AMENDED AND RESTATED CREDIT AGREEMENT
Among
McMoRan OIL & GAS LLC,
as Borrower,
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION,
as Agent,
and
THE LENDERS SIGNATORY HERETO
Dated as of January 18, 2000
$35,000,000 Revolving Credit Facility
TABLE OF CONTENTS
Page
ARTICLE I Definitions and Accounting Matters -1-
Section 1.01 Terms Defined Above -1-
Section 1.02 Certain Defined Terms -1-
Section 1.03 Accounting Terms and Determinations -14-
ARTICLE II Commitments -15-
Section 2.01 Loans and Letters of Credit -15-
Section 2.02 Borrowings, Continuations and Conversions,
Letters of Credit -15-
Section 2.03 Changes of Commitments -17-
Section 2.04 Fees -18-
Section 2.05 Several Obligations -19-
Section 2.06 Notes -19-
Section 2.07 Prepayments -20-
Section 2.08 Borrowing Base; Threshold Amount -21-
Section 2.09 Assumption of Risks -23-
Section 2.10 Obligation to Reimburse and to Prepay -24-
Section 2.11 Lending Offices -25-
ARTICLE III Payments of Principal and Interest -25-
Section 3.01 Repayment of Loans -25-
Section 3.02 Interest -25-
ARTICLE IV Payments; Pro Rata Treatment; Computations; Etc. -26-
Section 4.01 Payments -26-
Section 4.02 Pro Rata Treatment -27-
Section 4.03 Computations -27-
Section 4.04 Non-receipt of Funds by the Agent -27-
Section 4.05 Set-off, Sharing of Payments, Etc. -28-
Section 4.06 Taxes -28-
Section 4.07 Disposition of Proceeds -31-
ARTICLE V Capital Adequacy -32-
Section 5.01 Additional Costs -32-
Section 5.02 Limitation on Eurodollar Loans -33-
Section 5.03 Illegality -34-
Section 5.04 Base Rate Loans Pursuant to Sections 5.01, 5.02
and 5.03 -34-
Section 5.05 Compensation -34-
Section 5.06 Replacement Lenders -35-
ARTICLE VI Conditions Precedent -36-
Section 6.01 Initial Funding -36-
Section 6.02 Initial and Subsequent Loans and Letters of
Credit -37-
Section 6.03 Conditions Relating to Letters of Credit -38-
ARTICLE VII Representations and Warranties -38-
Section 7.01 Existence -38-
Section 7.02 Financial Condition -39-
Section 7.03 Litigation -39-
Section 7.04 No Breach -39-
Section 7.05 Authority -40-
Section 7.06 Approvals -40-
Section 7.07 Use of Loans -40-
Section 7.08 ERISA -40-
Section 7.09 Taxes -41-
Section 7.10 Titles, etc. -41-
Section 7.11 No Material Misstatements -42-
Section 7.12 Investment Company Act -42-
Section 7.13 Public Utility Holding Company Act -43-
Section 7.14 Subsidiaries -43-
Section 7.15 Location of Business and Offices -43-
Section 7.16 Defaults -43-
Section 7.17 Environmental Matters -43-
Section 7.18 Compliance with the Law -44-
Section 7.19 Insurance -45-
Section 7.20 Hedging Agreements -45-
Section 7.21 Restriction on Liens -45-
Section 7.22 Material Agreements -45-
Section 7.23 Gas Imbalances -46-
Section 7.24 Year 2000 -46-
ARTICLE VIII Affirmative Covenants -46-
Section 8.01 Financial Statements -46-
Section 8.02 Litigation -48-
Section 8.03 Maintenance, Etc. -48-
Section 8.04 Environmental Matters -50-
Section 8.05 Further Assurances -50-
Section 8.06 Performance of Obligations -51-
Section 8.07 Engineering Reports -51-
Section 8.08 Title Information -52-
Section 8.09 Collateral -53-
Section 8.10 ERISA Information and Compliance -53-
ARTICLE IX Negative Covenants -54-
Section 9.01 Debt -54-
Section 9.02 Liens -55-
Section 9.03 Investments, Loans and Advances -56-
Section 9.04 Dividends, Distributions and Redemptions -57-
Section 9.05 Sales and Leasebacks -57-
Section 9.06 Nature of Business -57-
Section 9.07 Mergers, Etc. -57-
Section 9.08 Proceeds of Notes -58-
Section 9.09 ERISA Compliance -58-
Section 9.10 Sale or Discount of Receivables -59-
Section 9.11 Ratio of Debt to EBITDAX -60-
Section 9.12 Interest Coverage Ratio -60-
Section 9.13 Sale of Oil and Gas Properties -60-
Section 9.14 Environmental Matters -60-
Section 9.15 Transactions with Affiliates -60-
Section 9.16 Subsidiaries -60-
Section 9.17 Negative Pledge Agreements -61-
Section 9.18 Gas Imbalances, Take-or-Pay or Other
Prepayments -61-
ARTICLE X Events of Default; Remedies -62-
Section 10.01 Events of Default -62-
Section 10.02 Remedies -64-
ARTICLE XI The Agent -64-
Section 11.01 Appointment, Powers and Immunities -64-
Section 11.02 Reliance by Agent -65-
Section 11.03 Defaults -65-
Section 11.04 Rights as a Lender -65-
Section 11.05 INDEMNIFICATION -66-
Section 11.06 Non-Reliance on Agent and other Lenders -66-
Section 11.07 Action by Agent -66-
Section 11.08 Resignation or Removal of Agent -67-
ARTICLE XII Miscellaneous -67-
Section 12.01 Waiver -67-
Section 12.02 Notices -67-
Section 12.03 Payment of Expenses, Indemnities, etc -68-
Section 12.04 Amendments, Etc. -70-
Section 12.05 Successors and Assigns -70-
Section 12.06 Assignments and Participations -70-
Section 12.07 Invalidity -72-
Section 12.08 Counterparts -72-
Section 12.09 References -72-
Section 12.10 Survival -72-
Section 12.11 Captions -73-
Section 12.12 NO ORAL AGREEMENTS -73-
Section 12.13 GOVERNING LAW; SUBMISSION TO JURISDICTION -73-
Section 12.14 Interest -74-
Section 12.15 Confidentiality -75-
Section 12.16 Effectiveness -76-
Section 12.17 EXCULPATION PROVISIONS -76-
THIS AMENDED AND RESTATED CREDIT AGREEMENT dated as of
January 18, 2000 is among: McMoRan OIL & GAS LLC (successor by
merger with McMoRan Oil & Gas Co.), formed under the laws of the
State of Delaware (together with its successors and assigns, the
"Borrower"); each of the lenders that is a signatory hereto or
which becomes a signatory hereto as provided in Section 12.06
(individually, together with its successors and assigns, a "Lender"
and, collectively, the "Lenders"); and CHASE BANK OF TEXAS,
NATIONAL ASSOCIATION, a national banking association (in its
individual capacity, "Chase"), as agent for the Lenders (in such
capacity, together with its successors in such capacity, the
"Agent").
R E C I T A L S
A. Pursuant to that certain Credit Agreement dated as of
August 19, 1998, by and among the Company, the Agent and the
lenders party thereto (such Credit Agreement, as heretofore amended
and supplemented, the "Existing Credit Agreement"), the Company
received certain loans and extensions of credit under a revolving
credit facility made available to the Company under the Existing
Credit Agreement, evidenced by those certain promissory notes in
the aggregate principal amount of $20,000,000, issued by the
Company under and pursuant to the Existing Credit Agreement (the
"Prior Notes").
B. The Company, the Agent and the Lenders mutually desire to
amend and restate in its entirety the Existing Credit Agreement to,
among other things, provide for the modifications described above.
C. In consideration of the mutual covenants and agreements
herein contained and of the loans, extensions of credit and
commitments hereinafter referred to, the parties hereto agree that
the Existing Credit Agreement is hereby amended and restated in its
entirety to read as follows:
ARTICLE I
Definitions and Accounting Matters
Section 1.01 Terms Defined Above. As used in this
Agreement, the terms "Agent," "Borrower," "Chase," AExisting Credit
Agreement,@ "Lender," "Lenders" and APrior Notes@ shall have the
meanings indicated above.
Section 1.02 Certain Defined Terms. As used herein, the
following terms shall have the following meanings (all terms
defined in this Article I or in other provisions of this Agreement
in the singular to have the same meanings when used in the plural
and vice versa):
"Additional Costs" shall have the meaning assigned such term
in Section 5.01(a).
"Affected Loans" shall have the meaning assigned such term in
Section 5.04.
"Affiliate" of any Person shall mean (i) any Person directly
or indirectly controlled by, controlling or under common control
with such first Person, (ii) any director or officer of such first
Person or of any Person referred to in clause (i) above and (iii)
if any Person in clause (i) above is an individual, any member of
the immediate family (including parents, spouse and children) of
such individual and any trust whose principal beneficiary is such
individual or one or more members of such immediate family and any
Person who is controlled by any such member or trust. For purposes
of this definition, any Person which owns directly or indirectly
35% or more of the securities having ordinary voting power for the
election of directors or other governing body of a corporation or
35% or more of the partnership or other ownership interests of any
other Person (other than as a limited partner of such other Person)
will be deemed to "control" (including, with its correlative
meanings, "controlled by" and "under common control with") such
corporation or other Person.
"Agreement" shall mean this Credit Agreement, as the same may
from time to time be amended or supplemented.
"Aggregate Commitments" at any time shall equal the amount
calculated in accordance with Section 2.03(a) hereof.
"Aggregate Maximum Credit Amount" at any time shall equal the
sum of the Maximum Credit Amounts of the Lenders ($35,000,000), as
the same may be reduced pursuant to Section 2.03(b).
"Applicable Lending Office" shall mean, for each Lender and
for each Type of Loan, the lending office of such Lender (or an
Affiliate of such Lender) designated for such Type of Loan on the
signature pages hereof or such other offices of such Lender (or of
an Affiliate of such Lender) as such Lender may from time to time
specify to the Agent and the Borrower as the office by which its
Loans of such Type are to be made and maintained.
"Applicable Margin" shall mean, the applicable per annum
percentage set forth at the appropriate intersection in the table
shown below, based on the Threshold Amount Utilization Percentage
as in effect from time to time:
Threshold Amount Utilization Percentage Eurodollar Rate Base Rate
-------------------------------------- --------------- ---------
Less than or equal to 33% 1.75% 0.0%
Greater than 33% but less than
or equal to 66% 2.00% 0.25%
Greater than 66% but less than
or equal to 100% 2.25% 0.50%
Greater than 100% 2.75% 1.00%
"Assignment" shall have the meaning assigned such term in
Section 12.06(b).
"Base Rate" shall mean, with respect to any Base Rate Loan,
for any day, the higher of (i) the Federal Funds Rate for any such
day plus 1/2 of 1% or (ii) the Prime Rate for such day. Each
change in any interest rate provided for herein based upon the Base
Rate resulting from a change in the Base Rate shall take effect at
the time of such change in the Base Rate.
"Base Rate Loans" shall mean Loans that bear interest at rates
based upon the Base Rate.
"Borrowing Base" shall mean at any time an amount equal to the
amount determined in accordance with Section 2.08(f).
"Borrowing Base Deficiency" shall have the meaning assigned
such term in Section 2.07(c).
"Business Day" shall mean any day other than a day on which
commercial banks are authorized or required to close in Houston,
Texas and, where such term is used in the definition of "Quarterly
Date" or if such day relates to a borrowing or continuation of, a
payment or prepayment of principal of or interest on, or a
conversion of or into, or the Interest Period for, a Eurodollar
Loan or a notice by the Borrower with respect to any such borrowing
or continuation, payment, prepayment, conversion or Interest
Period, any day which is also a day on which dealings in Dollar
deposits are carried out in the London interbank market.
"Closing Date" shall mean January 18, 2000.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time and any successor statute.
"Commitment" shall mean, for any Lender, its obligation to (i)
make Loans up to the lesser of such Lender's Maximum Credit Amount
or the Lender's Percentage Share of the then effective Borrowing
Base and (ii) participate in the issuance of Letters of Credit as
provided in Section 2.01(b).
"Consolidated Subsidiaries" shall mean with regard to any
entity each Subsidiary of such entity (whether now existing or
hereafter created or acquired) the financial statements of which
shall be (or should have been) consolidated with the financial
statements of such entity in accordance with GAAP.
"Debt" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money (including principal,
interest, fees and charges), (b) all obligations of such Person
evidenced by bonds, debentures, notes or similar instruments
(including principal, interest, fees and charges), (c) all
obligations of such Person for the unearned balance of any payment
received under any contract outstanding for 180 days, (d) all
obligations of such Person under conditional sale or other title
retention agreements relating to Property or assets purchased by
such Person, (e) all obligations of such Person issued or assumed
as the deferred purchase price of Property or services (excluding
trade accounts payable and accrued obligations incurred in the
ordinary course of business so long as the same are not 180 days
overdue or, if overdue, are being contested in good faith and by
appropriate proceedings), (f) all Debt of others secured by (or for
which the holder of such Debt has an existing right, contingent or
otherwise, to be secured by) any Lien on Property owned or acquired
by such Person, whether or not the obligations secured thereby have
been assumed, (g) all obligations of such Person, contingent or
otherwise, guaranteeing or having the economic effect of
guaranteeing Debt of others, (h) all obligations of such Person to
pay rent or other amounts under a capital lease, (i) all recourse
obligations of such Person with respect to sales of accounts
receivable which would be shown under GAAP on the balance sheet of
such Person as a liability, (j) all obligations of such Person as
an account party (including reimbursement obligations to the issuer
of a letter of credit) in respect of bankers= acceptances and
letters of credit guaranteeing Debt, (k) all noncontingent
obligations of such Person as an account party (including
reimbursement obligations to the issuer of a letter of credit) in
respect of letters of credit other than those referred to in clause
(j) above, (l) all obligations under leases which require such
Person to make payments over the term of such lease, including
payments at termination, which are substantially equal to at least
eighty percent (80%) of the purchase price of the Property subject
to such lease plus interest at an imputed rate of interest, (m) all
obligations or undertakings of such Person to maintain or cause to
be maintained the financial position or covenants of others or to
purchase the Debt or Property of others, (n) obligations
outstanding for 180 days or more to deliver goods or services
including Hydrocarbons in consideration of advance payments, (o)
obligations to pay for goods or services in the event that such
goods or services are not actually received or utilized by such
Person, (p) any capital stock of such Person in which such Person
has a mandatory obligation to redeem such stock within two (2)
years after the Termination Date (plus any extension of such date),
(q) any Debt of a Special Entity for which such Person is liable
either by agreement or because of a Governmental Requirement, (r)
the undischarged balance of any production payment created by such
Person or for the creation of which such Person directly received
payment; and (s) all obligations of such Person under Hedging
Agreements. The Debt of any person shall exclude obligations under
leases which are characterized as operating leases.
"Default" shall mean an Event of Default or an event which
with notice or lapse of time or both would become an Event of
Default.
"Dollars" and "$" shall mean lawful money of the United States
of America.
"EBITDAX" shall mean, for any period, the sum of consolidated
net income for such period plus the following expenses or charges
to the extent deducted from consolidated net income in such period:
interest paid or accrued on the Loans to the Borrower and on other
Debt of the Borrower during such period, taxes, depreciation,
depletion, amortization and exploration expenses. As used herein,
"consolidated net income" shall mean, for any period, the amount
which, in conformity with GAAP, would be set forth opposite the
caption "net income or loss" (or any like caption) on a
consolidated income statement of the Borrower and its Consolidated
Subsidiaries (before deducting minority interests in net income of
Consolidated Subsidiaries, but disregarding all extraordinary or
unusual noncash items in calculating such consolidated net income).
The calculation of each of the items specified above will exclude
items relating to Unrestricted Subsidiaries.
"Effective Date" shall have the meaning assigned such term in
Section 12.16.
"Engineering Reports" shall have the meaning assigned such
term in Section 2.08.
"Environmental Laws" shall mean any and all applicable
Governmental Requirements pertaining to health or the environment
in effect in jurisdictions in which the Borrower or any Subsidiary
is conducting or at any time has conducted business, or where any
Property of the Borrower or any Subsidiary is located, including
without limitation, the Oil Pollution Act of 1990 ("OPA"), the
Clean Air Act, as amended, the Comprehensive Environmental,
Response, Compensation, and Liability Act of 1980 ("CERCLA"), as
amended, the Federal Water Pollution Control Act, as amended, the
Occupational Safety and Health Act of 1970, as amended, the
Resource Conservation and Recovery Act of 1976 ("RCRA"), as
amended, the Safe Drinking Water Act, as amended, the Toxic
Substances Control Act, as amended, the Superfund Amendments and
Reauthorization Act of 1986, as amended, the Hazardous Materials
Transportation Act, as amended, and other environmental
conservation or protection laws. The term "oil" shall have the
meaning specified in OPA, the terms "hazardous substance" and
"release" (or "threatened release") have the meanings specified in
CERCLA, and the terms "solid waste" and "disposal" (or "disposed")
have the meanings specified in RCRA; provided, however, that (i) in
the event either OPA, CERCLA or RCRA is amended so as to broaden
the meaning of any term defined thereby, such broader meaning shall
apply subsequent to the effective date of such amendment and (ii)
to the extent the laws of the state in which any Property of the
Borrower or any Subsidiary is located establish a meaning for
"oil," "hazardous substance," "release," "solid waste" or
"disposal" which is broader than that specified in either OPA,
CERCLA or RCRA, such broader meaning shall apply.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time and any successor statute.
"ERISA Affiliate" shall mean each trade or business (whether
or not incorporated) which together with the Borrower or any
Subsidiary would be deemed to be a "single employer" within the
meaning of section 4001(b)(1) of ERISA or subsections (b), (c), (m)
or (o) of section 414 of the Code.
"ERISA Event" shall mean (i) with respect to any plan, as to
which PBGC has not by regulation waived the requirement of
Section 4043(a) of ERISA that it be notified within 30 days of the
occurrence of such event (provided that a failure to meet the
minimum funding standard of Section 412 of the Code or Section 302
of ERISA, including, without limitation, the failure to make on or
before its due date a required installment under Section 412(m) of
the Code or Section 302(e) of ERISA, shall be a reportable event
regardless of the issuance of any waivers in accordance with
Section 412(d) of the Code) a "Reportable Event" described in
Section 4043 of ERISA and the regulations issued thereunder, (ii)
the withdrawal of the Borrower, any Subsidiary or any ERISA
Affiliate from a Plan during a plan year in which it was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA,
(iii) the filing of a notice of intent to terminate a Plan or the
treatment of a Plan amendment as a termination under Section 4041
of ERISA, (iv) the institution of proceedings to terminate a Plan
by the PBGC or (v) any other event or condition which might
constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Plan.
"Eurodollar Loans" shall mean Loans the interest rates on
which are determined on the basis of rates referred to in the
definition of "Eurodollar Rate".
"Eurodollar Rate" shall mean, with respect to any Eurodollar
Loan, the rate per annum (rounded upwards, if necessary, to the
nearest 1/16 of 1%) quoted by the Agent at approximately 11:00 a.m.
London time (or as soon thereafter as practicable) two (2) Business
Days prior to the first day of the Interest Period for such Loan
for the offering by the Agent to leading banks in the London
interbank market of Dollar deposits having a term comparable to
such Interest Period and in an amount comparable to the principal
amount of the Eurodollar Loan to be made by the Lenders for such
Interest Period.
"Event of Default" shall have the meaning assigned such term
in Section 10.01.
"Excepted Liens" shall mean: (i) Liens for taxes, assessments
or other governmental charges or levies not yet due or which are
being contested in good faith by appropriate action and for which
adequate reserves have been maintained; (ii) Liens in connection
with workmen's compensation, unemployment insurance or other social
security, old age pension or public liability obligations not yet
due or which are being contested in good faith by appropriate
action and for which adequate reserves have been maintained in
accordance with GAAP; (iii) operators', vendors', carriers',
warehousemen's, repairmen's, mechanics', workmen's, materialmen's,
construction or other like Liens arising by operation of law or
lien in favor of operators or co-interest owners under contract in
the ordinary course of business or incident to the exploration,
development, operation and maintenance of Oil and Gas Properties or
statutory landlord's liens, each of which is in respect of
obligations that have not been outstanding more than 90 days or
which are being contested in good faith by appropriate proceedings
and for which adequate reserves have been maintained in accordance
with GAAP; (iv) any Liens reserved in leases or farmout agreements
for rent or royalties and for compliance with the terms of the
farmout agreements or leases in the case of leasehold estates, to
the extent that any such Lien referred to in this clause does not
materially impair the use of the Property covered by such Lien for
the purposes for which such Property is held by the Borrower or any
Subsidiary or materially impair the value of such Property subject
thereto; (v) encumbrances (other than to secure the payment of
borrowed money or the deferred purchase price of Property or
services), easements, restrictions, servitudes, permits,
conditions, covenants, exceptions or reservations in any rights of
way or other Property of the Borrower or any Subsidiary for the
purpose of roads, pipelines, transmission lines, transportation
lines, distribution lines for the removal of gas, oil, coal or
other minerals or timber, and other like purposes, or for the joint
or common use of real estate, rights of way, facilities and
equipment, and defects, irregularities, zoning restrictions and
deficiencies in title of any rights of way or other Property which
in the aggregate do not materially impair the use of such rights of
way or other Property for the purposes of which such rights of way
and other Property are held by the Borrower or any Subsidiary or
materially impair the value of such Property subject thereto; (vi)
deposits of cash or securities to secure the performance of bids,
trade contracts, leases, statutory obligations and other
obligations of a like nature incurred in the ordinary course of
business; (vii) Liens permitted by the Security Instruments ;
(viii) required margin deposits on permitted Hedging Agreements
arising in the ordinary course of business; (ix) Liens on assets or
Properties not owned as of the Closing Date by the Borrower or any
Restricted Subsidiary securing only purchase money Debt of the
Borrower or such Restricted Subsidiary permitted by Section
9.01(f), which Liens are limited to the specific Property the
purchase of which is financed by such Debt; (x) Liens existing at
the time of acquisition by the Borrower or any Restricted
Subsidiary of the majority of the capital stock or other ownership
interests or substantially all of the assets of any other Person or
existing at the time of the merger of any such other Person into
the Borrower or any Restricted Subsidiary, on such capital stock or
other ownership interests or assets so acquired or on the assets of
the Person so merged into the Borrower or such Restricted
Subsidiary; provided, however, that such acquisition or merger (and
the discharge of such Liens referred to in the immediately
succeeding proviso) shall not otherwise result in an Event of
Default or Default; and provided further that all such Liens shall
be discharged within 180 days after the date of the respective
acquisition or merger; (xi) Liens of lessors of Property (in such
capacity) leased by the Borrower or any Restricted Subsidiary
pursuant to an operating lease or permitted capital lease, which
Lien in any such case is limited to the Property leased thereunder;
and (xii) Liens on equity or debt investments in Third Parties
owned by the Borrower or a Restricted Subsidiary (which Lien in any
case is limited to such pledged equity or debt investment) which
secure Debt of Third Parties or other Third Party obligations (or
guaranties thereof); provided that such pledged investments were
initially acquired in accordance with Section 9.03.
"Federal Funds Rate" shall mean, for any day, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
equal to the weighted average of the rates on overnight federal
funds transactions with a member of the Federal Reserve System
arranged by federal funds brokers on such day, as published by the
Federal Reserve Bank of New York on the Business Day next
succeeding such day, provided that (i) if the date for which such
rate is to be determined is not a Business Day, the Federal Funds
Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding
Business Day, and (ii) if such rate is not so published for any
day, the Federal Funds Rate for such day shall be the average rate
charged to the Agent on such day on such transactions as determined
by the Agent.
"Fee Letter" shall mean that certain letter agreement dated
January 18, 2000 from Chase to the Borrower, concerning certain
fees in connection with this Agreement and any agreements or
instruments executed in connection therewith, as the same may be
amended, supplemented or replaced from time to time.
"Financial Statements" shall mean the financial statement or
statements of the Borrower and its Consolidated Subsidiaries
described or referred to in Section 7.02.
"GAAP" shall mean generally accepted accounting principles in
the United States of America in effect from time to time.
"Governmental Authority" shall include the country, the state,
county, city and political subdivisions in which any Person or such
Person's Property is located or which exercises valid jurisdiction
over any such Person or such Person's Property, and any court,
agency, department, commission, board, bureau or instrumentality of
any of them including monetary authorities which exercises valid
jurisdiction over any such Person or such Person's Property.
Unless otherwise specified, all references to Governmental
Authority herein shall mean a Governmental Authority having
jurisdiction over, where applicable, the Borrower, the Subsidiaries
or any of their Property or the Agent, any Lender or any Applicable
Lending Office.
"Governmental Requirement" shall mean any law, statute, code,
ordinance, order, determination, rule, regulation, judgment,
decree, injunction, franchise, permit, certificate, license,
authorization or other directive or requirement (whether or not
having the force of law), including, without limitation,
Environmental Laws, energy regulations and occupational, safety and
health standards or controls, of any Governmental Authority.
"Hedging Agreements" shall mean any commodity, interest rate
or currency swap, cap, floor, collar, forward agreement or other
exchange or protection agreements or any option with respect to any
such transaction.
"Highest Lawful Rate" shall mean, with respect to each Lender,
the maximum nonusurious interest rate, if any, that at any time or
from time to time may be contracted for, taken, reserved, charged
or received on the Notes or on other Indebtedness under laws
applicable to such Lender which are presently in effect or, to the
extent allowed by law, under such applicable laws which may
hereafter be in effect and which allow a higher maximum nonusurious
interest rate than applicable laws now allow.
"Hydrocarbon Interests" shall mean all rights, titles,
interests and estates now or hereafter acquired in and to oil and
gas leases, oil, gas and mineral leases, or other liquid or gaseous
hydrocarbon leases, mineral fee interests, overriding royalty and
royalty interests, net profit interests and production payment
interests, including any reserved or residual interests of whatever
nature.
"Hydrocarbons" shall mean oil, gas, casinghead gas, drip
gasoline, natural gasoline, condensate, distillate, liquid
hydrocarbons, gaseous hydrocarbons and all products refined or
separated therefrom.
"Indebtedness" shall mean any and all amounts owing or to be
owing by the Borrower or any Restricted Subsidiary to the Agent
and/or Lenders in connection with the Loan Documents and the Letter
of Credit Agreements, and any Hedging Agreements now or hereafter
arising between the Borrower or any Restricted Subsidiary and any
Lender or any Affiliate of such Lender and permitted by the terms
of this Agreement and all renewals, refinancings, extensions and/or
rearrangements of any of the above.
"Indemnified Parties" shall have the meaning assigned such
term in Section 12.03(b).
"Indemnity Matters" shall mean any and all actions, suits,
proceedings (including any investigations, litigation or
inquiries), claims, demands and causes of action made or threatened
against a Person and, in connection therewith, all losses,
liabilities, damages (including, without limitation, consequential
damages) or reasonable costs and expenses of any kind or nature
whatsoever incurred by such Person whether caused by the sole or
concurrent negligence of such Person seeking indemnification.
"Initial Funding" shall mean the funding of the initial Loans
or issuance of the initial Letters of Credit, whichever occurs
first, pursuant to Section 6.01 hereof.
"Interest Period" shall mean, with respect to any Eurodollar
Loan, the period commencing on the date such Eurodollar Loan is
made and ending on the numerically corresponding day in the first,
second, third or sixth calendar month thereafter, as the Borrower
may select as provided in Section 2.02 (or such longer period as
may be requested by the Borrower and agreed to by the Majority
Lenders), except that each Interest Period which commences on the
last Business Day of a calendar month (or on any day for which
there is no numerically corresponding day in the appropriate
subsequent calendar month) shall end on the last Business Day of
the appropriate subsequent calendar month.
Notwithstanding the foregoing: (i) no Interest Period may
commence before and end after the Termination Date; (ii) each
Interest Period which would otherwise end on a day which is not a
Business Day shall end on the next succeeding Business Day (or, if
such next succeeding Business Day falls in the next succeeding
calendar month, on the next preceding Business Day); and (iii) no
Interest Period shall have a duration of less than one month and,
if the Interest Period for any Eurodollar Loans would otherwise be
for a shorter period, such Loans shall not be available hereunder.
"LC Commitment" at any time shall mean $7,000,000.00
"LC Exposure" at any time shall mean the aggregate face amount
of all undrawn and uncancelled Letters of Credit and the aggregate
of all amounts drawn under all Letters of Credit and not yet
reimbursed.
"Letter of Credit Agreements" shall mean the written
agreements with the Agent, as issuing lender for any Letter of
Credit, executed or hereafter executed in connection with the
issuance by the Agent of the Letters of Credit, such agreements to
be on the Agent's customary form for letters of credit of
comparable amount and purpose as from time to time in effect or as
otherwise agreed to by the Borrower and the Agent.
"Letters of Credit" shall mean the letters of credit issued
pursuant to Section 2.01(b) and all reimbursement obligations
pertaining to any such letters of credit, and "Letter of Credit"
shall mean any one of the Letters of Credit and the reimbursement
obligations pertaining thereto.
"Lien" shall mean any interest in Property securing an
obligation owed to, or a claim by, a Person other than the owner of
the Property, whether such interest is based on the common law,
statute or contract, and whether such obligation or claim is fixed
or contingent, and including but not limited to (i) the lien or
security interest arising from a mortgage, encumbrance, pledge,
security agreement, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes or (ii) production
payments and the like payable out of Oil and Gas Properties. The
term "Lien" shall include reservations, exceptions, encroachments,
easements, rights of way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances affecting
Property. For the purposes of this Agreement, the Borrower or any
Subsidiary shall be deemed to be the owner of any Property which it
has acquired or holds subject to a conditional sale agreement, or
leases under a financing lease or other arrangement pursuant to
which title to the Property has been retained by or vested in some
other Person in a transaction intended to create a financing.
"Loan Documents" shall mean this Agreement, the Notes and the
Security Instruments.
"Loans" shall mean the loans as provided for by Section
2.01(a).
"Majority Lenders" shall mean, at any time while no Loans are
outstanding, Lenders having at least seventy-five percent (75%) of
the Aggregate Commitments and, at any time while Loans are
outstanding, Lenders holding at least seventy-five percent (75%) of
the outstanding aggregate principal amount of the Loans (without
regard to any sale by a Lender of a participation in any Loan under
Section 12.06(c)).
"Material Adverse Effect" shall mean any material and adverse
effect on (i) the assets, liabilities, financial condition,
business, operations or affairs of the Borrower and the Restricted
Subsidiaries taken as a whole or from the facts represented or
warranted in any Loan Document, or (ii) the ability of the Borrower
and the Restricted Subsidiaries taken as a whole to carry out their
business as at the Closing Date or as proposed as of the Closing
Date to be conducted or meet their obligations under the Loan
Documents on a timely basis.
"Maximum Credit Amount" shall mean, as to each Lender, the
amount set forth opposite such Lender's name on Annex I under the
caption "Maximum Credit Amounts" (as the same may be reduced
pursuant to Section 2.03(b) hereof pro rata to each Lender based on
its Percentage Share) as modified from time to time to reflect any
assignments permitted by Section 12.06(b).
"MMR" shall mean McMoRan Exploration Co., a Delaware
corporation and the sole member of the Borrower.
"Mortgaged Property" shall mean the Property owned by the
Borrower or a Restricted Subsidiary and which is subject to the
Liens existing and to exist under the terms of the Security
Instruments.
"Multiemployer Plan" shall mean a Plan defined as such in Sec-
tion 3(37) or 4001(a)(3) of ERISA.
"net dividends, distributions and redemptions" shall mean the
gross amount of all dividends, distributions and redemptions under
Section 9.04 of the Existing Credit Agreement after August 27,
1999, less the amount of cash contributed to the capital of the
Borrower after August 27, 1999.
"Notes" shall mean the promissory note or notes (whether one
or more) of the Borrower provided for by Section 2.06 and in the
form of Exhibit A hereto, together with any and all renewals,
extensions for any period, increases, rearrangements, substitutions
or modifications thereof.
"Oil and Gas Properties" shall mean Hydrocarbon Interests; the
Properties now or hereafter pooled or unitized with Hydrocarbon
Interests; all presently existing or future unitization, pooling
agreements and declarations of pooled units and the units created
thereby (including without limitation all units created under
orders, regulations and rules of any Governmental Authority) which
may affect all or any portion of the Hydrocarbon Interests; all
operating agreements, contracts and other agreements which relate
to any of the Hydrocarbon Interests or the production, sale,
purchase, exchange or processing of Hydrocarbons from or
attributable to such Hydrocarbon Interests; all Hydrocarbons in and
under and which may be produced and saved or attributable to the
Hydrocarbon Interests, including all oil in tanks, the lands
covered thereby and all rents, issues, profits, proceeds, products,
revenues and other incomes from or attributable to the Hydrocarbon
Interests; all tenements, hereditaments, appurtenances and
Properties in any manner appertaining, belonging, affixed or
incidental to the Hydrocarbon Interests; and all Properties,
rights, titles, interests and estates described or referred to
above, including any and all Property, real or personal, now owned
or hereinafter acquired and situated upon, used, held for use or
useful in connection with the operating, working or development of
any of such Hydrocarbon Interests or Property (excluding drilling
rigs, automotive equipment or other personal property which may be
on such premises for the purpose of drilling a well or for other
similar temporary uses) and including any and all oil xxxxx, gas
xxxxx, injection xxxxx or other xxxxx, buildings, structures, fuel
separators, liquid extraction plants, plant compressors, pumps,
pumping units, field gathering systems, tanks and tank batteries,
fixtures, valves, fittings, machinery and parts, engines, boilers,
meters, apparatus, equipment, appliances, tools, implements,
cables, wires, towers, casing, tubing and rods, surface leases,
rights-of-way, easements and servitudes together with all
additions, substitutions, replacements, accessions and attachments
to any and all of the foregoing.
"Other Taxes" shall have the meaning assigned such term in
Section 4.06(b).
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any entity succeeding to any or all of its functions.
"Percentage Share" shall mean the percentage of the Aggregate
Commitments to be provided by a Lender under this Agreement as
indicated on Annex I hereto, as modified from time to time to
reflect any assignments permitted by Section 12.06(b).
"Person" shall mean any individual, corporation, company,
voluntary association, partnership, joint venture, trust,
unincorporated organization or government or any agency,
instrumentality or political subdivision thereof, or any other form
of entity.
"Plan" shall mean any employee pension benefit plan, as
defined in Section 3(2) of ERISA, which (i) is currently or
hereafter sponsored, maintained or contributed to by the Borrower,
any Subsidiary or an ERISA Affiliate or (ii) was at any time during
the preceding six calendar years sponsored, maintained or
contributed to, by the Borrower, any Subsidiary or an ERISA
Affiliate.
"Post-Default Rate" shall mean, in respect of any principal of
any Loan or any other amount payable by the Borrower under this
Agreement or any Note, a rate per annum during the period
commencing on the date of an Event of Default until such amount is
paid in full or all Events of Default are cured or waived equal to
2% per annum above the Base Rate as in effect from time to time
plus the Applicable Margin (if any), but in no event to exceed the
Highest Lawful Rate provided that, for a Eurodollar Loan, the
"Post-Default Rate" for such principal shall be, for the period
commencing on the date of the Event of Default and ending on the
earlier to occur of the last day of the Interest Period therefor or
the date all Events of Default are cured or waived, 2% per annum
above the interest rate for such Loan as provided in Section
3.02(ii), but in no event to exceed the Highest Lawful Rate.
"Prime Rate" shall mean the rate of interest from time to time
announced publicly by the Agent at the Principal Office as its
prime commercial lending rate. Such rate is set by the Agent as a
general reference rate of interest, taking into account such
factors as the Agent may deem appropriate, it being understood that
many of the Agent's commercial or other loans are priced in
relation to such rate, that it is not necessarily the lowest or
best rate actually charged to any customer and that the Agent may
make various commercial or other loans at rates of interest having
no relationship to such rate.
"Principal Office" shall mean the principal office of the
Agent, presently located at 000 Xxxxxx, Xxxxxxx, Xxxxx 00000 or
such other location as designated by the Agent from time to time.
"Property" shall mean any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"Quarterly Dates" shall mean the last day of each March, June,
September and December, in each year, the first of which shall be
March 31, 2000; provided, however, that if any such day is not a
Business Day, such Quarterly Date shall be the next succeeding
Business Day.
"Redetermination Date" shall have the meaning assigned such
term in Section 2.08(a).
"Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System (or any successor), as the
same may be amended or supplemented from time to time.
"Regulatory Change" shall mean, with respect to any Lender,
any change after the Closing Date in any Governmental Requirement
(including Regulation D) or the adoption or making after such date
of any interpretations, directives or requests applying to a class
of lenders (including such Lender or its Applicable Lending Office)
of or under any Governmental Requirement (whether or not having the
force of law) by any Governmental Authority charged with the
interpretation or administration thereof.
"Required Payment" shall have the meaning assigned such term
in Section 4.04.
"Reserve Report" shall mean a report, in form and substance
satisfactory to the Agent, to be delivered prior to March 1 of each
year, setting forth as of prior year-end: (i) the oil and gas
reserves attributable to certain of the Borrower's and/or any
Restricted Subsidiary's Oil and Gas Properties together with a
projection of the rate of production and future net income, taxes,
operating expenses and capital expenditures with respect thereto as
of such date, based upon the pricing assumptions consistent with
SEC reporting requirements at the time, and (ii) such other
information as the Agent may reasonably request. The term "Reserve
Report" shall also include the information to be provided by the
Borrower pursuant to Section 8.07(a) prior to September 1 of each
year, setting forth, as of July 1 of such year, the information
required in clauses (i) and (ii) of the preceding sentence.
"Responsible Officer" shall mean, as to any Person, the Chief
Executive Officer, the President or any Vice President of such
Person and, with respect to financial matters, the term
"Responsible Officer" shall include the Chief Financial Officer or
the Treasurer of such Person. Unless otherwise specified, all
references to a Responsible Officer herein shall mean a Responsible
Officer of the Borrower.
"Restricted Subsidiary" means any direct or indirect
Subsidiary of the Borrower that is not an Unrestricted Subsidiary.
"Scheduled Redetermination Date" shall have the meaning
assigned such term in Section 2.08(d).
"SEC" shall mean the Securities and Exchange Commission or any
successor Governmental Authority.
"Security Instruments" shall mean the Letters of Credit, the
Letter of Credit Agreements, the Fee Letter, the agreements or
instruments described or referred to in Exhibit E, and any and all
other agreements or instruments now or hereafter executed and
delivered by the Borrower, any Restricted Subsidiary or any other
Person (other than participation or similar agreements between any
Lender and any other lender or creditor with respect to any
Indebtedness pursuant to this Agreement) in connection with, or as
security for the payment or performance of the Notes or this
Agreement, or reimbursement obligations under the Letters of
Credit, as such agreements may be amended, supplemented or restated
from time to time.
"Special Entity" shall mean any joint venture, limited
liability company or partnership, general or limited partnership or
any other type of partnership or company other than a corporation
in which the Borrower or one or more of its other Subsidiaries is
a member, owner, partner or joint venturer and owns, directly or
indirectly, at least a majority of the equity of such entity or
controls such entity, but excluding any tax partnerships that are
not classified as partnerships under state law. For purposes of
this definition, any Person which owns directly or indirectly an
equity investment in another Person which allows the first Person
to manage or elect managers who manage the normal activities of
such second Person will be deemed to "control" such second Person
(e.g. a sole general partner controls a limited partnership).
"Subsidiary" shall mean (i) any corporation of which at least
a majority of the outstanding shares of stock having by the terms
thereof ordinary voting power to elect a majority of the board of
directors of such corporation (irrespective of whether or not at
the time stock of any other class or classes of such corporation
shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned or
controlled by the Borrower or one or more of its Subsidiaries or by
the Borrower and one or more of its Subsidiaries and (ii) any
Special Entity. Unless otherwise indicated herein, each reference
to the term "Subsidiary" shall mean a Subsidiary of the Borrower.
"Taxes" shall have the meaning assigned such term in
Section 4.06(a).
"Termination Date" shall mean, unless the Commitments are
sooner terminated pursuant to Sections 2.03(b) or 10.02 hereof,
January 14, 2002.
"Third Party" shall have the meaning assigned such term in
Section 9.03.
"Threshold Amount" shall mean (i) during the period from and
including the Closing Date to but excluding April 28, 2000,
$30,000,000, subject to optional monthly redeterminations pursuant
to Section 2.08(d), and (ii) on April 28, 2000 and at all times
thereafter, the amount equal to the Borrowing Base.
"Threshold Amount Utilization Percentage" shall mean, as of
any day, the fraction expressed as a percentage, the numerator of
which is the sum of (i) the LC Exposure, plus (ii) the aggregate
principal amount of all outstanding Loans on such day, and the
denominator of which is the Threshold Amount in effect on such day.
For purposes of this calculation, the value of the denominator
shall be limited to the lesser of (i) the Threshold Amount then in
effect, or (ii) the Aggregate Commitments.
"Type" shall mean, with respect to any Loan, a Base Rate Loan
or a Eurodollar Loan.
"Unrestricted Subsidiary" shall mean (i) any of the
Subsidiaries listed on Schedule 7.14 hereto as an Unrestricted
Subsidiary, (ii) any Subsidiary of any Unrestricted Subsidiary,
(iii) any surviving Person (other than the Borrower or a Restricted
Subsidiary) into which any of such Persons referred to in clause
(i) or (ii) is merged or consolidated and (iv) any Subsidiary
organized after the date of this Agreement and designated as an
Unrestricted Subsidiary by the Borrower (pursuant to Section
9.16(b) hereof). By written notice to the Agent, the Borrower may
(x) declare any Unrestricted Subsidiary to be a Restricted
Subsidiary and such former Unrestricted Subsidiary shall thereafter
be deemed to be a Restricted Subsidiary for all purposes of this
Agreement (subject to the limitations of this Agreement and
pursuant to Section 9.16 hereof) or (y) at any time other than when
a Default or Event of Default has occurred and is continuing or
would exist after giving effect to such declaration, in any fiscal
year, declare one or more Restricted Subsidiaries, to be an
Unrestricted Subsidiary, subject to the limitations contained in
Section 9.03 hereof, and any such former Restricted Subsidiary
shall thereafter be deemed to be an Unrestricted Subsidiary for all
purposes of this Agreement.
"Wholly-Owned Subsidiary" shall mean, as to the Borrower, any
Subsidiary of which all of the outstanding shares of stock having
by the terms thereof ordinary voting power to elect the board of
directors of such corporation, other than directors' qualifying
shares, are owned or controlled by the Borrower or one or more of
the Wholly-Owned Subsidiaries or by the Borrower and one or more of
the Wholly-Owned Subsidiaries.
Section 1.03 Accounting Terms and Determinations.
Unless otherwise specified herein, all accounting terms used herein
shall be interpreted, all determinations with respect to accounting
matters hereunder shall be made, and all financial statements and
certificates and reports as to financial matters required to be
furnished to the Agent or the Lenders hereunder shall be prepared,
in accordance with GAAP, applied on a basis consistent with the
audited financial statements of MMR referred to in Section 7.02
(except for changes concurred with by MMR's independent public
accountants).
ARTICLE II
Commitments
Section 2.01 Loans and Letters of Credit.
(a) Loans. Each Lender severally agrees, on the terms
of this Agreement, to make Loans to the Borrower during the
period from and including (i) the Closing Date or (ii) such
later date that such Lender becomes a party to this Agreement
as provided in Section 12.06(b), to but excluding, the
Termination Date in an aggregate principal amount at any one
time outstanding up to but not exceeding the amount of such
Lender's Commitment as then in effect; provided, however, that
the aggregate principal amount of all Loans by all Lenders
hereunder at any one time outstanding together with the LC
Exposure shall not exceed the Aggregate Commitments. Subject
to the terms of this Agreement, during the period from the
Closing Date to but excluding the Termination Date, the
Borrower may borrow, repay and reborrow the amount described
in this Section 2.01(a).
(b) Letters of Credit. During the period from and
including the Closing Date to but excluding the Termination
Date, the Agent, as issuing bank for the Lenders, agrees, on
the terms of this Agreement, to extend credit for the account
of the Borrower at any time and from time to time by issuing,
renewing, extending or reissuing Letters of Credit; provided
however, the LC Exposure at any one time outstanding shall not
exceed the lesser of (i) the LC Commitment or (ii) the
Aggregate Commitments, as then in effect, minus the aggregate
principal amount of all Loans then outstanding. The Lenders
shall participate in such Letters of Credit according to their
respective Percentage Shares.
(c) Limitation on Types of Loans. Subject to the other
terms and provisions of this Agreement, at the option of the
Borrower, the Loans may be Base Rate Loans or Eurodollar
Loans; provided that, without the prior written consent of the
Majority Lenders, no more than six (6) Eurodollar Loans may be
outstanding at any time to any Lender.
Section 2.02 Borrowings, Continuations and Conversions,
Letters of Credit.
(a) Borrowings. The Borrower shall give the Agent
(which shall promptly notify the Lenders) advance notice as
hereinafter provided of each borrowing hereunder, which shall
specify the aggregate amount of such borrowing, the Type and
the date (which shall be a Business Day) of the Loans to be
borrowed and (in the case of Eurodollar Loans) the duration of
the Interest Period therefor.
(b) Minimum Amounts. All Base Rate Loan borrowings
shall be in amounts of at least $1,000,000 or the remaining
balance of the Aggregate Commitments, if less, or any whole
multiple of $1,000,000 in excess thereof, and all Eurodollar
Loans shall be in amounts of at least $1,000,000 or any whole
multiple of $1,000,000 in excess thereof.
(c) Notices. The initial borrowing and all subsequent
borrowings, continuations and conversions shall require
advance written notice to the Agent (which shall promptly
notify the Lenders) in the form of Exhibit B hereto (or
telephonic notice promptly confirmed by such a written
notice), which in each case may be revocable or irrevocable,
from the Borrower to be received by the Agent not later than
11:00 a.m. Houston, Texas time on the date of each Base Rate
Loan borrowing and three Business Days prior to the date of
each Eurodollar Loan borrowing, continuation or conversion.
Without in any way limiting the Borrower's obligation to
confirm in writing any telephonic notice, the Agent may act
without liability upon the basis of telephonic notice believed
by the Agent in good faith to be from the Borrower prior to
receipt of written confirmation. In each such case, the
Borrower hereby waives the right to dispute the Agent's record
of the terms of such telephonic notice except in the case of
gross negligence or willful misconduct by the Agent.
(d) Continuation Options. Subject to the provisions
made in this Section 2.02(d), the Borrower may elect to
continue all or any part of any Eurodollar Loan beyond the
expiration of the then current Interest Period relating
thereto by giving advance notice as provided in Section
2.02(c) to the Agent (which shall promptly notify the Lenders)
of such election, specifying the amount of such Loan to be
continued and the Interest Period therefor. In the absence of
such a timely and proper election, the Borrower shall be
deemed to have elected to convert such Eurodollar Loan to a
Base Rate Loan pursuant to Section 2.02(e). All or any part
of any Eurodollar Loan may be continued as provided herein,
provided that (i) any continuation of any such Loan shall be
(as to each Loan as continued for an applicable Interest
Period) in amounts of at least $1,000,000 or any whole
multiple of $1,000,000 in excess thereof and (ii) no Default
shall have occurred and be continuing. If a Default shall
have occurred and be continuing, each Eurodollar Loan shall be
converted to a Base Rate Loan on the last day of the Interest
Period applicable thereto.
(e) Conversion Options. The Borrower may elect to
convert all or any part of any Eurodollar Loan on the last day
of the then current Interest Period relating thereto to a Base
Rate Loan by giving advance notice to the Agent (which shall
promptly notify the Lenders) of such election. Subject to the
provisions made in this Section 2.02(e), the Borrower may
elect to convert all or any part of any Base Rate Loan at any
time and from time to time to a Eurodollar Loan by giving
advance notice as provided in Section 2.02(c) to the Agent
(which shall promptly notify the Lenders) of such election.
All or any part of any outstanding Loan may be converted as
provided herein, provided that (i) any conversion of any Base
Rate Loan into a Eurodollar Loan shall be (as to each such
Loan into which there is a conversion for an applicable
Interest Period) in amounts of at least $1,000,000 or any
whole multiple of $1,000,000 in excess thereof and (ii) no
Default shall have occurred and be continuing. If a Default
shall have occurred and be continuing, no Base Rate Loan may
be converted into a Eurodollar Loan.
(f) Advances. Not later than 1:00 p.m. Houston, Texas
time on the date specified for each borrowing hereunder, each
Lender shall make available the amount of the Loan to be made
by it on such date to the Agent, to an account which the Agent
shall specify, in immediately available funds, for the account
of the Borrower. The amounts so received by the Agent shall,
subject to the terms and conditions of this Agreement, be made
available to the Borrower by depositing the same, in
immediately available funds, in an account of the Borrower,
designated by the Borrower and maintained at the Principal
Office.
(g) Letters of Credit. The Borrower shall give the
Agent (which shall promptly notify the Lenders of such
request) advance revocable or irrevocable notice to be
received by the Agent not later than 11:00 a.m. Houston, Texas
time not less than three (3) Business Days prior thereto of
each request for the issuance and at least thirty (30)
Business Days prior to the date of the renewal or extension of
a Letter of Credit hereunder which request shall specify the
amount of such Letter of Credit, the date (which shall be a
Business Day) such Letter of Credit is to be issued, renewed
or extended, the duration thereof, the name and address of the
beneficiary thereof, the form of the Letter of Credit and such
other information as the Agent may reasonably request all of
which shall be reasonably satisfactory to the Agent. Subject
to the terms and conditions of this Agreement, on the date
specified for the issuance, renewal or extension of a Letter
of Credit, the Agent shall issue such Letter of Credit to the
beneficiary thereof.
In conjunction with the issuance of each Letter of
Credit, the Borrower shall execute a Letter of Credit
Agreement. In the event of any conflict between any provision
of a Letter of Credit Agreement and this Agreement, the
Borrower, the Agent and the Lenders hereby agree that the
provisions of this Agreement shall govern.
The Agent will send to the Borrower and each Lender, upon
issuance of any Letter of Credit, or an amendment thereto, a
true and complete copy of such Letter of Credit, or such
amendment thereto.
Section 2.03 Changes of Commitments.
(a) The Aggregate Commitments shall at all times be
equal to the lesser of (i) the Aggregate Maximum Credit Amount
after adjustments resulting from reductions pursuant to
Section 2.03(b) hereof or (ii) the Borrowing Base as
determined from time to time pursuant to Section 2.08(f)
hereof.
(b) The Borrower shall have the right to terminate or to
reduce the amount of the Aggregate Maximum Credit Amounts at
any time or from time to time upon not less than three (3)
Business Days' prior notice to the Agent (which shall promptly
notify the Lenders) of each such termination or reduction,
which notice shall specify the effective date thereof and the
amount of any such reduction (which shall not be less than
$2,500,000 or any whole multiple of $1,000,000 in excess
thereof) and may be revocable or irrevocable and effective
only upon receipt by the Agent. The Aggregate Maximum Credit
Amounts once terminated or reduced pursuant to this Section
2.03(b) may not be reinstated.
Section 2.04 Fees.
(a) The Borrower agrees to pay to the Agent, for the
account of each Lender, a commitment fee on the daily average
of the amount by which the Aggregate Commitments exceed the
sum of (A) the LC Exposure, plus (B) the aggregate principal
amount of all outstanding Loans for the period from and
including the Closing Date up to but excluding the earlier of
the date the Aggregate Commitments are terminated or the
Termination Date at a rate per annum set forth at the
appropriate intersection in the table shown below based upon
the Threshold Amount Utilization Percentage as in effect from
time to time on each day during the period in question:
Threshold Amount Utilization Percentage Commitment Fee
--------------------------------------- ---------------
Less than or equal to 33% 0.50%
Greater than 33% but less than
or equal to 66% 0.50%
Greater than 66% but less than
or equal to 100% 0.50%
Greater than 100% 0.50%
All such commitment fees shall be calculated on the basis of
a year of 365 (or, in a leap year, 366) days for the actual number
of days elapsed. The accrued commitment fees shall be due and
payable quarterly in arrears on each Quarterly Date and on the
earlier of the date the Aggregate Commitments are terminated or the
Termination Date.
(b) The Borrower agrees to pay the Agent, for the
account of each Lender, commissions for issuing the Letters of
Credit on the daily average outstanding of the maximum
liability of the Agent existing from time to time under such
Letter of Credit (calculated separately for each Letter of
Credit) at the applicable per annum percentage set forth at
the appropriate intersection in the table shown below,
provided that each Letter of Credit shall bear a minimum
commission of $300.00. Each Letter of Credit shall be deemed
to be outstanding up to the full face amount of the Letter of
Credit until the Agent has received the canceled Letter of
Credit or a written cancellation of the Letter of Credit from
the beneficiary of such Letter of Credit in form and substance
acceptable to the Agent, or for any reductions in the amount
of the Letter of Credit (other than from a drawing), written
notification from the beneficiary of such Letter of Credit.
Such commissions are payable quarterly in arrears.
Threshold Amount Utilization Percentage Letter of Credit Fee
--------------------------------------- ---------------------
Less than or equal to 33% 1.75%
Greater than 33% but less than
or equal to 66% 2.00%
Greater than 66% but less than
or equal to 100% 2.25%
Greater than 100% 2.75%
(c) The Agent, for its own account, shall retain 0.125%
of the Letter of Credit fee (as described in subsection (b)
above) as an issuing fee and shall pay the balance of such
Letter of Credit fee to the Lenders pro rata.
(d) The Borrower shall pay to the Agent for its account
such other fees as are set forth in the Fee Letter on the
dates specified therein to the extent not paid prior to the
Closing Date.
(e) If the Borrower exercises its option to cause the
Lenders to redetermine the Borrowing Base pursuant to Section
2.08(d), then for each exercise of such option, the Borrower
shall pay a fee to the Agent in the amount of $2,000 to be
shared by the Lenders pro rata in proportion to their
Percentage Share. Such fee shall be due and payable at the
time the Borrower gives notice of its election to exercise
such option.
Section 2.05 Several Obligations. The failure of any
Lender to make any Loan to be made by it or to provide funds for
disbursements or reimbursements under Letters of Credit on the date
specified therefor shall not relieve any other Lender of its
obligation to make its Loan or provide funds on such date, but no
Lender shall be responsible for the failure of any other Lender to
make a Loan to be made by such other Lender or to provide funds to
be provided by such other Lender.
Section 2.06 Notes. The Loans made by each Lender shall
be evidenced by a single promissory note of the Borrower in
substantially the form of Exhibit A hereto, dated (i) the Closing
Date or (ii) the effective date of an Assignment pursuant to
Section 12.06(b), payable to the order of such Lender in a
principal amount equal to its Maximum Credit Amount as in effect
and otherwise duly completed and such substitute Notes as required
by Section 12.06(b). The date, amount, Type, interest rate and
Interest Period of each Loan made by each Lender, and all payments
made on account of the principal thereof, shall be recorded by such
Lender on its books for its Notes, and, prior to any transfer, may
be endorsed by such Lender on a schedule attached to such Notes or
any continuation thereof or on any separate record maintained by
such Lender. Failure to make any such notation or to attach a
schedule shall not affect any Lender's or the Borrower's rights or
obligations in respect of such Loans or affect the validity of such
transfer by any Lender of its Notes.
Section 2.07 Prepayments.
(a) The Borrower may prepay the Base Rate Loans upon one
(1) Business Day's prior notice to the Agent (which shall
promptly notify the Lenders), which notice shall specify the
prepayment date (which shall be a Business Day) and the amount
of the prepayment (which shall be at least $1,000,000 or the
remaining aggregate principal balance outstanding on the
Notes) and may be revocable or irrevocable and effective only
upon receipt by the Agent, provided that interest on the
principal prepaid, accrued to the prepayment date, shall be
paid on the prepayment date. The Borrower may prepay all or
any portion of Eurodollar Loans upon not less than three (3)
Business Day's prior notice to the Agent (which shall promptly
notify the Lenders), which notice shall specify the prepayment
date (which shall be a Business Day) and the amount of the
prepayment (which shall be at least $1,000,000 or the
remaining aggregate principal balance outstanding on the
Notes) and may be revocable or irrevocable and effective only
upon receipt by the Agent, provided that interest on the
principal prepaid, accrued to the prepayment date, shall be
paid on the prepayment date. In addition, prepayments of
Eurodollar Loans shall be subject to the terms of Section
5.05.
(b) If, after giving effect to any termination or
reduction of the Aggregate Maximum Credit Amounts pursuant to
Section 2.03(b), the outstanding aggregate principal amount of
the Loans plus the LC Exposure exceeds the Aggregate Maximum
Credit Amounts, the Borrower shall (i) prepay the Loans on the
date of such termination or reduction in an aggregate
principal amount equal to the excess, together with interest
on the principal amount paid accrued to the date of such
prepayment and (ii) if any excess remains after prepaying all
of the Loans, pay to the Agent on behalf of the Lenders an
amount equal to the excess to be held as cash collateral as
provided in Section 2.10(b) hereof.
(c) Upon any adjustment or redetermination of the amount
of the Borrowing Base in accordance with Sections 2.07(e),
2.07(f), 2.08, 6.02, 8.08(c), 9.01(e), 9.03(i) or 9.12 or
otherwise, if the adjusted or redetermined Borrowing Base is
less than the sum of the aggregate outstanding principal
amount of the Loans and the LC Exposure (a "Borrowing Base
Deficiency"), then (i) the Borrower shall cure such Borrowing
Base Deficiency by prepaying the Loans or reducing the LC
Exposure in an aggregate principal amount equal to such
excess, together with interest on the principal amount paid
which has accrued to the date of such prepayment, within 45
days of receipt of written notice thereof unless such
Borrowing Base Deficiency occurs before April 28, 2000 at a
time when the Aggregate Commitments exceed the Threshold
Amount, in which case any such Borrowing Base Deficiency shall
be due and payable on the earlier of the 30th day following
the Borrower's receipt of written notice thereof or April 28,
2000. If such Borrowing Base Deficiency is not cured by the
30th or 45th day, as applicable, after the Borrower=s receipt
of notice of such Borrowing Base Deficiency (or on April 28,
2000 with respect to a Borrowing Base Deficiency existing on
such date), then such Borrowing Base Deficiency shall
constitute an Event of Default hereunder.
(d) Following a casualty loss to all or any part of the
Oil and Gas Properties constituting the Borrowing Base, all
insurance proceeds payable to the Borrower or a Restricted
Subsidiary, as applicable, and not used by the Borrower or
such Restricted Subsidiary to repair or replace such
Properties shall be used by the Borrower or such Restricted
Subsidiary to prepay the Loans. The Borrowing Base shall be
reduced by an amount reasonably determined at the time by the
Agent to reflect the contribution to the Borrowing Base of
such Oil and Gas Properties not repaired or replaced and such
Oil and Gas Properties shall no longer be included in the
Borrowing Base.
(e) Upon the request of the Borrower, the Agent shall
release any Oil and Gas Properties from the Lien of the
Security Documents; provided that (i) at the time of such
request, no Event of Default shall have occurred and be
continuing and (ii) with respect to Oil and Gas Properties
included in the Borrowing Base, the Borrowing Base shall be
reduced by an amount reasonably determined at the time by the
Agent to reflect the contribution to the Borrowing Base of
such Oil and Gas Properties so released and any such Oil and
Gas Properties so released shall no longer be included in the
Borrowing Base.
(f) Prepayments permitted or required under this Section
2.07 shall be without notice, premium or penalty, except as
required under Section 5.05 for prepayment of Eurodollar
Loans. Any prepayments on the Loans may be reborrowed subject
to the then effective Aggregate Commitments.
Section 2.08 Borrowing Base; Threshold Amount.
(a) During the period from and after the Closing Date
until the first scheduled redetermination of the Borrowing
Base (scheduled to be April 1, 2000) in accordance with this
Section 2.08, the amount of (i) the Borrowing Base shall be
$35,000,000; and (ii) the Threshold Amount shall be
$30,000,000. The Borrowing Base shall be redetermined in
accordance with Sections 2.08(b), 2.08(c) and 2.08(d) by the
Agent with the concurrence of the Majority Lenders. Upon any
redetermination of the Borrowing Base, such redetermination
shall remain in effect until the next successive
Redetermination Date. "Redetermination Date" shall mean the
date that the redetermined Borrowing Base becomes effective
subject to the notice requirements specified in Section
2.08(e) both for scheduled redeterminations and unscheduled
redeterminations. On April 28, 2000, and at all times
thereafter, the Threshold Amount shall be equal to the amount
of the Borrowing Base then in effect.
(b) Upon receipt of the reports required by Section 8.07
and such other reports, data and supplemental information as
may from time to time be reasonably requested by the Agent
(the "Engineering Reports"), the Agent will redetermine the
Borrowing Base. Such redetermination will be in accordance
with its normal and customary procedures for evaluating oil
and gas reserves and other related assets as such exist at
that particular time. The Agent, in its sole discretion, may
make adjustments to the rates, volumes and prices and other
assumptions set forth therein in accordance with its normal
and customary procedures for evaluating oil and gas reserves
and other related assets as such exist at that particular
time. The Agent shall propose to the Lenders a new Borrowing
Base (i) within 14 days following receipt by the Agent and the
Lenders of the applicable Engineering Reports in a timely and
complete manner, with respect to the first scheduled
redetermination of the Borrowing Base scheduled to occur on
April 1, 2000, and (ii) within 30 days following receipt by
the Agent and the Lenders of the applicable Engineering
Reports in a timely and complete manner, with respect to each
scheduled redetermination of the Borrowing Base thereafter.
After having received notice of such proposal by the Agent,
each Lender shall have 14 days to agree or disagree with such
proposal. If at the end of the 14 days, any Lender shall have
not communicated its approval or disapproval, such silence
shall be deemed to be an approval. If within such 14 day
period the Majority Lenders have approved or been deemed to
approve the Agent's proposal, then the Agent's proposal shall
be the new Borrowing Base. If however, the Majority Lenders
have not approved or been deemed to approve the Agent's
proposal within 14 days, the Majority Lenders shall, within a
reasonable period of time, agree on a new Borrowing Base. The
first scheduled redetermination of the Borrowing Base is to
occur on April 1, 2000.
(c) The Agent may exclude any Oil and Gas Property or
portion of production therefrom or any income from any other
Property from the Borrowing Base, at any time, because title
information is not reasonably satisfactory, such Property is
not Mortgaged Property or such Property is not assignable.
(d) (i) So long as any of the Commitments are in effect
and until payment in full of all Loans hereunder, on or around
April 1, 2000, and on or around the fifteenth (15th) day of
each October and April thereafter, commencing October 15, 2000
(each being a "Scheduled Redetermination Date"), the Lenders
shall redetermine the amount of the Borrowing Base in
accordance with Section 2.08(b). (ii) In addition to the
scheduled redeterminations pursuant to clause (i) of this
Section 2.08(d), the following optional redeterminations may
occur: (x) At any time after the first Scheduled
Redetermination Date, the Majority Lenders or the Borrower may
each initiate a redetermination of the Borrowing Base as they
so elect; provided, however, only one such unscheduled
redetermination may be elected between each Scheduled
Redetermination Date. If such redetermination is initiated by
the Majority Lenders, the Agent shall specify in writing to
the Borrower the date on which the Borrower is to furnish a
Reserve Report in accordance with Section 8.07(b) and the date
on which such redetermination is to occur. (y) For the period
from and after the Closing Date to and including the earlier
of April 28, 2000, or the date on which the Aggregate
Commitments equal the Threshold Amount, the Agent, with the
concurrence of the Majority Lenders, shall have the right to
redetermine the Borrowing Base and/or the Threshold Amount
once during each calendar month to the extent and only to the
extent that the Agent reasonably determines that there has
been a material adverse change in the value of the oil and gas
reserves constituting the Borrowing Base. Each such
redetermination shall be made in accordance with
Sections 2.08(b) and (c); provided, however, the Agent shall
propose to the Lenders the redetermined Borrowing Base and/or
Threshold Amount within 14 days following receipt by the Agent
and the Lenders of the Engineering Reports in a timely and
complete manner. After having received notice of such
proposal by the Agent, the Majority Lenders shall have 14 days
to agree or disagree with such proposal. If at the end of the
14 days, the Majority Lenders have not communicated their
approval or disapproval, such silence shall be deemed to be an
approval and the Agent's proposal shall be the new Borrowing
Base. If however, the Majority Lenders notify Agent within
14 days of their disapproval, the Majority Lenders shall,
within a reasonable period of time, agree on a new Borrowing
Base.
(e) The Agent shall promptly notify in writing the
Borrower and the Lenders of the new Borrowing Base. Any
redetermination of the Borrowing Base shall not be in effect
until written notice is received by the Borrower.
(f) Upon the Borrower's receipt of written notice from
the Agent of the amount of the Borrowing Base then in effect,
the Agent and the Borrower shall mutually agree on the portion
of such Borrowing Base to be accepted by the Borrower as the
Borrowing Base. During the period from and after the Closing
Date to and including the effective date of the next
designation of the Borrowing Base in accordance with this
Section 2.08(f), the amount of the Borrowing Base shall be
$35,000,000.
(g) In addition to the scheduled and unscheduled
redeterminations of the Borrowing Base pursuant to this
Section 2.08, the Borrowing Base in effect from time to time
is subject to reductions and adjustments made in accordance
with Sections 2.07(e), 2.07(f), 8.08(c), 9.01(e), 9.03(i) or
9.13.
(h) So long as any of the Commitments are in effect or
any LC Exposure or Loans are outstanding hereunder, the Loans
and Letters of Credit shall be governed by the then effective
Borrowing Base.
(i) At no time shall the Threshold Amount exceed the
Borrowing Base.
Section 2.09 Assumption of Risks. The Borrower assumes
all risks of the acts or omissions of any beneficiary of any Letter
of Credit or any transferee thereof with respect to its use of such
Letter of Credit. Neither the Agent (except in the case of willful
misconduct or bad faith on the part of the Agent or any of its
employees), its correspondents nor any Lender shall be responsible
for the validity, sufficiency or genuineness of certificates or
other documents or any endorsements thereon, even if such
certificates or other documents should in fact prove to be invalid,
insufficient, fraudulent or forged; for errors, omissions,
interruptions or delays in transmissions or delivery of any
messages by mail, telex, or otherwise, whether or not they be in
code; for errors in translation or for errors in interpretation of
technical terms; the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any
Letter of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; the failure of any beneficiary or any
transferee of any Letter of Credit to comply fully with conditions
required in order to draw upon any Letter of Credit; or for any
other consequences arising from causes beyond the Agent's control
or the control of the Agent's correspondents. In addition, neither
the Agent nor any Lender shall be responsible for any error,
neglect, or default of any of the Agent's correspondents; and none
of the above shall affect, impair or prevent the vesting of any of
the Agent's or any Lender's rights or powers hereunder or under the
Letter of Credit Agreements, 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 of any
matter contained therein regardless of any notice or information to
the contrary. In furtherance and not in limitation of the
foregoing provisions, the Borrower agrees that any action, inaction
or omission taken or not taken by the Agent or by any correspondent
for the Agent in good faith in connection with any Letter of
Credit, or any related drafts, certificates, documents or
instruments, shall be binding on the Borrower and shall not put the
Agent or its correspondents under any resulting liability to the
Borrower.
Section 2.10 Obligation to Reimburse and to Prepay.
(a) If a disbursement by the Agent is made under any
Letter of Credit, the Borrower shall pay to the Agent within
two (2) Business Days after notice of any such disbursement is
received by the Borrower, the amount of each such disbursement
made by the Agent under the Letter of Credit (if such payment
is not sooner effected as may be required under this Section
2.10 or under other provisions of the Letter of Credit),
together with interest on the amount disbursed from and
including the date of disbursement until payment in full of
such disbursed amount at a varying rate per annum equal to (i)
the then applicable interest rate for Base Rate Loans through
the second Business Day after notice of such disbursement is
received by the Borrower and (ii) thereafter, the Post-Default
Rate for Base Rate Loans (but in no event to exceed the
Highest Lawful Rate) for the period from and including the
third Business Day following the date of notice of such
disbursement to and including the date of repayment in full of
such disbursed amount. The obligations of the Borrower under
this Agreement with respect to each Letter of Credit shall be
absolute, unconditional and irrevocable and shall be paid or
performed strictly in accordance with the terms of this
Agreement under all circumstances whatsoever, including,
without limitation, but only to the fullest extent permitted
by applicable law, the following circumstances: (i) any lack
of validity or enforceability of this Agreement, any Letter of
Credit or any of the Security Instruments; (ii) any amendment
or waiver of (including any default), or any consent to
departure from this Agreement (except to the extent permitted
by any amendment or waiver), any Letter of Credit or any of
the Security Instruments; (iii) the existence of any claim,
set-off, defense or other rights which the Borrower may have
at any time against the beneficiary of any Letter of Credit or
any transferee of any Letter of Credit (or any Persons for
whom any such beneficiary or any such transferee may be
acting), the Agent, any Lender or any other Person, whether in
connection with this Agreement, any Letter of Credit, the
Security Instruments, the transactions contemplated hereby or
any unrelated transaction; (iv) any statement, certificate,
draft, notice or any other document presented under any Letter
of Credit proves to have been forged, fraudulent, insufficient
or invalid in any respect or any statement therein proves to
have been untrue or inaccurate in any respect whatsoever; (v)
payment by the Agent under any Letter of Credit against
presentation of a draft or certificate which appears on its
face to comply, but does not comply, with the terms of such
Letter of Credit; and (vi) any other circumstance or happening
whatsoever, whether or not similar to any of the foregoing.
Notwithstanding anything in this Agreement to the contrary,
the Borrower will not be liable for payment or performance
that results from the gross negligence or willful misconduct
of the Agent, except (i) where the Borrower or any Subsidiary
actually recovers the proceeds for itself or the Agent of any
payment made by the Agent in connection with such gross
negligence or willful misconduct or (ii) in cases where the
Agent makes payment to the named beneficiary of a Letter of
Credit.
(b) In the event of the occurrence of any Event of
Default, a payment or prepayment pursuant to Sections 2.07(b),
(c) and (d) hereof or the maturity of the Notes, whether by
acceleration or otherwise, an amount equal to the LC Exposure
(or the excess in the case of Section 2.07(b)) shall be deemed
to be forthwith due and owing by the Borrower to the Agent and
the Lenders as of the date of any such occurrence; and the
Borrower's obligation to pay such amount shall be absolute and
unconditional, without regard to whether any beneficiary of
any such Letter of Credit has attempted to draw down all or a
portion of such amount under the terms of a Letter of Credit,
and, to the fullest extent permitted by applicable law, shall
not be subject to any defense or be affected by a right of
set-off, counterclaim or recoupment which the Borrower may now
or hereafter have against any such beneficiary, the Agent, the
Lenders or any other Person for any reason whatsoever. Such
payments shall be held by the Agent on behalf of the Lenders
as cash collateral securing the LC Exposure in an interest
bearing account or accounts at the Principal Office; and the
Borrower hereby grants to and by its deposit with the Agent
grants to the Agent a security interest in such cash
collateral. In the event of any such payment by the Borrower
of amounts contingently owing under outstanding Letters of
Credit and in the event that thereafter drafts or other
demands for payment complying with the terms of such Letters
of Credit are not made prior to the respective expiration
dates thereof, the Agent agrees, if no Event of Default has
occurred and is continuing or if no other amounts are
outstanding under this Agreement, the Notes or the Security
Instruments, to remit to the Borrower amounts for which the
contingent obligations evidenced by the Letters of Credit have
ceased.
(c) Each Lender severally and unconditionally agrees
that it shall promptly reimburse the Agent an amount equal to
such Lender's Percentage Share of any disbursement made by the
Agent under any Letter of Credit that is not reimbursed
according to this Section 2.10.
Section 2.11 Lending Offices. The Loans of each Type
made by each Lender shall be made and maintained at such Lender's
Applicable Lending Office for Loans of such Type.
ARTICLE III
Payments of Principal and Interest
Section 3.01 Repayment of Loans. The Borrower will pay
to the Agent, for the account of each Lender, the principal
payments required by this Section 3.01. On the Termination Date
the Borrower shall repay the outstanding aggregate principal and
accrued and unpaid interest under the Notes.
Section 3.02 Interest. The Borrower will pay to the
Agent, for the account of each Lender, interest on the unpaid
principal amount of each Loan made by such Lender for the period
commencing on the date such Loan is made to but excluding the date
such Loan shall be paid in full, at the following rates per annum:
(i) if such a Loan is a Base Rate Loan, the Base
Rate (as in effect from time to time) plus the Applicable
Margin, but in no event to exceed the Highest Lawful
Rate; and
(ii) if such a Loan is a Eurodollar Loan, for each
Interest Period relating thereto, the Eurodollar Rate for
such Loan plus the Applicable Margin, but in no event to
exceed the Highest Lawful Rate.
Notwithstanding the foregoing, the Borrower will pay to the Agent,
for the account of each Lender interest at the applicable Post-
Default Rate on any principal of any Loan made by such Lender, and
(to the fullest extent permitted by law) on any other amount
payable by the Borrower hereunder, under any Loan Document or under
any Note held by such Lender to or for account of such Lender, for
the period commencing on the date of an Event of Default until the
same is paid in full or all Events of Default are cured or waived.
Accrued interest on Base Rate Loans shall be payable on each
Quarterly Date commencing on March 31, 2000, and accrued interest
on each Eurodollar Loan shall be payable on the last day of the
Interest Period therefor and, if such Interest Period is longer
than three months at three-month intervals following the first day
of such Interest Period, except that interest payable at the Post-
Default Rate shall be payable from time to time on demand and
interest on any Eurodollar Loan that is converted into a Base Rate
Loan (pursuant to Section 5.04) shall be payable on the date of
conversion (but only to the extent so converted).
Promptly after the determination of any interest rate provided
for herein or any change therein, the Agent shall notify the
Lenders to which such interest is payable and the Borrower thereof.
Each determination by the Agent of an interest rate or fee
hereunder shall, except in cases of manifest error, be final,
conclusive and binding on the parties.
ARTICLE IV
Payments; Pro Rata Treatment; Computations; Etc.
Section 4.01 Payments. Except to the extent otherwise
provided herein, all payments of principal, interest and other
amounts to be made by the Borrower under the Loan Documents shall
be made in Dollars, in immediately available funds, to the Agent at
such account as the Agent shall specify by notice to the Borrower
from time to time, not later than 11:00 a.m. Houston, Texas time on
the date on which such payments shall become due (each such payment
made after such time on such due date to be deemed to have been
made on the next succeeding Business Day). Such payments shall be
made without (to the fullest extent permitted by applicable law)
defense, set-off or counterclaim. Each payment received by the
Agent under this Agreement or any Note for account of a Lender
shall be paid promptly to such Lender in immediately available
funds. Except as provided in clause (iii) of the definition of
"Interest Period", if the due date of any payment under this
Agreement or any Note would otherwise fall on a day which is not a
Business Day such date shall be extended to the next succeeding
Business Day and interest shall be payable for any principal so
extended for the period of such extension. At the time of each
payment to the Agent of any principal of or interest on any
borrowing, the Borrower shall notify the Agent of the Loans to
which such payment shall apply. In the absence of such notice the
Agent may specify the Loans to which such payment shall apply, but
to the extent possible such payment or prepayment will be applied
first to the Loans comprised of Base Rate Loans.
Section 4.02 Pro Rata Treatment. Except to the extent
otherwise provided herein each Lender agrees that: (i) each
borrowing from the Lenders under Section 2.01 and each continuation
and conversion under Section 2.02 shall be made from the Lenders
pro rata in accordance with their Percentage Share, each payment of
commitment fee or other fees under Sections 2.04(a), (b) and (c)
shall be made for account of the Lenders pro rata in accordance
with their Percentage Share, and each termination or reduction of
the amount of the Aggregate Maximum Credit Amounts under
Section 2.03(b) shall be applied to the Commitment of each Lender,
pro rata according to the amounts of its respective Commitment;
(ii) each payment of principal of Loans by the Borrower shall be
made for account of the Lenders pro rata in accordance with the
respective unpaid principal amount of the Loans held by the
Lenders; and (iii) each payment of interest on Loans by the
Borrower shall be made for account of the Lenders pro rata in
accordance with the amounts of interest due and payable to the
respective Lenders; and (iv) each reimbursement by the Borrower of
disbursements under Letters of Credit shall be made for account of
the Agent or, if funded by the Lenders, pro rata for the account of
the Lenders, in accordance with the amounts of reimbursement
obligations due and payable to each respective Lender.
Section 4.03 Computations. Interest on Eurodollar Loans
shall be computed on the basis of a year of 360 days and actual
days elapsed (including the first day but excluding the last day)
occurring in the period for which such interest is payable, unless
such calculation would exceed the Highest Lawful Rate, in which
case interest shall be calculated on the per annum basis of a year
of 365 or 366 days, as the case may be. Interest on Base Rate
Loans and fees 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) occurring in the period
for which such interest is payable.
Section 4.04 Non-receipt of Funds by the Agent. Unless
the Agent shall have been notified by a Lender or the Borrower
prior to the date on which such notifying party is scheduled to
make payment to the Agent (in the case of a Lender) of the proceeds
of a Loan or a payment under a Letter of Credit to be made by it
hereunder or (in the case of the Borrower) a payment to the Agent
for account of one or more of the Lenders hereunder (such payment
being herein called the "Required Payment"), which notice shall be
effective upon receipt, that it 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(s) on such date and, if such
Lender or the Borrower (as the case may be) has not in fact made
the Required Payment to the Agent, the recipient(s) of such payment
shall, on demand, repay to the Agent the amount so made available
together with interest thereon in respect of each day during the
period commencing on the date such amount was so made available by
the Agent until but excluding the date the Agent recovers such
amount at a rate per annum which, for any Lender as recipient, will
be equal to the Federal Funds Rate, and for the Borrower as
recipient, will be equal to the Base Rate plus the Applicable
Margin.
Section 4.05 Set-off, Sharing of Payments, Etc.
(a) The Borrower agrees that, in addition to (and
without limitation of) any right of set-off, bankers' lien or
counterclaim a Lender may otherwise have, each Lender shall
have the right and be entitled (after consultation with the
Agent), at its option, to offset balances held by it or by any
of its Affiliates for account of the Borrower or any
Restricted Subsidiary at any of its offices, in Dollars or in
any other currency, against any principal of or interest on
any of such Lender's Loans, or any other amount payable to
such Lender hereunder, which is not paid when due (regardless
of whether such balances are then due to the Borrower), in
which case it shall promptly notify the Borrower and the Agent
thereof, provided that such Lender's failure to give such
notice shall not affect the validity thereof.
(b) If any Lender shall obtain payment of any principal
of or interest on any Loan made by it to the Borrower under
this Agreement (or reimbursement as to any Letter of Credit)
through the exercise of any right of set-off, banker's lien or
counterclaim or similar right or otherwise, and, as a result
of such payment, such Lender shall have received a greater
percentage of the principal or interest (or reimbursement)
then due hereunder by the Borrower to such Lender than the
percentage received by any other Lenders, it shall promptly
(i) notify the Agent and each other Lender thereof and (ii)
purchase from such other Lenders participations in (or, if and
to the extent specified by such Lender, direct interests in)
the Loans (or participations in Letters of Credit) made by
such other Lenders (or in interest due thereon, as the case
may be) in such amounts, and make such other adjustments from
time to time as shall be equitable, to the end that all the
Lenders shall share the benefit of such excess payment (net of
any expenses which may be incurred by such Lender in obtaining
or preserving such excess payment) pro rata in accordance with
the unpaid principal and/or interest on the Loans held by each
of the Lenders (or reimbursements of Letters of Credit). To
such end all the Lenders shall make appropriate adjustments
among themselves (by the resale of participations sold or
otherwise) if such payment is rescinded or must otherwise be
restored. The Borrower agrees that any Lender so purchasing
a participation (or direct interest) in the Loans made by
other Lenders (or in interest due thereon, as the case may be)
may exercise all rights of set-off, banker's lien, counter-
claim or similar rights with respect to such participation as
fully as if such Lender were a direct holder of Loans (or
Letters of Credit) 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 Borrower. If under any applicable bankruptcy, insolvency
or other similar law, any Lender receives a secured claim in
lieu of a set-off to which this Section 4.05 applies, such
Lender shall, to the extent practicable, exercise its rights
in respect of such secured claim in a manner consistent with
the rights of the Lenders entitled under this Section 4.05 to
share the benefits of any recovery on such secured claim.
Section 4.06 Taxes.
(a) Payments Free and Clear. Any and all payments by
the Borrower hereunder shall be made, in accordance with
Section 4.01, free and clear of and without deduction for any
and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of each Lender and the Agent,
taxes imposed on its income, and franchise or similar taxes
imposed on it, by (i) any jurisdiction (or political
subdivision thereof) of which the Agent or such Lender, as the
case may be, is a citizen or resident or in which such Lender
has an Applicable Lending Office, (ii) the jurisdiction (or
any political subdivision thereof) in which the Agent or such
Lender is organized, or (iii) any jurisdiction (or political
subdivision thereof) in which such Lender or the Agent is
presently doing business in which taxes are imposed solely as
a result of doing business in such jurisdiction (all such non-
excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as
"Taxes"). If the Borrower shall be required by law to deduct
any Taxes from or in respect of any sum payable hereunder to
the Lenders or the Agent (i) the sum payable shall be
increased by the amount necessary so that after making all
required deductions (including deductions applicable to
additional sums payable under this Section 4.06) such Lender
or the Agent (as the case may be) shall receive an amount
equal to the sum it would have received had no such deductions
been made, (ii) the Borrower shall make such deductions and
(iii) the Borrower shall pay the full amount deducted to the
relevant taxing authority or other Governmental Authority in
accordance with applicable law.
(b) Other Taxes. In addition, to the fullest extent
permitted by applicable law, the Borrower agrees to pay any
present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies that arise
from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to,
this Agreement, any Assignment or any Security Instrument
(hereinafter referred to as "Other Taxes").
(c) INDEMNIFICATION. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, BUT SUBJECT TO SECTION 4.06(d)(ii), THE
BORROWER WILL INDEMNIFY EACH LENDER AND THE AGENT FOR THE FULL
AMOUNT OF TAXES AND OTHER TAXES (INCLUDING, BUT NOT LIMITED
TO, ANY TAXES OR OTHER TAXES IMPOSED BY ANY GOVERNMENTAL
AUTHORITY ON AMOUNTS PAYABLE UNDER THIS SECTION 4.06) PAID BY
SUCH LENDER OR THE AGENT (ON THEIR BEHALF OR ON BEHALF OF ANY
LENDER), AS THE CASE MAY BE, AND ANY LIABILITY (INCLUDING
PENALTIES, INTEREST AND EXPENSES) ARISING THEREFROM OR WITH
RESPECT THERETO, WHETHER OR NOT SUCH TAXES OR OTHER TAXES WERE
CORRECTLY OR LEGALLY ASSERTED UNLESS THE PAYMENT OF SUCH TAXES
WAS NOT CORRECTLY OR LEGALLY ASSERTED AND SUCH LENDER'S
PAYMENT OF SUCH TAXES OR OTHER TAXES WAS THE RESULT OF ITS
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. ANY PAYMENT PURSUANT
TO SUCH INDEMNIFICATION SHALL BE MADE WITHIN THIRTY (30) DAYS
AFTER THE DATE ANY LENDER OR THE AGENT, AS THE CASE MAY BE,
MAKES WRITTEN DEMAND THEREFOR. IF ANY LENDER OR THE AGENT
RECEIVES A REFUND OR CREDIT IN RESPECT OF ANY TAXES OR OTHER
TAXES FOR WHICH SUCH LENDER OR THE AGENT HAS RECEIVED PAYMENT
FROM THE BORROWER IT SHALL PROMPTLY NOTIFY THE BORROWER OF
SUCH REFUND OR CREDIT AND SHALL, IF NO DEFAULT HAS OCCURRED
AND IS CONTINUING, WITHIN THIRTY (30) DAYS AFTER RECEIPT OF A
REQUEST BY THE BORROWER (OR PROMPTLY UPON RECEIPT, IF THE
BORROWER HAS REQUESTED APPLICATION FOR SUCH REFUND OR CREDIT
PURSUANT HERETO), PAY AN AMOUNT EQUAL TO SUCH REFUND OR CREDIT
TO THE BORROWER WITHOUT INTEREST (BUT WITH ANY INTEREST SO
REFUNDED OR CREDITED), PROVIDED THAT THE BORROWER, UPON THE
REQUEST OF SUCH LENDER OR THE AGENT, AGREES TO RETURN SUCH
REFUND OR CREDIT (PLUS PENALTIES, INTEREST OR OTHER CHARGES)
TO SUCH LENDER OR THE AGENT IN THE EVENT SUCH LENDER OR THE
AGENT IS REQUIRED TO REPAY SUCH REFUND OR CREDIT.
(d) Lender Representations.
(i) Each Lender represents that it is either (1) a
corporation or banking association organized under the
laws of the United States of America or any state thereof
or (2) it is entitled to complete exemption from United
States withholding tax imposed on or with respect to any
payments, including fees, to be made to it pursuant to
this Agreement (A) under an applicable provision of a tax
convention to which the United States of America is a
party or (B) because it is acting through a branch,
agency or office in the United States of America and any
payment to be received by it hereunder is effectively
connected with a trade or business in the United States
of America. Each Lender that is not a corporation or
banking association organized under the laws of the
United States of America or any state thereof agrees to
provide to the Borrower and the Agent on the Closing
Date, or on the date of its delivery of the Assignment
pursuant to which it becomes a Lender, and at such other
times as required by United States law or as the Borrower
or the Agent shall reasonably request, two accurate and
complete original signed copies of either (A) Internal
Revenue Service Form 4224 (or successor form) certifying
that all payments to be made to it hereunder will be
effectively connected to a United States trade or
business (the "Form 4224 Certification") or (B) Internal
Revenue Service Form 1001 (or successor form) certifying
that it is entitled to the benefit of a provision of a
tax convention to which the United States of America is
a party which completely exempts from United States
withholding tax all payments to be made to it hereunder
(the "Form 1001 Certification"). In addition, each
Lender agrees that if it previously filed a Form 4224
Certification, it will deliver to the Borrower and the
Agent a new Form 4224 Certification prior to the first
payment date occurring in each of its subsequent taxable
years; and if it previously filed a Form 1001
Certification, it will deliver to the Borrower and the
Agent a new certification prior to the first payment date
falling in the third year following the previous filing
of such certification. Each Lender also agrees to
deliver to the Borrower and the Agent such other or
supplemental forms as may at any time be required as a
result of changes in applicable law or regulation in
order to confirm or maintain in effect its entitlement to
exemption from United States withholding tax on any
payments hereunder, provided that the circumstances of
such Lender at the relevant time and applicable laws
permit it to do so. If a Lender determines, as a result
of any change in either (i) a Governmental Requirement or
(ii) its circumstances, that it is unable to submit any
form or certificate that it is obligated to submit
pursuant to this Section 4.06, or that it is required to
withdraw or cancel any such form or certificate
previously submitted, it shall promptly notify the
Borrower and the Agent of such fact. If a Lender is
organized under the laws of a jurisdiction outside the
United States of America, unless the Borrower and the
Agent have received a Form 1001 Certification or
Form 4224 Certification satisfactory to them indicating
that all payments to be made to such Lender hereunder are
not subject to United States withholding tax, the
Borrower shall withhold taxes from such payments at the
applicable statutory rate. Each Lender agrees to
indemnify and hold harmless the Borrower or Agent, as
applicable, from any United States taxes, penalties,
interest and other expenses, costs and losses incurred or
payable by (i) the Agent as a result of such Lender's
failure to submit any form or certificate that it is
required to provide pursuant to this Section 4.06 or
(ii) the Borrower or the Agent as a result of their
reliance on any such form or certificate which such
Lender has provided to them pursuant to this Section
4.06.
(ii) For any period with respect to which a Lender
has failed to provide the Borrower with the form required
pursuant to this Section 4.06, if any, (other than if
such failure is due to a change in a Governmental
Requirement occurring subsequent to the date on which a
form originally was required to be provided), such Lender
shall not be entitled to indemnification under Section
4.06 with respect to taxes imposed by the United States
which taxes would not have been imposed but for such
failure to provide such forms; provided, however, that
should a Lender, which is otherwise exempt from or
subject to a reduced rate of withholding tax becomes
subject to taxes because of its failure to deliver a form
required hereunder, the Borrower shall take such steps as
such Lender shall reasonably request to assist such
Lender to recover such taxes.
(iii) Any Lender claiming any additional
amounts payable pursuant to this Section 4.06 shall use
reasonable efforts (consistent with legal and regulatory
restrictions) to file any certificate or document
requested by the Borrower or the Agent or to change the
jurisdiction of its Applicable Lending Office or to
contest any tax imposed if the making of such a filing or
change or contesting such tax would avoid the need for or
reduce the amount of any such additional amounts that may
thereafter accrue and would not, in the sole
determination of such Lender, be otherwise
disadvantageous to such Lender.
Section 4.07 Disposition of Proceeds. The Security
Instruments contain an assignment by the Borrower or a Restricted
Subsidiary, as the case may be, unto and in favor of the Agent for
the benefit of the Lenders of all production and all proceeds
attributable thereto which may be produced from or allocated to the
Mortgaged Property, and the Security Instruments further provide in
general for the application of such proceeds to the satisfaction of
the Indebtedness and other obligations described therein and
secured thereby. Notwithstanding the assignment contained in such
Security Instruments, until the occurrence of an Event of Default,
the Lenders agree that they will neither notify the purchaser or
purchasers of such production nor take any other action to cause
such proceeds to be remitted to the Lenders, but the Lenders will
instead permit such proceeds to be paid to the Borrower or such
Restricted Subsidiary.
ARTICLE V
Capital Adequacy
Section 5.01 Additional Costs.
(a) Eurodollar Regulations, etc. The Borrower shall pay
directly to each Lender from time to time such amounts as such
Lender may determine to be necessary to compensate such Lender
for any costs which it determines are attributable to its
making or maintaining of any Eurodollar Loans or issuing or
participating in Letters of Credit hereunder or its obligation
to make any Eurodollar Loans or issue or participate in any
Letters of Credit hereunder, or any reduction in any amount
receivable by such Lender hereunder in respect of any of such
Eurodollar Loans, Letters of Credit or such obligation (such
increases in costs and reductions in amounts receivable being
herein called "Additional Costs"), resulting from any
Regulatory Change which: (i) changes the basis of taxation of
any amounts payable to such Lender under this Agreement or any
Note in respect of any of such Eurodollar Loans or Letters of
Credit (other than taxes imposed on the overall net income of
such Lender or of its Applicable Lending Office for any of
such Eurodollar Loans by the jurisdiction in which such Lender
has its principal office or Applicable Lending Office); or
(ii) imposes or modifies any reserve, special deposit, minimum
capital, capital ratio or similar requirements relating to any
extensions of credit or other assets of, or any deposits with
or other liabilities of such Lender, or the Commitment or
Loans of such Lender or the Eurodollar interbank market; or
(iii) imposes any other condition affecting this Agreement or
any Note (or any of such extensions of credit or liabilities)
or such Lender's Commitment or Loans. Each Lender will notify
the Agent and the Borrower of any event occurring after the
Closing Date which will entitle such Lender to compensation
pursuant to this Section 5.01(a) as promptly as practicable
after it obtains knowledge thereof and determines to request
such compensation, and will designate a different Applicable
Lending Office for the Loans of such Lender affected by such
event if such designation will avoid the need for, or reduce
the amount of, such compensation and will not, in the sole
opinion of such Lender, be disadvantageous to such Lender,
provided that such Lender shall have no obligation to so
designate an Applicable Lending Office located in the United
States. If any Lender requests compensation from the Borrower
under this Section 5.01(a), the Borrower may, by notice to
such Lender, suspend the obligation of such Lender to make
additional Loans of the Type with respect to which such
compensation is requested until the Regulatory Change giving
rise to such request ceases to be in effect (in which case the
provisions of Section 5.04 shall be applicable).
(b) Regulatory Change. Without limiting the effect of
the provisions of Section 5.01(a), in the event that, by
reason of any Regulatory Change or any other circumstances
arising after the Closing Date affecting such Lender, the
Eurodollar interbank market or such Lender's position in such
market, any Lender either (i) incurs Additional Costs based on
or measured by the excess above a specified level of the
amount of a category of deposits or other liabilities of such
Lender which includes deposits by reference to which the
interest rate on Eurodollar Loans is determined as provided in
this Agreement or a category of extensions of credit or other
assets of such Lender which includes Eurodollar Loans or
(ii) becomes subject to restrictions on the amount of such a
category of liabilities or assets which it may hold, then, if
such Lender so elects by notice to the Borrower, the
obligation of such Lender to make additional Eurodollar Loans
shall be suspended until such Regulatory Change or other
circumstances ceases to be in effect (in which case the
provisions of Section 5.04 shall be applicable).
(c) Capital Adequacy. Without limiting the effect of
the foregoing provisions of this Section 5.01 (but without
duplication), the Borrower shall pay directly to any Lender
from time to time on request such amounts as such Lender may
reasonably determine to be necessary to compensate such Lender
or its parent or holding company for any costs which it
determines are attributable to the maintenance by such Lender
or its parent or holding company (or any Applicable Lending
Office), pursuant to any Governmental Requirement following
any Regulatory Change, of capital in respect of its
Commitment, its Notes, its Loans or any interest held by it in
any Letter of Credit, 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 its parent or
holding company (or any Applicable Lending Office) to a level
below that which such Lender or its parent or holding company
(or any Applicable Lending Office) could have achieved but for
such Governmental Requirement. Such Lender will notify the
Borrower that it is entitled to compensation pursuant to this
Section 5.01(c) as promptly as practicable after it determines
to request such compensation.
(d) Compensation Procedure. Any Lender notifying the
Borrower of the incurrence of additional costs under this
Section 5.01 shall deliver such notice to the Borrower as soon
as practicable and in any event within ninety (90) days after
the change or other event giving rise to the incurrence of
such additional costs and shall in such notice to the Borrower
and the Agent set forth in reasonable detail the basis and
amount of its request for compensation. Determinations and
allocations by each Lender for purposes of this Section 5.01
of the effect of any Regulatory Change pursuant to Section
5.01(a) or (b), or of the effect of capital maintained
pursuant to Section 5.01(c), on its costs or rate of return of
maintaining Loans or its obligation to make Loans or issue
Letters of Credit, or on amounts receivable by it in respect
of Loans or Letters of Credit, and of the amounts required to
compensate such Lender under this Section 5.01, shall be
conclusive and binding for all purposes, provided that such
determinations and allocations are made on a reasonable basis.
Any request for additional compensation under this Section
5.01 shall be paid by the Borrower within thirty (30) days of
the receipt by the Borrower of the notice described in this
Section 5.01(d).
Section 5.02 Limitation on Eurodollar Loans. Anything
herein to the contrary notwithstanding, if, on or prior to the
determination of any Eurodollar Rate for any Interest Period:
(i) the Agent determines (which determination
shall be conclusive, absent manifest error) that
quotations of interest rates for the relevant deposits
referred to in the definition of "Eurodollar Rate" in
Section 1.02 are not being provided in the relevant
amounts or for the relevant maturities for purposes of
determining rates of interest for Eurodollar Loans as
provided herein; or
(ii) the Agent determines (which determination
shall be conclusive, absent manifest error) that the
relevant rates of interest referred to in the definition
of "Eurodollar Rate" in Section 1.02 upon the basis of
which the rate of interest for Eurodollar Loans for such
Interest Period is to be determined are not sufficient to
adequately cover the cost to the Lenders of making or
maintaining Eurodollar Loans;
then the Agent shall give the Borrower prompt notice thereof, and
so long as such condition remains in effect, the Lenders shall be
under no obligation to make additional Eurodollar Loans.
Section 5.03 Illegality. Notwithstanding any other
provision of this Agreement, in the event that it becomes unlawful
for any Lender or its Applicable Lending Office to honor its
obligation to make or maintain Eurodollar Loans hereunder, then
such Lender shall promptly notify the Borrower thereof and such
Lender's obligation to make Eurodollar Loans shall be suspended
until such time as such Lender may again make and maintain
Eurodollar Loans (in which case the provisions of Section 5.04
shall be applicable).
Section 5.04 Base Rate Loans Pursuant to Sections 5.01,
5.02 and 5.03. If the obligation of any Lender to make Eurodollar
Loans shall be suspended pursuant to Sections 5.01, 5.02 or 5.03
("Affected Loans"), all Affected Loans which would otherwise be
made by such Lender shall be made instead as Base Rate Loans (and,
if an event referred to in Section 5.01(b) or Section 5.03 has
occurred and such Lender so requests by notice to the Borrower, all
Affected Loans of such Lender then outstanding shall be
automatically converted into Base Rate Loans on the date specified
by such Lender in such notice) and, to the extent that Affected
Loans are so made as (or converted into) Base Rate Loans, all
payments of principal which would otherwise be applied to such
Lender's Affected Loans shall be applied instead to its Base Rate
Loans.
Section 5.05 Compensation. The Borrower shall pay to
each Lender within thirty (30) days of receipt of written request
of such Lender (which request shall set forth, in reasonable
detail, the basis for requesting such amounts and which shall be
conclusive and binding for all purposes provided that such
determinations are made on a reasonable basis), such amount or
amounts as shall compensate it for any loss, cost, expense or
liability which such Lender determines are attributable to:
(i) any payment, prepayment or conversion of a
Eurodollar Loan properly made by such Lender or the
Borrower for any reason (including, without limitation,
the acceleration of the Loans pursuant to Section 10.02)
on a date other than the last day of the Interest Period
for such Loan;
(ii) any failure by the Borrower for any reason
(including but not limited to, the failure of any of the
conditions precedent specified in Article VI to be
satisfied) to borrow, continue or convert a Eurodollar
Loan from such Lender on the date for such borrowing,
continuation or conversion specified in the relevant
notice given pursuant to Section 2.02(c); or
(iii) the revocation by the Borrower of (a) a
revocable notice of borrowing delivered pursuant to
Section 2.02(c) or (b) a revocable request for the
issuance of a Letter of Credit delivered pursuant to
Section 2.02(g) or (c) a revocable notice of reduction or
termination delivered pursuant to Section 2.03(c) or (d)
a revocable notice of prepayment delivered pursuant to
Section 2.07(a).
Without limiting the effect of the preceding sentence, such
compensation shall include an amount equal to the excess, if any,
of (i) the amount of interest which would have accrued on the
principal amount so paid, prepaid or converted or not borrowed for
the period from the date of such payment, prepayment or conversion
or failure to borrow to the last day of the Interest Period for
such Loan (or, in the case of a failure to borrow, the Interest
Period for such Loan which would have commenced on the date
specified for such borrowing) at the applicable rate of interest
for such Loan provided for herein over (ii) the interest component
of the amount such Lender would have bid in the London interbank
market for Dollar deposits of leading banks in amounts comparable
to such principal amount and with maturities comparable to such
period (as reasonably determined by such Lender).
Section 5.06 Replacement Lenders.
(a) If any Lender has notified the Borrower and the
Agent of its incurring additional costs under Section 5.01
hereof or has required the Borrower to make payments for Taxes
under Section 4.06 hereof, then the Borrower may, unless such
Lender has notified the Borrower and the Agent that the
circumstances giving rise to such notice no longer apply,
terminate, in whole but not in part, the Commitment of any
Lender (other than the Agent) (the "Terminated Lender") at any
time upon five (5) Business Days' prior written notice to the
Terminated Lender and the Agent (such notice referred to
herein as a "Notice of Termination").
(b) In order to effect the termination of the Commitment
of the Terminated Lender, the Borrower shall: (i) obtain an
agreement with one or more Lenders to increase their
Commitment or Commitments and/or (ii) request any one or more
other banking institutions to become parties to this Agreement
in place and instead of such Terminated Lender and agree to
accept a Commitment or Commitments; provided, however, that
such one or more other banking institutions are reasonably
acceptable to the Agent and become parties by executing an
Assignment (the Lenders or other banking institutions that
agree to accept in whole or in part the Commitment of the
Terminated Lender being referred to herein as the "Replacement
Lenders"), such that the aggregate increased and/or accepted
Commitments of the Replacement Lenders under clauses (i) and
(ii) above equal the Commitment of the Terminated Lender.
(c) The Notice of Termination shall include the name of
the Terminated Lender, the date the termination will occur
(the "Termination Date"), and the Replacement Lender or
Replacement Lenders to which the Terminated Lender will assign
its Commitment and, if there will be more than one Replacement
Lender, the portion of the Terminated Lender's Commitment to
be assigned to each Replacement Lender.
(d) On the Termination Date, (i) the Terminated Lender
shall by execution and delivery of an Assignment assign its
Commitment to the Replacement Lender or Replacement Lenders
(pro rata, if there is more than one Replacement Lender, in
proportion to the portion of the Terminated Lender's Commit-
ment to be assigned to each Replacement Lender) indicated in
the Notice of Termination and shall assign to the Replacement
Lender or Replacement Lenders each of its Loans (if any) then
outstanding and participation interests in Letters of Credit
(if any) then outstanding (pro rata as aforesaid), (ii) the
Terminated Lender shall endorse its Notes, payable without
recourse, representation or warranty to the order of the
Replacement Lender or Replacement Lenders (pro rata as
aforesaid), (iii) the Replacement Lender or Replacement
Lenders shall purchase the Notes held by the Terminated Lender
(pro rata as aforesaid) at a price equal to the unpaid
principal amount thereof plus interest and facility and other
fees accrued and unpaid to the Termination Date, and (iv) the
Replacement Lender or Replacement Lenders will thereupon (pro
rata as aforesaid) succeed to and be substituted in all
respects for the Terminated Lender with like effect as if
becoming a Lender pursuant to the terms of Section 12.06(b),
and the Terminated Lender will have the rights and benefits of
an assignor under Section 12.06(b). To the extent not in
conflict, the terms of Section 12.06(b) shall supplement the
provisions of this Section 5.06(d). For each assignment made
under this Section 5.06, the Replacement Lender shall pay to
the Agent the processing fee provided for in Section 12.06(b).
The Borrower will be responsible for the payment of any
breakage costs associated with termination of the Terminated
Lender, as set forth in Section 5.05.
ARTICLE VI
Conditions Precedent
Section 6.01 Initial Funding.
The obligation of the Lenders to make the Initial Funding
is subject to the receipt by the Agent and the Lenders of all fees
payable pursuant to Section 2.04 on or before the Closing Date and
the receipt by the Agent of the following documents and
satisfaction of the other conditions provided in this Section 6.01,
each of which shall be satisfactory to the Agent in form and
substance:
(a) A certificate of the Secretary of MMR setting forth
(i) resolutions of the board of directors of MMR, as the sole
member of the Borrower, with respect to the authorization of
the Borrower to execute and deliver the Loan Documents to
which it is a party and to enter into the transactions
contemplated in those documents, (ii) the officers of MMR and
the Borrower (y) who are authorized to sign the Loan Documents
to which Borrower is a party and (z) who will, until replaced
by another officer or officers duly authorized for that
purpose, act as its representative for the purposes of signing
documents and giving notices and other communications in
connection with this Agreement and the transactions
contemplated hereby, (iii) specimen signatures of the
authorized officers, (iv) the limited liability company
agreement of the Borrower, and (v) the certificate of
formation filed with the Delaware Secretary of State, as
amended, all certified as being true and complete. The Agent
and the Lenders may conclusively rely on such certificate
until the Agent receives notice in writing from MMR or the
Borrower to the contrary.
(b) Certificates of the appropriate state agencies with
respect to the existence, qualification and good standing of
the Borrower.
(c) A compliance certificate which shall be
substantially in the form of Exhibit C, duly and properly
executed by a Responsible Officer and dated as of the date of
the Initial Funding.
(d) The Notes, duly completed and executed.
(e) An opinion of Jones, Walker, Waechter, Poitevent,
Carrere & Xxxxxxx, L.L.P. counsel to the Borrower,
substantially in the form of Exhibit D hereto.
(f) A certificate of insurance coverage of the Borrower
evidencing that the Borrower is carrying insurance in
accordance with Section 7.19 hereof.
(g) Receipt by the Agent of the fees due and payable
after the Closing Date as provided for in the Fee Letter.
(h) Receipt by the Agent of each of the Security
Instruments, including those described on Exhibit E, duly
completed and executed in sufficient number of counterparts
for recording, if necessary, and otherwise in recordable form
and substance satisfactory to the Agent.
(i) Receipt by the Agent of such title information as
the Agent may require from attorneys satisfactory to the Agent
setting forth the status of title to at least 100% of the
value of the Hydrocarbon Interests included in the Borrowing
Base.
(j) The Agent shall have been furnished with appropriate
UCC search certificates reflecting no prior liens or security
interests.
(k) Receipt by the Agent of documentation in form and
substance satisfactory to the Agent, evidencing that the
acquisition of the Properties listed in Subpart B of Schedule
7.22 has been completed.
(l) Receipt by the Agent of such other documents as the
Agent or any Lender or special counsel to the Agent may
reasonably request.
Section 6.02 Initial and Subsequent Loans and Letters of
Credit. The obligation of the Lenders to make Loans to the
Borrower upon the occasion of each borrowing hereunder and to
issue, renew, extend or reissue Letters of Credit for the account
of the Borrower (including the Initial Funding) and to increase the
Borrowing Base in accordance with Section 6.02 is subject to the
further conditions precedent that, as of the date of such Loans or
Letters of Credit or increase, as the case may be, and after giving
effect thereto: (i) no Default shall have occurred and be
continuing; (ii) no Material Adverse Effect shall have occurred;
(iii) the representations and warranties made by the Borrower in
Article VII and by the Borrower or any Restricted Subsidiary in the
Security Instruments shall be true on and as of the date of the
making of such Loans or issuance, renewal, extension or reissuance
of a Letter of Credit or increase of the Borrowing Base, as the
case may be, with the same force and effect as if made on and as of
such date and following such new borrowing, issuance or increase,
except to the extent such representations and warranties are
expressly limited to an earlier date or the Majority Lenders may
expressly consent in writing to the contrary; and (iv) the
aggregate outstanding amount of investments, loans and advances
permitted by Section 9.03(i) and net dividends, distributions and
redemptions permitted by Section 9.04, shall not exceed $7,200,000.
Each request for a borrowing or issuance, renewal, extension or
reissuance of a Letter of Credit by the Borrower hereunder shall
constitute a certification by the Borrower to the effect set forth
in the preceding sentence (both as of the date of such notice and,
unless the Borrower otherwise notifies the Agent prior to the date
of and immediately following such borrowing or issuance, renewal,
extension or reissuance of a Letter of Credit, as of the date
thereof).
Section 6.03 Conditions Relating to Letters of Credit.
In addition to the satisfaction of all other conditions precedent
set forth in this Article VI, the issuance, renewal, extension or
reissuance of the Letters of Credit referred to in Section 2.01(b)
hereof is subject to the following conditions precedent:
(a) At least three (3) Business Days prior to the date
of the issuance and at least thirty (30) Business Days prior
to the date of the renewal, extension or reissuance of each
Letter of Credit, the Agent shall have received a written
request for a Letter of Credit, in accordance with Section
2.02(g) hereof.
(b) Each of the Letters of Credit shall (i) be issued by
the Agent, (ii) contain such terms and provisions as are
reasonably required by the Agent, (iii) be for the account of
the Borrower and (iv) expire not later than the earlier of one
(1) year from the date of issuance, renewal, extension or
reissuance or two (2) days before the Termination Date;
provided, however, Borrower may request that any one-year
Letter of Credit be renewed annually up to two (2) days prior
to the Termination Date.
(c) The Borrower shall have duly and validly executed
and delivered to the Agent a Letter of Credit Agreement
pertaining to the Letter of Credit.
ARTICLE VII
Representations and Warranties
The Borrower represents and warrants to the Agent and the
Lenders that (each representation and warranty herein is given as
of the Closing Date and shall be deemed repeated and reaffirmed on
the dates of each borrowing and issuance, renewal, extension or
reissuance of a Letter of Credit as provided in Section 6.03):
Section 7.01 Existence. Each of the Borrower and each
Restricted Subsidiary: (i) is a corporation or limited liability
company duly organized, legally existing and in good standing under
the laws of the jurisdiction of its incorporation or formation;
(ii) has all requisite power, and has all material governmental
licenses, authorizations, consents and approvals necessary to own
its assets and carry on its business as now being or as proposed to
be conducted; and (iii) is qualified to do business in all
jurisdictions in which the nature of the business conducted by it
makes such qualification necessary and where failure so to qualify
would have a Material Adverse Effect.
Section 7.02 Financial Condition. The audited
consolidated financial statements of MMR and its Consolidated
Subsidiaries as at December 31, 1998, and the balance sheet of the
Borrower and its Consolidated Subsidiaries as at December 31, 1998
and the related statement of income, member's capital and cash flow
of the Borrower and its Consolidated Subsidiaries for the fiscal
year ended on said date, in each case as included in the
consolidating statements of MMR and its Consolidated Subsidiaries
as of said date with the opinion thereon of Xxxxxx Xxxxxxxx LLP
heretofore furnished to each of the Lenders and the unaudited
consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as at September 30, 1999 and the related consolidated
statements of income, members capital and cash flow of the Borrower
and its Consolidated Subsidiaries for the nine-month and three-
month periods ended on such date heretofore furnished to the Agent,
are complete and correct and fairly present the consolidated
financial condition of the Borrower and its Consolidated
Subsidiaries as at said dates and the results of its operations for
the fiscal year and the nine-month and three-month periods ended on
said dates, all in accordance with GAAP, as applied on a consistent
basis (subject, in the case of the interim financial statements, to
normal year-end adjustments). Neither the Borrower nor any
Subsidiary has on the Closing Date any material Debt, contingent
liabilities, liabilities for taxes, unusual forward or long-term
commitments or unrealized or anticipated losses from any
unfavorable commitments, in each case, that would be required to be
reserved for in the Financial Statements in accordance with GAAP,
except as referred to or reflected or provided for in the Financial
Statements or in Schedule 7.02. Except as set forth on Schedule
7.10, since September 30, 1999, there has been no change or event
having a Material Adverse Effect. Except as set forth on Schedule
7.10, since the date of the Financial Statements, neither the
business nor the Properties of the Borrower or any Subsidiary have
been materially and adversely affected as a result of any fire,
explosion, earthquake, flood, drought, windstorm, accident, strike
or other labor disturbance, embargo, requisition or taking of
Property or cancellation of contracts, permits or concessions by
any Governmental Authority, riot, activities of armed forces or
acts of God or of any public enemy.
Section 7.03 Litigation. Except as disclosed to the
Lenders in Schedule 7.03 hereto, at the Closing Date there is no
litigation, legal, administrative or arbitral proceeding,
investigation or other action of any nature pending or, to the
knowledge of the Borrower threatened against or affecting the
Borrower or any Restricted Subsidiary as to which there is a
reasonable possibility of an adverse determination and which, if
adversely determined, could, individually or in the aggregate,
materially impair the ability of the Borrower to conduct its
business substantially as now conducted, or materially and
adversely affect the businesses, assets, operations, prospects or
condition, financial or otherwise, of the Borrower, or impair the
validity or enforceability of, or the ability of the Borrower to
perform its obligations under, this Agreement or any of the other
Loan Documents to which it is a party, in each case, taking into
account any applicable insurance.
Section 7.04 No Breach. Neither the execution and
delivery of the Loan Documents, nor compliance with the terms and
provisions hereof will conflict with or result in a breach of, or
require any consent which has not been obtained as of the Closing
Date under, the respective charter or by-laws of the Borrower or
any Restricted Subsidiary, or any Governmental Requirement or any
agreement or instrument to which the Borrower or any Restricted
Subsidiary is a party or by which it is bound or to which it or its
Properties are subject, or constitute a default under any such
agreement or instrument, or result in the creation or imposition of
any Lien upon any of the revenues or assets of the Borrower or any
Restricted Subsidiary pursuant to the terms of any such agreement
or instrument other than the Liens created by the Loan Documents
and those permitted under Section 9.02.
Section 7.05 Authority. The Borrower and each
Restricted Subsidiary have all necessary power and authority to
execute, deliver and perform its obligations under the Loan
Documents to which it is a party; and the execution, delivery and
performance by the Borrower and each Restricted Subsidiary of the
Loan Documents to which it is a party, have been duly authorized by
all necessary corporate action on its part; and the Loan Documents
constitute the legal, valid and binding obligations of the Borrower
and each Restricted Subsidiary, enforceable in accordance with
their terms.
Section 7.06 Approvals. No authorizations, approvals or
consents of, and no filings or registrations with, any Governmental
Authority are necessary for the execution, delivery or performance
by the Borrower or any Restricted Subsidiary of the Loan Documents
or for the validity or enforceability thereof, except for the
recording and filing of the Security Instruments as required by
this Agreement.
Section 7.07 Use of Loans. The proceeds of the Loans
shall be used to (a) renew, extend, modify and rearrange the
outstanding principal balance of the Prior Notes, (b) develop the
Borrower's proven reserves from its Oil and Gas Properties,
(c) provide funding for acquisitions of Oil and Gas Properties and
(d) for general corporate purposes. The Borrower is not engaged
principally, or as one of its important activities, in the business
of extending credit for the purpose, whether immediate, incidental
or ultimate, of buying or carrying margin stock (within the meaning
of Regulation G, U or X of the Board of Governors of the Federal
Reserve System) and no part of the proceeds of any Loan hereunder
will be used to buy or carry any margin stock.
Section 7.08 ERISA.
(a) The Borrower and each Restricted Subsidiary have
complied in all material respects with ERISA and, where
applicable, the Code regarding each Plan.
(b) Each Plan of the Borrower and of each Restricted
Subsidiary is, and has been, maintained in substantial
compliance with ERISA and, where applicable, the Code.
(c) To the knowledge of the Borrower, no act, omission
or transaction has occurred which could result in imposition
on the Borrower or on any Restricted Subsidiary (whether
directly or indirectly) of (i) either a civil penalty assessed
pursuant to section 502(c), (i) or (l) of ERISA or a tax
imposed pursuant to Chapter 43 of Subtitle D of the Code or
(ii) breach of fiduciary duty liability damages under section
409 of ERISA.
(d) No Plan (other than a defined contribution plan) or
any trust created under any such Plan has been terminated
since September 2, 1974. No liability to the PBGC (other than
for the payment of current premiums which are not past due) by
the Borrower, any Subsidiary or any ERISA Affiliate has been
or is expected by the Borrower, any Subsidiary or any ERISA
Affiliate to be incurred with respect to any Plan. No ERISA
Event with respect to any Plan has occurred.
(e) Full payment when due has been made of all amounts
which the Borrower, any Subsidiary or any ERISA Affiliate is
required under the terms of each Plan or applicable law to
have paid as contributions to such Plan, and no accumulated
funding deficiency (as defined in section 302 of ERISA and
section 412 of the Code), whether or not waived, exists with
respect to any Plan.
(f) The actuarial present value of the benefit
liabilities under each Plan which is subject to Title IV of
ERISA does not, as of the end of the Borrower's most recently
ended fiscal year, exceed the current value of the assets
(computed on a plan termination basis in accordance with
Title IV of ERISA) of such Plan allocable to such benefit
liabilities. The term "actuarial present value of the benefit
liabilities" shall have the meaning specified in section 4041
of ERISA.
(g) Neither the Borrower nor any Restricted Subsidiary
sponsors, maintains, or contributes to an employee welfare
benefit plan, as defined in section 3(1) of ERISA, including,
without limitation, any such plan maintained to provide
benefits to former employees of such entities, that may not be
terminated by the Borrower or a Restricted Subsidiary or any
ERISA Affiliate in its sole discretion at any time without any
material liability.
(h) None of the Borrower, any Subsidiary or any ERISA
Affiliate sponsors, maintains or contributes to, or has at any
time in the preceding six calendar years, sponsored,
maintained or contributed to, any Multiemployer Plan.
(i) None of the Borrower, any Subsidiary or any ERISA
Affiliate is required to provide security under section
401(a)(29) of the Code due to a Plan amendment that results in
an increase in current liability for the Plan.
Section 7.09 Taxes. Except as set out in Schedule 7.09,
each of the Borrower and the Restricted Subsidiaries has filed all
United States Federal income tax returns and all other tax returns
which are required to be filed by them and have paid all material
taxes due pursuant to such returns or pursuant to any assessment
received by the Borrower or any Restricted Subsidiary, other than
any taxes the validity of which the Borrower or the relevant
Restricted Subsidiary is contesting in good faith by appropriate
proceedings, and with respect to which the Borrower or such
Restricted Subsidiary shall, to the extent required by GAAP, have
set aside on its books adequate reserves. The charges, accruals
and reserves on the books of the Borrower and the Restricted
Subsidiaries in respect of taxes and other governmental charges
are, in the opinion of the Borrower, adequate. No tax lien has
been filed and, to the knowledge of the Borrower, no claim is being
asserted with respect to any such tax, fee or other charge.
Section 7.10 Titles, etc.
(a) Except as set out in the title reports delivered to
the Agent prior to the Closing Date, each of the Borrower and
the Restricted Subsidiaries has good and defensible title to
its material (individually or in the aggregate) Properties,
free and clear of all Liens except Liens permitted by Section
9.02. Except as set forth in Schedule 7.10, after giving full
effect to the Excepted Liens, the Borrower or each Restricted
Subsidiary, as applicable, owns the net interests in produc-
tion attributable to the Hydrocarbon Interests reflected in
the most recently delivered Reserve Report and the ownership
of such Properties shall not in any material respect obligate
the Borrower or any Restricted Subsidiary to bear the costs
and expenses relating to the maintenance, development and
operations of each such Property in an amount in excess of the
working interest of each Property set forth in the most
recently delivered Reserve Report. All factual information
contained in the most recently delivered Reserve Report is
true and correct in all material respects as of the date
thereof.
(b) All leases and agreements necessary for the conduct
of the business of the Borrower and the Restricted
Subsidiaries are valid and subsisting, in full force and
effect and there exists no default or event or circumstance
which with the giving of notice or the passage of time or both
would give rise to a default under any such lease or leases,
which would affect in any material respect the conduct of the
business of the Borrower and the Restricted Subsidiaries.
(c) The rights, Properties and other assets presently
owned, leased or licensed by the Borrower and the Restricted
Subsidiaries including, without limitation, all easements and
rights of way, include all rights, Properties and other assets
necessary to permit the Borrower and the Restricted
Subsidiaries to conduct their business in all material
respects in the same manner as its business has been conducted
prior to the Closing Date.
(d) Except as set forth on Schedule 7.10, all of the
assets and Properties of the Borrower and the Restricted
Subsidiaries which are reasonably necessary for the operation
of its business are in good working condition and are
maintained in accordance with prudent business standards.
Section 7.11 No Material Misstatements. No written
information, statement, exhibit, certificate, document or report
furnished to the Agent and the Lenders (or any of them) by the
Borrower or any Subsidiary in connection with the negotiation of
this Agreement contained any material misstatement of fact or
omitted to state a material fact or any fact necessary to make the
statement contained therein not materially misleading in the light
of the circumstances in which made and with respect to the Borrower
and the Subsidiaries taken as a whole. There is no fact peculiar
to the Borrower or any Subsidiary which has a Material Adverse
Effect or in the future is reasonably likely to have (so far as the
Borrower can now foresee) a Material Adverse Effect and which has
not been set forth in this Agreement or the other documents,
certificates and statements furnished to the Agent by or on behalf
of the Borrower or any Subsidiary prior to, or on, the Closing Date
in connection with the transactions contemplated hereby.
Section 7.12 Investment Company Act. Neither the
Borrower nor any Subsidiary is an "investment company" or a company
"controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended.
Section 7.13 Public Utility Holding Company Act.
Neither the Borrower nor any Subsidiary is a "holding company," or
a "subsidiary company" of a "holding company," or an "affiliate" of
a "holding company" or of a "subsidiary company" of a "holding
company," or a "public utility" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
Section 7.14 Subsidiaries. Except as set forth on
Schedule 7.14 which indicates all Restricted Subsidiaries and all
Unrestricted Subsidiaries, the Borrower has no Subsidiaries other
than those formed pursuant to Section 9.16 prior to the quarterly
report required by Section 8.01(i).
Section 7.15 Location of Business and Offices. The
Borrower's principal place of business and chief executive offices
are located at the address stated on the signature page of this
Agreement. The principal place of business and chief executive
office of each Subsidiary are located at the addresses stated on
Schedule 7.14.
Section 7.16 Defaults. Neither the Borrower nor any
Subsidiary is in default nor has any event or circumstance occurred
which, but for the expiration of any applicable grace period or the
giving of notice, or both, would constitute a default under any
material agreement or instrument to which the Borrower or any
Subsidiary is a party or by which the Borrower or any Subsidiary is
bound which default would have a Material Adverse Effect. No
Default hereunder has occurred and is continuing.
Section 7.17 Environmental Matters. Except (i) as
provided in Schedule 7.17 or (ii) as would not have a Material
Adverse Effect (or with respect to (c), (d) and (e) below, where
the failure to take such actions would not have a Material Adverse
Effect):
(a) Neither any Property of the Borrower or any
Subsidiary nor the operations conducted thereon violate any
order or requirement of any court or Governmental Authority or
any Environmental Laws;
(b) Without limitation of clause (a) above, no Property
of the Borrower or any Subsidiary nor the operations currently
conducted thereon or, to the best knowledge of the Borrower,
by any prior owner or operator of such Property or operation,
are in violation of or subject to any existing, pending or
threatened action, suit, investigation, inquiry or proceeding
by or before any court or Governmental Authority or to any
remedial obligations under Environmental Laws;
(c) All notices, permits, licenses or similar
authorizations, if any, required to be obtained or filed in
connection with the operation or use of any and all Property
of the Borrower and each Subsidiary, including without
limitation past or present treatment, storage, disposal or
release of a hazardous substance or solid waste into the
environment, have been duly obtained or filed, and the
Borrower and each Subsidiary are in compliance with the terms
and conditions of all such notices, permits, licenses and
similar authorizations;
(d) All hazardous substances, solid waste, and oil and
gas exploration and production wastes, if any, generated at
any and all Property of the Borrower or any Subsidiary have in
the past been transported, treated and disposed of in
accordance with Environmental Laws and so as not to pose an
imminent and substantial endangerment to public health or
welfare or the environment, and, to the best knowledge of the
Borrower, all such transport carriers and treatment and
disposal facilities have been and are operating in compliance
with Environmental Laws and so as not to pose an imminent and
substantial endangerment to public health or welfare or the
environment, and are not the subject of any existing, pending
or threatened action, investigation or inquiry by any
Governmental Authority in connection with any Environmental
Laws;
(e) The Borrower has taken all steps reasonably
necessary to determine and has determined that no hazardous
substances, solid waste, or oil and gas exploration and
production wastes, have been disposed of or otherwise released
and there has been no threatened release of any hazardous
substances on or to any Property of the Borrower or any
Subsidiary except in compliance with Environmental Laws and so
as not to pose an imminent and substantial endangerment to
public health or welfare or the environment;
(f) To the extent applicable, all Property of the
Borrower and each Subsidiary currently satisfies all design,
operation, and equipment requirements imposed by the OPA or
scheduled as of the Closing Date to be imposed by OPA during
the term of this Agreement, and the Borrower does not have any
reason to believe that such Property, to the extent subject to
OPA, will not be able to maintain compliance with the OPA
requirements during the term of this Agreement; and
(g) Neither the Borrower nor any Subsidiary has any
known contingent liability in connection with any release or
threatened release of any oil, hazardous substance or solid
waste into the environment.
Section 7.18 Compliance with the Law. Neither the
Borrower nor any Subsidiary has violated any Governmental
Requirement or failed to obtain any license, permit, franchise or
other governmental authorization necessary for the ownership of any
of its Properties or the conduct of its business, which violation
or failure would have (in the event such violation or failure were
asserted by any Person through appropriate action) a Material
Adverse Effect. Except for such acts or failures to act as would
not have a Material Adverse Effect, the Oil and Gas Properties (and
properties unitized therewith) have been maintained, operated and
developed in a good and workmanlike manner and in conformity with
all applicable laws and all rules, regulations and orders of all
duly constituted authorities having jurisdiction and in conformity
with the provisions of all leases, subleases or other contracts
comprising a part of the Hydrocarbon Interests and other contracts
and agreements forming a part of the Oil and Gas Properties;
specifically in this connection, (i) after the Closing Date, no Oil
and Gas Property is subject to having allowable production reduced
below the full and regular allowable (including the maximum
permissible tolerance) because of any overproduction (whether or
not the same was permissible at the time) prior to the Closing Date
and (ii) none of the xxxxx comprising a part of the Oil and Gas
Properties (or properties unitized therewith) are deviated from the
vertical more than the maximum permitted by applicable laws,
regulations, rules and orders, and such xxxxx are, in fact,
bottomed under and are producing from, and the producing intervals
are wholly within the Oil and Gas Properties (or in the case of
xxxxx located on properties unitized therewith, such unitized
properties).
Section 7.19 Insurance. Schedule 7.19 attached hereto
contains an accurate and complete description of all material
policies of fire, liability, workmen's compensation and other forms
of insurance maintained by or on behalf of the Borrower and each
Restricted Subsidiary. All such policies are in full force and
effect, all premium payments with respect thereto covering all
periods up to and including the date of the closing are current,
and no notice of cancellation or termination has been received with
respect to any such policy. Such policies are sufficient for
compliance with all requirements of law and of all agreements to
which the Borrower or any Restricted Subsidiary is a party; are
valid, outstanding and enforceable policies; provide adequate
insurance coverage in at least such amounts and against at least
such risks (but including in any event public liability) as are
usually insured against in the same general area by companies
engaged in the same or a similar business for the assets and
operations of the Borrower and each Restricted Subsidiary; will
remain in full force and effect through the respective dates set
forth in Schedule 7.19 without the payment of additional premiums
(except for adjustments); and will not in any way be affected by,
or terminate or lapse by reason of, the transactions contemplated
by this Agreement. Schedule 7.19 identifies all material risks, if
any, which the Borrower and the Restricted Subsidiaries and their
respective board of directors or officers have designated as being
self-insured. Neither the Borrower nor any Restricted Subsidiary
has been refused any insurance with respect to its assets or
operations, nor has its coverage been limited below usual and
customary policy limits, by an insurance carrier to which it has
applied for any such insurance or with which it has carried
insurance during the last three years.
Section 7.20 Hedging Agreements. Schedule 7.20 sets
forth, as of the Closing Date, a true and complete list of all
Hedging Agreements (including commodity price swap agreements,
forward agreements or contracts of sale which provide for
prepayment for deferred shipment or delivery of oil, gas or other
commodities) of the Borrower and each Restricted Subsidiary, the
material terms thereof (including the type, term, effective date,
termination date and notional amounts or volumes), the net xxxx to
market value thereof, all credit support agreements relating
thereto (including any margin required or supplied), and the
counterparty to each such agreement.
Section 7.21 Restriction on Liens. Except as set forth
on Schedule 7.21, neither the Borrower nor any of the Restricted
Subsidiaries is a party to any agreement or arrangement (other than
this Agreement and the Security Instruments), or subject to any
order, judgment, writ or decree, which either restricts or purports
to restrict its ability to grant Liens to other Persons on or in
respect of their respective assets or Properties.
Section 7.22 Material Agreements. Set forth on Schedule
7.22 hereto (as same may be amended quarterly and delivered
together with the reports required in Sections 8.01(a) and 8.01(b)
hereof for leases, agreements, and other documents, entered into
after the Closing Date) is a complete and correct list of all
material agreements, leases, indentures, purchase agreements,
obligations in respect of letters of credit, guarantees, joint
venture agreements, and other instruments in effect or to be in
effect as of the Closing Date (other than Hedging Agreements)
providing for, evidencing, securing or otherwise relating to any
Debt of the Borrower or any of the Restricted Subsidiaries, and all
obligations of the Borrower or any of the Restricted Subsidiaries
to issuers of surety or appeal bonds issued for account of the
Borrower or any such Restricted Subsidiary, and such list correctly
sets forth the names of the debtor or lessee and creditor or lessor
with respect to the Debt or lease obligations outstanding or to be
outstanding and the property subject to any Lien securing such Debt
or lease obligation. Also set forth on Schedule 7.22 hereto is a
complete and correct list of all material agreements and other
instruments of the Borrower and the Restricted Subsidiaries
relating to the purchase, transportation by pipeline, gas
processing, marketing, sale and supply of natural gas and other
Hydrocarbons, but in any event, any such agreement or other
instrument that will account for more than 20% of the sales of the
Borrower and the Restricted Subsidiaries during the Borrower's
current fiscal year.
Section 7.23 Gas Imbalances. As of the Closing Date,
except as set forth on Schedule 7.23 or on the most recent
certificate delivered pursuant to Section 8.07(c), on a net basis
there are no gas imbalances, take or pay or other prepayments with
respect to the Borrower's or any Restricted Subsidiary's Oil and
Gas Properties which would require the Borrower or such Restricted
Subsidiary to deliver Hydrocarbons produced from the Oil and Gas
Properties at some future time without then or thereafter receiving
full payment therefor exceeding one billion cubic feet of gas in
the aggregate.
Section 7.24 Year 2000. Any reprogramming required to
permit the proper functioning, in and following the year 2000, of
(i) the Borrower's and its Subsidiaries' computer systems and (ii)
equipment containing embedded microchips (including systems and
equipment supplied by others or with which the Borrower's and its
Subsidiaries' systems interface) and the testing of all such
systems and equipment, as so reprogrammed, has been completed. The
cost to the Borrower and its Subsidiaries of such reprogramming and
testing and of the reasonably foreseeable consequences of year 2000
to the Borrower and its Subsidiaries (including reprogramming
errors and the failure of others' systems or equipment) will not
result in any Event of Default or a Material Adverse Effect.
ARTICLE VIII
Affirmative Covenants
The Borrower covenants and agrees that, so long as any of the
Commitments are in effect and until payment in full of all
Indebtedness hereunder, all interest thereon and all other amounts
payable by the Borrower hereunder:
Section 8.01 Financial Statements. The Borrower shall
deliver, or shall cause to be delivered, to the Agent with
sufficient copies for each for the Lenders:
(a) As soon as available and in any event within 90 days
after the end of each fiscal year of the Borrower, the
statements of income, member's capital, and cash flow of the
Borrower and its Consolidated Subsidiaries for such fiscal
year, and the related balance sheets of the Borrower and its
Consolidated Subsidiaries as at the end of such fiscal year,
as contained in the audited consolidated and consolidating
financial statements of MMR and its Consolidated Subsidiaries
as at the end of such fiscal year, and setting forth in each
case in comparative form the corresponding figures for the
preceding fiscal year, and accompanied by the related opinion
of independent public accountants of recognized national
standing acceptable to the Agent which opinion shall state
that said financial statements fairly present the consolidated
financial condition and results of operations of the Borrower
and its Consolidated Subsidiaries as at the end of, and for,
such fiscal year and that such financial statements have been
prepared in accordance with GAAP except for such changes in
such principles with which the independent public accountants
shall have concurred and such opinion shall not contain a
"going concern" or like qualification or exception, and a
certificate of such accountants stating that, in making the
examination necessary for their opinion, they obtained no
knowledge, except as specifically stated, of any Default.
(b) As soon as available and in any event within 60 days
after the end of each of the first three fiscal quarterly
periods of each fiscal year of the Borrower, consolidated
statements of income, member's capital, and cash flow of the
Borrower and its Consolidated Subsidiaries for such period and
for the period from the beginning of the respective fiscal
year to the end of such period, and the related consolidated
balance sheets as at the end of such period, and setting forth
in each case in comparative form the corresponding figures for
the corresponding period in the preceding fiscal year,
accompanied by the certificate of a Responsible Officer, which
certificate shall state that said financial statements fairly
present the consolidated financial condition and results of
operations of the Borrower and its Consolidated Subsidiaries
in accordance with GAAP, as at the end of, and for, such
period (subject to normal year-end audit adjustments).
(c) Promptly after the Borrower knows that any Default
or any Material Adverse Effect has occurred, a notice of such
Default or Material Adverse Effect, describing the same in
reasonable detail and the action the Borrower proposes to take
with respect thereto.
(d) Promptly upon receipt thereof, a copy of each other
report or letter submitted to MMR, the Borrower or any
Restricted Subsidiary by independent accountants in connection
with any annual, interim or special audit made by them of the
books of MMR, the Borrower and the Restricted Subsidiaries,
and a copy of any response by MMR, the Borrower or any
Restricted Subsidiary, or the board of directors of MMR, the
Borrower or any Restricted Subsidiary, to such letter or
report.
(e) Promptly upon its becoming available, each financial
statement, report, notice or proxy statement sent by MMR to
stockholders generally and each regular or periodic report and
any registration statement, prospectus or written
communication (other than transmittal letters) in respect
thereof filed by MMR with or received by MMR in connection
therewith from any securities exchange or the SEC or any
successor agency.
(f) Promptly after the furnishing thereof, copies of any
material statement, report or notice furnished by the Borrower
to any Person pursuant to the terms of any material (i.e.,
over $1,500,000, if permitted) indenture, loan or credit or
other similar agreement, other than this Agreement and not
otherwise required to be furnished to the Lenders pursuant to
any other provision of this Section 8.01.
(g) From time to time such other information regarding
the business, affairs or financial condition of the Borrower
or any Restricted Subsidiary (including, without limitation,
any Plan or Multiemployer Plan and any reports or other
information required to be filed under ERISA) as any Lender or
the Agent may reasonably request.
(h) Simultaneously with the delivery of the Financial
Statements referred to in clauses (a) and (b) above, a report,
in form and substance satisfactory to the Agent, setting forth
as of the last Business Day of such calendar quarter a true
and complete list of all Hedging Agreements (including
commodity price swap agreements, forward agreements or
contracts of sale which provide for prepayment for deferred
shipment or delivery of oil, gas or other commodities) of the
Borrower and each Restricted Subsidiary, the material terms
thereof (including the type, term, effective date, termination
date and notional amounts or volumes), the net xxxx to market
value therefor, any new credit support agreements relating
thereto not listed on Schedule 7.20, any margin required or
supplied under any credit support document, and the
counterparty to each such agreement.
(i) Simultaneously with the delivery of the Financial
Statements referred to in clause (b) above, an update to
Schedule 7.14 setting forth all Subsidiaries of the Borrower
as of the last Business Day of such calendar quarter.
The Borrower will furnish to the Agent, at the time it furnishes
each set of financial statements pursuant to paragraph (a) or (b)
above, a certificate substantially in the form of Exhibit C hereto
executed by a Responsible Officer (i) certifying as to the matters
set forth therein and stating that no Default has occurred and is
continuing (or, if any Default has occurred and is continuing,
describing the same in reasonable detail), and (ii) setting forth
in reasonable detail the computations necessary to determine
whether the Borrower is in compliance with Sections 9.11 and 9.12
as of the end of the respective fiscal quarter or fiscal year;
provided, however, so long as the Aggregate Commitments exceed the
Threshold Amount, the certificate required to be provided pursuant
to this Section 8.01 shall be provided within 30 days after the end
of each calendar month.
Section 8.02 Litigation. The Borrower shall promptly
give to the Agent notice of all legal or arbitral proceedings, and
of all proceedings before any Governmental Authority affecting the
Borrower or any Restricted Subsidiary, except proceedings which, if
adversely determined, would not have a Material Adverse Effect.
The Borrower will, and will cause each of the Restricted
Subsidiaries to, promptly notify the Agent and each of the Lenders
of any claim, judgment, Lien or other encumbrance affecting any
Property of the Borrower or any Restricted Subsidiary if the value
of the claim, judgment, Lien, or other encumbrance affecting such
Property shall exceed $1,000,000.
Section 8.03 Maintenance, Etc.
(a) The Borrower shall and shall cause each Restricted
Subsidiary to: preserve and maintain its existence and all of
its material rights, privileges and franchises; keep books of
record and account in which full, true and correct entries
will be made of all dealings or transactions in relation to
its business and activities; comply with all Governmental
Requirements if failure to comply with such requirements will
have a Material Adverse Effect; pay and discharge all taxes,
assessments and governmental charges or levies imposed on it
or on its income or profits or on any of its Property prior to
the date on which penalties attach thereto, except for any
such tax, assessment, charge or levy the payment of which is
being contested in good faith and by proper proceedings and
against which adequate reserves are being maintained; upon
reasonable notice, permit representatives of the Agent or any
Lender, during normal business hours, to examine, copy and
make extracts from its books and records, to inspect its
Properties, and to discuss its business and affairs with its
officers, all to the extent reasonably requested by such
Lender or the Agent (as the case may be); and keep, or cause
to be kept, insured by financially sound and reputable
insurers all Property of a character usually insured by
Persons engaged in the same or similar business similarly
situated against loss or damage of the kinds and in the
amounts customarily insured against by such Persons and carry
such other insurance as is usually carried by such Persons
including, without limitation, pollution insurance to the
extent reasonably available.
(b) Contemporaneously with the delivery of the financial
statements required by Section 8.01(a) to be delivered for
each year, the Borrower will furnish or cause to be furnished
to the Agent and the Lenders a certificate of insurance
coverage from the insurer in form and substance satisfactory
to the Agent and, if requested, will furnish the Agent and the
Lenders copies of the applicable policies.
(c) The Borrower will and will cause each Restricted
Subsidiary to operate its Properties or cause such Properties
to be operated in a good and workmanlike manner in accordance
with the standard practices of the industry and in compliance
with all applicable contracts and agreements and in compliance
in all material respects with all Governmental Requirements.
(d) The Borrower will and will cause each Restricted
Subsidiary to, at its own expense, do or cause to be done all
things reasonably necessary to preserve and keep in good
repair, working order and efficiency all of its Oil and Gas
Properties subject to a Lien in favor of the Agent and other
material Properties including, without limitation, all
equipment, machinery and facilities, and from time to time
will make all the reasonably necessary repairs, renewals and
replacements so that at all times the state and condition of
its Oil and Gas Properties subject to a Lien in favor of the
Agent and other material Properties will be fully preserved
and maintained, except (1) for ordinary wear and tear, (2) for
equipment, machinery and facilities no longer used or useful
in the Borrower's or such Restricted Subsidiary's business,
(3) for casualty losses being handled in accordance with
Section 2.07(e) and (4) to the extent a portion of such
Properties is no longer capable of producing Hydrocarbons in
economically reasonable amounts. The Borrower will and will
cause each Restricted Subsidiary to promptly: (i) pay and
discharge, or make reasonable and customary efforts to cause
to be paid and discharged, all delay rentals, royalties,
expenses and indebtedness accruing under the leases or other
agreements affecting or pertaining to its Oil and Gas
Properties subject to a Lien in favor of the Agent, to the
extent that any failure to so pay or discharge would have a
Material Adverse Effect, (ii) perform or make reasonable and
customary efforts to cause to be performed, in accordance with
industry standards, the material obligations required by each
and all of the assignments, deeds, leases, subleases,
contracts and agreements affecting its interests in its Oil
and Gas Properties subject to a Lien in favor of the Agent and
other material Properties, (iii) do all other things necessary
to keep unimpaired, except for Liens described in Section
9.02, its rights with respect to its Oil and Gas Properties
subject to a Lien in favor of the Agent and other material
Properties and prevent any forfeiture thereof or a default
thereunder, except to the extent a portion of such Properties
is no longer capable of producing Hydrocarbons in economically
reasonable amounts. The Borrower will and will cause each
Restricted Subsidiary to operate its Oil and Gas Properties
subject to a Lien in favor of the Agent and other material
Properties or cause or make reasonable and customary efforts
to cause such Oil and Gas Properties and other material
Properties to be operated in a good and workmanlike manner in
accordance with the standard practices of the industry and in
compliance with all applicable contracts and agreements and in
compliance in all material respects with all Governmental
Requirements.
Section 8.04 Environmental Matters.
(a) The Borrower will and will cause each Subsidiary, to
the extent not already in place, to establish and implement
such procedures as may be reasonably necessary to continuously
determine and assure that any failure of the following does
not have a Material Adverse Effect: (i) all Property of the
Borrower and the Subsidiaries and the operations conducted
thereon and other activities of the Borrower and the
Subsidiaries are in compliance with and do not violate the
requirements of any Environmental Laws, (ii) no oil, hazardous
substances or solid wastes are disposed of or otherwise
released on or to any Property owned by any such party except
in compliance with Environmental Laws, (iii) no hazardous
substance will be released on or to any such Property in a
quantity equal to or exceeding that quantity which requires
reporting pursuant to Section 103 of CERCLA, and (iv) no oil,
oil and gas exploration and production wastes or hazardous
substance is released on or to any such Property so as to pose
an imminent and substantial endangerment to public health or
welfare or the environment.
(b) The Borrower will promptly notify the Agent and the
Lenders in writing of any material threatened action,
investigation or inquiry by any Governmental Authority of
which the Borrower has knowledge in connection with any
Environmental Laws, excluding routine testing and corrective
action.
(c) The Borrower will and will cause each Subsidiary to
provide environmental audits and tests in accordance with
American Society for Testing and Materials standards as
reasonably requested by the Agent and the Lenders (or as
otherwise required to be obtained by the Agent or the Lenders
by any Governmental Authority) in connection with any future
acquisitions of Oil and Gas Properties or other material
Properties.
Section 8.05 Further Assurances. The Borrower will and
will cause each Restricted Subsidiary to cure promptly any defects
in the creation and issuance of the Notes and the execution and
delivery of the Security Instruments and this Agreement. The
Borrower at its expense will and will cause each Restricted
Subsidiary to promptly execute and deliver to the Agent upon
request all such other documents, agreements and instruments to
comply with or accomplish the covenants and agreements of the
Borrower or any Restricted Subsidiary, as the case may be, in the
Security Instruments and this Agreement, or to further evidence and
more fully describe the collateral intended as security for the
Notes, or to correct any omissions in the Security Instruments, or
to state more fully the security obligations set out herein or in
any of the Security Instruments, or to perfect, protect or preserve
any Liens created pursuant to any of the Security Instruments, or
to make any recordings, to file any notices or obtain any consents,
all as may be necessary or appropriate in connection therewith.
Section 8.06 Performance of Obligations. The Borrower
will pay the Notes according to the reading, tenor and effect
thereof; and the Borrower will and will cause each Restricted
Subsidiary to do and perform every act and discharge all of the
obligations to be performed and discharged by them under the
Security Instruments and this Agreement, at the time or times and
in the manner specified.
Section 8.07 Engineering Reports.
(a) Not less than (i) 30 days prior to the first
Scheduled Redetermination Date to occur on April 1, 2000, and
(ii) 45 days prior to each Scheduled Redetermination Date
thereafter, the Borrower shall furnish to the Agent and the
Lenders a Reserve Report. The Reserve Report to be delivered
by March 1 of each year shall be prepared by certified
independent petroleum engineers or other independent petroleum
consultant(s) acceptable to the Agent and the Reserve Report
to be delivered by September 1 of each year shall be prepared
by or under the supervision of the chief engineer of the
Borrower who shall certify such Reserve Report to be true and
accurate and to have been prepared in accordance with the
procedures used in the immediately preceding March 1 Reserve
Report.
(b) In the event of an unscheduled redetermination, the
Borrower shall furnish to the Agent and the Lenders a Reserve
Report prepared by or under the supervision of the chief
engineer of the Borrower who shall certify such Reserve Report
to be true and accurate and to have been prepared in
accordance with the procedures used in the immediately
preceding Reserve Report. For any unscheduled redetermination
requested by the Majority Lenders or the Borrower pursuant to
Section 2.08(d), the Borrower shall provide such Reserve
Report with an "as of" date as required by the Majority
Lenders as soon as possible, but in any event no later than 30
days following the receipt of the request by the Agent on
behalf of the Majority Lenders.
(c) With the delivery of each Reserve Report, the
Borrower shall provide to the Agent and the Lenders, a
certificate from a Responsible Officer certifying that, to the
best of his knowledge and in all material respects: (i) the
information contained in the Reserve Report and any other
information delivered in connection therewith is true and
correct, (ii) the Borrower or each Restricted Subsidiary, as
applicable, owns good and defensible title to the Oil and Gas
Properties evaluated in such Reserve Report and such
Properties are free of all Liens except for Liens permitted by
Section 9.02, (iii) except as set forth on an exhibit to the
certificate, on a net basis there are no gas imbalances, take
or pay or other prepayments with respect to the Borrower's or
any Restricted Subsidiary's Oil and Gas Properties evaluated
in such Reserve Report which would require the Borrower or
such Restricted Subsidiary to deliver Hydrocarbons produced
from such Oil and Gas Properties at some future time without
then or thereafter receiving full payment therefor, (iv) none
of the Borrower's or any Restricted Subsidiary's Oil and Gas
Properties have been sold since the date of the last Borrowing
Base determination except as set forth on an exhibit to the
certificate, which certificate shall list all of such Oil and
Gas Properties sold and in such detail as reasonably required
by the Majority Lenders, (v) attached to the certificate is a
list of the Borrower's or any Restricted Subsidiary's Oil and
Gas Properties added to and deleted from the immediately prior
Reserve Report and a list showing any change in working
interest or net revenue interest in the Borrower's or any
Restricted Subsidiary's Oil and Gas Properties occurring and
the reason for such change, (vi) attached to the certificate
is a list of all Persons disbursing proceeds to the Borrower
or a Restricted Subsidiary from its Oil and Gas Properties and
(vii) Schedule B attached to such Reserve Report is a listing
of the Oil and Gas Properties to be considered in the
determination of the Borrowing Base.
(d) As soon as available and in any event within 60 days
after the end of each calendar quarter, the Borrower shall
provide production reports and lease operating summaries by
lease for the Borrower's and each Restricted Subsidiary's Oil
and Gas Properties subject to a Lien in favor of the Agent,
which reports shall include quantities or volume of
production, revenue, realized product prices, operating
expenses, taxes, capital expenditures and lease operating
costs which have accrued to the Borrower's or such Restricted
Subsidiary's accounts in such period, and such other
information with respect thereto as the Agent may reasonably
require; provided, however, for the period from and after
January 1, 2000, up to and including April 28, 2000, so long
as the Aggregate Commitments exceed the Threshold Amount, the
Borrower shall provide, or cause to be provided, all reports,
summaries and other information required by this
Section 8.07(d) within 30 days after the end of each calendar
month.
Section 8.08 Title Information.
(a) On or before the delivery to the Agent and the
Lenders of each Reserve Report required by Section 8.07(a),
the Borrower will deliver, or cause to be delivered, title
information in form and substance acceptable to the Agent
covering enough of the Hydrocarbon Interests included in the
Borrowing Base that were not included in the immediately
preceding Reserve Report, so that the Agent shall have
received together with title information previously delivered
to the Agent, satisfactory title information on 100% of the
value of the Hydrocarbon Interests included in the Borrowing
Base.
(b) The Borrower shall cure, or cause to be cured, any
title defects or exceptions which are not Excepted Liens
raised by such information, or substitute, or cause to be
substituted, acceptable Mortgaged Properties with no title
defects or exceptions except for Excepted Liens covering
Mortgaged Properties of an equivalent value, within 30 days
after a request by the Agent or the Lenders to cure such
defects or exceptions.
(c) If the Borrower is unable to cure, or cause to be
cured, any title defect requested by the Agent or the Lenders
to be cured within the 30-day period or the Borrower does not
comply with the requirements to provide acceptable title
information covering 100% of the value of the Oil and Gas
Properties evaluated in the most recent Reserve Report, such
default shall not be a Default or an Event of Default, but
instead the Agent and the Lenders shall have the right to
exercise the following remedy in their sole discretion from
time to time, and any failure to so exercise this remedy at
any time shall not be a waiver as to future exercise of the
remedy by the Agent or the Lenders. To the extent that the
Agent or the Lenders are not satisfied with title to any
Mortgaged Property after the time period in Section 8.08(b)
has elapsed, such unacceptable Mortgaged Property shall not
count towards the 100% requirement, and the Agent may send a
notice to the Borrower and the Lenders that the then
outstanding Borrowing Base shall be reduced by an amount as
determined by the Majority Lenders to cause the Borrower to be
in compliance with the requirement to provide, or cause to be
provided, acceptable title information on 100% of the value of
the Hydrocarbon Interests included in the Borrowing Base.
This new Borrowing Base shall become effective immediately
after receipt of such notice.
Section 8.09 Collateral.
(a) Acquisitions. Should the Borrower or any Restricted
Subsidiary acquire any additional Oil and Gas Properties which
will be part of the Oil and Gas Properties included in the
Borrowing Base, the Borrower or such Restricted Subsidiary
will grant to the Agent as security for the Indebtedness a
first-priority Lien interest (subject only to Liens permitted
under Section 9.02) on the Borrower's or such Restricted
Subsidiary's interest in any such Oil and Gas Properties
included in the Borrowing Base not already subject to a Lien
of the Security Instruments, which Lien will be created and
perfected by and in accordance with the provisions of
mortgages, deeds of trust, security agreements and financing
statements, or other Security Instruments, all in form and
substance satisfactory to the Agent in its sole discretion and
in sufficient executed (and acknowledged where necessary or
appropriate) counterparts for recording purposes.
(b) Concurrently with the granting of the Lien or other
action referred to in Section 8.09(a) above, the Borrower will
provide, or cause to be provided, to the Agent title
information in form and substance satisfactory to the Agent in
its reasonable discretion with respect to the Borrower's or
such Restricted Subsidiary's interests in such Oil and Gas
Properties.
(c) Also, promptly after the filing in any state of each
new Security Instrument delivered pursuant to Section 8.09(a),
upon the reasonable request of the Agent, the Borrower will
provide, or cause to be provided, to the Agent an opinion
addressed to the Agent for the benefit of the Lenders in form
and substance satisfactory to the Agent in its sole discretion
from counsel acceptable to the Agent, stating that such
Security Instrument is valid, binding and enforceable in
accordance with its terms and in legally sufficient form for
recordation in such jurisdiction.
Section 8.10 ERISA Information and Compliance. When
requested by the Agent, the Borrower will promptly furnish and will
cause the Subsidiaries and any ERISA Affiliate to promptly furnish
to the Agent with sufficient copies to the Lenders copies of each
annual and other report with respect to each Plan or any trust
created thereunder filed with the United States Secretary of Labor,
the Internal Revenue Service or the PBGC. The Borrower will
promptly notify the Agent immediately upon becoming aware of the
occurrence of any ERISA Event or, with respect to any Restricted
Subsidiary or Plan thereof, of any "prohibited transaction," as
described in section 406 of ERISA or in section 4975 of the Code,
in connection with any Plan or any trust created thereunder, to the
extent that such ERISA Event or Aprohibited transaction@ results in
a Material Adverse Effect, in a written notice signed by a
Responsible Officer specifying the nature thereof, what action the
Borrower, the Subsidiary or the ERISA Affiliate is taking or
proposes to take with respect thereto, and, when known, any action
taken or proposed by the Internal Revenue Service, the Department
of Labor or the PBGC with respect thereto. Immediately upon
receipt thereof, the Borrower will promptly send to the Agent, with
sufficient copies to the Lenders, copies of any notice of the
PBGC's intention to terminate or to have a trustee appointed to
administer any Plan. With respect to each Plan (other than a
Multiemployer Plan), the Borrower will, and will cause each
Subsidiary and ERISA Affiliate to, (i) satisfy in full, without
giving rise to any lien, all of the contribution and funding
requirements of section 412 of the Code (determined without regard
to subsections (d), (e), (f) and (k) thereof) and of section 302 of
ERISA (determined without regard to sections 303, 304 and 306 of
ERISA), and (ii) pay, or cause to be paid, to the PBGC all premiums
required pursuant to sections 4006 and 4007 of ERISA.
ARTICLE IX
Negative Covenants
The Borrower covenants and agrees that, so long as any of the
Commitments are in effect and until payment in full of Loans
hereunder, all interest thereon and all other amounts payable by
the Borrower hereunder, without the prior written consent of the
Majority Lenders:
Section 9.01 Debt. Neither the Borrower nor any
Restricted Subsidiary will incur, create, assume or suffer to exist
any Debt, except:
(a) the Notes or other Indebtedness arising under the
Loan Documents or any guaranty of or suretyship arrangement
for the Notes or other Indebtedness arising under the Loan
Documents;
(b) Debt existing on the Closing Date which is reflected
in the Financial Statements or is disclosed in Schedule 9.01,
and any renewals, extensions or refinancings (but not
increases) thereof;
(c) Debt (unrelated to Unrestricted Subsidiaries and
other than for borrowed money) incurred in the ordinary course
of business in connection with Hydrocarbon transportation,
Hydrocarbon purchasing or other similar arrangements, provided
that such arrangements are disclosed to the Agent and the
costs of the financing related to such arrangements are
incorporated into the Engineering Reports provided to the
Agent;
(d) Debt under Hedging Agreements with a Lender or
another counterparty rated BBB+ by Standard & Poor's Ratings
Services or better (or the equivalent rating by another
nationally recognized rating service), the notional amounts of
which, with respect to commodity Hedging Agreements, do not
exceed 80% of Borrower's anticipated oil and/or gas
production from producing xxxxx to be produced during the term
of such Hedging Agreements, entered into as a part of its
normal business operations as a risk management strategy
and/or hedge against changes resulting from market conditions
related to the Borrower's and its Subsidiaries' operations;
(e) So long as the Threshold Amount equals the Aggregate
Commitments and no Borrowing Base Deficiency has occurred
which is continuing, additional Debt (including, without
limitation, guarantees of Debt of Unrestricted Subsidiaries)
with an outstanding aggregate principal amount not at any time
in excess of $5,000,000; provided, however, that the Borrowing
Base shall be reduced by the amount of all such Debt
outstanding at any time which is in excess of $1,500,000.
(f) Debt secured by the Liens permitted by clause (x) of
the definition of "Excepted Liens"; provided that such Debt is
discharged within 180 days of the relevant acquisition or
merger;
(g) Debt consisting of a pledge of investments in
Unrestricted Subsidiaries permitted by clause (xii) of the
definition of "Excepted Liens"; provided that such Debt is
recourse solely to the investment so pledged;
(h) loans and advances between the Restricted
Subsidiaries, to any Restricted Subsidiary from the Borrower
and to the Borrower from any Restricted Subsidiary;
(i) Debt approved by the Majority Lenders which is
subordinated on terms satisfactory to the Majority Lenders to
the payment of the Indebtedness (with the Borrowing Base in
effect from time to time being reduced by an amount equal to
any effect upon the Borrowing Base occasioned by such
subordinated Debt in the judgment of the Majority Lenders).
Section 9.02 Liens. Neither the Borrower nor any
Restricted Subsidiary will create, incur, assume or permit to exist
any Lien on any of its Properties included in the Borrowing Base
(now owned or hereafter acquired), except:
(a) Liens securing the payment of any Indebtedness;
(b) Excepted Liens;
(c) Liens securing capital leases allowed under Section
9.01(e) but only on the Property under lease;
(d) Liens disclosed on Schedule 9.02; and
(e) Liens on cash or securities of the Borrower securing
the Debt described in Sections 9.01(c) and (d);
provided, however, the exceptions permitted under this Section 9.02
shall not permit any contractual Liens upon the Oil and Gas
Properties which are included in the Borrowing Base superior to any
Liens in favor of the Agent as security for the Indebtedness.
Section 9.03 Investments, Loans and Advances. Neither
the Borrower nor any Restricted Subsidiary will make or permit to
remain outstanding any loans or advances to or investments in any
Person which is not the Borrower or a Restricted Subsidiary, but
which does include Unrestricted Subsidiaries (each such Person
being a "Third Party") (which shall include any payments on behalf
of any Unrestricted Subsidiary and shall include the Borrower's
investments in and any loans and advances to any Restricted
Subsidiaries that become Unrestricted Subsidiaries in accordance
with Section 9.16 and the definition of "Unrestricted Subsidiary"),
except that the foregoing restriction shall not apply to:
(a) investments, loans or advances reflected in the
Financial Statements or which are disclosed to the Lenders in
Schedule 9.03;
(b) accounts receivable arising in the ordinary course
of business;
(c) direct obligations of the United States or any
agency thereof, or obligations guaranteed by the United States
or any agency thereof, in each case maturing within one year
from the date of creation thereof;
(d) commercial paper maturing within one year from the
date of creation thereof rated in the highest grade by
Standard & Poors Ratings Services or Xxxxx'x Investors
Service, Inc.;
(e) deposits maturing within one year from the date of
creation thereof with, including certificates of deposit
issued by, any Lender or any office located in the United
States of any other bank or trust company which is organized
under the laws of the United States or any state thereof, has
capital, surplus and undivided profits aggregating at least
$100,000,000.00 (as of the date of such Lender's or bank or
trust company's most recent financial reports) and has a short
term deposit rating of no lower than A2 or P2, as such rating
is set forth from time to time, by Standard & Poors Ratings
Services or Xxxxx'x Investors Service, Inc., respectively;
(f) deposits in money market funds investing exclusively
in investments described in Section 9.03(c), 9.03(d) or
9.03(e);
(g) investments in direct ownership interests in
additional Oil and Gas Properties and gas gathering systems
related thereto;
(h) investments in Unrestricted Subsidiaries in the form
of Oil and Gas Properties which are included in the Borrowing
Base with adjustments to be made to the Borrowing Base with
respect to the elimination of such properties from the
Borrowing Base; provided, however, the approval of the
Majority Lenders shall be required for such removal of a
property from the Borrowing Base; and
(i) investments, loans and advances of cash and any
other Property not included in the Borrowing Base in an
aggregate outstanding amount not at any time in excess of
(when aggregated with net dividends, distributions and
redemptions permitted under Section 9.04) $7,200,000;
provided, however, that with respect to investments of
Property, only the amount of the excess (if any) of the book
value of such Property over the consideration received by the
transferor in connection with the investment of such Property
shall count against such $7,200,000 limit; and provided
further, however, that if the Borrowing Base is more than 50%
utilized, or if the making of any such investment, loan or
advance using the proceeds of a Loan would result in the
Borrowing Base being more than 50% utilized, then no such
investment, loan or advance otherwise permitted by this
Section 9.03 may be made using the proceeds of a Loan
hereunder.
Section 9.04 Dividends, Distributions and Redemptions.
The Borrower will not declare or pay any dividend, purchase,
redeem or otherwise acquire for value any of its stock now or
hereafter outstanding, return any capital to its stockholders or
make any distribution of its assets to its stockholders, except
that:
(a) The Borrower may make dividends, distributions and
redemptions to its parent not to exceed $2,800,000 on a one
time basis following the Closing Date; provided, however, that
such dividends, distributions and redemptions shall not be
permitted hereunder if an Event of Default has occurred and is
continuing or would result therefrom; and
(b) The Borrower may make dividends, distributions and
redemptions to its parent in addition to the amounts set forth in
subparagraph (a) of this Section 9.04 so long as the aggregate
amount of net dividends, distributions and redemptions (excluding
the dividends, distributions and redemptions described in
subparagraph (a) of this Section 9.04), when aggregated with
investments, loans and advances permitted under Section 9.03(i), do
not exceed $7,200,000; provided, however, that such dividends,
distributions and redemptions shall not be permitted hereunder if
an Event of Default has occurred and is continuing or would result
therefrom; and provided further, however, that for any dividend,
distribution or redemption made by the Borrower to the parent after
January 31, 2000, if the Borrowing Base is more than 50% utilized,
or if the making of any such dividend, distribution or redemption
using the proceeds of a Loan would result in the Borrowing Base
being more than 50% utilized, then no such dividend, distribution
or redemption otherwise permitted by this Section 9.04 may be made
using the proceeds of a Loan hereunder.
Section 9.05 Sales and Leasebacks. Neither the Borrower
nor any Restricted Subsidiary will enter into any arrangement,
directly or indirectly, with any Person whereby the Borrower or any
Restricted Subsidiary shall sell or transfer any of its Property
included in the Borrowing Base, whether now owned or hereafter
acquired, and whereby the Borrower or any Restricted Subsidiary
shall then or thereafter rent or lease as lessee such Property or
any part thereof or other Property which the Borrower or any
Restricted Subsidiary intends to use for substantially the same
purpose or purposes as the Property sold or transferred.
Section 9.06 Nature of Business. Neither the Borrower
nor any Restricted Subsidiary will allow any material change to be
made in the character of its business as an independent oil and gas
exploration and production company.
Section 9.07 Mergers, Etc. Neither the Borrower nor any
Restricted Subsidiary will merge into or with or consolidate with
any other Person, or sell, lease or otherwise dispose of (whether
in one transaction or in a series of transactions) all or
substantially all of its Property or assets to any other Person,
except that:
(a) the Borrower or any Restricted Subsidiary may merge
or liquidate any other Person into itself, so long as the
surviving entity will be in compliance with all of the terms
of this Agreement immediately following the merger or
liquidation;
(b) any Restricted Subsidiary may merge or liquidate
into the Borrower or another Restricted Subsidiary; and
(c) any Restricted Subsidiary may be merged into any
other Person; provided that such other Person, immediately
following such merger, shall be deemed a Restricted Subsidiary
and shall comply with the provisions of Section 9.16 hereof;
provided, however, that in the case of a merger permitted by
clauses (a) and (b) above, immediately thereafter and giving
effect thereto, the Borrower or, as the case may be, a
Restricted Subsidiary would be the surviving Person and, in
the case of a merger permitted by clause (a), (b), (c), or (d)
above, no Default or Event of Default would, immediately
thereafter and giving effect thereto, have occurred and be
continuing.
Section 9.08 Proceeds of Notes. The Borrower will not
permit the proceeds of the Notes to be used for any purpose other
than those permitted by Section 7.07. Neither the Borrower nor
any Person acting on behalf of the Borrower has taken or will take
any action which might cause any of the Loan Documents to violate
Regulation G, U or X or any other regulation of the Board of
Governors of the Federal Reserve System or to violate Section 7 of
the Securities Exchange Act of 1934 or any rule or regulation
thereunder, in each case as now in effect or as the same may
hereinafter be in effect.
Section 9.09 ERISA Compliance. The Borrower will not at
any time engage in or permit any of the following if a Material
Adverse Effect would result:
(a) Engage in, or permit any Restricted Subsidiary or
ERISA Affiliate to engage in, any transaction in connection
with which the Borrower, any Restricted Subsidiary or any
ERISA Affiliate could be subjected to either a civil penalty
assessed pursuant to section 502(c), (i) or (l) of ERISA or a
tax imposed by Chapter 43 of Subtitle D of the Code;
(b) Terminate, or permit any Subsidiary or ERISA
Affiliate to terminate, any Plan in a manner, or take any
other action with respect to any Plan, which could result in
any liability of the Borrower, any Subsidiary or any ERISA
Affiliate to the PBGC;
(c) Fail to make, or permit any Restricted Subsidiary to
fail to make, full payment of all amounts which, under the
provisions of any Plan, agreement relating thereto or
applicable law, the Borrower or a Restricted Subsidiary is
required to pay as contributions thereto;
(d) Permit to exist, or allow any Subsidiary or ERISA
Affiliate to permit to exist, any accumulated funding
deficiency within the meaning of Section 302 of ERISA or
Section 412 of the Code, whether or not waived, with respect
to any Plan;
(e) Permit, or allow any Subsidiary or ERISA Affiliate
to permit, the actuarial present value of the benefit liabil-
ities under any Plan maintained by the Borrower, any
Subsidiary or any ERISA Affiliate which is regulated under
Title IV of ERISA to exceed the current value of the assets
(computed on a plan termination basis in accordance with
Title IV of ERISA) of such Plan allocable to such benefit
liabilities to the extent that such liability can not be paid
in the ordinary course. The term "actuarial present value of
the benefit liabilities" shall have the meaning specified in
section 4041 of ERISA;
(f) Contribute to or assume an obligation to contribute
to, or permit any Subsidiary or ERISA Affiliate to contribute
to or assume an obligation to contribute to, any Multiemployer
Plan;
(g) Acquire, or permit any Subsidiary or ERISA Affiliate
to acquire, an interest in any Person that causes such Person
to become an ERISA Affiliate with respect to the Borrower, any
Subsidiary or any ERISA Affiliate if such Person sponsors,
maintains or contributes to, or at any time in the six-year
period preceding such acquisition has sponsored, maintained,
or contributed to, (1) any Multiemployer Plan, or (2) any
other Plan that is subject to Title IV of ERISA under which
the actuarial present value of the benefit liabilities under
such Plan exceeds the current value of the assets (computed on
a plan termination basis in accordance with Title IV of ERISA)
of such Plan allocable to such benefit liabilities;
(h) Incur, or permit any Subsidiary or ERISA Affiliate
to incur, a liability to or on account of a Plan under
sections 515, 4062, 4063, 4064, 4201 or 4204 of ERISA;
(i) Contribute to or assume an obligation to contribute
to, or permit any Restricted Subsidiary to contribute to or
assume an obligation to contribute to, any employee welfare
benefit plan, as defined in section 3(1) of ERISA, including,
without limitation, any such plan maintained to provide
benefits to former employees of such entities, that may not be
terminated by such entities in their sole discretion at any
time without any material liability; or
(j) Amend or permit any Subsidiary or ERISA Affiliate to
amend, a Plan resulting in an increase in current liability
such that the Borrower, any Subsidiary or any ERISA Affiliate
is required to provide security to such Plan under section
401(a)(29) of the Code.
Section 9.10 Sale or Discount of Receivables. Neither
the Borrower nor any Restricted Subsidiary will discount or sell
(with or without recourse) any of its notes receivable or accounts
receivable except (i) in the ordinary course of business, or (ii)
in connection with a receivables asset securitization, otherwise
permitted under this Agreement.
Section 9.11 Ratio of Debt to EBITDAX. The Borrower
will not permit the ratio of Debt to EBITDAX as of the end of any
fiscal quarter of the Borrower (calculated on a rolling four
quarter basis) to be greater than 2.50 to 1.00 for any fiscal
quarter. As used in this Agreement, "rolling four quarter basis"
shall mean, as to any fiscal quarter, such quarter and the three
preceding fiscal quarters; provided, however, so long as the
Aggregate Commitments exceed the Threshold Amount, the ratio of
Debt to EBITDAX will be determined as of the end of each calendar
month.
Section 9.12 Interest Coverage Ratio. The Borrower will
not permit its Interest Coverage Ratio as of the end of any fiscal
quarter of the Borrower (calculated on a rolling four quarter
basis) to be less than 3.00 to 1.00. For the purposes of this
Section 9.12, "Interest Coverage Ratio" shall mean the ratio of (i)
EBITDAX for the four fiscal quarters ending on such date to (ii)
cash interest payments made for such four fiscal quarters of the
Borrower and its Restricted Subsidiaries, provided, however, so
long as the Aggregate Commitments exceed the Threshold Amount, the
Interest Coverage Ratio will be determined as of the end of each
calendar month.
Section 9.13 Sale of Oil and Gas Properties. The
Borrower will not, and will not permit any Restricted Subsidiary
to, sell, assign, farm-out, convey or otherwise transfer any Oil
and Gas Property subject to a Lien in favor of the Agent or any
interest in any Oil and Gas Property subject to a Lien in favor of
the Agent, unless (i) no Default shall have occurred and be
continuing and (ii) simultaneously with any such disposition of Oil
and Gas Properties included in the Borrowing Base, the Borrowing
Base is reduced by an amount reasonably determined at the time by
the Agent to reflect the contribution to the Borrowing Base of the
Oil and Gas Property so disposed of.
Section 9.14 Environmental Matters. Neither the
Borrower nor any Subsidiary will cause or permit any of its
Property to be in violation of, or do anything or permit anything
to be done which will subject any such Property to any remedial
obligations under any Environmental Laws, assuming disclosure to
the applicable Governmental Authority of all relevant facts,
conditions and circumstances, if any, pertaining to such Property
where such violations or remedial obligations would have a Material
Adverse Effect.
Section 9.15 Transactions with Affiliates. Neither the
Borrower nor any Restricted Subsidiary will enter into any
transaction, including, without limitation, any purchase, sale,
lease or exchange of Property or the rendering of any service, with
any Affiliate unless such transactions are otherwise permitted
under this Agreement, are in the ordinary course of its business
and are upon fair and reasonable terms no less favorable to it than
it would obtain in a comparable arm's length transaction with a
Person not an Affiliate.
Section 9.16 Subsidiaries. The Borrower shall not and
shall not permit any Restricted Subsidiary to sell or to issue any
stock or ownership interest of a Restricted Subsidiary except to
the Borrower or a Restricted Subsidiary and except in compliance
with Section 9.03. The Borrower shall not create any additional
Subsidiaries or permit any Restricted Subsidiary to do so, except:
(a) the Borrower or any Restricted Subsidiary may create
(by formation or by an acquisition otherwise permitted by this
Agreement) a Restricted Subsidiary provided, that:
(i) each new Restricted Subsidiary shall forthwith
execute and deliver to the Agent for the benefit of the
Lenders a written instrument of guaranty, unconditionally
guaranteeing payment of all Indebtedness of the Borrower;
and
(ii) simultaneously with the delivery of the
aforementioned written instrument of guaranty, each new
Restricted Subsidiary shall deliver to the Agent a
certificate of the Secretary or Assistant Secretary of
such Restricted Subsidiary setting forth (A) resolutions
of its board of directors with respect to the
authorization of such Restricted Subsidiary to execute
and deliver such written instrument of guaranty and to
enter into the transactions contemplated thereby, (B) the
officers of such Restricted Subsidiary (y) who are
authorized to sign such written instrument of guaranty,
and (z) who will, until replaced by another officer or
officers duly authorized for that purpose, act as its
representative for the purposes of signing documents and
giving notices and other communications in connection
with such written instrument of guaranty and the
transactions contemplated thereby, (C) specimen
signatures for such officers, and (D) the articles or
certificate of incorporation and bylaws of such
Restricted Subsidiary, certified as being true and
complete. The Agent and the Lenders may conclusively
rely on such certificate until the Agent receives notice
in writing from the Borrower or such Restricted
Subsidiary to the contrary;
(b) the Borrower or a Restricted Subsidiary may create
(by formation or by an acquisition otherwise permitted by this
Agreement) additional Subsidiaries provided, that, such
Subsidiary is designated as an Unrestricted Subsidiary by a
certificate of the Borrower signed by both of the chief
financial officer (or treasurer) and the general counsel of
the Borrower, which certificate shall be delivered to the
Agent.
Section 9.17 Negative Pledge Agreements. Neither the
Borrower nor any Restricted Subsidiary will create, incur, assume
or suffer to exist any contract, agreement or understanding (other
than this Agreement and the Security Instruments) which in any way
prohibits or restricts the granting, conveying, creation or
imposition of any Lien on any of its Property included in the
Borrowing Base or restricts any Restricted Subsidiary from paying
dividends to the Borrower, or which requires the consent of or
notice to other Persons in connection therewith.
Section 9.18 Gas Imbalances, Take-or-Pay or Other
Prepayments. The Borrower will not allow gas imbalances, take-or-
pay or other prepayments with respect to the Oil and Gas Properties
of the Borrower or any Restricted Subsidiary which would require
the Borrower or such Restricted Subsidiary to deliver Hydrocarbons
produced on Oil and Gas Properties at some future time without then
or thereafter receiving full payment therefor to exceed one billion
cubic feet of gas in the aggregate on a net basis for the Borrower
and the Restricted Subsidiaries.
ARTICLE X
Events of Default; Remedies
Section 10.01 Events of Default. One or more of the
following events shall constitute an "Event of Default":
(a) the Borrower shall default in the payment or
prepayment (including, without limitation, prepayments
resulting from a Borrowing Base Deficiency, but excluding
prepayment to be made pursuant to revocable notices delivered
pursuant to Section 2.07(a) hereof) when due of any principal
of or interest on any Loan, or any reimbursement obligation
for a disbursement made under any Letter of Credit, or any
fees or other amount payable by it hereunder or under any
Security Instrument and such default, other than a default of
a payment or prepayment of principal (which shall have no cure
period) shall continue unremedied for a period of 3 Business
Days; or
(b) the Borrower or any Restricted Subsidiary shall
default in the payment when due of any principal of or
interest on any of its other Debt aggregating $500,000 or
more, or any event specified in any note, agreement, indenture
or other document evidencing or relating to any such Debt
shall occur if the effect of such event is to cause, or (with
the giving of any notice or the lapse of time or both) to
permit the holder or holders of such Debt (or a trustee or
agent on behalf of such holder or holders) to cause, such Debt
to become due prior to its stated maturity; or
(c) any representation, warranty or certification made
or deemed made herein or in any Security Instrument by the
Borrower or any Restricted Subsidiary, or any certificate
furnished to any Lender or the Agent pursuant to the
provisions hereof or any Security Instrument, shall prove to
have been false or misleading as of the time made or furnished
in any material respect; or
(d) the Borrower shall default in the performance of any
of its obligations under Article IX or any other Article of
this Agreement other than under Article VIII; or the Borrower
shall default in the performance of any of its obligations
under Article VIII or the Borrower or any Restricted
Subsidiary shall default in the performance of any of its
obligations under any Security Instrument (other than the
payment of amounts due which shall be governed by Section
10.01(a)) and such default shall continue unremedied for a
period of thirty (30) days after the earlier to occur of (i)
notice thereof to the Borrower by the Agent or any Lender
(through the Agent), or (ii) the Borrower otherwise becoming
aware of such default; or
(e) the Borrower shall admit in writing its inability
to, or be generally unable to, pay its debts as such debts
become due; or
(f) the Borrower shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver,
custodian, trustee or liquidator of itself or of all or a
substantial part of its property, (ii) make a general
assignment for the benefit of its creditors, (iii) commence a
voluntary case under the Federal Bankruptcy Code (as now or
hereafter in effect), (iv) file a petition seeking to take
advantage of any other law relating to bankruptcy, insolvency,
reorganization, winding-up, liquidation or composition or
readjustment of debts, (v) fail to controvert in a timely and
appropriate manner, or acquiesce in writing to, any petition
filed against it in an involuntary case under the Federal
Bankruptcy Code, or (vi) take any corporate action for the
purpose of effecting any of the foregoing; or
(g) a proceeding or case shall be commenced, without the
application or consent of the Borrower, in any court of
competent jurisdiction, seeking (i) its liquidation,
reorganization, dissolution or winding-up, or the composition
or readjustment of its debts, (ii) the appointment of a
trustee, receiver, custodian, liquidator or the like of the
Borrower of all or any substantial part of its assets, or
(iii) similar relief in respect of the Borrower under any law
relating to bankruptcy, insolvency, reorganization, winding-
up, or composition or adjustment of debts, and such proceeding
or case shall continue undismissed, or an order, judgment or
decree approving or ordering any of the foregoing shall be
entered and continue unstayed and in effect, for a period of
60 days; or (iv) an order for relief against the Borrower
shall be entered in an involuntary case under the Federal
Bankruptcy Code; or
(h) a judgment or judgments for the payment of money in
excess of $500,000 in the aggregate shall be rendered by a
court against the Borrower or any Restricted Subsidiary and
the same shall not be discharged (or arrangements satisfactory
to the Agent shall not be made for such discharge), or a stay
of execution thereof shall not be procured, within thirty (30)
days from the date of entry thereof and the Borrower or such
Restricted Subsidiary shall not, within said period of 30
days, or such longer period during which execution of the same
shall have been stayed, appeal therefrom and cause the
execution thereof to be stayed during such appeal; or
(i) the Security Instruments after delivery thereof
shall for any reason, except to the extent permitted by the
terms thereof, cease to be in full force and effect and valid,
binding and enforceable in accordance with their terms, or
cease to create a valid and perfected Lien of the priority
required thereby on any of the collateral purported to be
covered thereby, except to the extent permitted by the terms
of this Agreement, or the Borrower shall so state in writing;
or
(j) any Letter of Credit becomes the subject matter of
any order, judgment, injunction or any other such
determination, or if the Borrower or any other Person shall
petition or apply for or obtain any order restricting payment
by the Agent under any Letter of Credit or extending the
Lenders' liability under any Letter of Credit beyond the
expiration date stated therein or otherwise agreed to by the
Agent; or
(k) the Borrower discontinues its usual business or
suffers to exist any material change in its ownership, control
or management; or
(l) any Restricted Subsidiary takes, suffers or permits
to exist any of the events or conditions referred to in
paragraphs (e), (f), (g) or (h) hereof; or
(m) a Borrowing Base Deficiency shall remain after the
applicable time period provided for in Section 2.07(c).
Section 10.02 Remedies.
(a) In the case of an Event of Default other than one
referred to in clauses (e), (f) or (g) of Section 10.01 or in
clause (l) to the extent it relates to clauses (e), (f) or
(g), the Agent, upon request of the Majority Lenders, shall,
by notice to the Borrower, cancel the Commitments and/or
declare the principal amount then outstanding of, and the
accrued interest on, the Loans and all other amounts payable
by the Borrower hereunder and under the Notes (including
without limitation the payment of cash collateral to secure
the LC Exposure as provided in Section 2.10(b) hereof) to be
forthwith due and payable, whereupon such amounts shall be
immediately due and payable without presentment, demand,
protest, notice of intent to accelerate, notice of
acceleration or other formalities of any kind, all of which
are hereby expressly waived by the Borrower.
(b) In the case of the occurrence of an Event of Default
referred to in clauses (e), (f) or (g) of Section 10.01 or in
clause (l) to the extent it relates to clauses (e), (f) or
(g), the Commitments shall be automatically canceled and the
principal amount then outstanding of, and the accrued interest
on, the Loans and all other amounts payable by the Borrower
hereunder and under the Notes (including without limitation
the payment of cash collateral to secure the LC Exposure as
provided in Section 2.10(b) hereof) shall become automatically
immediately due and payable without presentment, demand,
protest, notice of intent to accelerate, notice of
acceleration or other formalities of any kind, all of which
are hereby expressly waived by the Borrower.
(c) All proceeds received after maturity of the Notes,
whether by acceleration or otherwise shall be applied first to
reimbursement of expenses and indemnities provided for in this
Agreement and the Security Instruments; second to accrued
interest on the Notes; third to fees; fourth pro rata to
principal outstanding on the Notes and other Indebtedness;
fifth to serve as cash collateral to be held by the Agent to
secure the LC Exposure; and any excess shall be paid to the
Borrower or the Restricted Subsidiaries, as applicable, or as
otherwise required by any Governmental Requirement.
ARTICLE XI
The Agent
Section 11.01 Appointment, Powers and Immunities. Each
Lender hereby irrevocably appoints and authorizes the Agent to act
as its agent hereunder and under the Security Instruments with
such powers as are specifically delegated to the Agent by the terms
of this Agreement and the Security Instruments, together with such
other powers as are reasonably incidental thereto. The Agent
(which term as used in this sentence and in Section 11.05 and the
first sentence of Section 11.06 shall include reference to its
Affiliates and its and its Affiliates' officers, directors,
employees, attorneys, accountants, experts and agents): (i) shall
have no duties or responsibilities except those expressly set forth
in the Loan Documents, and shall not by reason of the Loan
Documents be a trustee or fiduciary for any Lender; (ii) makes no
representation or warranty to any Lender and shall not be
responsible to the Lenders for any recitals, statements,
representations or warranties contained in this Agreement, or in
any certificate or other document referred to or provided for in,
or received by any of them under, this Agreement, or for the value,
validity, effectiveness, genuineness, execution, legality,
enforceability or sufficiency of this Agreement, any Note or any
other document referred to or provided for herein or for any
failure by the Borrower or any other Person (other than the Agent)
to perform any of its obligations hereunder or thereunder or for
the existence, value, perfection or priority of any collateral
security or the financial or other condition of the Borrower, the
Subsidiaries or any other obligor or guarantor; (iii) except
pursuant to Section 11.07 shall not be required to initiate or
conduct any litigation or collection proceedings hereunder; and
(iv) shall not be responsible for any action taken or omitted to be
taken by it hereunder or under any other document or instrument
referred to or provided for herein or in connection herewith
including its own ordinary negligence, except for its own gross
negligence or willful misconduct. The Agent may employ agents,
accountants, attorneys and experts and shall not be responsible for
the negligence or misconduct of any such agents, accountants,
attorneys or experts selected by it in good faith or any action
taken or omitted to be taken in good faith by it in accordance with
the advice of such agents, accountants, attorneys or experts. The
Agent may deem and treat the payee of any Note as the holder
thereof for all purposes hereof unless and until a written notice
of the assignment or transfer thereof permitted hereunder shall
have been filed with the Agent. The Agent is authorized to release
any collateral that is permitted to be sold or released pursuant to
the terms of the Loan Documents.
Section 11.02 Reliance by Agent. The Agent shall be
entitled to rely upon any certification, notice or other
communication (including any thereof by telephone, telex,
telecopier, telegram or cable) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the
proper Person or Persons, and upon advice and statements of legal
counsel, independent accountants and other experts selected by the
Agent.
Section 11.03 Defaults. The Agent shall not be deemed
to have knowledge of the occurrence of a Default (other than the
non-payment of principal of or interest on Loans or of fees or
failure to reimburse for Letter of Credit drawings) unless the
Agent has received notice from a Lender or the Borrower specifying
such Default and stating that such notice is a "Notice of Default."
In the event that the Agent receives such a notice of the
occurrence of a Default, the Agent shall give prompt notice thereof
to the Lenders. In the event of a payment Default, the Agent shall
give each Lender prompt notice of each such payment Default.
Section 11.04 Rights as a Lender. With respect to its
Commitments and the Loans made by it and its participation in the
issuance of Letters of Credit, Chase (and any successor acting as
Agent) 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. Chase
(and any successor acting as Agent) and its Affiliates may (without
having to account therefor to any Lender) accept deposits from,
lend money to and generally engage in any kind of banking, trust or
other business with the Borrower (and any of its Affiliates) as if
it were not acting as the Agent, and Chase and its Affiliates may
accept fees and other consideration from the Borrower for services
in connection with this Agreement or otherwise without having to
account for the same to the Lenders.
Section 11.05 INDEMNIFICATION. THE LENDERS AGREE TO
INDEMNIFY THE AGENT RATABLY IN ACCORDANCE WITH THEIR PERCENTAGE
SHARES FOR THE INDEMNITY MATTERS AS DESCRIBED IN SECTION 12.03 TO
THE EXTENT NOT INDEMNIFIED OR REIMBURSED BY THE BORROWER UNDER
SECTION 12.03, BUT WITHOUT LIMITING THE OBLIGATIONS OF THE BORROWER
UNDER SAID SECTION 12.03 AND FOR ANY AND ALL OTHER LIABILITIES,
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS,
COSTS, EXPENSES OR DISBURSEMENTS OF ANY KIND AND NATURE WHATSOEVER
WHICH MAY BE IMPOSED ON, INCURRED BY OR ASSERTED AGAINST THE AGENT
IN ANY WAY RELATING TO OR ARISING OUT OF: (I) THIS AGREEMENT, THE
SECURITY INSTRUMENTS OR ANY OTHER DOCUMENTS CONTEMPLATED BY OR
REFERRED TO HEREIN OR THE TRANSACTIONS CONTEMPLATED HEREBY, BUT
EXCLUDING, UNLESS A DEFAULT HAS OCCURRED AND IS CONTINUING, NORMAL
ADMINISTRATIVE COSTS AND EXPENSES INCIDENT TO THE PERFORMANCE OF
ITS AGENCY DUTIES HEREUNDER OR (II) THE ENFORCEMENT OF ANY OF THE
TERMS OF THIS AGREEMENT, ANY SECURITY INSTRUMENT OR OF ANY SUCH
OTHER DOCUMENTS; WHETHER OR NOT ANY OF THE FOREGOING SPECIFIED IN
THIS SECTION 11.05 ARISES FROM THE SOLE OR CONCURRENT NEGLIGENCE OF
THE AGENT, PROVIDED THAT NO LENDER SHALL BE LIABLE FOR ANY OF THE
FOREGOING TO THE EXTENT THEY ARISE FROM THE GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OF THE AGENT.
Section 11.06 Non-Reliance on Agent and other Lenders.
Each Lender acknowledges and 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 Borrower and its decision to enter
into this Agreement, and that it will, independently and without
reliance upon the Agent or any other Lender, and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own analysis and decisions in taking or not
taking action under this Agreement. The Agent shall not be
required to keep itself informed as to the performance or
observance by the Borrower of this Agreement, the Notes, the
Security Instruments or any other document referred to or provided
for herein or to inspect the properties or books of the Borrower.
Except for notices, reports and other documents and information
expressly required to be furnished to the Lenders by the Agent
hereunder, the Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning
the affairs, financial condition or business of the Borrower (or
any of its Affiliates) which may come into the possession of the
Agent or any of its Affiliates. In this regard, each Lender
acknowledges that Xxxxxx & Xxxxxx L.L.P. is acting in this
transaction as special counsel to the Agent only, except to the
extent otherwise expressly stated in any legal opinion or any Loan
Document. Each Lender will consult with its own legal counsel to
the extent that it deems necessary in connection with the Loan
Documents and the matters contemplated therein.
Section 11.07 Action by Agent. Except for action or
other matters expressly required of the Agent hereunder, the Agent
shall in all cases be fully justified in failing or refusing to act
hereunder unless it shall (i) receive written instructions from the
Majority Lenders (or all of the Lenders as expressly required by
Section 12.04) specifying the action to be taken, and (ii) be
indemnified to its satisfaction by the Lenders against any and all
liability and expenses which may be incurred by it by reason of
taking or continuing to take any such action. The instructions of
the Majority Lenders (or all of the Lenders as expressly required
by Section 12.04) and any action taken or failure to act pursuant
thereto by the Agent shall be binding on all of the Lenders. If a
Default has occurred and is continuing, the Agent shall take such
action with respect to such Default as shall be directed by the
Majority Lenders (or all of the Lenders as required by Section
12.04) in the written instructions (with indemnities) described in
this Section 11.07, provided that, unless and until the Agent shall
have received such directions, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action,
with respect to such Default as it shall deem advisable in the best
interests of the Lenders. In no event, however, shall the Agent be
required to take any action which exposes the Agent to personal
liability or which is contrary to this Agreement and the Security
Instruments or applicable law.
Section 11.08 Resignation or Removal of 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 Borrower, and the Agent may be removed at any
time with or without cause by the Majority Lenders. Upon any such
resignation or removal, the Majority Lenders shall have the right
to appoint a successor Agent. If no successor Agent shall have
been so appointed by the Majority Lenders and shall have accepted
such appointment within thirty (30) days after the retiring Agent's
giving of notice of resignation or the Majority Lenders' removal of
the retiring Agent, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent. Upon the acceptance of such
appointment hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation or removal
hereunder as Agent, the provisions of this Article XI and Section
12.03 shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as
the Agent.
ARTICLE XII
Miscellaneous
Section 12.01 Waiver. No failure on the part of the
Agent or any Lender to exercise and no delay in exercising, and no
course of dealing with respect to, any right, power or privilege
under any of the Loan Documents shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, power or
privilege under any of the Loan Documents preclude any other or
further exercise thereof or the exercise of any other right, power
or privilege. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law.
Section 12.02 Notices. All notices and other communica-
tions provided for herein and in the other Loan Documents
(including, without limitation, any modifications of, or waivers or
consents under, this Agreement or the other Loan Documents) shall
be given or made by telecopy, personal delivery, nationally
recognized overnight courier or U.S. Mail in writing and
telecopied, mailed or delivered to the intended recipient at the
"Address for Notices" specified below its name on the signature
pages hereof or in the Loan Documents or, as to any party, at such
other address as shall be designated by such party in a notice to
each other party. Except as otherwise provided in this Agreement
or in the other Loan Documents, all such communications shall be
deemed to have been duly given when transmitted, if transmitted
before 1:00 p.m. local time on a Business Day (otherwise on the
next succeeding Business Day) by telecopier to the extent that
confirmation of receipt is obtained, or personally delivered or, in
the case of a mailed notice, three (3) Business Days after the date
deposited in the mails, postage prepaid, or, in the case of a
nationally recognized overnight courier, one (1) day after the date
delivered to such courier with guaranteed next day delivery, in
each case given or addressed as aforesaid.
Section 12.03 Payment of Expenses, Indemnities, etc.
The Borrower agrees:
(a) whether or not the transactions hereby contemplated
are consummated, to pay all reasonable expenses of the Agent
in the administration (both before and after the execution
hereof and including advice of counsel as to the rights and
duties of the Agent and the Lenders with respect thereto) of,
and in connection with the negotiation, syndication,
investigation, preparation, execution and delivery of,
recording or filing of, preservation of rights under,
enforcement of, and refinancing, renegotiation or
restructuring of, the Loan Documents and any amendment, waiver
or consent relating thereto (including, without limitation,
travel, photocopy, mailing, courier, telephone and other
similar expenses of the Agent, the cost of environmental
audits, surveys and appraisals at reasonable intervals, the
reasonable fees and disbursements of counsel and other outside
consultants for the Agent and, in the case of enforcement, the
reasonable fees and disbursements of counsel for the Agent and
any of the Lenders); and promptly reimburse the Agent for all
amounts expended, advanced or incurred by the Agent or the
Lenders to satisfy any obligation of the Borrower under this
Agreement or any Security Instrument, including without
limitation, all costs and expenses of foreclosure;
(b) TO INDEMNIFY THE AGENT AND EACH LENDER AND EACH OF
THEIR AFFILIATES AND EACH OF THEIR OFFICERS, DIRECTORS,
EMPLOYEES, REPRESENTATIVES, AGENTS, ATTORNEYS, ACCOUNTANTS AND
EXPERTS ("INDEMNIFIED PARTIES") FROM, HOLD EACH OF THEM
HARMLESS AGAINST AND PROMPTLY UPON DEMAND PAY OR REIMBURSE
EACH OF THEM FOR, THE INDEMNITY MATTERS WHICH MAY BE INCURRED
BY OR ASSERTED AGAINST OR INVOLVE ANY OF THEM (WHETHER OR NOT
ANY OF THEM IS DESIGNATED A PARTY THERETO) AS A RESULT OF,
ARISING OUT OF OR IN ANY WAY RELATED TO (I) ANY ACTUAL OR
PROPOSED USE BY THE BORROWER OF THE PROCEEDS OF ANY OF THE
LOANS OR LETTERS OF CREDIT, (II) THE EXECUTION, DELIVERY AND
PERFORMANCE OF THE LOAN DOCUMENTS, (III) THE OPERATIONS OF THE
BUSINESS OF THE BORROWER AND THE SUBSIDIARIES, (IV) THE
FAILURE OF THE BORROWER OR ANY SUBSIDIARY TO COMPLY WITH THE
TERMS OF ANY SECURITY INSTRUMENT OR THIS AGREEMENT, OR WITH
ANY GOVERNMENTAL REQUIREMENT, (V) ANY INACCURACY OF ANY
REPRESENTATION OR ANY BREACH OF ANY WARRANTY OF THE BORROWER
SET FORTH IN ANY OF THE LOAN DOCUMENTS, (VI) THE ISSUANCE,
EXECUTION AND DELIVERY OR TRANSFER OF OR PAYMENT OR FAILURE TO
PAY UNDER ANY LETTER OF CREDIT, OR (VII) THE PAYMENT OF A
DRAWING UNDER ANY LETTER OF CREDIT NOTWITHSTANDING THE NON-
COMPLIANCE, NON-DELIVERY OR OTHER IMPROPER PRESENTATION OF THE
MANUALLY EXECUTED DRAFT(S) AND CERTIFICATION(S), (VIII) ANY
ASSERTION THAT THE LENDERS WERE NOT ENTITLED TO RECEIVE THE
PROCEEDS RECEIVED PURSUANT TO THE SECURITY INSTRUMENTS OR (IX)
ANY OTHER ASPECT OF THE LOAN DOCUMENTS, INCLUDING, WITHOUT
LIMITATION, THE REASONABLE FEES AND DISBURSEMENTS OF COUNSEL
AND ALL OTHER EXPENSES INCURRED IN CONNECTION WITH
INVESTIGATING, DEFENDING OR PREPARING TO DEFEND ANY SUCH
ACTION, SUIT, PROCEEDING (INCLUDING ANY INVESTIGATIONS,
LITIGATION OR INQUIRIES) OR CLAIM AND INCLUDING ALL INDEMNITY
MATTERS ARISING BY REASON OF THE ORDINARY NEGLIGENCE OF ANY
INDEMNIFIED PARTY, BUT EXCLUDING ALL INDEMNITY MATTERS ARISING
SOLELY BY REASON OF CLAIMS BETWEEN THE LENDERS OR ANY LENDER
AND THE AGENT OR A LENDER'S SHAREHOLDERS AGAINST THE AGENT OR
LENDER OR BY REASON OF THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT ON THE PART OF THE INDEMNIFIED PARTY OR ITS
AFFILIATE; AND
(c) TO INDEMNIFY AND HOLD HARMLESS FROM TIME TO TIME THE
INDEMNIFIED PARTIES FROM AND AGAINST ANY AND ALL LOSSES,
CLAIMS, COST RECOVERY ACTIONS, ADMINISTRATIVE ORDERS OR
PROCEEDINGS, DAMAGES AND LIABILITIES TO WHICH ANY SUCH PERSON
MAY BECOME SUBJECT (I) UNDER ANY ENVIRONMENTAL LAW APPLICABLE
TO THE BORROWER OR ANY SUBSIDIARY OR ANY OF THEIR PROPERTIES,
INCLUDING WITHOUT LIMITATION, THE TREATMENT OR DISPOSAL OF
HAZARDOUS SUBSTANCES ON ANY OF THEIR PROPERTIES, (II) AS A
RESULT OF THE BREACH OR NON-COMPLIANCE BY THE BORROWER OR ANY
SUBSIDIARY WITH ANY ENVIRONMENTAL LAW APPLICABLE TO THE
BORROWER OR ANY SUBSIDIARY, (III) DUE TO PAST OWNERSHIP BY THE
BORROWER OR ANY SUBSIDIARY OF ANY OF THEIR PROPERTIES OR PAST
ACTIVITY ON ANY OF THEIR PROPERTIES WHICH, THOUGH LAWFUL AND
FULLY PERMISSIBLE AT THE TIME, COULD RESULT IN PRESENT
LIABILITY, (IV) THE PRESENCE, USE, RELEASE, STORAGE, TREATMENT
OR DISPOSAL OF HAZARDOUS SUBSTANCES ON OR AT ANY OF THE
PROPERTIES OWNED OR OPERATED BY THE BORROWER OR ANY
SUBSIDIARY, OR (V) ANY OTHER ENVIRONMENTAL, HEALTH OR SAFETY
CONDITION IN CONNECTION WITH THE LOAN DOCUMENTS, PROVIDED,
HOWEVER, NO INDEMNITY SHALL BE AFFORDED UNDER THIS SECTION
12.03(C) IN RESPECT OF ANY PROPERTY FOR ANY OCCURRENCE ARISING
FROM THE ACTS OR OMISSIONS OF THE AGENT OR ANY LENDER DURING
THE PERIOD AFTER WHICH SUCH PERSON, ITS SUCCESSORS OR ASSIGNS
SHALL HAVE OBTAINED POSSESSION OF SUCH PROPERTY (WHETHER BY
FORECLOSURE OR DEED IN LIEU OF FORECLOSURE, AS MORTGAGEE-IN-
POSSESSION OR OTHERWISE).
(d) No Indemnified Party may settle any claim to be
indemnified without the consent of the indemnitor, such
consent not to be unreasonably withheld; provided, that the
indemnitor may not reasonably withhold consent to any
settlement that an Indemnified Party proposes, if the
indemnitor does not have the financial ability to pay all its
obligations outstanding and asserted against the indemnitor at
that time, including the maximum potential claims against the
Indemnified Party to be indemnified pursuant to this Section
12.03.
(e) In the case of any indemnification hereunder, the
Agent or Lender, as appropriate shall give notice to the
Borrower of any such claim or demand being made against the
Indemnified Party and the Borrower shall have the
non-exclusive right to join in the defense against any such
claim or demand provided that if the Borrower provides a
defense, the Indemnified Party shall bear its own cost of
defense unless there is a conflict between the Borrower and
such Indemnified Party.
(f) THE FOREGOING INDEMNITIES SHALL EXTEND TO THE
INDEMNIFIED PARTIES NOTWITHSTANDING THE SOLE OR CONCURRENT
NEGLIGENCE OF EVERY KIND OR CHARACTER WHATSOEVER (OTHER THAN
GROSS NEGLIGENCE), WHETHER ACTIVE OR PASSIVE, WHETHER AN
AFFIRMATIVE ACT OR AN OMISSION, INCLUDING WITHOUT LIMITATION,
ALL TYPES OF NEGLIGENT CONDUCT IDENTIFIED IN THE RESTATEMENT
(SECOND) OF TORTS OF ONE OR MORE OF THE INDEMNIFIED PARTIES OR
BY REASON OF STRICT LIABILITY IMPOSED WITHOUT FAULT ON ANY ONE
OR MORE OF THE INDEMNIFIED PARTIES. TO THE EXTENT THAT AN
INDEMNIFIED PARTY IS FOUND TO HAVE COMMITTED AN ACT OF GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT, THIS CONTRACTUAL OBLIGATION
OF INDEMNIFICATION SHALL CONTINUE BUT SHALL ONLY EXTEND TO THE
PORTION OF THE CLAIM THAT IS DEEMED TO HAVE OCCURRED BY REASON
OF EVENTS OTHER THAN THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF THE INDEMNIFIED PARTY.
(g) The Borrower's obligations under this Section 12.03
shall survive any termination of this Agreement and the
payment of the Notes and shall continue thereafter in full
force and effect.
(h) The Borrower shall pay any amounts due under this
Section 12.03 within thirty (30) days of the receipt by the
Borrower of notice of the amount due.
Section 12.04 Amendments, Etc. Any provision of this
Agreement or any Security Instrument may be amended, modified or
waived with the Borrower's and the Majority Lenders' prior written
consent; provided that (i) no amendment, modification or waiver
which extends the final maturity of the Loans, increases the
Aggregate Maximum Credit Amounts, forgives the principal amount of
any Indebtedness outstanding under this Agreement, releases any
guarantor of the Indebtedness or releases any of the collateral,
reduces the interest rate applicable to the Loans or the fees
payable to the Lenders generally, affects Sections 2.03(a) or (b),
this Section 12.04 or Section 12.06(a) or modifies the definition
of "Majority Lenders" shall be effective without consent of all
Lenders; (ii) no amendment, modification or waiver which increases
the Maximum Credit Amount of any Lender shall be effective without
the consent of such Lender; and (iii) no amendment, modification or
waiver which modifies the rights, duties or obligations of the
Agent shall be effective without the consent of the Agent.
Section 12.05 Successors and Assigns. This Agreement
shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
Section 12.06 Assignments and Participations.
(a) The Borrower may not assign its rights or
obligations hereunder or under the Notes or any Letters of
Credit without the prior consent of all of the Lenders and the
Agent.
(b) Any Lender may assign to one or more of its
Affiliates or, upon the written consent of the Agent and the
Borrower (which consent will not be unreasonably withheld),
assign to one or more assignees who are not Affiliates of such
Lender, all or a portion of its rights and obligations under
this Agreement pursuant to an Assignment Agreement
substantially in the form of Exhibit F (an "Assignment")
provided, however, that (i) any such assignment shall be in
the amount of at least $10,000,000 or such lesser amount to
which the Borrower has consented and (ii) the assignee or
assignor shall pay to the Agent a processing and recordation
fee of $2,500 for each assignment. Any such assignment will
become effective upon the execution and delivery to the Agent
of the Assignment and the consent of the Agent. Promptly
after receipt of an executed Assignment, the Agent shall send
to the Borrower a copy of such executed Assignment. Upon
receipt of such executed Assignment, the Borrower, will, at
its own expense, execute and deliver new Notes to the assignor
and/or assignee, as appropriate, in accordance with their
respective interests as they appear. Upon the effectiveness
of any assignment pursuant to this Section 12.06(b), the
assignee will become a "Lender," if not already a "Lender,"
for all purposes of this Agreement and the Security
Instruments. The assignor shall be relieved of its
obligations hereunder to the extent of such assignment (and if
the assigning Lender no longer holds any rights or obligations
under this Agreement, such assigning Lender shall cease to be
a "Lender" hereunder except that its rights under Sections
4.06, 5.01, 5.05 and 12.03 shall not be affected). The Agent
will prepare on the last Business Day of each month during
which an assignment has become effective pursuant to this
Section 12.06(b), a new Annex I giving effect to all such
assignments effected during such month, and will promptly
provide the same to the Borrower and each of the Lenders.
(c) Each Lender may transfer, grant or assign
participations in all or any part of such Lender's interests
hereunder pursuant to this Section 12.06(c) to any Person,
provided that: (i) such Lender shall remain a "Lender" for all
purposes of this Agreement and the transferee of such
participation shall not constitute a "Lender" hereunder; and
(ii) no participant under any such participation shall have
rights to approve any amendment to or waiver of any of the
Loan Documents except to the extent such amendment or waiver
would (x) forgive any principal owing on any Indebtedness or
extend the final maturity of the Loans, (y) reduce the
interest rate (other than as a result of waiving the
applicability of any post-default increases in interest rates)
or fees applicable to any of the Commitments or Loans or
Letters of Credit in which such participant is participating,
or postpone the payment of any thereof, or (z) release any
guarantor of the Indebtedness or release all or substantially
all of the collateral (except as provided in the Loan
Documents) supporting any of the Commitments or Loans or
Letters of Credit in which such participant is participating.
In the case of any such participation, the participant shall
not have any rights under this Agreement or any of the
Security Instruments (the participant's rights against the
granting Lender in respect of such participation to be those
set forth in the agreement with such Lender creating such
participation), and all amounts payable by the Borrower
hereunder shall be determined as if such Lender had not sold
such participation, provided that such participant shall be
entitled to receive additional amounts under Article V on the
same basis as if it were a Lender and be indemnified under
Section 12.03 as if it were a Lender. In addition, each
agreement creating any participation must include an agreement
by the participant to be bound by the provisions of Section
12.15.
(d) The Lenders may furnish any information concerning
the Borrower in the possession of the Lenders from time to
time to assignees and participants (including prospective
assignees and participants); provided that, such Persons agree
to be bound by the provisions of Section 12.15 hereof.
(e) Notwithstanding anything in this Section 12.06 to
the contrary, any Lender may assign and pledge all or any of
its Notes to any Federal Reserve Bank or the United States
Treasury as collateral security pursuant to Regulation A of
the Board of Governors of the Federal Reserve System and any
operating circular issued by such Federal Reserve System
and/or such Federal Reserve Bank. No such assignment and/or
pledge shall release the assigning and/or pledging Lender from
its obligations hereunder.
(f) Notwithstanding any other provisions of this Section
12.06, no transfer or assignment of the interests or
obligations of any Lender or any grant of participations
therein shall be permitted if such transfer, assignment or
grant would require the Borrower to file a registration
statement with the SEC or to qualify the Loans under the "Blue
Sky" laws of any state.
Section 12.07 Invalidity. In the event that any one or
more of the provisions contained in any of the Loan Documents or
the Letters of Credit, the Letter of Credit Agreements shall, for
any reason, be held invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not
affect any other provision of the Notes, this Agreement or any
Security Instrument.
Section 12.08 Counterparts. This Agreement may be
executed in any number of counterparts, all of which taken together
shall constitute one and the same instrument and any of the parties
hereto may execute this Agreement by signing any such counterpart.
Section 12.09 References. The words "herein," "hereof,"
"hereunder" and other words of similar import when used in this
Agreement refer to this Agreement as a whole, and not to any
particular article, section or subsection. Any reference herein to
a Section shall be deemed to refer to the applicable Section of
this Agreement unless otherwise stated herein. Any reference
herein to an exhibit or schedule shall be deemed to refer to the
applicable exhibit or schedule attached hereto unless otherwise
stated herein.
Section 12.10 Survival. The obligations of the parties
under Section 4.06, Article V, and Sections 11.05 and 12.03 shall
survive the repayment of the Loans and the termination of the
Commitments. To the extent that any payments on the Indebtedness
or proceeds of any collateral are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, debtor in possession, receiver or other
Person under any bankruptcy law, common law or equitable cause,
then to such extent, the Indebtedness so satisfied shall be revived
and continue as if such payment or proceeds had not been received
and the Agent's and the Lenders' Liens, security interests, rights,
powers and remedies under this Agreement and each Security
Instrument shall continue in full force and effect. In such event,
each Security Instrument shall be automatically reinstated and the
Borrower shall take such action as may be reasonably requested by
the Agent and the Lenders to effect such reinstatement.
Section 12.11 Captions. Captions and section headings
appearing herein are included solely for convenience of reference
and are not intended to affect the interpretation of any provision
of this Agreement.
Section 12.12 NO ORAL AGREEMENTS. THE LOAN DOCUMENTS
EMBODY THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES
AND SUPERSEDE ALL OTHER AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH
PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF. THE
LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Section 12.13 GOVERNING LAW; SUBMISSION TO JURISDICTION.
(a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
TEXAS EXCEPT TO THE EXTENT THAT UNITED STATES FEDERAL LAW
PERMITS ANY LENDER TO CHARGE INTEREST AT THE RATE ALLOWED BY
THE LAWS OF THE STATE WHERE SUCH LENDER IS LOCATED. TEX. REV.
CIV. STAT. XXX. ART. 0000, XX. 15 (WHICH REGULATES CERTAIN
REVOLVING CREDIT LOAN ACCOUNTS AND REVOLVING TRI-PARTY
ACCOUNTS) SHALL NOT APPLY TO THIS AGREEMENT OR THE NOTES.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THE
LOAN DOCUMENTS SHALL BE BROUGHT IN THE COURTS OF THE STATE OF
TEXAS OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF TEXAS, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, THE BORROWER HEREBY ACCEPTS FOR ITSELF AND (TO THE
EXTENT PERMITTED BY LAW) IN RESPECT OF ITS PROPERTY, GENERALLY
AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS.
THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS. THIS
SUBMISSION TO JURISDICTION IS NON-EXCLUSIVE AND DOES NOT
PRECLUDE THE AGENT OR ANY LENDER FROM OBTAINING JURISDICTION
OVER THE BORROWER IN ANY COURT OTHERWISE HAVING JURISDICTION.
(c) THE BORROWER HEREBY IRREVOCABLY DESIGNATES C.T.
CORPORATION LOCATED IN HOUSTON, TEXAS, AS THE DESIGNEE,
APPOINTEE AND AGENT OF THE BORROWER TO RECEIVE, FOR AND ON
BEHALF OF THE BORROWER, SERVICE OF PROCESS IN SUCH RESPECTIVE
JURISDICTIONS IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT
TO THE LOAN DOCUMENTS. IT IS UNDERSTOOD THAT A COPY OF SUCH
PROCESS SERVED ON SUCH AGENT WILL BE PROMPTLY FORWARDED BY
OVERNIGHT COURIER TO THE BORROWER AT ITS ADDRESS SET FORTH
UNDER ITS SIGNATURE BELOW, BUT THE FAILURE OF THE BORROWER TO
RECEIVE SUCH COPY SHALL NOT AFFECT IN ANY WAY THE SERVICE OF
SUCH PROCESS. THE BORROWER FURTHER IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN
ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF
BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE
BORROWER AT ITS SAID ADDRESS, SUCH SERVICE TO BECOME EFFECTIVE
THIRTY (30) DAYS AFTER SUCH MAILING.
(d) NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT
OR ANY LENDER OR ANY HOLDER OF A NOTE TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS
OR OTHERWISE PROCEED AGAINST THE BORROWER IN ANY OTHER
JURISDICTION.
(e) EACH OF THE BORROWER AND EACH LENDER HEREBY (I)
IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE FULLEST EXTENT
PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY SECURITY
INSTRUMENT AND FOR ANY COUNTERCLAIM THEREIN; (II) IRREVOCABLY
WAIVE, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT
IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY
SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR
DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (III)
CERTIFY THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT
OF COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT
OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (IV)
ACKNOWLEDGE THAT IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT, THE SECURITY INSTRUMENTS AND THE TRANSACTIONS
CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION
12.13.
Section 12.14 Interest. It is the intention of the
parties hereto that each Lender shall conform strictly to usury
laws applicable to it. Accordingly, if the transactions
contemplated hereby would be usurious as to any Lender under laws
applicable to it (including the laws of the United States of
America and the State of Texas or any other jurisdiction whose laws
may be mandatorily applicable to such Lender notwithstanding the
other provisions of this Agreement), then, in that event,
notwithstanding anything to the contrary in any of the Loan
Documents or any agreement entered into in connection with or as
security for the Notes, it is agreed as follows: (i) the aggregate
of all consideration which constitutes interest under law
applicable to any Lender that is contracted for, taken, reserved,
charged or received by such Lender under any of the Loan Documents
or agreements or otherwise in connection with the Notes shall under
no circumstances exceed the maximum amount allowed by such
applicable law, and any excess shall be canceled automatically and
if theretofore paid shall be credited by such Lender on the
principal amount of the Indebtedness (or, to the extent that the
principal amount of the Indebtedness shall have been or would
thereby be paid in full, refunded by such Lender to the Borrower);
and (ii) in the event that the maturity of the Notes is accelerated
by reason of an election of the holder thereof resulting from any
Event of Default under this Agreement or otherwise, or in the event
of any required or permitted prepayment, then such consideration
that constitutes interest under law applicable to any Lender may
never include more than the maximum amount allowed by such
applicable law, and excess interest, if any, provided for in this
Agreement or otherwise shall be canceled automatically by such
Lender as of the date of such acceleration or prepayment and, if
theretofore paid, shall be credited by such Lender on the principal
amount of the Indebtedness (or, to the extent that the principal
amount of the Indebtedness shall have been or would thereby be paid
in full, refunded by such Lender to the Borrower). All sums paid
or agreed to be paid to any Lender for the use, forbearance or
detention of sums due hereunder shall, to the extent permitted by
law applicable to such Lender, be amortized, prorated, allocated
and spread throughout the full term of the Loans evidenced by the
Notes until payment in full so that the rate or amount of interest
on account of any Loans hereunder does not exceed the maximum
amount allowed by such applicable law. If at any time and from
time to time (i) the amount of interest payable to any Lender on
any date shall be computed at the Highest Lawful Rate applicable to
such Lender pursuant to this Section 12.14 and (ii) in respect of
any subsequent interest computation period the amount of interest
otherwise payable to such Lender would be less than the amount of
interest payable to such Lender computed at the Highest Lawful Rate
applicable to such Lender, then the amount of interest payable to
such Lender in respect of such subsequent interest computation
period shall continue to be computed at the Highest Lawful Rate
applicable to such Lender until the total amount of interest
payable to such Lender shall equal the total amount of interest
which would have been payable to such Lender if the total amount of
interest had been computed without giving effect to this Section
12.14. To the extent that Article 5069-1.04 of the Texas Revised
Civil Statutes is relevant for the purpose of determining the
Highest Lawful Rate, such Lender elects to determine the applicable
rate ceiling under such Article by the indicated weekly rate
ceiling from time to time in effect.
Section 12.15 Confidentiality. In the event that the
Borrower provides to the Agent or the Lenders written confidential
information belonging to the Borrower, if the Borrower shall
denominate such information in writing as "confidential", the Agent
and the Lenders shall thereafter maintain such information in
confidence in accordance with the standards of care and diligence
that each utilizes in maintaining its own confidential information.
This obligation of confidence shall not apply to such portions of
the information which (i) are in the public domain, (ii) hereafter
become part of the public domain without the Agent or the Lenders
breaching their obligation of confidence to the Borrower, (iii) are
previously known by the Agent or the Lenders from some source other
than the Borrower, (iv) are hereafter developed by the Agent or the
Lenders without using the Borrower's information, (v) are hereafter
obtained by or available to the Agent or the Lenders from a third
party who owes no obligation of confidence to the Borrower with
respect to such information or through any other means other than
through disclosure by the Borrower, (vi) are disclosed with the
Borrower's consent, (vii) must be disclosed either pursuant to any
Governmental Requirement or to Persons regulating the activities of
the Agent or the Lenders, or (viii) as may be required by law or
regulation or order of any Governmental Authority in any judicial,
arbitration or governmental proceeding. Further, the Agent or a
Lender may disclose any such information to any other Lender, any
Affiliate of any Lender, any independent petroleum engineers or
consultants, any independent certified public accountants, any
legal counsel employed by such Person in connection with this
Agreement or any Security Instrument, including without limitation,
the enforcement or exercise of all rights and remedies thereunder,
or any assignee or participant (including prospective assignees and
participants) in the Loans; provided, however, that the Agent or
the Lenders shall receive a confidentiality agreement from the
Person to whom such information is disclosed such that said Person
shall have the same obligation to maintain the confidentiality of
such information as is imposed upon the Agent or the Lenders
hereunder. Notwithstanding anything to the contrary provided
herein, this obligation of confidence shall cease three (3) years
from the date the information was furnished, unless the Borrower
requests in writing at least thirty (30) days prior to the
expiration of such three year period, to maintain the
confidentiality of such information for an additional three year
period. The Borrower waives any and all other rights it may have
to confidentiality as against the Agent and the Lenders arising by
contract, agreement, statute or law except as expressly stated in
this Section 12.15.
Section 12.16 Effectiveness. This Agreement shall be
effective on the Closing Date (the "Effective Date").
Section 12.17 EXCULPATION PROVISIONS. EACH OF THE
PARTIES HERETO SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS
AGREEMENT AND THE SECURITY INSTRUMENTS AND AGREES THAT IT IS
CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS OF THIS AGREEMENT
AND THE SECURITY INSTRUMENTS; THAT IT HAS IN FACT READ THIS
AGREEMENT AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE
OF THE TERMS, CONDITIONS AND EFFECTS OF THIS AGREEMENT; THAT IT HAS
BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF ITS CHOICE
THROUGHOUT THE NEGOTIATIONS PRECEDING ITS EXECUTION OF THIS
AGREEMENT AND THE SECURITY INSTRUMENTS; AND HAS RECEIVED THE ADVICE
OF ITS ATTORNEY IN ENTERING INTO THIS AGREEMENT AND THE SECURITY
INSTRUMENTS; AND THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS OF
THIS AGREEMENT AND THE SECURITY INSTRUMENTS RESULT IN ONE PARTY
ASSUMING THE LIABILITY INHERENT IN SOME ASPECTS OF THE TRANSACTION
AND RELIEVING THE OTHER PARTY OF ITS RESPONSIBILITY FOR SUCH
LIABILITY. EACH PARTY HERETO AGREES AND COVENANTS THAT IT WILL NOT
CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION
OF THIS AGREEMENT AND THE SECURITY INSTRUMENTS ON THE BASIS THAT
THE PARTY HAD NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE
PROVISION IS NOT "CONSPICUOUS."
The parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
BORROWER:
McMoRan OIL & GAS LLC
By:/s/ Xxxxxx X. Xxxxx
--------------------
Name: Xxxxxx X. Xxxxx
Title: Treasurer
Address for Notices:
0000 Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxx 00000
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
Attention: Treasurer
with copy to:
Jones, Walker, Waechter,
Poitevent, Carrere & Xxxxxxx, L.L.P.
000 Xx. Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Relationship Partner
LENDER AND AGENT:
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, Individually and
as Agent
By:/s/ Xxxxxxx X. Xxxxxxx
-----------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
Lending Office for Base Rate
Loans and Eurodollar Loans and
Address for Notice:
Chase Bank of Texas, National
Association
Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No. 212/000-0000
Telephone No. 212/000-0000
Attn: Xxxx Anemone
with copies to:
Chase Bank of Texas, National
Association
000 Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxx 00000
Telecopier No. 713/000-0000
Telephone No. 713/000-0000
Attn: Xxxxx Xxxxxxx
Chase Bank of Texas, National
Association
One Chase Xxxxxxxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No. 212/000-0000
Telephone No. 212/000-0000
Attn: Xxxxxxx Xxxxxxx
BANK OF MONTREAL
By:
___________________________________
Name:
_________________________________
Title:
__________________________________
Lending Office for Base Rate
Loans and
Eurodollar Loans and Address
for Notice:
Bank of Montreal
000 X. XxXxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopier No.: 312/000-0000
Telephone No.: 312/000-0000
Attention: Keiko Kuze
with copies to:
Bank of Montreal
000 Xxxxxxxxx Xxxxxx, Xxxxx
0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxxxxx
CITICORP USA
By:
___________________________________
Name:
_________________________________
Title:
__________________________________
Lending Office for Base Rate
Loans and
Eurodollar Loans and Address
for Notice:
Citicorp USA
0 Xxxxx Xxx, Xxxxx 000
Xxx Xxxxxx, Xxxxxxxx 00000
Telecopier No.: 302/000-0000
Telephone No.: 302/000-0000
Attention: Xxxxx xxXxxxxxxxx
with copies to:
Xxxxxxx Xxxxx Xxxxxx
000 Xxxx Xxxxx Xxxxxx, 00xx
Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopier No.: 213/000-0000
Telephone No.: 213/000-0000
Attention: Xxxxxxxx Xxxxx
