any, as
all of the Obligations have been paid and performed in full and no portion
of any Commitment of the Agent and any Lender to any Borrower under any
Loan Document remains in effect, no Borrower shall have any right of
subrogation, contribution, reimbursement or indemnity, and each Borrower
expressly waives any right to enforce any remedy that the Agent or any
Lender now has or hereafter may have against any other Person and waives
the benefit of, or any right to participate in, any Collateral now or
hereafter held by the Agent. Each Borrower expressly waives all
presentments, demands for payment or performance, notices of nonpayment or
nonperformance, protests, notices of protest, notices of dishonor and all
other notices or demands of any kind or nature whatsoever with respect to
the Obligations, and all notices of acceptance of this Agreement or of the
existence, creation or incurring of new or additional Obligations.
(k) To the fullest extent permitted by applicable law, each
Borrower expressly waives any suretyship defenses to the enforcement of
this Agreement or any rights of the Agent or any Lender created or granted
hereby or to the recovery by the Agent or any Lender against any Borrower
or any other Person liable therefor of any deficiency after a judicial or
nonjudicial foreclosure or sale, even though such a foreclosure or sale
may impair the subrogation rights of the Borrowers and may preclude the
Borrowers from obtaining reimbursement or contribution from other
Borrowers. Each Borrower expressly waives any defenses or benefits that
may be derived pursuant to or from Rule 31 of the Texas Rules of Civil
Procedure, Section 17.001 of the Civil Practice and Remedies Code and
Chapter 34 of the Texas Business and Commerce Code, as amended, or
comparable provisions of the laws of any other jurisdiction, and all other
suretyship defenses it otherwise might or would have under Texas law or
other applicable law.
(l) The Borrowers and each of them warrant and agree that
each of the waivers and consents set forth herein are made after
consultation with legal counsel and with
a\credit.agr
-23-
full knowledge of their significance and consequences, with the
understanding that events giving rise to any defense or right waived may
diminish, destroy or otherwise adversely affect rights which the Borrowers
otherwise may have against any other Borrower, the Agent, the Lenders or
others, or against the Collateral, and that, under the circumstances, the
waivers and consents herein given are reasonable and not contrary to
public policy or law. If any of the waivers or consents herein are
determined to be contrary to any applicable law or public policy, such
waivers and consents shall be effective to the maximum extent permitted by
law.
22 PRO RATA TREATMENT. Except to the extent otherwise provided herein: (a)
each Loan shall be made by the Lenders under Section 2.1, each payment of
facility fee under Section 2.11 shall be made for the account of the Lenders,
and each termination or reduction of the Commitments shall be applied to the
Commitments of the Lenders, pro rata according to the respective unused
Commitments; (b) each payment and prepayment of principal of or interest on
Loans by the Borrowers shall be made to the Agent for the account of the Lenders
holding Loans pro rata in accordance with the respective Loan Balance held by
such Lenders. Each Lender hereby agrees that it shall be liable under and
pursuant to each Letter of Credit pro rata in proportion to its Commitment
Amount of the face amount thereof to the same extent and of the same effect as
if such Lender had issued such Letter of Credit. In that regard, immediately
upon issuance by the Agent of any Letter of Credit in accordance with this
Agreement, each other Lender shall be deemed to have irrevocably and
unconditionally purchased and received from the Agent, WITHOUT RECOURSE OR
WARRANTY, an undivided interest and participation in such Letter of Credit, and
including all obligations of the Borrowers with respect thereto and any security
therefor or any guaranty relating thereto, in an amount equal to the product of
(i) the Commitment Amount of such Bank and (ii) the stated amount of such Letter
of Credit.
23 NON-RECEIPT OF FUNDS BY THE AGENT. Unless the Agent shall have been
notified by a Lender or the Borrowers (the "PAYOR") prior to the date on which
such Lender is to make payment to the Agent of the proceeds of a Loan to be made
by it hereunder or the Borrowers are to make a payment to the Agent for the
account of one or more of the Lenders, as the case may be (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 such date and, if the Payor has
not in fact made the Required Payment to the Agent, the recipient of such
payment shall, on demand, pay to the Agent the amount made available to it
together with interest thereon in respect of the period commencing on 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 (i) the federal funds rate for such
period in the case of a Lender and (b) the applicable rate of interest provided
for herein for such period in the case of the Borrowers.
24 WITHHOLDING TAX EXEMPTION. Each Lender that is not incorporated under
the laws of the United States of America or a state thereof agrees that it will
deliver to the Borrowers and the Agent two duly completed copies of Form 1001 or
4224, certifying in either case that such Lender is entitled to receive payments
from the Borrowers under any Loan Document without deduction or withholding of
any United States federal income taxes. Each Lender which so delivers a Form
1001 or 4224 further undertakes to deliver to Borrowers and the Agent two
additional copies of such form
a\credit.agr
-24-
(or a successor form) on or before the date such form expires or becomes
obsolete or after the occurrence of any event requiring a change in the most
recent form so delivered by it, and such amendments thereto or extensions or
renewals thereof as may be reasonably requested by the Borrowers or the Agent,
in each case certifying that such Lender is entitled to receive payments from
the Borrower under any Loan Document without deduction or withholding of any
United States federal income taxes, unless an event (including without
limitation any change in treaty, law or regulation) has occurred prior to the
date on which any such delivery would otherwise be required which renders all
such forms inapplicable or which would prevent such Lender from duly completing
and delivering any such form with respect to it and such Lender advises the
Borrowers and the Agent that it is not capable of receiving such payments
without any deduction or withholding of United States federal income tax.
25 CERTAIN AGREEMENTS REGARDING LETTERS OF CREDIT. The Borrowers
assume all risks of acts or omissions of beneficiaries of any of the Letters of
Credit with respect to their use of the Letters of Credit. Except in the case of
gross negligence or willful misconduct on the part of the Agent, the Agent, the
Lenders or any correspondent, neither the Agent nor any Lender or correspondent
shall be liable or responsible for any of the following (including, but not
limited to, those caused by the Agent's, its correspondents' or any of the
Lenders' own negligence):
(a) The validity or genuineness of certificates or other documents
even if such certificates or documents should in fact prove to be invalid,
fraudulent or forged;
(b) Errors, omissions, interruptions or delay in transmission or
delivery of any messages, by mail, telex, facsimile or otherwise, whether
or not they be in code;
(c) Errors in the translation or for errors in interpretation of
technical terms; or
(d) Any consequences arising from causes beyond the Agent's control
or the control of its correspondents;
nor shall the Agent be responsible for any error, neglect or default by any of
its correspondents; and none of the above shall affect, impair or prevent the
vesting of any of the Agent's rights or powers hereunder or under any Letter of
Credit, all of which rights shall be cumulative. The Agent and its
correspondents may accept certificates or other documents that appear on their
face to be in order, without responsibility for further investigation. In
furtherance but not in limitation of the foregoing provisions, the Borrowers
agree that any action taken by the Agent or any of its correspondents in good
faith in connection with a Letter of Credit or any related drafts, certificates,
documents or instruments, shall be binding on the Borrowers and shall not put
the Agent or its correspondents under any resulting liability to the Borrowers;
and the Borrowers make a like agreement as to any inaction or omission, unless
in breach of good faith.
ARTICLE III
CONDITIONS
a\credit.agr
-25-
The obligations of the Agent and the Lenders to enter into this
Agreement, the obligations of the Lenders to make the initial Loans to the
Borrowers and the obligation of the Agent to issue the initial Letters of Credit
are subject to the satisfaction of the following conditions precedent:
1 RECEIPT OF LOAN DOCUMENTS AND OTHER ITEMS. The Lenders shall have
no obligation to make any Loan under this Agreement and the Agent shall have no
obligation to issue any Letter of Credit unless and until the Agent and the
Lenders shall have received, reviewed, and approved the following documents and
other items, appropriately executed when necessary and, where applicable,
acknowledged by one or more authorized officers of the Borrowers, all in form
and substance satisfactory to the Agent and dated, where applicable, of even
date herewith or a date prior thereto and acceptable to the Agent:
(a) multiple counterparts of this Agreement, as requested by the
Agent;
(b) the Notes;
(c) copies of the Articles of Incorporation or Certificate of
Incorporation and all amendments thereto and the bylaws and all amendments
thereto of each Borrower, accompanied by a certificate issued by the
secretary or an assistant secretary of each Borrower, to the effect that
each such copy is correct and complete;
(d) certificates of incumbency and signatures of the Responsible
Officers of each Borrower who are authorized to execute Loan Documents on
behalf of such entity, each such certificate being executed by the
secretary or an assistant secretary of such entity;
(e) copies of corporate resolutions approving the Loan Documents and
authorizing the transactions contemplated herein and therein, duly adopted
by the board of directors of each Borrower, accompanied by certificates of
the secretary or an assistant secretary of each Borrower, to the effect
that such copies are true and correct copies of resolutions duly adopted
at a meeting or by unanimous written consent of the board of directors of
such Borrower, and that such resolutions constitute all the resolutions
adopted with respect to such transactions, have not been amended,
modified, or revoked in any respect, and are in full force and effect as
of the date of such certificate;
(f) multiple counterparts, as requested by the Agent, of the
following Security Instruments creating, evidencing, perfecting, and
otherwise establishing Liens in favor of the Agent in and to the
Collateral:
(i) Deed of Trust, Mortgage, Assignment of Production,
Security Agreement and Financing Statement from the Borrowers
covering the Mortgaged Properties (other than those subject to the
Pledge);
a\credit.agr
-26-
(ii) Pledge covering the Mortgaged Properties described
therein;
(iii) Financing Statements from the Borrowers, as debtors,
constituent to the instrument described in clauses (i) and (ii)
above;
(iv) undated letters, in form and substance satisfactory to
the Agent and the Borrowers, from the relevant Borrower to each
purchaser of production and disburser of the proceeds of production
from or attributable to the Mortgaged Properties of such Borrower,
together with additional letters with the addressees left blank,
authorizing and directing the addressees to make future payments
attributable to production from the Mortgaged Properties directly to
the Agent;
(g) certificates dated as of a recent date from the Secretary of
State or other appropriate Governmental Authority evidencing the existence
or qualification and good standing of each Borrower in its jurisdiction of
incorporation and in any other jurisdictions where it does business;
(h) results of searches of the UCC Records of the Secretary of State
of the State of Texas and other states where Mortgaged Properties are
located from sources acceptable to the Agent and reflecting no Liens
against any of the Collateral as to which perfection of a Lien is
accomplished by the filing of a financing statement other than in favor of
the Agent for the benefit of the Lenders;
(i) confirmation, acceptable to the Agent and the Lenders, of the
title of the Borrowers to the Mortgaged Properties, free and clear of
Liens other than Permitted Liens;
(j) all operating, lease, sublease, royalty, sales, exchange,
processing, farmout, bidding, pooling, unitization, communitization, and
other agreements relating to the Mortgaged Properties requested by the
Agent and the Lenders;
(k) certificates evidencing the insurance coverage required pursuant
to Section 5.18; and
(l) such other agreements, documents, instruments, opinions,
certificates, waivers, consents, and evidence as the Agent may reasonably
request.
a\credit.agr
-27-
2 EACH LOAN AND LETTER OF CREDIT. In addition to the conditions
precedent stated elsewhere herein, the Lenders shall not be obligated to make
any Loan and the Agent shall not be obligated to issue any Letter of Credit
unless:
(a) a Borrower shall have delivered to the Agent a written request
signed by a Responsible Officer of such Borrower specifying the amount of
Loan requested and the date of borrowing (which shall be a Business Day)
no later than 11:00 a.m. Central Standard or Central Daylight Savings
Time, as the case may be, on the Business Day preceding the requested
borrowing for the relevant Loan or a Letter of Credit Application at least
two Business Days prior to the requested issuance date for the relevant
Letter of Credit; and each statement or certification made in such written
request or Letter of Credit Application shall be true and correct in all
material respects on the requested date for such Loan;
(b) no Event of Default or Default shall exist or will occur as a
result of the making of the requested Loan;
(c) no event shall have occurred which could reasonably be expected
to have a Material Adverse Effect;
(d) each of the representations and warranties contained in this
Agreement shall be true and correct and shall be deemed to be repeated by
the Borrowers as if made on the requested date for such Loan;
(e) all of the Security Instruments shall be in full force and
effect and provide to the Agent for the benefit of the Lenders the
security intended thereby;
(f) the making of such Loan or issuance of such Letter of Credit
shall not contravene, violate, or conflict with any Requirement of Law;
(g) each of the Borrowers shall hold title to the Collateral pledged
by such entity in accordance with Section 4.5 and be the sole beneficial
owner thereof; and
(h) the Agent shall have received the payment of all Commitment
Fees, Engineering Fees, Facility Fees, Letter of Credit Fees and other
fees payable to the Agent or for the benefit of the Lenders for (i) all
reasonable fees and expenses of counsel to the Agent for which the
Borrowers are responsible pursuant to applicable provisions of this
Agreement and for which invoices have been presented as of or prior to the
date of the relevant Loan or Letter of Credit Application, and (ii)
estimated fees charged by filing officers and other public officials
incurred or to be incurred in connection with the filing and recordation
of any Security Instruments, for which invoices have been presented as of
or prior to the date of the requested Loan or Letter of Credit
Application.
a\credit.agr
-28-
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into this Agreement
and (in the case of the Lenders) to make the Loans and (in the case of the
Agent) to issue Letters of Credit, the Borrowers, jointly and severally,
represent and warrant to the Agent and the Lenders (which representations and
warranties shall survive the delivery of the Notes) that:
1 DUE AUTHORIZATION. The execution and delivery by the Borrowers of
this Agreement and the borrowings hereunder, the execution and delivery by the
Borrowers of the Notes, the repayment of the Notes and interest and fees
provided for in the Notes and this Agreement, the execution and delivery of the
Security Instruments by the Borrowers, and the performance of all obligations
of the Borrowers under the Loan Documents are within the corporate power of the
Borrowers, have been duly authorized by all necessary corporate action by the
Borrowers, and do not and will not (a) require the consent of any Governmental
Authority to be obtained by any of the Borrowers, (b) contravene or conflict
with any Requirement of Law applicable to the Borrowers, (c) contravene or
conflict with any material indenture, instrument, or other agreement to which
any Borrower is a party or by which any Mortgaged Property may be presently
bound or encumbered, or (d) result in or require the creation or imposition of
any Lien in, upon or of any Property of any Borrower under any such indenture,
instrument, or other agreement, other than the Loan Documents.
2 CORPORATE EXISTENCE. Each Borrower is a corporation duly
organized, legally existing, and in good standing under the laws of the state of
its incorporation and is duly qualified as a foreign corporation and is in good
standing in all jurisdictions wherein the ownership of Property or the operation
of its business necessitates same, other than those jurisdictions wherein the
failure to so qualify will not have a Material Adverse Effect.
3 VALID AND BINDING OBLIGATIONS. All Loan Documents, when duly
executed and delivered by the Borrowers, will be the legal, valid, and binding
obligations of the Borrowers, enforceable against the Borrowers in accordance
with their respective terms, subject to the effect of bankruptcy or other
similar laws and to general principles of equity.
4 SECURITY INSTRUMENTS. The provisions of each Security Instrument
are effective to create in favor of the Agent for the benefit of the Lenders, a
legal, valid, and enforceable Lien in all right, title, and interest of the
Borrowers in the Collateral described therein, which Liens, assuming the
accomplishment of recording and filing in accordance with Applicable Laws, shall
constitute fully perfected first-priority Liens (subject to Permitted Liens) on
all right, title, and interest of the Borrowers in the Collateral described
therein.
5 TITLE TO ASSETS. (a) The Borrowers have good and indefeasible
title to their respective Leases, Lands and Easements, as such terms are defined
in the Deed of Trust referred to in Section 3.1(g)(i) and all other real
Property of the Borrowers, each free and clear of all Liens except Permitted
Liens; and (b) the Borrowers have good and marketable title to their respective
a\credit.agr
-29-
Pipelines, Contracts, and Facility, as the terms are defined in such Deed of
Trust and all other personal Property of the Borrowers, each free and clear of
all Liens except Permitted Liens.
6 SCOPE AND ACCURACY OF FINANCIAL STATEMENTS. The Financial
Statements of each Borrower as of March 31, 1997, present fairly the financial
position and results of operations and cash flows of such Borrower in accordance
with sound accounting principles as at the relevant point in time or for the
period indicated, as applicable. No event or circumstance has occurred since
March 31, 1997, which could reasonably be expected to have a Material Adverse
Effect.
7 NO MATERIAL MISSTATEMENTS. No information, exhibit, statement, or
report furnished to the Agent or any Lender by or at the direction of the
Borrowers in connection with this Agreement contains any material misstatement
of fact or omits to state a material fact or any fact necessary to make the
statements contained therein not misleading as of the date made or deemed made.
8 LIABILITIES, LITIGATION, AND RESTRICTIONS. Other than as listed
under the heading "Liabilities" on Exhibit IV attached hereto, none of the
Borrowers has any liabilities, direct or contingent, which could reasonably be
expected to have a Material Adverse Effect. Except as set forth under the
heading "Litigation" on Exhibit IV hereto, no litigation or other proceeding
affecting any Borrower is pending before any Governmental Authority or, to the
best knowledge of the Borrowers, threatened against any Borrower.
9 AUTHORIZATIONS; CONSENTS. Except as expressly contemplated by this
Agreement, no authorization, consent, approval, exemption, franchise, permit, or
license of, or filing with, any Governmental Authority or any other Person is
required to authorize or is otherwise required in connection with the valid
execution and delivery by the Borrowers of the Loan Documents, the repayment by
the Borrowers of the Notes and interest and fees provided in the Notes and this
Agreement, or the performance by the Borrowers of the Obligations.
10 COMPLIANCE WITH LAWS. Each Borrower and its Property, including,
without limitation, the Mortgaged Properties of such Borrower, are in compliance
with all applicable Requirements of Law, including, without limitation,
Environmental Laws, the Natural Gas Policy Act of 1978, as amended, and ERISA,
except to the extent non-compliance with any such Requirements of Law could not
reasonably be expected to have a Material Adverse Effect.
11 ERISA. No Reportable Event has occurred with respect to any
Single Employer Plan, and each Single Employer Plan has complied with and been
administered in all material respects in accordance with applicable provisions
of ERISA and the Code. To the best knowledge of the Borrowers, (a) no Reportable
Event has occurred with respect to any Multiemployer Plan, and (b) each
Multiemployer Plan has complied with and been administered in all material
respects with applicable provisions of ERISA and the Code. The present value of
all benefits vested under each Single Employer Plan maintained by any Borrower
or any Commonly Controlled Entity (based on the assumptions used to fund such
Plan) did not, as of the last annual valuation date applicable thereto, exceed
the value of the assets of such Plan allocable to such vested
a\credit.agr
-30-
benefits. Neither any Borrower nor any Commonly Controlled Entity has had a
complete or partial withdrawal from any Multiemployer Plan for which there is
any withdrawal liability. As of the most recent valuation date applicable to any
Multiemployer Plan, neither any Borrower nor any Commonly Controlled Entity
would become subject to any liability under ERISA if such Borrower or such
Commonly Controlled Entity were to withdraw completely from such Multiemployer
Plan. Neither any Borrower nor any Commonly Controlled Entity has received
notice that any Multiemployer Plan is Insolvent or in Reorganization. To the
best knowledge of the Borrowers, no such Insolvency or Reorganization is
reasonably likely to occur. Based upon GAAP existing as of the date of this
Agreement and current factual circumstances, the Borrowers have no reason to
believe that the annual cost during the term of this Agreement to the Borrowers
and all Commonly Controlled Entities for post-retirement benefits to be provided
to the current and former employees of the Borrowers and all Commonly Controlled
Entities under Plans which are welfare benefit plans (as defined in Section 3(1)
of ERISA) will, in the aggregate, have a Material Adverse Effect.
12 ENVIRONMENTAL LAWS. To the best knowledge and belief of the
Borrowers after due inquiry, except as would not have a Material Adverse Effect,
or as described on Exhibit IV under the heading "Environmental Matters:"
(a) no Property of any Borrower is currently on or has ever been on,
or is adjacent to any Property which is on or has ever been on, any
federal or state list of Superfund Sites;
(b) no Hazardous Substances have been generated, transported, and/or
disposed of by any Borrower at a site which was, at the time of such
generation, transportation, and/or disposal, or has since become, a
Superfund Site;
(c) except in accordance with applicable Requirements of Law or the
terms of a valid permit, license, certificate, or approval of the relevant
Governmental Authority, no Release of Hazardous Substances by any Borrower
or from, affecting, or related to any Property of any Borrower or adjacent
to any Property of any Borrower has occurred which could (i) require
reporting to any Governmental Authority, (ii) require remediation or other
response action, or (iii) be the basis of a claim for personal injury or
property damage; and
(d) no Environmental Complaint concerning any Property or operations
of any Borrower has been received by any Borrower.
13 REFUNDS. Except as described on Exhibit IV under the heading
"Refunds," no orders of, proceedings pending before, or other requirements of,
the Federal Energy Regulatory Commission, the Texas Railroad Commission, or any
Governmental Authority exist which could result in any Borrower being required
to refund any material portion of the proceeds received or to be received from
the sale of hydrocarbons constituting part of the Mortgaged Property.
a\credit.agr
-31-
14 GAS CONTRACTS. Except as described on Exhibit IV under the
heading "Gas Contract," or as reflected in the Reserve Reports delivered prior
to the date of this Agreement, no Borrower (a) is obligated in any material
respect by virtue of any prepayment made under any contract containing a
"take-or-pay" or "prepayment" provision or under any similar agreement to
deliver Hydrocarbons produced from or allocated to any of the Mortgaged Property
at some future date without receiving full payment therefor within 90 days of
delivery, nor (b) has produced gas, in any material amount, subject to, and no
Borrower nor any of the Mortgaged Properties is subject to, balancing rights of
third parties or subject to balancing duties under governmental requirements,
except as to such matters for which the relevant Borrower has established
monetary reserves adequate in amount in accordance with GAAP to satisfy such
obligations and has segregated such reserves on its books from other accounts.
15 INTELLECTUAL PROPERTY. Except as would not have a Material
Adverse Effect, each Borrower owns or is licensed to use all Intellectual
Property necessary to conduct all business material to its condition (financial
or otherwise), business, or operations as such business is currently conducted.
To the best knowledge and belief of the Borrowers, no claim has been asserted or
is pending by any Person with respect to the use of any such Intellectual
Property or challenging or questioning the validity or effectiveness of any such
Intellectual Property; and no Borrower knows of any valid basis for any such
claim. The use of such Intellectual Property by the Borrowers does not infringe
on the rights of any Person, except for such claims and infringements as do not,
in the aggregate, give rise to any Material Adverse Effect.
16 CASUALTIES OR TAKING OF PROPERTY. Except as would not have a
Material Adverse Effect, or as disclosed on Exhibit IV under the heading
"Casualties," since June 30, 1997, neither the business nor any Property of any
Borrower has been affected as a result of any fire, explosion, earthquake,
flood, drought, windstorm, accident, strike or other labor disturbance, embargo,
requisition or taking of Property, or cancellation of contracts, permits, or
concessions by any Governmental Authority, riot, activities of armed forces, or
acts of God.
17 LOCATIONS OF BORROWERS. The principal place of business and chief
executive office of each Borrower is located at the address of the Borrowers set
forth in Section 9.3 or at such other location as the Borrowers may have, by
proper written notice hereunder, advised the Agent, provided that such other
location is within a state in which appropriate financing statements from each
of the Borrowers in favor of the Agent for the benefit of the Lenders have been
filed.
ARTICLE V
AFFIRMATIVE COVENANTS
So long as any Obligation remains outstanding or unpaid or any
Commitment exists, each Borrower, jointly and severally, shall:
a\credit.agr
-32-
1 MAINTENANCE AND ACCESS TO RECORDS. Keep adequate records, in
accordance with GAAP, of all its transactions, and promptly following the
reasonable request of the Agent, make such records available for inspection by
the Agent or any Lender at the Borrowers' respective offices during normal
business hours and, at the expense of such Borrower, allow the Agent and any
Lender to make and take away such copies thereof as it may reasonably request.
2 QUARTERLY FINANCIAL STATEMENTS. Deliver to the Agent and each
Lender, on or before the 45th day after the close of each of the first three
quarterly periods of each fiscal year, (a) a copy of the unaudited combined and
combining Financial Statements of the Borrowers as at the close of such
quarterly period and from the beginning of such year to the end of such period,
such Financial Statements to be certified by a Responsible Officer of each
Borrower as having been prepared in accordance with GAAP consistently applied
and as a fair presentation of the condition of the Borrowers, subject to changes
resulting from normal year-end audit adjustments, and (b) a Compliance
Certificate.
3 ANNUAL FINANCIAL STATEMENTS. Deliver to the Agent and each Lender,
on or before the 90th day after the close of each fiscal year of the Borrowers,
(a) a copy of the annual audited Financial Statements of the Borrowers and (b) a
Compliance Certificate.
4 OIL AND GAS RESERVE REPORTS. Deliver to the Agent and each Lender,
no later than April 1 of each year during the term of this Agreement,
engineering reports in form and substance satisfactory to the Agent, certified
by any nationally- or regionally-recognized independent consulting petroleum
engineers reasonably acceptable to the Agent, fairly and accurately setting
forth (i) the proven and producing, shut-in, behind-pipe, and undeveloped oil
and gas reserves (separately classified as such) attributable to the Mortgaged
Properties as of December 31 of the immediately preceding year for which such
reserve reports are furnished, (ii) the aggregate present value of the future
net income with respect to such Mortgaged Properties that are proved and
producing reserves, discounted at a stated per annum discount rate of proven and
producing reserves, (iii) projections of the annual rate of production, gross
income, and net income with respect to such proven and producing reserves, and
(iv) information with respect to the "take-or-pay," "prepayment," and
gas-balancing liabilities of the Borrowers.
(a) Deliver to the Agent and each Lender no later than October 1 of
each year during the term of this Agreement, engineering reports in form and
substance satisfactory to the Agent prepared by or under the supervision of a
qualified petroleum engineer or other Person designated by the Borrowers and
acceptable to the Agent evaluating the Mortgaged Properties as of June 30 of the
year for which such reserve reports are furnished and updating the information
provided in the reports pursuant to Section 5.4(a).
(b) Within 30 days after the end of each calendar month commencing
with the calendar month ending August 31, 1997, a written report on all Swap
Obligations, to be in a form and substance reasonably satisfactory to the Agent
and the Lenders; and
a\credit.agr
-33-
(c) Each of the reports provided pursuant to this Section shall be
submitted to the Agent and each Lender together with additional data concerning
pricing, quantities of production from the Mortgaged Properties, volumes of
production sold, purchasers of production, gross revenues, expenses, and such
other information and engineering and geological data with respect thereto as
the Agent may reasonably request.
5 TITLE OPINIONS; TITLE DEFECTS; ETC. Promptly upon the request of
the Agent, furnish to the Agent and the Lenders title opinions, in form and
substance and by counsel reasonably satisfactory to the Agent, or other
confirmation of title acceptable to the Agent, covering Mortgaged Properties
constituting not less than 80% of the value, determined by the Agent in its sole
discretion, of the Mortgaged Properties; and promptly, but in any event within
60 days after notice by the Agent of any defect, material in the opinion of the
Agent in value, in the title of any Borrower to any of its Mortgaged Properties,
proceed diligently to clear such title defects, and, in the event any such title
defects are capable of being cured in the opinion of the Agent and not cured in
a timely manner, pay all related costs and fees incurred by the Agent to do so.
Within 10 Business Days of the date of this Agreement, furnish to the Agent and
the Lenders the opinion of Xxxxxx & Xxxxxxxx in the form attached hereto as
Exhibit III, with such changes thereto as may be approved by the Agent.
6 NOTICES OF CERTAIN EVENTS. Deliver to the Agent and each Lender,
promptly and in any event within 5 Business Days upon having knowledge of the
occurrence of any of the following events or circumstances, a written statement
with respect thereto, signed by a Responsible Officer of each Borrower and
setting forth the relevant event or circumstance and the steps being taken by
the Borrowers with respect to such event or circumstance:
(a) any Default or Event of Default;
(b) any default or event of default under any contractual obligation
of any Borrower, or any litigation, investigation, or proceeding between
any Borrower and any Governmental Authority which, in either case, if not
cured or if adversely determined, as the case may be, could reasonably be
expected to have a Material Adverse Effect;
(c) any litigation or proceeding involving any Borrower as a
defendant or in which any Property of any Borrower is subject to a claim
and in which the amount involved is $100,000 or more and which is not
covered by insurance or in which injunctive or similar relief is sought;
(d) the receipt by any Borrower of any Environmental Complaint
requesting or requiring remediation of contaminated soil or ground water,
imposing fines or penalties, rejecting or revoking any license or permit,
or any other Environment Complaint which could reasonably be expected to
have a Material Adverse Effect;
a\credit.agr
-34-
(e) any actual, proposed, or threatened testing or other
investigation by any Governmental Authority or other Person concerning the
environmental condition of, or relating to, any Property of any Borrower
or adjacent to any Property of any Borrower following any allegation of a
violation of any Requirement of Law that relates to such testing or other
investigation;
(f) any Release of Hazardous Substances by any Borrower or from,
affecting, or related to any Property of any Borrower or adjacent to any
Property of any Borrower, or the violation of any Environmental Law, or
the revocation, suspension, or forfeiture of or failure to renew, any
permit, license, registration, approval, or authorization which could, in
the case of each of the items in this clause (f), reasonably be expected
to have a Material Adverse Effect;
(g) the change in identity or address of any Person remitting to any
Borrower proceeds from the sale of Hydrocarbon production from or
attributable to any Mortgaged Property;
(h) any change in the president or chief executive officer of any
Borrower;
(i) any Reportable Event or imminently expected Reportable Event
with respect to any Plan; any withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan; the institution
of proceedings or the taking of any other action by the PBGC, any Borrower
or any Commonly Controlled Entity or Multiemployer Plan with respect to
the withdrawal from, or the termination, Reorganization or Insolvency of,
any Single Employer Plan or Multiemployer Plan; or any Prohibited
Transaction in connection with any Plan or any trust created thereunder
and the action being taken by the Internal Revenue Service with respect
thereto; and
(j) any other event or condition which could reasonably be expected
to have a Material Adverse Effect.
7 LETTERS IN LIEU OF TRANSFER ORDERS; DIVISION ORDERS. Promptly upon
request by the Agent at any time and from time to time, and without limitation
on the rights of the Agent pursuant to Sections 2.19 and 2.20, execute such
letters in lieu of transfer orders, in addition to the letters signed by the
Borrowers and delivered to the Agent in satisfaction of the condition set forth
in Section 3.1(g)(iii) and/or division and/or transfer orders as are necessary
or appropriate to transfer and deliver to the Agent after an Event of Default
proceeds from or attributable to any Mortgaged Property.
8 ADDITIONAL INFORMATION. Furnish to the Agent, promptly upon the
request of the Agent or any Lender, such additional financial or other
information concerning the assets, liabilities, operations, and transactions of
the Borrowers as the Agent or any Lender may from time to time reasonably
request; and notify the Agent not less than 10 Business Days prior to the
a\credit.agr
-35-
occurrence of any condition or event that may change the proper location for the
filing of any financing statement or other public notice or recording for the
purpose of perfecting a Lien in any Collateral, including, without limitation,
any change in its name or the location of its principal place of business or
chief executive office; and upon the request of the Agent, execute such
additional Security Instruments as may be necessary or appropriate in connection
therewith.
9 COMPLIANCE WITH LAWS. Except to the extent the failure to comply
or cause compliance would not have a Material Adverse Effect, comply with all
Requirements of Law applicable to the Borrowers, including, without limitation,
(a) the Natural Gas Policy Act of 1978, as amended, (b) ERISA, (c) Environmental
Laws, and (d) all permits, licenses, registrations, approvals, and
authorizations (i) issued pursuant to any such Requirements of Law, (ii)
required for the performance of the operations of any Borrower, or (iii)
applicable to the use, generation, handling, storage, treatment, transport, or
disposal of any Hazardous Substances; and cause all employees, crew members,
agents, contractors, subcontractors, and future lessees (pursuant to appropriate
lease provisions) of all Borrowers, while such Persons are acting within the
scope of their relationship with such Borrower, to comply with all such
Requirements of Law as may be necessary or appropriate to enable all Borrowers
to so comply.
10 PAYMENT OF ASSESSMENTS AND CHARGES. Pay all taxes, assessments,
governmental charges, rent, and other Indebtedness which, if unpaid, might
become a Lien against the Property of the Borrowers, except any of the foregoing
being contested in good faith and as to which adequate reserves in accordance
with GAAP have been established or unless failure to pay would not have a
Material Adverse Effect.
11 MAINTENANCE OF CORPORATE EXISTENCE AND GOOD STANDING. Maintain
its corporate existence and good standing in its jurisdictions of incorporation
and, unless the failure to do so would not have a Material Adverse Effect,
maintain its qualification and good standing in all jurisdictions wherein the
Property now owned or hereafter acquired or business now or hereafter conducted
necessitates same.
12 PAYMENT OF NOTES; PERFORMANCE OF OBLIGATIONS. Pay the Notes
according to the reading, tenor, and effect thereof, and do and perform every
act and discharge all of its other Obligations in accordance with the terms
hereof and the other Loan Documents.
13 FURTHER ASSURANCES. Promptly cure any defects in the execution
and delivery of any of the Loan Documents, and execute, acknowledge, and deliver
such other assurances and instruments as shall, in the reasonable opinion of the
Agent or any Lender, be necessary to fulfill the terms of the Loan Documents.
14 INITIAL FEES AND EXPENSES OF COUNSEL TO AGENT. Upon request by
the Agent, promptly reimburse the Agent for all reasonable fees and expenses of
Xxxxxxxx Xxxxxxxx & Xxxxxx P.C., special counsel to the Agent, in connection
with the preparation of this Agreement and all documentation contemplated
hereby, the satisfaction of the conditions precedent set forth herein, the
a\credit.agr
-36-
filing and recordation of Security Instruments, and the consummation of the
transactions contemplated in this Agreement.
15 SUBSEQUENT FEES AND EXPENSES OF AGENT AND LENDERS. Upon request
by the Agent, promptly reimburse the Agent (to the fullest extent permitted by
law) for all amounts reasonably expended, advanced, or incurred by or on behalf
of the Agent or any Lender to satisfy any obligation of the Borrowers under any
of the Loan Documents; to collect the Obligations; to ratify, amend, restate, or
prepare additional Loan Documents, as the case may be; for the filing and
recordation of Security Instruments; to enforce the rights of the Agent or any
Lender under any of the Loan Documents; and to protect the Collateral, which
amounts shall be deemed compensatory in nature and liquidated as to amount upon
notice to the Borrowers by the Agent and which amounts shall include, but not be
limited to (a) all court costs, (b) reasonable attorneys' fees, (c) reasonable
fees and expenses of auditors, accountants and petroleum engineers, incurred to
protect the interests of the Agent and the Lenders, (d) reasonable fees and
expenses incurred in connection with the participation by the Agent as a member
of the creditors' committee in a case commenced under any Insolvency Proceeding,
(e) reasonable fees and expenses incurred in connection with lifting the
automatic stay prescribed in ss.362 Title 11 of the United States Code, and (f)
fees and expenses incurred in connection with any action pursuant to ss.1129
Title 11 of the United States Code all reasonably incurred by the Agent in
connection with the collection of any sums due under the Loan Documents,
together with interest at the per annum interest rate equal to the Floating
Rate, calculated on a basis of a calendar year of 365 or 366 days, as the case
may be, counting the actual number of days elapsed, on each such amount from the
date of notification that the same was expended, advanced, or incurred by the
Agent until the date it is repaid to the Agent, with the obligations under this
Section surviving the non-assumption of this Agreement in a case commenced under
any Insolvency Proceeding and being binding upon the Borrowers and/or a trustee,
receiver, custodian, or liquidator of any Borrower appointed in any such case.
16 OPERATION OF PROPERTIES. Develop, maintain, and operate its
Properties in a prudent and workmanlike manner in accordance with industry
standards.
17 MAINTENANCE AND INSPECTION OF PROPERTIES. Maintain all of its
tangible Properties in good repair and condition, ordinary wear and tear
excepted; make all necessary replacements thereof and operate such Properties in
a good and workmanlike manner; and permit any authorized representative of the
Agent, at reasonable times on reasonable notice, to visit and inspect, at the
expense of the Lenders, any tangible Property of any Borrower.
18 MAINTENANCE OF INSURANCE. (a) Maintain insurance with respect to
its Properties and businesses against such liabilities, casualties, risks, and
contingencies as is customary in the relevant industry and sufficient to prevent
a Material Adverse Effect, all such insurance to be in amounts and from insurers
reasonably acceptable to the Agent and the Lenders, (b) within 60 days of the
Closing Date for property damage insurance covering Collateral and business
interruption insurance, if any, maintained by the Borrowers, naming the Agent as
loss payee for the benefit of the Agent and the Lenders, and (c) on the Closing
Date, upon any renewal or replacement of any such insurance, and at other times
upon reasonable request by the Agent, furnish to the Agent evidence,
a\credit.agr
-37-
reasonably satisfactory to the Agent and the Lenders, of the maintenance of such
insurance. The Agents and the Lenders shall be named as additional assureds on
all property and liability insurance.
19 INDEMNIFICATION. INDEMNIFY AND HOLD THE AGENT AND EACH LENDER AND
THEIR RESPECTIVE SHAREHOLDERS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
ATTORNEYS-IN-FACT, AND AFFILIATES AND EACH TRUSTEE FOR THE BENEFIT OF THE AGENT
AND THE LENDERS (EACH AN "INDEMNIFIED PARTY") UNDER ANY SECURITY INSTRUMENT
HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS, LOSSES, DAMAGES, LIABILITIES,
FINES, PENALTIES, CHARGES, ADMINISTRATIVE AND JUDICIAL PROCEEDINGS AND ORDERS,
JUDGMENTS, REMEDIAL ACTIONS, REQUIREMENTS, AND ENFORCEMENT ACTIONS OF ANY KIND,
AND ALL COSTS AND EXPENSES INCURRED IN CONNECTION THEREWITH (INCLUDING, WITHOUT
LIMITATION, REASONABLE ATTORNEYS' FEES AND EXPENSES), TO THE EXTENT THAT THEY
ARISE DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, FROM (A) THE PRESENCE OF ANY
HAZARDOUS SUBSTANCES ON, UNDER, OR FROM ANY PROPERTY OF ANY BORROWER, WHETHER
PRIOR TO OR DURING THE TERM HEREOF, (B) ANY ACTIVITY CARRIED ON OR UNDERTAKEN ON
OR OFF ANY PROPERTY OF ANY BORROWER, WHETHER PRIOR TO OR DURING THE TERM HEREOF,
AND WHETHER BY ANY BORROWER OR ANY PREDECESSOR IN TITLE, EMPLOYEE, AGENT,
CONTRACTOR, OR SUBCONTRACTOR OF ANY BORROWER OR ANY OTHER PERSON (OTHER THAN THE
LENDERS OR ANY PERSON ACTING ON BEHALF OF THE LENDERS) AT ANY TIME OCCUPYING OR
PRESENT ON SUCH PROPERTY, IN CONNECTION WITH THE HANDLING, TREATMENT, REMOVAL,
STORAGE, DECONTAMINATION, CLEANUP, TRANSPORTATION, OR DISPOSAL OF ANY HAZARDOUS
SUBSTANCES AT ANY TIME LOCATED OR PRESENT ON OR UNDER SUCH PROPERTY, (C) ANY
CONTAMINATION OF ANY PROPERTY OR NATURAL RESOURCES ARISING IN CONNECTION WITH
THE GENERATION, USE, HANDLING, STORAGE, TRANSPORTATION OR DISPOSAL OF ANY
HAZARDOUS SUBSTANCES BY ANY BORROWER OR ANY EMPLOYEE, AGENT, CONTRACTOR, OR
SUBCONTRACTOR OF ANY BORROWER WHILE SUCH PERSONS ARE ACTING WITHIN THE SCOPE OF
THEIR RELATIONSHIP WITH ANY BORROWER, IRRESPECTIVE OF WHETHER ANY OF SUCH
ACTIVITIES WERE OR WILL BE UNDERTAKEN IN ACCORDANCE WITH APPLICABLE REQUIREMENTS
OF LAW, OR (D) THE PERFORMANCE AND ENFORCEMENT OF ANY LOAN DOCUMENT OR ANY OTHER
ACT OR OMISSION IN CONNECTION WITH OR RELATED TO ANY LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING, WITHOUT LIMITATION, ANY OF THE
FOREGOING IN THIS SECTION ARISING FROM NEGLIGENCE, WHETHER SOLE OR CONCURRENT,
ON THE PART OF THE AGENT OR ANY LENDER OR ANY OTHER INDEMNIFIED PARTY UNDER ANY
SECURITY INSTRUMENT, BUT EXCLUDING ANY OF THE FOREGOING ARISING FROM THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF THE AGENT OR ANY LENDER OR OTHER INDEMNIFIED
PARTY; WITH THE FOREGOING
a\credit.agr
-38-
INDEMNITY SURVIVING SATISFACTION OF ALL OBLIGATIONS AND THE TERMINATION OF THIS
AGREEMENT.
ARTICLE VI
NEGATIVE COVENANTS
So long as any Obligation remains outstanding or unpaid or any
Commitment exists, the Borrowers jointly and severally covenant that none of
them will:
1 INDEBTEDNESS. Create, incur, assume, or suffer to exist any
Indebtedness, whether by way of loan or otherwise; provided, however, the
foregoing restriction shall not apply to (a) the Obligations, (b) unsecured
accounts payable incurred in the ordinary course of business, which are not
unpaid in excess of 60 days beyond the later of the date services are rendered
or invoice date or are being contested in good faith and as to which such
reserve as is required by GAAP has been made, and (c) Indebtedness which is
expressly subordinate to the Obligations upon terms satisfactory to the Agent
and the Required Lenders in their sole discretion.
2 CONTINGENT OBLIGATIONS. Create, incur, assume, or suffer to exist
any Contingent Obligation; provided, however, the foregoing restriction shall
not apply to (a) performance guarantees and performance surety or other bonds
provided in the ordinary course of business, (b) trade credit incurred or
operating leases entered into in the ordinary course of business, or (c) the
endorsement of commercial paper for deposit or collection in the ordinary course
of business.
3 LIENS. Create, incur, assume, or suffer to exist any Lien on any
of its Properties, whether now owned or hereafter acquired; provided, however,
the foregoing restrictions shall not apply to Permitted Liens.
4 SALES OF ASSETS. Without the prior written consent of the Agent
and the Required Lenders, sell, transfer, or otherwise dispose of, in one or any
series of transactions, any assets, whether now owned or hereafter acquired, or
enter into any agreement to do so; provided, however, the foregoing restriction
shall not apply to (a) the sale of hydrocarbons or inventory in the ordinary
course of business provided that no contract for the sale of hydrocarbons shall
obligate any Borrower to deliver hydrocarbons produced from any of the Mortgaged
Property at some future date without receiving full payment therefor within 90
days of delivery, (b) the sale or other disposition of Property destroyed, lost,
worn out, damaged, or having only salvage value or no longer used or useful in
the business of any Borrower, or (c) the sale of non-recourse production
payments; provided that (i) the Agent has been notified in advance of each such
sale, (ii) all proceeds of any such sale are applied to the Obligations, and
(iii) on a proforma basis, after each such sale, no Default or Event of Default
exists. In connection with each such production payment transaction, and
provided that each requirement set forth above is satisfactory to the Agent and
the Required Lenders in their sole
a\credit.agr
-39-
discretion, the Agent shall release that portion of the Mortgaged Property
sufficient to allow the Borrowers to complete such transaction.
5 LEASEBACKS. Enter into any agreement to sell or transfer any
Property and thereafter rent or lease as lessee such Property or other Property
intended for the same use or purpose as the Property sold or transferred.
6 LOANS OR ADVANCES. Without the prior written consent of the Agent
and the Required Lenders, make or agree to make or allow to remain outstanding
any loans or advances to any Person; provided, however, the foregoing
restrictions shall not apply to (a) advances or extensions of credit in the form
of accounts receivable incurred in the ordinary course of business and upon
terms common in the industry for such accounts receivable, (b) advances to
officers or employees of the Borrowers for the payment of expenses in the
ordinary course of business not exceeding in the aggregate at any time $25,000,
or (c) loans or advances to the other Borrower.
7 INVESTMENTS. Acquire Investments in, or purchase or otherwise
acquire all or substantially all of the assets of, any Person; provided,
however, the foregoing restrictions shall not apply to the purchase or
acquisition of Investments in the form of (a) debt securities issued or directly
and fully guaranteed or insured by the United States Government or any agency or
instrumentality thereof, with maturities of no more than one year, or (b)
certificates of deposit issued by or acquired from or through the Agent or any
Lender.
8 DIVIDENDS AND DISTRIBUTIONS. Declare, pay, or make, whether in
cash or Property, any dividend or distribution on, or purchase, redeem, or
otherwise acquire for value, any share of any class of its capital stock.
9 CHANGE IN CONTROL. Permit Xxxxx X. Xxxxxxxxx to cease to hold,
except for Cause, the position, and have the responsibilities, of chief
executive officer of each Borrower and, if Xxxxx X. Xxxxxxxxx has been removed
for Cause, cease to have a chief executive officer and chief financial officer
acceptable to the Agent and the Required Lenders.
10 TRANSACTIONS WITH AFFILIATES. Directly or indirectly, enter into
any transaction (including the sale, lease, or exchange of Property or the
rendering of service) with any of its Affiliates, other than upon fair and
reasonable terms no less favorable than could be obtained in an arm's length
transaction with a Person which was not an Affiliate.
11 LINES OF BUSINESS. Expand, on its own or through any Affiliate,
into any line of business other than the exploration, production, gathering,
transporting and processing of oil, condensate, natural gas and natural gas
liquids and the purchase and sale of such products in connection with such
businesses.
12 ERISA COMPLIANCE. Permit any Plan maintained by any Borrower or
any Commonly Controlled Entity to (a) engage in any Prohibited Transaction, (b)
incur any "accumulated funding deficiency," as such term is defined in Section
302 of ERISA, or (c) terminate in a manner
a\credit.agr
-40-
which could result in the imposition of a Lien on any Property of any Borrower
pursuant to Section 4068 of ERISA; or assume an obligation to contribute to any
Multiemployer Plan; or acquire any Person or substantially all of the assets of
any Person which has now or has had at any time an obligation to contribute to
any Multiemployer Plan.
13 POSITIVE WORKING CAPITAL. Permit, as of the close of any calendar
quarter or month, working capital to be other than a positive number (excluding
in the calculation thereof current maturities of long-term debt).
14 HEDGE AGREEMENTS. Create, incur, assume or suffer to exist any
Swap Obligations that (i) require a Borrower to deliver, or make cash settlement
payments based on quantities of Hydrocarbons which, in the aggregate for all
such Swap Obligations, would exceed 60% of the estimated production during the
term of such agreements from that portion of the Mortgaged Properties consisting
of proved developed producing reserves and (ii) of a maturity exceeding three
years, without the prior written consent of the Agent and the Required Lenders.
ARTICLE VII
EVENTS OF DEFAULT
1 ENUMERATION OF EVENTS OF DEFAULT. Any of the following events
shall constitute an Event of Default:
(a) any Borrower shall fail to pay when due any Obligation, fee or
other sum payable under any Loan Document;
(b) any Borrower shall fail to perform, observe, or comply with any
covenant, agreement, or term contained in the Loan Documents and, with
respect to Sections 5.13, 5.16, 5.17 or 6.11, such default shall continue
for 30 days after the earlier of notice thereof to the Borrowers by the
Agent or knowledge thereof by the Borrowers;
(c) any representation or warranty made by any Borrower in any of
the Loan Documents or in any representation, statement (including
Financial Statements), certificate, or data furnished or made to the Agent
or any Lender in connection with any Loan Document proves to have been
untrue in any material respect when made or as of the date the facts
therein set forth were stated or certified;
(d) any Borrower shall fail to comply (as principal or guarantor or
other surety) in the payment or performance of any bond, debenture, note,
or other Indebtedness or under any credit agreement, loan agreement,
indenture, promissory note, or similar agreement or instrument executed in
connection with any of the
a\credit.agr
-41-
foregoing, and such default permits any holder or holders of such
Indebtedness to accelerate the maturity thereof;
(e) any Borrower shall (i) apply for or consent to the appointment
of a receiver, trustee, or liquidator of it or all or a substantial part
of its assets, (ii) file a voluntary petition commencing an Insolvency
Proceeding, (iii) make a general assignment for the benefit of creditors,
(iv) be unable, or admit in writing its inability, to pay its debts
generally as they become due, or (v) file an answer admitting the material
allegations of a petition filed against it in any Insolvency Proceeding;
(f) an order, judgment, or decree shall be entered against any
Borrower by any court of competent jurisdiction or by any other duly
authorized authority, on the petition of a creditor or otherwise, granting
relief in any Insolvency Proceeding or approving a petition seeking
reorganization or an arrangement of its debts or appointing a receiver,
trustee, conservator, custodian, or liquidator of it or all or any
substantial part of its assets, and such order, judgment, or decree shall
not be dismissed or stayed within 60 days;
(g) the levy against any significant portion of the Property of any
Borrower, or any execution, garnishment, attachment, sequestration, or
other writ or similar proceeding against any significant portion of the
Property of any Borrower which is not permanently dismissed or discharged
within 30 days after the levy;
(h) a final and non-appealable order, judgment, or decree shall be
entered against any Borrower for money damages and/or Indebtedness due in
an amount in excess of $50,000, and such order, judgment, or decree shall
not be dismissed or stayed within 30 days or be diligently contested in
good faith by appropriate proceedings with adequate reserves having been
set aside in accordance with GAAP;
(i) any charges are filed or any other action or proceeding is
instituted by any Governmental Authority against any Borrower under the
Racketeering Influence and Corrupt Organizations Statute (18 U.S.C.
ss.1961 ET SEQ.), the result of which could be the forfeiture or transfer
of any material Property subject to a Lien in favor of the Agent without
(i) satisfaction or provision for satisfaction of such Lien, or (ii) such
forfeiture or transfer of such Property being expressly made subject to
such Lien;
(j) any Borrower shall have (i) concealed, removed, or diverted, or
permitted to be concealed, removed, or diverted, any part of its Property,
with intent to hinder, delay, or defraud its creditors or any of them,
(ii) made or suffered a transfer of any of its Property which may be
fraudulent under any bankruptcy, fraudulent conveyance, or similar law, or
(iii) shall have suffered or permitted, while insolvent, any creditor to
obtain a Lien upon any of its Property through legal proceedings or
distraint which is not vacated within 30 days from the date thereof;
a\credit.agr
-42-
(k) any Person shall engage in any Prohibited Transaction involving
any Plan; any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan for
which an excise tax is due or would be due in the absence of a waiver; a
Reportable Event shall occur with respect to, or proceedings shall
commence to have a trustee appointed, or a trustee shall be appointed, to
administer or to terminate, any Single Employer Plan, which Reportable
Event or commencement of proceedings or appointment of a trustee is, in
the reasonable opinion of the Agent, likely to result in the termination
of such Plan for purposes of Title IV of ERISA; any Single Employer Plan
shall terminate for purposes of Title IV of ERISA; any Borrower or any
Commonly Controlled Entity shall incur, or in the reasonable opinion of
the Agent, be likely to incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer
Plan; or any other event or condition shall occur or exist with respect to
a Plan and the result of such events or conditions referred to in this
Section 7.1(k) could subject any Borrower or any Commonly Controlled
Entity to any tax (other than an excise tax under Section 4980 of the
Code), penalty or other liabilities which taken in the aggregate would
have a Material Adverse Effect and any such circumstance shall exist for
in excess of 30 days;
(l) any Security Instrument shall for any reason not, or cease to,
create valid and perfected first-priority Liens (subject to Permitted
Liens) against a portion of the Collateral purportedly covered thereby in
favor of the Agent for the benefit of the Lenders; or
(m) the occurrence of a Material Adverse Effects and the same shall
remain unremedied for in excess of 30 days after notice given by the
Agents.
2 REMEDIES. Upon the occurrence of an Event of Default specified in
Sections 7.1(e) or 7.1(f), immediately and without notice, (i) all Obligations
shall automatically become immediately due and payable, without presentment,
demand, protest, notice of protest, default, or dishonor, notice of intent to
accelerate maturity, notice of acceleration of maturity, or other notice of any
kind, except as may be provided to the contrary elsewhere herein, all of which
are hereby expressly waived by the Borrowers; (ii) the Commitment shall
immediately cease and terminate unless and until reinstated by the Lenders in
writing; and (iii) the Agent and each Lender are hereby authorized at any time
and from time to time, without notice to the Borrowers (any such notice being
expressly waived by the Borrowers), to set-off and apply any and all deposits
(general or special, time or demand, provisional or final) held by the Agent or
any Lender, and any and all other indebtedness at any time owing by the Agent or
any Lender to or for the credit or account of any Borrower against any and all
of the Obligations.
(a) Upon the occurrence of any Event of Default other than those
specified in Sections 7.1(e) or 7.1(f), the Agent may, by notice to the
Borrowers, (i) declare all Obligations immediately due and payable, without
presentment, demand, protest, notice of protest, default, or dishonor, notice of
intent to accelerate maturity, notice of acceleration of maturity, or other
notice
a\credit.agr
-43-
of any kind, except as may be provided to the contrary elsewhere herein, all of
which are hereby expressly waived by the Borrowers; (ii) terminate the
Commitment unless and until reinstated by the Lenders in writing; and (iii) the
Agent and each Lender are hereby authorized at any time and from time to time,
without notice to the Borrowers (any such notice being expressly waived by the
Borrowers), to set-off and apply any and all deposits (general or special, time
or demand, provisional or final) held by the Agent or any Lender, and any and
all other indebtedness at any time owing by the Agent or any Lender to or for
the credit or account of any Borrower against any and all of the Obligations
although such Obligations may be unmatured.
(b) Upon the occurrence of any Event of Default, the Lender may, in
addition to the foregoing in this Section 7.2, exercise any or all of its rights
and remedies provided by law or pursuant to the Loan Documents.
ARTICLE VIII
THE AGENT
1 APPOINTMENT, POWERS AND IMMUNITIES. In order to expedite the various
transactions contemplated by this Agreement, the Lenders hereby irrevocably
appoint and authorize Comerica to act as their Agent hereunder and under each of
the other Loan Documents. Comerica consents to such appointment and agrees to
perform the duties of the Agent as specified herein. The Lenders authorize and
direct the Agent to take such action in their name and on their behalf under the
terms and provisions of the Loan Documents and to exercise such rights and
powers thereunder as are specifically delegated to or required of the Agent for
the Lenders, together with such rights and powers as are reasonably incidental
thereto. The Agent is hereby expressly authorized to act as the Agent on behalf
of itself and the other Lenders:
(a) To receive on behalf of each of the Lenders any payment of
principal, interest, fees or other amounts paid pursuant to this Agreement
and the Notes and to distribute to each Lender its share of all payments
so received as provided in this Agreement;
(b) To receive all documents and items to be furnished under the
Loan Documents;
(c) To act as nominee for and on behalf of the Lenders in and under
the Loan Documents;
(d) To arrange for the means whereby the funds of the Lenders are to
be made available to the Borrowers;
(e) To distribute to the Lenders information, requests, notices,
payments, prepayments, documents and other items received from any
Borrower and other Persons;
a\credit.agr
-44-
(f) To execute and deliver to the Borrower and other Persons, all
requests, demands, approvals, notices, and consents received from the
Lenders;
(g) To the extent permitted by the Loan Documents, to exercise on
behalf of each Lender all rights and remedies of such Persons upon the
occurrence of any Event of Default;
(h) To accept, execute, and deliver the Security Documents as the
secured party, including, without limitation all UCC financing statements;
and
(i) To take such other actions as may be requested by Required
Lenders.
Neither the Agent nor any of its Affiliates, officers, directors,
employees, attorneys, or agents shall be liable for any action taken or omitted
to be taken by any of them hereunder or otherwise in connection with this
Agreement or any of the other Loan Documents except for its or their own gross
negligence or willful misconduct. Without limiting the generality of the
preceding sentence, the Agent (i) may treat the payee of any Note as the holder
thereof until the Agent receives written notice of the assignment or transfer
thereof signed by such payee and in form satisfactory to the Agent; (ii) shall
have no duties or responsibilities except those expressly set forth in this
Agreement and the other Loan Documents, and shall not by reason of this
Agreement or any other Loan Document be a trustee or fiduciary for any Lender;
(iii) shall not be required to initiate any litigation or collection proceedings
hereunder or under any other Loan Document except to the extent requested by the
Required Lenders; (iv) shall not be responsible to the Lenders for any recitals,
statements, representations or warranties contained in this Agreement or any
other Loan Document, or any certificate or other document referred to or
provided for in, or received by any of them under, this Agreement or any other
Loan Document, or for the value, validity, effectiveness, enforceability, or
sufficiency of this Agreement or any other Loan Document or any other document
referred to or provided for herein or therein or for any failure by any Person
to perform any of its obligations hereunder or thereunder; (v) may consult with
legal counsel (including counsel for the Borrowers), independent public
accountants, and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants, or experts; and (vi) shall incur no
liability under or in respect of any Loan Document by acting upon any notice,
consent, certificate, or other instrument or writing believed by it to be
genuine and signed or sent by the proper party or parties. As to any matters not
expressly provided for by this Agreement, the Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder in accordance with
instructions signed by Lenders, and such instructions of Lenders and any action
taken or failure to act pursuant thereto shall be binding on all of the Lenders;
PROVIDED, however, that the Agent shall not be required to take any action which
exposes the Agent to personal liability or which is contrary to this Agreement
or any other Loan Document or applicable law.
2 RIGHTS OF AGENT AS A LENDER. With respect to its Commitment, the Loans
made by it and the Notes issued to it, Comerica in its capacity as a Lender
hereunder shall have the same rights and powers hereunder as any other Lender
and may exercise the same as though it were not acting as the Agent, and the
term "LENDER" or "LENDERS" shall, unless the context otherwise indicates,
include the Agent in its individual capacity. The Agent and its Affiliates may
(without having to
a\credit.agr
-45-
account therefor to any Lender) accept deposits from, lend money to, act as
trustee under indentures of, provide merchant banking services to, and generally
engage in any kind of business with the Borrower and any other Person who may do
business with or own securities of the Borrower, all as if it were not acting as
the Agent and without any duty to account therefor to the Lenders.
3 SHARING OF PAYMENTS, ETC. If any Lender shall obtain any payment of any
principal of or interest on any Loan made by it under this Agreement or payment
of any other obligation under the Loan Documents then owed by the Borrowers to
such Lender, whether voluntary, involuntary, through the exercise of any right
of setoff, banker's lien, counterclaim or similar right, or otherwise, in excess
of its pro rata share, such Lender shall promptly purchase from the other
Lenders participations in the Loans held by them hereunder in such amounts, and
make such other adjustments from time to time as shall be necessary to cause
such purchasing Lenders to share the excess payment ratably with each of the
other Lenders in accordance with its pro rata portion thereof. To such end, all
of the Lenders shall make appropriate adjustments among themselves (by the
resale of participations sold or otherwise) if all or any portion of such excess
payment is thereafter rescinded or must otherwise be restored. Each Borrower
agrees, to the fullest extent it may effectively do so under applicable law,
that any Lender so purchasing a participation in the Loans made by the other
Lenders may exercise all rights of setoff, banker's lien, counterclaim, or
similar rights with respect to such participation as fully as if such Lender
were a direct holder of Loans to the Borrowers in the amount of such
participation. Nothing contained herein shall require any Lender to exercise any
such right or shall affect the right of any Lender to exercise, and retain the
benefits of exercising, any such right with respect to any other indebtedness or
obligation of the Borrowers.
4 INDEMNIFICATION. THE LENDERS HEREBY AGREE TO INDEMNIFY THE AGENT FROM
AND HOLD THE AGENT HARMLESS AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS,
LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, DEFICIENCIES, SUITS, COSTS,
EXPENSES (INCLUDING ATTORNEYS' FEES), AND DISBURSEMENTS OF ANY KIND OR NATURE
WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST THE AGENT
IN ANY WAY RELATING TO OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY ACTION
TAKEN OR OMITTED TO BE TAKEN BY THE AGENT UNDER OR IN RESPECT OF ANY OF THE LOAN
DOCUMENTS; PROVIDED, FURTHER, THAT, AS BETWEEN AGENT AND LENDERS, NO LENDER
SHALL BE LIABLE FOR ANY PORTION OF THE FOREGOING TO THE EXTENT CAUSED BY THE
AGENT'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. WITHOUT LIMITATION OF THE
FOREGOING, IT IS THE EXPRESS INTENTION OF THE LENDERS THAT THE AGENT SHALL BE
INDEMNIFIED HEREUNDER FROM AND HELD HARMLESS AGAINST ALL OF SUCH LIABILITIES,
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, DEFICIENCIES,
SUITS, COSTS, EXPENSES (INCLUDING ATTORNEYS' FEES), AND DISBURSEMENTS OF ANY
KIND OR NATURE DIRECTLY OR INDIRECTLY ARISING OUT OF OR RESULTING FROM THE SOLE
OR CONTRIBUTORY NEGLIGENCE OF THE AGENT. WITHOUT LIMITING ANY OTHER PROVISION OF
THIS SECTION, EACH LENDER AGREES TO REIMBURSE THE
a\credit.agr
-46-
AGENT PROMPTLY UPON DEMAND FOR ITS PRO RATA SHARE (CALCULATED ON THE BASIS OF
THE COMMITMENTS) OF ANY AND ALL OUT-OF-POCKET EXPENSES (INCLUDING REASONABLE
ATTORNEYS' FEES) INCURRED BY THE AGENT OR IN CONNECTION WITH THE PREPARATION,
EXECUTION, DELIVERY, ADMINISTRATION, MODIFICATION, AMENDMENT OR ENFORCEMENT
(WHETHER THROUGH NEGOTIATIONS, LEGAL PROCEEDINGS, OR OTHERWISE) OF, OR LEGAL
ADVICE IN RESPECT OF RIGHTS OR RESPONSIBILITIES UNDER, THE LOAN DOCUMENTS, TO
THE EXTENT THAT THE AGENT IS NOT REIMBURSED FOR SUCH EXPENSES BY THE BORROWERS.
5 INDEPENDENT CREDIT DECISIONS. Each Lender agrees that it has
independently and without reliance on the Agent, or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis of the Borrowers and decision to enter into this Agreement and
that it will, independently and without reliance upon the Agent, or any other
Lender, and based upon 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 this Agreement or any of the other Loan
Documents. The Agent shall not be required to keep itself informed as to the
performance or observance by the Borrowers or any obligated party of this
Agreement or any other Loan Document or to inspect the properties or books of
any Borrower. Except for notices, reports and other documents and information
expressly required to be furnished by the Borrowers to the Agent only or
otherwise by the Agent to the Lenders hereunder or under the other Loan
Documents, or both, the Agent shall not have any duty or responsibility to
provide any Lender with any credit, financial or other information concerning
the affairs, financial condition or business of the Borrowers (or any of their
Affiliates) which may come into the possession of the Agent or any of its
Affiliates.
6 SEVERAL COMMITMENTS. The Commitments and other obligations of the
Lenders under this Agreement are several. The default by any Lender in making a
Loan in accordance with its Commitment shall not relieve the other Lenders of
their obligations under this Agreement. In the event of any default by any
Lender in making any Loan, each nondefaulting Lender shall be obligated to make
its Loan but shall not be obligated to advance the amount which the defaulting
Lender was required to advance hereunder. In no event shall any Lender be
required to advance an amount or amounts which shall in the aggregate exceed
such Lender's Commitment. No Lender shall be responsible for any act or omission
of any other Lender.
7 SUCCESSOR 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 Lenders and the Borrowers and the Agent may be removed at
any time with or without cause by Required Lenders. Upon any such resignation or
removal, Required Lenders will have the right to appoint a successor Agent. If
no successor Agent shall have been so appointed by Required Lenders and shall
have accepted such appointment within 30 days after the retiring Agent's giving
of notice of resignation or the Required Lenders' removal of the retiring Agent,
then the retiring Agent may, on behalf of the Required Lenders, appoint a
successor Agent, which shall be a commercial bank organized under the
a\credit.agr
-47-
laws of the United States of America or any State thereof and having combined
capital and surplus of at least $100,000,000. In the event the successor Agent
is not at the time of its appointment, a Lender hereunder, the Borrower shall
have the right to consent to the successor Agent, which consent shall not be
unreasonably withheld or delayed. Upon the acceptance of its appointment as
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all rights, powers, privileges, immunities, and duties of the
resigning or removed Agent, and the resigning or removed Agent shall be
discharged from its duties and obligations as Agent under this Agreement and the
other Loan Documents. After any Agent's resignation or removal as Agent, the
provisions of this Article VIII shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was the
Agent.
ARTICLE IX
MISCELLANEOUS
1 SUCCESSORS AND ASSIGNS.
(a) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns. The
Borrowers may not assign or transfer any of their rights or obligations
hereunder without the prior written consent of the Agent and all of the
Lenders. Any Lender may sell participations to one or more banks or other
institutions in or to all or a portion of its rights and obligations under
this Agreement and the other Loan Documents (including, without
limitation, all or a portion of its Commitments and the Loans owing to
it); PROVIDED, however, that (i) such Lender's obligations under this
Agreement and the other Loan Documents (including, without limitation, its
Commitments) shall remain unchanged, (ii) such Lender shall remain solely
responsible to the Borrowers for the performance of such obligations,
(iii) such Lender shall remain the holder of its Notes for all purposes of
this Agreement, (iv) the Borrowers shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents, and (v)
such Lender shall not sell a participation that conveys to the participant
the right to vote or give or withhold consents under this Agreement or any
other Loan Document, other than the right to vote upon or consent to (A)
any increase of such Lender's Commitments, (B) any reduction of the
principal amount of, or interest to be paid on, the Loans of such Lender,
(C) any reduction of any commitment fee or other amount payable to such
Lender under any Loan Document, or (D) any postponement of any date for
the payment of any amount payable in respect of the Loans of such Lender.
(b) The Borrower and each of the Lenders agree that any Lender (the
"ASSIGNING LENDER") may, with the Agent's consent (and, unless a Default
or Event of Default then exists, the consent of the Borrowers, which
consent of the Borrowers will not be unreasonably withheld), at any time
assign to one or more Eligible Assignees all, or a proportionate part of
all, of its rights and obligations under this Agreement and the other Loan
Documents
a\credit.agr
-48-
(including, without limitation, its Commitments and Loans) (each an
"ASSIGNEE"); PROVIDED, however, that (i) each such assignment shall be of
a consistent, and not a varying, percentage of all of the assigning
Lender's Commitments, rights and obligations under this Agreement and the
other Loan Documents, (ii) except in the case of an assignment of all of a
Lender's rights and obligations under this Agreement and the other Loan
Documents, the amount of the Commitments of the Assigning Lender being
assigned pursuant to each assignment (determined as of the date of the
Assignment and Acceptance with respect to such assignment) shall in no
event be less than $5,000,000, and (iii) the parties to each such
assignment shall execute and deliver to the Agent for its acceptance and
recording in the Register (as defined below), an Assignment and
Acceptance, together with the Notes subject to such assignment, and a
processing and recordation fee of $3,500, to be paid by the Assignee. Upon
such execution, delivery, acceptance, and recording, from and after the
effective date specified in each Assignment and Acceptance, which
effective date shall be at least five Business Days after the execution
thereof, or, if so specified in such Assignment and Acceptance, the date
of acceptance thereof by the Agent, (x) the Assignee thereunder shall be a
party hereto as a "Lender" and, to the extent that rights and obligations
hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder and
under the Loan Documents and (y) the Assigning Lender thereunder shall, to
the extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement and the other Loan
Documents (and, in the case of an Assignment and Acceptance covering all
or the remaining portion of a Lender's rights and obligations under the
Loan Documents, such Lender shall cease to be a party thereto).
(c) By executing and delivering an Assignment and Acceptance, the
Assigning Lender and the Assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such Assigning Lender makes no
representation or warranty and assumes no responsibility with respect to
any statements, warranties, or representations made in or in connection
with the Loan Documents or the execution, legality, validity, and
enforceability, genuineness, sufficiency, or value of the Loan Documents
or any other instrument or document furnished pursuant thereto; (ii) such
Assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrowers or
the performance or observance by the Borrowers of their obligations under
the Loan Documents; (iii) such Assignee confirms that it has received a
copy of the other Loan Documents, together with copies of the financial
statements referred to in Sections 5.2 and 5.3 and such other documents
and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (iv)
such Assignee will, independently and without reliance upon the Agent or
such Assigning Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement and the
other Loan Documents; (v) such Assignee confirms that it is an Eligible
Assignee; (vi) such
a\credit.agr
-49-
Assignee appoints and authorizes the Agent to take such action as agent on
its behalf and exercise such powers under the Loan Documents as are
delegated to the Agent by the terms thereof, together with such powers as
are reasonably incidental thereto; and (vii) such Assignee agrees that it
will perform in accordance with their terms all of the obligations which
by the terms of the Loan Documents are required to be performed by it as a
Lender.
(d) The Agent shall maintain at its Principal Office a copy of each
Assignment and Acceptance delivered to and accepted by it and a register
for the recordation of the names and addresses of the Lenders and the
Commitments of, and principal amount of the Loans owing to, each Lender
from time to time (the "REGISTER"). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and the
Borrowers, the Agent, and the Lenders may treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes under the
Loan Documents. The Register shall be available for inspection by the
Borrowers, or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
Assigning Lender and Assignee representing that it is an Eligible
Assignee, together with any Note subject to such assignment, the Agent
shall, if such Assignment and Acceptance has been completed and is in
substantially the form of EXHIBIT VI hereto, (i) accept such Assignment
and Acceptance, (ii) record the information contained therein in the
Register, and (iii) give prompt written notice thereof to the Borrowers.
Within five (5) Business Days after its receipt of such notice, the
Borrowers, at their expense, shall execute and deliver to the Agent in
exchange for the surrendered Notes new Notes to the order of such Eligible
Assignee in an amount equal to the Commitments assumed by it pursuant to
such Assignment and Acceptance and, if the Assigning Lender has retained a
portion of its Commitments, new Notes to the order of the Assigning Lender
in an amount equal to the Commitments retained by it hereunder (each such
promissory note shall constitute a "NOTE" for purposes of the Loan
Documents). Such new Notes shall be in an aggregate principal amount of
the surrendered Notes, shall be dated the effective date of such
Assignment and Acceptance, and shall otherwise be in substantially the
form of Exhibit I hereto.
(f) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this
Section, disclose to the Assignee or participant or proposed Assignee or
participant, any information relating to the Borrowers furnished to such
Lender by or on behalf of the Borrowers; provided, however, with respect
to all written information belonging to the Borrowers and marked
"confidential" by the Borrowers and obtained by the Lenders or the
proposed assignee pursuant to or in connection with this Agreement or any
other Loan Documents such information shall be maintained in confidence in
accordance with the standards of care and diligence that each utilizes in
maintaining its own confidential information.
a\credit.agr
-50-
2 SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND COVENANTS. All
representations and warranties of the Borrowers and all covenants and agreements
herein made shall survive the execution and delivery of the Notes and the
Security Instruments and shall remain in force and effect so long as any
Obligation is outstanding or any Commitment exists.
3 NOTICES AND OTHER COMMUNICATIONS. Except as to oral notices
expressly authorized herein, which oral notices shall be confirmed in writing,
all notices, requests, and communications hereunder or in connection herewith
shall be in writing (including by telecopy). Unless otherwise expressly provided
herein, any such notice, request, demand, or other communication shall be deemed
to have been duly given or made when delivered by hand, or, in the case of
delivery by mail, when deposited in the mail, certified mail, return receipt
requested, postage prepaid, or, in the case of telecopy notice, when receipt
thereof is acknowledged orally or by written confirmation report, addressed as
follows:
(a) if to the Agent, to:
Comerica Bank-Texas
X.X. Xxx 0000
Xxxxxxx, Xxxxx 00000-0000
AttentionMr. Xxxxx X. Xxxxxx
Telecopy:(000) 000-0000
with a copy to:
Comerica Bank-Texas
0000 Xxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxx 00000
Attn: Mr. Xxxx Xxxxx
Telecopy: (000) 000-0000
(b) if to the Lenders, to:
Comerica Bank-Texas
X.X. Xxx 0000
Xxxxxxx, Xxxxx 00000-0000
AttentionMr. Xxx Xxxxxx
Telecopy:(000) 000-0000
First Union National Bank
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxxxxx
Telecopy:(000) 000-0000
a\credit.agr
-51-
with a copy to:
First Union Corporation
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxx X. Xxxxxxxxx
Telecopy: 713/650-6354
(c) if to the Borrowers, to:
Cliffwood Oil & Gas Corp.
000 Xxxxxxx Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxxxx
Telecopy:(000) 000-0000
with a copy to:
Cliffwood Energy Company
000 Xxxxxxx Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxxxx
Telecopy:(000) 000-0000
and
Cliffwood Production Co.
000 Xxxxxxx Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxxxx
Telecopy: (000) 000-0000
Any party may, by proper written notice hereunder to the others,
change the individuals or addresses to which such notices to it shall
thereafter
be sent.
4 PARTIES IN INTEREST. Subject to the restrictions on changes in
corporate structure set forth in Section 6.9 and other applicable restrictions
contained herein, all covenants and agreements herein contained by or on behalf
of the Borrowers, the Agent or the Lenders shall be binding upon and inure to
the benefit of the Borrowers, the Agent or the Lenders, as the case may be, and
their respective legal representatives, successors, and assigns.
5 RIGHTS OF THIRD PARTIES. All provisions herein are imposed solely
and exclusively for the benefit of the Agent, the Lenders and the Borrowers. No
other Person shall have
a\credit.agr
-52-
any right, benefit, priority, or interest hereunder or as a result hereof or
have standing to require satisfaction of provisions hereof in accordance with
their terms, and any or all of such provisions in favor of the Agent or the
Lenders may be freely waived in whole or in part by the Agent or each Lender at
any time if in its sole discretion it deems it advisable to do so.
6 RENEWALS; EXTENSIONS. All provisions of this Agreement relating to
the Notes shall apply with equal force and effect to each promissory note
hereafter executed which in whole or in part represents a renewal or extension
of any part of the Indebtedness of the Borrowers under this Agreement, the
Notes, or any other Loan Document.
7 NO WAIVER; RIGHTS CUMULATIVE. No course of dealing on the part of
the Agent, the Lenders, their respective officers or employees, nor any failure
or delay by the Agent or any Lender with respect to exercising any of its rights
under any Loan Document shall operate as a waiver thereof. The rights of the
Agent and the Lenders under the Loan Documents shall be cumulative and the
exercise or partial exercise of any such right shall not preclude the exercise
of any other right. The making of any Loan shall not constitute a waiver of any
of the covenants, warranties, or conditions of the Borrowers contained herein.
In the event the Borrowers are unable to satisfy any such covenant, warranty, or
condition, the making of any Loan shall not have the effect of precluding the
Agent or the Lenders from thereafter declaring such inability to be an Event of
Default as hereinabove provided.
8 SURVIVAL UPON UNENFORCEABILITY. In the event any one or more of
the provisions contained in any of the Loan Documents or in any other instrument
referred to herein or executed in connection with the Obligations shall, for any
reason, be held to be invalid, illegal, or unenforceable in any respect, such
invalidity, illegality, or unenforceability shall not affect any other provision
of any Loan Document or of any other instrument referred to herein or executed
in connection with such Obligations.
9 AMENDMENTS; WAIVERS. Neither this Agreement nor any provision
hereof may be amended, waived, discharged, or terminated orally, but only by an
instrument in writing signed by the party against whom enforcement of the
amendment, waiver, discharge, or termination is sought.
10 CONTROLLING AGREEMENT. In the event of a conflict between the
provisions of this Agreement and those of any other Loan Document, the
provisions of this Agreement shall control.
11 DISPOSITION OF COLLATERAL. Notwithstanding any term or provision,
express or implied, in any of the Security Instruments, the realization,
liquidation, foreclosure, or any other disposition on or of any or all of the
Collateral shall be in the order and manner and determined in the sole
discretion of the Agent and the Lenders; provided, however, that in no event
shall the Agent and the Lenders violate applicable law or exercise rights and
remedies other than those provided in such Security Instruments or otherwise
existing at law or in equity.
a\credit.agr
-53-
12 GOVERNING LAW. This Agreement and the Notes shall be deemed to be
contracts made under and shall be construed in accordance with and governed by
the laws of the State of Texas without giving effect to principles thereof
relating to conflicts of law; provided, however, that Vernon's TEXAS CIVIL
STATUTES, Article 5069, Chapter 15 (which regulates certain revolving credit
loan accounts and revolving triparty accounts) shall not apply except for
Section 15.10(b) of such Chapter.
13 JURISDICTION AND VENUE. All actions or proceedings with respect
to, arising directly or indirectly in connection with, out of, related to, or
from this Agreement or any other Loan Document may be litigated, at the sole
discretion and election of the Lender, in courts having situs in Houston, Xxxxxx
County, Texas. Each Borrower hereby submits to the jurisdiction of any local,
state, or federal court located in Houston, Xxxxxx County, Texas, and hereby
waives any rights it may have to transfer or change the jurisdiction or venue of
any litigation brought against it by the Lender in accordance with this Section.
14 WAIVER OF RIGHTS TO JURY TRIAL. Each Borrower, the Agent and each
Lender hereby knowingly, voluntarily, intentionally, irrevocably, and
unconditionally waive all rights to trial by jury in any action, suit,
proceeding, counterclaim, or other litigation that relates to or arises out of
this Agreement or any other Loan Document or the acts or omissions of the Lender
in the enforcement of any of the terms or provisions of this Agreement or any
other Loan Document or otherwise with respect thereto. The provisions of this
Section are a material inducement for the Agent and the Lenders entering into
this Agreement.
15 ENTIRE AGREEMENT. THIS AGREEMENT CONSTITUTES THE ENTIRE AGREEMENT
BETWEEN THE PARTIES HERETO WITH RESPECT TO THE SUBJECT HEREOF AND SHALL
SUPERSEDE ANY PRIOR AGREEMENT BETWEEN THE PARTIES HERETO, WHETHER WRITTEN OR
ORAL, RELATING TO THE SUBJECT HEREOF, INCLUDING, WITHOUT LIMITATION, THE
PRELIMINARY TERM SHEET ENCLOSED THEREWITH. FURTHERMORE, IN THIS REGARD, THIS
AGREEMENT AND THE OTHER WRITTEN LOAN DOCUMENTS REPRESENT, COLLECTIVELY, THE
FINAL AGREEMENT AMONG THE PARTIES THERETO AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF SUCH
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG SUCH PARTIES.
16 COUNTERPARTS. For the convenience of the parties, this Agreement
may be executed in multiple counterparts, each of which for all purposes shall
be deemed to be an original, and all such counterparts shall together constitute
but one and the same Agreement.
17 AMENDMENT AND RESTATEMENT OF PRIOR CREDIT AGREEMENT. This
Agreement is executed in amendment and restatement of that certain Credit
Agreement dated September 17, 1996 executed by the Borrowers and Comerica, as
amended by that certain First Amendment to Credit Agreement dated September 27,
1996, executed by the Borrowers and Comerica and that certain
a\credit.agr
-54-
Second Amendment to Credit Agreement dated March 18, 1997, executed by the
Borrowers and Comerica.
a\credit.agr
-55-
IN WITNESS WHEREOF, this Agreement is deemed executed effective as
of the date first above written.
BORROWERS:
CLIFFWOOD OIL & GAS CORP.
By:/S/ XXXXX X. XXXXXXXXX
Xxxxx X. Xxxxxxxxx
President
CLIFFWOOD ENERGY COMPANY
By:/S/ XXXXX X. XXXXXXXXX
Xxxxx X. Xxxxxxxxx
President
CLIFFWOOD PRODUCTION CO.
By: /S/ XXXXX X. XXXXXXXXX
Xxxxx X. Xxxxxxxxx
President
AGENT:
COMERICA BANK-TEXAS
By: /S/ XXXXX X. XXXXXX
Xxxxx X. Xxxxxx
Assistant Vice President
a\credit.agr
-00-
XXXXXXXXXX XXXXXX: LENDERS:
$ 8,100,000 COMERICA BANK-TEXAS
By:/S/ XXXXX X. XXXXXX
Xxxxx X. Xxxxxx
Assistant Vice President
Lending Office:
One Shell Plaza
000 Xxxxxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxx 00000
Fax No.: 713/000-0000
Telephone No.: 713/000-0000
Attn: Xxxxx X. Xxxxxx
COMMITMENT AMOUNT: LENDER:
$ 5,400,000 FIRST UNION NATIONAL BANK
By:/S/ XXXXXXX X. XXXXXXXXXX
Xxxxxxx X. Xxxxxxxxxx
Vice President
Lending Office:
000 Xxxxx Xxxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Fax No.: 704/000-0000
Telephone No.: 704/000-0000
Attn: Xxxxxxx X. Xxxxxxxxxx
a\credit.agr
-57-
EXHIBIT I
PROMISSORY NOTE
$_____________ Houston, Texas August 1, 1997
FOR VALUE RECEIVED and WITHOUT GRACE except as may be provided in the
below-referenced Amended and Restated Credit Agreement, the undersigned (whether
one or more, referred hereinafter, collectively, as "MAKER") promise to pay,
jointly and severally, to the order of ____________________ ("PAYEE"), at the
banking quarters of Comerica Bank-Texas, as Agent in Dallas, Dallas County,
Texas, the sum of __________________________________ DOLLARS ($_______________),
or so much thereof as may be advanced against this Note pursuant to the Amended
and Restated Credit Agreement dated August 1, 1997 by and among Maker, Payee,
other Lenders from time to time signatory thereto and Comerica Bank-Texas, as
Agent (as amended, restated, or supplemented from time to time, the "CREDIT
AGREEMENT"), together with interest at the rates and calculated as provided in
the Credit Agreement.
Reference is hereby made to the Credit Agreement for matters governed
thereby, including, without limitation, general provisions relating to interest,
governing law, and certain events which will entitle the holder hereof to
accelerate the maturity of all amounts due hereunder. Capitalized terms used but
not defined in this Note shall have the meanings assigned to such terms in the
Credit Agreement.
This Note is issued pursuant to, is a "Note" under, and is payable as
provided in the Credit Agreement. Subject to compliance with applicable
provisions of the Credit Agreement, Maker may at any time pay the full amount or
any part of this Note without the payment of any premium or fee, but such
payment shall not, until this Note is fully paid and satisfied, excuse the
payment as it becomes due of any payment on this Note provided for in the Credit
Agreement.
Without being limited thereto or thereby, this Note is secured by the
Security Instruments.
This Note and the other Notes under the Credit Agreement renew, extend and
replace that certain Promissory Note dated September 17, 1996, made by Maker
payable to the order of Comerica Bank-Texas, in the original principal sum of
$15,000,000.
EXECUTED as of the date first-above written.
CLIFFWOOD OIL & GAS CORP.
By: _________________________________
Xxxxx X. Xxxxxxxxx
President
Page 1 of 2
CLIFFWOOD ENERGY COMPANY
By: _____________________________________
Xxxxx X. Xxxxxxxxx
President
CLIFFWOOD PRODUCTION CO.
By: _____________________________________
Xxxxx X. Xxxxxxxxx
President
Page 2 of 2
EXHIBIT II
[FORM OF COMPLIANCE CERTIFICATE]
_______________, 19___
Comerica Bank - Texas, Agent
0000 Xxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Energy Group
Re: Amended and Restated Credit Agreement dated as of August 1, 1997, by
and between Comerica Bank - Texas, as agent, other lenders from time
to time signatory thereto Cliffwood Oil & Gas Corp., Cliffwood
Energy Company and Cliffwood Production Co. (as amended, restated,
or supplemented from time to time, the "CREDIT AGREEMENT")
Ladies and Gentlemen:
Pursuant to applicable requirements of the Credit Agreement, the
undersigned, as Responsible Officers of each Borrower, hereby certify to you the
following information as true and correct as of the date hereof or for the
period indicated, as the case may be:
[1. To the best of the knowledge of the undersigned, no Default or Event
of Default exists as of the date hereof or has occurred since the date of
our previous certification to you, if any.]
[1. To the best of the knowledge of the undersigned, the following
Defaults or Events of Default exist as of the date hereof or have occurred
since the date of our previous certification to you, if any, and the
actions set forth below are being taken to remedy such circumstances:]
2. The compliance of the Borrowers with the financial covenants of the
Credit Agreement, as of the close of business on _______________, is
evidenced by the following:
Section 6.13: Working Capital
REQUIRED ACTUAL
Greater than zero dollar $_____________
3. No Material Adverse Effect has occurred since the date of the Financial
Statements dated as of _______________.
II, VI-i
Each capitalized term used but not defined herein shall have the
meaning assigned to such term in the Credit Agreement.
Very truly yours,
CLIFFWOOD OIL & GAS CORP.
By: ________________________________________
Name:
Title:
CLIFFWOOD PRODUCTION CO.
By: ________________________________________
Name:
Title:
CLIFFWOOD ENERGY COMPANY
By: ________________________________________
Name:
Title:
II, VI-ii
EXHIBIT III
[FORM OF OPINION OF COUNSEL]
August 4, 1997
Comerica Bank-Texas, Agent
Xxx Xxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Energy Group
Re: Amended and Restated Credit Agreement dated as of August 1, 1997, by
and between Comerica Bank-Texas, as agent ("Agent"), other Lenders
from time to time signatory thereto ("Lenders") Cliffwood Oil & Gas
Corp., Cliffwood Energy Company and Cliffwood Production Co. (as
amended, restated, or supplemented from time to time, the "CREDIT
AGREEMENT")
Ladies and Gentlemen:
We have acted as counsel to Cliffwood Oil & Gas Corp., Cliffwood
Energy Company and Cliffwood Production Co. (together, the "BORROWERS") in
connection with the transactions contemplated in the Credit Agreement. This
Opinion is delivered pursuant to Section 3.1(l) of the Credit Agreement, and the
Agent and the Lenders are hereby authorized to rely upon this Opinion in
connection with the transactions contemplated in the Credit Agreement. Each
capitalized term used but not defined herein shall have the meaning assigned to
such term in the Credit Agreement.
In our representation of the Borrowers, we have examined an
executed counterpart of each of the following (the "LOAN DOCUMENTS"):
(a) the Assignment of the deeds of trust executed in connection with
the prior Credit Agreement referred to in Section 9.17 of the Credit
Agreement (the "Assignment").
(b) the Credit Agreement;
(c) the Notes;
(d) the several instruments styled "Deed of Trust, Mortgage,
Assignment of Production, Security Agreement and Financing Statement"
dated of even date herewith from the Borrowers in favor of the Lender (the
"MORTGAGE"); and
III-i
(e) Non-Standard Financing Statements from the Borrowers, as
debtors, constituent to the Mortgage and the Pledge (the "FINANCING
STATEMENTS");
We have also examined the originals, or copies certified to our
satisfaction, of such other records of the Borrowers, certificates of public
officials and officers of the Borrowers, agreements, instruments, and documents
as we have deemed necessary as a basis for the opinions hereinafter expressed.
In making such examinations, we have, with your permission, assumed:
(a) the genuineness of all signatures to the Loan Documents other
than those of the Borrowers;
(b) the authenticity of all documents submitted to us as originals
and the conformity with the originals of all documents submitted to us as
copies;
(c) the Agent and the Lenders are authorized and has the power to
enter into and perform its obligations under the Credit Agreement;
(d) the due authorization, execution, and delivery of all Loan
Documents by each party thereto other than the Borrowers; and
(e) the Borrowers have title to all Property covered or affected by
the Mortgage.
Based upon the foregoing and subject to the qualifications set
forth herein, we are of the opinion that:
1. Each Borrower is a corporation duly organized, legally existing,
and in good standing under the laws of the state of its incorporation and
is duly qualified as a foreign corporation and is in good standing in all
jurisdictions wherein the ownership of its Property or the operation of
its business necessitates same.
2. The execution and delivery by the Borrowers of the Credit
Agreement and the borrowings thereunder, the execution and delivery by the
Borrowers of the other Loan Documents to which the Borrowers are a party,
and the payment and performance of all Obligations of the Borrowers
thereunder are within the power of each Borrower, have been duly
authorized by all necessary corporate action, and do not (a) require the
consent of any Governmental Authority, (b) contravene or conflict with any
Requirement of Law, (c) to our knowledge after due inquiry, contravene or
conflict with any indenture, instrument, or other agreement to which any
Borrower is a party or by which any Property of any Borrower may be
presently bound or encumbered, or (d) result in or require the creation or
imposition of any Lien upon any Property of the Borrower other than as
contemplated by the Loan Documents.
III-ii
3. The Loan Documents to which each Borrower is a party constitute
legal, valid, and binding obligations of such Borrower, enforceable
against such Borrower in accordance with their respective terms.
4. The forms of the Mortgage, the Financing Statements, and the
description of the Collateral and the Mortgaged Properties (as such term
is defined in the Mortgage and so used herein) situated in the State of
Texas (the "STATE") satisfy all applicable Requirements of Law of the
State and are legally sufficient under the laws of the State to enable the
Agent and the Lenders to realize the practical benefits purported to be
afforded thereby.
5. The Assignment and Mortgage (a) create a valid lien upon and
security interest in all Mortgaged Property situated in the State to
secure the Indebtedness (as such term is defined in the Mortgage and the
Pledge and so used herein), and (b) provide for nonjudicial foreclosure
remedies customarily used in the State.
6. The Assignment, Mortgage and the Financing Statements are in
satisfactory form for filing and recording in the offices described
below.
7. The filing and/or recording, as the case may be, of (a) the
Mortgage in the office of the county clerk of each county in the State in
which any portion of the Mortgaged Property is located, and as a financing
statement in the office of the Secretary of State of the State, and (b)
the Financing Statements in the Uniform Commercial Code records in each
county in the State in which any portion of the Mortgaged Property is
located, are the only recordings or filings in the State necessary to
perfect the liens and security interests in the Mortgaged Property created
by the Mortgage or to permit the Lender to enforce in the State its rights
under the Mortgage and the Financing Statements in the Uniform Commercial
Code records of the Secretary of State of Texas is the only recordings or
filings in the State necessary to perfect the liens and security interests
in the created Mortgaged Property in the Pledge or to permit the Lender to
enforce in the State its rights under the Pledge. No subsequent filing,
re-filing, recording, or re-recording will be required in the State in
order to continue the perfection of the liens and security interests
created by the Mortgage or the Pledge except that (a) a continuation
statement must be filed with respect to the Mortgage or the Pledge filed
as a financing statement in the office of the Secretary of State of the
State and with respect to the Financing Statement filed in the Uniform
Commercial Code records in each county in the State in which any portion
of the Mortgaged Property is located, each within six months prior to the
expiration of five years from the date of the relevant initial financing
statement filing, (b) a subsequent continuation statement must be filed
within six months prior to the expiration of each subsequent five-year
period from the date of each initial financing statement filing, and (c)
amendments or supplements to the Mortgage filed as a financing statement
and the Financing Statement; and/or additional financing
III-iii
statements may be required to be filed in the event of a change in the
name, identity, or structure of any Borrower or in the event the financing
statement filing otherwise becomes inaccurate or incomplete.
8. To our knowledge after due inquiry, except as disclosed in
Exhibit IV to the Credit Agreement, no litigation or other action of any
nature affecting any Borrower is pending before any Governmental Authority
or threatened against any Borrower. To our knowledge after due inquiry, no
unusual or unduly burdensome restriction, restraint, or hazard exists by
contract, Requirement of Law, or otherwise relative to the business or
operations of the Borrowers or the ownership and operation of any
Properties of the Borrowers other than such as relate generally to Persons
engaged in business activities similar to those conducted by the
Borrowers.
9. No authorization, consent, approval, exemption, franchise, permit
or license of, or filing (other than the filings set forth above) with,
any Governmental Authority or any other Person is required to authorize or
is otherwise required in connection with the valid execution and delivery
by the Borrowers of the Loan Documents or any instrument contemplated
thereby, or the payment and performance by the Borrowers of the
Obligations.
10. No transaction contemplated by the Loan Documents is in
violation of any regulations promulgated by the Board of Governors of the
Federal Reserve System, including, without limitation, Regulations G, T,
U, or X.
11. No Borrower is, nor is any Borrower directly or indirectly
controlled by or acting on behalf of any Person which is, an "investment
company" or an "affiliated person" of an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
12. No Borrower is a "holding company," or an "affiliate" of a
"holding company" or of a "subsidiary company" of a "holding company,"
within the meaning of the Public Utility Holding Company Act of 1935, as
amended.
The opinions expressed herein are subject to the following
qualifications and limitations:
(a) We are licensed to practice law only in the State and other
jurisdictions whose laws are not applicable to the opinions expressed
herein; accordingly, the foregoing opinions are limited solely to the laws
of the State, and applicable United States federal law.
(b) The validity, binding effect, and enforceability of the Loan
Documents may be limited or affected by bankruptcy, insolvency,
moratorium, reorganization, or other similar laws affecting rights of
creditors generally, including, without limitation, statutes or rules of
law which limit the effect of waivers of rights by a debtor or
III-iv
grantor; provided, however, that the limitations and other effects of such
statutes or rules of law upon the validity and binding effect of the Loan
Documents should not differ materially from the limitations and other
effects of such statutes or rules of law upon the validity and binding
effect of credit agreements, promissory notes, guaranties, and security
instruments generally.
(c) The enforceability of the respective obligations of the
Borrowers under the Loan Documents is subject to general principles of
equity (whether such enforceability is considered in a suit in equity or
at law).
This Opinion is furnished by us solely for the benefit of the Agent
and the Lenders in connection with the transactions contemplated by the Loan
Documents and is not to be quoted in whole or in part or otherwise referred to
or disclosed in any other transaction.
Very truly yours,
III-v
EXHIBIT IV
DISCLOSURES
Section 1.2 PERMITTED LIENS
None
Section 4.8 LIABILITIES
None
LITIGATION
None
Section 4.12 ENVIRONMENTAL MATTERS
None
Section 4.13 REFUNDS
None
Section 4.14 GAS CONTRACTS
None
Section 4.16 CASUALTIES
None
Section 6.1 INDEBTEDNESS
None
ho972030203
IV-i
EXHIBIT V
PART ONE -[TO COME FROM BORROWER]
ho972030203
V-i
EXHIBIT VI
ASSIGNMENT AND ACCEPTANCE AGREEMENT
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Agreement") dated as of
_________________, ____ is made by and between _________________________________
(the "Assignor") and (the "Assignee").
R E C I T A L S
WHEREAS, the Assignor is party to that certain Amended and Restated
Credit Agreement (the "Credit Agreement") dated as of August 1, 1997, by and
among Cliffwood Oil & Gas Corp., Cliffwood Energy Company and Cliffwood
Production Co., (the "Borrowers"), the several financial institutions from time
to time a party thereto (including the Assignor, the "Lenders") and Comerica
Bank - Texas, as Agent for the Lenders (terms defined in the Credit Agreement
are used herein with the same meaning);
WHEREAS, as provided in the Credit Agreement, the Lenders have committed
to extend credit to the Borrowers; and
WHEREAS, the Assignor wishes to assign to the Assignee part of its rights
and obligations under the Credit Agreement in respect of its Commitment,
together with a corresponding portion of each of its outstanding Loans, in a
total amount equal to $________ and its L/C Exposure in the amount of
$____________ (the "Assigned Amount") on the terms listed on Annex I hereto, and
subject to the conditions set forth herein and in the Credit Agreement, and the
Assignee wishes to accept assignment of such rights and to assume such
obligations from the Assignor on such terms and subject to such conditions.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
1. ASSIGNMENT AND ACCEPTANCE.
(a) Before giving effect to this Agreement, Assignor's (a)
Commitment is $________, (b) its Loan Balance is $__________, (c) Commitment
Amount is $________, and (d) L/C Exposure is $_________. With effect on and
after the Effective Date (as defined in Section 4 hereof), the Assignor hereby
sells and assigns to the Assignee, and the Assignee hereby purchases and assumes
from the Assignor, the Assigned Amount, which shall be equal to percent ( %)
(the "Assignee's Percentage Share") of all of the Assignor's rights and
obligations under the Credit Agreement, including, without limitation, the
Assignee's Percentage Share of the Assignor's (i) Commitment, (ii) outstanding
Loan Balance, (iii) Commitment Amount, and (iv) L/C Exposure. After giving
effect to this Agreement on the Effective Date, the interests of Assignor and
Assignee, respectively, are set forth on Annex II hereto.
-1-
The assignment set forth in this Section 1(a) shall be WITHOUT
RECOURSE TO, OR REPRESENTATION OR WARRANTY (except as expressly provided in this
Agreement) by, the Assignor.
(b) With effect on and after the Effective Date, the Assignee shall
be a party to the Credit Agreement, shall become a "Lender" for all purposes as
therein defined and contemplated, and shall succeed to all of the rights, shall
assume all of the obligations and shall be obligated to perform all of the
obligations of a Lender under the Credit Agreement with a Commitment Amount
equal to the Assigned Amount. The Assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Credit Agreement are required to be performed by it as a Lender. It is the
intent of the parties hereto that the Commitment and Commitment Amount of the
Assignor shall, as of the Effective Date, be reduced by an amount equal to the
Assigned Amount and the Assignor shall relinquish its rights and be released
from its obligations under the Credit Agreement to the extent such obligations
have been assumed by the Assignee.
2. PAYMENTS.
(a) As consideration for the sale, assignment and transfer
contemplated in Section 1 hereof, the Assignee shall (i) pay to the Assignor on
the Effective Date in immediately available funds an amount equal to Dollars ($
), representing the Assignee's Percentage Share of the principal amount of all
Loans previously made, and currently owned, by the Assignor under the Credit
Agreement and outstanding on the Effective Date and (ii) assume liability for
$_______ of L/C Exposure.
(b) The Assignee further agrees to pay to the Agent a processing or
transfer fee in the amount of $3,500.
(c) To the extent payment to be made by the Assignee pursuant to
Section 2(a) hereof is not made when due, the Assignor shall be entitled to
recover such amount together with interest thereon at the federal funds rate
accruing from the date such amounts were due.
3. REALLOCATION OF PAYMENTS. Any interest, commissions, fees and other
payments accrued to but excluding the Effective Date with respect to the
Assigned Amount shall be for the account of the Assignor. Any interest, fees and
other payments accrued on and after the Effective Date with respect to the
Assigned Amount shall be for the account of the Assignee. Each of the Assignor
and the Assignee agree that it will hold in trust for the other party any
interest, commissions, fees and other amounts which it may receive to which the
other party is entitled pursuant to the preceding sentence and pay to the other
party any such amounts which it may receive promptly upon receipt. The
Assignor's and the Assignee's obligations to make the payments referred to in
this Section 3 are non-assignable.
-2-
4. EFFECTIVE DATE; NOTICES; NOTES.
(a) The effective date for this Agreement shall be _________________
(the "Effective Date"); PROVIDED that the following conditions precedent have
been satisfied on or before the Effective Date:
(i) this Agreement shall be executed and delivered by the Assignor
and the Assignee;
(ii) the consent of the Borrower (if no Default or Event of Default
has occurred and is continuing on the Effective Date) and the Agent
required for an effective assignment of the Assigned Amount by the
Assignor to the Assignee shall have been duly obtained in the form set
forth on Annex III hereof, and shall be in full force and effect as of the
Effective Date;
(iii) the Assignee shall pay to the Assignor all amounts due to the
Assignor under this Agreement; and
(iv) the processing or transfer fee referred to in Section 2(b)
shall have been paid to the Agent.
(b) Promptly following the execution of this Agreement, the
Assignor shall deliver to the Agent for acceptance by the Agent, the notices,
agreements or other documents as may be required under the Credit Agreement.
(c) Promptly following payment by the Assignee of the consideration
as provided in Section 2 hereof, the Assignor shall deliver its Note to the
Agent and shall request that new Notes be issued to the Assignor and the
Assignee as of the Effective Date to properly reflect the respective amounts of
the Loans held by each party.
5. AGENT [INCLUDE ONLY IF ASSIGNOR IS AGENT].
(a) The Assignee hereby appoints and authorizes the Assignor to
take such action as Agent on its behalf and to exercise such powers under the
Credit Agreement as are delegated to the Agent by the Lenders pursuant to the
terms of the Credit Agreement.
(b) The Assignee shall assume no duties or obligations held by the
Assignor in its capacity as Agent under the Credit Agreement.]
6. REPRESENTATIONS AND WARRANTIES.
(a) The Assignor represents and warrants that (i) it is the legal
and beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any lien, security interest or other adverse
claim; (ii) it is duly organized and existing and it has the full power and
authority to take, and has taken, all action necessary to execute and deliver
this Agreement and any other documents required or permitted to be executed or
delivered by it in connection with this Agreement and to fulfill its obligations
hereunder, (iii) no notices to, or consents, authorizations or
-3-
approvals of, any person are required (other than any already given or obtained)
for its due execution, delivery and performance of this Agreement, and apart
from any agreements or undertakings or filings required by the Credit Agreement,
no further action by, or notice to, or filing with, any person is required of it
for such execution, delivery or performance; and (iv) this Agreement has been
duly executed and delivered by it and constitutes the legal, valid and binding
obligations of the Assignor, enforceable against the Assignor in accordance with
the terms hereof, except subject, as to enforcement, to bankruptcy, insolvency,
moratorium, reorganization and other laws of general appli cation relating to or
affecting creditors' rights and to general equitable principles.
(b) The Assignor makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or any other instrument or document furnished pursuant thereto. The
Assignor makes no representation or warranty in connection with, and assumes no
responsibility with respect to, the solvency, financial condition or statements
of the Borrowers or the performance or observance by the Borrower or any
guarantor of any of its respective obligations under the Credit Agreement or any
other instrument or document furnished in connection therewith.
(c) The Assignee represents and warrants that (i) it is duly
organized and existing and it has full power and authority to take, and has
taken, all action necessary to execute and deliver this Agreement and any other
documents required or permitted to be executed or delivered by it in connection
with this Agreement, and to fulfill its obligations hereunder; (ii) no notices
to, or consents, authorizations or approvals of, any person are required (other
than any already given or obtained) for its due execution, delivery and
performance of this Agreement; and apart from any agreements or undertaking or
filings required by the Credit Agreement, no further action by, or notice to, or
filing with, any person is required of it for such execution, delivery or
performance; (iii) this Agreement has been duly executed and delivered by it and
constitutes the legal, valid and binding obligations of the Assignee,
enforceable against the Assignee in accordance with the terms hereof, except
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting
creditors' rights and to general equitable principles; and (iv) it is eligible
under the Credit Agreement to be an assignee in accordance with the terms
thereof.
7. FURTHER ASSURANCES. The Assignor and the Assignee each hereby agree to
execute and deliver such other instruments, and take such other action, as
either party may reasonably request in connection with the transactions
contemplated by this Agreement, including, without limitation, the delivery of
any notices or other documents or instruments to the Borrower, the Agent or any
guarantor which may be required in connection with the assignment and assumption
contemplated hereby.
8. INDEMNITY. The Assignee agrees to indemnify and hold harmless the
Assignor against any and all losses, costs, expenses (including, without
limitation, reasonable attorneys' fees and expenses) and liabilities incurred by
the Assignor in connection with or arising in any manner from the
non-performance by the Assignee of any obligation assumed by the Assignee under
this Agreement.
-4-
9. MISCELLANEOUS.
(a) Any amendment or waiver of any provision of this Agreement
shall be in writing signed by the parties hereto. No failure or delay by either
party hereto in exercising any right, power or privilege hereunder shall operate
as a waiver thereof and any waiver of any breach of the provisions of this
Agreement shall be without prejudice to any rights with respect to any other or
further breach hereof.
(b) All payments made hereunder shall be made without any set-off
or counterclaim.
(c) All communications among the parties or notices in connection
herewith shall be in writing, hand-delivered, telex or facsimile transmitter,
addressed as follows: (i) if to the Assignor or the Assignee, at their
respective addresses set forth on the signature pages hereof and (ii) if to the
Borrowers, the Agent or any guarantor, at their respective addresses set forth
in the Credit Agreement or other documents or instruments. All such
communications and notices shall be effective upon receipt. The Assignee
specifies as its Lending Office the office set forth beneath its name on the
signature page hereof.
(d) The Assignor and the Assignee shall each pay their own costs
and expenses incurred in connection with the negotiation, preparation, execution
and performance of this Agreement.
(e) The representations and warranties made herein shall survive
the consummation of the transactions contemplated hereby.
(f) Subject to the terms of the Credit Agreement, this Agreement
shall be binding upon and inure to the benefit of the Assignor and the Assignee
and their respective successors and assigns; PROVIDED, HOWEVER, that no party
shall assign its rights hereunder without the prior written consent of the other
party and any purported assignment, absent such consent, shall be void. The
preceding sentence shall not limit or enhance the right of the Assignee to
assign or participate all or part of the Assignee's Percentage Share and the
Assigned Amount and any outstanding Loans attributable thereto in the manner
contemplated by the Credit Agreement.
(g) This Agreement may be executed in any number of counterparts and
all of such counterparts taken together shall be deemed to constitute one and
the same instrument.
(h) This Agreement shall be governed by and construed in accordance
with the law of the State of Texas. The Assignor and the Assignee each
irrevocably submits to the non-exclusive jurisdiction of any Texas State or
Federal court sitting in the Southern District of Texas over any suit, action or
proceeding arising out of or relating to this Agreement or the Credit Agreement
and irrevocably agrees that all claims in respect of such action or proceeding
may be heard and determined in such Texas State or Federal court. Each party to
this Agreement hereby irrevocably waives, to the fullest extent it may
effectively do so, the defense of an inconvenient forum to the maintenance of
such action or proceeding.
-5-
(i) This Agreement and any agreement, document or instrument
attached hereto or referred to herein integrate all the terms and conditions
mentioned herein or incidental hereto, and together with the Credit Agreement
constitutes the entire agreement and understanding between the parties hereto
and supersedes any and all prior agreements and understandings related to the
subject matter hereof. In the event of any conflict between the terms,
conditions and provisions of this Agreement and the Credit Agreement, the terms,
conditions and provisions of the Credit Agreement shall prevail.
(j) In the event of any inconsistency between the provisions of this
Agreement, on the one hand, and Annex I, Annex II or Annex III hereto, on the
other hand, this Agreement shall control. Headings are for reference only and
are to be ignored in interpreting this Agreement.
(k) The illegality or unenforceability of any provision of this
Agreement or any instrument or agreement required hereunder shall not in any way
affect or impair the legality or enforceability of the remaining provisions of
this Agreement or any instrument or agreement required hereunder.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Agreement to be executed and delivered by their duly authorized officers as of
the date first above written.
ASSIGNOR:
_____________________________________
By: _________________________________
Name:
Title:
-6-
ASSIGNEE:
_____________________________________
By: _________________________________
Name:
Title:
Lending Office:
_____________________________________
_____________________________________
-7-
ANNEX I
TO
ASSIGNMENT AND ACCEPTANCE AGREEMENT
1. BORROWER:
2. DATE OF CREDIT AGREEMENT:
3. ASSIGNOR:
4. ASSIGNEE:
5. DATE OF ASSIGNMENT AGREEMENT:
6. EFFECTIVE DATE:
7. FEES PAID BY ASSIGNEE TO ASSIGNOR:
8. INTEREST PAID BY ASSIGNEE TO ASSIGNOR:
9. PAYMENT INSTRUCTIONS:
Assignor:
Assignee:
10. Assignee's Notice
INSTRUCTIONS:
11. OTHER INFORMATION:
-1-
ANNEX II
TO
ASSIGNMENT AND ACCEPTANCE AGREEMENT
1. BORROWER:
2. DATE OF CREDIT AGREEMENT:
3. ASSIGNOR:
4. ASSIGNEE:
5. DATE OF ASSIGNMENT AGREEMENT:
6. EFFECTIVE DATE:
7. ASSIGNOR'S COMMITMENT AMOUNT AS OF EFFECTIVE DATE: $__________
8. ASSIGNOR'S LOAN BALANCE AS OF EFFECTIVE DATE: $__________
9. ASSIGNOR'S L/C EXPOSURE AS OF EFFECTIVE DATE:
10. ASSIGNEE'S COMMITMENT AMOUNT AS OF EFFECTIVE DATE: $__________
11. ASSIGNEE'S LOAN BALANCE AS OF EFFECTIVE DATE: $__________
12. ASSIGNEE'S L/C EXPOSURE AS OF EFFECTIVE DATE:
-2-
ANNEX III
TO
NOTICE OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
_______________, _____
[Agent's Name and Address]
[Borrower's Name and Address]
Dear Sirs:
We refer to the Credit Agreement dated as of April 1, 1997 (the "Credit
Agreement") by and among you and the Lenders from time to time a party thereto.
Capitalized terms not defined herein shall have the meaning ascribed to them in
the Credit Agreement.
1. We hereby give you notice of, and request the approval of the Borrower
(if required) and the Agent to, the assignment by ______________________________
(the "Assignor") to ________________________________ (the "Assignee") of _____%
of the right, title and interest of the Assignor in and to the
Credit Agreement (including without limitation the right, title and interest of
the Assignor in and to the Commitment of the Assignor, all of Assignor's L/C
Exposure and all Loan Balances of the Assignor). Before giving effect to such
assignment the Assignor's (a) Commitment Amount is $________, (b) the Loan
Balance is $_________, and (c) L/C Exposure is $___________. After giving effect
to such assignment, the Assignor's and Assignee's respective Loan Balances,
Commitment Amounts and L/C Exposures are as set forth on Schedule X hereto.
2. The Assignee agrees that upon receiving the consent of the Borrower (if
required) and the Agent to such assignment and from and after the Effective Date
of the Assignment, the Assignee will be bound by the terms of the Credit
Agreement, with respect to the interest in the Credit Agreement assigned to it
as specified above, as fully and to the same extent as if the Assignee were the
Lender originally holding such interest in the Credit Agreement.
-1-
3. The following administrative details apply to the Assignee:
(A) Lending Office:
Assignee name: _______________________________
Address: _______________________________
Attention: _______________________________
Telephone: (_____)________________________
Telecopier: (_____)________________________
(B) Notice Address:
Assignee name _______________________________
Address: _______________________________
Attention: _______________________________
Telephone: (_____)________________________
Telecopier: (_____)________________________
(C) Payment Instructions:
Account No.: _______________________________
At: _______________________________
_______________________________
Reference: _______________________________
Attention: _______________________________
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Assignment and Acceptance to be executed by their respective duly authorized
officials, officers or agents as of the date first above mentioned.
Very truly yours,
[Name of Assignor]
By: __________________________________
Name: ________________________________
Title: _______________________________
-2-
[Name of Assignee]
By: __________________________________
Name: ________________________________
Title: _______________________________
The Borrowers (if necessary) and the Agent hereby grant their approval of the
foregoing assignment:
[Borrowers]
By: _________________________________
Name: _______________________________
COMERICA BANK- TEXAS, Agent
By: ________________________________
Name: ______________________________
-3-
SCHEDULE X
[To Be Completed at Time of Assignment]
ho972030203
-4-
EXHIBIT 4.12
------------------------------------------------------------------------------
AMENDED AND RESTATED
CREDIT AGREEMENT
BY AND AMONG
CLIFFWOOD OIL & GAS CORP.
CLIFFWOOD ENERGY COMPANY
CLIFFWOOD PRODUCTION CO.
COMERICA BANK - TEXAS,
AS AGENT
AND
THE SEVERAL FINANCIAL INSTITUTIONS
FROM TIME TO TIME PARTY HERETO
DATED AS OF
August 1, 1997
$25,000,000 MASTER REDUCING REVOLVING LINE OF CREDIT
AND LETTER OF CREDIT FACILITY
WITH AN INITIAL COMMITMENT AMOUNT OF $13,500,000
------------------------------------------------------------------------------
TABLE OF CONTENTS
(Continued) PAGE
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND INTERPRETATION..................... 1
------------------------------
1.1 TERMS DEFINED ABOVE............................................ 1
-------------------
1.2 ADDITIONAL DEFINED TERMS....................................... 1
------------------------
1.3 UNDEFINED FINANCIAL ACCOUNTING TERMS........................... 12
------------------------------------
1.4 REFERENCES..................................................... 12
----------
1.5 ARTICLES AND SECTIONS.......................................... 13
---------------------
1.6 NUMBER AND GENDER.............................................. 13
-----------------
1.7 INCORPORATION OF EXHIBITS...................................... 13
-------------------------
ARTICLE II
TERMS OF FACILITY........................... 13
2.1 REVOLVING LINE OF CREDIT....................................... 13
------------------------
2.2 USE OF LOAN PROCEEDS AND LETTERS OF CREDIT..................... 14
------------------------------------------
2.3 INTEREST....................................................... 14
--------
2.4 LETTER OF CREDIT FACILITY...................................... 14
-------------------------
2.5 REPAYMENT OF LOANS AND INTEREST................................ 14
-------------------------------
2.6 OUTSTANDING AMOUNTS............................................ 15
-------------------
2.7 TIME, PLACE, AND METHOD OF PAYMENTS............................ 15
-----------------------------------
2.8 BORROWING BASE DETERMINATIONS; REDUCTION OF BORROWING BASE..... 15
----------------------------------------------------------
2.9 MANDATORY PREPAYMENTS.......................................... 16
---------------------
2.10 VOLUNTARY PREPAYMENTS OF LOANS................................. 17
------------------------------
2.11 COMMITMENT FEE................................................. 17
--------------
2.12 ENGINEERING FEE................................................ 17
---------------
2.13 FACILITY FEE................................................... 17
------------
2.14 LETTER OF CREDIT FEE........................................... 18
--------------------
2.15 LOANS TO SATISFY OBLIGATIONS OF BORROWERS...................... 18
-----------------------------------------
2.16 SECURITY INTEREST IN ACCOUNTS; RIGHT OF OFFSET................. 18
----------------------------------------------
2.17 GENERAL PROVISIONS RELATING TO INTEREST........................ 19
---------------------------------------
2.18 YIELD PROTECTION............................................... 20
----------------
2.19 LETTERS IN LIEU OF TRANSFER ORDERS............................. 20
----------------------------------
2.20 POWER OF ATTORNEY.............................................. 20
-----------------
2.21 JOINT BORROWER PROVISIONS...................................... 21
-------------------------
2.22 PRO RATA TREATMENT............................................. 24
------------------
2.23 NON-RECEIPT OF FUNDS BY THE AGENT.............................. 25
---------------------------------
2.24 WITHHOLDING TAX EXEMPTION...................................... 25
-------------------------
2.25 CERTAIN AGREEMENTS REGARDING LETTERS OF CREDIT................. 26
----------------------------------------------
ARTICLE III
-i-
TABLE OF CONTENTS
(Continued) PAGE
CONDITIONS............................... 26
3.1 RECEIPT OF LOAN DOCUMENTS AND OTHER ITEMS...................... 27
-----------------------------------------
3.2 EACH LOAN AND LETTER OF CREDIT................................. 28
------------------------------
ARTICLE IV
REPRESENTATIONS AND WARRANTIES..................... 30
------------------------------
4.1 DUE AUTHORIZATION.............................................. 30
-----------------
4.2 CORPORATE EXISTENCE............................................ 30
-------------------
4.3 VALID AND BINDING OBLIGATIONS.................................. 30
-----------------------------
4.4 SECURITY INSTRUMENTS........................................... 30
--------------------
4.5 TITLE TO ASSETS................................................ 30
---------------
4.6 SCOPE AND ACCURACY OF FINANCIAL STATEMENTS..................... 31
------------------------------------------
4.7 NO MATERIAL MISSTATEMENTS...................................... 31
-------------------------
4.8 LIABILITIES, LITIGATION, AND RESTRICTIONS...................... 31
-----------------------------------------
4.9 AUTHORIZATIONS; CONSENTS....................................... 31
------------------------
4.10 COMPLIANCE WITH LAWS........................................... 31
--------------------
4.11 ERISA.......................................................... 31
-----
4.12 ENVIRONMENTAL LAWS............................................. 32
------------------
4.13 REFUNDS........................................................ 32
-------
4.14 GAS CONTRACTS.................................................. 33
-------------
4.15 INTELLECTUAL PROPERTY.......................................... 33
---------------------
4.16 CASUALTIES OR TAKING OF PROPERTY............................... 33
--------------------------------
4.17 LOCATIONS OF BORROWERS......................................... 33
----------------------
ARTICLE V
AFFIRMATIVE COVENANTS......................... 34
5.1 MAINTENANCE AND ACCESS TO RECORDS.............................. 34
---------------------------------
5.2 QUARTERLY FINANCIAL STATEMENTS................................. 34
------------------------------
5.3 ANNUAL FINANCIAL STATEMENTS.................................... 34
---------------------------
5.4 OIL AND GAS RESERVE REPORTS.................................... 34
---------------------------
5.5 TITLE OPINIONS; TITLE DEFECTS; ETC............................. 35
-----------------------------------
5.6 NOTICES OF CERTAIN EVENTS...................................... 35
-------------------------
5.7 LETTERS IN LIEU OF TRANSFER ORDERS; DIVISION ORDERS............ 36
---------------------------------------------------
5.8 ADDITIONAL INFORMATION......................................... 37
----------------------
5.9 COMPLIANCE WITH LAWS........................................... 37
--------------------
5.10 PAYMENT OF ASSESSMENTS AND CHARGES............................. 37
----------------------------------
5.11 MAINTENANCE OF CORPORATE EXISTENCE AND GOOD STANDING........... 37
----------------------------------------------------
5.12 PAYMENT OF NOTES; PERFORMANCE OF OBLIGATIONS................... 37
--------------------------------------------
5.13 FURTHER ASSURANCES............................................. 37
------------------
5.14 INITIAL FEES AND EXPENSES OF COUNSEL TO AGENT.................. 38
---------------------------------------------
5.15 SUBSEQUENT FEES AND EXPENSES OF AGENT AND LENDERS.............. 38
-------------------------------------------------
-ii-
TABLE OF CONTENTS
(Continued) PAGE
5.16 OPERATION OF PROPERTIES........................................ 38
-----------------------
5.17 MAINTENANCE AND INSPECTION OF PROPERTIES....................... 38
----------------------------------------
5.18 MAINTENANCE OF INSURANCE....................................... 39
------------------------
5.19 INDEMNIFICATION................................................ 39
---------------
ARTICLE VI
NEGATIVE COVENANTS........................... 40
6.1 INDEBTEDNESS................................................... 40
------------
6.2 CONTINGENT OBLIGATIONS......................................... 40
----------------------
6.3 LIENS.......................................................... 40
-----
6.4 SALES OF ASSETS................................................ 40
---------------
6.5 LEASEBACKS..................................................... 41
----------
6.6 LOANS OR ADVANCES.............................................. 41
-----------------
6.7 INVESTMENTS.................................................... 41
-----------
6.8 DIVIDENDS AND DISTRIBUTIONS.................................... 41
---------------------------
6.9 CHANGE IN CONTROL.............................................. 41
-----------------
6.10 TRANSACTIONS WITH AFFILIATES................................... 41
----------------------------
6.11 LINES OF BUSINESS.............................................. 42
-----------------
6.12 ERISA COMPLIANCE............................................... 42
----------------
6.13 POSITIVE WORKING CAPITAL....................................... 42
------------------------
6.14 HEDGE AGREEMENTS............................................... 42
----------------
ARTICLE VII
EVENTS OF DEFAULT........................... 42
7.1 ENUMERATION OF EVENTS OF DEFAULT............................... 42
--------------------------------
7.2 REMEDIES....................................................... 44
--------
ARTICLE VIII
THE AGENT............................... 45
8.1 APPOINTMENT, POWERS AND IMMUNITIES............................. 45
----------------------------------
8.2 RIGHTS OF AGENT AS A LENDER.................................... 47
---------------------------
8.3 SHARING OF PAYMENTS, ETC....................................... 47
------------------------
8.4 INDEMNIFICATION................................................ 48
---------------
8.5 INDEPENDENT CREDIT DECISIONS................................... 48
----------------------------
8.6 SEVERAL COMMITMENTS............................................ 49
-------------------
8.7 SUCCESSOR AGENT................................................ 49
---------------
ARTICLE IX
MISCELLANEOUS............................. 49
-iii-
TABLE OF CONTENTS
(Continued) PAGE
9.1 SUCCESSORS AND ASSIGNS......................................... 49
----------------------
9.2 SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND COVENANTS......... 52
------------------------------------------------------
9.3 NOTICES AND OTHER COMMUNICATIONS............................... 52
--------------------------------
9.4 PARTIES IN INTEREST............................................ 54
-------------------
9.5 RIGHTS OF THIRD PARTIES........................................ 54
-----------------------
9.6 RENEWALS; EXTENSIONS........................................... 54
--------------------
9.7 NO WAIVER; RIGHTS CUMULATIVE................................... 55
----------------------------
9.8 SURVIVAL UPON UNENFORCEABILITY................................. 55
------------------------------
9.9 AMENDMENTS; WAIVERS............................................ 55
-------------------
9.10 CONTROLLING AGREEMENT.......................................... 55
---------------------
9.11 DISPOSITION OF COLLATERAL...................................... 55
-------------------------
9.12 GOVERNING LAW.................................................. 55
-------------
9.13 JURISDICTION AND VENUE......................................... 56
----------------------
9.14 WAIVER OF RIGHTS TO JURY TRIAL................................. 56
------------------------------
9.15 ENTIRE AGREEMENT............................................... 56
----------------
9.16 COUNTERPARTS................................................... 56
------------
9.17 AMENDMENT AND RESTATEMENT OF PRIOR CREDIT AGREEMENT............ 56
---------------------------------------------------
LIST OF EXHIBITS
Exhibit I - Form of Note
Exhibit II - Form of Compliance Certificate
Exhibit III - Form of Opinion of Counsel
Exhibit IV - Disclosures
Exhibit V - Description of Belleview Acquisition
Exhibit VI - Form of Assignment and Assumption
-iv-
