EXHIBIT 10.22
Execution Copy
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AMENDED AND RESTATED
CREDIT AGREEMENT
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NUEVO ENERGY COMPANY,
as Borrower
NATIONSBANK OF TEXAS, N.A.
as Administrative Agent
XXXXXX GUARANTY TRUST COMPANY OF NEW YORK,
as Documentation Agent
and CERTAIN LENDERS
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$400,000,000
Dated as of February 13, 1998
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TABLE OF CONTENTS
Page
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AMENDED AND RESTATED CREDIT AGREEMENT 1
ARTICLE I - Definitions and References 1
Section 1.1. Defined Terms 1
Section 1.2. Exhibits and Schedules; Additional Definitions 24
Section 1.3. Amendment of Defined Instruments 25
Section 1.4. References and Titles 25
Section 1.5. Calculations and Determinations 25
ARTICLE II - The Loans 26
Section 2.1. Advances 26
Section 2.2. Requests for Advances 26
Section 2.3. Use of Proceeds 27
Section 2.4. Rate Elections 27
Section 2.5. Facility Fees 28
Section 2.6. Administrative Agent's Fees 28
Section 2.7. Optional Prepayments 28
Section 2.8. Mandatory Prepayments 29
Section 2.9. Payments to Lenders 30
Section 2.10. Initial Borrowing Base 31
Section 2.11. Subsequent Determinations of Borrowing Base 31
Section 2.12. Prudent Industry Lending Standards 32
Section 2.13. Capital Reimbursement 33
Section 2.14. Increased Cost of Fixed Rate Portions 33
Section 2.15. Availability 34
Section 2.16. Funding Losses 34
Section 2.17. Reimbursable Taxes 35
Section 2.18. Change of Lending Office and Lender; Time Limit; etc 36
ARTICLE III - Conditions Precedent to Lending 37
Section 3.1. Documents to be Delivered 37
Section 3.2. Additional Conditions Precedent 38
ARTICLE IV - Representations and Warranties 38
Section 4.1. Borrower's Representations and Warranties 38
(a) No Default 39
(b) Organization and Good Standing 39
(c) Authorization 39
(d) No Conflicts or Consents 39
(e) Enforceable Obligations 40
(f) Initial Financial Statements 40
(g) Other Obligations and Restrictions 40
i
(h) Full Disclosure 40
(i) Litigation 41
(j) Labor Disputes and Acts of God 41
(k) ERISA Liabilities 41
(l) Environmental and Other Laws 42
(m) Borrower's Subsidiaries 42
(n) Title to Properties; Licenses 43
(o) Government Regulation 43
(p) No Insolvency 43
Section 4.2. Representation by Lenders 44
ARTICLE V - Covenants of Borrower 44
Section 5.1. Affirmative Covenants 44
(a) Payment and Performance 44
(b) Books, Financial Statements and Reports 44
(c) Other Information; Inspections; Confidentiality 46
(d) Notice of Material Events and Change of Address 46
(e) Maintenance of Properties 47
(f) Maintenance of Existence and Qualifications 47
(g) Payment of Trade Liabilities, Taxes, etc 47
(h) Insurance 48
(i) Payment of Expenses 48
(j) Performance on Borrower's Behalf 48
(k) Interest 48
(l) Compliance with Agreements and Law 48
(m) Evidence of Compliance 49
Section 5.2. Negative Covenants 49
(a) Guaranties and Indebtedness 49
(b) Prepayments of Subordinated Indebtedness 50
(c) Prepayments of Additional Senior Indebtedness 51
(d) Limitation on Liens 51
(e) Limitation on Mergers, Issuances of Securities 51
(f) Limitation on Sales of Property 51
(g) Derivative Contracts 52
(h) Restricted Payments and Investments 53
(i) Limitation on Acquisitions, New Businesses, and Margin Stock 54
(j) Transactions with Affiliates 54
(k) Certain Prohibited Contracts; Torch Agreements; Multiemployer ERISA Plans 55
(l) Unrestricted Subsidiaries; Maximum Non-Recourse Indebtedness 55
(m) EBITDA to Fixed Charges 56
(n) Indebtedness to Capitalization 57
ARTICLE VI - Intentionally Omitted 57
ARTICLE VII - Events of Default and Remedies 57
ii
Section 7.1. Events of Default 57
Section 7.2. Acceleration; Other Remedies 59
Section 7.3. Indemnity 60
Section 7.4. Bank Accounts; Offset 61
ARTICLE VIII - Administrative Agent 61
Section 8.1. Appointment and Authority 61
Section 8.2. Exculpation, Administrative Agent's Reliance, Etc. 61
Section 8.3. Lenders' Credit Decisions 62
Section 8.4. Indemnification 62
Section 8.5. Rights as Lender 63
Section 8.6. Sharing of Set-Offs and Other Payments 63
Section 8.7. Investments 64
Section 8.8. Benefit of Article VIII 64
Section 8.9. Resignation 64
ARTICLE IX - Miscellaneous 65
Section 9.1. Waivers and Amendments; Acknowledgements 65
Section 9.2. Survival of Agreements; Cumulative Nature 66
Section 9.3. Notices 67
Section 9.4. Joint and Several Liability; Parties in Interest 67
Section 9.5. Governing Law; Submission to Process 70
Section 9.6. Limitation on Interest 70
Section 9.7. Termination; Limited Survival 71
Section 9.8. Severability 71
Section 9.9. Counterparts 71
SECTION 9.10. WAIVER OF JURY TRIAL. 71
Section 9.11. Restatement 72
iii
Schedules and Exhibits:
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LENDER SCHEDULE
SCHEDULE 1 Disclosure Schedule
SCHEDULE 2 California Real Estate
SCHEDULE 3 List of Initial Engineering Reports
EXHIBIT A Promissory Note
EXHIBIT B Request for Advances
EXHIBIT C Rate Election
EXHIBIT D Opinion of Xxxxxx & Xxxxxx, L.L.P., counsel for Related Persons
EXHIBIT E Certificate Accompanying Financial Statements
EXHIBIT F Assignment and Assumption
iv
AMENDED AND RESTATED CREDIT AGREEMENT
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THIS AMENDED AND RESTATED CREDIT AGREEMENT is made as of February 13, 1998,
by and among Nuevo Energy Company, a Delaware corporation (herein called
"Borrower"), NationsBank of Texas, N.A., a national banking association (herein
called "Administrative Agent"), Xxxxxx Guaranty Trust Company of New York
(herein called "Documentation Agent"), and the Lenders referred to below.
RECITALS
WHEREAS, Borrower, Administrative Agent, Documentation Agent and Lenders
entered into that certain Credit Agreement dated as of April 1, 1996, to be
effective as of April 9, 1996 (the "Original Agreement"); and
WHEREAS, the parties desire to amend and restate the Original Agreement for
the purposes set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein the parties hereto do hereby (a) amend and restate the Original
Agreement so that it shall read in its entirety as follows and (b) agree as
follows:
ARTICLE I - Definitions and References
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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:
"1996 Indenture" means the Indenture dated as of April 1, 1996, effective
as of April 9, 1996, among Borrower, as issuer, certain Subsidiaries of
Borrower, as guarantors (such Subsidiaries being released as guarantors by a
Release and Termination of Subsidiary Guarantees dated February 2, 1998), and
State Street Bank and Trust Company, as Indenture Trustee, pursuant to which the
1996 Subordinated Notes were issued, as supplemented by that certain First
Supplemental Indenture dated as of December 23, 1996.
"1996 Subordinated Notes" means Borrower's 9 1/2% Senior Subordinated Notes
due April 1, 2006, issued by Borrower in the aggregate principal amount of
$160,000,000 under the 1996 Indenture.
"Additional Senior Indebtedness" means Indebtedness owing by any Related
Person, excluding (a) the Obligations, (b) Subordinated Indebtedness, (c)
Intercompany Indebtedness, (d) Indebtedness arising under Derivative Contracts,
(e) Indebtedness in respect of Permitted Production Payments, (f) Non-Recourse
Indebtedness, and (g) guaranties in respect of any of the foregoing.
"Adjusted Net Income" for any period means the consolidated net income of
Borrower and its Restricted Subsidiaries for such period, calculated after
excluding: (a) the after-tax effects
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of all write-ups or write-downs (such as Ceiling Test Adjustments), after the
date hereof, in the book value of assets as a result of the reevaluation
thereof, (b) the net income or loss of any Person (other than Borrower and the
Restricted Subsidiaries) in which Borrower or any Restricted Subsidiary has any
ownership interest, except to the extent that Borrower or a Restricted
Subsidiary has actually received cash during such period in respect of dividends
or distributions from such Person (whether such dividends or distributions
accrued during such period or an earlier period), and (c) any portion of such
consolidated net income which is attributable to production dedicated to
Permitted Production Payments.
"Adjusted Net Worth" means, at the time in question, that portion of the
consolidated stockholders' equity of Borrower and its Restricted Subsidiaries
which is attributable to Non-Redeemable Stock (excluding treasury stock), but
calculated after excluding: (a) the cumulative effects on retained earnings of
(i) the after-tax effects of all write-ups or write-downs (such as Ceiling Test
Adjustments) after December 31, 1995, in the book value of assets as a result of
the reevaluation thereof, (ii) the net income or loss after December 31, 1995,
of any Person (other than Borrower and the Restricted Subsidiaries) in which
Borrower or any Restricted Subsidiary has any ownership interest, except to the
extent that Borrower or a Restricted Subsidiary has actually received cash in
respect of dividends or distributions from such Person, and (iii) any portion of
consolidated net income after December 31, 1995, which is attributable to
production dedicated to Permitted Production Payments, and (b) the book value of
all Investments in Unrestricted Subsidiaries (provided that for the purposes of
this definition the book value of the California Real Estate, as reported on the
consolidated balance sheet of Borrower and all of its Subsidiaries, shall be
included in such calculation, regardless of whether the California Real Estate
is held by Borrower, a Restricted Subsidiary, or an Unrestricted Subsidiary).
"Administrative Agent" means NationsBank of Texas, N.A., as Administrative
Agent hereunder, and its successors in such capacity.
"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. A Person shall be
deemed to be "controlled by" any other Person if such other Person possesses,
directly or indirectly, power:
(a) to vote 20% or more of the securities (on a fully diluted basis)
having ordinary voting power for the election of directors or managing
general partners; or
(b) to direct or cause the direction of the management and policies
of such Person, whether by contract or otherwise.
For so long as the Torch Administrative Services Agreement (or any similar
agreement) is in effect, Torch and its Subsidiaries shall also be deemed
Affiliates of the Related Persons.
"Agreement" means this Amended and Restated Credit Agreement.
2
"Allowed Put" means any put agreement with respect to capital stock issued
by Borrower which obligates Borrower to repurchase such capital stock at an
exercise or strike price that Borrower views as favorable for the purpose of
reacquiring its stock; provided, that at the time of entering into such put
agreement, the repurchase by Borrower of the underlying capital stock at such
exercise or strike price would not be prohibited by Section 5.2(h) hereof.
"Approved Petroleum Engineers" means, in connection with any annual
Engineering Report to be furnished under Section 5.1(b), any one or more of the
following independent petroleum engineering firms:
Xxxxxx & Xxxxx, Ltd.
Netherland, Sewell, & Associates, Inc.
Xxxxx Xxxxx Company,
X. X. Xxxxxxxx and Associates, Inc.,
or any other independent petroleum engineers chosen by Borrower and acceptable
to Majority Lenders. D.O.R. Engineering Inc. shall be deemed acceptable to
Majority Lenders with respect to Borrower's properties listed on Schedule 3
hereto as having been reviewed by such firm. In addition, if Borrower furnishes
such Engineering Report in the form of multiple reports covering different
Borrowing Base Assets and if one or more of such multiple reports is prepared by
other independent petroleum engineering firms or by Borrower's or Torch's
internal reserve engineers, such other firms or internal reserve engineers shall
also be considered to be "Approved Petroleum Engineers" to the extent that the
Borrowing Base Assets which are covered by their reports do not, in the
aggregate, have present values as shown in such reports which exceed ten percent
of the aggregate present values of all Borrowing Base Assets covered by such
Engineering Report taken as a whole.
"Available Borrowing Base" means, at the particular time in question, the
lesser of (a) the Borrowing Base then in effect minus the aggregate amount of
Additional Senior Indebtedness outstanding at such time, and (b) the Maximum
Loan Amount.
"BBB/Baa2 Debt Rating", and Borrower's maintenance of a "BBB/Baa2 Debt
Rating", means that at the time in question:
(a) any two Rating Agencies are then giving the following ratings to
Borrower's non-credit enhanced, senior subordinated long-term debt
securities:
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(i) a rating of BB+ (or its then equivalent) or higher by S&P, or
(ii) a rating of Ba1 (or its then equivalent) or higher by
Xxxxx'x, or
(iii) a rating of BB+ (or its then equivalent) or higher by Duff
& Xxxxxx; or
(b) if any Rating Agencies are rating any of Borrower's non-credit
enhanced, senior unsecured long-term debt securities which are outstanding
at such time, any two Rating Agencies are then giving the following ratings
to such senior unsecured long-term debt securities:
(i) a rating of BBB (or its then equivalent) or higher by S&P, or
(ii) a rating of Baa2 (or its then equivalent) or higher by
Xxxxx'x, or
(iii) a rating of BBB (or its then equivalent) or higher by Duff
& Xxxxxx.
"BB-/Ba3 Debt Rating", and Borrower's maintenance of a "BB-/Ba3 Debt
Rating", means that at the time in question:
(a) any two Rating Agencies are then giving the following ratings to
Borrower's non-credit enhanced, senior subordinated long-term debt
securities:
(i) a rating of B (or its then equivalent) or higher by S&P, or
(ii) a rating of B2 (or its then equivalent) or higher by
Xxxxx'x, or
(iii) a rating of B (or its then equivalent) or higher by Duff &
Xxxxxx; or
(b) if any Rating Agencies are rating any of Borrower's non-credit
enhanced, senior unsecured long-term debt securities which are outstanding
at such time, any two Rating Agencies are then giving the following ratings
to such senior unsecured long-term debt securities:
(i) a rating of BB- (or its then equivalent) or higher by S&P, or
(ii) a rating of Ba3 (or its then equivalent) or higher by
Xxxxx'x, or
(iii) a rating of BB- (or its then equivalent) or higher by Duff
& Xxxxxx.
"Base Rate" means, for any day, the then applicable Base Rate Spread plus
the higher of (a) the Federal Funds Rate for such day plus one-half percent
(0.5%), and (b) Administrative Agent's Prime Rate as in effect on such day. As
used in this paragraph, Administrative Agent's "Prime Rate" means the rate of
interest established by Administrative Agent from time to time as its "prime
rate". Such rate is set by Administrative Agent as a general reference rate of
interest, taking into account such factors as it may deem appropriate, it being
understood that many of
4
Administrative Agent's commercial or other loans are priced in relation to such
rate, that it is not necessarily the lowest or the best rate actually charged to
any customer, that it may not correspond with further increases or decreases in
interest rates charged by other lenders or market rates in general and that
Administrative Agent may make various commercial or other loans at rates of
interest having no relationship to such rate. If Administrative Agent's Prime
Rate, the Federal Funds Rate, or the applicable Base Rate Spread changes after
the date hereof the Base Rate shall be automatically increased or decreased, as
the case may be, without notice to Borrower from time to time as of the
effective time of each such change. The Base Rate shall in no event, however,
exceed the Highest Lawful Rate.
"Base Rate Portion" means that portion of the unpaid principal balance of
any Loan which is not made up of Fixed Rate Portions.
"Base Rate Spread" means zero percent (0%) per annum.
"Borrower" means Nuevo Energy Company, a Delaware corporation.
"Borrowing Base" means, at the particular time in question, either the
amount provided for in Section 2.10, as increased as provided in such section,
or the amount determined by Administrative Agent and Lenders in accordance with
the provisions of Section 2.11(a), (c) or (d), as reduced by Borrower pursuant
to Section 2.11(b).
"Borrowing Base Assets" means, at the time in question, all material Oil
and Gas Properties then owned by any Related Person which are located in or
offshore of the United States and which have proved oil or gas reserves
attributable thereto, excluding from time to time any of the foregoing which
were not included among the assets and properties addressed in the Engineering
Report then most recently given under Section 5.2(b)(iv) (or, prior to receipt
of the first such Engineering Report, addressed in the Initial Engineering
Report).
"Borrowing Base Asset Sale" means any transaction of any kind which results
in a Related Person (other than a Restricted Subsidiary which is obligated in
any way for Non-Recourse Indebtedness) ceasing to be the direct owner of
Borrowing Base Assets. "Borrowing Base Asset Sales" include all sales, leases,
exchanges, dispositions and other transfers of Borrowing Base Assets, whether
made to Unrestricted Subsidiaries or to any other Person (other than a Related
Person which is not obligated in any way for Non-Recourse Indebtedness),
including sales of Permitted Production Payments and Investments in Unrestricted
Subsidiaries or any other such Person by means of transfers of Borrowing Base
Assets. "Borrowing Base Asset Sales" also include any designations which result
in Restricted Subsidiaries which own Borrowing Base Assets becoming Unrestricted
Subsidiaries and any sales or other transfers of Equity Interests (other than
Permitted Preferred Trust Securities) in any such Restricted Subsidiaries.
Sales of hydrocarbons shall not, however, be included in Borrowing Base Asset
Sales if sold after production in the ordinary course of business. The "amount"
of any Borrowing Base Asset Sale shall be the fair market value of the Borrowing
Base Assets transferred, which shall be deemed to be the gross cash proceeds
received in any all-cash transaction with third parties which are not Affiliates
of Borrower and which shall otherwise be determined in good faith by Borrower's
Board of Directors.
5
"Borrowing Base Deficiency" has the meaning given it in Section 2.8(b).
"Business Day" means a day, other than a Saturday or Sunday, on which
commercial banks are open for business with the public in Dallas, Texas and New
York, New York. 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, in the reasonable judgment of Administrative Agent, significant
transactions in dollars are carried out in the interbank eurocurrency market in
London, England.
"California Real Estate" means the fee simple interests of Borrower in real
property located in the State of California acquired from the Unocal companies,
excluding the mineral estate in all such fee simple interests, as described on
Schedule 2 attached hereto.
"Cash Equivalents" means any of the following:
(a) any evidence of indebtedness with a maturity of 180 days or less
issued or directly and fully guaranteed or insured by the United States of
America or any agency or instrumentality thereof (provided that the full
faith and credit of the United States of America is pledged in support
thereof);
(b) demand and time deposits and certificates of deposit or
acceptances with a maturity of 180 days or less of any financial
institution that is a member of the Federal Reserve System having combined
capital and surplus and undivided profits of not less than $500,000,000;
(c) commercial paper with a maturity of 180 days or less issued by a
corporation that is not an Affiliate of Borrower and is organized under the
laws of any state of the United States or the District of Columbia and
rated at least A-1 by S&P or at least P-1 by Xxxxx'x;
(d) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in subparagraph (a) above
entered into with any commercial bank meeting the specifications of
subparagraph (b) above;
(e) overnight bank deposits and bankers' acceptances at any commercial
bank meeting the qualifications specified in subparagraph (b) above;
(f) deposits available for withdrawal on demand with any commercial
bank not meeting the qualifications specified in subparagraph (b) above but
which is organized under the laws of any country in which any Related
Person maintains an office or is engaged in the oil and gas business,
provided that (i) all such deposits are required to be made in such
accounts in the ordinary course of business, (ii) such deposits do not at
any one time exceed $5,000,000 in the aggregate, and (iii) no funds so
deposited remain on deposit in such bank for more than 30 days; and
6
(g) investments in money market funds substantially all of whose
assets comprise securities of the types and maturities described in
subparagraphs (a) through (e) above.
"Ceiling Test Adjustment" means any recognition by Borrower and its
Restricted Subsidiaries, in accordance with Borrower's full cost accounting
election, of a charge for consolidated accumulated depletion, depreciation and
amortization expense due to a valuation adjustment which reduces the net book
value of Borrower's and its Restricted Subsidiaries' consolidated Oil and Gas
Properties to the net present value of their consolidated oil and gas reserves.
"Change of Control" has the meaning given to such term in the 1996
Indenture as originally executed, without giving regard to any amendments made
thereto.
"Commitment Period" means the period from and including the date hereof,
until and including April 1, 2003 (or, if earlier, the day on which the Notes
first become due and payable in full).
"Consolidated Funded Indebtedness" means, at the time in question, all
consolidated Indebtedness of Borrower and its Restricted Subsidiaries (whether
current or long term) of the kinds specified in subsection (a), (b), (c), (f),
(g), (i)(2) or (k) of the definition herein of "Indebtedness"; provided, that
"Consolidated Funded Indebtedness" shall not include (i) accrued interest which
is not past due, or (ii) Indebtedness in respect of Permitted Production
Payments.
"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.
"Derivative Contracts" means all futures contracts, forward contracts,
swap, cap or collar contracts, option contracts, hedging contracts, other
derivative contracts, or similar agreements. Allowed Puts do not constitute
Derivative Contracts.
"Determination Date" has the meaning given it in Section 2.11.
"Disclosure Report" means any notice given by Borrower under Section
5.1(d), any financial statements furnished by Borrower under Section 5.1(b)(i)
or (ii), any certificate given by Borrower's chief financial officer under
Section 5.1(b)(ii), or any other notice given by Borrower to Administrative
Agent or Lenders which expressly states that it is a Disclosure Report under
this Agreement.
"Disclosure Schedule" means Schedule 1 hereto.
"Documentation Agent" means Xxxxxx Guaranty Trust Company of New York.
"Duff & Xxxxxx" means Duff & Xxxxxx Credit Rating Co., or its successor at
the time in question.
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"Eligible Transferee" means a Person which either:
(a) is primarily engaged in the business of commercial banking and is (i) a
Lender, (ii) a Subsidiary of a Lender, (iii) a Subsidiary of a Person of which a
Lender is a Subsidiary, or (iv) a Person of which a Lender is a Subsidiary, or
(b) is consented to as an Eligible Transferee by both Borrower and
Administrative Agent, which consent will not be unreasonably withheld (provided
that no consent of Borrower shall be required during the continuance of any
Event of Default described in Section 7.1(a) or (b)), and represents that it is
either (i) a commercial bank organized under the laws of the United States, or
any state thereof, having a combined capital and surplus of at least
$200,000,000, or (ii) a commercial bank organized under the laws of any other
country which is a member of the Organization for Economic Development, or a
political subdivision of any such country, having a combined capital and surplus
of at least $200,000,000, provided that such bank is acting through a branch or
agency located in the United States and further provided that Borrower is not
required to pay withholding taxes on interest or principal owed to such bank.
"Engineering Report" means the Initial Engineering Report and each
engineering report (or set of concurrently delivered engineering reports)
delivered pursuant to Section 5.1(b)(iv).
"Environmental Laws" means any and all 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.
"Equity Interests" means, with respect to any Person: (a) any stock, shares
or other equity interests in such Person, (b) any other participations or rights
of any kind in the equity interests (however designated) in such Person, and (c)
any rights (other than debt securities convertible into or exchangeable for any
equity interest), warrants or options exercisable for, exchangeable for or
convertible into any such stock, shares, other equity interests, participations
or rights. For purposes of this Agreement, Allowed Puts do not constitute
Equity Interests. Permitted Preferred Trust Securities constitute undivided
interests of indebtedness but for purposes of this Agreement shall constitute
Equity Interests.
"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 employee pension benefit plan subject to Title IV of
ERISA maintained by any Related Person or any Affiliate thereof for which any
Related Person has a fixed or contingent liability.
8
"Eurodollar Rate" means, with respect to each particular Fixed Rate Portion
and the related Interest Period, the rate per annum (rounded upwards, if not an
even 1/16th or 1/100th of 1%, to the nearest 1/100th of 1%) reported, on the
date two Business Days prior to the first day of such Interest Period, on
Telerate Access Service Page 3750 (British Bankers Association Settlement Rate)
as the London Interbank Offered Rate for U.S. dollar deposits having a term
comparable to such Interest Period and in an amount of $1,000,000 or more
(provided that, if such Page shall cease to be publicly available or if the
information contained on such Page, in Administrative Agent's reasonable
judgment, shall cease to accurately reflect such London Interbank Offered Rate
or if such Page does not report information for the term of the Interest Period
selected by Borrower, such rate shall be that reported by any publicly available
source of similar market data selected by Administrative Agent, or that
interpolated by Agent from such market data, which, in Administrative Agent's
reasonable judgment, accurately reflects such London Interbank Offered Rate).
"Evaluation Date" means each of the following:
(a) March 1 of each year, beginning March 1, 1998;
(b) at the option of Majority Lenders, any date specified by Majority
Lenders as of which the Borrowing Base shall be redetermined, provided that
Majority Lenders shall not be entitled to specify any such optional
redetermination more than once during any calendar year;
(c) at the option of Borrower, any date specified by Borrower as of
which the Borrowing Base shall be redetermined, provided that Borrower
shall not be entitled to specify any such optional redetermination more
than once during any calendar year; and
(d) whenever either of the events specified in Section 2.11(c) occurs
and Majority Lenders elect, as contemplated in clause (1) of such
subsection, to designate an additional Evaluation Date, any date specified
by Majority Lenders as of which the Borrowing Base shall be redetermined.
"Event of Default" has the meaning given it in Section 7.1.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day; provided that (a) if the day for which such rate is to be determined is not
a Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the next
succeeding Business Day, and (b) if such rate is not so published for any day,
the Federal Funds Rate for such day shall be such rate as reported by any
publicly available source of similar market data selected by Administrative
Agent that, in Administrative Agent's reasonable judgment, accurately reflects
such rate on overnight Federal funds transactions.
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"Fee Letter" means that certain letter agreement of even date herewith
among Borrower and Agent.
"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 Eurodollar Rate, the rate per annum calculated by Administrative
Agent, determined on a daily basis pursuant to the following formula:
Fixed Rate = Eurodollar Rate + Fixed Rate Spread
The Fixed Rate for any Fixed Rate Portion shall change whenever the Fixed Rate
Spread changes, without notice to Borrower. The Fixed Rate shall in no event,
however, exceed the Highest Lawful Rate.
"Fixed Rate Portion" means any portion of the unpaid principal balance of a
Loan which Borrower designates as such in a Rate Election.
"Fixed Rate Spread" means, at the time in question, the per annum
percentage set forth in the first column of the following table opposite the
range set forth in the second column of such table in which range is included
the quotient of (a) the sum of the Obligations and Additional Senior
Indebtedness outstanding at such time (excluding accrued interest which is not
past due), divided by (b) the Borrowing Base in effect at such time:
Per Annum Fixed Rate Spread Range of Quotients
--------------------------- ------------------
0.3% less than 25%
0.375% 25% or more but less than 50%
0.5% 50% or more but less than 75%
0.625% 75% or more but less than 90%
0.875% 90% or more
provided that, whenever Borrower is not maintaining a BB-/Ba3 Debt Rating, the
applicable Fixed Rate Spread as set out above shall be increased by one-quarter
percent (0.25%) per annum.
"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
Subsidiaries (or, where specified, Borrower and its Restricted 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 audited
Initial Financial Statements. If any change in any accounting principle or
practice is required by the Financial Accounting Standards Board (or any such
successor) in order for such principle or practice to continue as a generally
accepted accounting principle or practice, all reports and
10
financial statements required hereunder may be prepared in accordance with such
change, but all calculations and determinations to be made hereunder may be made
in accordance with such change only if Borrower and Majority Lenders agree to
such change (and to any related modifications of the terms hereof).
A "guaranty" by a Person means any direct or indirect guaranty by such
Person of any Liability of any other Person or any agreement by such Person to
purchase or acquire, or to assure the payment or performance of, or to otherwise
protect or insure a creditor against loss in respect of, any Liability of any
other Person (such as obligations under working capital maintenance agreements,
agreements to keep-well or cover losses, or agreements to purchase any
Liability, assets, goods, securities or services), but excluding indorsements in
the ordinary course of business of negotiable instruments in the course of
collection. When used as a verb, "guarantee" has a corresponding meaning.
"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, with respect to each Lender, the maximum
nonusurious rate of interest that such Lender is permitted under applicable law
to contract for, take, charge, or receive with respect to its Loan. All
determinations herein of the Highest Lawful Rate, or of any interest rate
determined by reference to the Highest Lawful Rate, shall be made separately for
each Lender as appropriate to assure that the Loan Documents are not construed
to obligate any Person to pay interest to any Lender at a rate in excess of the
Highest Lawful Rate applicable to such Lender.
"Indebtedness" of any Person means any Liability in any of the following
categories:
(a) any Liability for borrowed money,
(b) any Liability constituting an obligation to pay the deferred
purchase price of property or services,
(c) any Liability evidenced by a bond, debenture, note or similar
instrument,
(d) any Liability which (i) would under GAAP be shown on such
Person's balance sheet as a liability, and (ii) is payable more than one
year from the date of creation thereof (other than reserves for taxes and
reserves for contingent obligations),
(e) any Liability arising under Derivative Contracts,
(f) any Liability under capitalized leases,
(g) any Liability arising under conditional sales or other title
retention agreements,
11
(h) any Liability owing under any guaranty given by such Person of
Indebtedness owing by any other Person,
(i) any Liability consisting of (1) an obligation (for example, a
repurchase agreement) to purchase securities or other property, if such
Liability arises out of or in connection with the sale of the same or
similar securities or property, or (2) an obligation under any agreement to
redeem or purchase any stock or other equity security issued by such Person
or any of its Affiliates or to exchange such stock or other equity security
for, or convert such stock or other equity security to, any debt security
issued by such Person or any of its Affiliates,
(j) any Liability with respect to letters of credit or applications
or reimbursement agreements therefor, or
(k) any Liability with respect to obligations to deliver goods or
services in consideration of advance payments therefor, including any
Liability with respect to payments received in consideration of oil, gas,
or other minerals yet to be acquired or produced at the time of payment
(such as obligations under contracts to deliver oil or gas in return for
payments already received and production payments created by such Person or
for the creation of which such Person directly or indirectly received
payment);
provided, however, that the "Indebtedness" of any Person shall not include any
Liability (1) under Allowed Puts or Permitted Preferred Trust Securities or any
Permitted Subordinated Trust Indebtedness, (2) for gas balancing that was
incurred by such Person in the ordinary course of business or (3) that was
incurred by such Person on ordinary (or better than ordinary) trade terms to
vendors, suppliers, or other Persons providing goods and services for use by
such Person in the ordinary course of its business.
"Initial Engineering Report" means, collectively, the engineering reports
listed on Schedule 3 attached hereto concerning various Oil and Gas Properties
of the Related Persons.
"Initial Financial Statements" means the audited annual Consolidated
financial statements of Borrower as of December 31, 1996, copies of which
financial statements have heretofore been delivered to Administrative Agent and
each Lender.
"Intercompany Indebtedness" means Indebtedness owed by any Related Person
to any other Related Person.
"Interest Period" means, with respect to each particular Fixed Rate Portion
of a Loan, a period of 1, 2, 3 or 6 months (or any other period which is 15 days
or longer, shorter than six months, and acceptable to Administrative Agent), 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, if
such Interest Period is denominated in months, ending on but not including the
same day of the month as the day on which it began (e.g., a 2-month period
beginning on the third day of January shall end on but not include the third day
of the following March), provided that each Interest Period which would
otherwise end on a day which is not a
12
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).
No Interest Period may be elected which would extend past the date on which the
associated Note is due and payable in full.
"Investment" means any direct or indirect investment in any Person,
including (a) any purchase or other acquisition of Equity Interests in or
Indebtedness owing by any Person, (b) any other loan, advance, extension of
credit or capital contribution to any Person, and (c) any guarantee of any
Liabilities of any Person (other than guaranties of the type referred to in
clause (c) of the definition of Permitted Subordinated Trust Indebtedness), in
each case regardless of whether the consideration for such investment, or the
means by which such investment is made, consists of cash, the transfer of
property, the rendering of services, the issuance or exchange of Equity
Interests or other securities, the assumption of liabilities, the payment of
joint and several liabilities by one member of a jointly liable group without
obtaining appropriate reimbursement from any other member of the group (e.g.,
Borrower's payment of jointly owed taxes or ERISA obligations on behalf of any
Unrestricted Subsidiary), or otherwise. For the purposes of this Agreement, the
amount of any Investment made in property shall be the greater of (i) the fair
market value of such property (as determined in good faith by the board of
directors (or equivalent governing body) of the Person making such Investment)
and (ii) the net book value thereof on the books of such Person, in each case
determined as of the date on which such Investment is made. For the purposes of
this Agreement, whenever Borrower designates any of its Subsidiaries as an
Unrestricted Subsidiary, Borrower shall be deemed to have made an Investment in
an amount equal to the greater of (1) the fair market value of Borrower's
interests in such Subsidiary, as determined in good faith by Borrower's Board of
Directors and evidenced by a resolution of such board, and (2) Borrower's
shareholder's equity in such Subsidiary, in each case determined as of the date
on which such designation is made.
"Late Payment Rate" means, at the time in question, two percent (2.0%) 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 two percent
(2.0%) per annum plus the related Fixed Rate. The Late Payment Rate shall in no
event, however, exceed the Highest Lawful Rate.
"Lenders" means each signatory hereto (other than Borrower), including
NationsBank of Texas, N.A. in its capacity as a lender hereunder rather than as
Administrative Agent and Xxxxxx Guaranty Trust Company of New York in its
capacity as a lender hereunder rather than as Documentation Agent, and the
successors and permitted assigns of each such signatory as holder of a Note.
Each Lender may, in its discretion, fund all or any portion of its Loan through
any of its offices, branches, or Affiliates, and in such event references herein
to such Lender shall include such offices, branches or Affiliates.
"Liability" means, as to any Person, any indebtedness, liability or
obligation of such Person, whether matured or unmatured, liquidated or
unliquidated, primary or secondary, direct or indirect, absolute, fixed or
contingent, and whether or not required to be set forth on a balance sheet
prepared pursuant to GAAP.
13
"Lien" means, with respect to any property or assets, any right or interest
therein of a creditor to secure any Liability owed to such creditor or any other
arrangement with such creditor which provides for the payment of such Liability
out of such property or assets or which allows such creditor to have such
Liability 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. "Lien" also means any filed financing
statement, any registration of a pledge (such as with an issuer of
uncertificated securities), or any other arrangement or action which would serve
to perfect a Lien described in the preceding sentence, regardless of whether
such financing statement is filed, such registration is made, or such
arrangement or action is undertaken before or after such Lien exists. "Liens"
do not include survey exceptions, easements, rights-of-way, zoning restrictions,
and other minor defects in title which do not secure or provide for the payment
of any Liability and which do not interfere in any material respect with the
ordinary conduct of the business of the owner of the property subject thereto.
"Loan" has the meaning given it in Section 2.1.
"Loan Documents" means this Agreement, the Notes, the Fee Letter, any
mortgages or other security documents at any time given in connection with a
Borrowing Base Deficiency, and all other agreements, certificates, documents,
instruments and writings at any time delivered in connection herewith or
therewith (exclusive of term sheets, commitment letters, correspondence and
similar documents used in the negotiation hereof, except to the extent the same
(a) contain information provided by any Related Person about Borrower or its
Affiliates, properties, business or prospects or (b) are expressly referred to
in the Fee Letter).
"Majority Lenders" means, at any time in question, Lenders then
collectively having Percentage Shares totaling at least sixty-six and two-thirds
percent (66 2/3%).
"Material Adverse Effect" means a material adverse effect on the business,
condition (financial or otherwise), operations, or properties of Borrower and
its Subsidiaries, taken as a whole, or on the ability of Borrower to perform its
payment obligations or other material obligations under any of the Loan
Documents; provided, Lenders hereby acknowledge and agree that any industry-wide
decline in oil and gas prices shall not in itself constitute a "Material Adverse
Effect" hereunder.
"Maximum Loan Amount" means the amount of $400,000,000, provided that
Borrower may from time to time, by notice to Administrative Agent, permanently
reduce the Maximum Loan Amount as may be required under the 1996 Indenture in
connection with "Asset Sales" (as defined therein) or as may be required under
similar provisions of indentures or agreements governing Additional Senior
Indebtedness or Subordinated Indebtedness which is permitted hereunder.
"Moody's" means Xxxxx'x Investors Service, Inc., or its successor at the
time in question.
14
"Non-Recourse Indebtedness" means:
(a) Indebtedness of an Unrestricted Subsidiary which is not a
Liability, in whole or part, of any Related Person and which is not secured
by any Lien upon any property or assets of any Related Person, provided
that no such Indebtedness of an Unrestricted Subsidiary shall be considered
"Non-Recourse Indebtedness" if any default with respect to such
Indebtedness would allow or require any Indebtedness of $10,000,000 or more
in aggregate amount which is owed by one or more of the Related Persons to
be accelerated or otherwise made payable in advance of its stated maturity,
and
(b) Indebtedness of a Restricted Subsidiary which is not a Liability,
in whole or part, of any other Related Person and which is not secured by
any Lien upon any property or assets of any other Related Person, provided
that Borrower must designate such Indebtedness as "Non-Recourse
Indebtedness" to Administrative Agent prior to the incurrence thereof, and
provided further that no Indebtedness of a Restricted Subsidiary shall be
considered "Non-Recourse Indebtedness" if such Restricted Subsidiary owns
any Borrowing Base Assets at the time of such incurrence or at any time
when such Indebtedness is outstanding or if any other Related Person owes
Intercompany Indebtedness to such Restricted Subsidiary at any such time.
For the purposes hereof, any Restricted Subsidiary shall be deemed "obligated"
for Non-Recourse Indebtedness if it has any Liability to pay such Non-Recourse
Indebtedness, or if it has in any way guaranteed such Non-Recourse Indebtedness,
or if any of its assets or properties are subject to any Lien securing such Non-
Recourse Indebtedness.
"Non-Redeemable Stock" means common or preferred stock issued by Borrower,
provided that no Related Person has any obligation to redeem or purchase such
stock or to exchange such stock for, or convert such stock to, any other
security (other than Non-Redeemable Common Stock), whether such obligation
arises pursuant to the terms of such stock or of any agreement relating thereto
or otherwise and whether or not such obligation exists in all circumstances or
only upon the occurrence of a particular event or condition or upon the passage
of time or otherwise. "Non-Redeemable Common Stock" means Non-Redeemable Stock
that is common stock issued by Borrower.
"Note" has the meaning given it in Section 2.1.
"Nuevo Trust" means Nuevo Financing I, a business trust formed under the
laws of the State of Delaware.
"Obligations" means all Liabilities from time to time owing by any of the
Related Persons to Administrative Agent or any Lender under or pursuant to any
of the Loan Documents. "Obligation" means any part of the Obligations.
"Oil and Gas Business" means the businesses of exploring for, developing,
acquiring, producing, gathering, processing, marketing, storing, or transporting
oil, gas and related hydrocarbons.
15
"Oil and Gas Properties" means operating and non-operating interests
(whether held under leases, in fee, or otherwise, and including production
payments and royalties) in oil and gas xxxxx, production facilities, reserves,
development acreage, exploratory acreage, or gathering, processing, storage or
transportation facilities.
"Percentage Share" means, with respect to any Lender: (a) when used in
Sections 2.1 or 2.5, in any Request for Advances or when no Loans are
outstanding hereunder, the percentage set forth opposite such Lender's name on
the signature pages of this Agreement or, after any assignment under Section
9.4(c), on the schedule then most recently delivered by Administrative Agent
under Section 9.4(c)(ii), and (b) when used otherwise, the percentage equal to
the unpaid principal balance of such Lender's Loan at the time in question
divided by the aggregate unpaid principal balance of all Loans at such time.
"Permitted Liens" means:
(a) Liens which secure Obligations only;
(b) Liens described on the Disclosure Schedule which secure
Indebtedness outstanding as of the date hereof and any renewals, extensions
or refinancings (but not increases) of such Indebtedness;
(c) Liens for taxes, assessments and governmental charges or claims
which are either not delinquent or are being contested in good faith by
appropriate proceedings and as to which the Related Persons shall have set
aside on their books such reserves as may be required pursuant to GAAP;
(d) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen and other Liens imposed by law
incurred in the ordinary course of business for claims which are either not
delinquent or are being contested in good faith by appropriate proceedings
and as to which the Related Persons shall have set aside on their books
such reserves as may be required pursuant to GAAP;
(e) Liens on Cash Equivalents, deposits of cash or Cash Equivalents,
and statutory Liens on any assets, in each case created or made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security, or to secure the
payment or performance of tenders, statutory or regulatory obligations,
surety and appeal bonds, bids, government contracts and leases, performance
and return of money bonds and other similar obligations (exclusive of
obligations for the payment of Indebtedness), including lessee or operator
obligations under statutes, governmental regulations or instruments related
to the ownership, exploration and production of oil, gas and minerals on
private, state, federal or foreign lands or waters);
(f) judgment Liens not giving rise to an Event of Default or a
Default under Section 5.2, so long as any appropriate legal proceedings
which may have been duly
16
initiated for the review of such judgment shall not have been finally
terminated or the period within which such proceeding may be initiated
shall not have expired;
(g) Liens which (1) arise in the ordinary course of business under
operating agreements, joint venture agreements, oil and gas partnership
agreements, oil and gas leases, farm-out agreements, division orders,
contracts for the sale, transportation or exchange of oil and natural gas,
unitization and pooling declarations and agreements, area of mutual
interest agreements and other agreements which are customary in the oil and
gas business, and (2) are for claims which are either not delinquent or are
being contested in good faith by appropriate proceedings and as to which
the Related Persons shall have set aside on their books such reserves as
may be required pursuant to GAAP;
(h) Liens reserved in oil and gas mineral leases, or created by
statute, to secure royalty, bonus or rental payments and compliance with
the terms of such leases;
(i) Permitted Production Payments, and liens on properties subject
thereto to secure performance obligations in connection therewith;
(j) Liens on cash or Cash Equivalents to secure Indebtedness pursuant
to Derivative Contracts which are permitted under Section 5.2(g), provided
that the aggregate amount of cash and Cash Equivalents subject to such
Liens does not at any time exceed the sum of (i) $20,000,000 plus (ii) the
amount, if any, by which (1) five percent (5%) of the Borrowing Base as in
effect at such time, exceeds (2) all Permitted Priority Senior Indebtedness
(other than accrued interest which is not past due) which is outstanding at
such time;
(k) Liens arising solely by virtue of any statutory or common law
provision relating to banker's liens, rights of set-off or similar rights
and remedies and burdening only deposit accounts or other funds maintained
with a creditor depository institution; provided that (i) no such deposit
account is a dedicated cash collateral account or is subject to
restrictions against access by the depositor in excess of those set forth
by regulations promulgated by the Board of Governors of the Federal Reserve
System, and (ii) no such deposit account is intended by Borrower or any
other Related Person to provide collateral to the depository institution;
(l) Liens on properties of any Related Person to secure Indebtedness
which, both at the time such Indebtedness is created or otherwise incurred
and at the time such Liens are created, is Permitted Priority Senior
Indebtedness; and
(m) Liens on properties of any Restricted Subsidiary (provided such
Restricted Subsidiary does not own any Borrowing Base Assets) to secure
Non-Recourse Indebtedness owing by such Restricted Subsidiary that is
incurred in compliance with Section 5.2(a)(viii).
17
"Permitted Preferred Trust Securities" means (i) the TECONS and (ii) any
other securities made up of trust participation interests, or of limited
partnership interests, issued by a Subsidiary of Borrower, provided that:
(a) the issuer of such securities has no assets other than Permitted
Subordinated Trust Indebtedness owing to it by Borrower;
(b) payments upon such securities can be made only out of funds received in
payment of such Permitted Subordinated Trust Indebtedness; and
(c) all payments upon such securities can in all circumstances, at the
election of Borrower (acting either directly or through such issuer), be
deferred for the greater of (i) one or more payment periods, (ii) a period
expiring not earlier than the day after the last day of the Commitment Period in
effect at the time of issuance of such securities and (iii) a period of not less
than twelve months.
"Permitted Priority Senior Indebtedness" means Additional Senior
Indebtedness in either of the following categories:
(a) Additional Senior Indebtedness owing by Borrower which is secured
by Liens, and
(b) Additional Senior Indebtedness owing by any Restricted
Subsidiary, whether or not secured by Liens,
which is incurred or created after the date hereof and which, at the time such
Additional Senior Indebtedness is created or otherwise incurred, does not cause
the sum of such Additional Senior Indebtedness plus the aggregate outstanding
amount of all Permitted Priority Senior Indebtedness previously created or
incurred (excluding accrued interest which is not past due) to exceed five
percent (5%) of the Borrowing Base as in effect at such time.
"Permitted Production Payment" means any production payment burdening the
interests of any Related Person in any Oil and Gas Property, provided that, with
respect to any production payment burdening any interests of any Related Person
in Oil and Gas Properties on the date of this Agreement, such production payment
is listed on the Disclosure Schedule, and, with respect to any production
payment hereafter becoming a burden on any interest of any Related Person in any
Oil and Gas Property, no Related Person warrants, guarantees or otherwise
promises to any Person that:
(a) the reserves attributable to such production payment or such Oil
and Gas Property exist in any specified amounts, or in amounts sufficient
to discharge such production payment or to provide the owner or purchaser
thereof with any specified or minimum return on its investment, or
(b) production from such reserves will occur at any specified times or
in any specified amounts, or at times or in amounts sufficient to discharge
such production
18
payment or to provide the owner or purchaser thereof with any specified or
minimum return on its investment, or
(c) such production will be purchased (whether by any Related Person
or any other Person) at any specified price or prices other than a
specified, floating index price, or that the proceeds from such production
(either alone or in combination with Derivative Contracts or otherwise)
will be sufficient to discharge such production payment or to provide the
owner or purchaser thereof with any specified or minimum return on its
investment.
The requirements in the foregoing subsections (a), (b) and (c) shall not be
construed to prohibit (i) representations or warranties by any Related Person to
the purchaser of any Permitted Production Payment that the information and data
given to such purchaser is true and correct in all material respects, or (ii)
provisions in the documents governing any Permitted Production Payment which
provide for increases or decreases in the future production (or proceeds of
production) subject thereto as a result of actual production, or subsequent
reserve estimates, being different from anticipated amounts.
"Permitted Subordinated Trust Indebtedness" means (a) the TECON Debentures,
(b) any other promissory notes or debentures issued by Borrower to any issuer of
Permitted Preferred Trust Securities, provided that such notes or debentures (1)
are subordinated to the Obligations upon substantially similar terms as the
TECON Debentures, (2) do not require any principal payments to be made until
more than one year after the last day of the Commitment Period in effect at the
time of issuance of such notes or debentures, and (3) provide that all payments
upon such notes or debentures can in all circumstances, at the election of
Borrower be deferred for the greater of (i) one or more payment periods, (ii) a
period expiring not earlier than the day after the last day of the Commitment
Period in effect at the time of issuance of such notes or debentures, and (iii)
a period of not less than twelve months, and (c) any guaranty by Borrower that
the issuer of such Permitted Preferred Trust Securities will make required
distributions thereon to the extent it has funds available therefor, provided
that such guaranty is subordinated to the Obligations upon substantially similar
terms as the TECON Guaranty.
"Person" means an individual, corporation, partnership, limited liability
company, 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.
"Rate Election" has the meaning given it in Section 2.4.
"Rating Agency" means any of S&P, Moody's, and Xxxx & Xxxxxx.
"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 any of Borrower and the Restricted Subsidiaries.
19
"Request for Advances" means a written or telephonic request, or a written
confirmation, made by Borrower which meets the requirements of Section 2.2.
"Reserve Requirement" means, on any day with respect to each particular
Fixed Rate Portion in a Tranche, the maximum reserve requirement, as determined
by Administrative Agent (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 under Regulation D with respect
to "Eurocurrency liabilities" (as such term is defined in Regulation D).
"Restricted Investment" means any Investment in any Person made after the
date hereof by any Related Person other than:
(a) Investments in Cash Equivalents.
(b) 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.
(c) normal and prudent extensions of credit (not to exceed $200,000
at any time outstanding) to employees for travel advances or other purposes
which assist such employees to carry out the businesses of the Related
Persons.
(d) indorsements of negotiable instruments and documents in the
ordinary course of business.
(e) Investments pursuant to Derivative Contracts which are permitted
under Section 5.2(g).
(f) Investments in Borrower.
(g) Investments in any Person which is a Restricted Subsidiary or
which thereby becomes a Restricted Subsidiary, provided that no Event of
Default, and no Default under Section 5.2, exists immediately after such
Investment is made.
(h) Investments in stock, obligations or securities received in
settlement of debts owing to a Related Person as a result of bankruptcy or
insolvency proceedings or upon the foreclosure, perfection or enforcement
of any Lien in favor of a Related Person, in each case as to debts owing to
such Related Person that arose in the ordinary course of its business.
(i) Investments made with Non-Redeemable Stock, but only to the
extent allocable to such Non-Redeemable Stock.
(j) Investments in production payments burdening the property of
others.
20
(k) contributions of some or all of the California Real Estate to one
or more Unrestricted Subsidiaries.
(l) Investments of any kinds not listed above in this definition in
amounts at any time outstanding which do not exceed $15,000,000.
"Restricted Payment" means:
(a) any dividend or other distribution declared by any Related Person
on or in respect of any Equity Interest in any Related Person, or
(b) any purchase, redemption, acquisition or retirement by any Related
Person of any Equity Interest in any Related Person, or
(c) any sale, issuance or entering into of any Allowed Puts by
Borrower (but not any payments made upon the exercise or repurchase of
Allowed Puts),
excluding only those dividends, distributions, purchases, redemptions,
acquisitions and retirements which either:
(i) are payable only in Non-Redeemable Common Stock, or
(ii) are payable to Borrower by any Restricted Subsidiary or payable
to any Restricted Subsidiary by any other Restricted Subsidiary, or
(iii) are Investments excluded from Restricted Investments pursuant to
subsection (g) of the above definition of "Restricted Investment".
For the purposes of this Agreement: (a) the amount of any Restricted Payment
made in property shall be the greater of (i) the fair market value of such
property (as determined in good faith by the board of directors (or equivalent
governing body) of the Person making such Restricted Payment) and (ii) the net
book value thereof on the books of such Person, in each case determined as of
the date on which such Restricted Payment is made, and (b) the amount of any
Restricted Payment attributable to the sale, issuance or entering into of any
Allowed Put is the amount (calculated as of the inception of such Allowed Put)
which Borrower would be required to pay to repurchase its stock at the exercise
or strike price provided in such Allowed Put; provided, that upon the
termination of any commitment to purchase such underlying capital stock under
any Allowed Put, such Allowed Put shall cease to be treated as a Restricted
Payment.
"Restricted Subsidiary" means any Subsidiary of Borrower, whether now
existing or hereafter created or acquired or coming into existence: (a) which is
controlled by Borrower, (b) in which Borrower owns, directly or indirectly, a
majority of the Equity Interests (other than Permitted Preferred Trust
Securities), and (c) which is not, at the time in question, an Unrestricted
Subsidiary.
21
"Security" means any rights, properties, or interests of Administrative
Agent or Lenders, under the Loan Documents or otherwise, which provide recourse
or other benefits to Administrative Agent or Lenders in connection with the
Obligations or the non-payment or non-performance thereof, including collateral
(whether real or personal, tangible or intangible) in which Administrative Agent
or Lenders have rights under or pursuant to any Loan Documents, guaranties of
the payment or performance of any Obligation, bonds, surety agreements, keep-
well agreements, letters of credit, rights of subrogation, rights of offset, and
rights pursuant to which other claims are subordinated to the Obligations.
"S&P" means Standard & Poor's Ratings Group (a division of McGraw Hill,
Inc.), or its successor at the time in question.
"Subordinated Indebtedness" means Indebtedness owing by Borrower (but no
other Related Person) which: (a) is owing under the 1996 Subordinated Notes, (b)
is set forth on the Disclosure Schedule as "Existing Subordinated Indebtedness",
or (c) is subordinated to the Obligations, and provides for mandatory and
optional payments, on terms and conditions reasonably satisfactory to
Administrative Agent and Majority Lenders.
"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 (i.e., through one or
more intermediaries) controlled by such Person or in which such Person directly
or indirectly owns more than fifty percent of the voting stock or other equity
interests, provided that associations, joint ventures or other relationships (a)
which are established pursuant to a standard form operating agreement or similar
agreement or which are partnerships for purposes of income taxation only, (b)
which are not corporations or partnerships (or subject to the Uniform
Partnership Act) under applicable state law, and (c) whose businesses are
limited to the exploration, development and operation of oil, gas or mineral
properties and interests owned directly by the parties in such associations,
joint ventures or relationships, shall not be deemed to be "Subsidiaries" of
such Person.
"Supermajority Lenders" means, at any time in question, Lenders then
collectively having Percentage Shares totaling at least seventy-five percent
(75%)
"TECONS" means those certain Trust Preferred Securities, issued by Nuevo
Trust pursuant to the TECON Declaration of Trust in the amount of $115,000,000.
"TECON Debentures" means those certain 5.75% Convertible Subordinated
Debentures due December 15, 2026, issued by Borrower to Nuevo Trust pursuant to
the TECON Indenture and subordinated to the Obligations, in the aggregate
principal amount of $118,556,700.
"TECON Declaration of Trust" means that certain Amended and Restated
Declaration of Trust dated December 23, 1996, between Borrower, Wilmington Trust
Company, as Delaware Trustee and Institutional Trustee, and the other trustees
named therein, pursuant to which the TECONS were issued.
22
"TECON Guaranty" means that certain Preferred Securities Guaranty Agreement
dated December 23, 1996, by Borrower in favor of the holders of the TECONS
issued pursuant to the TECON Indenture and subordinated to the Obligations,
guaranteeing certain payments to be made by Nuevo Trust pursuant to the TECONS.
"TECON Indenture" means that certain Subordinated Indenture dated November
25, 1996 by Borrower to Wilmington Trust Company, as Indenture Trustee, as
supplemented by that certain First Supplemental Subordinated Indenture dated as
of December 23, 1996, pursuant to which the TECON Debentures were issued.
"Termination Event" means (a) the occurrence with respect to any ERISA Plan
of (i) a reportable event described in Sections 4043(c)(5) or (6) of ERISA or
(ii) any other reportable event described in Section 4043(c) 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.
"Torch" means Torch Energy Advisors Incorporated, a Delaware corporation.
"Torch Administrative Services Agreement" means that certain Administrative
Services Agreement dated as of January 1, 1996 between Torch, certain
Subsidiaries of Torch, and Borrower, as amended to the date hereof.
"Torch Operating Agreement" means that certain Agreement for Contract
Operations dated November 11, 1991 between Torch Operating Company and Borrower.
"Tranche" has the meaning given it in Section 2.4.
"Unrestricted Subsidiary" means (a) The Congo Holding Company, The Nuevo
Congo Company, and Bright Star Gathering, Inc., (b) any other Subsidiary of
Borrower which is hereafter designated an Unrestricted Subsidiary of Borrower by
Borrower's Board of Directors in compliance with the following sentence, and (c)
any Subsidiary of an Unrestricted Subsidiary. The Board of Directors of
Borrower may hereafter designate any Subsidiary of Borrower as an Unrestricted
Subsidiary provided that (i) the Board concurrently determines the amount of the
Investment made as a result of such designation, (ii) no Default or Borrowing
Base Deficiency exists at the time of such designation, or after taking such
Investment into account and otherwise giving effect to such designation, (iii)
immediately after such designation, no Related Person has any Liability to pay
any Indebtedness of such Subsidiary, has in any way guaranteed any Indebtedness
of such Subsidiary, or has any assets or properties which are subject to any
Lien
23
securing any Indebtedness of such Subsidiary, and (iv) notice of any such
designation, and of the amount of such Investment, is promptly given to Agent
and each Lender.
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 Schedule 2 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
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". Phrases such as "known to Borrower" or "to the best knowledge of
Borrower" refer to the actual knowledge (as distinguished from constructive
knowledge) of any of the following: Borrower's President, Borrower's Chief
Executive Officer, Borrower's Chief Financial Officer, Borrower's general
counsel, Borrower's Treasurer, or any Vice President of Borrower. 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 interest chargeable with respect to Fixed Rate Portions shall
be made on the basis of actual days elapsed (including the first day but
excluding the last) and a year of 360 days. All other calculations of interest
or of fees made under the Loan Documents shall be made on the basis of actual
days elapsed (including the first day but excluding the last) and a year of 365
or 366 days, as appropriate. Each determination by Administrative Agent or a
Lender of amounts to be paid under Sections 2.13 through 2.17 or any other
matters which are to be determined hereunder by Administrative Agent or a Lender
(such as any Eurodollar 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 Majority Lenders
otherwise consent all financial statements and reports furnished to
Administrative Agent or any Lender hereunder shall be prepared and all financial
computations and determinations pursuant hereto shall be made in accordance with
GAAP, to the extent GAAP is applicable. References
24
herein to the consolidation of any accounts of Borrower and its Restricted
Subsidiaries refer to the consolidation of such Persons (excluding the
Unrestricted Subsidiaries) in accordance with GAAP, with all investments in
Unrestricted Subsidiaries being accounted for using the cost method of
accounting (or, where provided herein, being excluded from consideration) and
the net income or loss of any Unrestricted Subsidiary being excluded from
consideration except to the extent that Borrower or a Restricted Subsidiary has
actually received cash during the accounting period in question from dividends
or distributions by such Unrestricted Subsidiary (whether such dividends or
distributions accrued during such period or an earlier period).
ARTICLE II - The Loans
---------
Section 2.1. Advances. Subject to the terms and conditions hereof, each
Lender agrees to make advances to Borrower (herein called such Lender's
"Advances") upon request from time to time during the Commitment Period so long
as (a) each Advance by such Lender does not exceed such Lender's Percentage
Share of the aggregate amount of Advances then requested from all Lenders, and
(b) the aggregate amount of such Lender's Advances outstanding at any time does
not exceed such Lender's Percentage Share of the Available Borrowing Base
determined as of the date on which the requested Advance is to be made. The
aggregate amount of all Advances requested of all Lenders in any Request for
Advances must be greater than or equal to $3,000,000 or must equal the
unadvanced portion of the Available Borrowing Base. The obligation of Borrower
to repay to each Lender the aggregate amount of all Advances made by such Lender
(herein called such Lender's "Loan"), together with interest accruing in
connection therewith, shall be evidenced by a single promissory note (herein
called such Lender's "Note") made by Borrower payable to the order of such
Lender in the form of Exhibit A with appropriate insertions. The amount of
principal owing on any Lender's Note at any given time shall be the aggregate
amount of all Advances theretofore made by such Lender minus all payments of
principal theretofore received by such Lender on such Note. Interest on each
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.
Section 2.2. Requests for Advances. Borrower must give to Administrative
Agent written notice, or telephonic notice promptly confirmed in writing, of any
requested Advances, which notice must be received by Administrative Agent not
later than 10:00 a.m., Dallas, Texas time, on the date of the requested Advances
(or three Business Days prior to the date of the requested Advances if Borrower
is desires for all or any part of such Advances to make up a Tranche of Fixed
Rate Portions on such date). After receiving any such notice Administrative
Agent shall give each Lender prompt notice of the requested Advances. Each such
written request or confirmation must be made in the form and substance of the
"Request for Advances" attached hereto as Exhibit B, duly completed. Each such
telephonic request shall be deemed a representation, warranty, acknowledgment
and agreement by Borrower as to the matters which are required to be set out in
such written confirmation. If all conditions precedent to such Advances have
been met, each Lender will on the date requested promptly remit to
Administrative Agent at Administrative Agent's office in Dallas, Texas the
amount of such Lender's Advance in immediately available funds, and upon receipt
of such funds, unless to its actual knowledge any conditions precedent to such
Advances have been neither met nor waived as provided herein, Administrative
Agent shall promptly make the Advances available to
25
Borrower. Each Request for Advances shall be irrevocable and binding on
Borrower. Unless Administrative Agent shall have received prompt notice from a
Lender that such Lender will not make available to Administrative Agent such
Lender's Advance, Administrative Agent may in its discretion assume that such
Lender has made such Advance available to Administrative Agent in accordance
with this section and Administrative Agent may if it chooses, in reliance upon
such assumption, make such Advance available to Borrower. If and to the extent
such Lender shall not so make its Advance available to Administrative Agent,
such Lender and Borrower severally agree to pay or repay to Administrative Agent
within three days after demand the amount of such Advance together with interest
thereon, for each day from the date such amount is made available to Borrower
until the date such amount is paid or repaid to Administrative Agent, at (i) the
Federal Funds Rate, in the case of such Lender, or (ii) the interest rate
applicable at the time to the other Advances made on such date, in the case of
Borrower. The failure of any Lender to make any Advance to be made by it
hereunder shall not relieve any other Lender of its obligation hereunder, if
any, to make its Advance, but neither Administrative Agent, Documentation Agent,
nor any other Lender shall be responsible for the failure of such Lender to make
any Advance to be made by such Lender.
Section 2.3. Use of Proceeds. Borrower shall use all funds from Advances
for general corporate purposes. In no event shall the funds from any Advance be
used directly or indirectly by any Person for personal, family, household or
agricultural purposes. Borrower represents and warrants to Lender 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
any "margin stock" (as such term is defined in Regulation U and Regulation G
promulgated by the Board of Governors of the Federal Reserve System).
Section 2.4. Rate Elections. Borrower may from time to time designate
all or any portions of the Loans (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 Loans which are required to be repaid prior to
the end of the designated Interest Period) as a "Tranche", which term refers to
a set of Fixed Rate Portions with identical Interest Periods and with each
Lender participating in such Tranche in accordance with its Percentage Share.
Without the consent of Majority Lenders, Borrower may make no such election
during the continuance of a Default under Section 5.2 or of an Event of 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
Tranche 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 aggregate amount of the Loans which Borrower desires
to designate as such Tranche, the first day of the Interest Period which is
to apply thereto, and the length of such Interest Period; and
(c) Be received by Administrative Agent not later than 10:00 a.m.,
Dallas, Texas time, on the third Business Day preceding the first day of
the specified Interest Period.
26
Promptly after receiving any such election (herein called a "Rate Election")
which meets the requirements of this section, Administrative Agent shall notify
each Lender thereof. Each 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 aggregate amount of
the Tranche elected in any Rate Election must be $3,000,000 or more. Upon the
termination of each Interest Period the portion of each Loan within the related
Tranche shall, unless the subject of a new Rate Election then taking effect,
automatically become a part of the Base Rate Portion of such Loan and become
subject to all provisions of the Loan Documents governing such Base Rate
Portion. Borrower shall have no more than five Tranches in effect at any time.
Section 2.5. Facility Fees. In consideration of each Lender's commitment
to make Advances, Borrower will pay to Administrative Agent for the account of
each Lender a facility fee, determined on a daily basis, equal to (a) the per
annum percentage set forth in the first column of the following table opposite
the range set forth in the second column of such table in which range is
included the quotient of (i) the sum of the Obligations and Additional Senior
Indebtedness outstanding at such time (excluding accrued interest which is not
past due), divided by (ii) the Borrowing Base in effect at such time, times (b)
the Maximum Loan Amount from time to time in effect:
Per Annum Rate Range of Quotients
-------------- ------------------
0.25% less than 50%
0.3% 50% or more but less than or equal to 75%
0.375% more than 75%
provided that, if such Maximum Loan Amount exceeds the Borrowing Base in effect
at the same time, the facility fee for such excess shall be reduced to one-
eighth of one percent (0.125%) per annum and provided further that, upon any
increase in the Borrowing Base, Borrower shall pay an additional facility fee
equal to any unpaid facility fee which would have been due (at the applicable
full prorated rate of 0.25%, 0.3% or 0.375% per annum, as the case may be) had
such increased Borrowing Base been in effect for the one year period preceding
the date of such increase (or, if less, for the period from the beginning of the
Commitment Period to the date of such increase). These facility fees shall be
due and payable in arrears on the last day of each Fiscal Quarter and at the end
of the Commitment Period.
Section 2.6. Administrative Agent's Fees. In addition to all other
amounts due to Administrative Agent under the Loan Documents, Borrower will pay
certain fees to Administrative Agent in accordance with the Fee Letter or as
otherwise from time to time hereafter agreed by Administrative Agent and
Borrower.
Section 2.7. Optional Prepayments. Borrower may from time to time and
without premium or penalty make optional prepayments of the Notes, in whole or
in part, so long as the aggregate amounts of all partial prepayments of
principal on the Notes equals $3,000,000 or more and Borrower concurrently pays
all amounts then due under Section 2.16. Borrower shall give notice of any such
prepayment to Administrative Agent not later than 10:00 a.m., Dallas,
27
Texas time, on the date of such prepayment, provided that such notice must be
given at least three Business Days prior to such date if all or any part of
Fixed Rate Portions are to be prepaid. Each prepayment of principal under this
section shall be accompanied by all interest then accrued and unpaid on the
principal so prepaid (provided that Borrower may, if it wishes, defer payment of
any such interest on Base Rate Portions of Loans until the next "Base Rate
Payment Date" specified in the Notes). 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. Mandatory Prepayments.
(a) If at any time the aggregate unpaid principal balance of the Loans
exceeds the Maximum Loan Amount (whether due to a reduction in the Maximum Loan
Amount in accordance with this Agreement, or otherwise), Borrower shall
immediately upon demand prepay the principal of the Loans in an amount at least
equal to such excess.
(b) If at any time the aggregate unpaid principal balance of the Loans is
less than the Maximum Loan Amount but in excess of the Available Borrowing Base
(such excess being herein called a "Borrowing Base Deficiency") Borrower shall,
within five Business Days after Administrative Agent gives notice of such fact
to Borrower, either:
(i) prepay the principal of the Loans or (subject to Section 5.2(c))
the principal of Additional Senior Indebtedness in an aggregate amount at
least equal to such Borrowing Base Deficiency, or
(ii) give notice to Administrative Agent electing to prepay the
principal of the Loans in up to six (or, at the option of Majority Lenders,
up to twelve) monthly installments in an aggregate amount at least equal to
such Borrowing Base Deficiency, with each such installment equal to or in
excess of the percentage of such Borrowing Base Deficiency equal to one
divided by the number of such scheduled installments, and with the first
such installment to be paid one month after the giving of such notice and
the subsequent installments to be due and payable at one month intervals
thereafter until such Borrowing Base Deficiency has been eliminated, or
(iii) give notice to Administrative Agent that Borrower desires to
provide Administrative Agent with deeds of trust, mortgages, chattel
mortgages, security agreements, financing statements and other security
documents in form and substance satisfactory to Administrative Agent,
granting, confirming, and perfecting first and prior liens or security
interests in Oil and Gas Properties or other collateral acceptable to
Majority Lenders, to the extent needed to allow Majority Lenders to
increase the Borrowing Base (as they in their reasonable discretion deem
consistent with prudent oil and gas banking industry lending standards at
the time) to an amount which eliminates such Borrowing Base Deficiency, and
then provide such security documents within thirty days after
Administrative Agent specifies such Oil and Gas Properties or other
collateral to Borrower. (If, prior to any such specification by
Administrative Agent, Majority Lenders determine that the giving of such
security documents will not serve to eliminate
28
such Borrowing Base Deficiency, then, within five Business Days after
receiving notice of such determination, Borrower will elect to make, and
thereafter make, the prepayments specified in either of the preceding
subsections (i) or (ii) of this subsection (b).)
(c) For so long as any Borrowing Base Deficiency has occurred and is
continuing, Borrower will keep account of all asset sales and other transactions
thereafter made by the Related Persons which are permitted under Section
5.2(f)(iii). At each time when the aggregate proceeds from such transactions
(net of transaction costs and taxes) equals or exceeds $3,000,000, Borrower
will, if such Borrowing Base Deficiency still exists, prepay the Loans in an
amount equal to such aggregate net proceeds. Such prepayments shall be applied
to any installments due under the preceding subsection (b)(ii) as directed by
Borrower.
(d) 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 2.9. Payments to Lenders. Borrower will make each payment which
it owes under the Loan Documents to Administrative Agent for the account of
Administrative Agent or the Lender to whom such payment is owed. Each such
payment must be received by Administrative Agent not later than 11:00 a.m.,
Dallas, Texas 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
Administrative Agent 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
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 Administrative Agent's Note.
When Administrative Agent collects or receives money on account of the
Obligations, Administrative Agent shall distribute all money so collected or
received, and Lenders and Administrative Agent shall apply all such money so
distributed, as follows:
(a) first, for the payment of all Obligations which are then due (and
if such money is insufficient to pay all such Obligations, first to any
reimbursements due Administrative Agent under Section 5.1(i) or (j) and
then to the partial payment of all other Obligations then due in proportion
to the amounts thereof, or as Supermajority Lenders shall otherwise agree);
(b) then for the prepayment of amounts owing under the Loan Documents
(other than principal on the Notes) if so specified by Borrower;
(c) then for the prepayment of principal on the Notes, together with
accrued and unpaid interest on the principal so prepaid; and
29
(d) last, for the payment or prepayment of any other Obligations.
All payments applied to principal or interest on any Note shall be applied first
to any interest then due and payable, then to principal then due and payable,
and last to any prepayment of principal and interest in compliance with Sections
2.7 and 2.8. All distributions of amounts described in any of subsections (b),
(c) or (d) above shall be made by Administrative Agent pro rata to
Administrative Agent and each Lender then owed Obligations described in such
subsection in proportion to all amounts owed to Administrative Agent and all
Lenders which are described in such subsection.
Section 2.10. Initial Borrowing Base. During the period from the date
hereof to the first Determination Date the Borrowing Base shall be $330,000,000.
Section 2.11. Subsequent Determinations of Borrowing Base.
(a) By each Evaluation Date, Borrower shall furnish to each Lender the
Engineering Report described in Section 5.1(b)(iv), together with all other
information and data which Administrative Agent has then reasonably requested
concerning the Related Persons' businesses and properties. Within thirty days
after receiving such reports and other information and data, or as promptly
thereafter as practicable, Administrative Agent shall propose to Lenders an
amount for the Borrowing Base, and within thirty days thereafter each Lender
will notify Administrative Agent of whether or not it accepts such proposed
amount. Failure of any Lender to give such notice within such time period shall
be deemed to constitute acceptance of such proposed amount by such Lender. If
such proposed amount is not accepted by Majority Lenders (or, if Administrative
Agent has proposed an increase in the Borrowing Base, by Supermajority Lenders),
Administrative Agent and Lenders shall continue to discuss a new Borrowing Base
until such time as Administrative Agent and Majority Lenders (or, if the
Borrowing Base is to be increased, Supermajority Lenders) shall have agreed upon
an amount for the new Borrowing Base, and promptly thereafter Administrative
Agent shall notify Borrower of such amount.
(b) Within five Business Days after receipt of such notice from
Administrative Agent, Borrower shall by notice to Administrative Agent either
accept such amount as the new Borrowing Base or reduce the Borrowing Base from
the amount proposed by Administrative Agent to any lesser amount. (Failure by
Borrower to take either such action within such five Business Day period shall
be deemed acceptance of such amount.) Upon any such acceptance or deemed
acceptance by Borrower, a new Borrowing Base in the amount accepted shall take
effect on such date (herein called a "Determination Date") and shall remain in
effect until but not including the next Determination Date. Upon any such
reduction by Borrower, a new Borrowing Base in the reduced amount specified by
Borrower shall take effect on such date (herein also called a "Determination
Date") and shall remain in effect until but not including the next Determination
Date.
(c) Whenever either of the following events occurs:
30
(i) the Related Persons, in one or more transactions after the
Determination Date immediately preceding the time in question (or, prior to
the first Determination Date, after the date hereof) make aggregate
Borrowing Base Asset Sales of $50,000,000 or more, or
(ii) Borrower decides, as contemplated in Section 5.2(b)(iv), to make
any unscheduled payment of Subordinated Indebtedness,
then Borrower will promptly give notice of such event to Administrative Agent
and each Lender and, upon receipt of such notice, Majority Lenders (acting
through Administrative Agent) may, at their option, either (1) specify an
additional Evaluation Date as contemplated in subsection (d) of the definition
in Section 1.1 of "Evaluation Date" and thereafter receive the reports and
information, and make the determinations, contemplated above in this Section
2.11, or (2) request any supplemental information which they reasonably desire
from Borrower without requiring all such reports and other information, and then
designate a new Borrowing Base as they deem appropriate in light of such event
and such supplemental information (provided that any increase in the Borrowing
Base must be consented to by Supermajority Lenders). Upon any such designation,
a new Borrowing Base in the amount designated shall take effect on such date
(herein also called a "Determination Date") and shall remain in effect until but
not including the next Determination Date.
(d) If Borrower does not furnish all of the reports, information, and data
referred to in the first sentence of subsection (a) of this section by the date
specified in such sentence, or promptly furnish any supplemental information
which Administrative Agent requests as contemplated in clause (2) of subsection
(c) of this section, then Administrative Agent may designate the Borrowing Base
at any amount which Administrative Agent and Majority Lenders (or Supermajority
Lenders, in the case of an increase) determine and may redesignate the Borrowing
Base from time to time thereafter until each Lender receives all such
information, reports and data, whereupon Administrative Agent and Lenders shall
determine, and Borrower shall accept or reduce, a new Borrowing Base as
described in subsections (a), (b) and (c) of this section.
Section 2.12. Prudent Industry Lending Standards. Administrative Agent
and Majority Lenders (or Supermajority Lenders) shall determine the amount of
the Borrowing Base based upon the loan value which they in their reasonable
discretion assign to the various Borrowing Base Assets of the Related Persons at
the time in question and based upon such other credit factors as they in their
reasonable discretion deem consistent with prudent oil and gas banking industry
lending standards at the time (such as general market conditions, pricing
forecasts, and the assets, liabilities, cash flow, hedged and unhedged exposures
to product price and interest rate changes, business, properties, management and
ownership of Borrower and its Affiliates). It is expressly understood that
Lenders and Administrative Agent have no obligation to agree upon or designate
the Borrowing Base at any particular amount, whether in relation to the Maximum
Loan Amount or otherwise, and that Lenders' commitments to advance funds
hereunder are determined by reference to the Available Borrowing Base as from
time to time in effect.
Section 2.13. Capital Reimbursement. If at any time after the date
hereof, and from time to time, any Lender determines that the adoption or
modification of any applicable law, rule or regulation regarding such Lender's
required levels of reserves, deposits, insurance or capital
31
(including any allocation of capital requirements or conditions), or similar
requirements, or any interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation, administration or compliance of such Lender with any of such
requirements, has or would have the effect of (a) increasing such Lender's costs
relating to the Obligations owing to such Lender, or (b) reducing the yield or
rate of return of such Lender on such Obligations, to a level below that which
such Lender could have achieved but for the adoption or modification of any such
requirements, Borrower shall, within 30 days after any request sent by such
Lender to Borrower (with a copy to Administrative Agent), pay to Administrative
Agent for the account of such Lender such additional amounts as (in such
Lender's reasonable judgment, after reasonable computation) will compensate such
Lender for such increase in costs or reduction in yield or rate of return of
such Lender. Subject to Section 2.18(b), no failure by such Lender to
immediately demand payment of any additional amounts payable under this section
shall constitute a waiver of such Lender's right to demand payment of such
amounts at any subsequent time. Nothing herein contained shall be construed or
so operate as to require Borrower to pay any interest, fees, costs or charges
not permitted by Section 9.6.
Section 2.14. Increased Cost of Fixed Rate Portions. If the introduction
of or any change in 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 any 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 franchise taxes or income taxes imposed on the overall
net income, assets, net worth or shareholders' capital of such Lender or of
any lending office of such Lender by any jurisdiction in which such
Lender's principal office or any such lending office is located); or
(b) shall change, impose, modify, apply or deem applicable any Reserve
Requirement or other reserve, special deposit or similar requirement in
respect of any Fixed Rate Portion of any Lender or against assets of,
deposits with or for the account of, or credit extended by, such Lender; or
(c) shall impose on any 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 any Lender of funding or maintaining any
Fixed Rate Portion or to reduce the amount of any sum receivable by any
Lender in respect of any Fixed Rate Portion by an amount deemed by such
Lender to be material,
then such Lender shall promptly notify Administrative Agent and Borrower in
writing of the happening of such event and of the amount required to compensate
such Lender for such event, whereupon (i) Borrower shall pay such amount to
Administrative Agent for the account of such Lender and (ii Borrower may elect,
by giving to Administrative Agent and 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.
32
Section 2.15. 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 any Lender to fund or maintain Fixed Rate
Portions, or shall materially restrict the authority of any Lender to purchase
or take offshore deposits of dollars (i.e., "eurodollars"), or (b) any Lender
determines that matching deposits appropriate to fund or maintain any Fixed Rate
Portion are not available to it, or (c) any Lender determines that the formula
for calculating the Adjusted Eurodollar Rate does not fairly reflect the cost to
such Lender of making or maintaining loans based on such rate, then, upon notice
by such Lender to Borrower and Administrative Agent, Borrower's right to elect
Fixed Rate Portions of such Lender's Loan shall be suspended to the extent and
for the duration of such illegality, impracticability or restriction and all
Fixed Rate Portions of such Lender's Loan (or portions thereof) which are then
outstanding or are then the subject of any Rate Election and which cannot
lawfully or practicably be maintained or funded shall immediately become or
remain part of the Base Rate Portion of such Lender's Loan. Borrower agrees to
indemnify Administrative Agent and each Lender and hold it harmless against all
costs, expenses, claims, penalties, liabilities and damages which may result
from any such change in law, treaty, rule, regulation, interpretation or
administration.
Section 2.16. Funding Losses. In addition to its other obligations
hereunder, Borrower will indemnify Administrative Agent and each Lender against,
and reimburse Administrative Agent and each Lender on demand for, any loss or
expense incurred or sustained by Administrative Agent or such Lender (including
any loss or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by a 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
a Loan 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 a 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 2.17. Reimbursable Taxes. Borrower covenants and agrees that:
(a) Borrower will indemnify Administrative Agent and each Lender
against and reimburse Administrative Agent and each 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 franchise
taxes or income taxes imposed on or measured by the overall net income,
assets, net worth or shareholders' capital of Administrative Agent or such
Lender or any lending office of Administrative Agent or such Lender by any
jurisdiction in which Administrative Agent or such Lender or any such
lending office is located (all such
33
non-excluded taxes, levies, costs and charges being collectively called
"Reimbursable Taxes" in this section). Such indemnification shall be on an
after-tax basis, taking into account any taxes imposed on the amounts paid
as indemnity.
(b) All payments on account of the principal of, and interest on, each
Lender's Loan and each Lender's Note, and all other amounts payable by
Borrower to Administrative Agent and each 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 Administrative Agent
or any 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 Administrative Agent or such 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 Administrative Agent or such 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
Administrative Agent and each 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, but such election shall not
diminish Borrower's obligation to pay all Reimbursable Taxes.
(d) Notwithstanding the foregoing provisions of this section, Borrower
shall be entitled, to the extent it is required to do so by law, to deduct
or withhold (and not to make any indemnification or reimbursement for)
income or other similar taxes imposed by the United States of America
(other than any portion thereof attributable to a change in federal income
tax laws effected after the date hereof) from interest, fees or other
amounts payable hereunder for the account of any Lender, other than a
Lender (i) who is a U.S. person for Federal income tax purposes or (ii) who
has the Prescribed Forms on file with Administrative Agent (with copies
provided to Borrower) for the applicable year to the extent deduction or
withholding of such taxes is not required as a result of the filing of such
Prescribed Forms, provided that if Borrower shall so deduct or withhold any
such taxes, it shall provide a statement to Administrative Agent and such
Lender, setting forth the amount of such taxes so deducted or withheld, the
applicable rate and any other information or documentation which such
Lender may reasonably request for assisting such Lender to obtain any
allowable credits or deductions for the taxes so deducted or withheld in
the jurisdiction or jurisdictions in which such Lender is subject to tax.
As used in this section, "Prescribed Forms" means such duly executed forms
or statements, and in such number of copies, which may, from time to time,
be prescribed by law and which, pursuant to applicable provisions of (x) an
income tax treaty between the United States and the country of residence of
the Lender providing the forms or statements, (y) the Internal Revenue Code
of 1986, as amended from time to time, or (z) any applicable
34
rules or regulations thereunder, permit Borrower to make payments hereunder
for the account of such Lender free of such deduction or withholding of
income or similar taxes.
Section 2.18. Change of Lending Office and Lender; Time Limit; etc.
(a) Each Lender agrees that, upon the occurrence of any event giving rise
to the operation of Sections 2.13 through 2.17 with respect to such Lender, it
will, if requested by Borrower, use reasonable efforts (subject to overall
policy considerations of such Lender) to designate another lending office for
its Loan (provided that such designation is made on such terms that such Lender
and its lending office suffer no economic, legal or regulatory disadvantage)
with the object of avoiding the consequence of the event giving rise to the
operation of any such section. Nothing in this subsection shall affect or
postpone any of the obligations of Borrower or the right of any Lender provided
in Sections 2.13 through 2.17.
(b) If any Lender elects to pass through to Borrower any charge or cost
under Sections 2.13 through 2.17 or elects to terminate the availability of
Fixed Rate Portions for any period of time, Borrower may elect to terminate such
Lender as a party to this Agreement; provided that, prior to or concurrently
with such termination, Borrower must either (i) if Administrative Agent and each
non-terminated Lender consent, pay to the terminated Lender all principal,
interest, fees, costs and other Obligations owed to such Lender and accrued
through the date of termination and terminate such Lender's commitment to make
Advances hereunder, in which event the Maximum Loan Amount shall be reduced by
the Percentage Share thereof of the terminated Lender, or (ii) arrange for one
or more Eligible Transferees to purchase the rights and duties of the terminated
Lender pursuant to Section 9.4(c), in which event the terminated Lender will
assign all of such rights and duties to such Eligible Transferees. Prior to
arranging for any Person other than an existing Lender to be such an Eligible
Transferee, Borrower shall notify the other Lenders of its intention to replace
the terminated Lender and, during the sixty day period after such notice, the
other Lenders shall have a right of first refusal to purchase the rights and
duties of the terminated Lender, pro rata in accordance with their Percentage
Shares.
(c) Notwithstanding anything to the contrary in Sections 2.13 through
2.17, Borrower shall not be required to reimburse or pay any costs or expenses
to any Lender as required under such sections which have accrued more than
ninety (90) days prior to such Lender's giving notice to Borrower that such
Lender has suffered or incurred such costs or expenses.
ARTICLE III - Conditions Precedent to Lending
-------------------------------
Section 3.1. Documents to be Delivered. This Agreement shall not become
effective unless and until Administrative Agent shall have received all of the
following, at the office of Administrative Agent or its counsel in Dallas or
Houston, Texas, duly executed and delivered and in form, substance and date
satisfactory to Administrative Agent:
(a) This Agreement.
(b) Each Note.
35
(c) Certain certificates of Borrower including:
(i) An "Omnibus Certificate" of the Secretary and of the
President or Chief Financial Officer of Borrower, which shall contain the
names and signatures of the officers of Borrower authorized to execute Loan
Documents and which shall certify to the truth, correctness and
completeness of the following exhibits attached thereto: (1) a copy of
resolutions duly adopted by the Board of Directors of Borrower 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, (2) a copy of the charter
documents of Borrower and all amendments thereto, certified by the
appropriate official of Borrower's state of organization (or certification
that such charter documents have not been amended, supplemented or restated
since the date of the Original Agreement), and (3) a copy of any bylaws of
Borrower (or certification that such bylaws have not been amended,
supplemented or restated since the date of the Original Agreement); and
(ii) A "Compliance Certificate" of the President or Chief
Executive Officer and of the Chief Financial Officer of Borrower, 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.
(d) Copies of 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 favorable opinion of Xxxxxx & Xxxxxx, L.L.P., counsel for the
Related Persons, substantially in the form set forth in Exhibit D.
(f) Payment of all fees required to be paid to Administrative Agent
or any Lender pursuant to the Fee Letter.
Section 3.2. Additional Conditions Precedent. No Lender has any
obligation to make any Advance 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.
(b) No Default shall exist at the date of such Advance.
(c) No event or condition having a Material Adverse Effect shall have
occurred since the date of the financial statements most recently delivered
under Section 5.1(b)
36
prior to the date of such Advance (or, prior to delivery of the first such
financial statements, since the date of this Agreement).
(d) The Related Persons shall have performed and satisfied all
conditions required in the Loan Documents to be performed or complied with
by them 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 any Lender to any penalty or other onerous condition
under or pursuant to any such law, regulation or order.
(f) Administrative Agent shall have received all documents,
instruments and information which Administrative Agent has then requested
and is entitled to receive under the Loan Documents.
ARTICLE IV - Representations and Warranties
------------------------------
Section 4.1. Borrower's Representations and Warranties. To confirm each
Lender's understanding concerning Borrower and Borrower's business, properties
and obligations and to induce Administrative Agent and each Lender to enter into
this Agreement and to make the Loans, Borrower and each other Related Person
which is a party hereto represents and warrants to Administrative Agent and each
Lender that:
(a) No Default. No Related Person is in default in the performance of any
of the covenants and agreements contained herein. 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 such 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 where the failure to so qualify, be in good
standing, or be authorized to do business has no material probability of having
a Material Adverse Effect. Each such 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 prudent, except
where the failure to do so has no material probability of having a Material
Adverse Effect.
(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
37
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 the articles or certificate of incorporation,
bylaws, charter, or partnership agreement or certificate of any Related
Person,
(ii) conflict with any provision of any domestic or foreign law,
statute, rule or regulation, or with any agreement, judgment, license,
order or permit applicable to or binding upon any Related Person or any
Unrestricted Subsidiary,
(iii) result in the acceleration of any Liability owed by any Related
Person, or
(iv) result in or require the creation of any Lien upon any assets or
properties of any Related Person
in any way which causes a Default to occur hereunder, which has a material
probability of having a Material Adverse Effect, or which adversely affects the
enforceability of 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 to which it is a party or
to consummate any transactions contemplated by the Loan Documents, except for
those which, if not obtained, do not cause any Default to occur hereunder, do
not cause any Material Adverse Effect, and do not adversely affect the
enforceability of the Loan Documents. The Obligations evidenced by the Notes
constitute "Senior Indebtedness" of the Company as defined in the TECON
Debentures, "Specified Senior Indebtedness" as defined in the 1996 Indenture,
and equivalent "Senior Indebtedness" (regardless of how named) with respect to
any other Permitted Subordinated Trust Indebtedness and Permitted Preferred
Trust Securities. All borrowings made under the Notes are and will be made in
compliance with the restrictions contained in Section 10.12(a) of the 1996
Indenture.
(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 or by the discretionary
application by a court of general principles of equity.
(f) Initial Financial Statements. The Initial Financial Statements fairly
present the matters addressed therein. Since the date of the audited annual
Initial Financial Statements no event or condition having a Material Adverse
Effect has occurred, except as reflected in the
38
Disclosure Schedule or a Disclosure Report. All Initial Financial Statements
were prepared in accordance with GAAP.
(g) Other Obligations and Restrictions. No Related Person has any
outstanding Liabilities of any kind (including contingent obligations, tax
assessments, and unusual forward or long-term commitments) which are, in the
aggregate, material to Borrower or material with respect to the consolidated
financial condition of Borrower and its Subsidiaries and not shown in the
Initial Financial Statements or disclosed in the Disclosure Schedule or a
Disclosure Report. Except as shown in the Initial Financial Statements or
disclosed in the Disclosure Schedule or a Disclosure Report, no Related Person
is subject to or restricted by any franchise, contract, deed, charter
restriction, or other instrument or restriction which has a material probability
of having a Material Adverse Effect. On the date hereof, no Related Person has
any Permitted Priority Senior Indebtedness, other Additional Senior
Indebtedness, Subordinated Indebtedness, Permitted Subordinated Trust
Indebtedness, Allowed Puts or Non-Recourse Indebtedness, and no Permitted
Production Payments exist or Permitted Preferred Trust Securities are
outstanding, except as listed in the Disclosure Schedule.
(h) Full Disclosure. No certificate, statement or other information
delivered herewith or heretofore by any Related Person to Administrative Agent
or any 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 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 normally associated with the types of businesses conducted by the
Related Persons) that has not been disclosed to Administrative Agent and each
Lender in writing which has a material probability of having a Material Adverse
Effect. All data and information which the Related Persons have furnished to
the Approved Petroleum Engineers or any Lender in connection with any
Engineering Report is true, correct and complete in all material respects, and,
to the best knowledge of Borrower, there are no statements or conclusions in any
Engineering Report which are based upon or include misleading data and
information or fail to take into account material data and information regarding
the matters reported therein. It is understood and agreed, however, that (i)
each Engineering Report is necessarily based upon economic assumptions and
professional opinions, estimates and projections, (ii) any financial projections
which the Related Persons have provided or may provide are similarly based on
economic assumptions, opinions and estimates, (iii) Borrower is not making any
representation or warranty that such assumptions, opinions, estimates and
projections will ultimately prove to have been accurate, (iv) Borrower is not
making any representation or warranty with respect to any price or cost
projections furnished by Administrative Agent or any Lender for use in preparing
any Engineering Report, and (v) Borrower's only representation and warranty with
respect to any financial projections that have been or will be provided by the
Related Persons is that such projections have been or will be prepared in good
faith based upon assumptions that Borrower's management believed or believes to
be reasonable at the time such projections were or are prepared. Borrower has
heretofore delivered to Administrative Agent and each Lender true, correct and
complete copies of the Initial Financial Statements and the Initial Engineering
Report.
40
(i) Litigation. Except as disclosed in the Initial Financial Statements
or in the Disclosure Schedule or a Disclosure Report: (i) to the best knowledge
of Borrower, there are no actions, suits or legal, equitable, arbitrative or
administrative proceedings pending or threatened against any Related Person or
Unrestricted Subsidiary before any federal, state, municipal or other court,
department, commission, body, board, bureau, agency, or instrumentality,
domestic or foreign, which have a material probability of having a Material
Adverse Effect, and (ii) there are no outstanding judgments, injunctions, writs,
rulings or orders by any such governmental entity against any Related Person,
any Unrestricted Subsidiary, or any Related Person's stockholders, partners,
directors or officers which have a material probability of having a Material
Adverse Effect.
(j) Labor Disputes and Acts of God. Except as disclosed in the Disclosure
Schedule or a Disclosure Report, since January 1, 1997, neither the business nor
the properties of any Related Person has been affected by any fire, explosion,
accident, strike, lockout or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance), which has a material probability of
having a Material Adverse Effect.
(k) ERISA Liabilities. All currently existing ERISA Plans are listed in
the Disclosure Schedule or a Disclosure Report. Except as disclosed in the
Initial Financial Statements or in the Disclosure Schedule or a Disclosure
Report, to the best knowledge of Borrower 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 Schedule or a Disclosure Report: (i) no "accumulated funding
deficiency" (as defined in Section 412(a) of the Internal Revenue Code of 1986,
as amended) in excess of $1,000,000 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 $1,000,000.
(l) Environmental and Other Laws. Except as disclosed in the Disclosure
Schedule or a Disclosure Report: (i) the Related Persons and Unrestricted
Subsidiaries are conducting their businesses in material compliance with all
applicable federal, state or local laws, including Environmental Laws, and have
and are in material compliance with all licenses and permits required under any
such laws; (ii) to the best knowledge of Borrower, none of the operations or
properties of any Related Person or Unrestricted Subsidiary is the subject of
federal, state or local investigation evaluating whether any material remedial
action is needed to respond to an improper 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 or Unrestricted Subsidiary (and to the best knowledge of Borrower, no
other Person) has filed any notice under any federal, state or local law
indicating that any Related Person or Unrestricted Subsidiary 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 Hazardous
Materials have been improperly released, or are improperly stored or disposed
of, upon any property of any Related Person or Unrestricted Subsidiary; (iv) to
the best knowledge
40
of Borrower, no Related Person or Unrestricted Subsidiary has any material
Liability in connection with the transportation of 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 or
Unrestricted Subsidiary for clean-up costs, remedial work, damages to natural
resources or for personal injury claims (whether under Environmental Laws or
otherwise); and (v) to the best knowledge of Borrower, no Related Person or
Unrestricted Subsidiary otherwise has any material Liability under any
Environmental Laws or in connection with the release into the environment, or
the storage or disposal, of any Hazardous Materials, except for plugging and
abandonment responsibilities and other routine Liabilities incurred in the
ordinary course of business.
(m) Borrower's Subsidiaries. All of Borrower's Subsidiaries are either
Restricted Subsidiaries or Unrestricted Subsidiaries. Borrower does not have
any Unrestricted Subsidiary or any Restricted Subsidiary or own, directly or
indirectly, any stock or other Equity Interest in any other Person except those
listed in the Disclosure Schedule or a Disclosure Report. No Related Person is
a member of any general or limited partnership, joint venture or association of
any type whatsoever except (i) those listed in the Disclosure Schedule or a
Disclosure Report and (ii) associations, joint ventures or other relationships
(1) which are established pursuant to a standard form operating agreement or
similar agreement or which are partnerships for purposes of income taxation
only, (2) which are not corporations or partnerships (or subject to the Uniform
Partnership Act) under applicable state law, and (3) whose businesses are
limited to the exploration, development and operation of oil, gas or mineral
properties and interests owned directly by the parties in such associations,
joint ventures or relationships. Except as otherwise revealed in a Disclosure
Report, Borrower owns, directly or indirectly, the Equity Interest in each of
its Subsidiaries which is indicated in the Disclosure Schedule.
(n) Title to Properties; Licenses. Each Related Person has good and
defensible title to (i) all material Borrowing Base Assets which it purports to
possess, as of the time in question, and (ii) all of its other material
properties and assets in the United States, free and clear in all cases of all
Liens other than Permitted Liens and of all encumbrances which interfere in any
material respect with the ordinary conduct of the business of the owner of the
property or assets subject thereto, except that (1) 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 and (2) Borrower may
be required, in connection with the California Real Estate and other
acquisitions, to obtain various post-closing consents to assignments and
transfers which are normally obtained in the ordinary course of the oil and gas
business following the acquisition of oil and gas properties. Each Related
Person possesses all licenses, permits, franchises, patents, copyrights,
trademarks and trade names, and other intellectual property (or otherwise
possesses the right to use such intellectual property) which are reasonably
necessary to carry out its business as presently conducted and as presently
proposed to be conducted hereafter, and no Related Person is in violation of the
terms under which it possesses such intellectual property or
41
the right to use such intellectual property in any way which has a material
probability of having a Material Adverse Effect.
(o) Government Regulation. Neither Borrower nor any other Related Person
owing Obligations 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 restricts the incurring by such Person of any
Obligations, including statutes, laws, regulations or decrees relating to common
contract carriers or the sale of electricity, gas, steam, water or other public
utility services.
(p) No Insolvency. Borrower is not "insolvent" on the date hereof (that
is, the sum of such Person's absolute and contingent liabilities, including the
Obligations, does not exceed the fair market value of such Person's assets,
including any rights of contribution, reimbursement or indemnity). Borrower has
capital which is adequate for the businesses in which such Person is engaged and
intends to be engaged. Borrower has not incurred (whether hereby or otherwise),
nor does Borrower intend to incur or believe that it will incur, Liabilities
which will be beyond its ability to pay as such Liabilities mature.
Section 4.2. Representation by Lenders. Each Lender hereby represents
that it will acquire its Note for its own account in the ordinary course of its
commercial lending business; however, the disposition of such Lender's property
shall at all times be and remain within its control and, in particular and
without limitation, such Lender may sell or otherwise transfer its Note, any
participation interest or other interest in its Note, or any of its other rights
and obligations under the Loan Documents as set forth in Section 9.4.
ARTICLE V - Covenants of Borrower
---------------------
Section 5.1. Affirmative Covenants. To conform with the terms and
conditions under which each Lender is willing to have credit outstanding to
Borrower, and to induce Administrative Agent and each Lender to enter into this
Agreement and make the Loans, Borrower and each other Related Person which is a
party hereto covenants and agrees that until the full and final payment of the
Obligations and the termination of this Agreement, unless Majority Lenders have
previously agreed otherwise:
(a) Payment and Performance. Borrower will pay all amounts due under the
Loan Documents in accordance with the terms thereof. Borrower will observe,
perform and comply with every covenant, term and condition expressed or implied
in the Loan Documents. Borrower will cause each of its Subsidiaries to observe,
perform and comply with every such term, covenant and condition which is
applicable to such Subsidiary.
(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
Administrative Agent and each Lender at Borrower's expense:
42
(i) As soon as available, and in any event within ninety days after
the end of each Fiscal Year, complete consolidated and consolidating
financial statements of Borrower and its Subsidiaries together with all
notes thereto, 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 accountants selected by Borrower and acceptable to
Majority Lenders, stating that such consolidated financial statements
fairly present the matters addressed therein in accordance with GAAP.
These financial statements shall contain a consolidated and consolidating
balance sheet as of the end of such Fiscal Year, consolidated and
consolidating statements of operations for such Fiscal Year, and
consolidated statements of cash flows and of changes in stockholders'
equity for such Fiscal Year, each setting forth in comparative form the
corresponding figures for the preceding Fiscal Year. In addition, within
ninety days after the end of each Fiscal Year Borrower will furnish a
report signed by such accountants stating that they have read this
Agreement and that in making the examination and reporting on the
consolidated financial statements described above they did not conclude
that any Default existed at the end of such Fiscal Year or at the time of
their report, or, if they did conclude that a Default existed, specifying
its nature and period of existence.
(ii) As soon as available, and in any event within forty-five days
after the end of each Fiscal Quarter, a consolidated and consolidating
balance sheet of Borrower and its Subsidiaries as of the end of such Fiscal
Quarter, consolidated and consolidating statements of their operations, and
consolidated statements of their 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, each setting
forth in comparative form the corresponding figures for the same Fiscal
Quarter in the prior Fiscal Year. In addition Borrower will, together with
each such set of financial statements and each set of financial statements
furnished under subsection (b)(i) of this section, furnish a certificate in
the form of Exhibit E, appropriately completed and signed by the Chief
Financial Officer of Borrower.
(iii) Promptly upon their becoming available, copies of all financial
statements, reports, notices and proxy statements sent by any Related
Person to its stockholders generally and all registration statements,
periodic reports and other statements and schedules (other than transmittal
letters) filed by any Related Person with any securities exchange, the
Securities and Exchange Commission or any similar governmental authority.
(iv) By (A) March 1 of each year, one or more engineering reports
prepared as of the preceding January 1 by Approved Petroleum Engineers
(provided, if Borrower is maintaining a BBB/Baa2 Debt Rating, such reports
may be prepared by Borrower's or Torch's internal reserve engineers,
subject, at the sole option of Administrative Agent, to external audit) and
(B) by August 15 of each year (and within 45 days after any other
Evaluation Date) an engineering report prepared by Borrower's or Torch's
internal reserve engineers, in each case concerning all material Oil and
Gas Properties owned by any
43
Related Person which are located in or offshore of the United States and
which have proved oil or gas reserves attributable thereto. Each report
shall be satisfactory to Administrative Agent, shall contain information
and analysis comparable in scope to that contained in the Initial
Engineering Report, shall be in accordance with the requirements of
Regulation S-X promulgated by the Securities and Exchange Commission (and,
as to any report prepared by Borrower's or Torch's internal reserve
engineers, shall utilize any pricing assumptions which may be provided to
Borrower by Administrative Agent), shall identify (or be accompanied by a
schedule identifying) any properties owned by any Restricted Subsidiary
which is obligated in any way for Non-Recourse Indebtedness, and shall take
into account (or be accompanied by a schedule showing) any "over-produced"
or "under-produced" status under gas balancing arrangements.
(v) Promptly after entering into any Derivative Contracts (or any
unwinding of any Derivative Contracts), at or about the same time, which
together cover more than twenty-five percent (25%) of the Related Persons'
anticipated production of oil and gas in any calendar year, notice that
such contracts have been entered into and describing the general terms
thereof.
(c) Other Information; Inspections; Confidentiality. Each Related Person
will furnish to Administrative Agent and each Lender any information which
Administrative Agent may from time to time reasonably request in writing
concerning any covenant, provision or condition of the Loan Documents or any
matter in connection with the Related Persons' businesses and operations. Each
Related Person will permit representatives appointed by Administrative Agent
(including independent accountants, agents, attorneys, appraisers and any other
Persons) 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 Administrative
Agent or its representatives to investigate and verify the accuracy of the
information furnished to Administrative Agent or any Lender in connection with
the Loan Documents and to discuss all such matters with its officers, employees
and representatives, in each case during normal business hours. Each of
Administrative Agent and Lenders 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 disclosures
of information: (i) made in connection with any enforcement or defense by
Administrative Agent or any Lender of its rights and remedies under the Loan
Documents, (ii) which has at the time in question entered the public domain,
(iii) which 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, (iv) to Administrative Agent's or any Lender's Affiliates, auditors,
attorneys, advisors, or agents (provided that Administrative Agent and each
Lender shall be responsible for causing its own Affiliates, auditors, attorneys,
advisors, or agents to comply with the foregoing confidentiality provisions), or
(v) to any other Lender or to any purchaser or prospective purchaser of
participations or other interests in any Loan or Loan Document (provided that
any such purchaser or prospective purchaser has agreed to be bound by the
foregoing confidentiality provisions).
44
(d) Notice of Material Events and Change of Address. Borrower will
promptly notify Administrative Agent and each Lender:
(i) of any event or condition having a Material Adverse Effect,
(ii) of the occurrence of any Default or Borrowing Base Deficiency,
(iii) of the acceleration of the maturity of any Indebtedness owed by
any Related Person or of any default by any Related Person 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 has a material probability of having
a Material Adverse Effect,
(iv) of the occurrence of any Termination Event known to Borrower,
(v) of any claim of $1,000,000 or more, any notice of potential
liability under any Environmental Laws which might exceed such amount, or
any other material adverse claim, which is asserted against any Related
Person or with respect to any Related Person's properties, and
(vi) of the filing of any suit or proceeding against any Related
Person in which an adverse decision would have a material probability of
having a Material Adverse Effect.
Upon the occurrence of any of the foregoing the Related Persons will take all
necessary or appropriate steps to remedy promptly any such Default,
acceleration, default or Termination Event, to protect against any such Material
Adverse Effect or adverse claim, to defend any such suit or proceeding, and to
resolve all controversies on account of any of the foregoing.
(e) Maintenance of Properties. Each Related Person will, in compliance
with prudent industry practices, maintain, preserve, protect, and keep its
property in good condition and in material compliance with all applicable laws,
rules and regulations, and will from time to time make all repairs, renewals and
replacements needed to do the foregoing. Each Related Person will operate, or
cause to be operated, all of its material Oil and Gas Properties in accordance
with prudent industry practices.
(f) Maintenance of Existence and Qualifications. Each Related Person
which is a corporation or partnership will maintain and preserve its corporate
or partnership existence (except for any mergers or consolidations expressly
permitted by this Agreement and except for the dissolution of any Restricted
Subsidiaries which no longer have any significant business or assets) 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 would not
have a material probability of having a Material Adverse Effect.
(g) Payment of Trade Liabilities, Taxes, etc. Each Related Person will (i)
timely file all required tax returns; (ii) timely pay all taxes, assessments,
and other governmental charges or
45
levies imposed upon it or upon its income, profits or property; (iii) within
ninety (90) days after the same becomes due pay all Liabilities owed by it on
ordinary trade terms to vendors, suppliers and other Persons providing goods and
services used by it in the ordinary course of its business; (iv) pay and
discharge when due all other material Liabilities now or hereafter owed by it;
and (v) maintain appropriate accruals and reserves for all of the foregoing in
accordance with GAAP. Each Related Person may, however, delay paying or
discharging any of the foregoing so long as it is in good faith contesting the
validity thereof by appropriate proceedings and has set aside on its books
adequate reserves therefor.
(h) Insurance. Each Related Person will keep or cause to be kept
adequately insured by financially sound and reputable insurers its surface
equipment, vehicles and all other property of a character usually insured by
similar Persons engaged in the same or similar businesses in the relevant area
of operations. Each Related Person shall at all times maintain adequate
insurance against its liability for injury to persons or property, which
insurance shall be by financially sound and reputable insurers and shall provide
the coverages usually maintained by similar Persons in the relevant area of
operations.
(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 out-
of-pocket costs and expenses (including reasonable attorneys' fees) incurred by
or on behalf of (i) Administrative Agent in connection with the negotiation,
preparation, execution and delivery of the Loan Documents, and any and all
consents, waivers or other documents or instruments relating thereto, and the
filing, recording, refiling and re-recording of any Loan Documents and any other
documents or instruments or further assurances required to be filed or recorded
or refiled or re-recorded by the terms of any Loan Document, and (ii)
Administrative Agent or any Lender in connection with the defense or enforcement
of the Loan Documents or the defense of Administrative Agent's or any Lender's
exercise of its rights thereunder (including reasonable costs and expenses of
determining whether and how to carry out such defense or enforcement).
(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, Administrative Agent or any Lender may
pay the same. Borrower shall immediately reimburse Administrative Agent or any
such Lender for any such payments and each amount paid by Administrative Agent
or any such Lender shall constitute an Obligation owed hereunder which is due
and payable on the date such amount is paid by Administrative Agent or such
Lender.
(k) Interest. Borrower hereby promises to Administrative Agent and
Lenders to pay interest 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 Administrative Agent or any Lender) and which
are not paid when due. Such interest shall accrue from the date such
Obligations become due until they are paid.
(l) Compliance with Agreements and Law. Each Related Person will perform
all obligations it is required to perform under the terms of each indenture,
mortgage, deed of trust,
46
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, except where the failure to do so would not have a material probability
of having a Material Adverse Effect. Each Related Person will conduct its
business and affairs in compliance with all laws, regulations, and orders
applicable thereto, including Environmental Laws, except where the failure to do
so would not have a material probability of having a Material Adverse Effect.
Without limitation of the foregoing, no Related Person will knowingly transport
or arrange for the transportation or disposal of any Hazardous Material in
violation of any Environmental Laws, and no Related Person will incur any
material Liability under any Environmental Laws or in connection with the
release into the environment, or the storage or disposal, of any Hazardous
Materials.
(m) Evidence of Compliance. Borrower will at its own expense furnish to
each Lender all evidence which Administrative Agent from time to time reasonably
requests in writing 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.
Section 5.2. Negative Covenants. To conform with the terms and
conditions under which each Lender is willing to have credit outstanding to
Borrower, and to induce Administrative Agent and each Lender to enter into this
Agreement and make the Loans, Borrower and each other Related Person which is a
party hereto covenants and agrees that until the full and final payment of the
Obligations and the termination of this Agreement, unless Majority Lenders have
previously agreed otherwise:
(a) Guaranties and Indebtedness. No Restricted Subsidiary will at any
time have any Liability under any guaranty of any Indebtedness other than
guaranties of the Obligations and guaranties constituting Permitted Priority
Senior Indebtedness. No Related Person will guarantee any Liability of any
Unrestricted Subsidiary or of any Restricted Subsidiary which is obligated for
Non-Recourse Indebtedness. No Related Person will directly or indirectly
create, incur, assume, guarantee, or otherwise become or be liable with respect
to any Indebtedness except:
(i) the Obligations;
(ii) Permitted Priority Senior Indebtedness owing by any Related
Person;
(iii) Additional Senior Indebtedness owing by Borrower (but no other
Related Person) which is not Permitted Priority Senior Indebtedness;
(iv) Subordinated Indebtedness owing by Borrower (but no other Related
Person);
(v) Indebtedness owing by Borrower (but no other Related Person)
arising under Derivative Contracts, provided that such Derivative Contracts
are in compliance with Section 5.2(g);
(vi) Indebtedness in respect of Permitted Production Payments;
47
(vii) Intercompany Indebtedness; and
(viii) Non-Recourse Indebtedness owing by any Restricted Subsidiary,
provided in each case that, both immediately before and after such Indebtedness
is created, incurred, assumed, guaranteed, or otherwise becomes a liability of
any such Related Person, no Borrowing Base Deficiency, Default under Section
5.2, or Event of Default exists (unless the proceeds of such Indebtedness are
applied in such a way that no Borrowing Base Deficiency or Default exists
immediately thereafter). For the purposes of this subsection, any Indebtedness
owing by a Person at the time it becomes a Restricted Subsidiary shall be deemed
to have been incurred at such time.
(b) Prepayments of Subordinated Indebtedness. No Related Person will make
any unscheduled payment on any Subordinated Indebtedness, except:
(i) unscheduled payments of any Subordinated Indebtedness in exchange
for, or out of the aggregate net cash proceeds of a substantially
concurrent issuance and sale (other than to another Related Person) of Non-
Redeemable Common Stock or of options or warrants giving the holders
thereof only the right to acquire Non-Redeemable Common Stock;
(ii) unscheduled payments of any Subordinated Indebtedness in exchange
for, or out of the aggregate net cash proceeds of a substantially
concurrent incurrence (other than to another Related Person) of new
Subordinated Indebtedness of Borrower that is permitted under subsection
(iv) of the immediately preceding subsection (a), provided that such new
Subordinated Indebtedness has a stated interest rate that is the same or
less than the stated interest rate of the Subordinated Indebtedness being
paid, purchased, redeemed, defeased, acquired, or retired, and has a
weighted average life to maturity that is longer than the weighted average
life to maturity of the Subordinated Indebtedness being paid, purchased,
redeemed, defeased, acquired, or retired; and
(iii) other unscheduled payments of any Subordinated Indebtedness,
provided that Borrower must give Agent and each Lender at least forty-five
(45) days' advance notice of its decision to do so and must defer making
any such unscheduled payments until (1) Majority Lenders have determined
whether or not to designate a new Borrowing Base pursuant to Section
2.11(c), (2) any Borrowing Base Deficiency (whether resulting from such a
designation or previously existing) has been eliminated, and (3) no Default
exists.
Each Related Person will take all actions (such as, for example, reinvesting
asset sales proceeds or using asset sales proceeds to pay the Obligations or
Additional Senior Indebtedness) necessary to avoid becoming obligated to make
any unscheduled payment on any Subordinated Indebtedness except as provided
above. For the purpose of this subsection, Section 2.11, and the immediately
following subsection (c), "unscheduled payment" means any payment on or
purchase, redemption, defeasance, or other acquisition or retirement for value
of any Subordinated Indebtedness or Additional Senior Indebtedness, excluding
only principal payments and sinking fund payments which are scheduled to occur
at specified times in the documents
48
governing such Indebtedness without regard to the occurrence of any default,
triggering event (such as asset sales, failure to maintain financial ratios, or
a change of control) or other contingency. For the purpose of this subsection,
the "weighted average life to maturity" of any Subordinated Indebtedness means,
as of any date of determination, the quotient of (1) the sum of the products of
(A) the number of years (and any portion thereof) from such date of
determination to the date of each successive scheduled payment of principal on
such Subordinated Indebtedness, times (B) the amount of each such scheduled
payment, divided by (2) the sum of all such scheduled payments.
(c) Prepayments of Additional Senior Indebtedness. No Related Person will
make any unscheduled payment (as defined in the immediately preceding subsection
(b)) on any Additional Senior Indebtedness at any time when a Borrowing Base
Deficiency or Default exists (unless immediately after the making of such
unscheduled payment no Borrowing Base Deficiency or Default will exist) or if
such incurrence would cause any Borrowing Base Deficiency or Default to exist.
Each Related Person will take all actions necessary to avoid becoming obligated
to make any unscheduled payment on any Additional Senior Indebtedness in
violation of the preceding sentence.
(d) Limitation on Liens. No Related Person will create, assume or permit
to exist any Lien other than Permitted Liens upon any of the properties or
assets which it now owns or hereafter acquires.
(e) Limitation on Mergers, Issuances of Securities. Except as expressly
provided in this subsection no Related Person will merge or consolidate with or
into any other business entity. Any Unrestricted Subsidiary may be merged into
or consolidated with another Unrestricted Subsidiary (including any Restricted
Subsidiary which in compliance herewith is designated as an Unrestricted
Subsidiary in anticipation of such merger) or any other Person that is not a
Related Person. Any Person may be merged into or consolidated with (i) a
Restricted Subsidiary, so long as a Restricted Subsidiary is the surviving
business entity and no Default is caused by such merger, or (ii) Borrower, so
long as Borrower is the surviving business entity and no Default is caused by
such merger. Borrower will not hereafter issue any Equity Interests other than
shares of Non-Redeemable Common Stock and any options or warrants giving the
holders thereof only the right to acquire Non-Redeemable Common Stock. No
Restricted Subsidiary will hereafter issue any Equity Interests, other than
Permitted Preferred Trust Securities, and, to the extent not otherwise forbidden
under the terms hereof, Equity Interests issued to another Related Person. No
Restricted Subsidiary which is a partnership will allow any diminution of
Borrower's interest (direct or indirect) therein.
(f) Limitation on Sales of Property. No Related Person will sell, lease,
exchange, alienate, dispose of, or otherwise transfer any of its material assets
or properties or any material interest therein to any Person other than a
Related Person, except:
(i) equipment or other tangible personal property which is worthless
or obsolete or which is replaced by items of equal suitability and value.
49
(ii) oil, gas and other hydrocarbons which are sold in the ordinary
course of business after production or processing, and parcels of
California surface real estate (excluding mineral rights) which are sold in
the ordinary course of business.
(iii) other assets and properties (including sales of Permitted
Production Payments or of all, or any part, of the stock of or partnership
interests in any of Borrower's Subsidiaries) which are sold or otherwise
transferred on an arm's-length basis, provided that (1) the receipt of any
consideration therefor other than cash will be deemed the making of an
Investment by the Related Person which receives such consideration, and
such sale or other transfer may be made only if such Investment can be made
in compliance herewith after giving effect to such sale or transfer, and
(2) any sale or other transfer to any of such Related Person's Affiliates
must also be in compliance with Section 5.2(j).
No Related Person will otherwise sell, transfer or otherwise dispose of capital
stock of any Restricted Subsidiary except that any Restricted Subsidiary may
sell or issue its own capital stock to the extent permitted under Section
5.2(e). No Related Person will discount, sell, pledge or assign any notes
payable to it, accounts receivable or future income except to the extent
expressly permitted under the Loan Documents.
(g) Derivative Contracts. No Restricted Subsidiary will be a party to or
be bound by any Derivative Contract. Borrower will not be a party to or bound
by any Derivative Contract, unless:
(i) such Derivative Contract, at the time it is entered into,
qualifies under GAAP as a hedge of oil and gas production, floating rate
Indebtedness, or foreign currency needs (and not as a speculative
investment) and is entered into by Borrower in the ordinary course of the
Related Persons' businesses.
(ii) such Derivative Contract does not require any Related Person to
provide any Lien to secure Borrower's obligations thereunder, except for
Permitted Liens described in subsection (j) of the definition thereof in
Section 1.1.
(iii) all Derivative Contracts relating to the Related Persons'
anticipated total sales (measured in unit volumes, not by sales price) of
oil and gas in the ordinary course of their businesses (excluding any such
production committed to fixed price sales contracts) do not, in the
aggregate, cover amounts greater than the percentages of the Related
Persons' production (determined looking only to anticipated production from
reserves which are proved, developed producing reserves at the time in
question and excluding any such production committed to fixed price sales
contracts) for terms which are longer than those set out in the following
table:
50
Percentage of Anticipated Production Length of Contract Terms
------------------------------------ ------------------------
0% to but not including 20% up to 7 years
20% to but not including 40% up to 5 years
40% to but not including 60% up to 3 years
60% to but not including 80% up to 1 year
over 80% up to 3 months
(h) Restricted Payments and Investments. No Related Person will incur any
Liability to make any Investment in any Restricted Subsidiary which is obligated
for Non-Recourse Indebtedness. No Related Person will make any Investment in
any Restricted Subsidiary which is obligated for Non-Recourse Indebtedness at
any time when, either immediately before or after giving effect to such
Investment, any Borrowing Base Deficiency, Default under Section 5.2, or Event
of Default would exist. No Related Person will declare, make or incur any
Liability to make any Restricted Payment or any Restricted Investment (including
the sale, issuance or entering into of any Allowed Put), unless both immediately
before and after giving effect to such action:
(i) no Borrowing Base Deficiency, Default under Section 5.2, or Event
of Default would exist, and
(ii) the sum of the aggregate amount of Restricted Investments
(valued immediately after such action), plus the aggregate amount of
Restricted Payments of the Related Persons declared or made during the
period commencing on January 1, 1996, and ending on the date such
Restricted Payment or Restricted Investment is declared or made, inclusive,
would not exceed the sum of
(1) $10,000,000, plus
(2) 50% of Adjusted Net Income for such period (or minus 100% of
Adjusted Net Income for such period if Adjusted Net Income for such period
is a loss), plus
(3) twenty-five percent (25%) of the aggregate proceeds (whether
or not in cash, but net of transaction costs) in excess of $130,000,000
received after December 31, 1995 and prior to January 1, 1998 from sales,
exchanges, conversions or other issuances of Equity Interests of any kind,
including the TECONS and other Permitted Preferred Trust Securities, by
Borrower or any of its Restricted Subsidiaries (other than from issuances
to each other which are permitted hereunder), plus
(4) fifty percent (50%) of the aggregate proceeds (whether or
not in cash, but net of transaction costs) received on or after January 1,
1998 and through the end of such period from sales, exchanges, conversions
or other issuances of Equity Interests of any kind, including Permitted
Preferred Trust Securities, by
51
Borrower or any of its Restricted Subsidiaries (other than from issuances
to each other which are permitted hereunder), plus
(5) the aggregate net cash proceeds received during such period
by the Related Persons, after elimination of inter-company transactions
between themselves, constituting a return of capital from any Restricted
Investment
Notwithstanding the foregoing subsection (ii), Borrower may make the
following Restricted Payments and Restricted Investments (which will
nonetheless be included in all calculations thereafter made under such
subsection (ii)):
(A) so long as no Default under Section 5.2 or Event of Default has
occurred and is continuing, quarterly dividends of not more than $17.50 per
share on Borrower's 7% Cumulative Convertible Preferred Stock which is
outstanding as of the date hereof.
(B) the payment of any dividend on any other capital stock of any
Related Person within 60 days after the date of declaration thereof, if at
such declaration date such declaration complied with the foregoing
subsections (i) and (ii) (and such payment shall be deemed to have been
paid on such date of declaration for purposes of any calculation required
by the provisions of such subsection (ii)).
(C) so long as no Default under Section 5.2 or Event of Default has
occurred and is continuing, repurchases or redemptions by Borrower of any
shares of its 7% Cumulative Convertible Preferred Stock, but only to the
extent that Borrower is required to do so pursuant to Article 10 (as in
effect on the date hereof) of the Stock Purchase Agreement dated May 28,
1992 between Borrower and The 1818 Fund, L.P.
(i) Limitation on Acquisitions, New Businesses, and Margin Stock. 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 other
than the Oil and Gas Business, the development or sale of California surface
real estate (excluding mineral rights) currently owned or as part of future
acquisitions of Oil and Gas Properties in California, or activities ancillary to
the foregoing, (iii) make any significant acquisitions of or investments in any
properties other than Oil and Gas Properties, the foregoing California real
estate, and ancillary properties used or useful in the Oil and Gas Business.
Borrower will not at any time, directly or indirectly, own "margin stock" (as
such term is defined in Regulations U and G promulgated by the Board of
Governors of the Federal Reserve System) which constitute more than twenty-five
percent of the value of Borrower's assets, and Borrower will not use the
proceeds of any Advances to acquire five percent or more of any class of
publicly-traded Equity Interests issued by any Person.
(j) Transactions with Affiliates. No Related Person will engage in any
material transaction (including any series of related transactions, but
excluding any extension of credit to employees which is described in subsection
(c) of the definition herein of "Restricted Investment") with any of its
Affiliates (other than another Related Person) unless (i) the terms of such
transaction are at least as favorable to it as those which would be obtainable
at the time in
53
arm's-length dealings with Persons who are not its Affiliates, and (ii) if such
transaction involves payments in excess of $5,000,000, a majority of those
members of Borrower's Board of Directors who are not related to such Affiliate
have approved such transaction.
(k) Certain Prohibited Contracts; Torch Agreements; 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 Restricted
Subsidiary to: (i) pay dividends or make other distributions to Borrower or
another Restricted Subsidiary, (ii) redeem Equity Interests held in it by
Borrower or another Restricted Subsidiary, (iii) repay loans and other
Indebtedness owing by it to Borrower or another Restricted Subsidiary, or (iv)
transfer any of its assets to Borrower or another Restricted Subsidiary (other
than leased assets or licenses which require the lessor's or licensor's consent
to any transfer). 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. Borrower will promptly notify Administrative
Agent and each Lender in writing not less than ninety days prior to any proposed
amendment or supplement to or replacement or termination of the Torch
Administrative Services Agreement, the Torch Operating Agreement or any related
marketing agreement, with a copy of any such proposed amendment, supplement or
replacement, and following any such amendment, supplement or replacement,
Borrower will promptly furnish to Administrative Agent and each Lender a copy
thereof. No Related Person will incur any obligation to contribute to any
"multiemployer plan" as defined in Section 4001 of ERISA.
(l) Unrestricted Subsidiaries; Maximum Non-Recourse Indebtedness.
Borrower will not have any Subsidiary that is neither a Restricted Subsidiary
nor an Unrestricted Subsidiary. Borrower will insure that (i) no Unrestricted
Subsidiary creates, incurs, assumes or otherwise becomes liable with respect to
any Indebtedness other than Non-Recourse Indebtedness, and (ii) no Unrestricted
Subsidiary or Restricted Subsidiary will create, incur, assume or otherwise
become liable with respect to any Non-Recourse Indebtedness if, after the
creation, incurrence or assumption thereof, the aggregate outstanding amount of
Non-Recourse Indebtedness owing by Unrestricted Subsidiaries and Restricted
Subsidiaries collectively (excluding accrued interest that is not past due)
would exceed the greater of (a) $150,000,000 or (b) fifteen percent (15%) of the
book value of Borrower's and Unrestricted Subsidiaries' and Restricted
Subsidiaries' consolidated assets (determined as of the end of Borrower's most
recently ended Fiscal Quarter). Borrower will (without violating Section
5.2(h) or any other provision of any Loan Document) insure that each
Unrestricted Subsidiary complies with each indenture, mortgage, deed of trust,
security agreement, lease, franchise, agreement, contract or other instrument or
obligation to which such Unrestricted Subsidiary is a party or by which it or
any of its properties is bound, and with all laws, regulations, and orders
applicable to such Unrestricted Subsidiary or its properties, business and
affairs, including Environmental Laws, if such Unrestricted Subsidiary's failure
so to comply would impose any Liability on any Related Person, require any
Related Person to pay or perform any Liability owing by any Unrestricted
Subsidiary, or otherwise have a material probability of having a Material
Adverse Effect. Borrower will (without violating Section 5.2(h) or any other
provision of any Loan Document) insure that no Unrestricted Subsidiary takes, or
omits to take, any action if such action or omission would cause Borrower to be
unable to remake its representations and warranties hereunder.
53
(m) EBITDA to Fixed Charges. At the end of any Fiscal Quarter the ratio
of (i) EBITDA for the four-Fiscal Quarter period ending with such Fiscal Quarter
to (ii) Fixed Charges for the same four-Fiscal Quarter period, will not be less
than 3.0 to 1. As used in this subsection:
"EBITDA" means the sum, without duplication, determined for Borrower
and its Restricted Subsidiaries on a consolidated basis for the period in
question, of:
(a) Adjusted Net Income for such period, determined after excluding:
(i) all extraordinary gains or losses, (ii) all gains or losses from sales
of assets (other than sales of hydrocarbons in the ordinary course of
business), and (iii) the net income (or net loss) of any Person combined
with Borrower or any Restricted Subsidiary on a "pooling of interests"
basis to the extent the same is attributable to any period prior to the
date of combination, plus
(b) all interest expenses (other than interest attributable to dollar-
denominated Permitted Production Payments), income taxes, adjustments for
depreciation and amortization, and other non-cash charges, to the extent
any of the foregoing were taken into account in determining such Adjusted
Net Income, minus
(c) all non-cash gains and revenues that were taken into account in
determining such Adjusted Net Income.
"Fixed Charges" means the sum, without duplication, determined for
Borrower and its Restricted Subsidiaries on a consolidated basis for the
period in question, of:
(i) all interest of any kind (including the interest component
of capitalized leases) paid, or required to be paid, in cash during such
period on all consolidated Indebtedness of Borrower and its Restricted
Subsidiaries (other than interest attributable to dollar-denominated
Permitted Production Payments, fees and transaction costs for any issuances
of Indebtedness which are accounted for as interest and are actually paid
by Borrower from the proceeds of such issuances, and interest expense of
any Person combined with Borrower or any Restricted Subsidiary on a
"pooling of interests" basis to the extent the same is attributable to any
period prior to the date of combination), plus
(ii) all cash payments (without duplication) by Borrower or any
Restricted Subsidiary with respect to (1) the TECON Debentures or any other
Permitted Subordinated Trust Indebtedness or (2) the TECONS or any other
Permitted Preferred Trust Securities, plus
(iii) all payments by Borrower and its Restricted Subsidiaries
on Derivative Contracts relating to interest rates which were made, or
required to be made, in cash during such period (reduced by all of
Borrower's and its Restricted Subsidiaries' consolidated cash receipts on
such Derivative Contracts which were received during such period), plus
54
(iv) all fees, discounts, commissions and other charges paid, or
required to be paid, in cash by Borrower and its Restricted Subsidiaries
during such period with respect to bankers' acceptances, letters of credit,
or applications or reimbursement agreements therefor, plus
(v) all cash dividends paid during such period on any preferred
stock issued by Borrower or any Restricted Subsidiary (other than dividends
payable to each other which are permitted hereunder).
(n) Indebtedness to Capitalization. The ratio of (i) the aggregate amount
of Consolidated Funded Indebtedness to (ii) the sum of (1) Adjusted Net Worth
plus (2) Consolidated Funded Indebtedness, shall not exceed 0.65 to 1 at any
time.
ARTICLE VI - Intentionally Omitted
---------------------
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 fails to pay the principal amount of any Obligation
owed by it when due and payable, whether at a date for the payment of a fixed
installment or as a contingent or other payment becomes due and payable or as a
result of acceleration or otherwise;
(b) Any Related Person fails to pay any interest or other amounts
(excluding principal) constituting Obligations owed by it within five days after
when such interest or other Obligation is due and payable, whether at a date
specified for the payment thereof or as a contingent or other payment becomes
due and payable or as a result of acceleration or otherwise;
(c) Any Related Person fails to duly observe, perform or comply with any
covenant, agreement or provision of Section 5.1(d)(ii) or of Sections 5.2(m) or
(n);
(d) Any Related Person fails (other than as referred to in subsections
(a), (b) and (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 Administrative Agent 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 Administrative Agent;
(f) Any Related Person (i) fails to pay any portion, when such portion is
due, of any Indebtedness (other than the Obligations) owing by it (whether as
principal, guarantor or
55
otherwise) in an aggregate amount in excess of $5,000,000, or (ii) breaches or
defaults in the performance of any agreement or instrument by which any such
Indebtedness is issued, evidenced, governed, or secured, and any such failure,
breach or default continues beyond any applicable period of grace provided
therefor;
(g) Either (i) any "accumulated funding deficiency" (as defined in Section
412(a) of the Internal Revenue Code of 1986, as amended) in excess of $5,000,000
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 $5,000,000 (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);
(h) any Change of Control occurs; and
(i) 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 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 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 $5,000,000 (not covered by insurance satisfactory to
Administrative Agent in its discretion), and either (1) enforcement
proceedings upon such judgment are commenced prior to such judgment being
stayed, or (2) sixty days elapse after the date of entry of such judgment
without an appeal or appropriate proceeding for review thereof being taken
and a stay of enforcement pending such appeal being obtained; or
56
(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,
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.
Section 7.2. Acceleration; Other Remedies. Upon the occurrence of an
Event of Default described in subsection (i)(i), (i)(ii) or (i)(iii) of Section
7.1 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 Borrower
and each Related Person who at any time ratifies or approves this Agreement.
Upon any such acceleration, any obligation of any Lender to make any further
Advances shall be terminated. During the continuance of any other Event of
Default, Administrative Agent may (provided it has received the consent of
Majority Lenders), at any time and from time to time and without notice to
Borrower or any other Related Person, do either or both of the following:
(a) terminate any obligation of Lenders to make Advances hereunder,
and
(b) 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.
After the occurrence of any Event of Default Administrative Agent may, on behalf
of itself and Lenders, protect and enforce their rights under the Loan Documents
by any appropriate proceedings, including proceedings to obtain specific
performance of any covenant or agreement contained in any Loan Document or to
enforce any other legal or equitable right. All rights, remedies and powers
conferred upon Administrative Agent and Lenders 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; provided that no
Lender shall individually give any notice to any holder of Subordinated
Indebtedness (or any trustee for such holders) which would have the effect of
suspending payments on such Subordinated Indebtedness, and any such notice shall
be given only by Administrative Agent with the consent of Majority Lenders.
Section 7.3. Indemnity. AS USED IN THIS SECTION THE TERM "INDEMNIFIED
PARTIES" REFERS TO ADMINISTRATIVE AGENT, DOCUMENTATION AGENT, EACH LENDER, AND
EACH DIRECTOR, OFFICER, AGENT, ATTORNEY, EMPLOYEE, REPRESENTATIVE AND AFFILIATE
OF ADMINISTRATIVE AGENT, DOCUMENTATION AGENT OR ANY LENDER. BORROWER HEREBY
AGREES TO INDEMNIFY EACH INDEMNIFIED PARTY, 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
57
"LIABILITIES AND COSTS") WHICH TO ANY EXTENT (IN WHOLE OR IN PART) MAY BE
IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST SUCH INDEMNIFIED PARTY GROWING OUT
OF, RESULTING FROM OR IN ANY OTHER WAY ASSOCIATED WITH ANY OF THE LOAN DOCUMENTS
AND 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 ANY RELATED PERSON OR ANY INDEMNIFIED PARTY WITH
RESPECT TO HAZARDOUS MATERIALS FOUND IN OR RELEASED INTO THE ENVIRONMENT).
THE FOREGOING INDEMNITIES SHALL EXTEND TO THE INDEMNIFIED PARTIES
NOTWITHSTANDING THE SOLE OR CONCURRENT NEGLIGENCE OF EVERY KIND OR
CHARACTER WHATSOEVER, WHETHER ACTIVE OR PASSIVE, WHETHER AN AFFIRMATIVE ACT
OR AN OMISSION, INCLUDING ALL TYPES OF NEGLIGENT CONDUCT IDENTIFIED IN THE
RESTATEMENT (SECOND) OF TORTS, OF ONE OR MORE OF THE INDEMNIFIED PARTIES OR
BY REASON OF STRICT LIABILITY IMPOSED WITHOUT FAULT ON ONE OR MORE OF THE
INDEMNIFIED PARTIES,
UNLESS AND ONLY TO THE EXTENT THAT IT SHALL BE JUDICIALLY DETERMINED (INCLUDING
WITHOUT LIMITATION BY AGREED ALTERNATIVE DISPUTE RESOLUTION) THAT SUCH
LIABILITIES AND COSTS WERE PROXIMATELY CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF ANY INDEMNIFIED PARTY, IN WHICH EVENT THE FOREGOING INDEMNITIES
(A) SHALL CONTINUE FOR THE BENEFIT OF THE OTHER INDEMNIFIED PARTIES IN ALL
RESPECTS, AND (B) SHALL ALSO CONTINUE FOR THE BENEFIT OF SUCH INDEMNIFIED PARTY
BUT SHALL ONLY EXTEND TO THOSE PORTIONS OF THE LIABILITIES AND COSTS THAT ARE
NOT DETERMINED TO HAVE BEEN PROXIMATELY CAUSED BY THE GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OF SUCH INDEMNIFIED PARTY.
Section 7.4. Bank Accounts; Offset. To secure the repayment of the
Obligations, Borrower hereby grants to Administrative Agent and to each Lender a
right of offset, which shall be in addition to all other interests and rights of
Administrative Agent or any Lender at common law, under the Loan Documents, or
otherwise, and which shall be upon and against (a) any and all moneys,
securities or other property (and the proceeds therefrom) of Borrower now or
hereafter held or received by or in transit to Administrative Agent or any
Lender from or for the account of Borrower, whether for safekeeping, custody,
pledge, transmission, collection or otherwise, (b) any and all deposits (general
or special, time or demand, provisional or final) of Borrower with
Administrative Agent or any Lender, and (c) any other credits and claims of
Borrower at any time existing against Administrative Agent or any Lender,
including claims under certificates of deposit. At any time and from time to
time during the continuation of any Event of Default, each of Administrative
Agent and Lenders is hereby authorized to offset against the Obligations then
due and payable (without notice to Borrower) any and all items hereinabove
referred to. If Administrative Agent or any Lender ever exercises such right of
offset, it shall give Borrower notice of such offset promptly thereafter, but
failure or delay in giving such notice shall in no way affect the validity or
enforceability of such offset.
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ARTICLE VIII - Administrative Agent
--------------------
Section 8.1. Appointment and Authority. Each Lender hereby irrevocably
authorizes Administrative Agent, and Administrative Agent hereby undertakes, to
receive payments of principal, interest and other amounts due hereunder as
specified herein and to take all other actions and to exercise such powers under
the Loan Documents as are specifically delegated to Administrative Agent by the
terms hereof or thereof, together with all other powers reasonably incidental
thereto. The relationship of Administrative Agent to Lenders is only that of
one commercial bank acting as administrative agent for others, and nothing in
the Loan Documents shall be construed to constitute Administrative Agent a
trustee or other fiduciary for any holder of any of the Notes or of any
participation therein nor to impose on Administrative Agent duties and
obligations other than those expressly provided for in the Loan Documents. With
respect to any matters not expressly provided for in the Loan Documents and any
matters which the Loan Documents place within the discretion of Administrative
Agent, Administrative Agent shall not be required to exercise any discretion or
take any action, and it may request instructions from Lenders with respect to
any such matter, in which case it shall be required to act or to refrain from
acting (and shall be fully protected and free from liability to all Lenders in
so acting or refraining from acting) upon the instructions of Majority Lenders
(including itself), provided, however, that Administrative Agent shall not be
required to take any action which exposes it to a risk of personal liability
that it considers unreasonable or which is contrary to the Loan Documents or to
applicable law. Upon receipt by Administrative Agent from Borrower of any
communication calling for action on the part of Lenders or upon notice from any
Lender to Administrative Agent of any Default or Event of Default,
Administrative Agent shall promptly notify each Lender thereof.
Section 8.2. Exculpation, Administrative Agent's Reliance, Etc. NEITHER
ADMINISTRATIVE AGENT NOR ANY OF ITS DIRECTORS, OFFICERS, AGENTS, ATTORNEYS, OR
EMPLOYEES SHALL BE LIABLE FOR ANY ACTION TAKEN OR OMITTED TO BE TAKEN BY ANY OF
THEM UNDER OR IN CONNECTION WITH THE LOAN DOCUMENTS, INCLUDING THEIR NEGLIGENCE
OF ANY KIND, EXCEPT THAT EACH SHALL BE LIABLE FOR ITS OWN GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT. Without limiting the generality of the foregoing,
Administrative Agent (a) may treat the payee of any Note as the holder thereof
until Administrative Agent receives written notice of the assignment or transfer
thereof in accordance with this Agreement, signed by such payee and in form
satisfactory to Administrative Agent; (b) may consult with legal counsel
(including counsel for Borrower), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (c) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties or
representations made in or in connection with the Loan Documents, or for the
adequacy, accuracy or completeness of any title, environmental or other review
or evidence referred to in Article III; (d) shall not have any duty to ascertain
or to inquire as to the performance or observance of any of the terms, covenants
or conditions of the Loan Documents on the part of any Related Person or to
inspect the property (including the books and records) of any Related Person;
(e) shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of any Loan Document
or any instrument or document furnished in connection therewith; (f) may rely
upon the representations and warranties of the Related Persons and the Lenders
in exercising
59
its powers hereunder; and (g) shall incur no liability under or in respect of
the Loan Documents by acting upon any notice, consent, certificate or other
instrument or writing (including any telecopy, telegram, cable or telex)
believed by it to be genuine and signed or sent by the proper Person or Persons.
Section 8.3. Lenders' Credit Decisions. Each Lender acknowledges that it
has, independently and without reliance upon Administrative Agent or any other
Lender, made its own analysis of Borrower and the transactions contemplated
hereby and its own independent decision to enter into this Agreement and the
other Loan Documents. Each Lender also acknowledges that it will, independently
and without reliance upon Administrative Agent or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Loan Documents.
Section 8.4. Indemnification. AS USED IN THIS SECTION THE TERM
"INDEMNIFIED PARTIES" REFERS TO ADMINISTRATIVE AGENT AND EACH DIRECTOR, OFFICER,
AGENT, ATTORNEY, EMPLOYEE, REPRESENTATIVE AND AFFILIATE OF ADMINISTRATIVE AGENT.
EACH LENDER HEREBY AGREES TO INDEMNIFY EACH INDEMNIFIED PARTY, 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 SUCH INDEMNIFIED PARTY GROWING OUT
OF, RESULTING FROM OR IN ANY OTHER WAY ASSOCIATED WITH ANY OF THE LOAN DOCUMENTS
AND 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 ANY RELATED PERSON OR ANY INDEMNIFIED PARTY WITH
RESPECT TO HAZARDOUS MATERIALS FOUND IN OR RELEASED INTO THE ENVIRONMENT).
THE FOREGOING INDEMNITIES SHALL EXTEND TO THE INDEMNIFIED PARTIES
NOTWITHSTANDING THE SOLE OR CONCURRENT NEGLIGENCE OF EVERY KIND OR
CHARACTER WHATSOEVER, WHETHER ACTIVE OR PASSIVE, WHETHER AN AFFIRMATIVE ACT
OR AN OMISSION, INCLUDING ALL TYPES OF NEGLIGENT CONDUCT IDENTIFIED IN THE
RESTATEMENT (SECOND) OF TORTS, OF ONE OR MORE OF THE INDEMNIFIED PARTIES OR
BY REASON OF STRICT LIABILITY IMPOSED WITHOUT FAULT ON ONE OR MORE OF THE
INDEMNIFIED PARTIES,
UNLESS AND ONLY TO THE EXTENT THAT IT SHALL BE JUDICIALLY DETERMINED (INCLUDING
WITHOUT LIMITATION BY AGREED ALTERNATIVE DISPUTE RESOLUTION) THAT SUCH
LIABILITIES AND COSTS WERE PROXIMATELY CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF ANY INDEMNIFIED PARTY, IN WHICH EVENT THE FOREGOING INDEMNITIES
(A) SHALL CONTINUE FOR THE BENEFIT OF THE OTHER INDEMNIFIED PARTIES IN ALL
RESPECTS, AND (B) SHALL ALSO CONTINUE FOR THE BENEFIT OF SUCH INDEMNIFIED PARTY
BUT SHALL ONLY EXTEND TO THOSE PORTIONS OF THE LIABILITIES AND COSTS THAT ARE
60
NOT DETERMINED TO HAVE BEEN PROXIMATELY CAUSED BY THE GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OF SUCH INDEMNIFIED PARTY.
Section 8.5. Rights as Lender. In its capacity as a Lender,
Administrative Agent shall have the same rights and obligations as any Lender
and may exercise such rights as though it were not Administrative Agent.
Administrative Agent may accept deposits from, lend money to, act as Trustee
under indentures of, and generally engage in any kind of business with any of
the Related Persons or their Affiliates, all as if it were not Administrative
Agent hereunder and without any duty to account therefor to any other Lender.
Section 8.6. Sharing of Set-Offs and Other Payments. Each of
Administrative Agent and Lender agrees that if it shall, whether through the
exercise of rights under security documents or rights of banker's lien, set off,
or counterclaim against Borrower or otherwise, obtain payment of a portion of
the aggregate Obligations owed to it which, taking into account all
distributions made by Administrative Agent under Section 2.9, causes
Administrative Agent or such Lender to have received more than it would have
received had such payment been received by Administrative Agent and distributed
pursuant to Section 2.9, then (a) it shall be deemed to have simultaneously
purchased and shall be obligated to purchase interests in the Obligations as
necessary to cause Administrative Agent and all Lenders to share all payments as
provided for in Section 2.9, and (b) such other adjustments shall be made from
time to time as shall be equitable to ensure that Administrative Agent and all
Lenders share all payments of Obligations as provided in Section 2.9; provided,
however, that nothing herein contained shall in any way affect the right of
Administrative Agent or any Lender to obtain payment (whether by exercise of
rights of banker's lien, set-off or counterclaim or otherwise) of indebtedness
other than the Obligations. Borrower expressly consents to the foregoing
arrangements and agrees that any holder of any such interest or other
participation in the Obligations, whether or not acquired pursuant to the
foregoing arrangements, may to the fullest extent permitted by law exercise any
and all rights of banker's lien, set-off, or counterclaim as fully as if such
holder were a holder of the Obligations in the amount of such interest or other
participation. If all or any part of any funds transferred pursuant to this
section is thereafter recovered from the seller under this section which
received the same, the purchase provided for in this section shall be deemed to
have been rescinded to the extent of such recovery, together with interest, if
any, if interest is required pursuant to court order to be paid on account of
the possession of such funds prior to such recovery.
Section 8.7. Investments. Whenever Administrative Agent in good faith
determines that it is uncertain about how to distribute to Lenders any funds
which it has received, or whenever Administrative Agent in good faith determines
that there is any dispute among Lenders about how such funds should be
distributed, Administrative Agent may choose to defer distribution of the funds
which are the subject of such uncertainty or dispute. If Administrative Agent
in good faith believes that the uncertainty or dispute will not be promptly
resolved, or if Administrative Agent is otherwise required to invest funds
pending distribution to Lenders, Administrative Agent shall invest such funds
pending distribution; all interest on any such investment shall be distributed
upon the distribution of such investment and in the same proportion and to the
same Persons as such investment. All moneys received by Administrative Agent
for distribution to Lenders (other than to the Person who is Administrative
Agent in its separate capacity as a Lender) shall be held by Administrative
Agent pending such distribution solely as Administrative
61
Agent for such Lenders, and Administrative Agent shall have no equitable title
to any portion thereof.
Section 8.8. Benefit of Article VIII. The provisions of this Article
(other than the following Section 8.9) are intended solely for the benefit of
Administrative Agent and Lenders, and no Related Person shall be entitled to
rely on any such provision or assert any such provision in a claim or defense
against Administrative Agent or any Lender. Administrative Agent and Majority
Lenders may waive or amend such provisions (other than the following Section
8.9) as they desire without any notice to or consent of Borrower or any Related
Person.
Section 8.9. Resignation. Administrative Agent may resign at any time by
giving written notice thereof to Lenders and Borrower, which notice shall set
forth the date of such resignation. Administrative Agent may be removed at any
time, with or without cause, by action of Majority Lenders. Upon any such
resignation or removal, Borrower may, with the written concurrence of Majority
Lenders, designate a successor Administrative Agent. If within fifteen days
after the date of such resignation or removal Borrower makes no such designation
or such written concurrence is not given, Majority Lenders shall have the right
to appoint a successor Administrative Agent. A successor must be appointed for
any retiring or removed Administrative Agent, and such Administrative Agent's
resignation or removal shall become effective when such successor accepts such
appointment. If, within thirty days after the date of the Administrative
Agent's resignation or removal, no successor Administrative Agent has been
appointed and has accepted such appointment, then the retiring or removed
Administrative Agent may appoint a successor Administrative Agent, which shall
be a commercial bank organized or licensed to conduct a banking or trust
business under the laws of the United States of America or of any state thereof.
Upon the acceptance of any appointment as Administrative Agent hereunder by a
successor Administrative Agent, the retiring or removed Administrative Agent
shall be discharged from its duties and obligations under this Agreement and the
other Loan Documents. After any resignation or removal of an Administrative
Agent hereunder, the provisions of this Article VIII shall continue to inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under the Loan Documents.
ARTICLE IX - Miscellaneous
-------------
Section 9.1. Waivers and Amendments; Acknowledgements.
(a) Waivers and Amendments. No failure or delay (whether by course of
conduct or otherwise) by Administrative Agent or any Lender in exercising any
right, power or remedy which Administrative Agent or such Lender may have 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
Administrative Agent or such 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 as provided
below in this section, 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
62
or other circumstances. No waiver, consent, release, modification or amendment
of or supplement to this Agreement or the other Loan Documents shall be valid or
effective against any party hereto unless the same is in writing and signed by
(i) if such party is Borrower, by Borrower, (ii) if such party is Administrative
Agent, by Administrative Agent and (iii) if such party is a Lender, by such
Lender or by Administrative Agent on behalf of Lenders with the written consent
of Majority Lenders (which consent has already been given as provided in Section
9.7). Notwithstanding the foregoing or anything to the contrary herein,
Administrative Agent shall not, without the prior consent of each individual
Lender affected thereby, execute and deliver on behalf of such Lender any waiver
or amendment which would: (1) waive any of the conditions specified in Article
III (provided that Administrative Agent may in its discretion withdraw any
request it has made under Section 3.2(f)), (2) increase any Lender's commitment
to make Advances to any amount greater than its Percentage Share of
$400,000,000, (3) reduce any fees hereunder, or the principal of, or interest
on, such Lender's Note, (4) postpone any date fixed for any payment of any fees
hereunder, or principal of, or interest on, such Lender's Note, (5) amend the
definition herein of "Majority Lenders" or "Supermajority Lenders", or otherwise
change the aggregate amount of Percentage Shares which is required for
Administrative Agent, Lenders or any of them to take any particular action under
the Loan Documents, or amend this Section 9.1(a), or (6) release Borrower from
its obligation to pay such Lender's Note.
(b) Acknowledgements and Admissions. Borrower hereby represents,
warrants, acknowledges and admits that (i) it has been advised by counsel in the
negotiation, execution and delivery of the Loan Documents to which it is a
party, (ii) neither Administrative Agent nor any Lender has any fiduciary
obligation toward Borrower with respect to any Loan Document or the transactions
contemplated thereby, (iii) the relationship pursuant to the Loan Documents
between Borrower, on one hand, and Administrative Agent and each Lender, on the
other hand, is and shall be solely that of debtor and creditor, respectively,
(iv no partnership or joint venture exists with respect to the Loan Documents
between any of Borrower, Administrative Agent and Lenders, (v) Administrative
Agent is not Borrower's Administrative Agent, but Administrative Agent for
Lenders, (vi) should an Event of Default or Default occur or exist
Administrative Agent and each 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, and (vii) without limiting any of the foregoing, Borrower is
not relying upon any representation or covenant by Administrative Agent or any
Lender, or any representative thereof, and no such representation or covenant
has been made, that Administrative Agent or any 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.
(c) Integration. This Agreement and the other Loan Documents set forth
the entire understanding between the parties hereto with respect to the
transactions contemplated herein and therein and supersede all prior discussions
and understandings, written or oral, with respect to the subject matter hereof
and thereof, and there are no representations, warranties, covenants,
undertakings or agreements by any of the parties hereto relating to the subject
matter hereof except as expressly set out in this Agreement or in another Loan
Document.
63
THIS WRITTEN AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Section 9.2. Survival of Agreements; Cumulative Nature. All of the
Related Persons' various representations, warranties, covenants and agreements
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 Loans and the delivery of the Notes and the other
Loan Documents, and shall further survive until all of the Obligations are paid
in full to Administrative Agent and Lenders and all of Administrative Agent's
and Lenders' obligations to Borrower are terminated. All statements and
agreements contained in any certificate or other instrument delivered by any
Related Person to Administrative Agent or any 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,
indemnities, and covenants made by the Related Persons in the Loan Documents,
and the rights, powers, and privileges granted to Administrative Agent and
Lenders 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
Administrative Agent or any Lender of any such representation, warranty,
indemnity, covenant, right, power or privilege. In particular and without
limitation, no exception set out in this Agreement to any representation,
warranty, indemnity, or covenant herein contained shall apply to any similar
representation, warranty, indemnity, or covenant contained in any other Loan
Document, and each such similar representation, warranty, indemnity, 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 9.3. 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 (provided
that Administrative Agent may give telephonic notices to Lenders), 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 Administrative Agent and the other Lenders at their addresses 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, as of the date of delivery at the address provided
herein, (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 Advances or Rate Election shall
become effective until actually received by Administrative Agent.
64
Section 9.4. Joint and Several Liability; Parties in Interest. (a) All
Obligations which are incurred by two or more Related Persons shall be their
joint and several obligations and liabilities. All grants, rights, 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 all Lenders. Neither any Related Person nor any
Affiliate of any Related Person shall directly or indirectly purchase or
otherwise retire any Obligations owed to any Lender nor will any Lender
knowingly accept any offer to do so, unless each Lender shall have received
substantially the same offer with respect to the same Percentage Share of the
Obligations owed to it. If any Related Person or any Affiliate of any Related
Person at any time purchases some but less than all of the Obligations owed to
Administrative Agent and all Lenders, such purchaser shall not be entitled to
any rights under the Loan Documents unless and until such Persons and their
Affiliates have purchased all of the Obligations.
(b) No Lender shall sell any participation interest in its commitment to
make Advances or any of its rights under its Loan or under the Loan Documents to
any Person other than an Eligible Transferee, and then only if the agreement
between such Lender and such participant at all times provides:
(i) that such participation exists only as a result of the agreement
between such participant and such Lender and that such transfer does not
give such participant any right to vote as a Lender or any other direct
claims or rights against any Person other than such Lender,
(ii) that such participant is not entitled to payment from any Related
Person under Sections 2.13 through 2.17 of amounts in excess of those
payable to such Lender under such sections (determined without regard to
the sale of such participation), and
(iii) unless such participant is an Affiliate of such Lender, that
such participant shall not be entitled to require such Lender to take any
action under any Loan Document or to obtain the consent of such participant
prior to taking any action under any Loan Document, except for actions
which would require the consent of all Lenders under subsection (a) of
Section 9.1.
No Lender selling such a participation shall, as between the other parties
hereto and such Lender, be relieved of any of its obligations hereunder as a
result of the sale of such participation. Each Lender which sells any such
participation to any Person (other than an Affiliate of such Lender) shall give
prompt notice thereof to Administrative Agent and Borrower.
(c) Except for sales of participations under the immediately preceding
subsection (b), no Lender shall make any assignment or transfer of any kind of
its commitment to make Advances or any of its rights under its Loan or under the
Loan Documents, except for assignments to an Eligible Transferee, and then only
if such assignment is made in accordance with the following requirements:
65
(i) Each such assignment:
(1) shall apply to all Obligations owing to the assignor Lender
under this Agreement and to the unused portion of the assignor Lender's
commitment to make Advances, so that after such assignment is made the
assignor Lender shall have a fixed (and not a varying) Percentage Share
(which shall be zero percent (0%) in the case of a total assignment) and be
committed to make that Percentage Share of all future Advances and the
assignee shall have a fixed (and not a varying) Percentage Share and be
committed to make that Percentage Share of all future Advances, and
(2) shall be in such an amount that, after such assignment is
made, neither the assignor Lender nor the assignee will have interests in
Loans and Notes under this Agreement which, together with their respective
unused commitments to make Advances (and any other Loans which may be held
by them hereunder), will be less than $15,000,000 in the aggregate
(provided that such $15,000,000 limit shall not apply to any assignment
made during the existence of any Event of Default).
(ii) The parties to each such assignment shall execute and deliver to
Administrative Agent, for its acceptance and recording in the "Register"
(as defined below in this section), an Assignment and Acceptance in the
form of Exhibit F, appropriately completed, together with the Note subject
to such assignment and a processing fee payable to Administrative Agent of
$3000. Upon such execution, delivery, and payment and upon the
satisfaction of the conditions set out in such Assignment and Acceptance,
then (1) Borrower shall issue new Notes to such assignor (if appropriate)
and assignee, and (2) as of the "Settlement Date" specified in such
Assignment and Acceptance the assignee thereunder shall be a party hereto
and a Lender hereunder and Administrative Agent shall thereupon deliver to
Borrower and each Lender a schedule showing the revised Percentage Shares
of such assignor Lender and such assignee Lender and the Percentage Shares
of all other Lenders.
(iii) Each assignee Lender which is not a United States person (as
such term is defined in Section 7701(a)(30) of the Internal Revenue Code of
1986, as amended) for Federal income tax purposes, shall (to the extent it
has not already done so) provide Administrative Agent and Borrower with the
"Prescribed Forms" referred to in Section 2.17(d).
(d) Nothing contained in this section shall prevent or prohibit any Lender
from assigning or pledging all or any portion of its Loan and Note to any
Federal Reserve Bank as collateral security pursuant to Regulation A of the
Board of Governors of the Federal Reserve System and any Operating Circular
issued by such Federal Reserve Bank; provided that no such assignment or pledge
shall relieve such Lender from its obligations hereunder.
(e) By executing and delivering an Assignment and Acceptance, each
assignee Lender thereunder will be confirming to and agreeing with
Administrative Agent and each other Lender
66
hereunder that such assignee understands and agrees to the terms of this
Agreement, including Section 2.11 and Article VIII hereof.
(f) Administrative Agent shall maintain a copy of each Assignment and
Acceptance and a register for the recordation of the names and addresses of the
Lenders and the commitment to make Advances of, and principal amount of the Loan
owing to, each Lender from time to time (in this section called the "Register").
The entries in the Register shall be conclusive, in the absence of manifest
error, and Borrower, Administrative Agent and Lenders may treat each person
whose name is recorded in the Register as a Lender hereunder for all purposes.
The Register shall be available for inspection by Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
Section 9.5. 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 Annotated Article 5069 (which regulates certain revolving
credit loan accounts and revolving tri-party accounts) does not apply to this
Agreement or to the Notes. Borrower hereby irrevocably submits itself and each
other Related Person to the non-exclusive jurisdiction of the state and federal
courts sitting in the State of Texas and agrees and consents that service of
process may be made upon it 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.
Section 9.6. Limitation on Interest. Administrative Agent, Lenders, the
Related Persons and any other parties to the Loan Documents intend to comply
strictly 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 by applicable law from time to time in
effect. Neither any Related Person nor any present or future guarantors,
indorsers, 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 permitted by
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. Administrative Agent and Lenders
expressly disavow any intention to contract for, receive, charge or collect
excessive unearned interest or finance charges in the event the maturity of any
Obligation is accelerated or any Obligation is prepaid. 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 maximum amount permitted by applicable law then in effect, or (c)
Administrative Agent or any 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 permitted by applicable law then in
effect, then all sums determined to constitute interest in excess of the maximum
amount then permitted by applicable law shall,
67
without penalty, be promptly applied to reduce the then outstanding principal of
the related Obligations or, if all Obligations have been paid in full or if
Administrative Agent or such Lender or holder otherwise prefers, 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,
Administrative Agent, Lenders 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 lawful rate of interest from time to time in effect
under applicable law. In the event applicable law provides for an interest
ceiling under (S)303 of the Texas Finance Code (the "Texas Finance Code") and
Chapter 1D of Title 79, Tex. Rev. Civ. Stats. 1925 ("Chapter 1D") as amended,
respectively for that day, the ceiling shall be the "indicated rate ceiling" or
"weekly ceiling" as defined in the Texas Finance Code and Chapter 1D 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 9.7. Termination; Limited Survival. In its sole and absolute
discretion Borrower may at any time that no Obligations are owing elect in a
written notice delivered to Administrative Agent to terminate this Agreement.
Upon receipt by Administrative Agent 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 Document, any
Obligations under Sections 2.13 through 2.17, and any obligations which any
Person may have to indemnify or compensate Administrative Agent or any Lender
shall survive any termination of this Agreement or any other Loan Document. At
the request and expense of Borrower, Administrative Agent shall prepare and
execute all necessary instruments to reflect and effect such termination of the
Loan Documents. Administrative Agent is hereby authorized to execute all such
instruments on behalf of all Lenders, without the joinder of or further action
by any Lender.
Section 9.8. 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 9.9. 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 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY KNOWINGLY,
VOLUNTARILY, INTENTIONALLY, AND IRREVOCABLY (A) WAIVES, TO THE MAXIMUM EXTENT
NOT PROHIBITED BY LAW, ANY
68
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON,
OR DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT OF, UNDER OR IN CONNECTION
WITH THE LOAN DOCUMENTS, BEFORE OR AFTER MATURITY; (B) 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 WAIVER, AND (C)
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 9.11. Restatement. Borrower has heretofore been indebted to
Lenders under the Original Agreement. Upon the execution and delivery of this
Agreement by each of the parties hereto: (a) any loans made under the Original
Agreement and outstanding as of the date hereof shall be deemed Loans made
hereunder as of the date hereof and shall be deemed made under, and evidenced
by, the Notes and subject to the terms and conditions hereof and thereof, (b)
the "Base Rate Portion" (as defined in the Original Agreement) of any such
outstanding loan shall constitute a Base Rate Portion hereunder, and (c) each
"Fixed Rate Portion" and related "Interest Period" (as defined in the Original
Agreement) of any such outstanding loan shall carryover and continue as a Fixed
Rate Portion hereunder, with an Interest Period ending on the last day of such
related "Interest Period", and in no event shall such carrying over and
continuing of such Fixed Rate Portions (i) constitute a payment or prepayment of
all or a portion of any "Fixed Rate Portion" or (ii) entitle any Lender to any
reimbursement under Section 2.16 of the Original Agreement or Section 2.16
hereof with respect thereto. This Agreement amends and restates the Original
Agreement in its entirety, and upon the effectiveness hereto, all terms and
provisions hereof shall supersede the terms and provisions thereof.
IN WITNESS WHEREOF, this Agreement is executed as of the date first written
above.
NUEVO ENERGY COMPANY
Borrower
By:
-------------------------------
Xxxxxx X. Xxxx
Senior Vice President and
Chief Financial Officer
Borrower's Address:
0000 Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Mr. Xxxxxx Xxxx
69
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
70
Percentage NATIONSBANK OF TEXAS, N.A.,
Share of as Administrative Agent and a Lender
Percentage Maximum
Share Loan Amount
---------- -----------
By:
------------------------------
Xxxx X. Xxxxxxx
Senior Vice President
11.25% $45,000,000
Address:
Houston Main Banking Center
Energy Finance Division
000 Xxxxxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xx. Xxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
NationsBank Plaza
Syndications Unit
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Xx. Xxxxx X. Xxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
00
XXXXXX XXXXXXXX XXXXX XXXXXXX XX
XXX XXXX, as Documentation Agent
10% $40,000,000 and a Lender
By:
------------------------------------
Xxxxxx X. Xxxx, Xx., Vice President
Address:
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Loan Department
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
00
XXXX XX XXXXXXXX,
8.25% $33,000,000 a Lender
By:
------------------------------
Name:
Title:
Address:
000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
73
BANQUE PARIBAS,
8.25% $33,000,000 a Lender
By:
-------------------------------
Name:
Title:
Address:
0000 Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxx-Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
74
BANKBOSTON, N.A.,
7% $28,000,000 a Lender
By:
-----------------------------
Xxxxxxxx Xxxxx, Vice President
Address:
000 Xxxxxxx Xxxxxx
Mailstop: 01-08-04
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxxx Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
75
BANKERS TRUST COMPANY,
7% $28,000,000 a Lender
By:
-------------------------------
Name:
Title:
Address:
Loan Div., MS 2141
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx
Attention: Xxxxx X. Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000 or 7351
76
CIBC INC.,
7% $28,000,000 a Lender
By:
------------------------------
Name:
Title:
Address:
0 Xxxxx Xxxx #0000
0000 Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Pluria Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
77
SOCIETE GENERALE,
7% $28,000,000 a Lender
By:
---------------------------------
Name:
Title:
Address:
0000 Xxxx Xx. #0000
Xxxxxx, Xxxxx 00000
Attention: Tequlla English
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
78
MELLON BANK, N.A.,
7% $28,000,000 a Lender
By:
-------------------------------
Name:
Title:
Address:
Three Mellon Bank Center
Room 2303
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
79
CHRISTIANIA BANK OG KREDITKASSE,
7% $28,000,000 a Lender
By:
------------------------------------
Name:
Title:
Address:
00 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
80
THE FIRST NATIONAL BANK OF CHICAGO,
7% $28,000,000 a Lender
By:
--------------------------------
Name:
Title:
Address:
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
81
ABN AMRO BANK, HOUSTON AGENCY,
7% $28,000,000 a Lender
By:
-------------------------------
Name:
Title:
Address:
Xxxxx Xxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
82
DEN NORSKE BANK ASA,
6.25% $25,000,000 a Lender
By:
--------------------------------------
Xxxxxxx X. Xxxx, Senior Vice President
By:
--------------------------------------
Name:
Title:
Address:
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
000 Xxxx Xxx., 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
83
LENDER SCHEDULE
Lender Percentage Share Maximum Loan Amount
------ ---------------- ------------------
NationsBank of Texas, N.A. 11.25% $45,000,000
Xxxxxx Guaranty Trust Company of New York 10.0% $40,000,000
Bank of Montreal 8.25% $33,000,000
Banque Paribas 8.25% $33,000,000
BankBoston, N.A. 7.0% $28,000,000
Bankers Trust Company 7.0% $28,000,000
CIBC Inc. 7.0% $28,000,000
Societe Generale 7.0% $28,000,000
Mellon Bank, N.A. 7.0% $28,000,000
Christiania Bank og Kreditkasse 7.0% $28,000,000
The First National Bank of Chicago 7.0% $28,000,000
ABN AMRO Bank, Houston Agency 7.0% $28,000,000
Den norske Bank ASA 6.25% $25,000,000
======= ============
TOTAL 100.0% $400,000,000
SCHEDULE 3
INITIAL ENGINEERING REPORTS
---------------------------
Consulting Firm Date of Evaluation
--------------- ------------------
Xxxxx Xxxxx Company 1/1/97
EXHIBIT A
PROMISSORY NOTE
$____________________ Dallas, Texas ___________,_____
FOR VALUE RECEIVED, the undersigned, Nuevo Energy Company, a Delaware
corporation (herein called "Borrower"), hereby promises to pay to the order of
________________________________________________, a national banking association
(herein called "Lender"), the principal sum of
______________________________________________________________________ Dollars
($__________), or, if greater or 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 the Administrative Agent under the Credit Agreement, 000 Xxxx
Xxxxxx, Xxxxxx, Xxxxx or at such other place within Dallas County, Texas, as
from time to time may be designated by the holder of this Note.
This Note (a) is issued and delivered under that certain Amended and
Restated Credit Agreement dated February 13, 1998 among Borrower, NationsBank of
Texas, N.A., as Administrative Agent, and the financial institutions (including
Lender) referred to therein (herein, as from time to time supplemented, amended
or restated, called the "Credit Agreement"), and is a "Note" as defined therein,
and (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. 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.
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 March, June,
September and December, beginning March 31, 1998, 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.
"Fixed Rate Payment Date" means, with respect to any Fixed Rate
Portion: (i) the day on which the related Interest Period ends (and, if
such Interest Period is three months or longer, the three-month anniversary
of the first day of such Interest Period), 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
1
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.
Upon the occurrence of certain events as set forth in the Credit Agreement,
all or a portion of the principal amount of this Note may be subject to
mandatory prepayment. The principal amount of this Note, together with all
interest accrued hereon, shall be due and payable in full on April 1, 2003.
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 an
interest ceiling under (S)303 of the Texas Finance Code (the "Texas Finance
Code") and Chapter 1D of Title 79, Tex. Rev. Civ. Stats. 1925 ("Chapter 1D") as
amended, respectively for that day, the ceiling shall be the "indicated rate
ceiling" or "weekly ceiling" as defined in the Texas Finance Code and Chapter 1D
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 indorsers, sureties
and guarantors of this Note jointly and severally agree to pay reasonable
2
attorneys' fees and collection costs to the holder hereof in addition to the
principal and interest payable hereunder.
Borrower and all indorsers, 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.
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.
NUEVO ENERGY COMPANY
By:
-----------------------------
Xxxxxx X. Xxxx
Senior Vice President and
Chief Financial Officer
3
EXHIBIT B
REQUEST FOR ADVANCES
--------------------
Reference is made to that certain Amended and Restated Credit Agreement
dated as of February 13, 1998 (as from time to time amended, the "Agreement"),
by and among Nuevo Energy Company, NationsBank of Texas, N.A., as Administrative
Agent, and certain financial institutions. 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 Lenders to make
Advances to Borrower in the aggregate principal amount of $ __________ and
specifies ____________, ____, as the date Borrower desires for Lenders to make
such Advances and for Administrative Agent to deliver to Borrower the proceeds
thereof.
To induce Lenders to make such Advances, Borrower hereby represents,
warrants, acknowledges, and agrees to and with Administrative Agent and each
Lender that:
(a) The officer of Borrower signing this instrument is the duly
elected, qualified and acting officer of Borrower 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 Borrower 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 9.1(a) of the Agreement; nor will any such Default
exist upon Borrower's receipt and application of the Advances requested
hereby. Borrower will use the Advances hereby requested in compliance with
Section 2.3 of the Agreement.
(d) Except to the extent waived in writing as provided in Section
9.1(a) of the Agreement, Borrower has performed and complied with all
agreements and conditions in the Agreement required to be performed or
complied with by Borrower on or prior to the date hereof, and each of the
conditions precedent to Advances contained in the Agreement remains
satisfied.
(e) The aggregate unpaid principal balances of the Loans, after the
making of the Advances requested hereby, will not be in excess of (i) the
Borrowing Base on the date requested for the making of such Advances minus
(ii) the outstanding amount of Additional Senior Indebtedness as of such
date.
1
(f) 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 9.1(a) of the
Agreement. The Agreement and the other Loan Documents are hereby ratified,
approved, and confirmed in all respects.
The officer of Borrower signing this instrument hereby certifies that, to
the best of his knowledge after due inquiry, the above representations,
warranties, acknowledgements, and agreements of Borrower are true, correct and
complete.
IN WITNESS WHEREOF, this instrument is executed as of ____________, ____.
NUEVO ENERGY COMPANY
By:
--------------------------------
Name:
Title:
2
EXHIBIT C
RATE ELECTION
-------------
Reference is made to that certain Amended and Restated Credit Agreement
dated as of February 13, 1998 (as from time to time amended, the "Agreement"),
by and among Nuevo Energy Company, NationsBank of Texas, N.A., as Administrative
Agent, and certain financial institutions. 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 Tranche of Fixed Rate Portions in the aggregate 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 Borrower signing this instrument is a duly
elected, qualified and acting ____________ of Borrower, 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 9.1(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 9.1(a) of the
Agreement. The Agreement and the other Loan Documents are hereby ratified,
approved, and confirmed in all respects.
The officer of Borrower signing this instrument hereby certifies that, to
the best of his knowledge after due inquiry, the above representations,
warranties, acknowledgements, and agreements of Borrower are true, correct and
complete.
IN WITNESS WHEREOF this instrument is executed as of __________________.
NUEVO ENERGY COMPANY
By:
--------------------------------
Name:
Title:
1
EXHIBIT D
FORM OF OPINION OF
XXXXXX & XXXXXX, COUNSEL FOR RELATED PERSONS
--------------------------------------------
1
EXHIBIT E
CERTIFICATE ACCOMPANYING
FINANCIAL STATEMENTS
------------------------
Reference is made to that certain Amended and Restated Credit Agreement
dated as of February 13, 1998 (as from time to time amended, the "Agreement"),
by and among Nuevo Energy Company, NationsBank of Texas, N.A., as Administrative
Agent, and certain financial institutions, 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 Administrative Agent and
each Lender Borrower's *[audited/unaudited] financial statements (the "Financial
Statements") as at ____________ (the "Reporting Date"). Borrower hereby
represents, warrants, and acknowledges to Administrative Agent and each Lender
that:
(a) the officer of Borrower signing this instrument is the duly
elected, qualified and acting ____________ of Borrower 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) attached hereto is a schedule of calculations showing Borrower's
compliance as of the Reporting Date with the requirements of Sections
[5.2(h), (m) and (n)] of the Agreement [and Borrower's non-compliance as of
such date with the requirements of Section(s) ____________ of the
Agreement];
(c) attached hereto are one or more schedules showing (i) all of
Borrower's Derivative Contracts and Allowed Puts on the Reporting Date,
(ii) the outstanding principal amount on the Reporting Date (determined in
accordance with GAAP) of all of the Related Persons' Permitted Priority
Senior Indebtedness, other Additional Senior Indebtedness, Non-Recourse
Indebtedness, Permitted Subordinated Trust Indebtedness and Subordinated
Indebtedness and of all of the Unrestricted Subsidiaries' Non-Recourse
Indebtedness, and (iii) the undischarged balance on the Reporting Date of
all Permitted Production Payments;
(d) 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].
1
(e) [Unless otherwise disclosed on a schedule attached hereto,] The
representations and warranties of Borrower 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 Borrower 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, such
representations, warranties, and acknowledgments are true, correct and complete.
IN WITNESS WHEREOF, this instrument is executed as of ____________, ____.
NUEVO ENERGY COMPANY
By:
--------------------------------
Name:
Title:
2
EXHIBIT F
ASSIGNMENT AND ASSUMPTION AGREEMENT
Date __________, ____
Reference is made to that certain Amended and Restated Credit Agreement
dated as of February 13, 1998, (as from time to time amended, the "Agreement"),
by and among Nuevo Energy Company, NationsBank of Texas, N.A., as Administrative
Agent, and certain financial institutions, which Agreement is in full force and
effect on the date hereof. Terms defined in the Agreement are used herein with
the meanings given them in the Agreement. ________ ("Assignor") and __________
("Assignee") hereby agree as follows:
1. Assignor hereby sells and assigns to Assignee without recourse and
without representation or warranty (other than as expressly provided herein),
and Assignee hereby purchases and assumes from Assignor, that interest in and to
all of Assignor's rights and duties under the Agreement as of the date hereof
which represents the percentage interest specified in Item 3 of Annex I hereto
(the "Assigned Share") of all of the outstanding rights and obligations of all
Lenders under the Agreement, including, without limitation, all rights and
obligations with respect to the Assigned Share in Assignor's Loan and Note.
After giving effect to such sale and assignment, Assignee's Percentage Share of
the Maximum Loan Amount (and Assignor's remaining Percentage Share of the
Maximum Loan Amount) will be as set forth in Item 3 of Annex I hereto.
2. Assignor: (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Agreement, the
other Loan Documents or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Agreement, the other Loan Documents or
any other instrument or document furnished pursuant thereto; and (iii) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of Borrower or any other Related Person or the performance
or observance by any of them of any of their respective obligations under the
Agreement, the other Loan Documents, or any other instrument or document
furnished pursuant thereto.
3. Assignee: (i) confirms that it has received a copy of the Agreement,
together with copies of the financial statements most recently delivered
thereunder and such other Loan Documents and other documents and information as
it has deemed appropriate to make its own analysis of Borrower and the
transactions contemplated by the Agreement and its own independent decision to
enter into this Assignment and Assumption Agreement; (ii) agrees that it will,
independently and without reliance upon Administrative Agent, Assignor or any
other Lender and based on such documents and information as it shall deem
appropriate at the time,
1
continue to make its own credit decisions in taking or not taking action under
the Agreement; (iii) confirms that it is a ____________________________ and
therefore is an Eligible Transferee under the Agreement; (iv) appoints and
authorizes Administrative Agent to take such action as agent on its behalf and
to exercise such powers under the Agreement and the other Loan Documents as are
specifically delegated to Administrative Agent, together with all other powers
reasonably incidental thereto; and (v) agrees that it will perform in accordance
with their terms all of the obligations which by the terms of the Agreement are
required to be performed by it as a Lender (including the obligation to make
future Advances)[; and (vi) attaches the "Prescribed Forms" described in Section
2.17(d) of the Agreement.]
4. Following the execution of this Assignment and Assumption Agreement by
Assignor and Assignee, an executed original hereof (together with all
attachments) will be delivered to Administrative Agent. The effective date of
this Assignment and Assumption Agreement (the "Settlement Date") shall be the
date specified in Item 4 of Annex I hereto; provided that this Assignment and
Assumption Agreement shall not be deemed to have taken effect unless (i) the
consent hereto of Administrative Agent and Borrower has been obtained (to the
extent required in the Agreement in the definition of "Eligible Transferee"),
(ii) Administrative Agent has received a fully executed original hereof, and
(iii) Administrative Agent has received the processing fee referred to in
Section 9.4(c) of the Agreement.
5. Upon the satisfaction of the foregoing conditions, then as of the
Settlement Date: (i) Assignee shall be a party to the Agreement and, to the
extent provided in this Assignment and Assumption Agreement, have the rights and
obligations of a Lender thereunder and under the other Loan Documents and (ii)
Assignor shall, to the extent provided in this Assignment and Assumption
Agreement, relinquish its rights and be released from its duties under the
Agreement and the other Loan Documents.
6. All interest, fees and other amounts that would otherwise accrue
pursuant to the Agreement and Assignor's Note for the account of Assignor from
and after the Settlement Date shall, instead accrue for the account of, and be
payable to, Assignor and Assignee, as the case may be, in accordance with their
respective interests as reflected in Item 3 to Annex I hereto. All payments of
principal that would otherwise be payable from and after the Settlement Date to
or for the account of Assignor pursuant to the Agreement and Assignor's Note
shall, instead, be payable to or for the account of Assignor and Assignee, as
the case may be, in accordance with their respective interests as reflected in
Item 3 to Annex I hereto. On the Settlement Date, Assignee shall pay to Assignor
an amount specified by Assignor in writing which represents the portion of
Assignor's Loan which is being assigned and which is outstanding on the
Settlement Date, net of any closing costs. Assignor and Assignee shall make all
appropriate adjustments in payments under the Agreement for periods prior to the
Settlement Date directly between themselves on the Settlement Date.
7. Each of the parties to this Assignment and Assumption Agreement agrees
that at any time and from time to time upon the written request of any other
party, it will execute and deliver such further documents and do such further
acts and things as such other party may reasonably request in order to effect
the purposes of this Assignment and Assumption Agreement.
2
8. This Assignment and Assumption Agreement shall be governed by, and
construed in accordance with, the laws of the State of Texas.
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers to execute and deliver this Assignment and Assumption Agreement, as of
the date first above written.
[NAME OF ASSIGNOR]
as Assignor
By:_________________________
Title:
[NAME OF ASSIGNEE]
By:_________________________
Title:
3
*CONSENTED TO AND ACKNOWLEDGED:
NUEVO ENERGY COMPANY
By:__________________________
Title
NATIONSBANK OF TEXAS, N.A., as Administrative Agent
By: _________________________
Title:
*Consent required only if Assignee not Lender or Affiliate thereof
and no payment Event of Default
4
ANNEX FOR ASSIGNMENT AND ASSUMPTION AGREEMENT
ANNEX I
1. Borrower: Nuevo Energy Company
2. Date of Assignment Agreement: __________, _____
3. Amounts (as of date of item #2 above):
Assignor Assignee
(as Revised) (New)
------------ -----------
a. Percentage Share/1/ __________% _________%
b. Percentage Share of
Maximum Loan Amount $__________ $_________
c. Percentage Share of Loans
Outstanding on Settlement Date $__________ $_________
4. Settlement Date: __________, ____
5. Notice:
ASSIGNEE:
____________________
____________________
____________________
Attention:
Telephone:
Telecopy:
6. Wiring Instructions:
____________________
/1/ Percentage taken to 7 decimal places.
