EXHIBIT 10
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FIRST RESTATED CREDIT AGREEMENT
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OEDC EXPLORATION & PRODUCTION, L.P.
Borrower
and
OFFSHORE ENERGY DEVELOPMENT CORPORATION
and
OEDC, INC.
and
OEDC PARTNERS, L.P.
and
DAUPHIN ISLAND GATHERING COMPANY, L.P.
and
OEDC PROCESSING, L.P.
Guarantors
and
UNION BANK OF CALIFORNIA, N.A.
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July 8, 1997
TABLE OF CONTENTS
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Page
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FIRST RESTATED CREDIT AGREEMENT............................................ 1
ARTICLE I - Definitions and References..................................... 1
Section 1.1. Defined Terms.......................................... 1
Section 1.2. Exhibits and Schedules; Additional Definitions......... 11
Section 1.3. Amendment of Defined Instruments....................... 11
Section 1.4. References and Titles.................................. 11
Section 1.5. Calculations and Determinations........................ 12
ARTICLE II - The Loan...................................................... 12
Section 2.1. Advances; Extension of Commitment Period............... 12
Section 2.2. Requests for Advances.................................. 13
Section 2.3. Use of Proceeds........................................ 13
Section 2.4. Rate Elections......................................... 13
Section 2.5. Fees................................................... 14
Section 2.6. Optional Prepayments................................... 14
Section 2.7. Mandatory Prepayments and Monthly Reduction............ 15
Section 2.8. Payments to Lender..................................... 15
Section 2.9. Initial Borrowing Base................................. 16
Section 2.10. Subsequent Determinations of Borrowing Base............ 16
Section 2.11. Capital Adequacy....................................... 16
Section 2.12. Increased Cost of Fixed Rate Portions.................. 17
Section 2.13. Availability........................................... 17
Section 2.14. Funding Losses......................................... 17
Section 2.15. Reimbursable Taxes..................................... 18
ARTICLE III - Conditions Precedent to Lending.............................. 18
Section 3.1. Documents to be Delivered.............................. 19
Section 3.2. Additional Conditions Precedent........................ 20
ARTICLE IV - Representations and Warranties................................ 21
Section 4.1. Borrower's Representations and Warranties.............. 21
Section 4.2. Representation by Lender............................... 26
ARTICLE V - Covenants of Borrower.......................................... 26
Section 5.1. Affirmative Covenants.................................. 26
Section 5.2. Negative Covenants..................................... 34
ARTICLE VI - Security...................................................... 39
Section 6.1. The Security........................................... 39
Section 6.2. Agreement to Deliver Security Documents................ 39
Section 6.3. Perfection and Protection of Security Interests
and Liens.............................................. 40
Section 6.4. Bank Accounts; Offset.................................. 40
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Section 6.5. Production Proceeds.................................... 40
ARTICLE VII - Events of Default and Remedies............................... 40
Section 7.1. Events of Default...................................... 40
Section 7.2. Remedies............................................... 43
Section 7.3. Indemnity.............................................. 43
ARTICLE VIII - Miscellaneous............................................... 44
Section 8.1. Waivers and Amendments; Acknowledgments................ 44
Section 8.2. Survival of Agreements; Cumulative Nature.............. 46
Section 8.3. Notices................................................ 46
Section 8.4. Parties in Interest.................................... 46
Section 8.5. Governing Law; Submission to Process................... 47
Section 8.6. Limitation on Interest................................. 47
Section 8.7. Termination; Limited Survival.......................... 48
Section 8.8. Severability........................................... 48
Section 8.9. Counterparts........................................... 48
Section 8.10. Waiver of Jury Trial, Punitive Damages, Etc............ 48
Section 8.11. Restatement............................................ 49
SCHEDULE 1 -- Disclosure Schedule
SCHEDULE 2 -- Security Schedule
SCHEDUEL 3 -- Hedging Contracts
EXHIBIT A -- Note
EXHIBIT B -- Request for Advance
EXHIBIT C -- Rate Election
EXHIBIT D -- Certificate Accompanying Financial Statement
EXHIBIT E -- Opinion of Borrower's Counsel
EXHIBIT F -- Insurance Certificates
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FIRST RESTATED CREDIT AGREEMENT
THIS FIRST RESTATED CREDIT AGREEMENT is made as of July 8, 1997, by and
among OEDC Exploration & Production, L.P., a Texas limited partnership (herein
called "Borrower"), Offshore Energy Development Corporation, a Delaware
corporation ("OEDC"), OEDC, Inc., a Texas corporation ("General Partner"), OEDC
Partners, L.P., a Texas limited partnership ("OEDC Partners"), Dauphin Island
Gathering Company, L.P., a Texas limited partnership ("Dauphin"), OEDC
Processing, L.P. a Texas limited partnership ("OEDC Processing") and Union Bank
of California, N.A. (herein called "Lender"). In consideration of the mutual
covenants and agreements contained herein the parties hereto agree as follows:
ARTICLE I - DEFINITIONS AND REFERENCES
Section 1.1. DEFINED TERMS. As used in this Agreement, each of the
following terms has the meaning given it in this Section 1.1 or in the sections
and subsections referred to below:
"ADVANCE" has the meaning given it in Section 2.1.
"AFFILIATE" means, as to any Person, each other Person that directly or
indirectly (through one or more intermediaries or otherwise) controls, is
controlled by, or is under common control with, such Person.
"AGREEMENT" means this First Restated Credit Agreement.
"ASSOCIATED PROPERTY" means any rights of any Related Person, as lessee in
the surface estate associated with the Property.
"BASE RATE" means the per annum rate of interest equal to the sum of (a)
the Base Rate Margin plus (b) the variable rate of interest per annum
established from time to time by Lender as its "reference rate" (which rate of
interest may not be the lowest rate charged on similar loans). Each change in
the Base Rate shall become effective without prior notice to Borrower
automatically as of the opening of business on the date of such change in the
Base Rate. The Base Rate shall in no event, however, exceed the Highest Lawful
Rate.
"BASE RATE MARGIN" means, on each day:
(a) two and one-half percent (2.5%) for that portion of the outstanding
principal amount of the Loan on such day which is in excess of $7,000,000,
(b) three-quarters of one percent (.75%) per annum for that portion of the
outstanding principal amount of the Loan on such date which is equal to or less
than $7,000,000 when the outstanding principal amount of the Loan on such day is
greater than $5,500,000,
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(c) one-half of one percent (.50%) per annum when the outstanding
principal amount of the Loan on such day is greater than $2,500,000 but less
than or equal to $5,500,000, and
(d) one-quarter of one percent (.25%) per annum when the outstanding
principal amount of the Loan on such day is less than or equal to $2,500,000.
"BASE RATE PORTION" means that portion of the unpaid principal balance of
the Loan which is not made up of Fixed Rate Portions.
"BORROWER" means OEDC Exploration & Production, L.P., a Texas limited
partnership.
"BORROWING BASE" means at the particular time in question, either the
amount provided for in Section 2.9 or the amount determined by Lender in
accordance with the provisions of Section 2.10.
"BUSINESS DAY" means a day, other than a Saturday or Sunday, on which
commercial banks are open for business with the public in Los Angeles,
California. Any Business Day in any way relating to Fixed Rate Portions (such as
the day on which an Interest Period begins or ends) must also be a day on which
transactions in United States' dollars are carried out in the eurocurrency
market.
"COLLATERAL" means all property of any kind of any Related Person which is
subject to a Lien in favor of Lender or which, under the terms of any Security
Document, is purported to be subject to such a Lien.
"COMMITMENT PERIOD" means the period from and including the date hereof
until and including September 30, 1999 as such date may be extended pursuant to
Section 2.1 (or, if earlier, the day on which the Note first becomes due and
payable in full).
"CONSOLIDATED" refers to the consolidation of any Person with its properly
consolidated subsidiaries. References herein to a Person's Consolidated
financial statements, financial position, financial condition, liabilities, etc.
refer to the consolidated financial statements, financial position, financial
condition, liabilities, etc. of such Person and its properly consolidated
subsidiaries.
"DAUPHIN" means Dauphin Island Gathering Company, L.P., a Texas limited
partnership, whose sole general partner is General Partner.
"DEBT" means, as to any Person, all indebtedness, liabilities and
obligations of such Person, whether matured or unmatured, liquidated or
unliquidated, primary or secondary, direct or indirect, absolute, fixed or
contingent.
"DEFAULT" means any Event of Default and any default, event or condition
which would, with the giving of any requisite notices and the passage of any
requisite periods of time, constitute an Event of Default.
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"DETERMINATION DATE" has the meaning given it in Section 2.10.
"DISCLOSURE SCHEDULE" means Schedule 1 hereto. Insofar as any
representations and warranties made herein are incorporated in other Loan
Documents by reference to this Agreement or otherwise remade in Loan Documents
delivered as of a date after the date hereof, the term "Disclosure Schedule"
shall in such representations and warranties be deemed to refer as well to all
information contained in the financial statements delivered pursuant to Section
5.1(b)(i) and all written disclosures made pursuant to Section 5.1(d).
"EBITDA" means, for any period, the sum (determined on a Consolidated
basis and in accordance with GAAP) of (a) Borrower's net income (or net loss)
after deduction of all expenses and other charges for such period, and (b)
Borrower's Consolidated taxes, interest, and interest associated with leasing
arrangements to the extent such taxes and interest are taken into account in
determining such net income (or net loss) for such period, depreciation,
amortization, depletion expenses and other non-cash items taken into account in
determining such net income (or net loss) for such period.
"ENGINEERING REPORT" means each engineering report delivered pursuant to
Sections 5.1(b)(iii) and (iv).
"ENRON PARTNERSHIP" means South Dauphin II Limited Partnership, a Texas
limited partnership, where sole general partner is Borrower.
"ENVIRONMENTAL LAWS" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986, the Resource Conservation and Recovery Act of
1976, as amended by the Used Oil Recycling Act of 1980, the Solid Waste Disposal
Act Amendments of 1980, and the Hazardous and Solid Waste Amendments of 1984,
and any and all other federal, state, local and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders, decrees, permits,
concessions, grants, franchises, licenses, agreements or other governmental
restrictions relating to the environment or to emissions, discharges, releases
or threatened releases of pollutants, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes into the environment including ambient
air, surface water, ground water, or land, or otherwise relating to the
manufacture, processing, distribution use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations promulgated
with respect thereto.
"ERISA PLAN" means any pension benefit plan subject to Title IV of ERISA
maintained by any Related Person or any Affiliate thereof with respect to which
any Related Person has a fixed or contingent liability.
"EVENT OF DEFAULT" has the meaning given it in Section 7.1.
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"EXCEPTED LIENS" means: (a) Liens for taxes, assessments or other
governmental charges or levies not yet due or which are being contested in good
faith by appropriate action; (b) Liens in connection with worker's compensation,
unemployment insurance or other social security, old age pension or public
liability obligations; (c) operators', vendors', carriers', warehousemen's,
repairmen's, mechanics', workmen's, materialmen's, construction or other like
Liens arising by operation of law in the ordinary course of business or incident
to the exploration, development, operation and maintenance of oil and gas
properties and statutory landlord's liens in respect of obligations which are
not yet due and payable or which are being contested in good faith by
appropriate proceedings diligently conducted by any Related Person and for which
adequate reserves have been made pursuant to GAAP; (d) any Liens reserved in
leases for rent and for compliance with the terms of the 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 any Related Person or materially
impair the value of such property subject thereto; (e) 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
any Related Person 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 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 such Related Person or materially impair the value of such property
subject thereto; (f) any Liens permitted by the terms of the Security Documents;
and (g) any Liens arising pursuant to transportation, production handling and
other similar agreements necessary or desirable in the transportation and
handling of hydrocarbons from the properties of the Related Persons, which Liens
secure amounts for the payment of the costs and expenses of such transportation
and handling, provided that such amounts are not yet due and payable or are
being contested in good faith by appropriate proceedings diligently conducted by
such Related Persons and for which adequate reserves have been made pursuant to
GAAP.
"FISCAL QUARTER" means a three-month period ending on March 31, June 30,
September 30 or December 31 of any year.
"FISCAL YEAR" means a twelve-month period ending on December 31 of any
year.
"FIXED RATE" means, with respect to each particular Fixed Rate Portion and
the associated LIBOR Rate and Reserve Percentage, the rate per annum calculated
by Lender (rounded upwards, if necessary, to the next higher 0.01%) determined
on a daily basis pursuant to the following formula:
Fixed Rate =
LIBOR RATE + Fixed Rate Margin
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100.0% - Reserve Percentage
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The Fixed Rate for any Fixed Rate Portion shall change whenever the Fixed Rate
Margin changes, but if the Reserve Percentage changes during the Interest Period
for a Fixed Rate Portion, Lender may, at its option, either change the Fixed
Rate for such Fixed Rate Portion or leave it unchanged for the duration of such
Interest Period. The Fixed Rate shall in no event, however, exceed the Highest
Lawful Rate.
"FIXED RATE MARGIN" means, on each day:
(a) four percent (4%) for that portion of the outstanding principal amount
of the Loan on such day which is in excess of $7,000,000,
(b) two and one-quarter of one percent (2.25%) per annum for that portion
of the outstanding principal amount of the Loan which is equal to or less than
$7,000,000 when the outstanding principal amount of the Loan on such day is
greater than $5,500,000,
(c) two percent (2.0%) per annum when the outstanding principal amount of
the Loan on such day is greater than $2,500,000 but less than or equal to
$5,500,000, and
(d) one and three-quarters of one percent (1.75%) per annum when the
outstanding principal amount of the Loan on such day is equal to or less than
$2,500,000.
"FIXED RATE PORTION" mean any portion of the unpaid principal balance of
the Loan which Borrower designates as such in a Rate Election.
"GAAP" means those generally accepted accounting principles and practices
which are recognized as such by the Financial Accounting Standards Board (or any
generally recognized successor) and which, in the case of Borrower and its
Consolidated Subsidiaries, are applied for all periods after the date hereof in
a manner consistent with the manner in which such principles and practices were
applied to the Initial Financial Statements.
"GENERAL PARTNER" means OEDC, Inc., a Texas corporation.
"GUARANTORS" means, collectively, OEDC, Dauphin, General Partner, OEDC
Partners, OEDC Processing, and any other Person who has guaranteed some or all
of the Obligations and has been accepted by Lender as a Guarantor; each
individually, a "GUARANTOR".
"HAZARDOUS MATERIALS" means any substances regulated under any
Environmental Law, whether as pollutants, contaminants, or chemicals, or as
industrial, toxic or hazardous substances or wastes, or otherwise.
"HIGHEST LAWFUL RATE" means the maximum nonusurious rate of interest that
Lender is permitted under applicable law to contract for, take, charge, or
receive with respect to the Loan.
"INITIAL ENGINEERING REPORT" means the engineering report concerning oil
and gas properties of Borrower, prepared by Xxxxx Xxxxx Company as of December
31, 1996.
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"INITIAL FINANCIAL STATEMENTS" means (i) the audited annual financial
statements of OEDC dated as of December 31, 1996, and (ii) the unaudited
quarterly consolidated financial statements of OEDC dated as of March 31, 1997.
"INTEREST EXPENSES" means for any period, the Consolidated expenses of
Borrower for such period for net interest and fees on Debt incurred in
connection with the borrowing of money.
"INTEREST ONLY PERIOD" means the period beginning on the date hereof and
ending on September 30, 1997 (or, if earlier, the day on which the Note first
becomes due and payable in full); provided that the Interest Only Period may be
extended by Lender in its sole discretion in connection with each
redetermination of the Borrowing Base.
"INTEREST PERIOD" means, with respect to each particular Fixed Rate
Portion of the Loan, a period of 1, 2 or 3 months, as specified in the Rate
Election applicable thereto, beginning on and including the date specified in
such Rate Election (which must be a Business Day), and ending on but not
including the same day of the month as the day on which it began (e.g., a period
beginning on the third day of one month shall end on but not include the third
day of another month), provided that (i) each Interest Period which would
otherwise end on a day which is not a Business Day shall end on the next
succeeding Business Day (unless such next succeeding Business Day is the first
Business Day of a calendar month, in which case such Interest Period shall end
on the immediately preceding Business Day) and (ii) any Interest Period which
begins on the last Business Day of a calendar month (or a day for which there is
no numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of the calendar month in
which it would have occurred if there were a numerically corresponding day in
such calendar month. No Interest Period may be elected which would extend past
the date on which the Note is due and payable in full.
"LATE PAYMENT RATE" means, at the time in question, five percent (5%) per
annum plus the Base Rate then in effect; provided that, with respect to any
Fixed Rate Portion with an Interest Period extending beyond the date such Fixed
Rate Portion becomes due and payable, "Late Payment Rate" shall mean five
percent (5%) per annum plus the related Fixed Rate. The Late Payment Rate shall
in no event, however, exceed the Highest Lawful Rate.
"LENDER" means Union Bank of California, N.A. and its successors and
assigns.
"LIBOR RATE" means, with respect to each particular Fixed Rate Portion and
with respect to the related Interest Period, the rate of interest per annum
determined by Lender in accordance with its customary general practices to be
representative of the rates at which deposits of dollars are offered to Lender
at approximately 9:00 a.m. Los Angeles time two Business Days prior to the first
day of such Interest Period (by prime banks in the interbank eurocurrency market
which have been selected by Lender in accordance with its customary general
practices) for delivery on the first day of such Interest Period in an amount
equal or comparable to the amount of such Fixed Rate Portion and for a period of
time equal or comparable to the length of such Interest Period. The LIBOR Rate
determined by Lender with respect to a particular Fixed Rate Portion shall be
fixed at such rate for the duration of the associated Interest Period. If Lender
is unable
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so to determine the LIBOR Rate for any Fixed Rate Portion, or if the associated
Fixed Rate would exceed the Highest Lawful Rate, Borrower shall be deemed not to
have elected such Fixed Rate Portion.
"LIEN" means, with respect to any property or assets, any right or
interest therein of a creditor to secure Debt owed to him or any other
arrangement with such creditor which provides for the payment of such Debt out
of such property or assets or which allows him to have such Debt satisfied out
of such property or assets prior to the general creditors of any owner thereof,
including any lien, mortgage, security interest, pledge, deposit, production
payment, rights of a vendor under any title retention or conditional sale
agreement or lease substantially equivalent thereto, tax lien, mechanic's or
materialman's lien, or any other charge or encumbrance for security purposes,
whether arising by law or agreement or otherwise, but excluding any right of
offset which arises without agreement in the ordinary course of business.
"LOAN" has the meaning given it in Section 2.1.
"LOAN DOCUMENTS" means this Agreement, the Note, the Security Documents,
and all other agreements, certificates, documents, instruments and writings at
any time delivered in connection herewith or therewith and under which there are
duties, representations, warranties, certifications or obligations of or by the
Related Persons (exclusive of term sheets, commitment letters, correspondence
and similar documents used in the negotiation hereof).
"MATERIAL AGREEMENTS" means, collectively, (i) the limited partnership
agreement of Borrower, (ii) the limited partnership agreement of Dauphin, (iii)
the limited partnership agreement of the Enron Partnership, (iv) the limited
partnership agreement of Dauphin Island Gathering Partners, (v) the limited
partnership agreement of OEDC Partners, (vi) the limited partnership agreement
of South Dauphin Partners, Ltd, and (vii) the limited partnership agreement of
OEDC Processing.
"MAXIMUM LOAN AMOUNT" means $30,000,000.
"MBPP" means Mobile Bay Processing Partners, a Delaware general
partnership, in which OEDC Processing owns a 1% general partnership interest.
"MBPP OPTION" means the option granted to OEDC Processing allowing it to,
upon exercise of such option, increase its investment in MBPP to any amount
equal to [24%] of MBPP.
"MMS" means the U.S. Department of Interior, Minerals Management Service.
"MONTHLY REDUCTION AMOUNT" means for each month after the Interest Only
Period, (i) $550,000, for the first twelve months after the Interest Only
Period, (ii) $440,000 for the thirteenth through eighteenth month after the
Interest Only Period, (iii) $293,333, for the nineteenth through twenty-third
month after the Interest Only Period, and (iv) $293,335 for the twenty-fourth
month after the Interest Only Period; provided that such amounts may be
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redetermined by Lender in its sole discretion in connection with each
redetermination of the Borrowing Base.
"NOTE" has the meaning given it in Section 2.1.
"OBLIGATIONS" means the sum of (a) all Debt from time to time owing by
Borrower to Lender under or pursuant to any of the Loan Documents, plus (b) all
other Debt from time to time owing by any of the Related Persons to Lender.
"OBLIGATION" means any part of the Obligations.
"OEDC" means Offshore Energy Development Corporation, a Delaware
corporation.
"OEDC PARTNERS" means OEDC Partners, L.P., a Texas limited partnership,
whose sole general partner is General Partner.
"OEDC PROCESSING" means OEDC Processing, L.P., a Texas limited
partnership.
"ORIGINAL CREDIT AGREEMENT" means that certain Credit Agreement dated
August 28, 1996, among Borrower, OEDC, General Partner, OEDC Partners, Dauphin
and Lender, as amended by that certain First Amendment to Credit Agreement dated
as of January 24, 1997, and that certain Second Amendment to Credit Agreement
dated as of March 14, 1997.
"PERMITTED INVESTMENTS" means investments:
(a) in open market commercial paper, maturing not later than thirty
(30) days after acquisition thereof, which has the highest or second
highest credit rating given by either Standard & Poor's Ratings Group (a
division of McGraw Hill, Inc.) or Xxxxx'x Investors Service, Inc.
(b) in marketable obligations, maturing within thirty (30) days
after acquisition thereof, issued or unconditionally guaranteed by the
United States of America or an instrumentality or agency thereof and
entitled to the full faith and credit of the United States of America.
(c) in demand deposits, and time deposits (including certificates of
deposit) maturing within thirty (30) days from the date of deposit
thereof, with any office of Lender or with a domestic office of any
national or state bank or trust company which is organized under the laws
of the United States of America or any state therein, which has capital,
surplus and undivided profits of at least $250,000,000, and whose
certificates of deposit have at least the third highest credit rating
given by either Standard & Poor's Ratings Group (a division of McGraw
Hill, Inc.) or Xxxxx'x Investors Service, Inc.
(d) in repurchase agreements relating to investments described in
clauses (a) through (c) above with a market value at least equal to the
consideration paid in connection therewith, with any Person who regularly
engages in the business of entering
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into repurchase agreements and has a combined capital surplus and
undivided profit of not less than $250,000,000.
(e) in any Related Person.
"PERSON" means an individual, corporation, partnership, association, joint
stock company, trust or trustee thereof, estate or executor thereof,
unincorporated organization or joint venture, court or governmental unit or any
agency or subdivision thereof, or any other legally recognizable entity.
"PROHIBITED LIEN" means any Lien not expressly allowed under Section
5.2(b).
"PROPERTY" has the meaning given it in the Mortgage.
"PROPERTY EXCHANGE" means the transfer by Borrower of certain of its oil
and gas interests related to Mobile Block 830 and Pensacola Block 881 in
exchange for certain oil and gas interests held by Taurus Exploration USA, Inc.
in Destin Dome 1 and Destin Dome 2.
"RATE ELECTION" has the meaning given it in Section 2.4.
"REGULATION D" means Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect.
"RELATED PERSON" means Borrower and Guarantors, provided that the addition
of any Person as a Guarantor after the date hereof shall be subject to Section
5.2(n).
"REPORTABLE EVENT" has the meaning stated in Title IV of ERISA.
"REQUEST FOR ADVANCE" means a written request made by Borrower which meets
the requirements of Section 2.2.
"RESERVE PERCENTAGE" means, on any day with respect to each particular
Fixed Rate Portion, the maximum reserve requirement, as determined by Lender
(including without limitation any basic, supplemental, marginal, emergency or
similar reserves), expressed as a percentage and rounded to the next higher
0.01%, which would then apply to Lender under Regulation D with respect to
"Eurocurrency liabilities" (as such term is defined in Regulation D) equal in
amount to such Fixed Rate Portion, were Lender to have any such "Eurocurrency
liabilities". If such reserve requirement shall change after the date hereof,
the Reserve Percentage shall be automatically increased or decreased, as the
case may be, from time to time as of the effective time of each such change in
such reserve requirement.
"RESTRICTED DEBT" of any Person means Debt in any of the following
categories:
(a) Debt for borrowed money,
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(b) Debt constituting an obligation to pay the deferred purchase
price of property or services,
(c) Debt evidenced by a bond, debenture, note or similar instrument,
(d) Debt which would be shown on such Person's balance sheet as a
liability (other than reserves for taxes and contingent obligations),
(e) Debt arising under futures contracts, swap contracts, or similar
speculative agreements,
(f) Debt constituting principal under capitalized leases,
(g) Debt arising under conditional sales or other title retention
agreements,
(h) Debt owing under direct or indirect guaranties of Debt of any
other Person or constituting obligations to purchase or acquire or to
otherwise protect or insure a creditor against loss in respect of Debt of
any other Person (such as obligations under working capital maintenance
agreements, agreements to keep-well, or agreements to purchase Debt,
assets, goods, securities or services), but excluding endorsements in the
ordinary course of business of negotiable instruments in the course of
collection,
(i) Debt of the types described in clauses (a), (b), (c), (f) and
(g) of this definition of Restricted Debt owing by virtue of such Person's
liability as a general partner of any other Person, except where the
holder of such Debt has agreed to waive any recourse as to such general
partner,
(j) Debt with respect to letters of credit or applications or
reimbursement agreements therefor,
(k) Debt with respect to payments received in consideration of oil,
gas, or other minerals yet to be acquired or produced at the time of
payment (including obligations under "take-or-pay" contracts to deliver
gas in return for payments already received and the undischarged balance
of any production payment created by such Person or for the creation of
which such Person directly or indirectly received payment), OR
(l) Debt with respect to other obligations to deliver goods or
services in consideration of advance payments therefor;
provided, however, that the term "Restricted Debt" shall not include Trade Debt
which is ninety (90) days or less past due.
'SECURITY DOCUMENTS" means the instruments listed in the Security Schedule
and all other security agreements, deeds of trust, mortgages, chattel mortgages,
pledges, guaranties, financing statements, continuation statements, extension
agreements and other agreements or instruments now, heretofore, or hereafter
delivered by any Related Person to Lender in connection with this
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Agreement or any transaction contemplated hereby to secure or guarantee the
payment of any part of the Obligations or the performance of any Related
Person's other duties and obligations under the Loan Documents.
'SECURITY SCHEDULE" means Schedule 2 hereto.
'SOLID WASTE" has the meaning specified in the Resource Conservation and
Recovery Act of 1976, as heretofore amended.
'SUBSIDIARY" means, with respect to any Person, any corporation,
association, partnership, joint venture, or other business or corporate entity,
enterprise or organization which is directly or indirectly (through one or more
intermediaries) controlled by or owned fifty percent or more by such Person.
"TERMINATION EVENT" means (a) the occurrence with respect to any ERISA
Plan of (i) a reportable event described in Sections 4043(b)(5) or (6) of ERISA
or (ii) any other reportable event described in Section 4043(b) of ERISA other
than a reportable event not subject to the provision for 30-day notice to the
Pension Benefit Guaranty Corporation pursuant to a waiver by such corporation
under Section 4043(a) of ERISA, or (b) the withdrawal of any Related Person or
of any Affiliate of any Related Person from an ERISA Plan during a plan year in
which it was a 'substantial employer" as defined in Section 4001(a)(2) of ERISA,
or (c) the filing of a notice of intent to terminate any ERISA Plan or the
treatment of any ERISA Plan amendment as a termination under Section 4041 of
ERISA, or (d) the institution of proceedings to terminate any ERISA Plan by the
Pension Benefit Guaranty Corporation under Section 4042 of ERISA, or (e) 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
ERISA Plan.
"TRADE DEBT" means any Debt owed by any Person on ordinary trade terms to
vendors, suppliers and other Persons providing goods and services used by it in
the ordinary course of its business.
Section 1.2. EXHIBITS AND SCHEDULES; ADDITIONAL DEFINITIONS. All Exhibits
and Schedules attached to this Agreement are a part hereof for all purposes.
Reference is hereby made to the Security Schedule for the meaning of certain
terms defined therein and used but not defined herein, which definitions are
incorporated herein by reference.
Section 1.3. AMENDMENT OF DEFINED INSTRUMENTS. Unless the context
otherwise requires or unless otherwise provided herein the terms defined in this
Agreement which refer to a particular agreement, instrument or document also
refer to and include all renewals, extensions, modifications, amendments and
restatements of such agreement, instrument or document, provided that nothing
contained in this section shall be construed to authorize any such renewal,
extension, modification, amendment or restatement.
Section 1.4. REFERENCES AND TITLES. All references in this Agreement to
Exhibits, Schedules, articles, sections, subsections and other subdivisions
refer to the Exhibits, Schedules, articles, sections, subsections and other
subdivisions of this Agreement unless expressly provided otherwise. Titles
appearing at the beginning of any subdivisions are for convenience only and do
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not constitute any part of such subdivisions and shall be disregarded in
construing the language contained in such subdivisions. The words "this
Agreement", "this instrument", "herein", "hereof", "hereby", "hereunder" and
words of similar import refer to this Agreement as a whole and not to any
particular subdivision unless expressly so limited. The phrases "this section"
and "this subsection" and similar phrases refer only to the sections or
subsections hereof in which such phrases occur. The word "or" is not exclusive,
and the word "including" (in its various forms) means "including without
limitation". Pronouns in masculine, feminine and neuter genders shall be
construed to include any other gender, and words in the singular form shall be
construed to include the plural and vice versa, unless the context otherwise
requires.
Section 1.5. CALCULATIONS AND DETERMINATIONS. All calculations under the
Loan Documents of fees and of interest shall be made on the basis of actual days
elapsed (including the first day but excluding the last) and a year of 360 days.
Each determination by Lender of amounts to be paid under Sections 2.11 through
2.15 or any other matters which are to be determined hereunder by Lender (such
as any LIBOR Rate, Fixed Rate, Business Day, Interest Period or Reserve
Percentage) shall, in the absence of manifest error, be conclusive and binding.
Unless otherwise expressly provided herein or unless Lender otherwise consents
all financial statements and reports furnished to Lender hereunder shall be
prepared and all financial computations and determinations pursuant hereto shall
be made in accordance with GAAP.
ARTICLE II - THE LOAN
Section 2.1. ADVANCES; EXTENSION OF COMMITMENT PERIOD.
(a) ADVANCES. Subject to the terms and conditions hereof, Lender agrees to
make advances to Borrower (herein called "Advances") upon request from time to
time during the Commitment Period so long as the aggregate amount of Advances
outstanding at any time does not exceed the lesser of the Maximum Loan Amount
and the Borrowing Base in effect as of the date on which the requested Advance
is to be made. It is expressly understood that Lender's commitment to advance
funds hereunder is determined only by reference to the lesser of the Maximum
Loan Amount and the Borrowing Base from time to time in effect, and the face
amount of the Note and the amount specified in the Security Documents are
specified at a greater amount only for the convenience of the parties to avoid
the necessity of preparing and recording supplements to the Security Documents.
The amount of any Advance must be greater than or equal to $100,000 or must
equal the unadvanced portion of the Borrowing Base. The obligation of Borrower
to repay to Lender the aggregate amount of all Advances made by Lender (herein
called the "Loan"), together with interest accruing in connection therewith,
shall be evidenced by a single promissory note (herein called the "Note") made
by Borrower payable to the order of Lender in the form of Exhibit A with
appropriate insertions. The amount of principal owing on the Note at any given
time shall be the aggregate amount of all Advances theretofore made minus all
payments of principal theretofore received by Lender on the Note. Interest on
the Note shall accrue and be due and payable as provided herein and therein.
Subject to the terms and conditions hereof, Borrower may borrow, repay, and
reborrow hereunder.
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(b) EXTENSION OF COMMITMENT PERIOD. So long as no Default shall have
occurred and be continuing at such time, at least ninety (90) days but not more
than 120 days before each September 30, beginning September 30, 1999, Borrower
may request in writing to Lender that the Commitment Period be extended by one
year from the then scheduled date. On or before the immediately following August
31 after each such request, Lender shall notify Borrower in writing whether it
elects to so extend the Commitment Period. Any failure by Lender to so notify
Borrower shall be deemed to be a decision by Lender to not extend the Commitment
Period.
Section 2.2. REQUESTS FOR ADVANCES. Borrower must give to Lender notice of
any requested Advance as follows:
(a) if all of such Advance is designated as a Base Rate Portion, by
11:00 a.m., Dallas, Texas time, on the date such Advance is requested to
be made;
(b) if any part of such Advance is designated by Borrower as a Fixed
Rate Portion, by 11:00 a.m., Dallas, Texas time, on the second Business
Day preceding the date such Advance is requested to be made.
Each such written request or confirmation must be made in the form and substance
of the "Request for Advance" attached hereto as Exhibit B, duly completed. If
all conditions precedent to such Advance have been met, Lender will on the date
requested make the Advance available to Borrower in immediately available funds
at Lender's office in Dallas, Texas. Each Request for Advance, with respect to
any portion of the Advance requested thereby that is designated as a Fixed Rate
Portion, shall be irrevocable and binding on Borrower.
Section 2.3. USE OF PROCEEDS. Borrower shall use all funds from the
initial Advance to repay all Debt owing in connection with the Existing Credit
Agreement. All funds from subsequent Advances shall be used (i) to finance the
acquisition and development of oil and gas properties, (ii) up to $1,000,000 to
fund Borrower's share of the capital expenditures made by the Enron Partnership
and (iii) for general business purposes. In no event shall any funds lent
hereunder be used directly or indirectly by any Persons for personal, family,
household or agricultural purposes or for the purpose, whether immediate,
incidental or ultimate, of purchasing, acquiring or carrying any "margin stock"
or any "margin securities" (as such terms are defined respectively in Regulation
U and Regulation G promulgated by the Board of Governors of the Federal Reserve
System) or to extend credit to others directly or indirectly for the purpose of
purchasing or carrying any such margin stock or margin securities. Borrower
represents and warrants that Borrower is not engaged principally, or as one of
Borrower's important activities, in the business of extending credit to others
for the purpose of purchasing or carrying such margin stock or margin
securities.
Section 2.4. RATE ELECTIONS. Borrower may from time to time designate all
or any portion of the Loan (including any yet to be made Advances which are to
be made prior to or at the beginning of the designated Interest Period but
excluding any portions of the Loan which are required to be repaid prior to the
end of the designated Interest Period) as a "Fixed Rate Portion". Without the
consent of Lender, Borrower may make no such election during the continuance of
a
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Default, and Borrower may make such an election with respect to already existing
Fixed Rate Portions only if such election will take effect at or after the
termination of the Interest Period applicable thereto. Each election by Borrower
of a Fixed Rate Portion shall:
(a) Be made in writing in the form and substance of the "Rate
Election" attached hereto as Exhibit C, duly completed;
(b) Specify the amount of the Loan which Borrower desires to
designate as a Fixed Rate Portion, the first day of the Interest Period
which is to apply thereto, and the length of such Interest Period; and
(c) Be received by Lender not later than 11:00 a.m., Dallas, Texas
time, on the second Business Day preceding the first day of the specified
Interest Period.
Each election which meets the requirements of this section (herein called a
"Rate Election") shall be irrevocable. Borrower may make no Rate Election which
does not specify an Interest Period complying with the definition of "Interest
Period" in Section 1.1, and the amount of the Fixed Rate Portion elected in any
Rate Election must be $100,000 or a higher integral multiple of $100,000. Upon
the termination of each Interest Period the portion of the Loan within the
related Fixed Rate Portion shall, unless the subject of a new Rate Election then
taking effect, automatically become a part of the Base Rate Portion of the Loan
and become subject to all provisions of the Loan Documents governing such Base
Rate Portion. Borrower shall have no more than three (3) Fixed Rate Portions in
effect at any time.
Section 2.5. FEES.
(a) COMMITMENT FEES. In consideration of Lender's commitment to make
Advances, Borrower will pay to Lender a commitment fee determined on a
daily basis by applying a rate of three-eighths of one percent (.375%) to
the unused portion of the Borrowing Base on each day during the Commitment
Period, determined for each such day by deducting from the amount of the
Borrowing Base at the end of such day the unpaid aggregate principal
balance of the Loan at the end of such day. This commitment fee shall be
due and payable in arrears on the last day of each calendar quarter and at
the end of the Commitment Period.
(b) FACILITY FEES. On the date hereof, Borrower shall pay to Lender
a facility fee in the amount of $50,000.
(c) ENGINEERING FEES. On each Determination Date, Borrower shall pay
to Lender an engineering fee in the amount of $5,000.
Section 2.6. OPTIONAL PREPAYMENTS. Borrower may, upon two (2) Business
Days" notice to Lender, from time to time and without premium or penalty prepay
the Note, in whole or in part, so long as each partial prepayment of principal
on the Note is greater than or equal to $10,000, so long as Borrower does not
make any prepayments which would reduce the unpaid principal balance of the Loan
to less than $10,000 without first either (a) terminating this
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Agreement or (b) providing assurance satisfactory to Lender in its discretion
that Lender's legal rights under the Loan Documents are in no way affected by
such reduction. Each prepayment of principal under this section shall be
accompanied by all interest then accrued and unpaid on the principal so prepaid.
Any principal or interest prepaid pursuant to this section shall be in addition
to, and not in lieu of, all payments otherwise required to be paid under the
Loan Documents at the time of such prepayment.
Section 2.7. MANDATORY PREPAYMENTS AND MONTHLY REDUCTION.
(a) MANDATORY PREPAYMENTS. If the unpaid principal balance of the
Loan ever exceeds the Borrowing Base (other than as a result of a Monthly
Reduction Amount as provided in Section 2.7(b)) Borrower shall, within ten
(10) days after Lender gives notice of such fact to Borrower, either (i)
prepay the principal of the Loan in an amount at least equal to such
excess, (ii) give notice to Lender electing to prepay the principal of the
Loan in six (or fewer) installments in an aggregate amount at least equal
to such excess, or (iii) grant Lender first perfected Liens in and to such
additional Collateral satisfactory to Lender, pursuant to documentation in
form and substance satisfactory to Lender to increase the Borrowing Base
to an amount equal to the then aggregate outstanding principal balance of
the Loan. Each installment under clause (ii) of the immediately preceding
sentence shall equal or exceed one-sixth of such excess; the first such
installment shall be paid with the giving of such notice and the
subsequent installments shall be due and payable at one month intervals
thereafter until such excess has been eliminated.
(b) MONTHLY REDUCTION. On the last day of each month beginning one
month after the end of the Interest Only Period, the Borrowing Base shall
be reduced by the Monthly Reduction Amount. To the extent that the unpaid
principal balance of the Loan ever exceeds the Borrowing Base (any such
amount being called the "excess") as a result of such a reduction,
Borrower shall, on the same day as such reduction occurs, prepay, the
principal of the Loan in the amount of the excess.
(c) APPLICATION OF PAYMENTS. Each prepayment of principal under this
section shall be accompanied by all interest then accrued and unpaid on
the principal so prepaid. Any principal or interest prepaid pursuant to
this section shall be in addition to, and not in lieu of, all payments
otherwise required to be paid under the Loan Documents at the time of such
prepayment.
Section 2.8. PAYMENTS TO LENDER. Borrower will make each payment which it
owes under the Loan Documents not later than 12:00 noon, Los Angeles, California
time, on the date such payment becomes due and payable, in lawful money of the
United States of America, without set-off, deduction or counterclaim, and in
immediately available funds. Any payment received by Lender after such time will
be deemed to have been made on the next following Business Day. Should any such
payment become due and payable on a day other than a Business Day, the maturity
of such payment shall be extended to the next succeeding Business Day, and, in
the case of a payment of principal or past due interest, interest shall accrue
and be payable thereon for the period of such extension as provided in the Loan
Document under which such
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payment is due. Each payment under a Loan Document shall be due and payable at
the place provided therein and, if no specific place of payment is provided,
shall be due and payable at the place of payment of the Note. When Lender
collects or receives money on account of the Obligations, Lender may apply such
money as it elects to the various Obligations then due and payable; provided
that, so long as no Event of Default has occurred, all payments applied to
principal shall be applied first to any outstanding Base Rate Portion, then to
the outstanding Fixed Rate Portions in such order as Borrower may direct.
Section 2.9. INITIAL BORROWING BASE. During the period from the date
hereof to the first Determination Date, the Borrowing Base shall be $11,000,000.
Section 2.10. SUBSEQUENT DETERMINATIONS OF BORROWING BASE. By March 31,
June 30, September 30 and December 31 of each year, beginning September 30,
1997, Borrower shall furnish to Lender all information, reports and data which
Lender has then requested concerning Borrower's businesses and properties
(including Borrower's oil and gas properties and interests and the reserves and
production relating thereto), together with the Engineering Report described in
Section 5.1(b)(iii) or (iv) as applicable. Borrower and Lender shall each have
the right to request one additional redetermination of the Borrowing Base during
any period of twelve consecutive calendar months. Within thirty (30) days after
receiving such information, reports and data, or as promptly thereafter as
practicable, Lender shall by notice to Borrower designate the new Borrowing Base
available to Borrower hereunder during the period beginning on and including the
date such notice is sent (herein called a "Determination Date") and continuing
until but not including the next date as of which the Borrowing Base is
redetermined. If Borrower does not furnish all such information, reports and
data by the date specified in the first sentence of this section Lender may
nonetheless designate the Borrowing Base at any amount which it determines and
may redesignate the Borrowing Base from time to time thereafter until Lender
receives all such information, reports and data, whereupon Lender shall
designate a new Borrowing Base as described above. Lender shall determine the
amount of the Borrowing Base based upon the loan collateral value which it in
its discretion assign to the various items of Collateral at the time in question
in accordance with its customary practices and standards applied generally to
its substantial energy credits and based upon such other credit factors
(including without limitation the assets, liabilities, cash flow, business,
properties, prospects, management and ownership of the Related Persons and their
Affiliates) as it in its discretion (but in accordance with its customary
practices and standards) deems significant. It is expressly understood that
Lender has no obligation to designate the Borrowing Base at any particular
amount.
Section 2.11. CAPITAL ADEQUACY. If either (a) the introduction or
implementation of or the compliance with or any change in or in the
interpretation of any law, rule or regulation, or (b) the introduction or
implementation of or the compliance with any request, directive or guideline
from any central bank or other governmental authority (whether or not having the
force of law) affects or would affect the amount of capital required or expected
to be maintained by Lender or any corporation controlling Lender, then, upon
demand by Lender, Borrower will pay to Lender, from time to time as specified by
Lender, such additional amount or amounts which Lender shall determine to be
appropriate to compensate Lender or any corporation controlling Lender in light
of such circumstances, to the extent that Lender reasonably determines that the
amount of any
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such capital would be increased or the rate of return on any such capital would
be reduced by or in whole or in part based on the existence of the face amount
of the Note or commitments under this Agreement.
Section 2.12. INCREASED COST OF FIXED RATE PORTIONS. If any applicable
domestic or foreign law, treaty, rule or regulation (whether now in effect or
hereinafter enacted or promulgated, including Regulation D) or any
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof (whether or not having the
force of law):
(a) shall change the basis of taxation of payments to Lender of any
principal, interest, or other amounts attributable to any Fixed Rate
Portion or otherwise due under this Agreement in respect of any Fixed Rate
Portion (other than taxes imposed on the overall net income of Lender or
any lending office of Lender by any jurisdiction in which Lender or any
such lending office is located); or
(b) shall change, impose, modify, apply or deem applicable any
reserve, special deposit or similar requirements in respect of any Fixed
Rate Portion (excluding those for which Lender is fully compensated
pursuant to adjustments made in the definition of Fixed Rate) or against
assets of, deposits with or for the account of, or credit extended by,
Lender; or
(c) shall impose on Lender or the interbank eurocurrency deposit
market any other condition affecting any Fixed Rate Portion, the result of
which is to increase the cost to Lender of funding or maintaining any
Fixed Rate Portion or to reduce the amount of any sum receivable by Lender
in respect of any Fixed Rate Portion by an amount deemed by Lender to be
material,
then Lender shall promptly notify Borrower in writing of the happening of such
event and of the amount required to compensate Lender for such event (on an
after-tax basis, taking into account any taxes on such compensation), whereupon
(i) Borrower shall pay such amount to Lender and (ii) Borrower may elect, by
giving to Lender not less than three Business Days" notice, to convert all (but
not less than all) of any such Fixed Rate Portion into a part of the Base Rate
Portion.
Section 2.13. AVAILABILITY. If (a) any change in applicable laws,
treaties, rules or regulations or in the interpretation or administration
thereof of or in any jurisdiction whatsoever, domestic or foreign, shall make it
unlawful or impracticable for Lender to fund or maintain Fixed Rate Portions, or
shall materially restrict the authority of Lender to purchase or take offshore
deposits of dollars, or (b) Lender determines that matching deposits appropriate
to fund or maintain any Fixed Rate Portion are not available to it, or (c)
Lender determines that the formula for calculating the Fixed Rate does not
fairly reflect the cost to Lender of making or maintaining loan based on such
rate, then the right of Borrower to elect Fixed Rate Portions shall be suspended
to the extent and for the duration of such illegality, impracticability or
restriction and all Fixed Rate Portions (or portions thereof) which are then
outstanding or are then the subject of
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any Rate Election and which cannot lawfully or practicably be maintained or
funded shall immediately become or remain part of the Base Rate Portion.
Section 2.14. FUNDING LOSSES. In addition to its other obligations
hereunder, Borrower will indemnify Lender against, and reimburse Lender on
demand for, any loss or expense incurred or sustained by Lender (including any
loss or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by Lender to fund or maintain Fixed Rate
Portions or Advances), as a result of (a) any payment or prepayment (whether
authorized or required hereunder or otherwise) of all or a portion of a Fixed
Rate Portion on a day other than the day on which the applicable Interest Period
ends, (b) any payment or prepayment, whether required hereunder or otherwise, of
an Advance made after the delivery, but before the effective date, of a Rate
Election, if such payment or prepayment prevents such Rate Election from
becoming fully effective, (c) the failure of any Advance to be made or of any
Rate Election to become effective due to any condition precedent not being
satisfied or due to any other action or inaction of any Related Person, or (d)
any conversion (whether authorized or required hereunder or otherwise) of all or
any portion of any Fixed Rate Portion into the Base Rate Portion or into a
different Fixed Rate Portion on a day other than the day on which the applicable
Interest Period ends.
Section 2.15. REIMBURSABLE TAXES. Borrower covenants and agrees that:
(a) Borrower will indemnify Lender against and reimburse Lender for
all present and future income, stamp and other taxes, levies, costs and
charges whatsoever imposed, assessed, levied or collected on or in respect
of this Agreement or any Fixed Rate Portions (whether or not legally or
correctly imposed, assessed, levied or collected), excluding, however, any
taxes imposed on or measured by the overall net income of Lender or any
lending office of Lender by any jurisdiction in which Lender or any such
lending office is located (all such non-excluded taxes, levies, costs and
charges being collectively called "Reimbursable Taxes" in this section).
(b) All payments on account of the principal of, and interest on,
the Loan and the Note, and all other amounts payable by Borrower to Lender
hereunder, shall be made in full without set-off or counterclaim and shall
be made free and clear of and without deductions or withholdings of any
nature by reason of any Reimbursable Taxes, all of which will be for the
account of Borrower. In the event of Borrower being compelled by law or
other regulations to make any such deduction or withholding from any
payment to Lender, Borrower shall pay on the due date of such payment, by
way of additional interest, such additional amounts as are needed to cause
the amount receivable by Lender after such deduction or withholding to
equal the amount which would have been receivable in the absence of such
deduction or withholding. If Borrower should make any deduction or
withholding as aforesaid, Borrower shall within 60 days thereafter forward
to Lender an official receipt or other official document evidencing
payment of such deduction or withholding.
(c) If Borrower is ever required to pay any Reimbursable Tax with
respect to any Fixed Rate Portion Borrower may elect, by giving to Lender
not less than three
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Business Days" notice, to convert all (but not less than all) of any such
Fixed Rate Portion into a part of the Base Rate Portion, but such election
shall not diminish the obligation of Borrower to pay all such Reimbursable
Taxes.
ARTICLE III - CONDITIONS PRECEDENT TO LENDING
Section 3.1. DOCUMENTS TO BE DELIVERED. Lender has no obligation to make
its first Advance unless Lender shall have received all of the following, at
Lender's office in Dallas, Texas, duly executed and delivered and in form,
substance and date satisfactory to Lender:
(a) The Note.
(b) An "Omnibus Certificate" of the Secretary and of the Chief
Operating Officer or the Executive Vice President of General Partner,
which shall contain the names and signatures of the officers of General
Partner authorized to execute Loan Documents on behalf of General Partner
and on behalf of Borrower and Dauphin in General Partner's capacity as
general partner of Borrower and Dauphin and which shall certify to the
truth, correctness and completeness of the following exhibits attached
thereto: (i) a copy of resolutions duly adopted by the Board of Directors
of General Partner and in full force and effect at the time this Agreement
is entered into, authorizing the execution of this Agreement and the other
Loan Documents delivered or to be delivered in connection herewith and the
consummation of the transactions contemplated herein and therein, (ii) a
copy of the charter documents of General Partner and all amendments
thereto, certified by the appropriate official of General Partner's state
of organization, (iii) a copy of any bylaws of General Partner, (iv) a
copy of the limited partnership agreement of Borrower, (v) a copy of the
limited partnership agreement of Dauphin, (vi) a copy of the Certificate
of Limited Partnership of Borrower, (vii) a copy of the Certificate of
Limited Partnership of Dauphin, (viii) a copy of the limited partnership
agreement of the Enron Partnership, (ix) a copy of the Certificate of
Limited Partnership of the Enron Partnership, (x) a copy of the limited
partnership agreement of OEDC Partners, (xi) a copy of the Certificate of
Limited Partnership of OEDC Partners, (xii) a copy of the limited
partnership agreement of OEDC Processing, and (xiii) a copy of the
Certificate of Limited Partnership of OEDC Processing.
(c) An "Omnibus Certificate" of the Secretary and of the Chief
Operating Officer or the Executive Vice President of OEDC, which shall
contain the names and signatures of OEDC authorized to execute Loan
Documents on behalf of OEDC and which shall certify to the truth,
correctness and completeness of the following exhibits attached thereto:
(i) a copy of resolutions duly adopted by the Board of Directors of OEDC
and in full force and effect at the time this Agreement is entered into,
authorizing the execution of this Agreement and the other Loan Documents
delivered or to be delivered in connection herewith and the consummation
of the transactions contemplated herein and therein, (ii) a copy of the
charter documents of OEDC and all amendments thereto,
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certified by the appropriate official of OEDC's state of organization and
(iii) a copy of any bylaws of OEDC.
(d) A certificate (or certificates) of the due formation, valid
existence and good standing of Borrower in its state of organization,
issued by the appropriate authorities of such jurisdiction.
(e) A "Compliance Certificate" of the Chief Operating Officer or the
Executive Vice President and of the secretary of General Partner, of even
date with such Advance, in which such officers certify to the satisfaction
of the conditions set out in subsections (a), (b), (c) and (d) of Section
3.2.
(f) A favorable opinion of Xxxxxxxxx & Xxxxxxxxx, counsel for
Borrower and Guarantors, substantially in the form set forth in Exhibit E.
(g) Each Security Document listed in the Security Schedule.
(h) Endorsements naming Lender as an additional insured or loss
payee, as appropriate, on all liability insurance, business interruption
and all property insurance policies of Borrower and a detailed schedule of
all insurance of Borrower attached hereto as Exhibit F.
(i) All pending or, to the knowledge of any Related Person,
threatened actions, suits or legal, equitable, arbitrative or
administrative proceedings by or against any Related Person before any
federal, state, municipal or other court, department, commission, body,
board, bureau, agency or instrumentality, domestic or foreign shall be
described on the Disclosure Schedule. There shall be no outstanding order
or injunction which would prohibit any of the transactions contemplated by
the Loan Documents.
(j) Evidence of bonds required by the MMS for the operation by
Borrower of its oil and gas properties.
(k) A certificate of a Vice President of General Partner certifying
that the Debt previously owed in respect of the Preference Units pursuant
to the terms of the Amended and Restated Agreement of Limited Partnership
of OEDC Partners, L.P. dated as of July 31, 1995 has been fully satisfied.
Section 3.2. ADDITIONAL CONDITIONS PRECEDENT. Lender has no obligation to
make any Advance (including the first) unless the following conditions precedent
have been satisfied:
(a) All representations and warranties made by any Related Person in
any Loan Document shall be true on and as of the date of such Advance
(except to the extent that the facts upon which such representations are
based have been changed by the extension of credit hereunder) as if such
representations and warranties had been made as of the date of such
Advance.
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(b) No Default shall exist at the date of such Advance.
(c) No material adverse change shall have occurred to Borrower's
Consolidated financial condition or businesses, or to the Related Persons"
financial condition or businesses taken as a whole, since the date of this
Agreement.
(d) Each Related Person shall have performed and complied with all
agreements and conditions required in the Loan Documents to be performed
or complied with by it on or prior to the date of such Advance.
(e) The making of such Advance shall not be prohibited by any law or
any regulation or order of any court or governmental agency or authority
and shall not subject Lender to any penalty or other onerous condition
under or pursuant to any such law, regulation or order.
(f) Lender shall have received all documents and instruments which
Lender has then reasonably requested as to the accuracy and validity of or
compliance with all representations, warranties and covenants made by any
of the Related Persons in this Agreement and the other Loan Documents.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES
Section 4.1. BORROWER'S REPRESENTATIONS AND WARRANTIES. To confirm
Lender's understanding concerning Borrower and its businesses, properties and
obligations and to induce Lender to enter into this Agreement and to make the
Loan, the Related Persons, jointly and severally, represent and warrant to
Lender that:
(a) NO DEFAULT. No event has occurred and is continuing which
constitutes a Default.
(b) ORGANIZATION AND GOOD STANDING. Each Related Person which is a
corporation or partnership is duly organized, validly existing and in good
standing under the laws of its state of organization, having all corporate
or partnership powers required to carry on its business and enter into and
carry out the transactions contemplated hereby. Each Related Person is
duly qualified, in good standing, and authorized to do business in all
other jurisdictions within the United States wherein the character of the
properties owned or held by it or the nature of the business transacted by
it makes such qualification necessary, except that it shall not be
required hereunder to so qualify in any jurisdiction where no Collateral
is located if the failure so to qualify could not reasonably be expected
to cause a material adverse change in the business, financial condition,
or results of operations of Borrower or of the Related Persons taken as a
whole. Each Related Person has taken all actions and procedures
customarily taken in order to enter, for the purpose of conducting
business or owning property, each jurisdiction outside the United States
wherein the character of the properties owned or held by it or the nature
of the business transacted by it makes such actions and procedures
desirable, except where such actions
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and procedures the failure of which to take could not reasonably be
expected to cause a material adverse change in the business, financial
condition, or results of operations of Borrower or of the Related Persons
taken as a whole.
(c) AUTHORIZATION. Each Related Person which is a corporation or
partnership has duly taken all corporate or partnership action necessary
to authorize the execution and delivery by it of the Loan Documents to
which it is a party and to authorize the consummation of the transactions
contemplated thereby and the performance of its obligations thereunder.
Borrower is duly authorized to borrow funds hereunder.
(d) NO CONFLICTS OR CONSENTS. The execution and delivery by the
various Related Persons of the Loan Documents to which each is a party,
the performance by each of its obligations under such Loan Documents, and
the consummation of the transactions contemplated by the various Loan
Documents, do not and will not (i) conflict with any provision of (1) any
domestic or foreign law, statute, rule or regulation, (2) the articles or
certificate of incorporation, bylaws, charter, or partnership agreement or
certificate of any Related Person, or (3) any agreement, judgment,
license, order or permit applicable to or binding upon any Related Person,
(ii) result in the acceleration of any Debt owed by any Related Person, or
(iii) result in or require the creation of any Lien upon any assets or
properties of any Related Person except as expressly contemplated in the
Loan Documents. Except as expressly contemplated in the Loan Documents no
consent, approval, authorization or order of, and no notice to or filing
with, any court or governmental authority or third party is required in
connection with the execution, delivery or performance by any Related
Person of any Loan Document or to consummate any transactions contemplated
by the Loan Documents.
(e) ENFORCEABLE OBLIGATIONS. This Agreement is, and the other Loan
Documents when duly executed and delivered will be, legal, valid and
binding obligations of each Related Person which is a party hereto or
thereto, enforceable in accordance with their terms except as such
enforcement may be limited by bankruptcy, insolvency or similar laws of
general application relating to the enforcement of creditors" rights and
general principles of equity.
(f) INITIAL FINANCIAL STATEMENTS. The Initial Financial Statements
fairly present OEDC's Consolidated financial position at the respective
dates thereof and the Consolidated results of OEDC's operations
Consolidated cash flows for the respective periods thereof. Since the date
of the annual Initial Financial Statements no material adverse change has
occurred in OEDC's financial condition or businesses, OEDC's Consolidated
financial condition or businesses, or the financial condition or
businesses of the Related Persons taken as a whole. All Initial Financial
Statements were prepared in accordance with GAAP.
(g) OTHER OBLIGATIONS AND RESTRICTIONS. No Related Person has any
outstanding Debt of any kind (including contingent obligations, tax
assessments, and unusual forward or long-term commitments) which is, in
the aggregate, material to such Related Person or material with respect to
such Related Person's Consolidated financial condition and not
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shown in the Initial Financial Statements or disclosed in the Disclosure
Schedule. No Related Person is in default in any material respect under
any material partnership agreement, indenture, promissory note, franchise
or other agreement or obligation to which it is a party or by which any of
its properties is bound. No Related Person is subject to or restricted by
any franchise, contract, deed, charter restriction, or other instrument or
restriction which is materially likely in the foreseeable future to
materially and adversely affect the businesses, properties, prospects,
operations, or financial condition of such Related Person or of such
Related Person on a Consolidated basis.
(h) FULL DISCLOSURE. No certificate, statement or other information
delivered herewith or heretofore by any Related Person to Lender in
connection with the negotiation of this Agreement or in connection with
any transaction contemplated hereby contains any untrue statement of a
material fact or omits to state any material fact known to any Related
Person (other than industry-wide risks, including pricing risks, normally
associated with the types of businesses conducted by the Related Persons)
necessary to make the statements contained herein or therein not
misleading as of the date made or deemed made. There is no fact known to
any Related Person (other than industry-wide risks, including pricing
risks, normally associated with the types of businesses conducted by the
Related Persons) that has not been disclosed to Lender in writing which
could materially and adversely affect any Related Person's properties,
business, prospects or condition (financial or otherwise) or any Related
Person's Consolidated properties, businesses, prospects or condition
(financial or otherwise). All data and information provided by Borrower in
connection with any Engineering Report was true and correct and did not
fail to include any information known to or reasonably available to any
Related Person which was required in order to keep the information which
was provided from being materially misleading, it being understood that
each Engineering Report is necessarily based upon professional opinions,
estimates and projections and that no Related Person warrants that such
opinions, estimates and projections will ultimately prove to have been
accurate. Borrower has heretofore delivered to Lender true, correct and
complete copies of the Initial Financial Statements.
(i) LITIGATION. Except as disclosed in the Initial Financial
Statements or in the Disclosure Schedule: (i) there are no actions, suits
or legal, equitable, arbitrative or administrative proceedings pending, or
to the knowledge of any Related Person threatened, which affect any of the
Property (including any challenge or otherwise pertaining to Borrower's
title to the Property) against any Related Person before any federal,
state, municipal or other court, department, commission, body, board,
bureau, agency, or instrumentality, domestic or foreign, which could
reasonably be expected to cause a material adverse change in the business,
financial condition, or results of operations of Borrower or of the
Related Persons taken as a whole, or their ownership or use of any of
their assets or properties, or the right or ability of any Related Person
to enter into the Loan Documents to which it is a party or to consummate
the transactions contemplated thereby or to perform its obligations
thereunder and (ii) there are no outstanding judgments, injunctions,
writs, rulings or orders by any such governmental entity against any
Related Person or any Related Person's stockholders, partners, directors
or officers which have or may have any such effect.
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(j) ERISA LIABILITIES. All currently existing ERISA Plans are listed
in the Disclosure Schedule. No Termination Event has occurred with respect
to any ERISA Plan and the Related Persons are in compliance with ERISA in
all material respects. No Related Person is required to contribute to, or
has any other absolute or contingent liability in respect of, any
"multiemployer plan" as defined in Section 4001 of ERISA. Except as set
forth in the Disclosure Materials: (i) no "accumulated funding deficiency"
(as defined in Section 412(a) of the Internal Revenue Code of 1986, as
amended) exists with respect to any ERISA Plan, whether or not waived by
the Secretary of the Treasury or his delegate, and (ii) the current value
of each ERISA Plan's benefits does not exceed the current value of such
ERISA Plan's assets available for the payment of such benefits by more
than $500,000.
(k) ENVIRONMENTAL AND OTHER LAWS. Except as disclosed in the
Disclosure Schedule: (i) the Related Persons are conducting their
businesses in material compliance with all applicable federal, state or
local laws, including Environmental Laws, and have and are in compliance
in all material respects with all licenses and permits required under any
such laws; (ii) none of the operations or properties of any Related Person
is the subject of federal, state or local investigation evaluating whether
any material remedial action is needed to respond to a release of any
Hazardous Materials into the environment or to the improper storage or
disposal (including storage or disposal at offsite locations) of any
Hazardous Materials; (iii) no Related Person (and to the best knowledge of
each Related Person, no other Person) has filed any notice under any
federal, state or local law indicating that any Related Person is
responsible for the improper release into the environment, or the improper
storage or disposal, of any material amount of any Hazardous Materials or
that any material amount of Hazardous Materials has been improperly
released, or are improperly stored or disposed of, upon any property of
any Related Person; (iv) no Related Person has transported or arranged for
the transportation of any Hazardous Material to any location which is (1)
listed on the National Priorities List under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended, listed for possible inclusion on such National Priorities List by
the Environmental Protection Agency in its Comprehensive Environmental
Response, Compensation and Liability Information System List, or listed on
any similar state list or (2) the subject of federal, state or local
enforcement actions or other investigations which may lead to claims
against any Related Person for clean-up costs, remedial work, damages to
natural resources or for personal injury claims (whether under
Environmental Laws or otherwise) which could reasonably be expected to
have a material adverse change in the business financial condition, or
results of operations of Borrower or the Related Persons taken as a whole;
and (v) no Related Person otherwise has any known material contingent
liability under any Environmental Laws or in connection with the release
into the environment, or the storage or disposal, of any Hazardous
Materials. Borrower undertook, at the time of acquisition of the Property,
all appropriate inquiry into the previous ownership and uses of the
Property consistent with good commercial or customary practice. Borrower
has taken all steps reasonably necessary to determine and has determined
that no material amount of Hazardous Materials or Solid Wastes have been
disposed of or otherwise released on or to the Property in violation of
any applicable law or the disposal or release of which will impose any
material remedial obligations
-24-
under any Environmental Laws. The use which Borrower makes and intends to
make of the Property will not result in the disposal of or other release
of any material amount Hazardous Material or Solid Waste on or to the
Property in violation of any applicable laws or the disposal or release of
which will subject Borrower to any material remedial obligations under any
Environmental Laws.
(l) NAMES AND PLACES OF BUSINESS. No Related Person has, during the
preceding five years, had, been known by, or used any other corporate
trade, or fictitious name, except as disclosed in the Disclosure Schedule.
Except as otherwise indicated in the Disclosure Schedule, the chief
executive office and principal place of business of the Related Persons
are (and for the preceding five years have been) located at the address of
Borrower set out in Section 8.3. Except as indicated in the Disclosure
Schedule, no Related Person has any other office or place of business.
(m) SUBSIDIARIES. No Related Person presently has any Subsidiary or
own any stock in any other corporation or association except those listed
in the Disclosure Schedule. No Related Person is a member of any general
or limited partnership, joint venture or association of any type
whatsoever except those listed in the Disclosure Schedule. As of the date
hereof each of the Related Persons owns, directly or indirectly, the
equity interest in each of its Subsidiaries which is indicated in the
Disclosure Schedule.
(n) TITLE TO PROPERTIES. Each Related Person has good and defensible
title to all of its material properties and assets free and clear of all
Prohibited Liens and of all impediments to the use of such properties and
assets in such Related Person's business, except that no representation or
warranty is made with respect to any oil, gas or mineral property or
interest to which no proved oil or gas reserves are properly attributed.
(o) SOLVENCY. Upon giving effect to the issuance of the Note, the
execution of the Loan Documents by Borrower and the consummation of the
transactions contemplated hereby, Borrower will be solvent (as such term
is used in applicable bankruptcy, liquidation, receivership, insolvency or
similar laws).
(p) NO FINANCING OF REGULATED CORPORATE TAKEOVERS. No funds lent
hereunder will be used to acquire any security in any transaction which is
subject to Sections 13 or 14 of the Securities Exchange Act of 1934,
including particularly (but without limitation) Sections 13(d) and 14(d)
thereof.
(q) TAXES. All tax returns required to be filed by any Related
Person in any jurisdiction have been filed and all taxes, assessments,
fees, or other governmental charges upon any Related Person or upon any of
its properties, income, or franchises have been paid prior to the time
that such taxes, assessments, or levies could give rise to a Lien thereon,
except for any taxes, assessments, charges or levies that such Related
Person is contesting in good faith by appropriate proceedings and has set
aside on its books adequate reserves therefor.
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(r) GOVERNMENT REGULATION. No Related Person is subject to
regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, the Investment Company Act of 1940 (as any of the
preceding acts have been amended) or any other statute, law, regulation or
decree which regulates the incurring by such Related Person of Debt,
including, but not limited to, statutes, laws, regulations or decrees
relating to common contract carriers or the sale of electricity, gas,
steam, water or other public utility services.
(s) INSIDER. No Related Person is, and no Person having "control"
(as that term is defined in 12 U.S.C. ss. 375(b)(5) or in regulations
promulgated pursuant thereto) of any Related Person is, an "executive
officer", "director" or "principal shareholder" (as those terms are
defined in 12 U.S.C. ss. 375(b) or in regulations promulgated pursuant
thereto) of Lender, of a bank holding company of which Lender is a
Subsidiary or of any Subsidiary of a bank holding company of which Lender
is a Subsidiary.
Section 4.2. REPRESENTATION BY LENDER. Lender hereby represents that it
will acquire the Note for its own account in the ordinary course of its
commercial lending business; however, the disposition of Lender's property shall
at all times be and remain within its control and, in particular and without
limitation, Lender may, subject to the terms of this Agreement, sell or
otherwise transfer the Note, any participation interest or other interest in the
Note, or any of its other rights and obligations under the Loan Documents.
ARTICLE V - COVENANTS OF BORROWER
Section 5.1. AFFIRMATIVE COVENANTS. To conform with the terms and
conditions under which Lender is willing to have credit outstanding to Borrower,
and to induce Lender to enter into this Agreement and make the Loan, the Related
Persons, jointly and severally, warrant, covenant and agree that until the full
and final payment of the Obligations and the termination of this Agreement,
unless Lender has previously agreed otherwise:
(a) PAYMENT AND PERFORMANCE. Borrower will pay all amounts due under
the Loan Documents in accordance with the terms thereof and will observe,
perform and comply with every covenant, term and condition expressed or
implied in the Loan Documents. Borrower will cause the other Related
Persons to observe, perform and comply with every such term, covenant and
condition. Nothing in this section 5.1(a) is intended to reduce, or shall
be construed as reducing, any grace period or eliminating any notice
requirements expressly provided for in the Loan Documents with respect to
such terms, covenants and conditions.
(b) BOOKS, FINANCIAL STATEMENTS AND REPORTS. Each Related Person
will at all times maintain full and accurate books of account and records.
Borrower will maintain and will cause its Subsidiaries to maintain a
standard system of accounting and will furnish the following statements
and reports to Lender at Borrower's expense:
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(i) ANNUAL STATEMENTS. As soon as available, and in any event
within ninety (90) days after the end of each Fiscal Year, the Enron
Partnership's and OEDC's Consolidated financial statements, together
with all notes thereto and all prepared in reasonable detail in
accordance with GAAP together with an opinion, based on an audit
using generally accepted auditing standards by KPMG Peat Marwick
LLP, or other independent certified public accountant's selected by
OEDC and acceptable to Lender, stating that such financial statement
have been so prepared. These financial statements shall contained a
Consolidated balance sheet as of the end of such Fiscal Year and
Consolidated statements of earnings, of cash flows, and of changes
in owners" equity for such Fiscal Year, each setting forth in
comparative form the corresponding figures for the preceding Fiscal
Year.
(ii) QUARTERLY STATEMENTS. As soon as available, and in any
event within forty-five (45) days after the end of each Fiscal
Quarter, a Consolidated balance sheet of OEDC as of the end of such
period and statements of OEDC's Consolidated earnings and cash flows
for the period from the beginning of the then current Fiscal Year to
the end of such Fiscal Quarter, all in reasonable detail and
prepared in accordance with GAAP subject to changes resulting from
normal year-end adjustments. In addition Borrower will, together
with each such set of financial statements and each set of financial
statements furnished under Section (b)(i) of this section, furnish a
certificate in the form of Exhibit D signed by the chief financial
officer of General Partner stating that such financial statements
are accurate and complete, stating that he has reviewed the Loan
Documents, containing calculations showing the compliance (or
non-compliance) at the end of such Fiscal Quarter with the
requirements of Sections 5.2(k) and 5.2(l), and stating that no
Default exists at the end of such Fiscal Quarter or at the time of
such certificate or specifying the nature and period of existence of
any such Default.
(iii) ENGINEERING REPORT. By March 31 of each year, (A) an
engineering report prepared as of January 1 by Xxxxx Xxxxx Company
or other independent petroleum engineers chosen by Borrower and
acceptable to Lender, concerning all oil and gas properties and
interests owned by any Related Person which are located in or
offshore of the United States and which have attributable to them
proved oil or gas reserves, and (B) an engineering report prepared
as of January 1 by Xxxxx Xxxxx or other independent petroleum
engineers chosen by Borrower and acceptable to Lender, concerning
all oil and gas properties and interests owned by the Enron
Partnership which are located in or offshore of the United States
and which have attributable to them proved oil or gas reserves.
These reports shall be in form and substance satisfactory to Lender,
shall take into account any "over- produced" or "under-produced"
status under gas balancing arrangements (shall identify each
property where such "over-produced" status occurred and the
magnitude of such over-production), shall contain a hedging report
prepared by Borrower regarding any forward, future, swap, or hedging
contract entered into by Borrower as in effect at the end of the
preceding Fiscal Year, and shall contain
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information and analysis comparable in scope to that contained in
the Initial Engineering Report. The report described in clause (A)
of the first sentence of this section 5.1(b)(iii) shall distinguish
(or shall be delivered together with a certificate from an
appropriate officer of Borrower which distinguishes) those
properties treated in the reports which are Collateral from those
properties treated in the report which are not Collateral.
(iv) INTERNAL ENGINEERING REPORT. By June 30, September 30 and
December 31 of each year, an engineering report prepared by in-house
petroleum engineers employed by any Related Person, concerning all
oil and gas properties and interests owned by any Related Person
which are located in or offshore of the United States and which have
attributable to them proved oil and gas reserves. These reports
shall be substantially in the form and substance as the reports
delivered under subsection (b)(iii) above and otherwise shall be
satisfactory to Lender. As soon as available, a copy of any
engineering report prepared by in-house petroleum engineers employed
by any Related Person or Enron Partnership, concerning all oil and
gas properties and interests owned by Enron Partnership which are
located in or offshore of the United States and which have
attributable to them proved oil and gas reserves.
(v) PRODUCTION REPORT. As soon as available, and in any event
within forty-five (45) days after the end of each month, a report
describing by lease or unit the gross volume of production and sales
attributable to production during such month from the properties
described in subsection (b)(iii) above and describing the related
severance taxes, other taxes, leasehold operating expenses and
capital costs attributable thereto and incurred during such month.
In addition, Borrower will, together with each such report furnish a
certificate signed by the Chairman of the Board or President of
General Partner stating that such report is accurate and complete.
(vi) INSURANCE REPORT. Within fifteen (15) days after any
material changes in insurance coverage by the Related Persons, a
report describing such changes, and, within thirty (30) days after
the renewal of the insurance coverages of the Related Persons, a
report describing the insurance coverage of the Related Persons and
certifying compliance with Section 5.1(h). In addition the Related
Persons will, together with each report describing any material
changes in insurance coverage by the Related Persons, provide a new
insurance certificate, naming Lender as an additional insured or
loss payee, as appropriate.
(vii) LITIGATION REPORT. Within ninety (90) days after the end
of each Fiscal Year, complete reports by the Chairman of the Board
or President of General Partner, describing all actions, suits or
legal, equitable, arbitrative or administrative proceedings pending,
or to the knowledge of the Related Persons, threatened against any
Related Person before any federal, state, municipal or other court,
department, commission, body, board, bureau, agency or
instrumentality, domestic or foreign, and (ii) within sixty (60)
days after the end of each Fiscal
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Quarter (except the last) of each Fiscal Year in which a material
change in any reported action, suit or proceeding has occurred or
any additional action, suit or proceeding which may materially and
adversely affect any Related Person, has been threatened in writing
or commenced, reports by the Chairman of the Board or President of
General Partner, describing such material changes or additions.
(viii) SEC FILINGS. Promptly upon their becoming available,
copies of all financial statements, reports, notices and proxy
statements sent by any Related Person to its stockholders and all
registration statements and periodic reports filed by any Related
Person with any securities exchange, the Securities and Exchange
Commission or any similar governmental authority.
(c) OTHER INFORMATION AND INSPECTIONS. Borrower will furnish to
Lender any information which Lender may from time to time reasonably
request concerning any covenant, provision or condition of the Loan
Documents or any matter in connection with the Related Persons" and their
Subsidiaries" businesses and operations. Each Related Person will permit
representatives appointed by Lender (including independent accountants,
agents, attorneys, appraisers and any other Persons) upon reasonable
notice and during normal business hours to visit and inspect any of such
Related Person's property, including its books of account, other books and
records, and any facilities or other business assets, and to make extra
copies therefrom and photocopies and photographs thereof, and to write
down and record any information such representatives obtain, and each
Related Person shall permit Lender or its representatives to investigate
and verify the accuracy of the information furnished to Lender in
connection with the Loan Documents and to discuss all such matters with
its officers and representatives. Lender agrees that it will take all
reasonable steps to keep confidential any proprietary information given to
it by any Related Person, provided, however, that this restriction shall
not apply to information which (i) has at the time in question entered the
public domain, (ii) is required to be disclosed by law or by any order,
rule or regulation (whether valid or invalid) of any court or governmental
agency, or authority, (iii) is disclosed to Lender's Affiliates, auditors,
attorneys, or agents, (iv) is furnished to any purchaser or prospective
purchaser of participation or other interests in the Loan or the Note, or
(v) is disclosed by Lender, to the extent reasonably necessary, in
connection with Lender's collecting the Obligations or enforcing its
rights under the Loan Documents following the occurrence of an Event of
Default.
(d) NOTICE OF MATERIAL EVENTS AND CHANGE OF ADDRESS. Borrower will
notify Lender in writing, stating that such notice is being given pursuant
to this Agreement, promptly upon Borrower having knowledge thereof:
(i) of any material adverse change in Borrower's individual or
Consolidated financial condition or in the aggregate value of the
Collateral,
(ii) of the occurrence of any Default,
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(iii) of the acceleration of the maturity of any Debt owed by
any Related Person or of any default by any Related Person or any
Subsidiary of the Related Persons under any indenture, mortgage,
agreement, contract or other instrument to which any of them is a
party or by which any of them or any of their properties is bound,
if such acceleration or default might have a material adverse effect
upon such Related Person's Consolidated financial condition or on
the value of any material part of the Collateral,
(iv) of any material adverse claim filed against any Related
Person or any Subsidiary of any Related Person or with respect to
any Related Person's properties or any property of any Subsidiary of
any Related Person, and
(v) of any circumstance or event which would cause the
representations and warranties contained in Sections 4.1(i), (j) or
(k) to be incorrect if remade on and as of the occurrence of such
circumstance or event.
Upon the occurrence of any of the foregoing Borrower will take all
necessary or appropriate steps to remedy promptly any such material
adverse change, Default, acceleration, default or circumstance or event,
and to resolve all controversies on account of any of the foregoing.
Borrower will also notify Lender in writing at least twenty Business Days
prior to the date that any Related Person changes its name or the location
of its chief executive office or principal place of business or the place
where it keeps its books and records concerning the Collateral, furnishing
with such notice any necessary financing statement amendments or
requesting Lender and its counsel to prepare the same.
(e) MAINTENANCE OF PROPERTIES. Each Related Person will maintain,
preserve, protect, and keep all Collateral and all other property used or
useful in the conduct of its business in good condition and in compliance
with all applicable laws, rules and regulations, and will from time to
time make all repairs, renewals and replacements needed to enable the
business and operations carried on in connection therewith to be promptly
and advantageously conducted at all times.
(f) MAINTENANCE OF EXISTENCE AND QUALIFICATIONS. Each Related Person
which is a corporation or partnership will, and will cause each of its
Subsidiaries which is a corporation or partnership to, maintain and
preserve its corporate or partnership existence and its rights and
franchises in full force and effect and will qualify to do business as a
foreign corporation or partnership in all states or jurisdictions where
required by applicable law, except where the failure so to qualify will
not have any material adverse effect on Borrower.
(g) PAYMENT OF TRADE DEBT, TAXES, ETC. Each Related Person will, and
will cause each of its Subsidiaries to, (i) timely file all required tax
returns; (ii) timely pay all taxes, assessments, and other governmental
charges or levies imposed upon it or upon its income, profits or property;
(iii) within ninety (90) days after the same becomes due, pay all Trade
Debt; and (iv) pay and discharge when due all other Debt now or hereafter
owed
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by it. Each Related Person and each of its Subsidiaries may, however,
delay paying or discharging any such taxes or assessments and other
governmental charges or levies, or Trade Debt so long as it is in good
faith contesting the validity thereof by appropriate proceedings.
(h) INSURANCE. Each Related Person will, and will cause of each of
its Subsidiaries to, at all times (i) keep or cause to be kept insured its
property of a character usually insured by Persons in the same location
and engaged in similar types of oil and gas activities and operations and
ownership interests as such Related Person or respective Subsidiary (ii)
maintain insurance against its liability for personal injury, death or
property damage and (iii) maintain business interruption insurance. All
such insurance shall be by financially sound and reputable insurers and
shall cover such casualties, risks and contingencies and in such types and
amounts as are consistent with customary standards of Persons in the same
location and engaged in similar types of oil and gas activities and
operations as such Related Person or respective Subsidiary; provided that
in no event shall such insurance coverage be less than the coverage set
forth on Exhibit F. Self insurance (other than prudent deductible amounts)
will not be used to satisfy the foregoing requirements. Upon demand by
Lender, any insurance policies covering Collateral shall be endorsed (i)
to provide for payment of losses to Lender as its interests may appear,
pursuant to a mortgage clause (without contribution) of standard form made
part of the applicable policy, (ii) to provide that such policies may not
be cancelled, reduced or affected in any manner for any reason without
fifteen days prior notice to Lender, (iii) to provide for any other
matters specified in any applicable Security Document or which Lender may
reasonably require; and (iv) to provide for insurance against fire,
casualty and any other hazards normally insured against, in the amount of
the full value (less a reasonable deductible not to exceed amounts
customary in the industry for similarly situated businesses and
properties) of the property insured.
(i) PAYMENT OF EXPENSES. Whether or not the transactions
contemplated by this Agreement are consummated, Borrower will promptly
(and in any event, within 30 days after any invoice or other statement or
notice) pay all reasonable costs and expenses incurred by or on behalf of
Lender (including reasonable attorneys" fees) in connection with (i) the
negotiation, preparation, execution and delivery of the Loan Documents,
and any and all consents, waivers or other documents or instruments
relating thereto, (ii) the filing, recording, refiling and re-recording of
any Loan Documents and any other documents or instruments or further
assurances reasonably required to be filed or recorded or refiled or
re-recorded by the terms of any Loan Document, and (iii) the defense or
enforcement of the Loan Documents or the defense of Lender's exercise of
its rights thereunder.
(j) PERFORMANCE ON BORROWER'S BEHALF. If any Related Person fails to
pay any taxes, insurance premiums, expenses, attorneys" fees or other
amounts it is required to pay under any Loan Document, Lender may pay the
same; provided that Lender shall not pay any of the foregoing that is
being contested by Borrower as provided in Section 5.1(g). Borrower shall
immediately reimburse Lender for any such payments and each
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amount paid by Lender shall constitute an Obligation owed hereunder which
is due and payable on the date such amount is paid by Lender.
(k) INTEREST. Borrower hereby promises to pay interest to Lender at
the Late Payment Rate on all Obligations which Borrower has in this
Agreement promised to pay (including Obligations to pay fees or to
reimburse or indemnify Lender) and which are not paid within three
Business Days of the date such payment is due.
(l) COMPLIANCE WITH AGREEMENTS AND LAW. Each Related Person will,
and will cause each of its Subsidiaries to, perform all material
obligations it is required to perform under the terms of each operating
agreement, indenture, mortgage, deed of trust, security agreement, lease,
franchise, agreement, contract or other instrument or obligation to which
it is a party or by which it or any of its properties is bound. Each
Related Person will, and will cause each of its Subsidiaries to, conduct
its business and affairs in material compliance with all laws,
regulations, and orders applicable thereto, including Environmental Laws.
(m) EVIDENCE OF COMPLIANCE. Borrower will furnish to Lender at
Borrower's reasonable expense all evidence which Lender from time to time
reasonably requests as to the accuracy and validity of or compliance with
all representations, warranties and covenants made by any Related Person
in the Loan Documents, the satisfaction of all conditions contained
therein, and all other matters pertaining thereto.
(n) ERISA COMPLIANCE. Each Related Person will (i) make prompt
payment of all contributions required under all ERISA Plans and required
to meet the minimum funding standard set forth in ERISA with respect to
its ERISA Plan, (ii) within 30 days after the filing thereof, furnish to
Lender each annual report return (Form 5500 Series), as well as all
schedules and attachments required to be filed with the Department of
Labor and/or the Internal Revenue Service pursuant to ERISA, and the
regulations promulgated thereunder, in connection with each of its ERISA
Plans for each ERISA Plan year, and (iii) notify Lender immediately of any
fact, including but not limited to, any Reportable Event arising in
connection with any of its ERISA Plan, which might constitute grounds for
termination thereof by the Pension Benefit Guaranty Corporation or for the
appointment by the appropriate United States District Court of a trustee
to administer such ERISA Plan, together with a statement, if requested by
Lender, as to the reason therefor and the action, if any, proposed to be
taken with respect thereto.
(o) ENVIRONMENTAL MATTERS; ENVIRONMENTAL REVIEWS.
(i) Each Related Person will, and will cause each of its
Subsidiaries to, comply in all material respects with all
Environmental Laws now or hereafter applicable to such Related
Person and shall obtain, at or prior to the time required by
applicable Environmental Laws, all environmental, health and safety
permits, licenses and other authorizations necessary for its
operations and will maintain such authorizations in full force and
effect. Without limiting the foregoing, each Related Person will,
and will cause each of its Subsidiaries to, plug abandoned
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xxxxx as required in accordance with all applicable laws,
regulations, leases and licenses.
(ii) Borrower will promptly furnish to Lender all written
notices of violation, orders, claims, citations, complaints, penalty
assessments, suits or other proceedings received by any Related
Person, or of which it has notice, pending or threatened against any
Related Person, by any governmental authority with respect to any
alleged material violation of or material non-compliance with any
Environmental Laws or any permits, licenses or authorizations in
connection with its ownership or use of its properties or the
operation of its business.
(iii) Borrower will promptly furnish to Lender all requests for
information, notices of claim, demand letters, and other
notifications, received by any Related Person in connection with any
Related Person's ownership or use of its properties or the conduct
of its business, relating to potential responsibility with respect
to any investigation or clean-up of a material amount of Hazardous
Material at any location.
(iv) Borrower will not cause or permit the Property, the
Associated Property or Borrower to be in violation of, or do
anything or permit anything to be done which will subject the
Property or the Associated Property to, any material remedial
obligations under any Environmental Laws, assuming disclosure to the
applicable governmental authorities of all relevant facts,
conditions and circumstances, if any, pertaining to the Property or
the Associated Property and Borrower will promptly notify Lender in
writing of any existing, pending or, to the best knowledge of
Borrower, threatened investigation or inquiry by any governmental
authority in connection with any Environmental Laws. Borrower will
take all steps reasonably necessary to determine that no material
amount of Hazardous Materials or Solid Wastes have been disposed of
or otherwise released on or to the Property or the Associated
Property in violation of applicable law or the disposal or release
of which will impose any material remedial obligations under any
Environmental Laws. Borrower will not cause or permit the disposal
or other release of any material amount of Hazardous Materials or
Solid Wastes on or to the Property or the Associated Property in
violation of applicable law or the disposal or release of which will
impose any material remedial obligations under any Environmental
Laws and covenants and agrees to keep or cause the Property and the
Associated Property to be kept free (except as permitted by
applicable law or which would not impose any material remedial
obligations) of any material amount of Hazardous Materials or Solid
Wastes and to remove the same (or if removal is prohibited by law,
to take whatever actions is required by law, to take whatever action
is required by law) promptly upon discovery at its sole expense.
Upon Lender's reasonable request, at any time and from time to time
during the existence of the Mortgage, Borrower will provide at
Borrower's sole expense an inspection or audit of the Property and
the Associated Property from an engineering or consulting firm
approved by Lender, indicating the presence or
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absence of Hazardous Materials and Solid Waste on the Property and
the Associated Property.
(p) LIENS ON MORTGAGED PROPERTIES ACQUIRED OR COMPLETED IN THE
FUTURE. Within thirty (30) days following each Determination Date,
Borrower will execute and deliver documentation in form and substance
satisfactory to Lender, granting to Lender first perfected Liens on and in
the oil, gas and mineral lease(s) covering each well (i) acquired or
completed since the prior Determination Date which is capable of
production of oil, gas or other hydrocarbons in paying quantities, insofar
as such lease(s) cover the proration unit assigned to such well, and (ii)
which is to be added to the Borrowing Base at the request of Borrower.
Prior to the granting of such Liens, Borrower will furnish to Lender title
opinions in form, substance and authorship satisfactory to Lender,
concerning not less than ninety percent (90%) of the aggregate value of
such properties and will furnish all other documents and information
relating to such properties as Lender may reasonably request.
(q) MAINTENANCE OF PERMITS AND BONDS. Borrower will maintain all
permits and bonds as may be required at any time by the MMS for the
operation of the oil and gas properties of Borrower.
(r) REQUIRED HEDGING. Borrower shall at all times maintain in effect
the forward, future, swap or hedging contracts described on Schedule 3,
subject to the maturity of such contracts by their terms. Borrower shall
use its best efforts to maintain a prudent commodity price hedging
strategy.
(s) SUBSIDIARIES. Notwithstanding anything in this Section 5.1 to
the contrary, no Subsidiary (other than the Related Persons and
wholly-owned Subsidiaries) of a Related Person shall be obligated to
comply with any covenant or provision of this Section 5.1 to such
Subsidiary to the extent that such covenant or provision (or the
compliance therewith) is in contravention of such Subsidiary's partnership
agreement or charter documents, as applicable; provided that Borrower
shall provide notice to Lender of the contravention to any covenant or
provision promptly upon determination thereof by any Related Person.
(t) FINANCIAL DATA REGARDING MBPP. Borrower will promptly furnish to
Lender all financial information which Lender may from time to time
reasonably request regarding the construction of a natural gas plant in
Alabama to be owned by MBPP, including budgets and cost projections for
such construction and financial statements of MBPP.
Section 5.2. NEGATIVE COVENANTS. To conform with the terms and conditions
under which Lender is willing to have credit outstanding to Borrower, and to
induce Lender to enter into this Agreement and make the Loans, the Related
Persons, jointly and severally, warrant, covenant and agree that until the full
and final payment of the Obligations and the termination of this Agreement,
unless Lender has previously agreed otherwise:
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(a) RESTRICTED DEBT. No Related Person will in any manner owe or be
liable for Restricted Debt except:
(i) the Obligations.
(ii) Debt outstanding under the instruments and agreements
described on Schedule 5.2(a), excluding any renewals or extensions
of such Debt.
(iii) Debt incurred in connection with the financing of
insurance premiums owed by the Related Persons and their
Subsidiaries in an aggregate principal amount not to exceed
$1,000,000 at any time.
(iv) purchase money Debt in an aggregate principal amount not
to exceed $1,500,000 at any time, provided that the original
principal amount of any such Debt shall not be in excess of the
purchase price of the asset acquired thereby and such Debt shall be
secured only by the acquired asset.
(v) performance guarantees and performance, surety or other
bonds provided by any Related Person in the ordinary course of its
business.
(vi) guarantees by Borrower of the obligations (other than
Debt for borrowed money) of any other Related Person, provided that
such obligations must be related to the types of business currently
being conducted by the Related Persons and must be incurred in the
ordinary course of business.
(vii) Restricted Debt of OEDC Processing incurred in
connection with the financing of OEDC Processing's investment in
MBPP in connection with its exercise of the MBPP Option; provided
that, such Restricted Debt shall be nonrecourse to the assets of
OEDC Processing (other than its investment in MBPP) and that no
Default or Event of Default exists at the time of and after giving
effect to the incurrence of such Restricted Debt.
(viii) miscellaneous items of Restricted Debt not described in
subsections (i) through (vii) of this subsection (a) which do not in
the aggregate (taking into account all such Restricted Debt of all
Related Persons) exceed $100,000 at any one time outstanding.
(b) LIMITATION ON LIENS. No Related Person will create, assume or
permit to exist any Lien upon any of the properties or assets which it now
owns or hereafter acquires, except, to the extent not otherwise forbidden
by the Security Documents:
(i) Liens which secure Obligations only.
(ii) Excepted Liens.
(iii) Liens securing Debt described in Section 5.2(a)(ii),
(iv) and (vii).
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(c) LIMITATION ON MERGERS, ISSUANCES OF SECURITIES. No Related
Person will merge or consolidate with or into any other business entity or
acquire by purchase, lease or merger all or any substantial part of the
assets or capital stock of any Person. No Subsidiary of any Related Person
which is a partnership will allow any diminution of such Related Person's
interest (direct or indirect) therein. For purposes of this Section
5.2(c), the term 'substantial part" means property or assets of any Person
with a fair market value in excess of ten percent (10%) of the fair market
value of all assets of such Person.
(d) LIMITATION ON SALES OF PROPERTY. No Related Person will sell,
transfer, lease, exchange, alienate or dispose of any of its material
assets or properties or any material interest therein except, to the
extent not otherwise forbidden under the Security Documents:
(i) equipment which is worthless or obsolete or which is
replaced by equipment of equal suitability and value.
(ii) inventory (including oil and gas sold as produced and
seismic data) which is sold in the ordinary course of business on
ordinary trade terms.
(iii) sales or other dispositions of property other than
Collateral which is sold for fair consideration which is in the
aggregate does not exceed $150,000 during the three consecutive
calendar months following any Determination Date.
(iv) interests in oil and gas leases, or portions thereof (if
released or abandoned, but not otherwise sold or transferred), so
long as no well situated in any such lease, or located on any unit
containing all or any part thereof, is capable of producing oil, gas
or other hydrocarbons or minerals in commercial quantities.
(v) transfers of interests in oil and gas leases and other
interests pursuant to the Property Exchange, provided that (1) on
the date such Property Exchange is made and immediately after giving
effect thereto no Default or Event of Default has occurred and is
continuing and (2) Borrower shall deliver to Lender, upon request by
Lender in its sole and absolute discretion, deeds of trust,
mortgages, chattel mortgages, financing statements and other
Security Documents in form and substance satisfactory to Lender for
the purpose of granting liens or security interests in the oil and
gas interests received by Borrower pursuant to the Property
Exchange. Borrower also agrees to deliver, if requested by Lender in
its sole and absolute discretion, favorable title opinions from
legal counsel acceptable to Lender covering at least ninety percent
(90%) of the value of the oil and gas interests received by Borrower
pursuant to the Property Exchange that will be subject to Security
Documents.
No Related Person will sell, transfer or otherwise dispose of capital
stock of any of such Related Person's Subsidiaries. No Related Person will
discount, sell, pledge or assign any
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notes payable to it, accounts receivable or future income except to the
extent expressly permitted under the Loan Documents.
(e) LIMITATION ON DIVIDENDS AND REDEMPTIONS. No Related Person will
declare or pay any dividends on, or make any other distribution in respect
of, any class of its capital stock or any partnership or other interest in
it nor will any Related Person directly or indirectly make any capital
contribution to or purchase, redeem, acquire or retire any shares of the
capital stock of or partnership interests in any Related Person (whether
such interests are now or hereafter issued, outstanding or created), or
cause or permit any reduction or retirement of the capital stock of any
Related Person, except as expressly provided in this section. Such
dividends, distributions, contributions, purchases, redemptions,
acquisitions, retirements or reductions may be made by Borrower and the
Guarantors (i) without limitation to Borrower and (ii) to the Guarantors,
so long as at the time of such dividend or other distribution and after
giving effect thereto, no Default or Event of Default has occurred and is
continuing. No Related Person will directly or indirectly make any capital
contribution to or purchase, redeem, acquire or retire any shares of the
capital stock of or partnership interests in any Related Person (whether
such interests are now or hereafter issued, outstanding or created), or
cause or permit any reduction or retirement of the capital stock of any
Related Person.
(f) LIMITATION ON INVESTMENTS AND NEW BUSINESSES. No Related Person
will (i) make any expenditure or commitment or incur any obligation or
enter into or engage in any transaction except in the ordinary course of
business, (ii) engage directly or indirectly in any business or conduct
any operations except in connection with or incidental to its present
businesses and operations, (iii) make any acquisitions of or capital
contributions to or other investments in any Person, other than Permitted
Investments and investments made pursuant to the Property Exchange and the
MBPP Option, or (iv) make any significant acquisitions or investments in
any properties other than (1) oil and gas properties acquired in the
ordinary course of business and (2) an independent power plant to be used
in connection with the natural gas liquids plant to be owned by MBPP (or
some other partnership in which a Guarantor will own a partnership
interest) in an amount not to exceed $1,250,000. Notwithstanding the
foregoing, Borrower and the other Related Persons may make such
investments, capital contributions and capital expenditures as may be
necessary for (A) the planned expansion of the Dauphin Island Gathering
System; provided that (i) the aggregate amount of all such investments,
capital contributions and capital expenditures under this clause (A)
together with any loans or advances made in connection therewith pursuant
to Section 5.2(g) shall not exceed $2,000,000 and (ii) at the time of any
investment, capital contribution or capital expenditure under this clause
(A) and after giving effect thereto, no Default or Event of Default has
occurred and is continuing, and (B) the construction, development and
operation of a natural gas liquids plant in Alabama to be owned by MBPP;
provided that (i) the aggregate amount of all such investments, capital
contributions and capital expenditures under this clause (B) together with
any loans or advances made in connection therewith pursuant to Section
5.2(g) shall not exceed $1,000,000, and (ii) at the time of any
investment, capital contribution or capital expenditure under this clause
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(B) and after giving effect thereto, no Default or Event of Default shall
have occurred and be continuing.
(g) LIMITATION ON CREDIT EXTENSIONS. Except for Permitted
Investments, no Related Person will extend credit, make advances or make
loans to any Person, other than (i) normal and prudent extensions of
credit to customers buying goods and services in the ordinary course of
business, which extensions shall not be for longer periods than those
extended by similar businesses operated in a normal and prudent manner and
(ii) loans to any Related Person. Notwithstanding the foregoing, Borrower
and the other Related Persons may make such loans or advances as may be
necessary for (A) the planned expansion of the Dauphin Island Gathering
System; provided that (i) the aggregate amount of all such loans or
advances under this clause (A) together with any investments, capital
contributions and capital expenditures made in connection therewith
pursuant to Section 5.2(f) shall not exceed $2,000,000 and (ii) at the
time of any loan or advance under this clause (A) and after giving effect
thereto, no Default or Event of Default has occurred and is continuing,
and (B) the construction, development and operation of a natural gas
liquids plant in Alabama to be owned by MBPP; provided that (i) the
aggregate amount of all such loans and advances under this clause (B)
together with any investments, capital contributions and capital
expenditures made in connection therewith pursuant to Section 5.2(f) shall
not exceed $1,000,000, and (ii) at the time of any loan or advance under
this clause (B) and after giving effect thereto, no Default or Event of
Default shall have occurred and be continuing.
(h) TRANSACTIONS WITH AFFILIATES. No Related Person will engage in
any transaction with or pay any management or other fees (other than
director's fees) or compensation to any of its Affiliates except
transactions on terms which are not less favorable to it than those which
would have been obtainable at the time in arms-length dealing with Persons
other than such Affiliates, provided that such restriction shall not apply
to transactions among the Related Persons.
(i) CERTAIN CONTRACTS; AMENDMENTS; MULTIEMPLOYER ERISA PLANS. Except
as expressly provided for in the Loan Documents, no Related Person will,
directly or indirectly, enter into, create, or otherwise allow to exist
any contract or other consensual restriction on the ability of any Related
Person to: (i) pay dividends or make other distributions to Borrower, (ii)
to redeem equity interests held in it by Borrower, (iii) to repay loans
and other indebtedness owing by it to Borrower, or (iv) to transfer any of
its assets to Borrower. Except for the contracts described on the
Disclosure Schedule under Section 5.2(i), no Related Person will enter
into any "take-or-pay" contract or other contract or arrangement for the
purchase of goods or services which obligates it to pay for such goods or
service regardless of whether they are delivered or furnished to it. No
Related Person will amend or permit any amendment to any contract or lease
which releases, qualifies, limits, makes contingent or otherwise
detrimentally affects the rights and benefits of Lender under or acquired
pursuant to any Security Documents. No Related Person will incur any
obligation to contribute to any "multiemployer plan" as defined in Section
4001 of ERISA.
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(j) FISCAL YEAR. No Related Person will change its fiscal year or
method of accounting.
(k) CURRENT RATIO. The ratio of Current Assets to Current
Liabilities will never be less than 1.0 to 1.0, which will be tested as of
the end of each Fiscal Quarter. For purposes of this subsection, the term
"Current Assets" means Borrower's Consolidated current assets, including
any unused portion of the Aggregate Borrowing Base which is then available
for borrowing. The term "Current Liabilities" means Borrower's
Consolidated current liabilities calculated without including any payments
of principal on Funded Debt which are to be required to be repaid within
one year from the time of calculation. "Funded Debt" means any Debt which
by its terms matures one year or more from the date of its creation.
(l) BORROWER'S CONSOLIDATED EBITDA TO INTEREST EXPENSE. The ratio of
Borrower's EBITDA to Borrower's Consolidated Interest Expense will never
be less than 2.5 to 1.0, which will be tested as of the end of any Fiscal
Quarter for any period of four consecutive Fiscal Quarters.
(m) WEIGHTED-AVERAGE PAYABLE MATURITY. The weighted-average maturity
of all Debt of Borrower incurred on ordinary terms to vendors, suppliers
and other Persons providing goods and services used by Borrower in the
ordinary course of business shall not exceed 60 days at any time.
(n) SUBSEQUENT GUARANTORS. Notwithstanding anything to the contrary
herein, no Person may become a Related Person after the date hereof unless
all of the following conditions precedent have been satisfied:
(i) Lender shall have received a certificate of the chief
financial officer of General Partner which states that Borrower
desires to add a Person (a 'subsequent Guarantor") to this Agreement
as a Related Person and sets forth the name of the Subsequent
Guarantor, its jurisdiction of incorporation or formation and a
brief description of its business and properties.
(ii) Lender shall have received (1) a guaranty of the
Obligations in form, substance and date satisfactory to Lender, duly
executed and delivered by the Subsequent Guarantor and (2) an
acknowledgment in form, substance and date satisfactory to Lender,
duly executed and delivered by the Subsequent Guarantor, pursuant to
which the Subsequent Guarantor acknowledges and agrees that it is a
Related Person and is subject to all representations, warranties,
covenants and agreements of the Loan Documents which pertain to
Related Persons.
(iii) at the time the Subsequent Guarantor becomes a Related
Person and after giving effect thereto, no Default or Event of
Default has occurred and is continuing.
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(iv) Lender shall have received a certificate of the Secretary
of the Subsequent Guarantor certifying as to the names and true
signatures of the officers of the Subsequent Guarantor authorized to
sign on behalf of the Subsequent Guarantor and certifying that
attached thereto is a true and complete copy of resolutions adopted
by the Board of Directors of the Subsequent Guarantor authorizing
the execution, delivery and performance by the Subsequent Guarantor
of a guaranty of the Obligations and an acknowledgment of its
liabilities and duties under the Loan Documents.
(v) a favorable opinion of counsel to Borrower and the
Subsequent Guarantor in form, substance and date satisfactory to
Lender.
ARTICLE VI - SECURITY
Section 6.1. THE SECURITY. The Obligations will be secured by the Security
Documents listed in the Security Schedule and any additional Security Documents
hereafter delivered by any Related Person and accepted by Lender.
Section 6.2. AGREEMENT TO DELIVER SECURITY DOCUMENTS. Each Related Person
agrees to deliver to further secure the Obligations whenever requested by Lender
in its sole and absolute discretion, deeds of trust, mortgages, chattel
mortgages, security agreements, financing statements and other Security
Documents in form and substance satisfactory to Lender for the purpose of
granting, confirming, and perfecting first and prior liens or security interests
in any real or personal property which is at such time Collateral or which was
to be Collateral pursuant to any Security Document previously executed and not
then released by Lender. Borrower also agrees to deliver, whenever requested by
Lender in its sole and absolute discretion, favorable title opinions from legal
counsel acceptable to Lender with respect to the Related Persons" properties and
interests that (i) are to included in the Borrowing Base pursuant to either
Section 2.7(a) or 5.1(p), (ii) are not covered by title opinions previously
delivered to Lender and (iii) concern at least ninety percent (90%) of the
aggregate value of such properties. Such title opinions shall (a) state that the
Related Persons have good and defensible title to such properties and interests,
free and clear of all Prohibited Liens, (b) confirm that such properties and
interests are subject to Security Documents securing the Obligations that
constitute and create legal, valid and duly perfected first deed of trust or
mortgage liens in such properties and interests and first priority assignments
of and security interests in the oil and gas attributable to such properties and
interests and the proceeds thereof, and (c) cover such other matters as Lender
may reasonably request.
Section 6.3. PERFECTION AND PROTECTION OF SECURITY INTERESTS AND LIENS.
Each Related Person will from time to time deliver to Lender any financing
statements, continuation statements, extension agreements and other documents,
properly completed and executed (and acknowledged when required) by such Related
Person in form and substance satisfactory to Lender, which Lender requests for
the purpose of perfecting, confirming, or protecting any Liens or other rights
in Collateral securing any Obligations.
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Section 6.4. BANK ACCOUNTS; OFFSET. To secure the repayment of the
Obligations each of the Related Persons hereby grants to Lender a security
interest, a lien, and a right of offset, each of which shall be in addition to
all other interests, liens, and rights of Lender at common law, under the Loan
Documents, or otherwise, and each of which shall be upon and against (a) any and
all moneys, securities or other property (and the proceeds therefrom) of such
Related Person, now or hereafter held or received by or in transit to Lender
from or for the account of such Related Person whether for safekeeping, custody,
pledge, transmission, collection or otherwise, (b) any and all deposits (general
or special, time or demand, provisional or final) of such Related Person with
Lender, and (c) any other credits and claims of such Related Person at any time
existing against Lender, including claims under certificates of deposit. Upon
the occurrence of any Event of Default, Lender is hereby authorized to foreclose
upon, offset, appropriate, and apply, at any time and from time to time, without
notice to such Related Person, any and all items hereinabove referred to against
the Obligations then due and payable.
Section 6.5. PRODUCTION PROCEEDS. Notwithstanding that, by the terms of
the various Security Documents, Borrower is and will be assigning to Lender all
of the "Production Proceeds" (as defined therein) accruing to the property
covered thereby, so long as no Event of Default has occurred Borrower may
continue to receive from the purchasers of production all such Production
Proceeds, subject, however, to the Liens created under the Security Documents,
which Liens are hereby affirmed and ratified. Upon the occurrence of an Event of
Default (other than any Event of Default arising under the Mortgage as a result
of Borrower's failure to pay Production Proceeds to Lender in accordance with
the terms therein), Lender may exercise all rights and remedies granted under
the Security Documents, including the right to obtain possession of all
Production Proceeds then held by Borrower or to receive directly from the
purchasers of production all other Production Proceeds. In no case shall any
failure, whether purposed or inadvertent, by Lender to collect directly any such
Production Proceeds constitute in any way a waiver, remission or release of any
of its rights under the Security Documents, nor shall any release of any
Production Proceeds by Lender to Borrower constitute a waiver, remission, or
release of any other Production Proceeds or of any rights of Lender to collect
other Production Proceeds thereafter.
ARTICLE VII - EVENTS OF DEFAULT AND REMEDIES
Section 7.1. EVENTS OF DEFAULT. Each of the following events constitutes
an Event of Default under this Agreement:
(a) Any Related Person shall fail to pay (i) any principal of the
Note when the same becomes due and payable, (ii) any interest on the Note
within three Business Days after the same becomes due and payable, or
(iii) any fee or other amount payable hereunder or under any other Loan
Document within three Business Days after the same becomes due and
payable;
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(b) Any "default" or "event of default" occurs under any Loan
Document which defines either such term, and the same is not remedied
within the applicable period of grace (if any) provided in such Loan
Document;
(c) Any Related Person fails to duly observe, perform or comply with
any covenant, agreement or provision of Section 5.1(d) or Section 5.2;
(d) Any Related Person fails (other than as referred to in
subsections (a), (b) or (c) above) to duly observe, perform or comply with
any covenant, agreement, condition or provision of any Loan Document, and
such failure remains unremedied for a period of thirty (30) days after
notice of such failure is given by Lender to Borrower;
(e) Any representation or warranty previously, presently or
hereafter made in writing by or on behalf of any Related Person in
connection with any Loan Document shall prove to have been false or
incorrect in any material respect on any date on or as of which made, or
any Loan Document at any time ceases to be valid, binding and enforceable
as warranted in Section 4.1(e) for any reason other than its release or
subordination by Lender;
(f) Any Related Person fails to duly observe, perform or comply with
any Material Agreement and such failure is not remedied within the
applicable period of grace (if any) provided in such Material Agreement;
(g) Any Related Person (i) fails to pay any portion, when such
portion is due, of any of its Debt in excess of $125,000 (other than Debt
described in Section 5.1(g) which is not required to be paid so long as
the Related Person is in good faith contesting the validity thereof by
appropriate proceedings), or (ii) breaches or defaults in the performance
of any agreement or instrument by which any such Debt is issued,
evidenced, governed, or secured, and any such failure, breach or default
continues beyond any applicable period of grace provided therefor;
(h) Any Related Person:
(i) suffers the entry against it of a judgment, decree or
order for relief by a court of competent jurisdiction in an
involuntary proceeding commenced under any applicable bankruptcy,
insolvency or other similar law of any jurisdiction now or hereafter
in effect, including the federal Bankruptcy Code, as from time to
time amended, or has any such proceeding commenced against it which
remains undismissed for a period of sixty days; or
(ii) commences a voluntary case under any applicable
bankruptcy, insolvency or similar law now or hereafter in effect,
including the federal Bankruptcy Code, as from time to time amended;
or applies for or consents to the entry of an order for relief in an
involuntary case under any such law; or makes a general assignment
for the benefit of creditors; or fails generally to pay (or admits
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in writing its inability to pay) its debts as such debts become due;
or takes corporate or other action to authorize any of the
foregoing; or
(iii) suffers the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of all or a substantial part of its assets or of
any part of the Collateral in a proceeding brought against or
initiated by it, and such appointment or taking possession is
neither made ineffective nor discharged within thirty days after the
making thereof, or such appointment or taking possession is at any
time consented to, requested by, or acquiesced to by it; or
(iv) suffers the entry against it of a final judgment for the
payment of money in excess of $125,000 (not covered by insurance
satisfactory to Lender in its discretion), unless the same is
discharged within thirty days after the date of entry thereof or an
appeal or appropriate proceeding for review thereof is taken within
such period and a stay of execution pending such appeal is obtained;
or
(v) suffers a writ or warrant of attachment or any similar
process to be issued by any court against all or any substantial
part of its assets or any part of the Collateral, and such writ or
warrant of attachment or any similar process is not stayed or
released within thirty days after the entry or levy thereof or after
any stay is vacated or set aside;
(i) Either (i) any "accumulated funding deficiency" (as defined in
Section 412(a) of the Internal Revenue Code of 1986, as amended) in excess
of $25,000 exists with respect to any ERISA Plan, whether or not waived by
the Secretary of the Treasury or his delegate, or (ii) any Termination
Event occurs with respect to any ERISA Plan and the then current value of
such ERISA Plan's benefit liabilities exceeds the then current value of
such ERISA Plan's assets available for the payment of such benefit
liabilities by more than $25,000 (or in the case of a Termination Event
involving the withdrawal of a substantial employer, the withdrawing
employer's proportionate share of such excess exceeds such amount);
(j) Any material adverse change occurs in Borrower's individual or
Consolidated financial condition or businesses or operations and such
adverse change is not remedied within 20 days; and
(k) Any two of Xxxxx X. Xxxxxxxxx, Xxxxxxx X. Xxxxxxxxxxx or R.
Xxxxx Xxxxxxxx cease to be the President or Vice-President of OEDC for any
reason other than their death or disability.
Upon the occurrence of an Event of Default described in subsection (h)(i),
(h)(ii) or (h)(iii) of this section with respect to Borrower, all of the
Obligations shall thereupon be immediately due and payable, without demand,
presentment, notice of demand or of dishonor and nonpayment, protest, notice of
protest, notice of intention to accelerate, declaration or notice of
acceleration, or any other notice or declaration of any kind, all of which are
hereby expressly waived by
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Borrower and each Related Person who at any time ratifies or approves this
Agreement. During the continuance of any other Event of Default, Lender at any
time and from time to time may by notice to Borrower declare any or all of the
Obligations immediately due and payable, and all such Obligations shall
thereupon be immediately due and payable, without demand, presentment, notice of
demand or of dishonor and nonpayment, protest, notice of protest, notice of
intention to accelerate, declaration or notice of acceleration, or any other
notice or declaration of any kind, all of which are hereby expressly waived by
Borrower and each Related Person who at any time ratifies or approves this
Agreement. During the continuance of any Event of Default, Lender may by notice
to Borrower, declare any obligation of Lender to make any further loans of any
kind under any agreement with any Related Person permanently terminated. After
any such acceleration (whether automatic or due to declaration by Lender), any
obligation of Lender to make any further loans of any kind under any agreement
with any Related Person shall be permanently terminated.
Section 7.2. REMEDIES. If any Default shall occur and be continuing,
Lender may protect and enforce its rights under the Loan Documents by any
appropriate proceedings, including proceedings for specific performance of any
covenant or agreement contained in any Loan Document, and Lender may enforce the
payment of any Obligations due or enforce any other legal or equitable right.
All rights, remedies and powers conferred upon Lender under the Loan Documents
shall be deemed cumulative and not exclusive of any other rights, remedies or
powers available under the Loan Documents or at law or in equity.
SECTION 7.3. INDEMNITY. THE RELATED PERSONS, JOINTLY AND SEVERALLY, AGREE
TO INDEMNIFY LENDER, UPON DEMAND, FROM AND AGAINST ANY AND ALL LIABILITIES,
OBLIGATIONS, CLAIMS, LOSSES, DAMAGES, PENALTIES, FINES, ACTIONS, JUDGMENTS,
SUITS, SETTLEMENTS, COSTS, EXPENSES OR DISBURSEMENTS (INCLUDING REASONABLE FEES
OF ATTORNEYS, ACCOUNTANTS, EXPERTS AND ADVISORS) OF ANY KIND OR NATURE
WHATSOEVER (IN THIS SECTION COLLECTIVELY CALLED "LIABILITIES AND COSTS") WHICH
TO ANY EXTENT (IN WHOLE OR IN PART) MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED
AGAINST LENDER GROWING OUT OF, RESULTING FROM OR IN ANY OTHER WAY ASSOCIATED
WITH (I) ANY OF THE COLLATERAL, THE LOAN DOCUMENTS, THE PROPERTY OR THE
TRANSACTIONS AND EVENTS (INCLUDING THE ENFORCEMENT OR DEFENSE THEREOF) AT ANY
TIME ASSOCIATED THEREWITH OR CONTEMPLATED THEREIN (INCLUDING ANY VIOLATION OR
NONCOMPLIANCE WITH ANY ENVIRONMENTAL LAWS BY ANY RELATED PERSON OR ANY
LIABILITIES OR DUTIES OF BORROWER OR OF LENDER WITH RESPECT TO HAZARDOUS
MATERIALS FOUND IN OR RELEASED INTO THE ENVIRONMENT), (II) BY REASON OF THE
ASSERTION THAT LENDER RECEIVED, EITHER BEFORE OR AFTER PAYMENT IN FULL OF THE
OBLIGATIONS, FUNDS FROM THE PRODUCTION OF OIL, GAS, OTHER HYDROCARBONS OR OTHER
MINERALS CLAIMED BY THIRD PERSONS (AND FUNDS ATTRIBUTABLE TO SALES OF
PRODUCTION) WHICH (A) WERE MADE AT PRICES IN EXCESS OF THE MAXIMUM PRICE
PERMITTED BY APPLICABLE LAW OR (B) WERE OTHERWISE MADE IN VIOLATION OF LAWS,
RULES, REGULATIONS AND ORDERS GOVERNING SUCH SALES, (III) ANY BODILY INJURY OR
DEATH OR PROPERTY DAMAGE OCCURRING IN OR UPON OR IN THE VICINITY OF THE PROPERTY
THROUGH ANY CAUSE WHATSOEVER, (IV) ANY ACT, OMISSION, EVENT OR CIRCUMSTANCE
(INCLUDING WITHOUT LIMITATION THE PRESENCE ON THE PROPERTY OR THE ASSOCIATED
PROPERTY OR RELEASE FROM THE PROPERTY OR THE ASSOCIATED PROPERTY OF HAZARDOUS
MATERIALS OR SOLID WASTES DISPOSED OF OR OTHERWISE RELEASED) RESULTING FROM OR
IN CONNECTION WITH THE OWNERSHIP, CONSTRUCTION, OCCUPANCY, OPERATION, USE AND
MAINTENANCE OF THE PROPERTY OR THE ASSOCIATED PROPERTY, REGARDLESS OF WHETHER
THE ACT,
-44-
OMISSION, EVENT OR CIRCUMSTANCE CONSTITUTED A VIOLATION OF ANY ENVIRONMENTAL LAW
AT THE TIME OF ITS EXISTENCE OR OCCURRENCE, AND (V) ANY AND ALL CLAIMS OR
PROCEEDINGS (WHETHER BROUGHT BY PRIVATE PARTY OR GOVERNMENTAL AGENCIES) FOR
BODILY INJURY, PROPERTY DAMAGE, ABATEMENT OR REMEDIATION, ENVIRONMENTAL DAMAGE
OR IMPAIRMENT OR ANY OTHER INJURY OR DAMAGE RESULTING FROM OR RELATING TO ANY
HAZARDOUS MATERIAL OR SOLID WASTE LOCATED UPON OR MIGRATING INTO, FROM OR
THROUGH THE PROPERTY OR THE ASSOCIATED PROPERTY (WHETHER OR NOT THE RELEASE OF
SUCH MATERIALS WAS CAUSED BY THE BORROWER, A TENANT OR SUBTENANT OR A PRIOR
OWNER OR TENANT OR SUBTENANT ON THE PROPERTY OR THE ASSOCIATED PROPERTY AND
WHETHER OR NOT THE ALLEGED LIABILITY IS ATTRIBUTABLE TO THE HANDLING, STORAGE,
GENERATION, TRANSPORTATION, REMOVAL OR DISPOSAL OF SUCH SUBSTANCE, WASTE OR
MATERIAL OR THE MERE PRESENCE OF SUCH SUBSTANCE, WASTE OR MATERIAL ON THE
PROPERTY OR THE ASSOCIATED PROPERTY), WHICH THE LENDER MAY HAVE LIABILITY WITH
RESPECT TO DUE TO THE MAKING OF THE LOANS, THE GRANTING OF THE MORTGAGE, THE
EXERCISE OF ANY OF ITS RIGHTS UNDER THE LOAN DOCUMENTS, OR OTHERWISE. DURING THE
CONTINUANCE OF ANY EVENT OF DEFAULT, LENDER SHALL HAVE THE RIGHT TO COMPROMISE
AND ADJUST ANY SUCH CLAIMS, ACTIONS AND JUDGMENTS, IF LENDER HAS REASONABLY
DETERMINED THAT THE RELATED PERSONS WILL OTHERWISE BE UNABLE TO FUND THE AMOUNT
OF SUCH CLAIM, ACTION OR JUDGMENT UNDER THIS SECTION.
THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND
COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM
OR THEORY OF STRICT LIABILITY OR ARE IN ANY EXTENT CAUSED, IN WHOLE OR IN PART,
BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY LENDER,
PROVIDED ONLY THAT LENDER SHALL BE NOT ENTITLED UNDER THIS SECTION TO RECEIVE
INDEMNIFICATION FOR THAT PORTION, IF ANY, OF (I) ANY LIABILITIES AND COSTS WHICH
IS PROXIMATELY CAUSED BY ITS OWN INDIVIDUAL GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT, AS DETERMINED IN A FINAL JUDGMENT OR (II) TO THE EXTENT THAT LENDER
OR ANY OF ITS AFFILIATES OR AGENTS EVER REPLACES BORROWER AS THE OPERATOR OF ANY
OIL AND GAS PROPERTIES CONSTITUTING COLLATERAL (AFTER FORECLOSURE THEREOF), ANY
LIABILITIES AND COSTS WHICH ARE PROXIMATELY CAUSED BY LENDER'S, ITS AFFILIATES"
OR AGENTS" OWN NEGLIGENCE IN THE OPERATION OF SUCH COLLATERAL, AS DETERMINED IN
A FINAL JUDGMENT. AS USED IN THIS SECTION THE TERM "LENDER" SHALL REFER NOT ONLY
TO THE PERSON DESIGNATED AS SUCH IN SECTION 1.1 BUT ALSO TO EACH DIRECTOR,
OFFICER, AGENT, ATTORNEY, EMPLOYEE, REPRESENTATIVE AND AFFILIATE OF SUCH PERSON
AND TO ANY TRUSTEE OR SUCCESSOR TRUSTEE UNDER ANY SECURITY DOCUMENT.
ARTICLE VIII - MISCELLANEOUS
Section 8.1. WAIVERS AND AMENDMENTS; ACKNOWLEDGMENTS.
(a) WAIVERS AND AMENDMENTS. No failure or delay (whether by course
of conduct or otherwise) by Lender in exercising any right, power or
remedy which Lender may have
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under any of the Loan Documents shall operate as a waiver thereof or of
any other right, power or remedy, nor shall any single or partial exercise
by Lender of any such right, power or remedy preclude any other or further
exercise thereof or of any other right, power or remedy. No waiver of any
provision of any Loan Document and no consent to any departure therefrom
shall ever be effective unless it is in writing and signed by Lender, and
then such waiver or consent shall be effective only in the specific
instances and for the purposes for which given and to the extent specified
in such writing. No notice to or demand on any Related Person shall in any
case of itself entitle any Related Person to any other or further notice
or demand in similar or other circumstances. This Agreement and the other
Loan Documents set forth the entire understanding and agreement of the
parties hereto and thereto with respect to the transactions contemplated
herein and therein and supersede all prior discussions and understandings
with respect to the subject matter hereof and thereof, and no modification
or amendment of or supplement to this Agreement or the other Loan
Documents shall be valid or effective unless the same is in writing and
signed by the party against whom it is sought to be enforced.
(b) ACKNOWLEDGEMENTS AND ADMISSIONS. The Related Persons hereby
represent, warrant, acknowledge and admit that (i) they have been advised
by counsel in the negotiation, execution and delivery of the Loan
Documents to which they are a party, (ii) they have made an independent
decision to enter into this Agreement and the other Loan Documents to
which they are a party, without reliance on any representation, warranty,
covenant or undertaking by Lender, whether written, oral or implicit,
other than as expressly set out in this Agreement or in another Loan
Document delivered on or after the date hereof, (iii) there are no
representations, warranties, covenants, undertakings or agreements by
Lender as to the Loan Documents except as expressly set out in this
Agreement or in another Loan Document delivered on or after the date
hereof, (iv) Lender owes no fiduciary duty to Borrower or any other
Related Person with respect to any Loan Document or the transactions
contemplated thereby, (v) the relationship pursuant to the Loan Documents
between Borrower, on one hand, and Lender, on the other hand, is and shall
be solely that of debtor and creditor, respectively, (vi) no partnership
or joint venture exists with respect to the Loan Documents between
Borrower or any other Related Person and Lender, (vii) should an Event of
Default or Default occur or exist Lender will determine in its sole
discretion and for its own reasons what remedies and actions it will or
will not exercise or take at that time, (viii) without limiting any of the
foregoing, no Related Person is relying upon any representation or
covenant by Lender, or any representative thereof, and no such
representation or covenant has been made, that Lender will, at the time of
an Event of Default or Default, or at any other time, waive, negotiate,
discuss, or take or refrain from taking any action permitted under the
Loan Documents with respect to any such Event of Default or Default or any
other provision of the Loan Documents, and (ix) Lender has relied upon the
truthfulness of the acknowledgements in this section in deciding to
execute and deliver this Agreement and to make the Loan.
THIS WRITTEN AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT
-46-
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Section 8.2. SURVIVAL OF AGREEMENTS; CUMULATIVE NATURE. The various
representations, warranties, covenants and agreements of the Related Persons in
the Loan Documents shall survive the execution and delivery of this Agreement
and the other Loan Documents and the performance hereof and thereof, including
the making or granting of the Loan and the delivery of the Note and the other
Loan Documents, and shall further survive until all of the Obligations are paid
in full to Lender and all of Lender's obligations to Borrower are terminated.
Any investigation at any time made by or on behalf of Lender shall not diminish
Lender's right to rely upon the representations and warranties in the Loan
Documents. All statements and agreements contained in any certificate or other
instrument delivered by any Related Person to Lender under any Loan Document
shall be deemed representations and warranties by Borrower or agreements and
covenants of Borrower under this Agreement. The representations, warranties, and
covenants made by Borrower in the Loan Documents, and the rights, powers, and
privileges granted to Lender in the Loan Documents, are cumulative, and, except
for expressly specified waivers and consents, no Loan Document shall be
construed in the context of another to diminish, nullify, or otherwise reduce
the benefit to Lender of any such representation, warranty, covenant, right,
power or privilege. In particular and without limitation, no exception set out
in this Agreement to any representation, warranty or covenant herein contained
shall apply to any similar representation, warranty or covenant contained in any
other Loan Document, and each such similar representation, warranty or covenant
shall be subject only to those exceptions which are expressly made applicable to
it by the terms of the various Loan Documents.
Section 8.3. NOTICES. All notices, requests, consents, demands and other
communications required or permitted under any Loan Document shall be in
writing, unless otherwise specifically provided in such Loan Document, and shall
be deemed sufficiently given or furnished if delivered by personal delivery, by
telecopy, by delivery service with proof of delivery, or by registered or
certified United States mail, postage prepaid, to Borrower and the Related
Persons at the address of Borrower specified on the signature pages hereto and
to Lender at its address specified on the signature pages hereto (unless changed
by similar notice in writing given by the particular Person whose address is to
be changed). Any such notice or communication shall be deemed to have been given
(a) in the case of personal delivery or delivery service, when received, (b) in
the case of telecopy, upon receipt, or (c) in the case of registered or
certified United States mail, three days after deposit in the mail; provided,
however, that no Request for Advance shall become effective until actually
received by Lender.
Section 8.4. PARTIES IN INTEREST. All grants, covenants and agreements
contained in the Loan Documents shall bind and inure to the benefit of the
parties thereto and their respective successors and assigns; provided, however,
that no Related Person may assign or transfer any of its rights or delegate any
of its duties or obligations under any Loan Document without the prior consent
of Lender. Notwithstanding the foregoing, Lender may not assign, or grant
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participations in, its interest in the Loan, this Agreement or the other Loan
Documents without the consent of Borrower, such consent not to be unreasonably
withheld.
Section 8.5. GOVERNING LAW; SUBMISSION TO PROCESS. Except to the extent
that the law of another jurisdiction is expressly elected in a Loan Document,
the Loan Documents shall be deemed contracts and instruments made under the laws
of the State of Texas and shall be construed and enforced in accordance with and
governed by the laws of the State of Texas and the laws of the United States of
America, without regard to principles of conflicts of law. Chapter 15 of Texas
Revised Civil Statutes Article 5069 (which regulates certain revolving credit
loan accounts and revolving tri-party accounts) does not apply to this Agreement
or the Note. The obligations of Borrower for payment of all amounts due under
this Agreement and the Loan Documents are performable in Los Angeles County,
California, and all other obligations of Borrower under this Agreement and the
Loan Documents are performable in Dallas County, Texas. The Related Persons
hereby irrevocably submit themselves and each other Related Person to the
jurisdiction of the state and federal courts sitting in the State of Texas and
agree and consent that service of process may be made upon them or any of the
Related Persons in any legal proceeding relating to the Loan Documents or the
Obligations by any means allowed under Texas or federal law. Any legal
proceeding arising out of or in any way related to any of the Loan Documents
shall be brought and litigated exclusively in the United States District Court
for the Northern District of Texas, Dallas Division, to the extent it has
subject matter jurisdiction, and otherwise in the Texas District Courts sitting
in Dallas County, Texas. The parties hereto hereby waive and agree not to
assert, by way of motion, as a defense or otherwise, that any such proceeding is
brought in an inconvenient forum or that the venue thereof is improper. In
furtherance thereof, the Related Persons and Lender each hereby acknowledge and
agree that it was not inconvenient for them to negotiate and receive funding of
the transactions contemplated by this Agreement in such county and that it will
be neither inconvenient nor unfair to litigate or otherwise resolve any disputes
or claims in a court sitting in such county.
Section 8.6. LIMITATION ON INTEREST. Lender, the Related Persons and any
other parties to the Loan Documents intend to contract in strict compliance with
applicable usury law from time to time in effect. In furtherance thereof such
Persons stipulate and agree that none of the terms and provisions contained in
the Loan Documents shall ever be construed to create a contract to pay, for the
use, forbearance or detention of money, interest in excess of the maximum amount
of interest permitted to be charged by applicable law from time to time in
effect. Neither any Related Person nor any present or future guarantors,
endorsers, or other Persons hereafter becoming liable for payment of any
Obligation shall ever be liable for unearned interest thereon or shall ever be
required to pay interest thereon in excess of the maximum amount that may be
lawfully charged under applicable law from time to time in effect, and the
provisions of this section shall control over all other provisions of the Loan
Documents which may be in conflict or apparent conflict herewith. Lender
expressly disavows any intention to charge or collect excessive unearned
interest or finance charges in the event the maturity of any Obligation is
accelerated. If (a) the maturity of any Obligation is accelerated for any
reason, (b) any Obligation is prepaid and as a result any amounts held to
constitute interest are determined to be in excess of the legal maximum, or (c)
Lender or any other holder of any or all of the Obligations shall otherwise
collect moneys which are determined to constitute interest which would otherwise
increase the interest on any or all of the Obligations to an amount in excess of
that
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permitted to be charged by applicable law then in effect, then all such sums
determined to constitute interest in excess of such legal limit shall, without
penalty, be promptly applied to reduce the then outstanding principal of the
related Obligations or, at Lender's or such holder's option, promptly returned
to Borrower or the other payor thereof upon such determination. In determining
whether or not the interest paid or payable, under any specific circumstance,
exceeds the maximum amount permitted under applicable law, Lender and the
Related Persons (and any other payors thereof) shall to the greatest extent
permitted under applicable law, (i) characterize any non-principal payment as an
expense, fee or premium rather than as interest, (ii) exclude voluntary
prepayments and the effects thereof, and (iii) amortize, prorate, allocate, and
spread the total amount of interest throughout the entire contemplated term of
the instruments evidencing the Obligations in accordance with the amounts
outstanding from time to time thereunder and the maximum legal rate of interest
from time to time in effect under applicable law in order to lawfully charge the
maximum amount of interest permitted under applicable law. In the event
applicable law provides for an interest ceiling under Texas Revised Civil
Statutes Annotated article 5069-1.04, that ceiling shall be the indicated rate
ceiling and shall be used when appropriate in determining the Highest Lawful
Rate. As used in this section the term "applicable law" means the laws of the
State of Texas or the laws of the United States of America, whichever laws allow
the greater interest, as such laws now exist or may be changed or amended or
come into effect in the future.
Section 8.7. TERMINATION; LIMITED SURVIVAL. In its sole and absolute
discretion Borrower may at any time that no Obligations are owing elect in a
notice delivered to Lender to terminate this Agreement. Upon receipt by Lender
of such a notice, if no Obligations are then owing this Agreement and all other
Loan Documents shall thereupon be terminated and the parties thereto released
from all prospective obligations thereunder. Notwithstanding the foregoing or
anything herein to the contrary, any waivers or admissions made by any Related
Person in any Loan Documents, any Obligations under Sections 2.11 through 2.15,
and any obligations which any Person may have to indemnify or compensate Lender
shall survive any termination of this Agreement or any other Loan Document. At
the request and expense of Borrower, Lender shall prepare and execute all
necessary instruments to reflect and effect such termination of the Loan
Documents.
Section 8.8. SEVERABILITY. If any term or provision of any Loan Document
shall be determined to be illegal or unenforceable all other terms and
provisions of the Loan Documents shall nevertheless remain effective and shall
be enforced to the fullest extent permitted by applicable law.
Section 8.9. COUNTERPARTS. This Agreement may be separately executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to constitute one
and the same Agreement.
SECTION 8.10. WAIVER OF JURY TRIAL, PUNITIVE DAMAGES, ETC. THE RELATED
PERSONS AND LENDER EACH HEREBY (A) KNOWINGLY, VOLUNTARILY, INTENTIONALLY, AND
IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
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DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT OF, UNDER OR IN CONNECTION WITH
THE LOAN DOCUMENTS OR ANY TRANSACTION CONTEMPLATED THEREBY OR ASSOCIATED
THEREWITH, BEFORE OR AFTER MATURITY; (B) IRREVOCABLY WAIVES, 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; (C) CERTIFIES THAT NO
PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OR 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 (D)
ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE OTHER
LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION.
Section 8.11. RESTATEMENT. This Agreement restates and amends the Original
Agreement in its entirety and all of the terms and provisions hereof shall
supersede the terms and provisions thereof.
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IN WITNESS WHEREOF, this Agreement is executed as of the date first
written above.
OEDC EXPLORATION & PRODUCTION, L.P.
By: OEDC, Inc., its General Partner
By: _______________________________
Xxxxxxx X. Xxxxxxxxxxx
Vice President
Address:
0000 Xxxxxxxx Xxxxxx Xx., Xxxxx 000
Xxx Xxxxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
OFFSHORE ENERGY DEVELOPMENT
CORPORATION
By: _______________________________
Xxxxxxx X. Xxxxxxxxxxx
Vice President
OEDC, INC.
By: _______________________________
Xxxxxxx X. Xxxxxxxxxxx
Vice President
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OEDC PARTNERS, L.P.
By: OEDC, Inc., its General Partner
By: _______________________________
Xxxxxxx X. Xxxxxxxxxxx
Vice President
DAUPHIN ISLAND GATHERING COMPANY, L.P.
By: OEDC, Inc., its General Partner
By: _______________________________
Xxxxxxx X. Xxxxxxxxxxx
Vice President
OEDC PROCESSING, L.P.
By: OEDC, Inc., its General Partner
By: _______________________________
Xxxxxxx X. Xxxxxxxxxxx
Vice President
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XXXXX XXXX XX XXXXXXXXXX, N.A.
By: _______________________________
Xxxx Xxxxxxxx
Vice President
By: _______________________________
Name: Xxxxx Xxxxxx
Title: Vice President
Address:
500 North Xxxxx
0000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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SCHEDULE 1
DISCLOSURE SCHEDULE
To supplement the following sections of the Agreement of which this
Schedule is a part, each Related Person hereby makes the following disclosures:
1. Section 4.1(f) INITIAL FINANCIAL STATEMENTS:
2. Section 4.1(g) OTHER OBLIGATIONS:
3. Section 4.1(i) LITIGATION:
4. Section 4.1(j) ERISA LIABILITIES:
5. Sections 4.1(l) and 8.3 NAMES AND PLACES OF BUSINESS:
6. Section 4.1(m) SUBSIDIARIES AND STOCKHOLDINGS:
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SCHEDULE 2
SECURITY SCHEDULE
1. Restated and Amended Mortgage, Assignment, Security Agreement, Fixture
Filing and Financing Statement executed by Borrower dated of even date
herewith, covering properties in Alabama (the "Alabama Mortgage").
2. Restated and Amended Mortgage, Assignment, Security Agreement, Fixture
Filing and Financing Statement executed by Borrower dated of even date
herewith covering properties in Louisiana (the "Louisiana Mortgage").
3. Deed of Trust, Mortgage, Assignment, Security Agreement, Fixture Filing and
Financing Statement executed by Borrower dated of even date herewith
covering properties in Texas (the "Texas Deed of Trust").
4. Deed of Trust, Mortgage, Assignment, Security Agreement, Fixture Filing and
Financing Statement executed by Borrower dated of even date herewith
covering properties in Mississippi (the "Mississippi Deed of Trust",
together with the Alabama Mortgage, the Louisiana Mortgage and the Texas
Deed of Trust, the "Mortgage").
4. Financing Statements covering collateral described in the Mortgage to be
filed with the Secretary of State of Texas, the Secretary of State of
Alabama, Terrebonne Parish, Louisiana, and the Secretary of State of
Mississippi.
5. Guaranty dated as of August 28, 1996, executed by OEDC, as amended by a
First Amendment to Guaranty dated of even date herewith.
6. Guaranty dated as of August 28, 1996, executed by General Partner, as
amended by a First Amendment to Guaranty dated of even date herewith.
7. Guaranty dated as of August 28, 1996, executed by OEDC Partners, as amended
by a First Amendment to Guaranty dated of even date herewith.
8. Guaranty dated as of August 28, 1996, executed by Dauphin, as amended by a
First Amendment to Guaranty dated of even date herewith.
9. Guaranty dated of even date herewith executed by OEDC Processing.
10. Pledge Agreement dated as of August 28, 1996, executed by Borrower, as
amended by a First Amendment to Pledge Agreement dated of even date
herewith and covering Borrower's limited partnership interest in the Enron
Partnership and its limited partnership interest in South Dauphin Partners,
Ltd.
-1-
11. Pledge and Security Agreement dated as of August 28, 1996, executed by
General Partner, as amended by a First Amendment to Pledge and Security
Agreement dated of even date herewith and covering General Partner's
partnership interest in Dauphin.
12. Pledge Agreement dated as of August 28, 1996, executed by Dauphin, as
amended by a First Amendment to Pledge Agreement and Security Agreement
dated of even date herewith and covering Dauphin's partnership interest in
Dauphin Island Gathering Partners.
13. Financing Statements covering collateral described in the Security
Documents described in items 10 through 12 immediately above, executed by
Borrower, General Partner, OEDC and Dauphin for filing with the Secretary
of State of Texas.
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EXHIBIT A
PROMISSORY NOTE
$30,000,000 Dallas, Texas July 8, 1997
FOR VALUE RECEIVED, the undersigned, OEDC Exploration & Production, L.P.,
a Texas limited partnership (herein called "Borrower"), hereby promises to pay
to the order of Union Bank of California, N.A. (herein called "Lender"), the
principal sum of Thirty Million Dollars ($30,000,000) or, if less, the aggregate
unpaid principal amount of the Loan made under this Note by Lender to Borrower
pursuant to the terms of the Credit Agreement (as hereinafter defined), together
with interest on the unpaid principal balance thereof as hereinafter set forth,
both principal and interest payable as herein provided in lawful money of the
United States of America at the offices of Lender, 000 Xxxxx Xxxxxxxx Xxxxxx,
Xxx Xxxxxxx, Xxxxxxxxxx 00000 or at such other place within Los Angeles County,
California, as from time to time may be designated by the holder of this Note.
This Note (a) is issued and delivered under that certain First Restated
Credit Agreement of even date herewith among Borrower, OEDC, Inc., OEDC
Partners, L.P., Dauphin Island Gathering Company, L.P., OEDC Processing, L.P.
and Lender (herein, as from time to time supplemented, amended or restated,
called the "Credit Agreement"), and is the Note as defined therein, (b) is
subject to the terms and provisions of the Credit Agreement, which contains
provisions for payments and prepayments hereunder and acceleration of the
maturity hereof upon the happening of certain stated events, and (c) is secured
by and entitled to the benefits of certain Security Documents (as identified and
defined in the Credit Agreement). Payments on this Note shall be made and
applied as provided herein and in the Credit Agreement. Reference is hereby made
to the Credit Agreement for a description of certain rights, limitations of
rights, obligations and duties of the parties hereto and for the meanings
assigned to terms used and not defined herein and to the Security Documents for
a description of the nature and extent of the security thereby provided and the
rights of the parties thereto. This Note is given in renewal, extension and
increase (but not in extinguishment or novation) of that certain Promissory Note
dated August 28, 1996, made by Borrower payable to the order of Lender.
For the purposes of this Note, the following terms have the meanings
assigned to them below:
"Base Rate Payment Date" means (i) the last day of each calendar
month, beginning July 31, 1997, and (ii) any day on which past due
interest or principal is owed hereunder and is unpaid. If the terms hereof
or of the Credit Agreement provide that payments of interest or principal
hereon shall be deferred from one Base Rate Payment Date to another day,
such other day shall also be a Base Rate Payment Date.
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"Fixed Rate Payment Date" means, with respect to any Fixed Rate
Portion: (i) the day on which the related Interest Period ends, and (ii)
any day on which past due interest or past due principal is owed hereunder
with respect to such Fixed Rate Portion and is unpaid. If the terms hereof
or of the Credit Agreement provide that payments of interest or principal
with respect to such Fixed Rate Portion shall be deferred from one Fixed
Rate Payment Date to another day, such other day shall also be a Fixed
Rate Payment Date.
The principal amount of this Note, together with all interest accrued
hereon, shall be due and payable in full on September 30, 1999.
The Base Rate Portion of the Loan (exclusive of any past due principal or
interest) from time to time outstanding shall bear interest on each day
outstanding at the Base Rate in effect on such day. On each Base Rate Payment
Date Borrower shall pay to the holder hereof all unpaid interest which has
accrued on the Base Rate Portion to but not including such Base Rate Payment
Date. Each Fixed Rate Portion of the Loan (exclusive of any past due principal
or interest) shall bear interest on each day during the related Interest Period
at the related Fixed Rate in effect on such day. On each Fixed Rate Payment Date
relating to such Fixed Rate Portion Borrower shall pay to the holder hereof all
unpaid interest which has accrued on such Fixed Rate Portion to but not
including such Fixed Rate Payment Date. All past due principal of and past due
interest on the Loan shall bear interest on each day outstanding at the Late
Payment Rate in effect on such day, and such interest shall be due and payable
daily as it accrues. Notwithstanding the foregoing provisions of this paragraph:
(a) this Note shall never bear interest in excess of the Highest Lawful Rate,
and (b) if at any time the rate at which interest is payable on this Note is
limited by the Highest Lawful Rate (by the foregoing clause (a) or by reference
to the Highest Lawful Rate in the definitions of Base Rate, Fixed Rate, and Late
Payment Rate), this Note shall bear interest at the Highest Lawful Rate and
shall continue to bear interest at the Highest Lawful Rate until such time as
the total amount of interest accrued hereon equals (but does not exceed) the
total amount of interest which would have accrued hereon had there been no
Highest Lawful Rate applicable hereto.
Notwithstanding the foregoing paragraph and all other provisions of this
Note, in no event shall the interest payable hereon, whether before or after
maturity, exceed the maximum amount of interest which, under applicable law, may
be charged on this Note, and this Note is expressly made subject to the
provisions of the Credit Agreement which more fully set out the limitations on
how interest accrues hereon. In the event applicable law provides for a ceiling
under Texas Revised Civil Statutes Annotated article 5069-1.04, that ceiling
shall be the indicated rate ceiling and shall be used in this Note for
calculating the Highest Lawful Rate and for all other purposes. The term
"applicable law" as used in this Note shall mean the laws of the State of Texas
or the laws of the United States, whichever laws allow the greater interest, as
such laws now exist or may be changed or amended or come into effect in the
future.
If this Note is placed in the hands of an attorney for collection after
default, or if all or any part of the indebtedness represented hereby is proved,
established or collected in any court or in any bankruptcy, receivership, debtor
relief, probate or other court proceedings, Borrower and all endorsers, sureties
and guarantors of this Note jointly and severally agree to pay reasonable
attorneys" fees and collection costs to the holder hereof in addition to the
principal and interest payable hereunder.
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Borrower and all endorsers, sureties and guarantors of this Note hereby
severally waive demand, presentment, notice of demand and of dishonor and
nonpayment of this Note, protest, notice of protest, notice of intention to
accelerate the maturity of this Note, declaration or notice of acceleration of
the maturity of this Note, diligence in collecting, the bringing of any suit
against any party and any notice of or defense on account of any extensions,
renewals, partial payments or changes in any manner of or in this Note or in any
of its terms, provisions and covenants, or any releases or substitutions of any
security, or any delay, indulgence or other act of any trustee or any holder
hereof, whether before or after maturity, except as otherwise provided in the
Credit Agreement.
THIS NOTE AND THE RIGHTS AND DUTIES OF THE PARTIES HERETO SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW), EXCEPT TO THE EXTENT THE SAME ARE GOVERNED BY APPLICABLE
FEDERAL LAW.
OEDC EXPLORATION & PRODUCTION, L.P.
By: OEDC, Inc., its General Partner
By: ________________________
Xxxxxxx X. Xxxxxxxxxxx
Vice President
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EXHIBIT B
REQUEST FOR ADVANCE
Reference is made to that certain First Restated Credit Agreement dated as
of July 8, 1997 (as from time to time amended, the "Agreement"), by and among
OEDC Exploration & Production, L.P. ("Borrower"), OEDC, Inc. ("General
Partner"), OEDC Partners, L.P. ("OEDC Partners"), Dauphin Island Gathering Co.,
L.P. ("Dauphin"), OEDC Processing, L.P. ("OEDC Processing") and Union Bank of
California, N.A. ("Lender"). Terms which are defined in the Agreement are used
herein with the meanings given them in the Agreement. Pursuant to the terms of
the Agreement Borrower hereby requests Lender to make an Advance to Borrower in
the principal amount of $ and specifies , as the date Borrower desires for
Lender to make such Advance and to deliver to Borrower the proceeds thereof.
To induce Lender to make such Advance, Borrower hereby represents,
warrants, acknowledges, and agrees that:
(a) The officer of General Partner signing this instrument is the duly
elected, qualified and acting officer of General Partner as indicated below
such officer's signature hereto having all necessary authority to act for
Borrower in making the request herein contained.
(b) The representations and warranties of the Related Persons set
forth in the Agreement and the other Loan Documents are true and correct on
and as of the date hereof (except to the extent that the facts on which
such representations and warranties are based have been changed by the
extension of credit under the Agreement), with the same effect as though
such representations and warranties had been made on and as of the date
hereof.
(c) There does not exist on the date hereof any condition or event
which constitutes a Default which has not been waived in writing as
provided in Section 8.1(a) of the Agreement; nor will any such Default
exist upon Borrower's receipt and application of the Advance requested
hereby. Borrower will use the Advance hereby requested in compliance with
Section 2.3 of the Agreement.
(d) Except to the extent waived in writing as provided in Section
8.1(a) of the Agreement, each Related Person has performed and complied
with all agreements and conditions in the Agreement required to be
performed or complied with by such Related Person on or prior to the date
hereof, and each of the conditions precedent to the Advance contained in
the Agreement remains satisfied.
(e) The Loan Documents have not been modified, amended or supplemented
by any unwritten representations or promises, by any course of dealing, or
by any other means not provided for in Section 8.1(a) of the Agreement. The
Agreement and the other Loan Documents are hereby ratified, approved, and
confirmed in all respects.
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IN WITNESS WHEREOF, this instrument is executed on behalf of Borrower by
the undersigned in his capacity as an officer of General Partner as of .
OEDC EXPLORATION & PRODUCTION, L.P.
By: OEDC, Inc., its General Partner
By: ___________________________
Name:
Title:
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EXHIBIT C
RATE ELECTION
Reference is made to that certain First Restated Credit Agreement dated as
of July 8, 1997 (as from time to time amended, the "Agreement"), by and among
OEDC Exploration & Production, L.P. ("Borrower"), OEDC, Inc. ("General
Partner"), OEDC Partners, L.P., Dauphin Island Gathering Company, L.P., OEDC
Processing, L.P. and Union Bank of California, N.A. ("Lender"). Terms which are
defined in the Agreement and which are used but not defined herein are used
herein with the meanings given them in the Agreement. Pursuant to the terms of
the Agreement Borrower hereby elects a Fixed Rate Portion in the amount of $
______________ with an Interest Period beginning on ____________________ and
continuing for a period of ______________.
To meet the conditions set out in the Agreement for the making of such
election, Borrower hereby represents, warrants, acknowledges and agrees that:
(a) The officer of General Partner signing this instrument is a duly
elected, qualified and acting __________ of General Partner, having all
necessary authority to act for Borrower in making the election herein
contained.
(b) There does not exist on the date hereof any condition or event
which constitutes a Default which has not been waived in writing as
provided in Section 8.1(a) of the Agreement.
(c) The Loan Documents have not been modified, amended or
supplemented by any unwritten representations or promises, by any course
of dealing, or by any other means not provided for in Section 8.1(a) of
the Agreement. The Agreement and the other Loan Documents are hereby
ratified, approved, and confirmed in all respects.
IN WITNESS WHEREOF, this instrument is executed on behalf of Borrower by
the undersigned in his capacity as an officer of General Partner as of .
OEDC EXPLORATION & PRODUCTION, L.P.
By: OEDC, Inc., its General Partner
By: ___________________________
Name:
Title:
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EXHIBIT D
CERTIFICATE ACCOMPANYING
FINANCIAL STATEMENTS
Reference is made to that certain First Restated Credit Agreement dated as
of July 8, 1997 (as from time to time amended, the "Agreement"), by and among
OEDC Exploration & Production, L.P. ("Borrower"), OEDC, Inc. ("General
Partner"), OEDC Partners, L.P. ("OEDC Partners"), Dauphin Island Gathering
Company, L.P. ("Dauphin"), OEDC Processing, L.P. ("OEDC Processing") and Union
Bank of California, N.A. ("Lender"), which Agreement is in full force and effect
on the date hereof. Terms which are defined in the Agreement are used herein
with the meanings given them in the Agreement.
This Certificate is furnished pursuant to Section 5.1(b)(ii) of the
Agreement. Together herewith Borrower is furnishing to Lender OEDC's [audited]
[unaudited] financial statements (the "Financial Statements") as at ____________
(the "Reporting Date"). Borrower hereby represents, warrants, and acknowledges
to Lender that:
(a) the officer of General Partner signing this instrument is the
duly elected, qualified and acting ____________ of General Partner and as
such is Borrower's chief financial officer;
(b) the Financial Statements are accurate and complete and satisfy
the requirements of the Agreement;
(c) on the Reporting Date Borrower was, and on the date hereof
Borrower is, in full compliance with the disclosure requirements of
Section 5.1(d) of the Agreement, and no Default otherwise existed on the
Reporting Date or otherwise exists on the date of this instrument *[except
for Default(s) under Section(s) ____________ of the Agreement, which
[is/are] more fully described on a schedule attached hereto].
(d) attached hereto is a schedule of calculations showing Borrower's
compliance as of the Reporting Date with the requirements of Sections
_____ of the Agreement; and
(e) *[Unless otherwise disclosed on a schedule attached hereto, ]The
representations and warranties of the Related Persons set forth in the
Agreement and the other Loan Documents are true and correct on and as of
the date hereof (except to the extent that the facts on which such
representations and warranties are based have been changed by the
extension of credit under the Agreement), with the same effect as though
such representations and warranties had been made on and as of the date
hereof.
The officer of General Partner signing this instrument hereby certifies
that he has reviewed the Loan Documents and the Financial Statements and has
otherwise undertaken such inquiry as is in his opinion necessary to enable him
to express an informed opinion with respect to the above representations,
warranties and acknowledgments of Borrower and, to the best of his knowledge,
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such representations, warranties, and acknowledgments are true, correct and
complete. The foregoing officer's certificate is based upon, and such officer's
"inquiry" is limited to, the officer's personal knowledge, the books and records
of the Related Persons, and statements of or conversations with the officers and
employees of the Related Persons. The officer of General Partner signing this
instrument has no reason to believe, however, in any instance in which he has
certified a statement "to the best of his knowledge" that the statement is
untrue in any material respect.
IN WITNESS WHEREOF, this instrument is executed on behalf of Borrower by
the undersigned in his capacity as an officer of General Partner as of .
OEDC EXPLORATION & PRODUCTION, L.P.
By: OEDC, Inc., its General Partner
By: ___________________________
Name:
Title:
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