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EXHIBIT 10.5
COHO ENERGY, INC.
COHO RESOURCES, INC.
COHO LOUISIANA PRODUCTION COMPANY
COHO EXPLORATION, INC.
COHO OIL & GAS, INC.
INTERSTATE NATURAL GAS COMPANY
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NOTE AGREEMENT
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DATED AS OF MARCH 31, 2000
$72,000,000 15.0% SENIOR SUBORDINATED NOTES DUE MARCH 31, 2007
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TABLE OF CONTENTS
PAGE
1. TERMS OF NOTES...................................................................2
1.1 Form of Notes; Joint and Several Obligations. ...............................2
1.2 Maturity. ...................................................................2
1.3 Optional Principal Payments..................................................2
1.4 Interest Payments. ..........................................................3
1.5 Offer to Pay Upon Change in Control..........................................4
1.6 No Other Payments of Principal; Acquisition of Notes. .......................6
1.7 Notation of Notes on Payment. ...............................................6
1.8 Manner of Payments...........................................................6
2. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES....................................7
2.1 Registration of Notes........................................................7
2.2 Exchange of Notes. ..........................................................7
2.3 Replacement of Notes. .......................................................8
2.4 Issuance Taxes...............................................................8
3. AFFIRMATIVE COVENANTS............................................................8
3.2 Notices of Material Events..................................................10
3.3 Information Regarding Issuer................................................11
3.4 Existence; Conduct of Business. ............................................11
3.5 Payment of Obligations......................................................11
3.6 Maintenance of Properties...................................................12
3.7 Insurance. .................................................................12
3.8 Casualty and Condemnation...................................................12
3.9 Books and Records; Inspection and Audit Rights..............................12
3.10 Compliance with Laws.......................................................13
3.11 Use of Proceeds............................................................13
3.12 Additional Subsidiaries. ..................................................13
3.13 Further Assurances.........................................................13
3.14 Environmental Covenant.....................................................14
4. NEGATIVE COVENANTS .............................................................14
4.1 Indebtedness; Certain Equity Securities.....................................14
4.2 Liens. .....................................................................15
4.3 Fundamental Changes. .......................................................16
4.4 Investments, Loans, Advances, Guarantees and Acquisitions. .................16
4.5 Asset Sales.................................................................17
4.6 Sale and Leaseback Transactions.............................................18
4.7 [Reserved] .................................................................18
4.8 Restricted Payments; Certain Payments of Indebtedness. .....................18
4.9 Transactions with Affiliates. ..............................................18
4.10 Restrictive Agreements. ...................................................18
4.11 Amendment of Material Documents. ..........................................19
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TABLE OF CONTENTS
(CONTINUED)
PAGE
4.12 Minimum EBITDAX to Total Interest Expense Ratio............................19
4.13 Maximum Leverage Ratio.....................................................19
4.14 Minimum Current Ratio......................................................19
4.15 Subsidiaries. .............................................................20
4.16 Take or Pay Contracts. ....................................................20
5. [RESERVED] .....................................................................20
6. EVENTS OF DEFAULT. .............................................................20
6.1 Events of Default...........................................................20
6.2 Default Remedies. ..........................................................22
6.3 Annulment of Acceleration of Notes. ........................................23
7. SUBORDINATION OF NOTES..........................................................24
8. INTERPRETATION OF THIS AGREEMENT ...............................................24
8.1 Terms Defined...............................................................24
8.2 Accounting Principles ......................................................39
8.3 Directly or Indirectly. ....................................................40
8.4 Section Headings and Table of Contents and Construction.....................40
8.5 Governing Law...............................................................40
8.6 General Interest Provisions. ...............................................40
9. MISCELLANEOUS...................................................................41
9.1 Notices.....................................................................41
9.2 Reproduction of Documents...................................................42
9.3 Survival. ..................................................................42
9.4 Successors and Assigns. ....................................................42
9.5 Amendment and Waiver........................................................43
9.6 Expenses....................................................................44
9.7 Waiver of Jury Trial; Consent to Jurisdiction; Etc..........................45
9.8 Indemnification of Each Holder. ............................................46
9.9 Entire Agreement. ..........................................................47
9.10 Execution in Counterpart. .................................................47
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NOTE AGREEMENT
NOTE AGREEMENT, dated as of March 31, 2000, among COHO ENERGY, INC., a
Texas corporation (together with its successors and assigns) (the "Company");
COHO RESOURCES, INC., a Nevada corporation (together with its successors and
assigns); COHO LOUISIANA PRODUCTION COMPANY, a Delaware corporation (together
with its successors and assigns); COHO EXPLORATION, INC., a Delaware corporation
(together with its successors and assigns); COHO OIL & GAS, INC., a Delaware
corporation (together with its successors and assigns); INTERSTATE NATURAL GAS
COMPANY, a Delaware corporation (together with its successors and assigns)
(herein referred to, collectively, as the "Issuers") and each of the purchasers
named on Annex I and Annex I(A) attached hereto (herein called the
"Purchasers").
RECITALS
WHEREAS, pursuant to the Securities Purchase Agreement, the Purchasers
have agreed to purchase from the Issuers, and the Issuers have agreed to sell to
the Purchasers, Seventy Two Million Dollars ($72,000,000) in aggregate principal
amount of their 15% Senior Subordinated Notes due March 31, 2007, (collectively,
with any PIK Notes issued hereunder, the "Notes" and individually, including PIK
Notes, a "Note"); and
WHEREAS, the Issuers and the Purchasers wish to enter into this
Agreement to govern the terms of the Notes;
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth herein, the parties to this Agreement hereby agree as
follows:
1. TERMS OF NOTES
1.1 FORM OF NOTES; JOINT AND SEVERAL OBLIGATIONS.
The Notes (other than the PIK Notes) shall be substantially in the form of
Exhibit A hereto. The PIK Notes shall be substantially in the form of Exhibit B
hereto. All obligations of the Issuers under this Agreement and the Notes shall
be joint and several.
1.2 MATURITY.
The entire principal amount of the Notes, together with interest accrued
thereon, shall be due and payable in cash on March 31, 2007.
1.3 OPTIONAL PRINCIPAL PAYMENTS.
(a) OPTIONAL PRINCIPAL PAYMENTS. The Issuers may prepay the principal
amount of the Notes at any time, in whole or in part, in cash in multiples of
One Million Dollars
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($1,000,000) (or, if the aggregate outstanding principal amount of the Notes is
less than One Million Dollars ($1,000,000) at such time, then such principal
amount), together with:
(i) interest on such principal amount then being paid and accrued to
the payment date; and
(ii) an amount equal to the Prepayment Fee due at such time in respect
of the principal amount of the Notes being so paid,
(b) NOTICE OF OPTIONAL PAYMENT. The Issuers will give notice of each
optional payment of the Notes pursuant to this Section 1.3 to each holder of
Notes not less than three (3) Business Days before the specified payment date,
stating:
(i) the specified payment date;
(ii) that such payment is to be made pursuant to this Section 1.3;
(iii) the principal amount of each Note to be paid on such date;
(iv) the interest to be paid on each such Note, accrued to the
specified payment date; and
(v) the calculation of the Prepayment Fee due in connection with such
payment.
(c) PREPAYMENT OF NOTES. Notice of payment having been so given, the
aggregate principal amount of the Notes to be paid stated in such notice,
together with the Prepayment Fee, determined as of the specified payment date,
and interest thereon accrued to the specified payment date, shall become due and
payable on the specified payment date.
1.4 INTEREST PAYMENTS.
(a) INTEREST PAYMENTS. Interest on the Notes shall be computed on the
basis of a 360-day year of twelve 30-day months on the unpaid principal balance
thereof from the date of each Note at the rate of 15.0% per annum plus, if
applicable, Contingent Interest and interest at the Default Rate, and shall be
payable, in arrears, semi-annually on the last Business Day of each March and
September in each year, commencing on September 29, 2000, until the principal
amount thereof is paid in full. Subject to Section 1.4(c), such interest shall
be paid in cash.
(b) OVERDUE SUMS. Any overdue principal (including overdue partial
payments of principal) of, or interest, including Contingent Interest, or
Prepayment Fee, on the outstanding principal amount of Notes or any other amount
due pursuant to this Agreement or the Notes shall bear interest, payable on
demand, for each day from and including the date payment thereof was due to, but
excluding, the date of actual payment, at a rate per annum equal to the lesser
of:
(i) the Maximum Legal Rate of Interest; or
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(ii) the then highest interest rate in effect with respect to the
Notes then outstanding plus two percent (2%) (the "Default Rate").
(c) PIK INTEREST. If and to the extent required by the Bank
Administrative Agent pursuant to the terms of the Intercreditor Agreement the
Issuer may, in lieu of payment of interest in cash, as and to the extent
required under the Intercreditor Agreement, issue PIK Notes for the applicable
interest payment.
(d) CONTINGENT INTEREST. Additional interest shall be payable on the
outstanding principal amount of the Notes from the first anniversary of the
Closing Date, at a rate per annum equal to one-half of one percent (1/2%) for
every twenty-five cents that the Actual Price exceeds the Base Price during any
applicable semi-annual interest period up to a maximum rate of additional
interest of 10% ("Contingent Interest"). Such Contingent Interest shall be
payable semi-annually on the last Business Day of each March and September, in
cash or, if required by the Bank Administrative Agent pursuant to the terms of
the Intercreditor Agreement, by the issuance of PIK Notes.
(e) MAXIMUM LEGAL RATE. Notwithstanding anything to the contrary herein
or in the Notes, the rate of interest payable with respect to the Notes shall at
no time directly or indirectly exceed the Maximum Legal Rate of Interest.
1.5 OFFER TO PAY UPON CHANGE IN CONTROL.
(a) NOTICE OF CHANGE IN CONTROL NOTICE EVENT. For all purposes this
Section 1.5 is subject to the terms and conditions of the Intercreditor
Agreement. In the event of the obtaining of knowledge of a Change in Control
Notice Event by any Responsible Officer (including, without limitation, via the
receipt of notice of a Change in Control Notice Event from any holder of Notes),
the Issuers will, within three (3) Business Days after the occurrence of such
event, give notice of such Change in Control Notice Event to each holder of
Notes. Each such notice shall:
(i) be dated the date of the sending of such notice;
(ii) be executed by a Responsible Officer;
(iii) refer to this Section 1.5; and
(iv) specify, in reasonable detail, the nature and date of the Change
in Control Notice Event.
(b) OFFER IN RESPECT OF A CHANGE IN CONTROL. In the event of a Change
in Control, the Issuers will, within three (3) Business Days after the
occurrence of such event (or, in the case of any Change in Control the
consummation or finalization of which would involve any action of the Issuers,
at least thirty (30) days prior to such Change in Control), give notice of such
Change in Control to each holder of Notes. Subject to the terms and conditions
of the Intercreditor Agreement, such notice, shall contain an irrevocable
separate offer to each holder of Notes to repurchase all, but not less than all,
of the principal of, and interest on the Notes held by such holder on a date
(the "Change in Control Payment Date") specified in such notice that is not
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less than twenty (20) days and not more than thirty (30) days after the date of
such notice. Each such notice shall:
(i) be dated the date of the sending of such notice;
(ii) be executed by a Responsible Officer;
(iii) specify, in reasonable detail, the nature and date of the Change
in Control;
(iv) specify the Change in Control Payment Date;
(v) specify the principal amount of each Note outstanding; and
(vi) specify the interest that will be due on each Note offered to be
repurchased, accrued to the Change in Control Payment Date.
If the Issuers shall not have received a written response to such notice from
any holder of Notes within ten (10) days after the date of posting of such
notice to such holder of Notes, then the Issuers shall immediately send a second
notice to each such holder of Notes.
(c) ACCEPTANCE, REJECTION. To accept such offered prepayment, a holder
of Notes shall cause a notice of such acceptance to be delivered to the Issuers
at least ten (10) days prior to the Change in Control Payment Date. A failure to
accept in writing such written offer of prepayment as provided in this Section
1.5(c), or a written rejection of such offered prepayment, shall be deemed to
constitute a rejection of such offer. If accepted, such offered prepayment shall
be due and payable on the Change in Control Payment Date (as may be adjusted or
rescinded pursuant to Section 1.5(d)). Such offered prepayment shall be made at
101% of the principal amount of such Notes as of the Change in Control Payment
Date, together with accrued interest thereon accrued to the Change in Control
Payment Date. In such event no Prepayment Fee is due.
(d) DEFERRAL OF OBLIGATION TO PURCHASE. The obligation of the Issuers
to purchase Notes pursuant to the offer required by Section 1.5(b) and accepted
in accordance with Section 1.5(c), is subject to the occurrence of the Change in
Control in respect of which such offers and acceptances shall have been made. In
the event that such Change in Control does not occur prior to the Change in
Control Payment Date in respect thereof, such purchase shall be deferred until
and shall be made on the date on which such Change in Control occurs or, if the
Issuers determine that activities to effect such Change in Control have ceased
or have been abandoned, then such offer, acceptances and obligation to purchase
shall be deemed to have been rescinded. The Issuers shall keep each holder of
Notes reasonably and timely informed of:
(i) any such deferral of the date of purchase;
(ii) the date on which such Change in Control and the purchase are
expected to occur; and
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(iii) any determination by the Issuers that activities to effect such
Change in Control have ceased or been abandoned.
1.6 NO OTHER PAYMENTS OF PRINCIPAL; ACQUISITION OF NOTES.
Except for payments of principal permitted under the Intercreditor
Agreement and made in accordance with this Section 1, the Issuers may not make
any payment of principal in respect of the Notes. The Issuers will not, and will
not permit any Subsidiary or any Affiliate of the Issuers to, directly or
indirectly, acquire or make any offer to acquire any Notes.
1.7 NOTATION OF NOTES ON PAYMENT.
Upon any partial payment of a Note, the holder of such Note may (but shall
not be required to), at its option:
(a) surrender such Note to the Issuers pursuant to Section 2.2 in
exchange for a new Note in a principal amount equal to the principal amount
remaining unpaid on the surrendered Note;
(b) make such Note available to the Issuers for notation thereon of the
portion of the principal so paid; or
(c) xxxx such Note with a notation thereon of the portion of the
principal so paid.
In case the entire principal amount of any Note is paid, such Note shall be
surrendered to the Issuers for cancellation and shall not be reissued, and no
Note shall be issued in lieu of the paid principal amount of any Note.
1.8 MANNER OF PAYMENTS.
(a) MANNER OF PAYMENT. The Issuers shall pay all amounts payable with
respect to each Note (without any presentment of such Notes and without any
notation of such payment being made thereon) in immediately available funds by
wire transfer to the account of the holder thereof in any bank in the United
States as may be designated in writing by such holder, or in such other manner
as may be reasonably directed or to such other address in the United States as
may be reasonably designated in writing by such holder. Annex I and Annex I(A)
shall be deemed to constitute notice, direction or designation (as appropriate)
by the Purchasers to the Issuers with respect to payments to be made to such
Purchasers as aforesaid. In the absence of such written direction, all amounts
payable with respect to each Note shall be paid by check mailed and addressed to
the registered holder of such Note at the address shown in the register
maintained by the Issuers pursuant to Section 2.1.
(b) PAYMENTS DUE ON HOLIDAYS. If any payment due on, or with respect
to, any Note shall fall due on a day other than a Business Day, then such
payment shall be made on the first Business Day following the day on which such
payment shall have so fallen due; provided that if all or any portion of such
payment shall consist of a payment of interest, for purposes of calculating such
interest, such payment shall be deemed to have been originally due
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on such first following Business Day, such interest shall accrue and be payable
to (but not including) the actual date of payment, and the amount of the next
succeeding interest payment shall be adjusted accordingly.
(c) PAYMENTS, WHEN RECEIVED. Any payment to be made to the holders of
Notes hereunder or under the Notes shall be deemed to have been made on the
Business Day such payment actually becomes available at such holder's bank prior
to the close of business of such bank.
2. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES
2.1 REGISTRATION OF NOTES.
The Issuers will keep at the Company's office a register for the
registration and transfer of Notes. The name and address of each holder of one
or more Notes, each transfer thereof made in accordance with Section 2.2 and the
name and address of each transferee of one or more Notes shall be registered in
such register. The Person in whose name any Note shall be registered shall be
deemed and treated as the owner and holder thereof for all purposes hereof, and
the Issuers shall not be affected by any notice or knowledge to the contrary,
other than in accordance with Section 2.2.
2.2 EXCHANGE OF NOTES.
(a) EXCHANGE OF NOTES. Upon surrender of any Note at the office of the
Company, duly endorsed or accompanied by a written instrument of transfer duly
executed by the registered holder of such Note or such holder's attorney duly
authorized in writing, the Issuers will execute and deliver, at the Issuers'
expense (except as provided in Section 2.2(b)), a new Note or Notes in exchange
therefor, in an aggregate principal amount equal to the unpaid principal amount
of the surrendered Note. Each such new Note shall be registered in the name of
such Person as such holder may request and shall be substantially in the form of
Exhibit A. Each such new Note shall be dated and bear interest from the date to
which interest shall have been paid on the surrendered Note or dated the date of
the surrendered Note if no interest shall have been paid thereon. Each such new
Note shall carry the same rights to unpaid interest and interest to accrue that
were carried by the Note so exchanged or transferred. Notes shall not be
transferred to holders other than officers of the Company in denominations of
less than Five Hundred Thousand Dollars ($500,000), provided that any holder of
Notes may transfer its entire holding of Notes regardless of the principal
amount of such holder's Notes.
(b) COSTS. The Issuers will pay the cost of delivering to or from such
holder's home office or custodian bank from or to the Issuers, insured to the
reasonable satisfaction of such holder, the surrendered Note and any Note issued
in substitution or replacement for the surrendered Note. The Issuers may require
payment of a sum sufficient to cover any stamp tax or governmental charge
imposed in respect of any such transfer of Notes.
2.3 REPLACEMENT OF NOTES.
Upon receipt by the Issuers from the registered holder of a Note of
evidence reasonably satisfactory to the Issuers of the loss, theft, destruction
or mutilation of any Note (which
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evidence shall be, in the case of an Institutional Investor, notice from such
institutional investor of such loss, theft, destruction or mutilation), and:
(a) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to the Issuers; provided, however, that if the holder of such Note
is a Purchaser, an Institutional Investor or a nominee of either, the unsecured
agreement of indemnity of such Purchaser or such Institutional Investor (but not
of any nominee therefor) shall be deemed to be satisfactory; or
(b) in the case of mutilation, upon surrender and cancellation thereof,
the Issuers at their own expense will execute and, within five (5) Business Days
after such receipt, deliver, in lieu thereof, a replacement Note, dated and
bearing interest from the date to which interest shall have been paid on such
lost, stolen, destroyed or mutilated Note or dated the date of such lost,
stolen, destroyed or mutilated Note if no interest shall have been paid thereon.
2.4 ISSUANCE TAXES.
The Issuers will pay all taxes, if any, due in connection with and as the
result of the initial issuance and sale of the Notes or the execution and
delivery of any other Financing Document and in connection with any
modification, waiver or amendment of any Financing Document and shall save each
holder of Notes harmless without limitation as to time against any and all
liabilities with respect to all such taxes. The obligations of the Issuers under
this Section 2.4 shall survive the payment or prepayment of the Notes and the
termination hereof.
3. AFFIRMATIVE COVENANTS
The Issuers covenant with each Purchaser that, until all of the Obligations
shall have been paid and performed in full, the Issuers will perform all of the
obligations set forth in this Section 3.
3.1 FINANCIAL STATEMENTS AND OTHER INFORMATION. The Issuers will furnish,
or will cause to be furnished, to each Purchaser copies of the following
financial statements, reports, notices and information:
(a) ANNUAL FINANCIALS. Within 90 days after the end of each fiscal year
of the Issuers, their audited consolidated and consolidating balance sheet and
related statements of operations, stockholders' equity and cash flows as of the
end of and for such year, setting forth in each case in comparative form the
figures for the previous fiscal year, all reported on by an independent public
accountants of recognized national standing (without a "going concern" or like
qualification or exception and without any qualification or exception as to the
scope of such audit) to the effect that such consolidated financial statements
present fairly in all material respects the financial condition and results of
operations of the Issuers and their consolidated Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied, together with a certificate
of the accounting firm that reported on such financial statements stating
whether they obtained knowledge during the course of their examination of such
financial statements of any Event of Default (which certificate may be limited
to the extent required by accounting rules or guidelines);
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(b) QUARTERLY FINANCIALS. Within 45 days after the end of each of the
first three fiscal quarters of each fiscal year of the Issuers, their
consolidated and consolidating balance sheet and related statements of
operations, stockholders' equity and cash flows as of the end of and for such
fiscal quarter and the then elapsed portion of the fiscal year, setting forth in
each case in comparative form the figures for the corresponding period or
periods of (or, in the case of the balance sheet, as of the end of) the previous
fiscal year, all certified by one of their Financial Officers as presenting
fairly in all material respects the financial condition and results of
operations of the Issuers and their consolidated Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied, subject to normal year-end
audit adjustments and the absence of footnotes;
(c) FINANCIAL OFFICER'S CERTIFICATE. Concurrently with any delivery of
financial statements under clause (a) or (b) above, a certificate of a Financial
Officer of the Issuers (i) certifying as to whether an Event of Default has
occurred and, if an Event of Default has occurred, specifying the details
thereof and any action taken or proposed to be taken with respect thereto, (ii)
setting forth reasonably detailed calculations demonstrating compliance with
Sections 4.12, 4.13 and 4.14 and (iii) stating whether any change in GAAP or in
the application thereof has occurred since the date of the Issuers' audited
financial statements referred to in this Section 3.1 and, if any such change has
occurred, specifying the effect of such change on the financial statements
accompanying such certificate;
(d) CERTIFICATE AS TO EVENTS OF DEFAULT. Concurrently with any delivery
of financial statements under clause (a) above, a certificate of the accounting
firm that reported on such financial statements stating whether they obtained
knowledge during the course of their examination of such financial statements of
any Events of Default (which certificate may be limited to the extent required
by accounting rules or guidelines);
(e) BUDGETS. At least thirty (30) days prior to the commencement of
each fiscal year of the Issuers, a detailed consolidated budget for such fiscal
year (including a projected consolidated balance sheet and related statements of
projected operations and cash flow as of the end of and for such fiscal year and
setting forth the assumptions used for purposes of preparing such budget) and,
promptly when available, any significant revisions of such budget;
(f) RESERVE REPORTS. By March 1st of each year, a Reserve Report
prepared by the Issuers and audited by an Approved Engineer; and by September
1st of each year, a Reserve Report prepared by the Issuer, in each case as
required under the Credit Agreement.
(g) SEC DISCLOSURE. Promptly after the same become publicly available,
all periodic and other reports, proxy statements and other materials filed by
the Issuers or any Subsidiary with the Securities and Exchange Commission, or
any Governmental Authority succeeding to any or all of the functions of said
Commission, or with any national securities exchange, or distributed by the
Issuers to their shareholders generally, as the case may be; and
(h) OTHER INFORMATION. Promptly following any request therefor, such
other information regarding the operations, business affairs and financial
condition of the Issuers or
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any Subsidiary, or compliance with the terms of any Financing Document, as any
Purchaser may reasonably request.
3.2 NOTICES OF MATERIAL EVENTS.
Promptly, and in any event within three (3) (or ten (10), in the case of
(d) or (e) below) Business Days upon the Issuer or any of their Subsidiaries
becoming aware of the following events, the Issuers will furnish to each
Purchaser written notice of the following:
(a) the occurrence of any Event of Default or default under the Credit
Agreement;
(b) (i) the filing or commencement of any action, suit or proceeding by
or before any arbitrator or Governmental Authority against or affecting any of
the Issuers or any Affiliate thereof or (ii) the occurrence of any adverse
development with respect to any action, suit or proceeding previously disclosed
to the Purchasers pursuant to this Agreement, in each case if such action, suit
or proceeding could reasonably be expected to result in a Material Adverse
Effect;
(c) the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to result in
liability of the Issuers and their Subsidiaries an aggregate amount exceeding
$500,000; and
(d)
(i) any claim by any Person against the Issuers or any of their
Subsidiaries of nonpayment of, or
(ii) any attempt by any Person to collect upon or enforce
any accounts payable (that are more than sixty (60) days past due) of the
Issuers or any of their Subsidiaries, in the case of any single account payable
in excess of $500,000, or in the case of all accounts payable in the aggregate
in excess of $500,000;
(e) (i) any and all enforcement, cleanup, removal or other governmental
or regulatory actions instituted, completed or threatened or other environmental
claims against the Issuers or any Subsidiary or any of their Properties pursuant
to any applicable Environmental Laws which could have a Material Adverse Effect,
and (ii) any environmental or similar condition on any real Property adjoining
or in the vicinity of the Property of the Issuers or any Subsidiary that could
reasonably be anticipated to cause such Property or any part thereof to be
subject to any material restrictions on the ownership, occupancy,
transferability or use of such Property under any Environmental Laws; and
(f) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section 3.2 shall be accompanied by a statement
of a Financial Officer or other Responsible Officer of the Issuers setting forth
the details of the event or
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development requiring such notice and any action taken or proposed to be taken
with respect thereto.
3.3 INFORMATION REGARDING ISSUER.
Promptly, and in any event within five (5) Business Days upon becoming
aware of the following changes, the Issuers will furnish to the Purchasers
written notice of any change: (i) in the location of any Subsidiary's chief
executive office, its principal place of business, any office in which it
maintains books or records relating to Collateral owned by it or any office or
facility at which Collateral owned by it is located (including the establishment
of any such new office or facility); (ii) in any Subsidiary's identity or
corporate structure.
3.4 EXISTENCE; CONDUCT OF BUSINESS.
Each of the Issuers will, and will cause each of its Subsidiaries to, do or
cause to be done all things necessary to preserve, renew and keep in full force
and effect (i) its legal existence and (ii) the rights, licenses, permits,
privileges, franchises, patents, copyrights, trademarks and trade names material
to the conduct of its business, except where the failure to so preserve, renew
or keep in full force and effect such rights, licenses, permits, privileges,
franchises, patents, copyrights, trademarks or trade names could not reasonably
be expected to result in a Material Adverse Effect.
3.5 PAYMENT OF OBLIGATIONS.
Each of the Issuers will, and will cause each of its Subsidiaries to, pay
its Indebtedness and other obligations, including Tax liabilities, before the
same shall become delinquent or in default, except where: (i) the validity or
amount thereof is being contested in good faith by appropriate proceedings; (ii)
the Issuers or such Subsidiary has set aside on their books adequate reserves
with respect thereto in accordance with GAAP; (iv) such contest effectively
suspends collection of the contested obligation and the enforcement of any Lien
securing such obligation; and (v) the failure to make payment pending such
contest could not reasonably be expected to result in a Material Adverse Effect.
3.6 MAINTENANCE OF PROPERTIES.
Each of the Issuers will, and will cause each of its Subsidiaries to, keep,
preserve, protect and maintain all Property material to the conduct of its
business in good repair, working order and condition, and make necessary and
proper repairs, renewals and replacements so that its business, and the
respective businesses of their Subsidiaries, carried on in connection therewith
may be properly conducted at all times in accordance with standard industry
practices unless the (i) Issuers or the respective Subsidiary determine in good
faith that the continued maintenance of any of their properties is no longer
economically desirable or (ii) the failure to so keep, preserve, protect and
maintain such Property or the failure to make such repairs, renewals or
replacements could not reasonably be expected to result in a Material Adverse
Effect. In particular, the Issuers will, and will cause each of their
Subsidiaries to, operate or cause to be operated its Oil and Gas Properties as a
reasonable and prudent operator.
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3.7 INSURANCE.
Each of the Issuers will, and will cause each of its Subsidiaries to,
maintain, with financially sound and reputable insurance companies (i) insurance
in such amounts (with no greater risk retention) and against such risks as are
customarily maintained by companies of established repute engaged in the same or
similar businesses operating in the same or similar locations and (ii) all
insurance required to be maintained pursuant to the Credit Agreement and related
loan documents. The Issuers will furnish to each of the Purchasers, upon
request, information in reasonable detail as to the insurance so maintained.
3.8 CASUALTY AND CONDEMNATION.
The Issuers will furnish to each of the Purchasers prompt written notice of
any casualty or other insured damage to any material portion of any Collateral
or the commencement of any action or proceeding for the taking of any Collateral
or any part thereof or interest therein under power of eminent domain or by
material condemnation or similar proceeding.
3.9 BOOKS AND RECORDS; INSPECTION AND AUDIT RIGHTS.
Each of the Issuers will, and will cause each of its Subsidiaries to, keep
proper books of record and account in which full, true and correct entries are
made of all dealings and transactions in relation to its business and
activities.
3.10 COMPLIANCE WITH LAWS.
The Issuers will, and will cause each of their Subsidiaries to, comply with
all Governmental Rules applicable to them, any Subsidiary, or their respective
Property, except where the failure to do so, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect.
3.11 USE OF PROCEEDS.
The proceeds of the sale of the Notes will be used only for the payment of
(a) amounts payable under the Existing Loan Agreement in accordance with the
Plan of Reorganization and (b) capital expenditures (including, without
limitation, oil and gas production projects), working capital and other general
corporate purposes of the Issuers and their Subsidiaries.
3.12 ADDITIONAL SUBSIDIARIES.
If any additional Subsidiary is formed or acquired after the Effective
Date, the Issuers will notify each of the Purchasers thereof and the Issuers
will cause such Subsidiary (unless such Subsidiary is a Foreign Subsidiary) to
execute a Guaranty within ten (10) Business Days after such Subsidiary is formed
or acquired.
3.13 FURTHER ASSURANCES.
The Issuers will, and will cause each Subsidiary to, execute any and all
further documents, agreements and instruments, and take all such further actions
which may be required
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under any applicable law, or which the Required Holders may reasonably request,
to effectuate the transactions contemplated by the Financing Documents, all at
the expense of the Obligors.
3.14 ENVIRONMENTAL COVENANT.
Each of the Issuers will, and will cause each of its Subsidiaries to,
(a) use and operate all of its facilities and properties in material
compliance with all Environmental Laws, keep all necessary permits, approvals,
certificates, licenses and other authorizations required by Environmental Laws
in effect and remain in material compliance therewith, and handle all Hazardous
Materials in material compliance with all applicable Environmental Laws;
(b) provide to each Purchaser promptly following receipt, copies of any
notice, pleading, citation, indictment, complaint, order, decree or other
documentation from any source asserting or alleging a material violation of any
Environmental Law or a circumstance or condition which requires or may require a
material financial contribution by the Issuers or any of their Subsidiaries for
a Remedial Action under any Environmental Law, or which seeks a material amount
of damages or civil, criminal or punitive penalties from the Issuers or any of
their Subsidiaries for an alleged or actual violation of any Environmental Law,
or which names or lists the Issuers or any of their Subsidiaries as a
potentially responsible party under Environmental Law;
(c) shall use its best efforts to promptly cure and have dismissed with
prejudice to the satisfaction of the Purchasers any actions and proceedings
relating to compliance with Environmental Laws; and
(d) provide such pertinent information and certifications which any
Purchaser may reasonably request from time to time to evidence compliance with
this Section 3.14.
4. NEGATIVE COVENANTS
Until the principal of and interest on each Note and all fees payable
hereunder have been paid in full, the Issuers covenant and agree with the
Purchasers that:
4.1 INDEBTEDNESS; CERTAIN EQUITY SECURITIES.
The Issuers will not, and will not permit any Subsidiary to, create, incur,
assume or permit to exist any Indebtedness, except:
(i) Indebtedness created under the Financing Documents;
(ii) the Senior Indebtedness and Refinancing Indebtedness;
(iii) Indebtedness existing on the Effective Date and set forth in
Schedule 6.1 to the Credit Agreement, but not any extensions, renewals or
replacements of any such Indebtedness;
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(iv) Indebtedness of any Issuer to any other Issuer, any Issuer to any
Subsidiary, and any Subsidiary to any Issuer or any other Subsidiary;
provided that Indebtedness of any Subsidiary that is not a Obligor to the
Issuers or any other Obligor shall be subject to Section 4.4;
(v) guarantees by any Issuer of Indebtedness of any other Issuer or of
any Subsidiary and by any Subsidiary of Indebtedness of any Issuer or any
other Subsidiary; provided that guarantees by the Issuers or any other
Obligor of Indebtedness of any Subsidiary that is not a Obligor shall be
subject to Section 4.4;
(vi) Indebtedness of any Person that becomes a Subsidiary after the
Effective Date; provided that (A) such Indebtedness exists at the time such
Person becomes a Subsidiary and is not created in contemplation of or in
connection with such Person becoming a Subsidiary and (B) the aggregate
principal amount of Indebtedness permitted by this clause (vi) and clause
(viii) shall not exceed $5,000,000 at any time outstanding;
(vii) Hedging Obligations incurred pursuant to the Hedging Agreements
required or permitted under the Credit Agreement; and
(viii) other unsecured Indebtedness in an aggregate principal amount
not exceeding $5,000,000 at any time outstanding; provided that the
aggregate principal amount of Indebtedness of the Issuers and their
Subsidiaries permitted by clause (vi) and this clause (viii) shall not
exceed $5,000,000 at any time outstanding.
4.2 LIENS.
The Issuers will not, and will not permit any Subsidiary to, create, incur,
assume or permit to exist any Lien on any Property or asset now owned or
hereafter acquired by it, or assign or sell any income or revenues (including
accounts receivable) or rights in respect of any thereof, except:
(a) Liens created under the Credit Agreement and related loan documents
and Refinancing Indebtedness;
(b) Permitted Encumbrances;
(c) any Lien on any Property or asset of the Issuers or any Subsidiary
existing on the Effective Date and set forth in Schedule 6.2 to the Credit
Agreement; provided that (i) such Lien shall not apply to any other Property or
asset of the Issuers or any Subsidiary and (ii) such Lien shall secure only
those obligations which it secures on the Effective Date;
(d) any Lien existing on any Property or asset prior to the acquisition
thereof by the Issuers or any Subsidiary or existing on any Property or asset of
any Person that becomes a Subsidiary after the Effective Date prior to the time
such Person becomes a Subsidiary; provided that (i) such Lien is not created in
contemplation of or in connection with such acquisition or such Person becoming
a Subsidiary, as the case may be, (ii) such Lien shall not apply to any other
Property or assets of the Issuers or any Subsidiary and (iii) such Lien shall
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secure only those obligations which it secures on the date of such acquisition
or the date such Person becomes a Subsidiary, as the case may be: and
(e) Liens on fixed or capital assets acquired, constructed or improved
by the Issuers or any Subsidiary which do not constitute Mortgaged Property (as
defined in the Credit Agreement); provided that (i) such security interests
secure Indebtedness permitted by clause (vi) or (viii) of Section 4.1, (ii) such
security interests and the Indebtedness secured thereby are incurred prior to or
within 90 days after such acquisition or the completion of such construction or
improvement, (iii) the Indebtedness secured thereby does not exceed 75% of the
cost of acquiring, constructing or improving such fixed or capital assets and
(iv) such security interests shall not apply to any other Property or assets of
the Issuers or any Subsidiary.
4.3 FUNDAMENTAL CHANGES.
(a) The Issuers will not, and will not permit any Subsidiary to, merge
into or consolidate with any other Person who is not an Issuer or a Subsidiary
Guarantor, or permit any other Person to merge into or consolidate with it, or
liquidate or dissolve, except that, if at the time thereof and immediately after
giving effect thereto no Event of Default shall have occurred and be continuing
(i) any Subsidiary may merge into any of the Issuers in a transaction in which
the respective Issuer is the surviving corporation, (ii) any Subsidiary may
merge into any Subsidiary in a transaction in which the surviving entity is a
Subsidiary and (if any party to such merger is an Obligor) is an Obligor and
(iii) any Subsidiary (other than an Obligor) may liquidate or dissolve if the
Issuers determine in good faith that such liquidation or dissolution is in the
best interests of the Issuers and is not materially disadvantageous to the
Purchasers; provided that any such merger involving a Person that is not a
wholly owned Subsidiary immediately prior to such merger shall not be permitted
unless also permitted by Section 4.4.
(b) The Issuers will not, and will not permit any of their Subsidiaries
to, engage to any material extent in any business other than businesses of the
type conducted by the Issuers and their Subsidiaries on the date of execution of
this Agreement and businesses reasonably related thereto.
4.4 INVESTMENTS, LOANS, ADVANCES, GUARANTEES AND ACQUISITIONS.
The Issuers will not, and will not permit any of their Subsidiaries to,
purchase, hold or acquire (including pursuant to any merger with any Person that
was not a wholly owned Subsidiary prior to such merger) any Equity Interests in
or evidences of indebtedness or other securities (including any option, warrant
or other right to acquire any of the foregoing) of, make or permit to exist any
loans or advances to, guaranty any obligations of, or make or permit to exist
any investment or any other interest in, any other Person, or purchase or
otherwise acquire (in one transaction or a series of transactions) any assets of
any other Person constituting a business unit, except:
(a) Permitted Investments,
(b) investments existing on the Effective Date and set forth on
Schedule 6.4 to the Credit Agreement;
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(c) investments by the Issuers and their Subsidiaries in Equity
Interests in their respective Subsidiaries; provided the aggregate amount of
investments by Subsidiaries in, and loans and advances by Subsidiaries to, and
guarantees by Subsidiaries of Indebtedness of, Foreign Subsidiaries (as defined
in the Credit Agreement) (including all such investments, loans, advances and
guarantees existing on the Effective Date) shall not exceed $5,000,000 at any
time outstanding;
(d) loans or advances made by any Issuer to any other Issuer, any
Issuer to any Subsidiary, and any Subsidiary to any Issuer or any other
Subsidiary; provided that the amount of such loans and advances made by
Subsidiaries to Foreign Subsidiaries shall be subject to the limitation set
forth in clause (c) above;
(e) guarantees constituting Indebtedness permitted by Section 4.1; and
(f) investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business.
4.5 ASSET SALES.
The Issuers will not, and will not permit any of their Subsidiaries to,
sell, transfer, lease or otherwise dispose of any asset, including any Equity
Interest owned by it, nor will the Issuers permit any of their Subsidiaries to
issue any additional Equity Interest in such Subsidiary, except:
(a) sales of inventory, used or surplus equipment and Permitted
Investments in the ordinary course of business and assignments of interests in
oil and gas leases in connection with customary farmout arrangements entered
into in the ordinary course of business;
(b) sales, transfers and dispositions to any Issuer or a Subsidiary;
provided that any such sales, transfers or dispositions involving a Subsidiary
that is not an Obligor shall be made in compliance with Section 4.9;
(c) sales, transfers and other dispositions by any Issuer or a
Subsidiary of the Tunisia Assets (as defined in the Credit Agreement);
(d) sales, transfers and other dispositions of assets (other than
Equity Interests in a Subsidiary) that are not permitted by any other clause of
this Section 4.5; provided that the aggregate fair market value of all assets
sold, transferred or otherwise disposed of in reliance upon this clause (d)
shall not exceed $5,000,000 during the last four consecutive fiscal quarter
period then most recently ended;
provided that all sales, transfers, leases and other dispositions permitted
hereby (other than those permitted by clause (b) above) shall be made for fair
value solely for cash consideration.
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4.6 SALE AND LEASEBACK TRANSACTIONS.
The Issuers will not, and will not permit any of their Subsidiaries to,
enter into any arrangement, directly or indirectly, whereby it shall sell or
transfer any Property, real or personal, used or useful in its business, whether
now owned or hereinafter acquired, and thereafter rent or lease such Property or
other Property that it intends to use for substantially the same purpose or
purposes as the Property sold or transferred.
4.7 [Reserved]
4.8 RESTRICTED PAYMENTS; CERTAIN PAYMENTS OF INDEBTEDNESS.
(a) The Issuers will, not, and will not permit any Subsidiary to,
declare or make, or agree to pay or make, directly or indirectly, any Restricted
Payment, or incur any obligation (contingent or otherwise) to do so, except that
(i) any Issuer or Subsidiary may pay dividends to the Company or any other
Issuer or Subsidiary (other than a Foreign Subsidiary) at such times and in such
amounts during any fiscal year, as shall be necessary to permit the Issuers or
any other Subsidiary (other than a Foreign Subsidiary) to discharge their
permitted liabilities, (ii) any Issuer or Subsidiary may pay dividends to a
Foreign Subsidiary at such times and in such amounts so that the aggregate
amount of the dividends paid by all Issuers (other than the Company) and all
Subsidiaries to all Foreign Subsidiaries does not exceed $250,000 during any
fiscal year, and (iii) the Company may make Restricted Payments in the form of
dividends to the extent payable in, or exchanges or conversions for or into,
shares of common stock of the Company or options or warrants to purchase common
stock of the Company; and (iv) any Issuer or Subsidiary may make Restricted
Payments required by the Confirmation Order to the shareholders of the "Existing
Common Stock" (as defined in the Plan of Reorganization) with respect to (A) 20%
of any proceeds or other amounts relating to the Xxxxx Muse Lawsuit (as defined
in the Credit Agreement) to which the Issuers or any of their Subsidiaries are
entitled, and (B) 40% of any Net Proceeds (as defined in the Credit Agreement)
received by the Issuers or any of their Subsidiaries with respect to any sale,
transfer or other disposition of the Tunisia Assets.
(b) The Issuers will not, and will not permit any Subsidiary to, make
or agree to pay or make, directly or indirectly, any payment or other
distribution (whether in cash securities or other Property) of or in respect of
principal of or interest on any Indebtedness not permitted under Section 4.1 or
any payment or other distribution (whether in cash, securities or other
Property), including any sinking fund or similar deposit, on account of the
purchase, redemption, retirement, acquisition, cancellation or termination of
any Indebtedness not permitted under Section 4.1.
4.9 TRANSACTIONS WITH AFFILIATES.
The Issuers will not and will not permit any Subsidiary to, sell, lease or
otherwise transfer any Property or assets to, or purchase, lease or otherwise
acquire any Property or assets from, or otherwise engage in any other
transactions with, any of its Affiliates, except (a) transactions in the
ordinary course of business and that are at prices and on terms and conditions
not less favorable to the applicable Issuers or such Subsidiary than could be
obtained on an arm's-length basis from unrelated third parties, (b) transactions
between or among the Issuers and the
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Subsidiaries not involving any other Affiliate and (c) any Restricted Payment
permitted by Section 4.8.
4.10 RESTRICTIVE AGREEMENTS.
The Issuers will not and will not permit any Subsidiary to, directly or
indirectly, enter into, incur or permit to exist any agreement or other
arrangement that prohibits, restricts or imposes any condition upon (a) the
ability of the Issuers or any Subsidiary to create, incur or permit to exist any
Lien upon any of its Property or assets, or (b) the ability of any Subsidiary to
pay dividends or other distributions with respect to any shares of its capital
stock or to make or repay loans or advances to the Issuers or any other
Subsidiary or to guaranty Indebtedness of the Issuers or any other Subsidiary;
provided that (i) the foregoing shall not apply to restrictions and conditions
imposed by law or by the Credit Agreement and related loan documents or the
Financing Documents, (ii) the foregoing shall not apply to restrictions and
conditions existing on the Effective Date identified on Schedule 6.10 to the
Credit Agreement (but shall apply to any extension or renewal of, or any
amendment or modification expanding the scope of, any such restriction or
condition), (iii) the foregoing shall not apply to customary restrictions and
conditions contained in agreements relating to the sale of any Issuer (other
than the Company) or a Subsidiary pending such sale, provided such restrictions
and conditions apply only to the Issuer or Subsidiary that is to be sold and
such sale is permitted hereunder, (iv) clause (a) of the foregoing shall not
apply to restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Agreement if such restrictions or conditions
apply only to the Property or assets securing such Indebtedness and (v) clause
(a) of the foregoing shall not apply to customary provisions in leases
restricting the assignment thereof.
4.11 AMENDMENT OF MATERIAL DOCUMENTS.
The Issuers will not and will not permit any Subsidiary to, amend, modify
or waive any of its rights under any of its Organic Documents.
4.12 MINIMUM EBITDA TO TOTAL INTEREST EXPENSE RATIO.
The Company will not permit its EBITDA to Total Interest Expense Ratio for
the last four consecutive fiscal quarter period then most recently ended to be
less than: (a) 2.00 to 1.00 as of the end of any fiscal quarter ending on or
before December 31, 2000; (b) 2.25 to 1.00 as of the end of any fiscal quarter
ending between January 1,2001 and June 30, 2001; (c) 2.50 to 1.00 as of the end
of any fiscal quarter ending between July 1, 2001 and October 31, 2001; (d) 2.75
to 1.00 as of the end of any fiscal quarter ending between November 1, 2001 and
December 31, 2001; and (e) 3.00 to 1.00 as of the end of any fiscal quarter
ending after January 1, 2002; provided, however that for periods of calculation
ending on or before December 31, 2000, each reference to "last four consecutive
fiscal quarter period then most recently ended" shall be deemed to be a
reference to the period from April 1, 2000 through the date of such calculation.
4.13 MAXIMUM LEVERAGE RATIO.
The Company will not permit its Leverage Ratio to exceed: (a) 5.00 to 1.00
as of the end of any fiscal quarter ending on or before December 31, 2000; (b)
4.50 to 1.00 as of the end of any fiscal quarter ending between January 1, 2001
and June 30, 2001; (c) 4.25 to 1.00 as of the
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end of any fiscal quarter ending between July 1, 2001 and October 31, 2001; (d)
3.75 to 1.00 as of the end of any fiscal quarter ending between November 1, 2001
and December 31, 2001; and (e) 3.50 to 1.00 as of the end of any fiscal quarter
ending after January 1, 2002; provided, however, that, notwithstanding the
foregoing, upon the occurrence of any prepayment of the principal outstanding
under the Financing Documents or any other Subordinated Debt, the Company from
the time of such prepayment will not permit its Leverage Ratio to exceed 3.50 to
1.00 as of the end of any fiscal quarter ending after the date of such
prepayment.
4.14 MINIMUM CURRENT RATIO.
The Company will not permit its Current Ratio to be less than 1.00 to 1.00
as of the end of any fiscal quarter.
4.15 SUBSIDIARIES.
The Issuers will not at any time create or acquire any Subsidiary unless
the Issuers have caused such Subsidiary to comply with the requirements of
Section 3.12.
4.16 TAKE OR PAY CONTRACTS.
Except as disclosed pursuant to Schedule 6.16 to the Credit Agreement, and
except for reservation charges payable for reservations of capacity in gathering
systems and pipelines incurred in the ordinary course of business on an arm's
length basis for volumes reasonably expected to be produced from the Issuers' or
their Subsidiaries' Properties to be transported through such systems and
pipelines, the Issuers will not, and will not permit any of their Subsidiaries
to, enter into or be a party to any arrangement for the purchase of materials,
supplies, other Property (including without limitation Hydrocarbons), or
services if such arrangement requires that payment be made by the applicable
Issuers or such Subsidiary regardless of whether such materials, supplies, other
Property, or services are delivered or furnished to it.
5. [RESERVED]
6. EVENTS OF DEFAULT.
6.1 EVENTS OF DEFAULT.
An "Event of Default" exists at any time if any of the following both
occurs and is continuing thereafter for any reason whatsoever (and whether such
occurrence shall be voluntary or involuntary or comes about or is effected by
operation of law or otherwise):
(a) PAYMENTS ON NOTES.
(i) PRINCIPAL OR PREPAYMENT FEE PAYMENTS. The Issuers shall fail to
make any payment of principal or Prepayment Fee amounts on any Note on or
before the date such payment is due; or
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(ii) INTEREST PAYMENTS. The Issuers shall fail to make any payment of
interest on any Note, including Contingent Interest, on or before five (5)
days after the date such payment is due,
(b) OTHER DEFAULTS.
(i) PARTICULAR COVENANT DEFAULTS. The Issuers shall fail to perform or
observe any covenant contained in Sections 3.2, 3.4, or 3.11 or in Article
4 of this Agreement; or
(ii) OTHER DEFAULTS. Any Obligor or any Subsidiary fails to comply
with any other provision hereof or of any other Financing Document, and
such failure continues for more than thirty (30) days after notice thereof
from any holder of Notes.
(c) WARRANTIES OR REPRESENTATIONS. Any warranty, representation or
other statement by or on behalf of any Obligor contained in any Financing
Document, in any written amendment, supplement, modification or waiver with
respect to any Financing Document or in any instrument furnished in compliance
therewith or in reference thereto, shall have been false or misleading in any
material respect when made;
(d) DEFAULT ON OR ACCELERATION OF INDEBTEDNESS. (i) Any Obligor or any
Subsidiary fails to make, when due, at maturity, upon demand or otherwise, any
payment or payments in respect of any Indebtedness having an aggregate amount of
all obligations in respect of all such Indebtedness exceeds at such time Two
Million Five Hundred Thousand Dollars ($2,500,000); or (ii) any event shall
occur or any condition shall exist in respect of Indebtedness of any Obligor or
any Subsidiary, or under any agreement securing or relating to such Indebtedness
having an aggregate amount of all obligations in respect of all such
Indebtedness exceeds at such time Two Million Five Hundred Thousand Dollars
($2,500,000) (1) as a result of which the holder or holders of such
Indebtedness, or some group of such holders or a trustee or agent acting on
their behalf, accelerates, or has the right to accelerate, the maturity of such
Indebtedness, or a portion thereof, or (2) that results in any one or more of
the holders thereof or a trustee therefor requiring, or have the rights to
require, any Obligor or any Subsidiary to repurchase such Indebtedness from the
holders thereof;
(e) INSOLVENCY.
(i) INVOLUNTARY BANKRUPTCY PROCEEDINGS.
(1) A receiver, liquidator, custodian or trustee of any Obligor
or Subsidiary, or of all or any substantial part of the Property of
any of them, is appointed by court order; or an order for relief is
entered with respect to any Obligor or Subsidiary, or any Obligor or
Subsidiary is adjudicated a bankrupt or insolvent;
(2) All or any substantial part of the Property of any Obligor or
Subsidiary is sequestered by court order; or
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(3) A petition is filed against any Obligor or Subsidiary under
any bankruptcy, reorganization, arrangement, insolvency, readjustment
of debt, dissolution or liquidation law of any whether now or
hereafter in effect, and is not dismissed, bonded or discharged within
sixty (60) days after such filing; or
(ii) VOLUNTARY PETITIONS. Any Obligor or Subsidiary files a voluntary
petition in bankruptcy or seeks relief under any provision of any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction, whether now or
hereafter in effect, or consents to the filing of any petition against it
under any such law;
(f) ASSIGNMENTS FOR BENEFIT OF CREDITORS, ETC. Any Obligor or
Subsidiary shall: (i) consent to the institution of, or fail to contest in a
timely and appropriate manner, any proceeding or petition described in clause
(e)(i) of this Section 6.1; (ii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official for
any Issuer or any Subsidiary or for a substantial part of its assets; (iii) file
an answer admitting the material allegations of a petition filed against it in
any such proceeding; (iv) make a general assignment for the benefit of
creditors; (v) take any action for the purpose of effecting any of the
foregoing; or (vi) become unable, admit in writing its inability or fail
generally to pay its debts as they become due;
(g) UNDISCHARGED FINAL JUDGMENTS. A final, non-appealable judgment or
final, non-appealable judgments for the payment of money aggregating in excess
of Two Million Five Hundred Thousand Dollars ($2,500,000) is or are outstanding
against any Obligor or Subsidiary and any one of such judgments shall have been
outstanding for more than thirty (30) days from the date of its entry and shall
not have been discharged in full, stayed, or bonded pending appeal; or
(h) FINANCING DOCUMENTS. Any Financing Document shall cease to be in
full force and effect or shall be declared by a court or other Governmental
Authority of competent jurisdiction to be void, voidable or unenforceable
against any Obligor; the validity or enforceability of any Financing Document
against any Obligor shall be contested by any Obligor or Subsidiary; or any
Obligor or Subsidiary shall deny that any Obligor or Subsidiary has any further
liability or obligation under any Financing Document to which it is a party.
(i) PLAN OF REORGANIZATION. The Plan of Reorganization or the
Confirmation Order shall for any reason be vacated or materially modified. If
any action, condition, event or other matter would, at any time, constitute an
Event of Default under any provision of this Section 6.1, then an Event of
Default shall exist, regardless of whether the same or a similar action,
condition, event or other matter is addressed in a different provision of this
Section 6.1 and would not constitute an Event of Default at such time under such
different provision.
6.2 DEFAULT REMEDIES.
(a) ACCELERATION OF MATURITY OF NOTES.
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(i) ACCELERATION ON EVENT OF DEFAULT.
(1) AUTOMATIC. If any Event of Default specified in Section
6.1(e) shall exist, all of the Notes at the time outstanding shall
automatically become immediately due and payable together with
interest accrued thereon, including Contingent Interest, and, to the
extent permitted by applicable law, the Prepayment Fee with respect
thereto, without presentment, demand, protest or notice of any kind,
all of which are hereby expressly waived.
(2) BY ACTION OF HOLDERS. If any Event of Default (other than an
Event of Default specified in Section 6.1(e)) shall exist, the
Required Holders may exercise any right, power or remedy permitted to
such holder or holders by law, and shall have, in particular, without
limiting the generality of the foregoing, the right to declare the
entire principal of, and all interest accrued on, including Contingent
Interest, all the Notes then outstanding to be, and such Notes shall
thereupon become, forthwith due and payable, without any presentment,
demand, protest or other notice of any kind, all of which are hereby
expressly waived, and the Issuers shall forthwith pay to the holder or
holders of all the Notes then outstanding the entire principal of, and
interest accrued on, the Notes and, to the extent permitted by law,
the Prepayment Fee at such time with respect to such principal amount
of such Notes.
(b) VALUABLE RIGHTS. The Issuers acknowledge, and the parties hereto
agree, that the right of each holder to maintain its investment in the Notes
free from repayment by the Issuers (except as herein specifically provided for)
is a valuable right and that the provision for payment of a Prepayment Fee by
the Issuers in the event that any Notes are prepaid or are accelerated as a
result of an Event of Default is intended to provide compensation for the
deprivation of such right under such circumstances.
(c) NONWAIVER; REMEDIES CUMULATIVE. No course of dealing on the part of
any holder of Notes nor any delay or failure on the part of any holder of Notes
to exercise any right shall operate as a waiver of such right or otherwise
prejudice such holder's rights, powers and remedies. All rights and remedies of
each holder of Notes hereunder and under applicable law are cumulative to, and
not exclusive of, any other rights or remedies any such holder of Notes would
otherwise have.
6.3 ANNULMENT OF ACCELERATION OF NOTES.
If a declaration is made pursuant to Section 6.2(a)(i)(2), then and in
every such case, notwithstanding anything herein or in the Notes to the
contrary, the Required Holders may, by written instrument filed with the
Issuers, rescind and annul such declaration, and the consequences thereof,
provided, however that at the time such declaration is annulled and rescinded:
(a) no judgment or decree shall have been entered for the payment of
any moneys due on or pursuant thereto or the Notes;
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(b) all arrears of interest upon all of the Notes and all of the other
sums payable hereunder and under the Notes (except any principal of, or interest
or Prepayment Fee on, the Notes which shall have become due and payable by
reason of such declaration under Section 6.2(a)(i)(2) shall have been duly paid;
and
(c) each and every other Default and Event of Default shall have been
waived pursuant to Section 9.5 or otherwise made good or cured; and provided,
further, that no such rescission and annulment shall extend to or affect any
subsequent Event of Default or impair any right consequent thereon.
7. SUBORDINATION OF NOTES
The Issuers covenant and agree, and each holder of Notes, by its acceptance
thereof, likewise covenants and agrees, that, to the extent and in the manner
set forth in the Intercreditor Agreement, the Indebtedness represented by the
Notes, including PIK Notes, and the payment of the principal of, Prepayment Fee,
if any, and interest on the Notes, including PIK Notes, are hereby expressly
made subordinate and subject in right of payment as provided in the
Intercreditor Agreement to the prior payment and satisfaction in full in cash of
all Senior Indebtedness or as to the extent provided in the Intercreditor
Agreement. This Section 7 shall constitute a continuing offer to all Persons
who, in reliance upon such provisions, become holders of or continue to hold
Senior Indebtedness; and such provisions are made for the benefit of the holders
of or continue to hold Senior Indebtedness; and such provisions are made for the
benefit of the holders of Senior Indebtedness; and such holders are made
obligees hereunder and they or each of them may enforce such provisions.
8. INTERPRETATION OF THIS AGREEMENT
8.1 TERMS DEFINED.
As used herein, the following terms have the respective meanings set forth
below or set forth in the Section hereof following such term:
ACTUAL PRICE - means the weighted average price received by the Issuers for
all of their oil and gas production, including hedged and unhedged production
(net of hedging costs), in dollars per barrel of oil equivalent using a 6:1
conversion ratio for natural gas. The Actual Price will be calculated over a
measurement period which shall be the six calendar month period ending on the
date two calendar months prior to the interest payment date for which the
calculation if to be made.
AFFILIATE - means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
AGREEMENT - means this Note Agreement, as it may be amended, restated or
otherwise modified from time to time.
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APPLICABLE INTEREST LAW - means any present or future law (including,
without limitation, the laws of the State of Illinois and the United States)
which has application to the interest and other charges pursuant to this
Agreement and the Notes.
APPROVED ENGINEER - means the independent engineer approved by the Bank
Administrative Agent under the terms of the Credit Agreement.
BANK ADMINISTRATIVE AGENT - means, at any time, the Administrative Agent
under the Credit Facility.
BASE PRICE - means $15 per barrel of oil equivalent.
BENEFIT PLAN - means any employee pension plan (other than a Multiemployer
Plan) subject to the provisions of Title IV or ERISA or Section 412 of the Code
or Section 302 of ERISA, and in respect of which the Company or any ERISA
Affiliate is (or, if such plan were terminated, would under 4069 of ERISA be
deemed to be) an "employer" as defined in Section 3(5) of ERISA.
BOARD OF DIRECTORS - means, (a) in the case of a Person that is a limited
liability company, the managers authorized to act therefor (or, if the limited
liability company has no managers, the members), (b) in the case of a Person
that is a corporation, the board of directors of such Person or any committee
authorized to act therefor, (c) in the case of a Person that is a limited
partnership, the board of directors of its corporate general partner or any
committee authorized to act therefor (or, if the general partner is itself a
limited partnership, the board of directors of such general partner's corporate
general partner or any committee authorized to act therefor) and (d) in the case
of any other Person, the board of directors, management committee or similar
governing body or any authorized committee thereof responsible for the
management of the business and affairs of such Person.
BUSINESS DAY - means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York, New York are authorized or required by law
to remain closed.
CAPITAL LEASE OBLIGATIONS - of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.
CHANGE IN CONTROL - means a change resulting when any Unrelated Person or
any Unrelated Persons acting together which would constitute a Group together
with any Affiliates or Related Persons thereof (in each case also constituting
Unrelated Persons) shall at any time either (i) Beneficially Own more than
49.99% of the aggregate voting power of all classes of Voting Stock of the
Company or (ii) during any period of two consecutive years ending on or after
the Effective Date, as determined as of the last day of each calendar quarter
after the Effective Date, the individuals and their successors nominated by any
of the Purchasers (the "Incumbent Directors") who at the beginning of such
period constituted the Board of Directors of the Company (other than additions
thereto or removals therefrom from time to time thereafter
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approved by a vote of the Board of Directors in accordance with the Company's
by-laws) shall cease for any reason to constitute 50% or more of the Board of
Directors of the Company. As used herein (a) "Beneficially Own" means
"beneficially own" as defined in Rule 13d-3 of the Securities Exchange Act of
1934, as amended, or any successor provision thereto; provided, however, that,
for purposes of this definition, a Person shall not be deemed to Beneficially
Own securities tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person's Affiliates until such tendered
securities are accepted for purchase or exchange; (b) "Group" means a "group"
for purposes of Section 13(d) of the Securities Exchange Act of 1934, as
amended; (c) "Unrelated Person" means at any time any Person other than the
Company or any Subsidiary of the Company or the holders of the Voting Stock of
the Company as of the Effective Date, including, without limitation, PPM America
Special Investments Fund, L.P., PPM America Special Investments CBO II, L.P.,
Appaloosa Management, L.P., Pacholder Associates, Inc., and Oaktree Capital
Management, L.L.C. and other than any trust for any employee benefit plan of the
Company or any Subsidiary of the Company; (d) "Related Person" of any Person
shall mean any other Person owning (1) 5% or more of the outstanding common
stock of such Person or (2) 5% or more of the Voting Stock of such Person; and
(e) "Voting Stock" of any Person shall mean capital stock of such Person which
ordinarily has voting power for the election of directors (or persons performing
similar functions) of such Person, whether at all times or only so long as no
senior class of securities has such voting power by reason of any contingency.
CHANGE IN CONTROL NOTICE EVENT - means:
(a) the execution of any written agreement which, when fully performed
by the parties thereto, would result in a Change in Control; or
(b) the making of any written offer by any person (as such term is used
in section 13(d) and section 14(d)(2) of the Exchange Act as in effect on the
Closing Date) or related persons constituting a group (as such term is used in
Rule 13d-5 under the Exchange Act as in effect on the Closing Date), which
offer, if accepted by the requisite number of such holders, would result in a
Change in Control, or
(c) any action taken by any of the Issuers which is reasonably likely
to result in a Change in Control.
CHANGE IN CONTROL PAYMENT DATE - Section 1.5(b).
CLOSING DATE - means the first day upon which any Securities are sold
to any Purchaser under the Securities Purchase Agreement.
CODE - means the Internal Revenue Code of 1986, as amended from time to
time.
COLLATERAL - has the meaning set forth in Section 1.1 of the Credit
Agreement.
CONTINGENT INTEREST - Section 1.4(d).
CONTROL - means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise
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voting power, by contract or otherwise. CONTROLLING AND CONTROLLED have meanings
correlative thereto.
CREDIT AGREEMENT - means that certain Credit Agreement dated as of
March 31, 2000, as amended, among Coho Energy, Inc., as Borrower, The Chase
Manhattan Bank, in its capacities as Bank Administrative Agent and Issuing Bank,
MeesPierson Capital Corp., in its capacity as Documentation Agent, and Fleet
National Bank, in its capacity as Syndication Agent, and the lenders party
thereto.
CREDIT FACILITY - means the Credit Agreement together with the
documents related thereto (including, without limitation, any guaranty
agreements and security documents), in each case as such agreements may be
amended (including any amendment and restatement thereof), supplemented or
otherwise modified from time to time, including any Refinancing Indebtedness.
CURRENT RATIO - means, as of any date a determination thereof is to be
made, the ratio of
(a) the sum of (i) the amount of the consolidated current assets of the
Issuers and their Subsidiaries plus (ii) the amount of the Borrowing Base Excess
(as defined in the Credit Agreement)
to
(b) the amount of the consolidated current liabilities of the Issuers
and their Subsidiaries.
DEFAULT - means any event which, with the giving of notice or the
passage of time, or both, would become an Event of Default.
DEFAULT RATE - Section 1.4(b)(ii).
DOLLARS and $ - means dollars in lawful currency of the United States.
EBITDA - means, for any period, the consolidated net income of the
Issuers and their Subsidiaries for such period (excluding material gains and
losses on sales and retirement of assets, non-cash write downs, charges
resulting from accounting convention changes and deductions for exploration
expenses) before deduction for federal and state taxes, interest expense
(including capitalized interest), depreciation, depletion and amortization
expense, costs associated directly with the reorganization of the Issuers in
accordance with the Plan of Reorganization, and any severance payments or other
bankruptcy-related costs relating to the reorganization of the Issuers incurred
by the Issuers and their Subsidiaries during the period from the Effective Date
until the date 90 days following such Effective Date.
EBITDA TO TOTAL INTEREST EXPENSE RATIO - means, on any date, the ratio
of EBITDA (calculated for the last four consecutive fiscal quarter period then
most recently ended) to Total Interest Expense (calculated for the last four
consecutive fiscal quarter period then most recently ended).
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EFFECTIVE DATE - means the date on which the conditions specified in
Section 4.1 of the Credit Agreement are satisfied (or waived in accordance with
Section 9.2 of the Credit Agreement).
ENVIRONMENTAL LAWS - means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.
EQUITY INTERESTS - means shares of capital stock, partnership
interests, membership interests in a limited liability company, beneficial
interests in a trust or other equity ownership interests in a Person.
ERISA - means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and all rules, regulations and interpretations by the
Internal Revenue Service or the Department of Labor thereunder.
ERISA AFFILIATE - means any trade or business (whether or not
incorporated) that, together with the Company, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
ERISA EVENT - means (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Benefit
Plan (other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Benefit Plan of an "accumulated funding
deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Benefit Plan; (d) the incurrence by the Company or
any of its ERISA Affiliates of any liability under Title IV of ERISA with
respect to the termination of any Benefit Plan; (e) the receipt by the Company
or any ERISA Affiliate from the PBGC or a plan administrator of any notice
relating to an intention to terminate any Benefit Plan or Benefit Plans or to
appoint a trustee to administer any Benefit Plan; (f) the incurrence by the
Company or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Benefit Plan or Multiemployer Plan; or
(g) the receipt by the Company or any ERISA Affiliate of any notice, or the
receipt by any Multiemployer Plan from the Company or any ERISA Affiliate of any
notice, concerning the imposition of Withdrawal Liability (as defined in the
Credit Agreement) or a determination that a Multiemployer Plan is, or is
expected to be, insolvent or in reorganization, within the meaning of Title IV
of ERISA.
EVENT OF DEFAULT - Section 6.1.
EXISTING LOAN AGREEMENT - means that certain Fourth Amended and
Restated Credit Agreement dated December 18, 1997, to which the Coho Entities
were parties as of the date of the commencement of the Bankruptcy Cases (as
defined in the Credit Agreement).
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FINANCIAL OFFICER - means the chief financial officer, principal
accounting officer, treasurer, assistant treasurer or comptroller of the
Company.
FINANCING DOCUMENTS - means and includes this Agreement, the Securities
Purchase Agreement, the Notes, the Registration Rights Agreement and all other
agreements, certificates and instruments to be executed pursuant to the terms of
each of the foregoing, as each may be amended, restated or otherwise modified
from time to time.
FOREIGN SUBSIDIARY - means any Subsidiary that is organized under the
laws of a jurisdiction other than the United States of America or any State
thereof or the District of Columbia.
GAAP - means generally accepted accounting principles in the United
States of America.
GOVERNMENTAL AUTHORITY - means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
GOVERNMENTAL RULE - means any statute, law, regulation, ordinance,
rule, judgment, order, decree, permit, concession, grant, franchise, license,
agreement, directive, requirement of, or other governmental restriction or any
similar binding form of decision of or determination by, or any binding
interpretation or administration of any of the foregoing by, any Governmental
Authority, whether now or hereafter in effect.
GUARANTY - of or by any Person (the "guarantor") means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the "primary obligor") in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided, that the term "guaranty" shall not include endorsements
for collection or deposit in the ordinary course of business.
HAZARDOUS MATERIALS - means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including asbestos or asbestos containing materials, polychlorinated biphenyls,
radon gas, infectious or medical wastes and all other substances or wastes of
any nature regulated pursuant to any Environmental Law and any petroleum,
petroleum products or petroleum distillates and associated oil or natural gas
exploration, production and development wastes that are not exempted or excluded
from being
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defined as "hazardous substances", "hazardous materials", "hazardous wastes" and
"toxic substances" under such Environmental Laws.
HEDGING AGREEMENT - means any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement
between Issuers or their Subsidiaries and any Lender (as defined in the Credit
Agreement) or an Affiliate of a Lender.
HEDGING OBLIGATIONS - means, with respect to any Person, all
liabilities (including but not limited to obligations and liabilities arising in
connection with or as a result of early or premature termination of a Hedging
Agreement, whether or not occurring as a result of a default thereunder) of such
Person under a Hedging Agreement.
HYDROCARBON INTERESTS - means all rights, titles and interests in and
to oil and gas leases, oil, gas and mineral leases, other Hydrocarbon leases,
mineral interests; mineral servitudes, overriding royalty interests, royalty
interests, net profits interests, production payment interests, and other
similar interests.
HYDROCARBONS - means, collectively, oil, gas, casinghead gas, drip
gasoline, natural gasoline, condensate, distillate and all other liquid or
gaseous hydrocarbons and related minerals and all products therefrom, in each
case whether in a natural or a processed state.
INDEBTEDNESS - of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (g) all guarantees by such Person of
Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i)
all obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty, (j) all obligations,
contingent or otherwise, of such Person in respect of bankers' acceptances, and
(k) all obligations of such Person with respect to any arrangement, directly or
indirectly, whereby such Person or its Subsidiaries shall sell or transfer any
material asset, and whereby such Person or any of its Subsidiaries shall then or
immediately thereafter rent or lease as lessee such asset or any part thereof,
(l) all recourse and support obligations of such Person or any of its
Subsidiaries with respect to the sale or discount of any of its accounts
receivable, (m) all obligations of such Person or any of its Subsidiaries with
respect to any arrangement for the purchase of materials, supplies, other
property or services if such arrangement by its express terms requires that
payment be made by such Person or such Subsidiary regardless of whether such
materials, supplies, other property or services are delivered or furnished to
it, (n) all obligations of such Person with respect to Production Payments (as
defined in the Credit Agreement), (o) net liabilities of such Person under all
Hedging Obligations, (p) all obligations of such Person under
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any prepayment for oil and gas production or other similar agreement, and (q)
all obligations of such Person under operating leases which require such Person
or its Affiliates to make payments over the term of such lease based on the
purchase price or appraisal value of the property subject to such lease plus a
marginal interest rate, and used primarily as a financing vehicle for, or to
monetize, such Property. The Indebtedness of any Person shall include the
Indebtedness of any other entity (including any partnership in which such Person
is a general partner) to the extent such Person is liable therefor as a result
of such Person's ownership interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness provide that such Person is
not liable therefor.
INSTITUTIONAL INVESTOR - means any insurance company, pension fund,
mutual fund, investment company, bank, savings bank, savings and loan
association, investment banking company, trust company, or any finance or credit
company, any portfolio or any investment fund managed by any of the foregoing,
or any other institutional investor, and any nominee of the foregoing.
INTERCREDITOR AGREEMENT - means that certain Intercreditor Agreement
between the Purchasers and the Bank Administrative Agent dated as of the Closing
Date.
ISSUER - has the meaning set forth in the introductory paragraph to
this Agreement.
LEVERAGE RATIO - means, on any date, the ratio of Total Senior Debt
outstanding on such date to EBITDA (calculated for the last four consecutive
fiscal quarter period then most recently ended) as of the end of the most recent
fiscal quarter; provided, however, that for purposes of calculating the Leverage
Ratio (except for calculating the Leverage Ratio used in the first proviso of
Section 4.13) for any period ending on or before December 31, 2000, the
appropriate EBITDA to be used in such calculation of the Leverage Ratio shall
not be calculated based on the last four consecutive fiscal quarter period then
most recently ended but instead shall be calculated by (a) for period of
calculation ending on or before June 30, 2000, multiplying the EBITDA for the
fiscal quarter ending June 30, 2000 by 4, (b) for period of calculation
commencing July 1, 2000 and ending on or before September 30, 2000, multiplying
the EBITDA for the last two consecutive fiscal quarter period then most recently
ended, by 2, and (c) for period of calculation commencing October 1, 2000 and
ending on or before December 31, 2000, multiplying the EBITDA for the last three
consecutive fiscal quarter period then most recently ended, by 4/3.
LIEN - means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge, collateral assignment
or security interest in, on or of such asset, (b) the interest of a vendor or a
lessor under any conditional sale agreement, capital lease or title retention
agreement (or any financing lease having substantially the same economic effect
as any of the foregoing) relating to such asset and (c) in the case of
securities, any purchase option, call or similar right of a third party with
respect to such securities.
MATERIAL ADVERSE EFFECT - means a material adverse effect on (a) the
business, assets, operations or condition (financial or otherwise) of the
Company, or of the Company and its Subsidiaries taken as a whole, (b) the
ability of the Company or of any of its Subsidiaries to
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perform any of their respective obligations under any Financing Document to
which it is a party or (c) the rights of or benefits available to the Purchasers
under any Financing Document.
MAXIMUM LEGAL RATE OF INTEREST - means the maximum rate of interest
that a holder of Notes may from time to time legally charge the Issuers by
agreement and in regard to which the Issuers would be prevented successfully
from raising the claim or defense of usury under the Applicable Interest Law as
now or hereafter construed by courts having appropriate jurisdiction.
MULTIEMPLOYER PLAN - means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
NOTES - has the meaning set forth in the first Recital of this
Agreement.
OBLIGOR - means and includes the Issuers and the Subsidiary Guarantors.
OIL AND GAS PROPERTIES - means the Hydrocarbon Interests; the
Properties now or hereafter pooled or unitized with Hydrocarbon Interests; all
presently existing or future unitization, pooling agreements and declarations of
pooled units and the units created thereby (including without limitation all
units created under orders, regulations and rules of any Governmental Authority
having jurisdiction) which may affect all or any portion of the Hydrocarbon
Interests; all operating agreements, joint venture agreements, contracts and
other agreements which relate to any of the Hydrocarbon Interests or the
production, sale, purchase, exchange or processing of Hydrocarbons from or
attributable to such Hydrocarbon Interests; all Hydrocarbons in and under and
which may be produced and saved or attributable to the Hydrocarbon Interests,
the lands covered thereby and all oil in tanks and all rents, issues, profits,
proceeds, products, revenues and other incomes from or attributable to the
Hydrocarbon Interests; all tenements, profits a prendre, hereditaments,
appurtenances and Properties in anywise appertaining, belonging, affixed or
incidental to the Hydrocarbon Interests, Properties, rights, titles, interests
and estates described or referred to above, including any and all Property, real
or personal, now owned or hereinafter acquired and situated upon, used, held for
use or useful in connection with the operating, working or development of any of
such Hydrocarbon Interests or Property (excluding drilling rigs, automotive
equipment or other personal property which may be on such premises for the
purpose of drilling a well or for other similar temporary uses) and including
any and all oil xxxxx, gas xxxxx, water xxxxx, injection xxxxx or other xxxxx,
buildings, structures, fuel separators, liquid extraction plants, plant
compressors, pumps, pumping units, field gathering systems, tanks and tank
batteries, fixtures, valves, fittings, machinery and parts, engines, boilers,
meters, apparatus, equipment, appliances, tools, implements, cables, wires,
towers, casing, tubing and rods, surface leases, rights-of-way, easements and
servitudes together with all additions, substitutions, replacements, accessions
and attachments to any and all of the foregoing.
ORGANIC DOCUMENTS - means, relative to any Person, its articles of
organization, formation or incorporation (or comparable document), its by-laws
or operating agreement and all shareholder agreements, partnership agreements,
limited liability company or operating agreements, voting trusts and similar
arrangements applicable to ownership.
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PBGC - means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA, or any other successor entity performing similar functions.
PERMITTED ENCUMBRANCES - means:
(a) Liens imposed by law for taxes that are not yet due or are being
contested in compliance with Section 5.5 of the Credit Agreement;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
and other like Liens imposed by law, arising in the ordinary course of business
and securing obligations that are not overdue by more than 30 days or are being
contested in compliance with Section 5.5 of the Credit Agreement;
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other social
security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature, in each case in the ordinary course of
business;
(e) judgment liens in respect of judgments that do not constitute an
Event of Default under clause (k) of Article VII of the Credit Agreement;
(f) easements, zoning and deed restrictions, rights-of-way and similar
encumbrances on real Property imposed by law or arising in the ordinary course
of business that do not secure any monetary obligations and do not materially
detract from the value of the affected Property or interfere with the ordinary
conduct of business of the Issuers or any Subsidiary;
(g) with respect to any Property from which Hydrocarbons may be severed
or extracted in commercial quantities, Liens for farmout, farmin, joint
operating, and area of mutual interest agreements and/or similar arrangements
that the Issuers or any Subsidiary determines in good faith to be necessary for
the economic development of such Property and are customary and usual for the
area in which such Property is located;
(h) production payments, advance payment obligations and other similar
burdens now existing or hereafter created on oil, gas or mineral leases or
interests now owned or hereafter acquired by the Issuers or any of their
Subsidiaries;
(i) royalties, overriding royalties, revenue interests, net revenue
interest and other similar burdens now existing or hereafter acquired on oil,
gas or mineral leases or interests now owned or hereafter acquired by the
Issuers or any of their Subsidiaries;
(j) rights reserved to or vested in any Governmental Authority by the
terms of any right, power, franchise, grant, license or permit, or by any
provision of law, to terminate such right, power, franchise, grant, license or
permit or to purchase, condemn, expropriate or recapture, or to designate a
purchaser of, any of the Property of Issuers or any of their Subsidiaries;
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(k) rights reserved to or vested in any Governmental Authority to
control or regulate any Property of the Issuers or of any of their Subsidiaries,
or to use such Property in a manner which does not materially impair the use of
such Property for the purposes for which it is held by the Issuers or any such
Subsidiary;
(l) any obligations or duties affecting the Property of the Issuers or
of any of their Subsidiaries to any municipality or other Governmental Authority
with respect to any franchise, grant, license or permit; and
(m) rights of a common owner of any interest in real estate, right of
way or easement held by the Issuers or any of their Subsidiaries and such common
owner as tenants in common or through other common ownership.
PERMITTED INVESTMENTS - means:
(a) direct obligations of, or obligations the principal of and interest
on which are unconditionally guaranteed by, the United States of America (or by
any agency thereof to the extent such obligations are backed by the full faith
and credit of the United States of America), in each case maturing within one
year from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days from the
date of acquisition thereof and having, at such date of acquisition, the highest
credit rating obtainable from S&P or from Xxxxx'x;
(c) investments in certificates of deposit, banker's acceptances and
time deposits maturing within 180 days from the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit accounts issued
or offered by, any domestic office of any commercial bank organized under the
laws of the United States of America or any State thereof which has a combined
capital and surplus and undivided profits of not less than $500,000,000; and
(d) fully collateralized repurchase agreements with a term of not more
than 30 days for securities described in clause (a) above and entered into with
a financial institution satisfying the criteria described in clause (c) above.
PERSON - means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
PIK NOTE - means a promissory note issued by the Issuers substantially
in the form of Exhibit B hereto pursuant to which the Issuers, at the direction
of the Bank Administrative Agent in accordance with the terms of the
Intercreditor Agreement, have made a payment of interest due hereunder by
issuing to the holder of each Note a new Note in an original principal amount
equal to such accrued interest and bearing interest at the then current rate per
annum provided herein for the Notes.
PLAN OF REORGANIZATION - has the meaning set forth in the recitals of
the Credit Agreement.
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PREPAYMENT FEE - means, with respect to a principal amount of the Notes
to which a Prepayment Fee is required to be paid, an amount equal to the
following:
(a) in the event such prepayment occurs within four years from the
Closing Date, the excess, if any of:
(i) the sum of the present values of all remaining scheduled payments
of principal and interest (based upon an interest rate of 15.0% per annum
payable semiannually), other than the accrued interest payable on such
redemption date, from such redemption date to the stated maturity of such
Note (or portion thereof), discounted semiannually on each applicable
interest payment date at a rate equal to the sum of the Treasury Rate plus
3.0%, per annum, based on a 360 day year of twelve 30-day months, over (b)
the aggregate outstanding principal amount of such Note (or portion
thereof); or
(b) in the event such prepayment occurs after four years from the
Closing Date, a premium equal to the following:
----------------------------------------------------------------------------------------------
If the Prepayment Fee is Due During the The Percentage of such Principal Amount to be
Period Set Forth Below: Paid as Prepayment Fee Shall be:
----------------------------------------------------------------------------------------------
From the Fourth Anniversary of the Closing
Date to March 30, 2005, inclusive 7.5%
----------------------------------------------------------------------------------------------
From March 31, 2005 to March 30, 2006,
inclusive 3.75%
----------------------------------------------------------------------------------------------
Thereafter No Prepayment Fee
----------------------------------------------------------------------------------------------
PROPERTY - means any interest in any kind of property or asset, whether
real, personal or mixed, and whether tangible or intangible.
PURCHASERS - has the meaning set forth in the introductory paragraph.
REFINANCING INDEBTEDNESS - means Indebtedness that refunds, refinances
or extends any Senior Indebtedness to the extent that: (i) all such Refinancing
Indebtedness is scheduled to mature no earlier than the Indebtedness being
refunded, refinanced or extended, (ii) the portion, if any, of the Refinancing
Indebtedness that is scheduled to mature on or prior to the maturity date of the
Notes has a weighted average life to maturity at the time such Refinancing
Indebtedness is incurred that is equal to or greater than the weighted average
life to maturity of the portion of the Indebtedness being refunded, refinanced
or extended that is scheduled to mature on or prior to the maturity date of the
Notes, (iii) all Refinancing Indebtedness is in an aggregate principal amount
that is equal to or less than the sum of (a) the aggregate principal amount then
outstanding of all Senior Indebtedness being refunded, refinanced or extended,
(b) the amount of accrued and unpaid interest, if any, and premiums owed, if
any, not in excess of preexisting payment provisions on such Indebtedness being
refunded, refinanced or extended and
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(c) the amount of customary fees, expenses and costs related to the incurrence
of such Refinancing Indebtedness and (iv) such Refinancing Indebtedness is
incurred by the same Person that initially incurred the Indebtedness being
refunded, refinanced or extended.
REGISTRATION RIGHTS AGREEMENT - means the Registration Rights
Agreement, of even date herewith, among the Issuers, the Purchasers and each of
the other Persons listed on the signature pages thereto, as such agreement may
be amended, restated or otherwise modified from time to time.
REMEDIAL ACTION - means any action under Environmental Laws required to
(a) clean up, remove, treat, dispose of, xxxxx, or in any other way address
pollutants (including Hazardous Materials) in the environment, (b) prevent the
Release or threat of a Release or minimize the further Release of pollutants, or
(c) investigate and determine if a remedial response is needed and to design
such a response and any post-remedial investigation, monitoring, operation, and
maintenance and care.
REQUIRED HOLDERS - means, at any time, the holders of percent 66 2/3%
in principal amount of the Notes at the time outstanding (exclusive of Notes
then owned by any one or more of the Issuers, any Subsidiary of the Issuers or
any Affiliate of the Issuers).
RESERVE REPORT - shall have the meaning set forth in Section 1.1 of the
Credit Agreement.
RESPONSIBLE OFFICER - means the chief executive officer, president, any
executive vice president or chief financial officer of the Company or any
equivalent officer or manager of the Company.
RESTRICTED PAYMENT - means any dividend or other distribution (whether
in cash, securities or other property, real, personal or mixed) with respect to
any Equity Interests in the Issuers or any Subsidiary, or any payment (whether
in cash, securities or other property, real, personal or mixed), including any
sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancellation or termination of any Equity Interests in
the Issuers or any Subsidiary or any option, warrant or other right to acquire
any such Equity Interests in the Issuers or any Subsidiary on or account of the
complete or partial liquidation or otherwise of the Issuers or any Subsidiary.
SEC - means, at any time, the Securities and Exchange Commission or any
other federal agency at such time administering the Securities Act.
SECURITIES ACT - means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
SECURITIES PURCHASE AGREEMENT - means the Securities Purchase
Agreements, of even date herewith, among the Issuers and the Purchasers, as such
agreements may be amended, restated or otherwise modified from time to time.
SENIOR INDEBTEDNESS - means the principal of and premium, if any, and
interest (including, without limitation, interest accruing or that would have
accrued but for the filing of a
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bankruptcy, reorganization or other insolvency proceeding whether or not such
interest constitutes an allowable claim in such proceeding) on, and any and all
other fees, expense reimbursement obligations, indemnities and other amounts due
pursuant to the terms of all agreements, documents and instruments providing
for, creating, securing or evidencing or otherwise entered into in connection
with (a) all Indebtedness of the Issuers owed to the Bank Administrative Agent
and the lenders under the Credit Facility including all obligations of the
Issuers to reimburse any bank or other Person in respect of amounts paid under
letters of credit, acceptances or other similar instruments; provided, however,
the principal amount of such Indebtedness shall not exceed $300,000,000,
excluding accrued interest, and (b) all deferrals, renewals, extensions and
refundings of, and amendments, modifications and supplements to, any of the
Senior Indebtedness described above.
SUBORDINATED DEBT - shall have the meaning set forth in Section 1.1 of
the Credit Agreement.
Subsidiary - means, with respect to any Person (the "parent") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in the
case of a partnership, more than 50% of the general partnership interests are,
as of such date, owned, controlled or held, or (b) that is, as of such date,
otherwise Controlled, by the parent or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent.
SUBSIDIARY - means any subsidiary of any of the Issuers. For purposes
of the representations and warranties made herein on the Effective Date, the
term "Subsidiary" includes each of the Issuers and their subsidiaries.
SUBSIDIARY GUARANTOR - means each Subsidiary of the Company that is
party to the Subsidiary Guaranty.
SUBSIDIARY GUARANTY - means the guaranty by certain Subsidiaries of the
Company of the obligations of the Issuers to the holders of the Notes in respect
of this Agreement and the Notes, in the form of Exhibit C attached hereto.
TAXES - means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
TOTAL DEBT - means all Indebtedness of the Issuers and their
Subsidiaries on a consolidated basis.
TOTAL INTEREST EXPENSE - means, with respect to any period for which a
determination thereof is to be made, the sum, without duplication, of (a) the
aggregate amount of all cash interest accrued (whether or not paid) on all
Indebtedness of the Issuers and their Subsidiaries on a consolidated basis plus
(b) the portion of any Capital Lease Obligations allocable to cash interest
expense in accordance with GAAP.
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TOTAL SENIOR DEBT - means Total Debt less Subordinated Debt.
TREASURY RATE - means the per annum rate, equal to the yield of United
States Treasury securities with a term equal to, with respect to each Note to be
redeemed or purchased, the then-remaining term of such Note, in each case as
indicated by Bloomberg Financial Markets (page PX1 or the relevant page at the
date of determination indicating such yields) (or, if such data ceases to be
available, any publicly available source of similar market data) at
approximately 10:00 a.m., New York City time, on the third business day prior to
the date of such redemption or purchase, as the case may be, of such Note
calculated based on straight line interpolation of, with respect to each Note to
be redeemed or purchased, the yields of the United States Treasury securities
having constant maturities closest to such then remaining term.
UNITED STATES - means the United States of America.
8.2 ACCOUNTING PRINCIPLES
(a) GENERALLY. Unless otherwise provided herein, all financial
statements delivered in connection herewith will be prepared in accordance with
GAAP. Where the character or amount of any asset or liability or item of income
or expense, or any consolidation or other accounting computation is required to
be made for any purpose hereunder, it shall be done in accordance with GAAP;
provided, however, that if any term defined herein includes or excludes amounts,
items or concepts that would not be included in or excluded from such term if
such term were defined with reference solely to GAAP, such term will be deemed
to include or exclude such amounts, items or concepts as set forth herein.
(b) CONSOLIDATION. Whenever accounting amounts of a group of Persons
are to be determined "on a consolidated basis" it shall mean that, as to balance
sheet amounts to be determined as of a specific time, the amount that would
appear on a consolidated balance sheet of such Persons prepared as of such time,
and as to income statement amounts to be determined for a specific period, the
amount that would appear on a consolidated income statement of such Persons
prepared in respect of such period, in each case with all transactions among
such Persons eliminated, and prepared iii accordance with GAAP except as
otherwise required hereby.
(c) CURRENCY. With respect to any determination, consolidation or
accounting computation required hereby, any amounts not denominated in the
currency in which this Agreement specifies shall be converted to such currency
in accordance with the requirements of GAAP (as such requirements relate to such
determination, consolidation or computation) and, if no such requirements shall
exist, converted to such currency in accordance with normal banking procedures,
at the closing rate as reported in The Wall Street Journal published most
recently as of the date of such determination, consolidation or computation or,
if no such quotation shall then be available, as quoted on such date by any bank
or trust company reasonably acceptable to the Required Holders.
8.3 DIRECTLY OR INDIRECTLY.
Where any provision herein refers to action to be taken by any Person, or
which such Person is prohibited from taking, such provision shall be applicable
whether such action is taken
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directly or indirectly by such Person, including actions taken by or on behalf
of any partnership in which such Person is a general partner.
8.4 SECTION HEADINGS AND TABLE OF CONTENTS AND CONSTRUCTION.
(a) SECTION HEADINGS AND TABLE OF CONTENTS, ETC. The titles of the
Sections of this Agreement and the Table of Contents of this Agreement appear as
a matter of convenience only, do not constitute a part hereof and shall not
affect the construction hereof. The words "herein," "hereof," "hereunder" and
"hereto" refer to this Agreement as a whole and not to any particular Section or
other subdivision. References to Sections are, unless otherwise specified,
references to Sections of this Agreement. References to Annexes and Exhibits
are, unless otherwise specified, references to Annexes and Exhibits attached to
this Agreement.
(b) CONSTRUCTION. Each covenant contained herein shall be construed
(absent an express contrary provision herein) as being independent of each other
covenant contained herein, and compliance with any one covenant shall not
(absent such an express contrary provision) be deemed to excuse compliance with
one or more other covenants.
8.5 GOVERNING LAW.
THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS. IN
ADDITION, THE PARTIES HERETO SELECT, TO THE EXTENT THEY MAY LAWFULLY DO SO, THE
INTERNAL LAWS OF THE STATE OF ILLINOIS AS THE APPLICABLE LAW GOVERNING THE
PAYMENT OF INTEREST.
8.6 GENERAL INTEREST PROVISIONS.
(a) INTEREST IN RESPECT OF THE NOTES. It is the intention of the
Issuers and the Purchasers to conform strictly to the Applicable Interest Law,
and the parties agree that the aggregate of all interest, and any other charges
or consideration constituting interest under the Applicable Interest Law that is
taken, reserved, contracted for, charged or received pursuant to this Agreement
or the Notes shall under no circumstances exceed the maximum amount of interest
allowed by the Applicable Interest Law. If any such excess interest is ever
charged, received or collected on account of or relating to this Agreement and
the Notes (including any charge or amount which is not denominated as "interest"
but is legally deemed to be interest under Applicable Interest Law), then in
such event:
(i) the provisions of this Section 8.6 shall govern and control;
(ii) the Issuers shall not be obligated to pay the amount of such
interest to the extent that it is in excess of the maximum amount of
interest allowed by the Applicable Interest Law;
(iii) any excess shall be deemed a mistake and cancelled automatically
and, if theretofore paid, shall be credited to the principal amount of the
Notes by the
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holders thereof, and if the principal balance of the Notes is paid in full,
any remaining excess shall be forthwith paid to the Issuers; and
(iv) the effective rate of interest shall be automatically subject to
reduction to the Maximum Legal Rate of Interest.
If at any time thereafter, the Maximum Legal Rate of Interest is increased,
then, to the extent that it shall be permissible under the Applicable Interest
Law, the Issuers shall forthwith pay to the holders of the Notes, on a pro rata
basis, all amounts of such excess interest that the holders of the Notes would
have been entitled to receive pursuant to the terms of this Agreement and the
Notes had such increased Maximum Legal Rate of Interest been in effect at all
times when such excess interest accrued. To the extent permitted by the
Applicable Interest Law, all sums paid or agreed to be paid to the holders of
the Notes for the use, forbearance or detention of the indebtedness evidenced
thereby shall be amortized, prorated, allocated and spread throughout the full
term of the Notes.
9. MISCELLANEOUS
9.1 NOTICES.
(a) METHOD; ADDRESS. All notices to be provided hereunder or under the
Notes shall be in writing and shall be delivered either by nationwide overnight
courier or by facsimile transmission (receipt acknowledged by electronic
transmission) or, by certified U.S. mail with return receipt requested if such
communications relate to the delivery of financial reports pursuant to this
Agreement. Notices to any Issuers shall be addressed as set forth on Annex II,
or at such other address of which such Issuer shall have notified each holder of
Notes. Notices to the holders of the Notes shall be addressed as set forth on
Annex I and Annex I(A) by such holder, or at such other address of which such
holder shall have notified the Issuers (and the Issuer shall record such address
in the register for the registration and transfer of Notes maintained pursuant
to Section 2.1).
(b) WHEN GIVEN. Any notice addressed and delivered as herein provided
shall be deemed to be received when actually delivered to the address of the
addressee (whether or not delivery is accepted except for the negligence of the
delivering party) or received by the telecopy machine of the recipient (assuming
evidence of electronic confirmation of transmission). Any notice not so
addressed and delivered shall be ineffective.
(c) SERVICE OF PROCESS. Notwithstanding the foregoing provisions of
this Section 9.1, service of process in any suit, action or proceeding arising
out of or relating to this Agreement or any document, agreement or transaction
contemplated hereby, or any action or proceeding to execute or otherwise enforce
any judgment in respect of any breach hereunder or under any document or
agreement contemplated hereby, shall be delivered in the manner provided in
Section 9.7(c).
9.2 REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating hereto, including, without
limitation, consents, waivers and modifications that may hereafter be executed,
documents received by any
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holder of Notes on the Closing Date (except the Notes themselves), and financial
statements, certificates and other information previously or hereafter furnished
to any holder of Notes, may be reproduced by any Issuers or any holder of Notes
by any photographic, photostatic, microfilm, micro-card, miniature photographic,
digital or other similar process and each holder of Notes may destroy any
original document so reproduced. Any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made by any Issuer or such holder of Notes in the regular
course of business) and any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence. Nothing in this
Section 9.2 shall prohibit any Issuers or any holder of Notes from contesting
the accuracy or validity of any such reproduction.
9.3 SURVIVAL.
All warranties, representations, certifications and covenants made by the
Issuers herein, in the Securities Purchase Agreement or in any certificate or
other instrument delivered hereunder shall be ordered to have been relied upon
by each holder of Notes and shall survive the delivery of the Notes regardless
of any investigation made by or on behalf of any party hereto. All statements in
any certificate or other instrument delivered pursuant to the terms hereof or of
the Securities Purchase Agreement shall constitute warranties and
representations of the Issuers hereunder. All obligations hereunder (other than
payment of the Notes, but including, without limitation, reimbursement
obligations in respect of costs, expenses and fees) shall survive the payment of
the Notes and the termination hereof.
9.4 SUCCESSORS AND ASSIGNS.
This Agreement shall inure to the benefit of and be binding upon the
successors and permitted assigns of each of the parties hereto. The provisions
hereof are intended to be for the benefit of all holders, from time to time, of
Notes, and shall be enforceable by any such holder whether or not an express
assignment to such holder of rights hereunder shall have been made by any such
holder or its successor or permitted assign. Anything contained in this Section
9.4 notwithstanding, the Issuers may not assign any of their respective rights,
duties or obligations hereunder or under any of the other Financing Documents
without the prior written consent of all holders of Notes. For purposes of the
avoidance of doubt, any holder of a Note shall be permitted to pledge or
otherwise xxxxx x Xxxx in and to such Note (including, without limitation,
pledging such Note to a trustee for the benefit of certain secured noteholders
pursuant to documents relating to the financing of such holder or to one or more
banks or other institutions providing financing in connection with the purchase
by such holder of such Note); provided, however, that any such pledgee or holder
of a Lien shall not be considered a holder hereunder until it shall have
foreclosed upon such Note in accordance with applicable law and informed the
Issuers, in writing, of the same.
9.5 AMENDMENT AND WAIVER.
(a) REQUIREMENTS. This Agreement may be amended, and the observance of
any term hereof may be waived, with (and only with) the written consent of the
Issuers and the Required Holders; provided, however, that no such amendment or
waiver shall, without the
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written consent of the holders of all Notes (exclusive of Notes held by the any
Issuers, any Subsidiary or any Affiliate) at the time outstanding;
(i) change the amount or time of any prepayment or payment of
principal or Prepayment Fee or the rate or time of payment of interest;
(ii) amend or waive the provisions of Section 6.1, Section 6.2,
Section 6.3 or Section 7, or amend or waive any defined term to the extent
used therein;
(iii) amend or waive the definition of "Required Holders;" or
(iv) amend or waive this Section 9.5 or amend or waive any defined
term to the extent used herein.
No amendment, supplement or modification of the provisions of Section 7, or
any defined term to the extent used therein, shall be effective as to any holder
of Senior Indebtedness who has not consented to such amendment, supplement or
modification.
(b) SOLICITATION OF NOTEHOLDERS.
(i) SOLICITATION. Each holder of the Notes (irrespective of the amount
of Notes then owned by it) shall be provided by the Issuers with all
material information provided by any Issuers to any other holder of Notes
with respect to any proposed waiver or amendment of any of the provisions
hereof or the Notes. Executed or true and correct copies of any amendment
or waiver effected pursuant to the provisions of this Section 9.5 shall be
delivered by the Issuers to each holder of outstanding Notes forthwith
following the date on which such amendment or waiver becomes effective.
(ii) PAYMENT. The Issuers shall not, nor shall any Subsidiary or
Affiliate of the Issuers, directly or indirectly, pay or cause to be paid
any remuneration, whether by way of supplemental or additional interest,
fee or otherwise, or grant any security, to any holder of Notes as
consideration for or as an inducement to the entering into by any holder of
Notes of any waiver or amendment of any of the provisions hereof or of the
Notes unless such remuneration is concurrently paid, or security is
concurrently granted, on the same terms, ratably to the holders of all
Notes then outstanding.
(iii) SCOPE OF CONSENT. Any amendment or waiver made pursuant to this
Section 9.5 by a holder of Notes that has transferred or has agreed to
transfer its Notes to the Issuers, any Subsidiary or any Affiliate and has
provided or has agreed to provide such amendment or waiver as a condition
to such transfer shall be void and of no force and effect except solely as
to such holder, and any amendments effected or waivers granted that would
not have been or would not be so effected or granted but for such amendment
or waiver (and the amendments or waivers of all other holders of Notes that
were acquired under the same or similar conditions) shall be void and of no
force and effect, retroactive to the date such amendment or waiver
initially took or takes effect, except solely as to such holder.
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(c) BINDING EFFECT. Except as provided in Section 9.5(b)(iii), any
amendment or waiver consented to as provided in this Section 9.5 shall apply
equally to all holders of Notes and shall be binding upon them and upon each
future holder of any Note and upon the Issuers whether or not such Note shall
have been marked to indicate such amendment or waiver. No such amendment or
waiver shall extend to or affect any obligation, covenant, agreement, Default or
Event of Default not expressly amended or waived or impair any right consequent
thereon.
9.6 EXPENSES.
(a) AMENDMENTS AND WAIVERS. The Issuers shall pay when billed the
reasonable out-of-pocket costs and expenses (including reasonable attorneys'
fees) incurred by the holders of the Notes in connection with the consideration,
negotiation, preparation or execution of any amendments, waivers, consents,
standstill agreements and other similar agreements with respect to this
Agreement or any other Financing Document (whether or not any such amendments,
waivers, consents, standstill agreements or other similar agreements are
executed).
(b) RESTRUCTURING AND WORKOUT, INSPECTIONS. At any time when any
Issuers and the holders of Notes are conducting restructuring or workout
negotiations in respect hereof, or an Event of Default exists, the Issuers shall
pay when billed the reasonable out-of-pocket costs and expenses (including
reasonable attorneys' fees and the fees of professional advisors) incurred by
the holders of the Notes in connection with the assessment, analysis or
enforcement of any rights or remedies that are or may be available to the
holders of Notes; provided, however, that at all other times inspections will be
at the expense of the inspecting holder of Notes.
(c) COLLECTION. If the Issuers shall fail to pay when due any principal
of, or Prepayment Fee or interest on, any Note, the Issuers shall pay to each
holder of Notes, to the extent permitted by law, such amounts as shall be
sufficient to cover the out-of-pocket costs and expenses, including but not
limited to reasonable attorneys' fees, incurred by such holder in collecting any
sums due on such Note.
9.7 WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION; ETC.
(a) WAIVER OF JURY TRIAL. THE PARTIES HERETO VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR
ANY OF THE DOCUMENTS, AGREEMENTS OR TRANSACTIONS CONTEMPLATED HEREBY.
(b) CONSENT TO JURISDICTION. ANY SUIT, ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT, OR ANY OF THE DOCUMENTS, AGREEMENTS OR
TRANSACTIONS CONTEMPLATED HEREBY OR ANY ACTION OR PROCEEDING TO EXECUTE OR
OTHERWISE ENFORCE ANY JUDGMENT IN RESPECT OF ANY BREACH UNDER THIS AGREEMENT OR
ANY DOCUMENT OR AGREEMENT CONTEMPLATED HEREBY, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, MAY BE BROUGHT BY SUCH PARTY IN ANY FEDERAL DISTRICT COURT
LOCATED IN CHICAGO,
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ILLINOIS, OR ANY ILLINOIS STATE COURT LOCATED IN CHICAGO, ILLINOIS AS SUCH PARTY
MAY IN ITS SOLE DISCRETION ELECT, AND BY THE EXECUTION AND DELIVERY OF THIS
AGREEMENT, THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMIT TO THE
NONEXCLUSIVE IN PERSONAM JURISDICTION OF EACH SUCH COURT, AND EACH OF THE
PARTIES HERETO IRREVOCABLY WAIVES AND AGREES NOT TO ASSERT IN ANY PROCEEDING
BEFORE ANY TRIBUNAL, BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, ANY CLAIM THAT
IT IS NOT SUBJECT TO THE IN PERSONAM JURISDICTION OF ANY SUCH COURT. IN
ADDITION, EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF VENUE IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY DOCUMENT, AGREEMENT OR TRANSACTION CONTEMPLATED HEREBY BROUGHT
IN ANY SUCH COURT, AND HEREBY IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
(c) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY AGREES THAT
PROCESS PERSONALLY SERVED OR SERVED BY U.S. REGISTERED MAIL AT THE ADDRESSES
PROVIDED HEREIN FOR NOTICES SHALL CONSTITUTE, TO THE FULLEST EXTENT PERMITTED BY
LAW, ADEQUATE SERVICE OF PROCESS IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT, AGREEMENT OR TRANSACTION
CONTEMPLATED HEREBY, OR ANY ACTION OR PROCEEDING TO EXECUTE OR OTHERWISE ENFORCE
ANY JUDGMENT IN RESPECT OF ANY BREACH HEREUNDER OR UNDER ANY DOCUMENT OR
AGREEMENT CONTEMPLATED HEREBY. RECEIPT OF PROCESS SO SERVED SHALL BE
CONCLUSIVELY PRESUMED AS EVIDENCED BY A DELIVERY RECEIPT FURNISHED BY THE UNITED
STATES POSTAL SERVICE OR ANY COMMERCIAL DELIVERY SERVICE.
(d) OTHER FORUMS. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO LIMIT
THE ABILITY OF ANY HOLDER OF NOTES TO SERVE ANY WRITS, PROCESSES OR SUMMONSES IN
ANY MANNER PERMITTED BY APPLICABLE LAW OR TO OBTAIN JURISDICTION OVER THE ISSUER
IN SUCH OTHER JURISDICTION, AND IN SUCH OTHER MANNER, AS MAY BE PERMITTED BY
APPLICABLE LAW.
9.8 INDEMNIFICATION OF EACH HOLDER.
From and at all times after the date of this Agreement, and in addition to
all of the holders' other rights and remedies against the Issuers, the Issuers
agree jointly and severally to indemnify and hold harmless each holder of the
Notes and each director, officer, employee, agent, investment advisor and
affiliate of each such holder ("Indemnified Parties") against any and all claims
(whether valid or not), losses, damages, liabilities, costs and expenses of any
kind or nature whatsoever (including, without limitation, reasonable attorneys'
fees, costs and
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expenses), incurred by or asserted against such Indemnified Party, from and
after the date hereof, as a result of, arising from, or in any way relating to,
whether directly or indirectly, the execution, delivery, performance or
enforcement of this Agreement or the other Financing Documents or any
transactions contemplated herein or therein, or arising out of any breach of any
representation or warranty, covenant or agreement of the Issuers or any of the
Subsidiaries under any Financing Document, including, without limitation any of
the foregoing relating to the violation of any Environmental Law applicable to
the Properties of the Issuers and their Subsidiaries; provided, however, that no
Indemnified Party shall have the right to be indemnified hereunder for any
liability resulting from the willful misconduct or gross negligence of such
Indemnified Party or with respect to liabilities arising from legal proceedings
commenced against such Indemnified Party by a security holder or creditor of
such Indemnified Party based upon alleged rights afforded to such security
holder or creditor solely in its capacity as such. All of the foregoing losses,
damages, costs and expenses of any Indemnified Party shall be payable as and
when incurred upon demand and shall be additional obligations hereunder, except
in the event any such Indemnified Party shall have been added to such legal
proceeding by the Issuer in order to establish the liability of such Indemnified
Party arising from its gross negligence or willful misconduct. Without limiting
the generality of the foregoing, but subject to the foregoing, each Indemnified
Party shall be entitled to collect, and the Issuers shall be obligated jointly
and severally to advance to each Indemnified Party, to the fullest extent
permitted by applicable law, all expenses (including, without limitations
reasonable fees and disbursements of counsel) attendant to defending against any
such claims (whether valid or not), when and as incurred, regardless of whether
any judicial determination of the Indemnified Party's entitlement to such
indemnity has been made, unless a final judicial determination is made that such
Indemnified Party is not entitled to such indemnity, in which case such
Indemnified Party shall promptly repay to the Issuers, with interest at the
applicable statutory rate applicable to judgments in the relevant jurisdiction,
all amounts so advanced by the Issuers. The obligations of the Issuers and the
rights of the Indemnified Parties under this Section 9.8 shall survive the
termination of this Agreement.
9.9 ENTIRE AGREEMENT.
This Agreement constitutes the final written expression of all of the terms
hereof and is a complete and exclusive statement of those terms.
9.10 EXECUTION IN COUNTERPART.
This Agreement may be executed in one or more counterparts and shall be
effective when at least one counterpart shall have been executed by each party
hereto, and each set of counterparts that, collectively, show execution by each
party hereto shall constitute one duplicate original.
[Remainder of page intentionally blank. Next page is signature page.]
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed and delivered by one of its duly authorized
officers or representatives.
COHO ENERGY, INC.
By: /s/ XXXX XXXXX X'XXXXXX
-------------------------------
Name: Xxxx Xxxxx X'Xxxxxx
Title: Senior Vice President
COHO RESOURCES, INC.
By: /s/ XXXX XXXXX X'XXXXXX
-------------------------------
Name: Xxxx Xxxxx X'Xxxxxx
Title: Senior Vice President
COHO LOUISIANA PRODUCTION COMPANY
By: /s/ XXXX XXXXX X'XXXXXX
-------------------------------
Name: Xxxx Xxxxx X'Xxxxxx
Title: Senior Vice President
COHO EXPLORATION, INC.
By: /s/ XXXX XXXXX X'XXXXXX
-------------------------------
Name: Xxxx Xxxxx X'Xxxxxx
Title: Senior Vice President
COHO OIL & GAS, INC.
By: /s/ XXXX XXXXX X'XXXXXX
-------------------------------
Name: Xxxx Xxxxx X'Xxxxxx
Title: Senior Vice President
48
INTERSTATE NATURAL GAS COMPANY
By: /s/ XXXX XXXXX X'XXXXXX
-------------------------------
Name: Xxxx Xxxxx X'Xxxxxx
Title: Senior Vice President
Agreed to and Accepted by:
PPM AMERICA SPECIAL INVESTMENTS FUND, L.P.
BY: PPM AMERICA, INC., ITS ATTORNEY-IN-FACT
By:
----------------------------------------------
Name:
Title:
PPM AMERICA SPECIAL INVESTMENTS CBO II, L.P.
BY: PPM AMERICA, INC., ITS ATTORNEY-IN-FACT
By:
----------------------------------------------
Name:
Title:
APPALOOSA INVESTMENT LIMITED PARTNERSHIP I
BY: APPALOOSA MANAGEMENT L.P., ITS GENERAL PARTNER
By: Appaloosa Partners Inc., its General Partner
By:
----------------------------------------------
Name:
Title:
49
PPM AMERICA SPECIAL INVESTMENTS FUND, L.P.
BY: PPM AMERICA, INC., ITS ATTORNEY-IN-FACT
By: /s/ XXXXXX X. XXXXXXX
----------------------------------------------
Name: XXXXXX X. XXXXXXX
Title: Managing Director
PPM AMERICA SPECIAL INVESTMENTS CBO II, L.P.
BY: PPM AMERICA, INC., ITS ATTORNEY-IN-FACT
By: /s/ XXXXXX X. XXXXXXX
----------------------------------------------
Name: XXXXXX X. XXXXXXX
Title: Managing Director
APPALOOSA INVESTMENT LIMITED PARTNERSHIP I
BY: APPALOOSA MANAGEMENT L.P., ITS GENERAL PARTNER
By: Appaloosa Partners Inc., its General Partner
By: /s/ XXXXXX XXXXXXXXX
----------------------------------------------
Name: XXXXXX XXXXXXXXX
Title: CHIEF FINANCIAL OFFICER
PALOMINO FUND LTD.
BY: APPALOOSA MANAGEMENT L.P., ITS INVESTMENT ADVISOR
By: Appaloosa Partners Inc., its General Partner
By: /s/ XXXXXX XXXXXXXXX
----------------------------------------------
Name: XXXXXX XXXXXXXXX
Title: CHIEF FINANCIAL OFFICER
50
TERSK LLC
BY: APPALOOSA MANAGEMENT L.P., ITS MANAGING MEMBER
By: Appaloosa Management L.P., its General Partner
By: /s/ XXXXXX XXXXXXXXX
----------------------------------------------
Name: XXXXXX XXXXXXXXX
Title: CHIEF FINANCIAL OFFICER
OAKTREE CAPITAL MANAGEMENT, LLC,
as agent and on behalf of certain funds and accounts
By:
----------------------------------------------
Name:
Title:
By:
----------------------------------------------
Name:
Title:
PACHOLDER VALUE OPPORTUNITY FUND, L.P.
BY: PACHOLDER ASSOCIATES, INC., ITS ATTORNEY-IN-FACT
By:
----------------------------------------------
Name:
Title:
PACHOLDER HIGH YIELD FUND, INC.
BY: PACHOLDER ASSOCIATES, INC., ITS ATTORNEY-IN-FACT
By:
----------------------------------------------
Name:
Title:
ONE GROUP HIGH YIELD BOND FUND
BY: PACHOLDER ASSOCIATES, INC., ITS ATTORNEY-IN-FACT
By:
----------------------------------------------
Name:
Title:
51
OAKTREE CAPITAL MANAGEMENT, LLC,
as general partner of and investment manager for
those entities set forth on Annex 1 hereto
By: /s/ XXXXXXX XXXXX
----------------------------------------------
Name: Xxxxxxx Xxxxx
Title: Principal
By: /s/ XXXXXXX XXXXXXX
----------------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Senior Vice President
52
PALOMINO FUND LTD.
BY: APPALOOSA MANAGEMENT L.P., ITS INVESTMENT ADVISOR
By: Appaloosa Partners Inc., its General Partner
By:
----------------------------------------------
Name:
Title:
TERSK LLC
BY: APPALOOSA MANAGEMENT L.P., ITS MANAGING MEMBER
By: Appaloosa Management L.P., its General Partner
By:
----------------------------------------------
Name:
Title:
PACHOLDER VALUE OPPORTUNITY FUND, L.P.
BY: PACHOLDER ASSOCIATES, INC., ITS ATTORNEY-IN-FACT
By: /s/ XXXXX X. XXXXXXXX
----------------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Senior Vice President
PACHOLDER HIGH YIELD FUND, INC.
BY: PACHOLDER ASSOCIATES, INC., ITS ATTORNEY-IN-FACT
By: /s/ XXXXX X. XXXXXXXX
----------------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Senior Vice President
ONE GROUP HIGH YIELD BOND FUND
BY: PACHOLDER ASSOCIATES, INC., ITS ATTORNEY-IN-FACT
By: /s/ XXXXX X. XXXXXXXX
----------------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Senior Vice President
53
EVANGELICAL LUTHERAN CHURCH IN AMERICA BOARD OF PENSIONS
BY: PACHOLDER ASSOCIATES, INC., ITS ATTORNEY-IN-FACT
By: /s/ XXXXX X. XXXXXXXX
----------------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Senior Vice President
