1
EXHIBIT 4.a
U.S. $150,000,000
AMENDED AND RESTATED CREDIT AGREEMENT,
dated as of June 1, 1995
among
POGO PRODUCING COMPANY,
as the Borrower,
and
CERTAIN COMMERCIAL LENDING INSTITUTIONS,
as the Lenders,
and
BANK OF MONTREAL,
acting through its Chicago, Illinois branch
as the Agent for the Lenders,
and
BANQUE PARIBAS,
acting through its Houston Agency
as the Co-Agent for the Lenders.
2
TABLE OF CONTENTS
PAGE
----
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Use of Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
1.3. Cross-References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
1.4. Accounting and Financial Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTES . . . . . . . . . . . . . . . . . . . . . . . . 25
2.1. Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.1.1. Revolving Loan Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.1.3. Lenders Not Permitted or Required To Make Loans in Excess of Commitment . . . . . . . . . . 26
2.2. Termination, Reduction, and Extension of the Commitment Amounts . . . . . . . . . . . . . . 26
2.2.1. Optional . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.2.2. Mandatory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.2.3. Mandatory as to Term Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.3. Borrowing Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.4. Continuation and Conversion Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.5. Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.6. Determination of Borrowing Base . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.7. Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES . . . . . . . . . . . . . . . . . . . . . . . . 30
3.1. Repayments and Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.1.1. Repayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.1.2. Mandatory Prepayments on Revolving Loans . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.1.3. Mandatory Prepayments on Term Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.1.4. Repayment Upon Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.2. Voluntary Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.3. Interest Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.3.1. Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.3.2. Post-Maturity Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.3.3. Payment Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
i
3
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
3.3.4. Interest Rate Determination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.3.5. Maximum Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.4. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.4.1. Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.4.2. Other Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE IV
CERTAIN CD RATE, LIBO RATE AND OTHER PROVISIONS . . . . . . . . . . . . . . . . . . . . . . 37
4.1. Fixed Rate Lending Unlawful . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.2. Rates Unavailable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.3. Increased Fixed Rate Loan Costs, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.4. Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.5. Increased Capital Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.6. Period of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.7. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.8. Payments, Computations, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.9. Sharing of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.10. Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.11. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE V
CONDITIONS TO BORROWING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.1. Initial Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.1.1. Corporate or Partnership Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.1.2. Resolutions, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.1.3. Compliance with Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . 43
5.1.4. Delivery of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.1.5. [Intentionally Omitted.]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.1.6. Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.1.7. Closing Fees, Expenses, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.2. Conditions Precedent to Revolving Loans . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.2.1. Compliance with Warranties, No Default, etc. . . . . . . . . . . . . . . . . . . . . . . . . 43
5.2.2. Borrowing Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.2.3. Satisfactory Legal Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ii
4
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
ARTICLE VI
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.1. Organization, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.2. Due Authorization, Non-Contravention, etc. . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.3. Government Approval, Regulation, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.4. Validity, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.5. Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.6. No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.7. Litigation, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.8. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.9. Ownership of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.10. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.11. Pension and Welfare Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.12. Environmental Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.13. Regulations G, T, U and X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.14. Rank of Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.15. Absence of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.16. Accuracy of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.17. No Contractual Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE VII
AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.1. Performance of Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.2. Financial Information, Reports, Notices, etc. . . . . . . . . . . . . . . . . . . . . . . . 51
7.3. Compliance with Laws, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.4. Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.5. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.6. Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.7. Environmental Covenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
7.8. [Intentionally Omitted] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
7.9. Payment of Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
7.10. Subsidiary Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
iii
5
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
ARTICLE VIII
NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.1. Performance of Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.2. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.3. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.4. Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.5. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.6. Restricted Payments, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
8.7. Consolidation, Merger, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.8. Asset Dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.9. Modification of Certain Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
8.10. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
8.11. [Intentionally Omitted] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
8.12. Negative Pledges, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE IX
EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
9.1. Listing of Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
9.1.1. Non-Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
9.1.2. Breach of Warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
9.1.3. Non-Performance of Certain Covenants and Obligations . . . . . . . . . . . . . . . . . . . . 63
9.1.4. Non-Performance of Other Covenants and Obligations . . . . . . . . . . . . . . . . . . . . . 63
9.1.5. Default on Other Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
9.1.6. Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
9.1.7. Pension Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
9.1.8. Control of the Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
9.1.9. Bankruptcy, Insolvency, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
9.2. Action if Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
9.3. Action if Other Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE X
THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
10.1. Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
10.2. Funding Reliance, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
10.3. Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
10.4. Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
iv
6
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
10.5. Loans by the Agent and Banque Paribas . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
10.6. Credit Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
10.7. Copies, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
ARTICLE XI
MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
11.1. Waivers, Amendments, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
11.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
11.3. Payment of Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
11.4. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
11.5. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
11.6. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
11.7. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
11.8. Execution in Counterparts, Effectiveness, etc. . . . . . . . . . . . . . . . . . . . . . . . 71
11.9. Governing Law; Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
11.10. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
11.11. Sale and Transfer of Loans and Notes; Participations in Loans and Notes . . . . . . . . . . 71
11.11.1. Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
11.11.2. Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
11.12. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
11.13. Other Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SCHEDULE I - Disclosure Schedule
EXHIBIT A - Form of Note
EXHIBIT B - Form of Borrowing Request
EXHIBIT C - Form of Continuation/Conversion Notice
EXHIBIT D - Form of Lender Assignment Agreement
EXHIBIT E - Form of Opinion of Xxxxxx X. Xxxxxx,
Corporate Secretary and Associate General Counsel to the Borrower
EXHIBIT F - Form of Subsidiary Guaranty
v
7
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of June 1, 1995,
among POGO PRODUCING COMPANY, a Delaware corporation (the "Borrower"), the
various financial institutions which are or may become parties hereto
(collectively, the "Lenders"), and BANK OF MONTREAL, acting through its
Chicago, Illinois branch ("the Bank"), as agent (the "Agent") for the Lenders
and BANQUE PARIBAS, acting through its Houston Agency, as co-agent (the
"Co-Agent") for the Lenders,
W I T N E S S E T H :
WHEREAS, the Borrower, the Lenders, the Agent and the Co-Agent entered
into that certain Credit Agreement dated as of September 23, 1992, which Credit
Agreement was amended and modified from time to time (as so amended and
modified, the "Original Credit Agreement"); and
WHEREAS, the Borrower desires to further amend the Original Credit
Agreement; and
WHEREAS, the Borrower, the Lenders, the Agent and the Co-Agent agree
that it is in the best interests of all parties to restate the Original Credit
Agreement in its entirety in connection with such further amendments sought by
Borrower;
WHEREAS, the Lenders are willing, on the terms and subject to the
conditions hereinafter set forth (including Article V), to extend such
Commitments and make such Loans to the Borrower; and
WHEREAS, there currently exist certain Loans outstanding under the
Original Credit Agreement and it is the intent of all parties that these
outstanding Loans shall become, as of the Effective Date of this Amended and
Restated Credit Agreement, outstanding Loans under the Amended and Restated
Credit Agreement; and
WHEREAS, the proceeds of Loans to be made after the date hereof will
be used for general corporate purposes of the Borrower and its Subsidiaries;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. Defined Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the
8
context otherwise requires, have the following meanings (such meanings to
be equally applicable to the singular and plural forms thereof):
"Activation Amount" means, in each case, any portion of the Inactive
Revolving Loan Commitment Amount that is converted to Active Revolving Loan
Commitment Amount by the Borrower following notice to the Agent in connection
with any Borrowing pursuant to Section 2.3 or, if not in connection with a
Borrowing, in a notice to the Agent pursuant to Section 11.2. Each Activation
Amount shall be in an amount equal to an integral multiple of $12,500,000.
"Active Revolving Loan Commitment Amount" means, on any date,
$100,000,000, plus the net amount of all Activation Amounts, as such Active
Revolving Loan Commitment Amount may be changed from time to time pursuant to
Section 2.2.
"Additional Costs" is defined in Section 4.3.
"Affiliate" of any Person means any other Person which, directly or
indirectly, controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan). A Person shall be deemed to be "controlled by" any
other Person if such other Person possesses, directly or indirectly, power
(a) to vote 10% 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.
"Agent" is defined in the preamble and includes each other Person as
shall have subsequently been appointed as the successor Agent pursuant to
Section 10.4.
"Agreement" means, on any date, this Credit Agreement as originally in
effect on the Effective Date and as thereafter from time to time amended,
supplemented, amended and restated, or otherwise modified and in effect on such
date.
"Alternate Reserve Report" means a report, in form and detail
satisfactory to the Agent and the Required Lenders, on reserves updated
internally by the Borrower making adjustments for any changes in production
volumes, expenses, Applicable Prices and for dispositions of properties in the
six-month period subsequent to the immediately preceding Reserve Report Date
and based upon the immediately preceding Reserve Report and, at the Borrower's
option, for any acquisitions of properties not included in the immediately
preceding Reserve Report or the restoration to the Borrowing Base of properties
previously removed from the Borrowing Base by the Borrower. If any report
which purports to be an Alternate Reserve Report and which is delivered by the
Borrower pursuant to the terms of this Agreement is unsatisfactory
2
9
in substance, form or detail to Lenders with an aggregate Percentage of at
least 75%, or if Lenders with an aggregate Percentage of 75% or more disagree
with the estimate of Proved Reserves insofar as such estimate reflects internal
work by the Borrower rather than estimates by independent engineers in the
preceding Reserve Report, the Borrower shall as promptly as practicable but in
any event within 90 days provide to the Agent and the Lenders an Alternate
Reserve Report Review. Such Alternate Reserve Report so reviewed pursuant to
the Alternate Reserve Report Review shall qualify as an Alternate Reserve
Report for purposes of this Agreement.
"Alternate Reserve Report Review" means a review of any Alternate
Reserve Report by Xxxxx Xxxxx Company Petroleum Engineers or other independent
petroleum engineers (provided that such other engineers are satisfactory to the
Borrower, the Agent and the Required Lenders), which engineer shall, as a part
of such review, certify that the estimates in the Alternate Reserve Report are
reasonable estimates using generally accepted petroleum engineering and
evaluation principles and that the methods and procedures used in preparing the
Alternate Reserve Report are reasonable. The principles to be utilized are
those set forth in the Standards Pertaining to the Estimating and Auditing of
Oil and Gas Reserve Information promulgated by the Society of Petroleum
Engineers.
"Applicable Gas Price" means the average (rounded to the nearest $.01)
of the natural gas prices being used (including prices for future periods) by
the Agent and the Co-Agent for evaluation of oil and gas reserve lending
transactions in accordance with the Agent's and the Co-Agent's customary
standards (which prices, other than those fixed by contract and subject to BTU
adjustment to reflect the liquids content of Borrower's natural gas, will be
consistent with those then being applied to other borrowers of the Agent or
Co-Agent generally) as of each January 1 or July 1, as applicable; provided,
however, that for purposes of determining the Borrowing Base, production
volumes hedged under fixed price contracts or production volumes committed
under long-term sales contracts (in each case with counterparties acceptable to
the Agent and the Co-Agent) will be included in the Reserve Reports at the
contracted price and the Applicable Gas Price will be BTU-adjusted to reflect
the liquids content of Borrower's natural gas.
"Applicable Margin" means, at any time that the Borrower's Implied
Senior Debt Rating is equal to any rating set forth below, the percentages per
annum set forth opposite such Implied Senior Debt Rating for CD Rate Loans and
LIBO Rate Loans; provided, that if the
3
10
Borrower's Implied Senior Debt Rating shall change at any time, the Applicable
Margin set forth below shall become effective on the immediately next Quarterly
Payment Date:
Minimum Implied Senior Debt
Rating from Standard & Poors
(or an equivalent rating from Moodys
or another approved rating agency) CD Rate Loans LIBO Rate Loans
------------------------------------ ------------- ---------------
B+ or lower 1 5/8% 1 1/2%
BB- 1 1/8% 1%
BB 7/8% 3/4%
BB+ or higher 3/4% 5/8%
"Applicable Oil Price" means the average (rounded to the nearest $.01)
of the crude oil prices being used (including prices for future periods) by the
Agent and the Co-Agent for evaluation of oil and gas reserve lending
transactions in accordance with the Agent's and Co-Agent's customary standards
(which prices, other than those fixed by contract and adjusted to reflect the
quality of Borrower's crude oil, will be consistent with those then being
applied to other borrowers of the Agent and Co-Agent generally) as of each
January 1 and July 1, as applicable, provided, however, that, for purposes of
determining the Borrowing Base, production volumes hedged under fixed price
contracts or production volumes committed under long-term sales contracts (in
each case with counterparties acceptable to the Agent and the Co-Agent) will be
included in the Reserve Reports at the contracted price and the Applicable Oil
Price will be adjusted to reflect the quality of Borrower's crude oil.
"Applicable Percentage" means (a) 65% for Proved Developed Producing
Reserves, (b) 33% for Proved Developed Shut-In Reserves, (c) 33% for Proved
Developed Behind Pipe Reserves and (d) 18% for Proved Undeveloped Reserves.
"Applicable Price" means the Applicable Gas Price, the Applicable Oil
Price and the Applicable Products Price, as the case may be.
"Applicable Products Price" means in respect of any year (a) for
volumes not hedged under fixed price contracts or committed under long-term
sales contracts the lesser of (i) (A) for the first two years included in any
calculation, the Current Products Price and (B) for all subsequent years
included in any calculation, the Current Products Price escalated at a rate of
4% per annum, such escalation commencing at the beginning of the third year
from the date such calculation is being made, and (ii) $26 per barrel and (b)
for volumes hedged under fixed price contracts or committed under long-term
sales contracts (in each case with counterparties acceptable to the Agent and
the Co-Agent), the contract price for such volumes.
"Assessment Rate" means, for any Interest Period with respect to a CD
Rate Loan, the net annual assessment rate (rounded upwards, if necessary, to
the next higher 1/100 of 1%)
4
11
actually incurred by the Bank to the Federal Deposit Insurance Corporation (or
any successor) for such Corporation (or such successor) insuring time deposits
at offices of the Bank in the United States during the most recent period for
which such rate has been determined prior to the commencement of such Interest
Period.
"Assignee Lender" is defined in Section 11.11.1.
"Audited Reserve Report" means a report of an independent petroleum
engineer pertaining to, and audit of, any Reserve Report or Updated Reserve
Report previously furnished to the Lenders which shall certify that the
estimates of Proved Reserves and the estimates of production and production
costs employed in such Reserve Report, or Updated Reserve Report, as the case
may be, are reasonable and report only the Proved Reserves attributable to
Borrower's working interest percentage in or Borrower's pro rata share of, as
the case may be, any Proved Reserves located on Borrowing Base Properties,
using generally accepted petroleum engineering and evaluation principles, and
that the methods and procedures used in preparing the Reserve Report, or
Updated Reserve Report, as the case may be are reasonable, or, if such engineer
cannot so certify as to such estimates, providing revised estimates of Proved
Reserves, estimates of production and production costs, which revised estimates
shall be certified to have been prepared in accordance with generally accepted
petroleum engineering and evaluation principles. The principles to be used are
those set forth in the Standards Pertaining to the Estimating and Auditing of
Oil and Gas Reserve Information promulgated by the Society of Petroleum
Engineers. The date of an Audited Reserve Report shall be the Reserve Report
Date of the previously rejected Reserve Report or the date of the previously
rejected Updated Reserve Report, as the case may be.
"Authorized Officer" means, relative to the Borrower, those of its
officers whose signatures and incumbency shall have been certified to the Agent
and the Lenders pursuant to Section 5.1.2.
"Bank" is defined in the preamble.
"Borrower" is defined in the preamble.
"Borrowing" means the Loans of the same Type made by all Lenders on
the same Business Day and pursuant to the same Borrowing Request in accordance
with Section 2.1.
"Borrowing Base" means, at any time, that amount, determined in
accordance with Section 2.6 and calculated using information in the then most
recent Reserve Report or Alternate Reserve Report, which equals the lesser of
(i) the sum total of (a) the Discounted Present Value of the Future Net Income
for each category of Proved Reserves multiplied by (b) the relevant Applicable
Percentage for each category of Proved Reserves, and (ii) the product of 10/7
times sixty-five percent (65%) of the Discounted Present Value of Future Net
Income attributable to the Proved Developed Producing Reserves. During the
period from June 1, 1995, to the date of the next determination of the
Borrowing Base pursuant to the provisions of Section 7.2, the amount of the
Borrowing Base shall be One Hundred and Fifty Million Dollars ($150,000,000)
provided that, if pursuant to a Reserve Report dated January 1st of any
5
12
year the ratio of (x) Borrowing Base to (y) Commitment Amount plus the amount of
Senior Debt (other than the Loans) that is outstanding on such date which is
permitted pursuant to Section 8.2(a)(ii) is at least 1.5 to 1.0, then the
Borrowing Base shall not be redetermined pursuant to the Alternate Reserve
Report dated as of the following July 1st.
"Borrowing Base Properties" means those oil and gas properties of the
Borrower or, to the extent provided below, of a Majority-owned Subsidiary of
the Borrower (including the Borrower's or such Majority-owned Subsidiary's pro
rata share of Qualified Partnership Properties pro rated on the basis of the
lesser of (i) Borrower's or such Majority- owned Subsidiary's share of income
from the partnership and (ii) the Borrower's or such Majority-owned
Subsidiary's share of partnership properties or proceeds thereof upon a
liquidation of the partnership) included in the most recent Reserve Report or
Alternate Reserve Report; provided, however, that Borrowing Base Properties
shall not include: (i) properties located outside the United States (ii)
properties owned by the Borrower's Subsidiaries (other than Qualified
Partnership Properties to the extent of the Borrower's or its Subsidiary's pro
rata share thereof) except as permitted by the provisions of the sentence
immediately following, (iii) properties which secure Non-Recourse Indebtedness
and (iv) properties subject to Liens other than those permitted under clauses
(d), (e), (f), (g) and (i) of Section 8.3; provided that, unless the Discounted
Present Value of such properties, in the aggregate, is no more than $5,000,000,
no properties of the Borrower or any Majority-owned Subsidiary of Borrower
(including the Borrower's or such Majority-owned Subsidiary's pro rata share of
Qualified Partnership Properties) included in the most recently delivered
Reserve Report or Alternate Reserve Report, as the case may be, may be deleted
from a subsequent Reserve Report or Alternate Reserve Report, including the
imposition of a Lien thereon or the securing of Non-Recourse Indebtedness
thereby, without the consent of the Required Lenders, which consent shall not
be unreasonably withheld and shall not require the payment of a fee or other
compensation by the Borrower. Notwithstanding the immediately preceding
sentence, the Borrower or a Subsidiary of the Borrower may transfer Borrowing
Base Properties to one or more Majority-owned Subsidiaries of the Borrower
provided that (i) such transfer is permitted pursuant to Section 8.8(b) and
(ii) the Subsidiary to which such properties are transferred by the Borrower or
any Majority-owned Subsidiary of the Borrower shall have executed and delivered
to the Agent a Subsidiary Guaranty. Nothing herein shall prevent a Subsidiary
from transferring Borrowing Base Properties to the Borrower at any time.
"Borrowing Request" means a loan request and certificate duly executed
by an Authorized Officer of the Borrower, substantially in the form of Exhibit
B hereto.
"Business Day" means any day which is neither a Saturday or Sunday nor
a legal holiday on which banks are authorized or required to be closed in
Chicago, Illinois or Houston, Texas.
"Capitalized Lease Liabilities" means all monetary obligations of the
Borrower or any of its Subsidiaries under any leasing or similar arrangement
which, in accordance with GAAP, would be classified as a capitalized lease,
and, for purposes of this Agreement and each other
6
13
Loan Document, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP, and the stated maturity thereof
shall be the date of the last payment of rent or any other amount due under such
lease prior to the first date upon which such lease may be terminated by the
lessee without payment of a penalty.
"Cash Equivalent Investment" means, at any time:
(a) any evidence of Indebtedness, maturing not more
than one year after such time, issued or guaranteed by the United
States Government;
(b) commercial paper, maturing not more than nine
months from the date of issue, which is issued by
(i) a corporation (other than an Affiliate
of the Borrower) organized under the laws of any state of the
United States or of the District of Columbia and rated to be
of investment grade by Standard & Poor's Corporation or
Xxxxx'x Investors Service, Inc., or
(ii) any Lender (or its holding company);
(c) any certificate of deposit or banker's acceptance,
maturing not more than one year after such time, which is issued by
either
(i) a commercial banking institution that
is a member of the Federal Reserve System and has a combined
capital and surplus and undivided profits of not less than
$500,000,000, or
(ii) any Lender;
(d) any repurchase agreement entered into with any
Lender (or other commercial banking institution of the stature
referred to in clause (c)(i)) which
(i) is secured by a fully perfected
security interest in any obligation of the type described in
any of clauses (a) through (c); and
(ii) has a market value at the time such
repurchase agreement is entered into of not less than 100% of
the repurchase obligation of such Lender (or other commercial
banking institution) thereunder; or
(e) any loan participation in a loan which is to a
Borrower with a long-term debt rating of investment grade or higher
from any nationally recognized rating agency and is made by
7
14
(i) a commercial banking institution that
is a member of the Federal Reserve System and has a combined
capital and surplus and undivided profits of not less than
$500,000,000, or
(ii) any Lender.
"CD Rate" means, relative to the Interest Period for each CD Rate Loan
comprising part of the same Borrowing, the rate of interest determined by the
Agent to be the arithmetic average (rounded upwards, if necessary, to the
nearest 1/16 of 1%) of the prevailing rates per annum bid at 10:00 a.m., United
States Central time (or as soon thereafter as practicable), on the first day of
such Interest Period by three or more certificate of deposit dealers of
recognized standing located in New York, New York for the purchase at face
value from each Reference Bank of its certificates of deposit in an amount
comparable to the unpaid principal amount of such Reference Bank's CD Rate Loan
comprising part of such Borrowing to which such Interest Period applies and
having a maturity approximately equal to such Interest Period.
"CD Rate Loan" means a Loan bearing interest, at all times during an
Interest Period applicable to such Loan, at a fixed rate determined by
reference to the CD Rate (Reserve Adjusted).
"CD Rate (Reserve Adjusted)" means, relative to any Lender and to any
Loan to be made, continued or maintained as, or converted into, a CD Rate Loan
for any Interest Period, a rate per annum (rounded upwards, if necessary, to
the nearest 1/16 of 1%) determined pursuant to the following formula:
CDR(RA) = CDR + AR
-----------------
(1.00 - CDRR)
where:
CDR(RA) = CD Rate (Reserve Adjusted)
CDR = CD Rate
CDRR = CD Reserve Requirement
AR = Assessment Rate
The CD Rate (Reserve Adjusted) for the Interest Period for each CD Rate Loan
comprising part of the same Borrowing will be determined by the Agent on the
basis of the Assessment Rate in effect on, and the applicable rates furnished
to and received by the Agent from the Reference Banks on, the first day of such
Interest Period, and the CD Reserve Requirement in effect on the first day of
such Interest Period for each Lender, subject, however, to the provisions of
Section 3.3.4.
"CD Reserve Requirement" means, relative to any Lender and each
Interest Period for each CD Rate Loan comprising part of the same Borrowing, a
percentage (expressed as a
8
15
decimal) equal to the maximum aggregate reserve requirements (including all
basic, supplemental, marginal and other reserves and taking into account any
transitional adjustments or other scheduled changes in reserve requirements
during such Interest Period) on the first day of such Interest Period, as
specified under regulations issued from time to time by the F.R.S. Board for
purposes of determining the maximum aggregate reserve requirements then
applicable to the class of banks of which such Lender is a member, on deposits
of the type and in the same amount used as a reference in determining the CD
Rate and having a maturity approximately equal to such Interest Period.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List.
"Change in Control" means the acquisition by any Person, or two or
more Persons acting in concert, of beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of fifty percent (50%) or more of the outstanding shares
of voting stock of the Borrower.
"Co-Agent" is defined in the preface and includes any successor or
assign of Banque Paribas in such capacity.
"Code" means the Internal Revenue Code of 1986, as amended, reformed
or otherwise modified from time to time.
"Commitment" means, relative to any Lender, such Lender's Revolving
Loan Commitment or Term Loan Commitment, as the case may be.
"Commitment Amount" means either the Revolving Loan Commitment Amount
or Term Loan Commitment Amount.
"Commitment Fees" is defined in Section 3.4.
"Commitment Termination Event" means
(a) the occurrence of any Default described in clauses
(a) through (d) of Section 9.1.9; and
(b) any other Event of Default shall have occurred and
be continuing and either
(i) the Loans are declared to be due and
payable pursuant to Section 9.3, or
9
16
(ii) in the absence of such declaration,
the Agent, acting at the direction of the Required Lenders,
gives notice to the Borrower that the Commitments have been
terminated.
"Confidentiality Letter" means the letter agreements entered into by
the Borrower with the Agent, the Co-Agent and each of the other Lenders and to
be entered into with each Assignee Lender or Participant respecting
non-disclosure of the Borrower's confidential information.
"Continuation/Conversion Notice" means a notice of continuation or
conversion and certificate duly executed by an Authorized Officer of the
Borrower, substantially in the form of Exhibit C hereto.
"Controlled Group" means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with the
Borrower, are treated as a single employer under Section 414(b) or 414(c) of
the Code or Section 4001 of ERISA.
"Current Products Price" means at any time the weighted average price
per barrel calculated on a property by property basis received by the Borrower
during the preceding 12 month period for all sales of hydrocarbon products.
"Current Ratio" means the ratio of
(a) consolidated current assets of the Borrower and
its Subsidiaries
to
(b) consolidated current liabilities, less current
maturities of long-term debts (including Non-Recourse Indebtedness),
of the Borrower and its Subsidiaries.
"Default" means any Event of Default or any condition, occurrence or
event which, after notice or lapse of time or both, would constitute an Event
of Default.
"Deficiency Period" means any period commencing upon any date that the
Agent determines that (i) the aggregate principal amount of all Revolving Loans
exceeds the Borrowing Base then in effect or (ii) those ratios with respect to
the Term Loans set forth in Section 3.1.3 are not satisfied, and continuing
until the date that, pursuant to the redetermination of the Borrowing Base or
the determination of a Revised Borrowing Base, or by reason of mandatory
prepayments or scheduled repayments, (i) with respect to Revolving Loans, the
aggregate outstanding principal amount no longer exceeds the Borrowing Base or
(ii) with respect to Term Loans outstanding, the ratios set forth in Section
3.1.3 are satisfied; provided that, pursuant to Sections 3.1.2 and 3.1.3 (i) if
a Reserve Report or Alternate Reserve Report shall be found unsatisfactory in
substance, form or detail, or unsatisfactory by reason
10
17
of the estimate of Proved Reserves, by Lenders having an aggregate Percentage of
at least 75% and (ii) upon the delivery by the Borrower of an Audited Reserve
Report or the results of any Alternate Reserve Report Review, as the case may
be, and the determination of the Borrowing Base pursuant thereto, the Agent
shall determine that as of the date of such Audited Reserve Report or the
Alternate Reserve Report so reviewed pursuant to an Alternate Reserve Report
Review, (A) the aggregate principal amount of all Revolving Loans exceeds the
Borrowing Base in effect or (B) those ratios with respect to Term Loans set
forth in Section 3.1.3 are not satisfied, then the Deficiency Period shall be
deemed to have begun on (i) the April 30th following the date of an Audited
Reserve Report (or the first day thereafter on which the Revolving Loans shall
have exceeded the Borrowing Base as determined pursuant to the Audited Reserve
Report) or (ii) the October 31st following the date of an Alternate Reserve
Report (or the first day thereafter on which the Revolving Loans shall have
exceeded the Borrowing Base as determined after the Alternate Reserve Report
Review) pursuant to the provisions of Sections 3.1.2 and 3.1.3.
"Disclosure Schedule" means the Disclosure Schedule attached hereto as
Schedule I, as it may be amended, supplemented or otherwise modified from time
to time by the Borrower with the written consent of the Agent and the Required
Lenders.
"Discounted Present Value" means, at any time that a calculation
thereof is being made, the sum total of the Future Net Income for each year, or
portion thereof, commencing on or after the date six months from the date of
such calculation, as presented in the then most recent Reserve Report or
Alternate Reserve Report delivered pursuant to Section 7.2(e), discounted to
present value as of the date six months from the date of such calculation at
such rate and in such manner as provided by the requirements of the S.E.C. from
time to time in effect.
"Dollar" and the sign "$" mean lawful money of the United States.
"Domestic Office" means, relative to any Lender, the office of such
Lender designated as such below its signature hereto or designated in the
Lender Assignment Agreement or such other office of a Lender (or any successor
or assign of such Lender) within the United States as may be designated from
time to time by notice from such Lender, as the case may be, to each other
Person party hereto. A Lender may have separate Domestic Offices for purposes
of making, maintaining or continuing, as the case may be, Prime Rate Loans and
CD Rate Loans.
"EBITDA" means, for any period for which a determination thereof is to
be made, on a consolidated basis and without duplication, the sum of the
amounts for such period of (i) net income (or loss) after taxes, (ii) interest
expense, (iii) depreciation expense and depletion expense, (iv) amortization
expense, (v) federal, state and foreign taxes, (vi) other non-cash charges and
expenses and (vii) any losses arising outside of the ordinary course of
business which have been included in the determination of consolidated net
income; less any gains arising outside of the ordinary course of business
which have been included in the
11
18
determination of consolidated net income, all as determined on a consolidated
basis for the Borrower and its Subsidiaries.
"Effective Date" means the date this Agreement becomes effective
pursuant to Section 11.8.
"Environmental Laws" means all applicable federal, state or local
statutes, laws (including common law causes of action), ordinances, codes,
rules, regulations and guidelines (including consent decrees and administrative
orders) relating to public health and safety and protection of
