EXHIBIT 10.3
$350,000,000.00
FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
among
STONE ENERGY CORPORATION
as Borrower,
THE FINANCIAL INSTITUTIONS
NAMED IN THIS CREDIT AGREEMENT
as Banks,
BANK OF AMERICA, N.A.
as Administrative Agent,
FLEET NATIONAL BANK
as Syndication Agent,
BANK ONE, NA
as Documentation Agent, and
U.S. BANK NATIONAL ASSOCIATION,
FORTIS CAPITAL CORP., and
BANK OF MONTREAL
as Co-Agents
December 20, 2001
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.1. Certain Defined Terms...................................1
Section 1.2. Computation of Time Periods............................12
Section 1.3. Accounting Terms; Changes in GAAP......................12
Section 1.4. Types of Advances......................................13
Section 1.5. Miscellaneous..........................................13
ARTICLE II
CREDIT FACILITIES
Section 2.1. Commitment for Advances................................13
Section 2.2. Borrowing Base.........................................14
Section 2.3. Method of Borrowing....................................15
Section 2.4. Prepayment of Advances.................................17
Section 2.5. Repayment of Advances..................................19
Section 2.6. Letters of Credit......................................20
Section 2.7. Fees...................................................23
Section 2.8. Interest...............................................24
Section 2.9. Payments and Computations..............................25
Section 2.10. Sharing of Payments, Etc...............................26
Section 2.11. Breakage Costs.........................................26
Section 2.12. Increased Costs........................................27
Section 2.13. Taxes..................................................28
ARTICLE III
CONDITIONS OF LENDING
Section 3.1. Conditions Precedent to Amendment and Restatement......29
Section 3.2. Conditions Precedent to All Borrowings.................31
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1. Corporate Existence; Subsidiaries......................32
Section 4.2. Corporate Power........................................32
Section 4.3. Authorization and Approvals............................32
Section 4.4. Enforceable Obligations................................32
Section 4.5. Financial Statements...................................33
Section 4.6. True and Complete Disclosure...........................33
Section 4.7. Litigation.............................................33
Section 4.8. Use of Proceeds........................................33
Section 4.9. Investment Company Act.................................34
Section 4.10. Public Utility Holding Company Act.....................34
Section 4.11. Taxes..................................................34
Section 4.12. Pension Plans..........................................34
Section 4.13. Condition of Property; Casualties......................35
Section 4.14. No Burdensome Restrictions; No Defaults................35
Section 4.15. Environmental Condition................................35
Section 4.16. Permits, Licenses, Etc.................................36
Section 4.17. Gas Contracts..........................................36
ARTICLE V
AFFIRMATIVE COVENANTS
Section 5.1. Compliance with Laws, Etc..............................36
Section 5.2. Maintenance of Insurance...............................37
Section 5.3. Preservation of Corporate Existence, Etc...............37
Section 5.4. Payment of Taxes, Etc..................................37
Section 5.5. Visitation Rights......................................37
Section 5.6. Reporting Requirements.................................38
Section 5.7. Maintenance of Property................................40
Section 5.8. New Subsidiaries.......................................40
ARTICLE VI
NEGATIVE COVENANTS
Section 6.1. Liens, Etc.............................................41
Section 6.2. Debts, Guaranties, and Other Obligations...............42
Section 6.3. Agreements Restricting Liens and Distributions.........42
Section 6.4. Merger or Consolidation; Asset Sales...................42
Section 6.5. Restricted Payments....................................43
Section 6.6. Investments............................................43
Section 6.7. Limitation on Speculative Hedging......................43
Section 6.8. Affiliate Transactions.................................43
Section 6.9. Compliance with ERISA..................................44
Section 6.10. Maintenance of Ownership of Subsidiaries...............44
Section 6.11. Sale-and-Leaseback.....................................44
Section 6.12. Change of Business.....................................44
Section 6.13. Debt to EBITDA Ratio...................................44
Section 6.14. Tangible Net Worth.....................................44
Section 6.15. Subordinated Debt......................................45
ARTICLE VII
REMEDIES
Section 7.1. Events of Default......................................45
Section 7.2. Optional Acceleration of Maturity......................47
Section 7.3. Automatic Acceleration of Maturity.....................47
Section 7.4. Right of Set-off.......................................48
Section 7.5. Actions Under Credit Documents.........................48
Section 7.6. Non-exclusivity of Remedies............................48
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ARTICLE VIII
THE AGENT AND THE ISSUING BANK
Section 8.1. Authorization and Action...............................48
Section 8.2. Agent's Reliance, Etc..................................49
Section 8.3. The Agent and Its Affiliates...........................49
Section 8.4. Bank Credit Decision...................................49
Section 8.5. Indemnification........................................50
Section 8.6. Successor Agent and Issuing Bank.......................50
ARTICLE IX
MISCELLANEOUS
Section 9.1. Amendments, Etc........................................51
Section 9.2. Notices, Etc...........................................51
Section 9.3. No Waiver; Remedies....................................51
Section 9.4. Costs and Expenses.....................................52
Section 9.5. Binding Effect.........................................52
Section 9.6. Bank Assignments and Participations....................52
Section 9.7. Indemnification........................................54
Section 9.8. Execution in Counterparts..............................54
Section 9.9. Survival of Representations, Etc.......................54
Section 9.10. Severability...........................................54
Section 9.11. Business Loans.........................................55
Section 9.12. Governing Law..........................................55
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EXHIBITS:
Exhibit A - Form of Assignment and Acceptance
Exhibit B - Form of Compliance Certificate
Exhibit C - Form of Guaranty
Exhibit D - Form of Note
Exhibit E - Form of Notice of Borrowing
Exhibit F - Form of Notice of Conversion or Continuation
Exhibit G - Form of Letter of Credit Application
Exhibit H-1 - Form of Borrower's General Counsel Opinion
Exhibit H-2 - Form of Agent's Counsel Opinion
SCHEDULES:
Schedule 1 - Commitments; Borrower, Agent, and Bank Notice
Information; Lending Offices and Wire
Instructions
Schedule 4.7 - Existing Litigation
Schedule 4.15(a) - Existing Environmental Concerns
Schedule 4.15(b) - Designated Environmental Sites
Schedule 6.1 - Permitted Existing Liens
Schedule 6.2 - Permitted Existing Debt
Schedule 6.8 - Affiliate Transactions
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FOURTH AMENDED AND RESTATED
CREDIT AGREEMENT
This Fourth Amended and Restated
Credit Agreement dated as of December
20, 2001 is among
Stone Energy Corporation, a Delaware corporation, the Banks
(as defined below), and Bank of America, N.A., as administrative agent for the
Banks.
The Borrower, the Banks, and the Agent agree as follows:
INTRODUCTION
A. The Borrower, the Agent, and the Banks are parties to the Third
Amended and Restated
Credit Agreement dated as of July 30, 1997 (as the same has
been amended, supplemented, or otherwise modified from time to time, the
"Existing
Credit Agreement").
B. The Borrower, the Agent, and the Banks have agreed to amend and
restate the Existing
Credit Agreement by entering into this Agreement.
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.1. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (unless otherwise indicated,
such meanings to be equally applicable to both the singular and plural forms of
the terms defined):
"Acquired Company" means Conoco Offshore Inc. or, prior to any merger
of the Acquired Company with the Borrower, any successor entity.
"Acquired Properties" means the properties acquired under the
Acquisition Agreement, including the stock of the Acquired Company.
"Acquisition Agreement" means, collectively (a) the Purchase and Sale
Agreement by and between Conoco Inc. and Conoco Offshore Pipe Line Company as
assignors and the Borrower as assignee and (b) the Share and Pipeline Purchase
Agreement by and between Conoco Inc. and Conoco Offshore Pipe Line Company as
sellers and the Borrower as buyer, in form and substance satisfactory to the
Agent and the Majority Banks.
"Adjusted Base Rate" means, for any day, the fluctuating rate per annum
of interest equal to the greater of (a) the Base Rate in effect on such day and
(b) the Federal Funds Rate in effect on such day plus 1.00%.
"Advance" means any advance by a Bank to the Borrower as part of a
Borrowing and refers to a Base Rate Advance or a Eurodollar Rate Advance.
"Affiliate" means, as to any Person, any other Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such Person or any Subsidiary of such Person. The
term "control" (including the terms "controlled by" or "under common control
with") means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through ownership of Voting Securities, by contract, or otherwise.
"Agent" means Bank of America, N.A., in its capacity as an
administrative agent pursuant to Article VIII and any successor administrative
agent pursuant to Section 8.6.
"Agent's Fee Letter" has the meaning specified in Section 2.7(b).
"Agreement" means this Fourth Amended and Restated
Credit Agreement, as
the same may be amended, supplemented, and otherwise modified from time to time.
"Applicable Lending Office" means, with respect to each Bank, such
Bank's Domestic Lending Office in the case of a Base Rate Advance and such
Bank's Eurodollar Lending Office in the case of a Eurodollar Rate Advance.
"Applicable Margin" means, for any day, the following percentages based
upon the ratio of (a) the aggregate outstanding amount of Advances plus the
Letter of Credit Exposure to (b) the Borrowing Base as of such day:
Ratio of Outstanding Advances Applicable Margin Base Applicable Margin Applicable Margin
to Borrowing Base Rate Advances Eurodollar Rate Advances Commitment Fees
----------------------------- ---------------------- ------------------------ ---------------
Less than .30 0.00% 1.250% 0.50%
Greater than or equal to .30 0.00% 1.375% 0.50%
but less than .60
Greater than or equal to .60 0.00% 1.500% 0.50%
but less than .90
Greater than or equal to .90 0.00% 1.750% 0.500%
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Bank and an Eligible Assignee, and accepted by the Agent, in
substantially the form of the attached Exhibit A.
"Banks" means the lenders listed on the signature pages of this
Agreement and each Eligible Assignee that shall become a party to this Agreement
pursuant to Section 9.6.
"Base Rate" means a fluctuating interest rate per annum as shall be in
effect from time to time equal to the rate of interest publicly announced by
Bank of America, N.A., as its base rate, whether or not the Borrower has notice
thereof.
"Base Rate Advance" means an Advance which bears interest as provided
in Section 2.8(a).
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"Borrower" means
Stone Energy Corporation, a Delaware corporation.
"Borrowing" means, subject to Sections 2.3(c)(ii) and 2.4(e), a
borrowing consisting of simultaneous Advances of the same Type made by each Bank
pursuant to Section 2.3(a), continued by each Bank pursuant to Section 2.3(b),
or Converted by each Bank to Advances of a different Type pursuant to Section
2.3(b).
"Borrowing Base" means, for any date of its determination by the
Majority Banks or all of the Banks, as the case may be, in accordance with
Section 2.2.
"Business Day" means a day of the year on which banks are not required
or authorized to close in Dallas,
Texas and, if the applicable Business Day
relates to any Eurodollar Rate Advances, on which dealings are carried on by
banks in the London interbank market.
"Capital Leases" means, as applied to any Person, any lease of any
Property by such Person as lessee which would, in accordance with GAAP, be
required to be classified and accounted for as a capital lease on the balance
sheet of such Person.
"Cash Collateral Account" means a special interest bearing cash
collateral account pledged to the Agent for the ratable benefit of the Banks
containing cash deposited pursuant to Sections 2.4(b) or (c), 7.2(b), or 7.3(b)
to be maintained at the Agent's office in accordance with Section 2.6(g) and
bear interest or be invested in the Agent's reasonable discretion.
"CERCLA" means the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended, state and local analogs, and all rules
and regulations and requirements thereunder in each case as now or hereafter in
effect.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute.
"Commitment" means, for any Bank, the amount set opposite such Bank's
name on the Schedule 1 as its Commitment, or if such Bank has entered into any
Assignment and Acceptance, as set forth for such Bank as its Commitment in the
Register maintained by the Agent pursuant to Section 9.6(c), as such amount may
be reduced or terminated pursuant to Article VII.
"Compliance Certificate" means a compliance certificate in the form of
the attached Exhibit B signed by a Responsible Officer of the Borrower.
"Controlled Group" means all members of a controlled group of
corporations and all trades (whether or not incorporated) under common control
which, together with the Borrower, are treated as a single employer under
Section 414 of the Code.
"Convert," "Conversion," and "Converted" each refers to a conversion of
Advances of one Type into Advances of another Type pursuant to Section 2.3(b).
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"Credit Documents" means this Agreement, the Notes, the Letter of
Credit Documents, the Guaranties, and each other agreement, instrument, or
document executed at any time in connection with this Agreement.
"Debt," for any Person, means without duplication:
(a) indebtedness of such Person for borrowed money, including, without
limitation, obligations under letters of credit and agreements relating to the
issuance of letters of credit or acceptance financing;
(b) obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments;
(c) obligations of such Person to pay the deferred purchase price of
property or services;
(d) obligations of such Person as lessee under Capital Leases;
(e) obligations of such Person under direct or indirect guaranties in
respect of, and obligations (contingent or otherwise) of such Person to purchase
or otherwise acquire, or otherwise to assure a creditor against loss in respect
of, indebtedness or obligations of others of the kinds referred to in clauses
(a) through (d) above;
(f) indebtedness or obligations of others of the kinds referred to in
clauses (a) through (e) secured by any Lien on or in respect of any Property of
such Person; and
(g) all liabilities of such Person in respect of unfunded vested
benefits under any Plan.
"Default" means (a) an Event of Default or (b) any event or condition
which with notice or lapse of time or both would, unless cured or waived, become
an Event of Default.
"Dollar Equivalent" means for all purposes of this Agreement, the
equivalent in another currency of an amount in Dollars to be determined by
reference to the rate of exchange quoted by Bank of America, N.A., at 10:00 a.m.
(Dallas,
Texas, time) on the date of determination, for the spot purchase in the
foreign exchange market of such amount of Dollars with such other currency.
"Dollars" and "$" means lawful money of the United States of America.
"Domestic Lending Office" means, with respect to any Bank, the office
of such Bank specified as its "Domestic Lending Office" opposite its name on
Schedule 1 or such other office of such Bank as such Bank may from time to time
specify to the Borrower and the Agent.
"EBITDA" means, with respect to any Person and for any period of its
determination, the consolidated Net Income, excluding extraordinary items, of
such Person for such period, plus the consolidated interest expense, income
taxes, depreciation, depletion, and amortization of such Person for such period.
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"Effective Date" means the date on which each of the conditions
precedent in Section 3.1 have been met or waived.
"Eligible Assignee" means any commercial bank organized under the laws
of any country which is a member of the Organization for Economic Cooperation
and Development and having primary capital (or its equivalent) of not less than
$250,000,000.00 (or its Dollar Equivalent) and approved by the Agent in its sole
discretion and the Borrower, which approval by the Borrower will not be
unreasonably withheld.
"Environment" or "Environmental" shall have the meanings set forth in
43 U.S.C. Section 9601(8) (1988).
"Environmental Claim" means any third party (including governmental
agencies and employees) action, lawsuit, claim, demand, regulatory action or
proceeding, order, decree, consent agreement or notice of potential or actual
responsibility or violation (including claims or proceedings under the
Occupational Safety and Health Acts or similar laws or requirements relating to
health or safety of employees) which seeks to impose liability under any
Environmental Law.
"Environmental Law" means all Legal Requirements arising from, relating
to, or in connection with the Environment, health, or safety, including without
limitation CERCLA, relating to (a) pollution, contamination, injury,
destruction, loss, protection, cleanup, reclamation or restoration of the air,
surface water, groundwater, land surface or subsurface strata, or other natural
resources; (b) solid, gaseous or liquid waste generation, treatment, processing,
recycling, reclamation, cleanup, storage, disposal or transportation; (c)
exposure to pollutants, contaminants, hazardous, or toxic substances, materials
or wastes; (d) the safety or health of employees; or (e) the manufacture,
processing, handling, transportation, distribution in commerce, use, storage or
disposal of hazardous, or toxic substances, materials or wastes.
"Environmental Permit" means any permit, license, order, approval or
other authorization under Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Federal Reserve Board (or any successor), as in effect from
time to time.
"Eurodollar Lending Office" means, with respect to any Bank, the office
of such Bank specified as its "Eurodollar Lending Office" opposite its name on
Schedule 1 (or, if no such office is specified, its Domestic Lending Office) or
such other office of such Bank as such Bank may from time to time specify to the
Borrower and the Agent.
"Eurodollar Rate" means, for the Interest Period for each Eurodollar
Rate Advance, the interest rate per annum (rounded upward to the nearest 1/100
of 1% per annum) appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two Business Days before the first day of such Interest
Period for a term comparable to such Interest Period. If for any reason such
rate is
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not available, the term "Eurodollar Rate" shall mean, for the Interest Period
for each Eurodollar Rate Advance, the interest rate per annum (rounded upward to
the nearest 1/100 of 1% per annum) appearing on Reuters Screen LIBO page as the
London interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two Business Days before the first day of such Interest
Period for a term comparable to such Interest Period; provided, however, if more
than one rate is specified on Reuters Screen LIBO page, the applicable rate
shall be the arithmetic mean of all such rates.
"Eurodollar Rate Advance" means an Advance which bears interest as
provided in Section 2.8(b).
"Eurodollar Rate Reserve Percentage" of any Bank for the Interest
Period for any Eurodollar Rate Advance means the reserve percentage applicable
during such Interest Period (or if more than one such percentage shall be so
applicable, the daily average of such percentages for those days in such
Interest Period during which any such percentage shall be so applicable) under
regulations issued from time to time by the Federal Reserve Board for
determining the maximum reserve requirement (including, without limitation, any
emergency, supplemental or other marginal reserve requirement) for such Bank
with respect to liabilities or assets consisting of or including Eurocurrency
Liabilities having a term equal to such Interest Period.
"Event of Default" has the meaning specified in Section 7.1.
"Existing Letters of Credit" means the letters of credit outstanding on
the date of this Agreement issued for the account of the Borrower or its
Subsidiaries which are described in the attached Schedule 6.2, as the same may
be amended, supplemented, and otherwise modified from time to time.
"Existing Letter of Credit Exposure" means at any time, the sum of (a)
the aggregate undrawn maximum face amount of each Existing Letter of Credit at
such time, plus (b) the aggregate unpaid amount of all reimbursement obligations
for payments made under Existing Letters of Credit at such time.
"Expiration Date" means, with respect to any Letter of Credit, the date
on which such Letter of Credit will expire or terminate in accordance with its
terms.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for any such day on
such transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any of its successors.
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"Financial Statements" means the balance sheet and statements of
operations, stockholders' equity and cash flow dated December 31, 2000 referred
to in Section 4.5, copies of which have been delivered to the Agent and the
Banks.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time, applied on a basis consistent with the requirements
of Section 1.3.
"Governmental Authority" means any foreign governmental authority, the
United States of America, any state of the United States of America and any
subdivision of any of the foregoing, and any agency, department, commission,
board, authority or instrumentality, bureau or court having jurisdiction over
any Bank, the Borrower, or the Borrower's Subsidiaries or any of their
respective Properties.
"Guaranties" means each Guaranty in favor of the Agent for the ratable
benefit of the Banks in the form of the attached Exhibit C executed on the date
hereof or as required by Section 5.8, as the same may be amended, supplemented,
or otherwise modified from time to time.
"Guarantors" means each Material Subsidiary of the Borrower which has
executed a Guaranty on the date hereof or as required by Section 5.8.
"Hazardous Substance" means the substances identified as such pursuant
to CERCLA and those regulated under any other Environmental Law, including
without limitation pollutants, contaminants, petroleum, petroleum products,
radionuclides, radioactive materials, and medical and infectious waste.
"Hazardous Waste" means the substances regulated as such pursuant to
any Environmental Law.
"Interest Period" means, for each Eurodollar Rate Advance comprising
part of the same Borrowing, the period commencing on the date of such Advance or
the date of the Conversion of any Base Rate Advance into such an Advance and
ending on the last day of the period selected by the Borrower pursuant to the
provisions below or by Section 2.3 and, thereafter, each subsequent period
commencing on the last day of the immediately preceding Interest Period and
ending on the last day of the period selected by the Borrower pursuant to the
provisions below or by Section 2.3. The duration of each such Interest Period
shall be one, two, three, or six months, in each case as the Borrower may, upon
notice received by the Agent not later than 10:00 a.m. (Dallas,
Texas, time) on,
the third Business Day prior to the first day of such Interest Period select;
provided, however, that:
(a) the Borrower may not select any Interest Period for any Advance
which ends after the Maturity Date;
(b) Interest Periods commencing on the same date for Advances
comprising part of the same Borrowing shall be of the same duration;
(c) whenever the last day of any Interest Period would otherwise occur
on a day other than a Business Day, the last day of such Interest Period shall
be extended to occur on the next succeeding Business Day, provided that if such
extension would cause the last day of such
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Interest Period to occur in the next following calendar month, the last day of
such Interest Period shall occur on the next preceding Business Day; and
(d) any Interest Period which begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on the last
Business Day of the calendar month in which it would have ended if there were a
numerically corresponding day in such calendar month.
"Interim Financial Statements" means the unaudited balance sheet and
statements of operations and cash flow dated as of September 30, 2001, referred
to in Section 4.5.
"Issuing Bank" means Bank of America, N.A., and any successor issuing
bank pursuant to Section 8.6.
"Legal Requirement" means any law, statute, ordinance, decree,
requirement, order, judgment, rule, regulation (or official interpretation of
any of the foregoing) of, and the terms of any license or permit issued by, any
Governmental Authority, including, but not limited to, Regulations T, U, and X.
"Letter of Credit" means, individually, any letter of credit issued by
the Issuing Bank which is subject to this Agreement and "Letters of Credit"
means all such letters of credit collectively, provided that the Existing
Letters of Credit shall not be Letters of Credit hereunder until made Letters of
Credit under this Agreement by the Issuing Bank at the time such Existing
Letters of Credit are replaced or rolled over.
"Letter of Credit Application" means the Issuing Bank's standard form
letter of credit application for either a commercial or standby letter of
credit, as the case may be, which has been executed by the Borrower and accepted
by the Issuing Bank in connection with the issuance of a Letter of Credit, which
form or forms as of the date of this Agreement are in the form of the attached
Exhibit G, as the same may be amended, supplemented, and otherwise modified from
time to time.
"Letter of Credit Documents" means all Letters of Credit, Letter of
Credit Applications, and agreements, documents, and instruments entered into in
connection with or relating thereto.
"Letter of Credit Exposure" means, at any time, the sum of (a) the
aggregate undrawn maximum face amount of each Letter of Credit at such time,
plus (b) the aggregate unpaid amount of all Reimbursement Obligations at such
time.
"Letter of Credit Obligations" means any obligations of the Borrower
under this Agreement in connection with the Letters of Credit, including the
Reimbursement Obligations.
"Lien" means any mortgage, lien, pledge, charge, deed of trust,
security interest, or encumbrance to secure or provide for the payment of any
obligation of any Person, whether arising by contract, operation of law, or
otherwise (including, without limitation, the interest of a vendor or lessor
under any conditional sale agreement, Capital Lease, or other title retention
agreement).
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"Liquid Investments" means:
(a) debt securities issued or directly and fully guaranteed or insured
by the United States government or any agency or instrumentality thereof, with
maturities of no more than two years from the date of acquisition;
(b) commercial paper of a domestic issuer rated at the date of
acquisition not less than P1 by Xxxxx'x Investor Service, Inc., or A1 by
Standard & Poor's Corporation;
(c) certificates of deposit, demand deposits, Eurodollar time deposits,
overnight bank deposits, and bankers' acceptances, with maturities of no more
than two years from the date of acquisition, issued by any Bank or any bank or
trust company organized under the laws of the United States or any state thereof
whose deposits are insured by the Federal Deposit Insurance Corporation, and
having capital and surplus aggregating at least $100,000,000.00;
(d) corporate bonds, mortgaged-backed securities, and municipal bonds
of a domestic issuer rated at the date of acquisition Aaa by Xxxxx'x Investor
Service, Inc., or AAA by Standard & Poor's Corporation, with maturities of no
more than two years from the date of acquisition;
(e) repurchase agreements secured by debt securities of the type
described in part (a) above, the market value of which, including accrued
interest, is not less than 100% of the amount of the repurchase agreement, with
maturities of no more than two years from the date of acquisition, issued by or
acquired from or through any Bank or any bank or trust company organized under
the laws of the United States or any state thereof and having capital and
surplus aggregating at least $100,000,000.00; and
(f) money market funds;
provided that (i) investments in any one issuer, excluding the United States
government or any agency or instrumentality thereof, shall not exceed 20% of
total fixed-income Liquid Investments based on market value at the time of
acquisition, (ii) fixed-income holdings shall not exceed 5% of all Investments
at any time, and (iii) certificates of deposit, commercial paper, corporate
bonds, mortgaged-backed securities, or municipal bonds issued by any one issuer
shall not exceed 5% of all Liquid Investments at any time.
"Majority Banks" means, at any time and except as provided in the last
sentence of this definition, Banks holding at least 66-2/3% of the then
aggregate unpaid principal amount of the Notes held by the Banks and the Letter
of Credit Exposure of the Banks at such time, but in no event less than two
Banks at any time when there are three or more Banks; provided that if no such
principal amount or Letter of Credit Exposure is then outstanding, "Majority
Banks" shall mean Banks having at least 66-2/3% of the aggregate amount of the
Commitments at such time, but in no event less than two Banks at any time when
there are three or more Banks. For any determination under Section 2.2,
"66-2/3%" in the foregoing sentence shall be "75%."
"Material Adverse Change" means (a) a material adverse change in the
business, financial condition, or results of operations of the Borrower or any
of its Subsidiaries, or (b) the occurrence and continuance of any event or
circumstance which could reasonably be expected
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(i) to have a material adverse effect on the Borrower's or any Guarantor's
ability to perform its obligations under this Agreement, any Note, any Guaranty,
or any other Credit Document or (ii) to cause a Default.
"Material Subsidiary" means, (a) in the case of Subsidiaries of the
Borrower existing on September 30, 2001, as of any date of its determination, a
Subsidiary of the Borrower (i) with assets constituting 10% or more of the
Borrower's consolidated assets on such date, (ii) that contributed more than 5%
of the Borrower's consolidated EBITDA for the four-quarter period ending on or
before such date, or (iii) the Borrower has designated to be Material Subsidiary
and (b) in the case of Subsidiaries of the Borrower created or acquired after
September 30, 2001, as of any date of its determination, a Subsidiary of the
Borrower (i) with assets constituting 5% or more of the Borrower's consolidated
assets on such date, (ii) that contributed more than 5% of the Borrower's
consolidated EBITDA for the four-quarter period ending on or before such date,
or (iii) the Borrower has designated to be Material Subsidiary.
"Maturity Date" means the earlier of (a) December 20, 2004 or (b) the
earlier termination in whole of the Commitments pursuant to Section 2.1(b) or
Article VII.
"Maximum Rate" means the maximum nonusurious interest rate under
applicable law.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA.
"Net Income" means, for any Person and for any period of its
determination, the net income of such Person determined in accordance with GAAP
consistently applied.
"Net Worth" means, for any Person that is a corporation and as of any
date of its determination, the consolidated total assets of such Person less the
total liabilities of such Person, determined in accordance with GAAP
consistently applied.
"Note" means a promissory note of the Borrower payable to the order of
any Bank, in substantially the form of the attached Exhibit D, evidencing
indebtedness of the Borrower to such Bank resulting from Advances owing to such
Bank.
"Notice of Borrowing" means a notice of borrowing in the form of the
attached Exhibit E signed by a Responsible Officer of the Borrower.
"Notice of Conversion or Continuation" means a notice of conversion or
continuation in the form of the attached Exhibit F signed by a Responsible
Officer of the Borrower.
"Obligations" means all principal, interest, fees, reimbursements,
indemnifications, and other amounts payable by the Borrower to the Agent or the
Banks under the Credit Documents.
"Oil and Gas Properties" means fee, leasehold or other interests in or
under mineral estates or oil, gas, and other liquid or gaseous hydrocarbon
leases with respect to Properties situated in the United States or offshore from
any state of the United States, including overriding royalty and royalty
interests, leasehold estate interests, net profits interests, production payment
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interests and mineral fee interests, together with contracts executed in
connection therewith and incidental rights belonging thereto.
"Oil and Gas Reserve Report" means each engineering report covering the
Borrower's consolidated Oil and Gas Properties provided to the Agent pursuant to
Section 5.6(c).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Liens" means the Liens permitted to exist pursuant to
Section 6.1.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, limited liability corporation or company,
limited liability partnership, trust, unincorporated association, joint venture
or other entity, or a government or any political subdivision or agency thereof
or any trustee, receiver, custodian or similar official.
"Plan" means an employee benefit plan (other than a Multiemployer Plan)
maintained for employees of the Borrower or any member of the Controlled Group
and covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code.
"Property" of any Person means any property or assets (whether real,
personal, or mixed, tangible or intangible) of such Person.
"Pro Rata Share" means, with respect to any Bank, either (a) the ratio
(expressed as a percentage) of such Bank's Commitments at such time to the
aggregate Commitments at such time or (b) if the Commitments have been
terminated, the ratio (expressed as a percentage) of such Bank's aggregate
outstanding Advances and Letter of Credit Exposure at such time to the aggregate
outstanding Advances and Letter of Credit Exposure of all the Banks at such
time.
"Register" has the meaning set forth in paragraph (c) of Section 9.6.
"Regulations T, U, and X" mean Regulations T, U, and X of the Federal
Reserve Board, as the same is from time to time in effect, and all official
rulings and interpretations thereunder or thereof.
"Reimbursement Obligations" means all of the obligations of the
Borrower to reimburse the Issuing Bank for amounts paid by the Issuing Bank
under Letters of Credit as established by the Letter of Credit Applications and
Section 2.6(d).
"Release" shall have the meaning set forth in CERCLA or under any other
Environmental Law.
"Response" shall have the meaning set forth in CERCLA or under any
other Environmental Law.
"Responsible Officer" means, with respect to any Person, such Person's
Chief Executive Officer, President, Chief Financial Officer, Chief Accounting
Officer, and Vice Presidents.
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"Restricted Payment" means, with respect to any Person, any dividends
or other distributions (in cash, property, or otherwise) on, or any payment for
the purchase, redemption, or other acquisition of, any shares of any capital
stock of such Person, other than dividends payable in such Person's stock.
"Subsidiary" of a Person means any corporation or other entity of which
more than 50% of the outstanding capital stock or other ownership interests
having ordinary voting power to elect a majority of the board of directors or
similar governing body of such corporation or other entity (irrespective of
whether at such time capital stock or other ownership interests of any other
class or classes of such corporation or other entity shall or might have voting
power upon the occurrence of any contingency) is at the time directly or
indirectly owned by such Person, by such Person and one or more Subsidiaries of
such Person or by one or more Subsidiaries of such Person.
"Tangible Net Worth" means, for any Person that is a corporation and as
of the date of its determination, the consolidated Net Worth of such Person,
excluding all consolidated intangible assets of such Person, as determined in
accordance with GAAP consistently applied.
"Termination Event" means (a) a Reportable Event described in Section
4043 of ERISA and the regulations issued thereunder (other than a Reportable
Event not subject to the provision for 30-day notice to the PBGC under such
regulations), (b) the withdrawal of the Borrower or any of its Affiliates from a
Plan during a plan year in which it was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA, (c) the filing of a notice of intent to terminate a
Plan or the treatment of a Plan amendment as a termination under Section 4041 of
ERISA, (d) the institution of proceedings to terminate a Plan by the PBGC, or
(e) any other event or condition which constitutes grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Plan.
"Type" has the meaning set forth in Section 1.4.
"Voting Securities" means with respect to any corporation, capital
stock of the corporation having general voting power under ordinary
circumstances to elect directors of such corporation (irrespective of whether at
the time stock of any other class or classes shall have or might have special
voting power or rights by reason of the happening of any contingency).
Section 1.2. Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to but excluding".
Section 1.3. Accounting Terms; Changes in GAAP.
(a) All accounting terms not specifically defined in this Agreement
shall be construed in accordance with GAAP applied on a consistent basis with
those applied in the preparation of the Financial Statements.
(b) Unless otherwise indicated, all financial statements of the
Borrower, all calculations for compliance with covenants in this Agreement and
all calculations of any amounts to be calculated under the definitions in
Section 1.1 shall be based upon the
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consolidated accounts of the Borrower and its Subsidiaries in accordance with
GAAP (or in compliance with the regulations promulgated by the United States
Securities and Exchange Commission regarding financial reporting) and consistent
with the principles applied in preparing the Financial Statements.
Section 1.4. Types of Advances. Advances are distinguished by "Type."
The "Type" of an Advance refers to the determination whether such Advance is a
Eurodollar Rate Advance or Base Rate Advance.
Section 1.5. Miscellaneous. Article, Section, Schedule, and Exhibit
references are to Articles and Sections of and Schedules and Exhibits to this
Agreement, unless otherwise specified.
ARTICLE II
CREDIT FACILITIES
Section 2.1. Commitment for Advances.
(a) Advances. Each Bank severally agrees, on the terms and conditions
set forth in this Agreement, to make Advances to the Borrower from time to time
on any Business Day during the period from the date of this Agreement until the
Maturity Date in an aggregate outstanding amount up to but not to exceed an
amount equal to (i) the lesser of such Bank's Commitment or such Bank's Pro Rata
Share of the Borrowing Base less (ii) the sum of (A) such Bank's Pro Rata Share
of the Letter of Credit Exposure, and (B) such Bank's Pro Rata Share of the
Existing Letter of Credit Exposure provided that the sum of (1) the outstanding
amount of all Advances made by such Bank, (2) such Bank's Pro Rata Share of the
Letter of Credit Exposure, and (3) such Bank's Pro Rata Share of the Existing
Letter of Credit Exposure shall not exceed such Bank's Commitment. Each
Borrowing shall, in the case of Borrowings consisting of Base Rate Advances, be
in an aggregate amount not less than $500,000.00 and in integral multiples of
$100,000.00 in excess thereof, and in the case of Borrowings consisting of
Eurodollar Rate Advances, be in an aggregate amount not less than $2,000,000.00
or in integral multiples of $1,000,000.00 in excess thereof, and in each case
shall consist of Advances of the same Type made on the same day by the Banks
ratably according to their respective Commitments. Within the limits of each
Bank's Commitment, and subject to the terms of this Agreement, the Borrower may
from time to time borrow, prepay, and reborrow Advances.
(b) Reduction of Commitment. The Borrower shall have the right, upon at
least three Business Days' irrevocable notice to the Agent, to terminate in
whole or reduce ratably in part the unused portion of the Commitments; provided
that each partial reduction of the Commitments shall be in the aggregate amount
of $5,000,000.00 or in integral multiples of $1,000,000.00 in excess thereof.
Any reduction or termination of the Commitments pursuant to this Section 2.1(b)
shall be permanent, with no obligation of the Banks to reinstate such
Commitments and the commitment fees provided for in Section 2.7(a) shall
thereafter be computed on the basis of the Commitments, as so reduced.
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(c) Notes. The indebtedness of the Borrower to each Bank resulting from
the Advances owing to such Bank shall be evidenced by a Note of the Borrower in
the maximum principal amount of such Bank's Commitment.
Section 2.2. Borrowing Base.
(a) The Borrowing Base has been set by the Majority Banks and
acknowledged by the Borrower as (i) as of the date hereof, $200,000,000.00, (ii)
as of the date of the acquisition of the Acquisition Properties,
$250,000,000.00.
(b) From the date hereof through the Maturity Date and subject to the
further provisions of this Section 2.2, the Borrowing Base shall be redetermined
by the Majority Banks each May 1 and November 1 in accordance with Section
2.2(d) on the basis of information, including the Oil and Gas Reserve Reports
required to be delivered before each such date supplied by Borrower in
compliance with the provisions of this Agreement, such additional data
concerning pricing, quantities of production, purchasers of production, and
other information and engineering and geological data with respect thereto as
the Agent or any Bank may reasonably request, together with all other
information then available to the Agent and the Banks. Notwithstanding the
foregoing, the Majority Banks may, in the exercise of their good faith
discretion, make redeterminations of the Borrowing Base in accordance with
Section 2.2(d) (i) by providing written notice to the Borrower, but only two
such requests may be made during any calendar year, (ii) from time to time on
the basis of information then available to the Agent and the Banks regarding the
Borrower's and the Guarantors' Oil and Gas Properties, and (iii) from time to
time upon the occurrence of any Material Adverse Change.
(c) The Borrower may request the Majority Banks to redetermine the
Borrowing Base (i) by providing a written request to the Agent, but only two
such requests may be made during any calendar year or (ii) in connection with
the Borrower's or any Guarantor's acquisition of Oil and Gas Properties with a
purchase price of $20,000,000 or more. In connection with any such request, the
Borrower shall provide the Agent and the Banks with an interim reserve report
prepared by the Borrower together with such other information, including
additional data concerning pricing, quantities of production, purchasers of
production, and other information and engineering and geological data, as the
Agent or any Bank may reasonably request. Within 30 days following the receipt
of such interim reserve report and other information, the Majority Banks shall
make a redetermination of the Borrowing Base in accordance with Section 2.2(d).
(d) Upon a redetermination of the Borrowing Base, the Agent shall
propose a Borrowing Base to the Banks, and the Banks shall vote to approve or
disapprove such proposed Borrowing Base. If the Majority Banks do not approve
the proposed Borrowing Base, the Agent shall propose, and the Banks shall vote
to approve or disapprove, another Borrowing Base, until the Majority Banks
approve a Borrowing Base proposed by the Agent. Once the Majority Banks approve
the proposed Borrowing Base, the Agent shall notify the Borrower of such
redetermination. Until the Borrower receives such notification from the Agent,
the Borrowing Base most recently established shall remain in effect, and
thereafter the new Borrowing Base as set forth in such notification shall be in
effect.
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(e) (i) Upon any asset sale permitted under Section 6.4(b)(ii), the
Borrowing Base shall automatically be reduced on the date of such sale by
subtracting from the Borrowing Base the value of the assets sold as determined
from the most recent information compiled by the Agent and the Banks in
connection with the most recent redetermination of the Borrowing Base and (ii)
upon the issuance of any Debt permitted under Section 6.2(f), the Borrowing Base
shall automatically reduce by 75% of the principal amount of such Debt.
(f) The Borrowing Base shall represent the determination by the
Majority Banks of the loan value of the Borrower's and the Guarantors'
unencumbered Oil and Gas Properties, but the Agent and the Majority Banks shall
make their determination and vote their approval, respectively, in accordance
with the applicable definitions and provisions herein contained, each such
Bank's standard policies regarding energy lending, industry lending practices,
consultation with the Agent and the other Banks (but without requiring the
approval of any such Bank), and consideration for the nature of the facilities
established hereunder. The Borrower acknowledges that the determination of the
Borrowing Base contains an equity cushion (market value in excess of loan
value), which is acknowledged by Borrower to be essential for the adequate
protection of the Agent and the Banks.
(g) The Borrower shall also have the right to reduce the Borrowing Base
once during the period from October 1 to March 31 and once during the period
from April 1 to September 30 during each year by providing the Agent 30 days
advance written notice of such reduction. The Agent shall promptly send to each
Bank a copy of such notice and such reduction shall be effective on the date of
the Agent's receipt of such notice.
(h) As of the date of this Agreement, the Agent has provided the
Borrower with the Agent's standard policies regarding energy lending. The Agent,
but not any other Bank, agrees to provide the Borrower with written notice of
any changes to such policies.
Section 2.3. Method of Borrowing.
(a) Notice. Each Borrowing shall be made pursuant to a Notice of
Borrowing (or by telephone notice promptly confirmed in writing by a Notice of
Borrowing), given not later than 10:00 a.m. (Dallas,
Texas, time) (i) on the
third Business Day before the date of the proposed Borrowing, in the case of a
Eurodollar Rate Borrowing or (ii) on the Business Day of the proposed Borrowing,
in the case of a Base Rate Borrowing, by the Borrower to the Agent, which shall
in turn give to each Bank prompt notice of such proposed Borrowing by telecopier
or telex. Each Notice of a Borrowing shall be given by telecopier or telex,
confirmed immediately in writing specifying the information required therein. In
the case of a proposed Borrowing comprised of Eurodollar Rate Advances, the
Agent shall promptly notify each Bank of the applicable interest rate under
Section 2.8(b). Each Bank shall (A) in the case of a Eurodollar Rate Borrowing,
before 10:00 a.m. (Dallas,
Texas, time) on the date of such Borrowing and (B) in
the case of a Base Rate Borrowing, before 3:00 p.m. (Dallas,
Texas, time) on the
date of such Borrowing, make available for the account of its Applicable Lending
Office to the Agent at its address referred to in Section 9.2, or such other
location as the Agent may specify by notice to the Banks, in same day funds,
such Bank's Pro Rata Share of such Borrowing. After the Agent's receipt of such
funds and upon fulfillment of the applicable conditions set forth in Article
III, the Agent shall make such funds available to the Borrower at its account
with the Agent.
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(b) Conversions and Continuations. The Borrower may elect to Convert or
continue any Borrowing under this Section 2.3 by delivering an irrevocable
Notice of Conversion or Continuation to the Agent at the Agent's office no later
than 10:00 a.m. (Dallas,
Texas, time) (i) on the date which is at least three
Business Days in advance of the proposed Conversion or continuation date in the
case of a Conversion to or a continuation of a Borrowing comprised of Eurodollar
Rate Advances and (ii) on the Business Day of the proposed conversion date in
the case of a Conversion to a Borrowing comprised of Base Rate Advances. Each
such Notice of Conversion or Continuation shall be in writing or by telex or
telecopier confirmed immediately in writing specifying the information required
therein. Promptly after receipt of a Notice of Conversion or Continuation under
this Section, the Agent shall provide each Bank with a copy thereof and, in the
case of a Conversion to or a Continuation of a Borrowing comprised of Eurodollar
Rate Advances, notify each Bank of the applicable interest rate under Section
2.8(b).
(c) Certain Limitations. Notwithstanding anything in paragraphs (a) and
(b) above:
(i) at no time shall there be more than eight Interest Periods
applicable to outstanding Eurodollar Rate Advances;
(ii) if any Bank shall, at least one Business Day before the
date of any requested Borrowing, Conversion, or continuation, notify
the Agent that the introduction of or any change in or in the
interpretation of any law or regulation makes it unlawful, or that any
central bank or other Governmental Authority asserts that it is
unlawful, for such Bank or its Eurodollar Lending Office to perform its
obligations under this Agreement to make Eurodollar Rate Advances or to
fund or maintain Eurodollar Rate Advances, the right of the Borrower to
select Eurodollar Rate Advances from such Bank shall be suspended until
such Bank shall notify the Agent that the circumstances causing such
suspension no longer exist, and the Advance made by such Bank in
respect of such Borrowing, Conversion, or continuation shall be a Base
Rate Advance;
(iii) if the Agent is unable to determine the Eurodollar Rate
for Eurodollar Rate Advances comprising any requested Borrowing, the
right of the Borrower to select Eurodollar Rate Advances for such
Borrowing or for any subsequent Borrowing shall be suspended until the
Agent shall notify the Borrower and the Banks that the circumstances
causing such suspension no longer exist, and each Advance comprising
such Borrowing shall be a Base Rate Advance;
(iv) if the Majority Banks shall, at least one Business Day
before the date of any requested Borrowing, notify the Agent that the
Eurodollar Rate for Eurodollar Rate Advances comprising such Borrowing
will not adequately reflect the cost to such Banks of making or funding
their respective Eurodollar Rate Advances, as the case may be, for such
Borrowing, the right of the Borrower to select Eurodollar Rate Advances
for such Borrowing or for any subsequent Borrowing shall be suspended
until the Agent shall notify the Borrower and the Banks that the
circumstances causing such suspension no longer exist, and each Advance
comprising such Borrowing shall be a Base Rate Advance; and
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(v) if the Borrower shall fail to select the duration or
continuation of any Interest Period for any Eurodollar Rate Advances in
accordance with the provisions contained in the definition of "Interest
Period" in Section 1.1 and paragraph (b) above, the Agent shall
forthwith so notify the Borrower and the Banks and such Advances shall
be made available to the Borrower on the date of such Borrowing as Base
Rate Advances or, if an existing Advance, Convert into Base Rate
Advances.
(d) Notices Irrevocable. Each Notice of Borrowing and Notice of
Conversion or Continuation shall be irrevocable and binding on the Borrower. In
the case of any Borrowing which the related Notice of Borrowing specifies is to
be comprised of Eurodollar Rate Advances, the Borrower shall indemnify each Bank
against any loss, out-of-pocket cost, or expense incurred by such Bank as a
result of any failure by the Borrower to fulfill on or before the date specified
in such Notice of Borrowing for such Borrowing the applicable conditions set
forth in Article III including, without limitation, any loss (including any loss
of anticipated profits), cost, or expense incurred by reason of the liquidation
or reemployment of deposits or other funds acquired by such Bank to fund the
Advance to be made by such Bank as part of such Borrowing when such Advance, as
a result of such failure, is not made on such date.
(e) Agent Reliance. Unless the Agent shall have received notice from a
Bank before the date of any Borrowing that such Bank shall not make available to
the Agent such Bank's Pro Rata Share of such Borrowing, the Agent may assume
that such Bank has made its Pro Rata Share of such Borrowing available to the
Agent on the date of such Borrowing in accordance with paragraph (a) of this
Section 2.3 and the Agent may, in reliance upon such assumption, make available
to the Borrower on such date a corresponding amount. If and to the extent that
such Bank shall not have so made its Pro Rata Share of such Borrowing available
to the Agent, such Bank and the Borrower severally agree to immediately repay to
the Agent on demand such corresponding amount, together with interest on such
amount, for each day from the date such amount is made available to the Borrower
until the date such amount is repaid to the Agent, at (i) in the case of the
Borrower, the interest rate applicable on such day to Advances comprising such
Borrowing and (ii) in the case of such Bank, the Federal Funds Rate for such
day. If such Bank shall repay to the Agent such corresponding amount and
interest as provided above, such corresponding amount so repaid shall constitute
such Bank's Advance as part of such Borrowing for purposes of this Agreement
even though not made on the same day as the other Advances comprising such
Borrowing.
(f) Bank Obligations Several. The failure of any Bank to make the
Advance to be made by it as part of any Borrowing shall not relieve any other
Bank of its obligation, if any, to make its Advance on the date of such
Borrowing. No Bank shall be responsible for the failure of any other Bank to
make the Advance to be made by such other Bank on the date of any Borrowing.
Section 2.4. Prepayment of Advances.
(a) Optional. The Borrower may prepay Advances, after giving by 10:00
a.m. (Dallas,
Texas, time) (i) in the case of Eurodollar Rate Advances, at least
two Business Days' or (ii) in case of Base Rate Advances, same Business Day's,
irrevocable prior written notice to the Agent stating the proposed date and
aggregate principal amount of such prepayment. If any such
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notice is given, the Borrower shall prepay Advances comprising part of the same
Borrowing in whole or ratably in part in an aggregate principal amount equal to
the amount specified in such notice, together with accrued interest to the date
of such prepayment on the principal amount prepaid and amounts, if any, required
to be paid pursuant to Section 2.11 as a result of such prepayment being made on
such date; provided, however, that each partial prepayment with respect to: (A)
any Borrowing comprised of Base Rate Advances shall be made in $100,000.00
multiples and in an aggregate principal amount such that after giving effect
thereto such Borrowing shall have a principal amount outstanding of at least
$500,000.00 and (B) any Borrowing comprised of Eurodollar Rate Advances shall be
made in $1,000,000.00 multiples and in an aggregate principal amount such that
after giving effect thereto such Borrowing shall have a principal amount
outstanding of at least $2,000,000.00. Full prepayments of any Borrowing are
permitted without restriction of amounts.
(b) Borrowing Base Deficiency. Subject to Section 2.4.(d) below, if the
aggregate outstanding amount of Advances plus the Letter of Credit Exposure plus
the Existing Letter of Credit Exposure ever exceeds the Borrowing Base, the
Borrower shall, within ten days after receipt of written notice of such
condition from the Agent elect by written notice to the Agent to take one or
more of the following actions to remedy the Borrowing Base deficiency:
(i) prepay Advances and, if the Advances have been repaid in
full, make deposits into the Cash Collateral Account to provide cash
collateral for the Letter of Credit Exposure, such that the Borrowing
Base deficiency is cured within ten days after the Borrower's written
election;
(ii) add additional Oil and Gas Properties acceptable to the
Majority Banks to the Borrowing Base such that the Borrowing Base
deficiency is cured within 30 days after the Borrower's written
election; or
(iii) pay the deficiency in monthly installments in amounts
not greater than one-half of the deficiency in any one monthly payment
or such lesser amounts satisfactory to the Majority Banks for the
prepayment of Advances and, if the Advances have been repaid in full,
make deposits into the Cash Collateral Account to provide cash
collateral for the Letter of Credit Exposure such that the Borrowing
Base deficiency is eliminated in a period of 90 days or such longer
period satisfactory to the Majority Banks, but in no event to exceed
six months, by irrevocably dedicating an amount of the monthly cash
flow from the Borrower's and its Subsidiaries' Oil and Gas Properties
to the prepayment of Advances and cash collateralization of the Letter
of Credit Exposure;
Each prepayment pursuant to this Section 2.4(b) shall be accompanied by accrued
interest on the amount prepaid to the date of such prepayment and amounts, if
any, required to be paid pursuant to Section 2.11 as a result of such prepayment
being made on such date.
(c) Reduction of Commitments. On the date of each reduction of the
aggregate Commitments pursuant to Section 2.1(b), the Borrower agrees to make a
prepayment in respect of the outstanding amount of the Advances and the Letter
of Credit Exposure to the extent, if any, that the aggregate unpaid principal
amount of all Advances plus the sum of the Letter of Credit Exposure and the
Existing Letter of Credit Exposure exceeds the Commitments, as so
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reduced. Any amount paid under the preceding sentence in respect of Letter of
Credit Exposure and Existing Letter of Credit Exposure shall be held as cash
collateral under Section 2.6(g). Each prepayment pursuant to this Section 2.4(c)
shall be accompanied by accrued interest on the amount prepaid to the date of
such prepayment and amounts, if any, required to be paid pursuant to Section
2.11 as a result of such prepayment being made on such date.
(d) Asset Sales; Debt Issuances. (i) If, after giving effect to the
sale, transfer or other disposition of any of the Borrower's or any of its
Subsidiaries' Oil and Gas Properties, the aggregate outstanding amount of
Advances plus the Letter of Credit Exposure plus the Existing Letter of Credit
Exposure exceeds the Borrowing Base, the Borrower shall repay the Advances by an
amount equal to such Borrowing Base deficiency, upon receipt of the proceeds of
such sale, transfer, or other disposition, whether at closing of such sale,
transfer, or other disposition or thereafter and (ii) upon the issuance of any
Debt permitted under Section 6.2(f), the Borrower shall prepay the Advances by
an amount equal to the net cash proceeds received from such Debt issuance. Each
prepayment pursuant to this Section 2.4(d) shall be accompanied by accrued
interest on the amount prepaid to the date of such prepayment and amounts, if
any, required to be paid pursuant to Section 2.11 as a result of such prepayment
being made on such date.
(e) Illegality. If any Bank shall notify the Agent and the Borrower
that the introduction of or any change in or in the interpretation of any law or
regulation makes it unlawful, or that any central bank or other governmental
authority asserts that it is unlawful for such Bank or its Eurodollar Lending
Office to perform its obligations under this Agreement to maintain any
Eurodollar Rate Advances of such Bank then outstanding hereunder, (i) the
Borrower shall, no later than 10:00 a.m. (Dallas,
Texas, time) (A) if not
prohibited by law, on the last day of the Interest Period for each outstanding
Eurodollar Rate Advance made by such Bank or (B) if required by such notice, on
the second Business Day following its receipt of such notice prepay all of the
Eurodollar Rate Advances made by such Bank then outstanding, together with
accrued interest on the principal amount prepaid to the date of such prepayment
and amounts, if any, required to be paid pursuant to Section 2.11 as a result of
such prepayment being made on such date, (ii) such Bank shall simultaneously
make a Base Rate Advance to the Borrower on such date in an amount equal to the
aggregate principal amount of the Eurodollar Rate Advances prepaid to such Bank,
and (iii) the right of the Borrower to select Eurodollar Rate Advances from such
Bank for any subsequent Borrowing shall be suspended until such Bank gives
notice referred to above shall notify the Agent that the circumstances causing
such suspension no longer exist.
(f) No Additional Right; Ratable Prepayment. The Borrower shall have no
right to prepay any principal amount of any Advance except as provided in this
Section 2.4, and all notices given pursuant to this Section 2.4 shall be
irrevocable and binding upon the Borrower. Each payment of any Advance pursuant
to this Section 2.4 shall be made in a manner such that all Advances comprising
part of the same Borrowing are paid in whole or ratably in part.
Section 2.5. Repayment of Advances. The Borrower shall repay to the
Agent for the ratable benefit of the Banks the outstanding principal amount of
each Advance on the Maturity Date.
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Section 2.6. Letters of Credit.
(a) Commitment. From time to time from the date of this Agreement until
the Maturity Date, at the request of the Borrower, the Issuing Bank shall, on
the terms and conditions hereinafter set forth, issue, increase, or extend the
expiration date of Letters of Credit for the account of the Borrower on any
Business Day or convert an Existing Letter of Credit to a Letter of Credit upon
its renewal. No Letter of Credit shall be issued, increased, or extended and no
Existing Letters of Credit shall convert to Letters of Credit:
(i) unless such issuance, increase, extension or conversion
would not cause the Letter of Credit Exposure plus the Existing Letter
of Credit Exposure to exceed the lesser of (A) $50,000,000.00 or (B)
the lesser of (1) the aggregate Commitments less the aggregate
outstanding principal amount of all Advances or (2) the Borrowing Base
less the aggregate outstanding principal amount of all Advances;
(ii) unless such Letter of Credit has an Expiration Date not
later than the earlier of (A) 12 months after the date of issuance
thereof (or, if extendable beyond such period, unless such Letter of
Credit is cancelable upon at least 30 days' notice given by the Issuing
Bank to the beneficiary of such Letter of Credit) or (B) the Maturity
Date;
(iii) unless such Letter of Credit Documents are in form and
substance acceptable to the Issuing Bank in its sole discretion;
(iv) unless such Letter of Credit is a standby letter of
credit not supporting the repayment of indebtedness for borrowed money
of any Person; and
(v) unless the Borrower has delivered to the Issuing Bank a
completed and executed Letter of Credit Application.
(b) Participations. Upon the date of the issuance or increase of a
Letter of Credit or the conversion of an Existing Letter of Credit to a Letter
of Credit, the Issuing Bank shall be deemed to have sold to each other Bank and
each other Bank shall have been deemed to have purchased from the Issuing Bank a
participation in the related Letter of Credit Obligations equal to such Bank's
Pro Rata Share at such date and such sale and purchase shall otherwise be in
accordance with the terms of this Agreement. The Issuing Bank shall promptly
notify each such participant Bank by telex, telephone, or telecopy of each
Letter of Credit issued, increased, or extended or converted and the actual
dollar amount of such Bank's participation in such Letter of Credit.
(c) Issuing. Each Letter of Credit shall be issued, increased, or
extended or converted from an Existing Letter of Credit pursuant to a Letter of
Credit Application (or by telephone notice promptly confirmed in writing by a
Letter of Credit Application), given not later than 10:00 a.m. (Dallas,
Texas,
time) on the fifth Business Day before the date of the proposed issuance,
increase, or extension of the Letter of Credit or conversion of the Existing
Letter of Credit, and the Agent shall give to each Bank prompt notice of thereof
by telex, telephone, or telecopy. Each Letter of Credit Application shall be
given by telecopier or telex, confirmed immediately in writing, specifying the
information required therein. After the Agent's receipt of such Letter of Credit
Application and upon fulfillment of the applicable conditions set forth in
Article III, the Agent shall issue, increase, or extend such Letter of Credit or
convert such
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Existing Letter of Credit for the account of the Borrower. Each Letter of Credit
Application shall be irrevocable and binding on the Borrower.
(d) Reimbursement. The Borrower hereby agrees to pay on demand to the
Issuing Bank an amount equal to any amount paid by the Issuing Bank under any
Letter of Credit. In the event the Issuing Bank makes a payment pursuant to a
request for draw presented under a Letter of Credit and such payment is not
promptly reimbursed by the Borrower upon demand, the Issuing Bank shall give the
Agent notice of the Borrower's failure to make such reimbursement and the Agent
shall promptly notify each Bank of the amount necessary to reimburse the Issuing
Bank. Upon such notice from the Agent, each Bank shall promptly reimburse the
Issuing Bank for such Bank's Pro Rata Share of such amount, and such
reimbursement shall be deemed for all purposes of this Agreement to be a Advance
to the Borrower transferred at the Borrower's request to the Issuing Bank. If
such reimbursement is not made by any Bank to the Issuing Bank on the same day
on which the Agent notifies such Bank to make reimbursement to the Issuing Bank
hereunder, such Bank shall pay interest on its Pro Rata Share thereof to the
Issuing Bank at a rate per annum equal to the Federal Funds Rate. The Borrower
hereby unconditionally and irrevocably authorizes, empowers, and directs the
Agent and the Banks to record and otherwise treat such reimbursements to the
Issuing Bank as Base Rate Advances under a Borrowing requested by the Borrower
to reimburse the Issuing Bank which have been transferred to the Issuing Bank at
the Borrower's request.
(e) Obligations Unconditional. The obligations of the Borrower under
this Agreement in respect of each Letter of Credit shall be unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances, including, without limitation, the following
circumstances:
(i) any lack of validity or enforceability of any Letter of
Credit Documents;
(ii) any amendment or waiver of, or any consent to, departure
from any Letter of Credit Documents;
(iii) the existence of any claim, set-off, defense, or other
right which the Borrower may have at any time against any beneficiary
or transferee of such Letter of Credit (or any Persons for whom any
such beneficiary or any such transferee may be acting), the Issuing
Bank, or any other person or entity, whether in connection with this
Agreement, the transactions contemplated in this Agreement or in any
Letter of Credit Documents, or any unrelated transaction;
(iv) any statement or any other document presented under such
Letter of Credit proving to be forged, fraudulent, invalid, or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect to the extent the Issuing Bank would not be
liable therefor pursuant to the following paragraph (f); or
(v) payment by the Issuing Bank under such Letter of Credit
against presentation of a draft or certificate which does not comply
with the terms of such Letter of Credit;
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provided, however, that nothing contained in this paragraph (e) shall be deemed
to constitute a waiver of any remedies of the Borrower in connection with the
Letters of Credit or the Borrower's rights under Section 2.6(f) below.
(f) Liability of Issuing Bank. The Borrower assumes all risks of the
acts or omissions of any beneficiary or transferee of any Letter of Credit with
respect to its use of such Letter of Credit. Neither the Issuing Bank nor any of
its officers or directors shall be liable or responsible for:
(i) the use which may be made of any Letter of Credit or any
acts or omissions of any beneficiary or transferee in connection
therewith;
(ii) the validity, sufficiency, or genuineness of documents,
or of any endorsement thereon, even if such documents should prove to
be in any or all respects invalid, insufficient, fraudulent, or forged;
(iii) payment by the Issuing Bank against presentation of
documents which do not comply with the terms of a Letter of Credit,
including failure of any documents to bear any reference or adequate
reference to the relevant Letter of Credit; or
(iv) any other circumstances whatsoever in making or failing
to make payment under any Letter of Credit (INCLUDING THE ISSUING
BANK'S OWN NEGLIGENCE),
except that the Borrower shall have a claim against the Issuing Bank, and the
Issuing Bank shall be liable to the Borrower, to the extent of any direct, as
opposed to consequential, damages suffered by the Borrower which the Borrower
proves were caused by (A) the Issuing Bank's willful misconduct or gross
negligence in determining whether documents presented under a Letter of Credit
comply with the terms of such Letter of Credit or (B) the Issuing Bank's willful
failure to make lawful payment under any Letter of Credit after the presentation
to it of a draft and certificate strictly complying with the terms and
conditions of such Letter of Credit. In furtherance and not in limitation of the
foregoing, the Issuing Bank may accept documents that appear on their face to be
in order, without responsibility for further investigation, regardless of any
notice or information to the contrary.
(g) Cash Collateral Account.
(i) If the Borrower is required to deposit funds in the Cash
Collateral Account pursuant to Sections 2.4(b) or (c), 7.2(b), or
7.3(b), then the Borrower and the Agent shall establish the Cash
Collateral Account and the Borrower shall execute any documents and
agreements, including the Agent's standard form assignment of deposit
accounts, that the Agent requests in connection therewith to establish
the Cash Collateral Account and grant the Agent a first priority
security interest in such account and the funds therein. The Borrower
hereby pledges to the Agent and grants the Agent a security interest in
the Cash Collateral Account, whenever established, all funds held in
the Cash Collateral Account from time to time, and all proceeds thereof
as security for the payment of the Obligations.
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(ii) So long as no Event of Default exists, (A) the Agent may
apply the funds held in the Cash Collateral Account only to the
reimbursement of any Letter of Credit Obligations, and (B) the Agent
shall release to the Borrower at the Borrower's written request any
funds held in the Cash Collateral Account in an amount up to but not
exceeding the excess, if any (immediately prior to the release of any
such funds), of the total amount of funds held in the Cash Collateral
Account over the Letter of Credit Exposure. During the existence of any
Event of Default, the Agent may apply any funds held in the Cash
Collateral Account to the Obligations in any order determined by the
Agent, regardless of any Letter of Credit Exposure which may remain
outstanding. The Agent may in its sole discretion at any time release
to the Borrower any funds held in the Cash Collateral Account.
(iii) The Agent shall exercise reasonable care in the custody
and preservation of any funds held in the Cash Collateral Account and
shall be deemed to have exercised such care if such funds are accorded
treatment substantially equivalent to that which the Agent accords its
own property, it being understood that the Agent shall not have any
responsibility for taking any necessary steps to preserve rights
against any parties with respect to any such funds.
Section 2.7. Fees.
(a) Commitment Fees.
(i) The Borrower agrees to pay to the Agent for the account of
each Bank a commitment fee per annum equal to the Applicable Margin for
commitment fees in effect from time to time on the average daily amount
by which such Bank's Pro Rata Share of the Borrowing Base exceeds the
sum of such Bank's outstanding Advances and such Bank's Pro Rata Share
of the Letter of Credit Exposure, from the Effective Date until the
Maturity Date.
(ii) The commitment fees shall be due and payable quarterly in
arrears on the last day of each March, June, September, and December
during the term of this Agreement and on the Maturity Date.
(b) Agent Fees. The Borrower agrees to pay to the Agent for the benefit
of the Agent the fees described in the letter dated November 5, 2001, from the
Agent to the Borrower (the "Agent's Fee Letter").
(c) Bank Fees. The Borrower agrees to pay to the Agent for the ratable
benefit of the Banks on the Effective Date, the fees agreed to between the
Borrower and the Banks.
(d) Letter of Credit Fees. The Borrower agrees to pay (i) to the Agent
for the pro rata benefit of the Banks a per annum fee for each Letter of Credit
issued hereunder equal to the Applicable Margin for Eurodollar Advances on the
face amount of such Letter of Credit, but with minimum annual fee of $500.00 on
each Letter of Credit and (ii) to the Agent for the benefit of the Issuing Bank
a fee for each Letter of Credit equal to 0.125% per annum of the face amount of
such Letter of Credit. Each such fee shall be payable quarterly in arrears after
the date of the
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issuance, increase or extension of the Letter of Credit, but, in the case of an
increase or extension only, on the amount of such increase or for the period of
such extension.
Section 2.8. Interest. The Borrower shall pay interest on the unpaid
principal amount of each Advance made by each Bank from the date of such Advance
until such principal amount shall be paid in full, at the following rates per
annum:
(a) Base Rate Advances. If such Advance is a Base Rate Advance, a rate
per annum equal at all times to the Adjusted Base Rate in effect from time to
time plus the Applicable Margin in effect from time to time, payable in arrears
on the last day of March, June, September, and December and on the date such
Base Rate Advance shall be paid in full, provided that any amount of principal
which is not paid when due (whether at stated maturity, by acceleration, or
otherwise) shall bear interest from the date on which such amount is due until
such amount is paid in full, payable on demand, at a rate per annum equal at all
times to the Adjusted Base Rate in effect from time to time plus the Applicable
Margin plus 2.00% per annum.
(b) Eurodollar Rate Advances. If such Advance is a Eurodollar Rate
Advance, a rate per annum equal at all times during the Interest Period for such
Advance to the Eurodollar Rate for such Interest Period plus the Applicable
Margin in effect from time to time, payable on the last day of such Interest
Period, and, in the case of six-month Interest Periods, on the day which occurs
during such Interest Period three months from the first day of such Interest
Period, provided that any amount of principal which is not paid when due
(whether at stated maturity, by acceleration, or otherwise) shall bear interest
from the date on which such amount is due until such amount is paid in full,
payable on demand, at a rate per annum equal at all times to the Adjusted Base
Rate in effect from time to time plus the Applicable Margin plus 2.00% per
annum.
(c) Additional Interest on Eurodollar Rate Advances. The Borrower shall
pay to each Bank, so long as any such Bank shall be required under regulations
of the Federal Reserve Board to maintain reserves with respect to liabilities or
assets consisting of or including Eurocurrency Liabilities, additional interest
on the unpaid principal amount of each Eurodollar Rate Advance of such Bank,
from the effective date of such Advance until such principal amount is paid in
full, at an interest rate per annum equal at all times to the remainder obtained
by subtracting (A) the Eurodollar Rate for the Interest Period for such Advance
from (B) the rate obtained by dividing such Eurodollar Rate by a percentage
equal to 100% minus the Eurodollar Rate Reserve Percentage of such Bank for such
Interest Period, payable on each date on which interest is payable on such
Advance. Such additional interest payable to any Bank shall be determined by
such Bank and notified to the Borrower through the Agent (such notice to include
the calculation of such additional interest, which calculation shall be
conclusive in the absence of manifest error).
(d) Usury.
(i) If, with respect to any Bank, the effective rate of
interest contracted for under the Credit Documents, including the
stated rates of interest and fees contracted for hereunder and any
other amounts contracted for under the Credit Documents which are
deemed to be interest, at any time exceeds the Maximum Rate, then the
outstanding
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principal amount of the loans made by such Bank hereunder shall bear
interest at a rate which would make the effective rate of interest for
such Bank under the Credit Documents equal the Maximum Rate until the
difference between the amounts which would have been due at the stated
rates and the amounts which were due at the Maximum Rate (the "Lost
Interest") has been recaptured by such Bank.
(ii) If, when the loans made hereunder are repaid in full, the
Lost Interest has not been fully recaptured by such Bank pursuant to
the preceding paragraph, then, to the extent permitted by law, for the
loans made hereunder by such Bank the interest rates charged under
Section 2.8 hereunder shall be retroactively increased such that the
effective rate of interest under the Credit Documents was at the
Maximum Rate since the effectiveness of this Agreement to the extent
necessary to recapture the Lost Interest not recaptured pursuant to the
preceding sentence and, to the extent allowed by law, the Borrower
shall pay to such Bank the amount of the Lost Interest remaining to be
recaptured by such Bank.
(iii) NOTWITHSTANDING the foregoing or any other term in this
Agreement and the Credit Documents to the contrary, it is the intention
of each Bank and the Borrower to conform strictly to any applicable
usury laws. Accordingly, if any Bank contracts for, charges, or
receives any consideration which constitutes interest in excess of the
Maximum Rate, then any such excess shall be canceled automatically and,
if previously paid, shall at such Bank's option be applied to the
outstanding amount of the loans made hereunder by such Bank or be
refunded to the Borrower.
Section 2.9. Payments and Computations.
(a) Payment Procedures. The Borrower shall make each payment under this
Agreement and under the Notes not later than 10:00 a.m. (Dallas, Texas, time) on
the day when due in Dollars to the Agent at 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxxxxx,
Xxxxx 00000 (or such other location as the Agent shall designate in writing to
the Borrower), in same day funds. The Agent shall promptly thereafter cause to
be distributed like funds relating to the payment of principal, interest or fees
ratably (other than amounts payable solely to the Agent, the Issuing Bank, or a
specific Bank pursuant to Section 2.7(b), 2.8(c), 2.11, 2.12, 2.13, 8.5, or 9.7,
but after taking into account payments effected pursuant to Section 9.4) to the
Banks for the account of their respective Applicable Lending Offices, and like
funds relating to the payment of any other amount payable to any Bank or the
Issuing Bank to such Bank for the account of its Applicable Lending Office, in
each case to be applied in accordance with the terms of this Agreement.
(b) Computations. All computations of interest based on the Base Rate
shall be made by the Agent on the basis of a year of 365 or 366 days, as the
case may be, and all computations of interest based on the Eurodollar Rate and
the Federal Funds Rate and of fees shall be made by the Agent, on the basis of a
year of 360 days, in each case for the actual number of days (including the
first day, but excluding the last day) occurring in the period for which such
interest or fees are payable. Each determination by the Agent of an interest
rate or fee shall be conclusive and binding for all purposes, absent manifest
error.
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(c) Non-Business Day Payments. Whenever any payment shall be stated to
be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or fees, as the case may be;
provided, however, that if such extension would cause payment of interest on or
principal of Eurodollar Rate Advances to be made in the next following calendar
month, such payment shall be made on the next preceding Business Day.
(d) Agent Reliance. Unless the Agent shall have received written notice
from the Borrower prior to the date on which any payment is due to the Banks
that the Borrower shall not make such payment in full, the Agent may assume that
the Borrower has made such payment in full to the Agent on such date and the
Agent may, in reliance upon such assumption, cause to be distributed to each
Bank on such date an amount equal to the amount then due such Bank. If and to
the extent the Borrower shall not have so made such payment in full to the
Agent, each Bank shall repay to the Agent forthwith on demand such amount
distributed to such Bank, together with interest, for each day from the date
such amount is distributed to such Bank until the date such Bank repays such
amount to the Agent, at the Federal Funds Rate for such day.
Section 2.10. Sharing of Payments, Etc. If any Bank shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) on account of the Advances or Letter of Credit
Obligations made by it in excess of its Pro Rata Share of payments on account of
the Advances or Letter of Credit Obligations obtained by all the Banks, such
Bank shall notify the Agent and forthwith purchase from the other Banks such
participations in the Advances made by them or Letter of Credit Obligations held
by them as shall be necessary to cause such purchasing Bank to share the excess
payment ratably with each of them; provided, however, that if all or any portion
of such excess payment is thereafter recovered from such purchasing Bank, such
purchase from each Bank shall be rescinded and such Bank shall repay to the
purchasing Bank the purchase price to the extent of such Bank's ratable share
(according to the proportion of (a) the amount of the participation sold by such
Bank to the purchasing Bank as a result of such excess payment to (b) the total
amount of such excess payment) of such recovery, together with an amount equal
to such Bank's ratable share (according to the proportion of (a) the amount of
such Bank's required repayment to the purchasing Bank to (b) the total amount of
all such required repayments to the purchasing Bank) of any interest or other
amount paid or payable by the purchasing Bank in respect of the total amount so
recovered. The Borrower agrees that any Bank so purchasing a participation from
another Bank pursuant to this Section 2.10 may, to the fullest extent permitted
by law, exercise all its rights of payment (including the right of set-off) with
respect to such participation as fully as if such Bank were the direct creditor
of the Borrower in the amount of such participation.
Section 2.11. Breakage Costs. If (a) any payment of principal of any
Eurodollar Rate Advance is made other than on the last day of the Interest
Period for such Advance, whether as a result of any payment pursuant to Section
2.4, the acceleration of the maturity of the Notes pursuant to Article VII, or
otherwise, or (b) the Borrower fails to make a principal or interest payment
with respect to any Eurodollar Rate Advance on the date such payment is due and
payable, the Borrower shall, within 10 days of any written demand sent by any
Bank to the Borrower through the Agent, pay to the Agent for the account of such
Bank any amounts required to compensate such Bank for any additional losses,
out-of-pocket costs or expenses which it may reasonably incur as a result of
such payment or nonpayment, including, without
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limitation, any loss (including loss of anticipated profits), cost or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by any Bank to fund or maintain such Advance.
Section 2.12. Increased Costs.
(a) Eurodollar Rate Advances. If, due to either (i) the introduction of
or any change (other than any change by way of imposition or increase of reserve
requirements included in the Eurodollar Rate Reserve Percentage) in or in the
interpretation of any law or regulation or (ii) the compliance with any
guideline or request from any central bank or other Governmental Authority
(whether or not having the force of law), there shall be any increase in the
cost to any Bank of agreeing to make or making, funding, or maintaining
Eurodollar Rate Advances, then the Borrower shall from time to time, upon demand
by such Bank (with a copy of such demand to the Agent), immediately pay to the
Agent for the account of such Bank additional amounts sufficient to compensate
such Bank for such increased cost. A certificate as to the amount of such
increased cost and detailing the calculation of such cost submitted to the
Borrower and the Agent by such Bank shall be conclusive and binding for all
purposes, absent manifest error.
(b) Capital Adequacy. If any Bank or the Issuing Bank determines in
good faith that compliance with any law or regulation or any guideline or
request from any central bank or other governmental authority (whether or not
having the force of law) affects or would affect the amount of capital required
or expected to be maintained by such Bank or the Issuing Bank or any corporation
controlling such Bank or the Issuing Bank and that the amount of such capital is
increased by or based upon the existence of such Bank's commitment to lend or
the Issuing Bank's commitment to issue the Letters of Credit and other
commitments of this type, then, upon 30 days' prior written notice by such Bank
or the Issuing Bank (with a copy of any such demand to the Agent), the Borrower
shall immediately pay to the Agent for the account of such Bank or to the
Issuing Bank, as the case may be, from time to time as specified by such Bank or
the Issuing Bank, additional amounts sufficient to compensate such Bank or the
Issuing Bank, in light of such circumstances, (i) with respect to such Bank, to
the extent that such Bank reasonably determines such increase in capital to be
allocable to the existence of such Bank's commitment to lend under this
Agreement and (ii) with respect to the Issuing Bank, to the extent that the
Issuing Bank reasonably determines such increase in capital to be allocable to
the issuance or maintenance of the Letters of Credit for such increased cost. A
certificate as to such amounts and detailing the calculation of such amounts
submitted to the Borrower by such Bank or the Issuing Bank shall be conclusive
and binding for all purposes, absent manifest error.
(c) Letters of Credit. If any change in any law or regulation or in the
interpretation thereof by any court or administrative or Governmental Authority
charged with the administration thereof shall either (i) impose, modify, or deem
applicable any reserve, special deposit, or similar requirement against letters
of credit issued by, or assets held by, or deposits in or for the account of,
the Issuing Bank or (ii) impose on the Issuing Bank any other condition
regarding the provisions of this Agreement relating to the Letters of Credit or
any Letter of Credit Obligations, and the result of any event referred to in the
preceding clause (i) or (ii) shall be to increase the cost to the Issuing Bank
of issuing or maintaining any Letter of Credit (which increase in cost shall be
determined by the Issuing Bank's reasonable allocation of the aggregate of such
cost increases resulting from such event), then, upon demand by the Issuing
Bank, the
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Borrower shall pay to the Issuing Bank, from time to time as specified by the
Issuing Bank, additional amounts which shall be sufficient to compensate the
Issuing Bank for such increased cost. A certificate as to such increased cost
incurred by the Issuing Bank, as a result of any event mentioned in clause (i)
or (ii) above, and detailing the calculation of such increased costs submitted
by the Issuing Bank to the Borrower, shall be conclusive and binding for all
purposes, absent manifest error.
Section 2.13. Taxes.
(a) No Deduction for Certain Taxes. Any and all payments by the
Borrower shall be made, in accordance with Section 2.9, free and clear of and
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Bank, the Issuing Bank, and the Agent, taxes
imposed on its income, and franchise taxes imposed on it, by the jurisdiction
under the laws of which such Bank, the Issuing Bank, or the Agent (as the case
may be) is organized or any political subdivision of the jurisdiction (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes") and, in the case of each
Bank and the Issuing Bank, Taxes by the jurisdiction of such Bank's Applicable
Lending Office or any political subdivision of such jurisdiction. If the
Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable to any Bank, the Issuing Bank, or the Agent, (i) the sum payable
shall be increased as may be necessary so that, after making all required
deductions (including deductions applicable to additional sums payable under
this Section 2.13), such Bank, the Issuing Bank, or the Agent (as the case may
be) receives an amount equal to the sum it would have received had no such
deductions been made; provided, however, that if the Borrower's obligation to
deduct or withhold Taxes is caused solely by such Bank's, the Issuing Bank's, or
the Agent's failure to provide the forms described in paragraph (d) of this
Section 2.13 and such Bank, the Issuing Bank, or the Agent could have provided
such forms, no such increase shall be required; (ii) the Borrower shall make
such deductions; and (iii) the Borrower shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance with applicable
law.
(b) Other Taxes. In addition, the Borrower agrees to pay any present or
future stamp or documentary taxes or any other excise or property taxes, charges
or similar levies which arise from any payment made or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement, the
Notes, or the other Credit Documents (hereinafter referred to as "Other Taxes").
(c) Indemnification. THE BORROWER INDEMNIFIES EACH BANK, THE ISSUING
BANK, AND THE AGENT FOR THE FULL AMOUNT OF TAXES OR OTHER TAXES (INCLUDING,
WITHOUT LIMITATION, ANY TAXES OR OTHER TAXES IMPOSED BY ANY JURISDICTION ON
AMOUNTS PAYABLE UNDER THIS SECTION 2.13) PAID BY SUCH BANK, THE ISSUING BANK, OR
THE AGENT (AS THE CASE MAY BE) AND ANY LIABILITY (INCLUDING INTEREST AND
EXPENSES) ARISING THEREFROM OR WITH RESPECT THERETO, WHETHER OR NOT SUCH TAXES
OR OTHER TAXES WERE CORRECTLY OR LEGALLY ASSERTED. EACH PAYMENT REQUIRED TO BE
MADE BY THE BORROWER IN RESPECT OF THIS INDEMNIFICATION SHALL BE MADE TO THE
AGENT FOR THE BENEFIT OF ANY
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PARTY CLAIMING SUCH INDEMNIFICATION WITHIN 30 DAYS FROM THE DATE THE BORROWER
RECEIVES WRITTEN DEMAND THEREFOR FROM THE AGENT ON BEHALF OF ITSELF AS AGENT,
THE ISSUING BANK, OR ANY SUCH BANK. IF ANY BANK, THE AGENT, OR THE ISSUING BANK
RECEIVES A REFUND IN RESPECT OF ANY TAXES PAID BY THE BORROWER UNDER THIS
PARAGRAPH (C), SUCH BANK, THE AGENT, OR THE ISSUING BANK, AS THE CASE MAY BE,
SHALL PROMPTLY PAY TO THE BORROWER THE BORROWER'S SHARE OF SUCH REFUND.
(d) Foreign Bank Withholding Exemption. Each Bank and Issuing Bank that
is not incorporated under the laws of the United States of America or a state
thereof agrees that it will deliver to the Borrower and the Agent on the date of
this Agreement or upon the effectiveness of any Assignment and Acceptance and
from time to time thereafter if requested in writing by the Borrower (i)
Internal Revenue Service Form W-8ECI, W-8BEN, W-8EXP, or W-8IMY as appropriate,
or any successor form prescribed by the Internal Revenue Service, certifying
that such Bank is entitled to benefits under an income tax treaty to which the
United States is a party which exempts such Bank from withholding tax on
payments of interest or certifying that the income receivable pursuant to this
Agreement is effectively connected with the conduct of a trade or business in
the United States, (ii) Internal Revenue Service Form W-9, as appropriate, or
any successor form prescribed by the Internal Revenue Service, and (iii) any
other form or certificate required by any taxing authority (including any
certificate required by Sections 871(h) and 881(c) of the Internal Revenue
Code), certifying that such Bank is entitled to an exemption from tax on
payments pursuant to this Agreement or any of the other Credit Documents If an
event (including without limitation any change in treaty, law or regulation) has
occurred prior to the date on which any delivery required by the preceding
sentence would otherwise be required which renders all such forms inapplicable
or which would prevent any Bank from duly completing and delivering any such
letter or form with respect to it and such Bank advises the Borrower and the
Agent that it is not capable of receiving payments without any deduction or
withholding of United States federal income tax, and, in the case of a Form W-9,
establishing an exemption from United States backup withholding tax, such Bank
shall not be required to deliver such letter or forms.
ARTICLE III
CONDITIONS OF LENDING
Section 3.1. Conditions Precedent to Amendment and Restatement. This
Agreement shall be effective and the Existing
Credit Agreement shall be amended
and restated as provided in this Agreement on the date the following conditions
precedent are met.
(a) Documentation. On or before the day on which the initial Borrowing
is made or the initial Letters of Credit are issued, the Agent shall have
received the following duly executed by all the parties thereto, in form and
substance satisfactory to the Agent and the Banks, and, where applicable, in
sufficient copies for each Bank:
(i) This Agreement and the Notes;
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(ii) A favorable opinion of the Borrower's general counsel,
dated as of The Effective Date, and substantially in the form of the
attached Exhibit H-1 covering the matters discussed in such Exhibit and
such other matters as any Bank through the Agent may reasonably
request;
(iii) A favorable opinion of Xxxxxxxxx & Xxxxxxxxx, L.L.P.,
counsel to the Agent, dated as of the Effective Date, and substantially
in the form of the attached Exhibit H-2;
(iv) A certificate of the Secretary or an Assistant Secretary
of the Borrower certifying the existence of the Borrower, a certificate
of good standing for the Borrower, the certificate of incorporation of
the Borrower, the bylaws of the Borrower, the resolutions of the Board
of Directors of the Borrower authorizing this Agreement and related
transactions, and the incumbency and signatures of the officers of the
Borrower authorized to execute this Agreement and related documents;
(v) A certificate of the Secretary or an Assistant Secretary
of each Guarantor certifying the existence of such Guarantor, a
certificate of good standing for such Guarantor, if applicable, the
certificate of incorporation, limited liability company agreement,
limited partnership agreement, or other charter document of the
Borrower, the bylaws, if any, of the Borrower, the resolutions of the
Board of Directors, management committee or general partner of such
Guarantor authorizing this Agreement and related transactions, and the
incumbency and signatures of the officers of such Guarantor authorized
to execute its Guaranty and related documents; and
(vi) Such other documents, governmental certificates,
agreements, and lien searches as the Agent or any Bank may reasonably
request.
(b) Payment of Fees. On the date of this Agreement, the Borrower shall
have paid the fees required by Section 2.7(b) and (c) and all costs and expenses
which have been invoiced and are payable pursuant to Section 9.4.
(c) Financial Statements. The Agent shall have reviewed and be
satisfied with the consolidated financial statements of the Borrower and its
Subsidiaries for the fiscal years ended 1998, 1999, and 2000, including balance
sheets, income and cash flow statements audited by independent public
accountants and prepared in conformity with GAAP and such other financial
information as the Agent may request.
(d) No Material Adverse Change. There shall not have occurred a
Material Adverse Change since December 31, 2000.
(e) No Material Litigation. The absence of any action, suit,
investigation or proceeding pending or threatened in any court or before any
arbitrator or governmental authority that purports (i) to materially and
adversely affect the Borrower or its Subsidiaries taken as a whole, or (ii) to
adversely affect any transaction contemplated hereby or the ability of the
Borrower and the Guarantors to perform their respective obligations under the
Credit Documents.
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(f) Due Diligence. Receipt and review, with results satisfactory to the
Agent and its counsel, of information regarding litigation, tax, capital
budgets, accounting, labor, insurance, pension liabilities (actual or
contingent), real estate leases, material contracts, debt agreements, property
ownership, environmental matters, contingent liabilities and management of the
Borrower and its subsidiaries.
(g) Engineering Reports. The Agent shall have received Engineering
Reports for the Oil and Gas Properties included in the Borrowing Base, including
the Acquired Properties.
(h) Environmental Condition. The Agent shall be satisfied with the
environmental condition of the Borrower and its Subsidiaries' Oil and Gas
Properties.
Section 3.2. Conditions Precedent to All Borrowings. The obligation of
each Bank to make an Advance on the occasion of each Borrowing and of the
Issuing Bank to issue, increase, or extend any Letter of Credit or to convert an
Existing Letter of Credit to a Letter of Credit shall be subject to the further
conditions precedent that on the date of such Borrowing or the issuance,
increase, or extension of such Letter of Credit or conversion of such Existing
Letter of Credit:
(a) the following statements shall be true (and each of the giving of
the applicable Notice of Borrowing or Letter of Credit Application and the
acceptance by the Borrower of the proceeds of such Borrowing or the issuance,
increase, or extension of such Letter of Credit or the conversion of such
Existing Letter of Credit shall constitute a representation and warranty by the
Borrower that on the date of such Borrowing, the issuance, increase, or
extension of such Letter of Credit or the conversion of such Existing Letter of
Credit, such statements are true):
(i) the representations and warranties contained in Article IV
and the Guaranties are correct in all material respects on and as of
the date of such Borrowing or the date of the issuance, increase, or
extension of such Letter of Credit or the conversion of such Existing
Letter of Credit, before and after giving effect to such Borrowing or
to the issuance, increase, or extension of such Letter of Credit or the
conversion of such Existing Letter of Credit and to the application of
the proceeds from such Borrowing, as though made on and as of such date
and
(ii) no Default has occurred and is continuing or would result
from such Borrowing or from the application of the proceeds therefrom,
from the issuance, increase, or extension of such Letter of Credit or
from the conversion of such Existing Letter of Credit;
(b) the Agent shall have received such other approvals, opinions, or
documents reasonably deemed necessary or desirable by any Bank as a result of
circumstances occurring after the date of this Agreement, as any Bank through
the Agent may reasonably request; and
(c) in the case of the any Borrowing made or the issuance, increase, or
extension of a Letter of Credit in connection with the closing of the
acquisition of the Acquired Properties, (i) the Borrower shall have acquired the
Acquired Properties under the Acquisition Agreement simultaneously with such
Borrowing or issuance, increase, or extension and (ii) any preferential rights
issues with respect to the Acquired Properties shall have been resolved so as
include such properties in the Borrowing Base in a manner satisfactory to the
Agent.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants as follows:
Section 4.1. Corporate Existence; Subsidiaries. The Borrower is a
corporation duly organized, validly existing, and in good standing under the
laws of Delaware and in good standing and qualified to do business in each
jurisdiction where its ownership or lease of property or conduct of its business
requires such qualification and where a failure to be qualified could reasonably
be expected to cause a Material Adverse Change. Each Guarantor is a corporation
duly organized, validly existing, and in good standing under the laws of its
jurisdiction of incorporation and in good standing and qualified to do business
in each jurisdiction where its ownership or lease of property or conduct of its
business requires such qualification and where a failure to be qualified could
reasonably be expected to cause a Material Adverse Change. Each Material
Subsidiary of the Borrower has executed a Guaranty except as specified in the
exception to Section 5.8.
Section 4.2. Corporate Power. The execution, delivery, and performance
by the Borrower of this Agreement, the Notes, and the other Credit Documents to
which it is a party and by the Guarantors of the Guaranties and the consummation
of the transactions contemplated hereby and thereby (a) are within the
Borrower's and the Guarantor's corporate powers, (b) have been duly authorized
by all necessary corporate action, (c) do not contravene (i) the Borrower's or
any Guarantor's certificate or articles, as the case may be, of incorporation or
by-laws or (ii) any law or any contractual restriction binding on or affecting
the Borrower or any Guarantor, and (d) will not result in or require the
creation or imposition of any Lien prohibited by this Agreement. At the time of
each Borrowing, such Borrowing and the use of the proceeds of such Borrowing
will be within the Borrower's corporate xxxxxx, xxxx have been duly authorized
by all necessary corporate action, (a) will not contravene (i) the Borrower's
certificate of incorporation or by-laws or (ii) any law or any contractual
restriction binding on or affecting the Borrower and (b) will not result in or
require the creation or imposition of any Lien prohibited by this Agreement.
Section 4.3. Authorization and Approvals. No authorization or approval
or other action by, and no notice to or filing with, any Governmental Authority
is required for the due execution, delivery, and performance by the Borrower of
this Agreement, the Notes, or the other Credit Documents to which the Borrower
is a party or by each Guarantor of its Guaranty or the consummation of the
transactions contemplated thereby. At the time of each Borrowing, no
authorization or approval or other action by, and no notice to or filing with,
any Governmental Authority will be required for such Borrowing or the use of the
proceeds of such Borrowing.
Section 4.4. Enforceable Obligations. This Agreement, the Notes, and
the other Credit Documents to which the Borrower is a party have been duly
executed and delivered by the Borrower and the Guaranties have been duly
executed and delivered by the Guarantors. Each Credit Document is the legal,
valid, and binding obligation of the Borrower and each Guarantor which is a
party to it enforceable against the Borrower and each such Guarantor in
accordance with its terms, except as such enforceability may be limited by any
applicable bankruptcy,
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insolvency, reorganization, moratorium, or similar law affecting creditors'
rights generally and by general principles of equity.
Section 4.5. Financial Statements. The audited consolidated balance
sheet of the Borrower and its Subsidiaries as at December 31, 2000 and the
related audited consolidated statements of operations, cash flow, and
stockholders' equity of the Borrower and its Subsidiaries for the fiscal year
then ended, copies of which have been furnished to each Bank, and the unaudited
consolidated balance sheet of the Borrower and its Subsidiaries as at September
30, 2001, and the related unaudited consolidated statements of operations and
cash flow of the Borrower and its Subsidiaries for the nine months then ended,
copies of which have been furnished to the Agent, fairly present, subject, in
the case of the balance sheet as at September 30, 2001 and said statements of
operations and cash flow for the nine months then ended, to year-end audit
adjustments, the consolidated financial condition of the Borrower and its
Subsidiaries as at such dates and the consolidated results of the operations of
the Borrower and its Subsidiaries for the periods ended on such dates, and such
consolidated balance sheets and consolidated statements of operations, cash
flow, and stockholders' equity were prepared in accordance with GAAP (or in
compliance with the regulations promulgated by the United States Securities and
Exchange Commission). Since the date of the Financial Statements, no Material
Adverse Change has occurred.
Section 4.6. True and Complete Disclosure. All factual information
(excluding estimates) heretofore or contemporaneously furnished by or on behalf
of the Borrower or any of its Subsidiaries in writing to any Bank or the Agent
for purposes of or in connection with this Agreement, any other Credit Document
or any transaction contemplated hereby or thereby is (taken as a whole) true and
accurate in all material respects on the date as of which such information is
dated or certified and does not contain any untrue statement of a material fact
or omit to state any material fact necessary to make the statements contained
therein not misleading as of the date of this Agreement. All projections,
estimates, and pro forma financial information furnished by the Borrower were
prepared on the basis of assumptions, data, information, tests, or conditions
believed to be reasonable at the time such projections, estimates, and pro forma
financial information were furnished.
Section 4.7. Litigation. Set forth on Schedule 4.7 is an accurate
description of all of the Borrower's and its Subsidiaries' pending litigation
existing on the date of this Agreement which could reasonably be expected to
cause a Material Adverse Change. There is no pending or, to the best knowledge
of the Borrower, threatened action or proceeding affecting the Borrower or any
of its Subsidiaries before any court, Governmental Agency or arbitrator, which
could reasonably be expected to cause a Material Adverse Change or which
purports to affect the legality, validity, binding effect, or enforceability of
this Agreement, any Note, or any other Credit Document.
Section 4.8. Use of Proceeds. All Advances and Letters of Credit shall
be used to finance the acquisition of oil and gas reserves and for general
corporate purposes of the Borrower and its Subsidiaries, but in no event for the
payment of dividends or other distributions or advances to the shareholders of
the Borrower. The Borrower is not engaged in the business of extending credit
for the purpose of purchasing or carrying margin stock (within the meaning of
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Regulation U). No proceeds of any Advance will be used to purchase or carry any
margin stock in violation of Regulation T, U or X.
Section 4.9. Investment Company Act. Neither the Borrower nor any of
its Subsidiaries is an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
Section 4.10. Public Utility Holding Company Act. Neither the Borrower
nor any of its Subsidiaries is a "holding company," or a "Subsidiary company" of
a "holding company," or an "affiliate" of a "holding company" or of a
"Subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
Section 4.11. Taxes. Proper and accurate (in all material respects)
federal, state, local, and foreign tax returns, reports and statements required
to be filed (after giving effect to any extension granted in the time of filing)
by or on behalf of the Borrower, its Subsidiaries, or any member of the
Controlled Group (hereafter collectively called the "Tax Group") have been duly
filed on a timely basis or appropriate extensions have been obtained with
appropriate governmental agencies in all jurisdictions in which such returns,
reports, and statements are required to be filed, except where the failure to so
file would not be reasonably expected to cause a Material Adverse Change; and
all taxes (which are material in amount) and other impositions due and payable
have been timely paid prior to the date on which any fine, penalty, interest,
late charge, or loss may be added thereto for non-payment thereof, except where
contested in good faith by appropriate proceedings. The reserves for accrued
taxes reflected in the financial statements delivered to the Banks under this
Agreement are adequate in the aggregate for the payment of all unpaid taxes,
whether or not disputed, for the period ended as of the date thereof and for any
period prior thereto, and for which the Tax Group may be liable in its own
right, as withholding agent or as a transferee of the assets of, or successor
to, any Person, except for such taxes or reserves therefor, the failure to pay
or provide for which does not and could not cause a Material Adverse Change.
Timely payment of all material sales and use taxes required by applicable law
has been made by the Borrower and all other members of the Tax Group.
Section 4.12. Pension Plans. All Plans are in compliance in all
material respects with all applicable provisions of ERISA. No Termination Event
has occurred with respect to any Plan, and each Plan has complied with and been
administered in all material respects with applicable provisions of ERISA and
the Code. No "accumulated funding deficiency" (as defined in Section 302 of
ERISA) has occurred and there has been no excise tax imposed under Section 4971
of the Code. No Reportable Event has occurred with respect to any Multiemployer
Plan, and each Multiemployer Plan has complied with and been administered in all
material respects with applicable provisions of ERISA and the Code. The present
value of all benefits vested under each Plan (based on the assumptions used to
fund such Plan) did not, as of the last annual valuation date applicable
thereto, exceed the value of the assets of such Plan allocable to such vested
benefits. Neither the Borrower nor any member of the Controlled Group has had a
complete or partial withdrawal from any Multiemployer Plan for which there is
any withdrawal liability. As of the most recent valuation date applicable
thereto, neither the Borrower nor any member of the Controlled Group would
become subject to any liability under ERISA if the Borrower or any member of the
Controlled Group has received notice that any Multiemployer Plan is insolvent or
in reorganization. Based upon GAAP existing as of the date of this
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Agreement and current factual circumstances, the Borrower has no reason to
believe that the annual cost during the term of this Agreement to the Borrower
or any member of the Controlled Group for post-retirement benefits to be
provided to the current and former employees of the Borrower or any member of
the Controlled Group under Plans that are welfare benefit plans (as defined in
Section 3(a) of ERISA) could, in the aggregate, reasonably be expected to cause
a Material Adverse Change.
Section 4.13. Condition of Property; Casualties. The Borrower and each
of the Guarantors has good and indefeasible title to all of its Properties as is
customary in the oil and gas industry in all material respects, free and clear
of all Liens except for Permitted Liens. The material Properties used or to be
used in the continuing operations of the Borrower and each of its Subsidiaries
are in good repair, working order and condition. Since the date of the Financial
Statements, neither the business nor the material properties of the Borrower and
each of its Subsidiaries, taken as a whole, has been materially and adversely
affected as a result of any fire, explosion, earthquake, flood, drought,
windstorm, accident, strike or other labor disturbance, embargo, requisition or
taking of property or cancellation of contracts, permits, or concessions by a
Governmental Authority, riot, activities of armed forces, or acts of God or of
any public enemy.
Section 4.14. No Burdensome Restrictions; No Defaults. Neither the
Borrower nor any of its Subsidiaries is a party to any indenture, loan, or
credit agreement or any lease or other agreement or instrument or subject to any
charter or corporate restriction or provision of applicable law or governmental
regulation which could reasonably be expected to cause a Material Adverse
Change. The Borrower and the Guarantors are not in default under or with respect
to any contract, agreement, lease, or other instrument to which the Borrower or
any Guarantor is a party and which could reasonably be expected to cause a
Material Adverse Change. Neither the Borrower nor any Guarantor has received any
notice of default under any material contract, agreement, lease, or other
instrument to which the Borrower or such Guarantor is a party. No Default has
occurred and is continuing.
Section 4.15. Environmental Condition.
(a) Permits, Etc. Except as set forth on Schedule 4.15(a), the Borrower
and its Subsidiaries (i) have obtained all Environmental Permits necessary for
the ownership and operation of their respective Properties and the conduct of
their respective businesses; (ii) have been and are in material compliance with
all terms and conditions of such Environmental Permits and with all other
material requirements of applicable Environmental Laws; (iii) have not received
notice of any material violation or alleged violation of any Environmental Law
or Environmental Permit; and (iv) are not subject to any actual or contingent
Environmental Claim, which could reasonably be expected to cause a Material
Adverse Change.
(b) Certain Liabilities. Except as set forth on Schedule 4.15(b), to
the Borrower's actual knowledge, none of the present or previously owned or
operated Property of the Borrower or of any of its present or former
Subsidiaries, wherever located, (i) has been placed on or proposed to be placed
on the National Priorities List, the Comprehensive Environmental Response
Compensation Liability Information System list, or their state or local analogs,
or have been otherwise investigated, designated, listed, or identified as a
potential site for removal,
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remediation, cleanup, closure, restoration, reclamation, or other response
activity under any Environmental Laws; (ii) is subject to a Lien, arising under
or in connection with any Environmental Laws, that attaches to any revenues or
to any Property owned or operated by the Borrower or any of its Subsidiaries,
wherever located, which could reasonably be expected to cause a Material Adverse
Change; or (iii) has been the site of any Release of Hazardous Substances or
Hazardous Wastes from present or past operations which has caused at the site or
at any third-party site any condition that has resulted in or could reasonably
be expected to result in the need for Response that would cause a Material
Adverse Change.
(c) Certain Actions. Without limiting the foregoing, (i) all necessary
notices have been properly filed, and no further action is required under
current Environmental Law as to each Response or other restoration or remedial
project undertaken by the Borrower, or its present or former Subsidiaries on any
of their presently or formerly owned or operated Property and (ii) the present
and, to the Borrower's best knowledge, future liability, if any, of the Borrower
and its Subsidiaries which could reasonably be expected to arise in connection
with requirements under Environmental Laws will not result in a Material Adverse
Change.
Section 4.16. Permits, Licenses, Etc. The Borrower and its Subsidiaries
possess all permits, licenses, patents, patent rights or licenses, trademarks,
trademark rights, trade names rights and copyrights which are material to the
conduct of its business. The Borrower and its Subsidiaries manage and operate
their business in all material respects in accordance with all applicable Legal
Requirements and good industry practices.
Section 4.17. Gas Contracts. Neither the Borrower nor any of its
Subsidiaries, as of the date hereof, (a) is obligated in any material respect by
virtue of any prepayment made under any contract containing a "take-or-pay" or
"prepayment" provision or under any similar agreement to deliver hydrocarbons
produced from or allocated to any of the Borrower's consolidated Oil and Gas
Properties at some future date without receiving full payment therefor at the
time of delivery, or (b) has produced gas, in any material amount, subject to,
and none of the Borrower's consolidated Oil and Gas Properties is subject to,
balancing rights of third parties or subject to balancing duties under
governmental requirements, except as to such matters for which the Borrower or
its relevant Subsidiary has established monetary reserves adequate in amount in
accordance with GAAP to satisfy such obligations.
ARTICLE V
AFFIRMATIVE COVENANTS
So long as any Note or any amount under any Credit Document shall
remain unpaid, any Letter of Credit shall remain outstanding, or any Bank shall
have any Commitment hereunder, the Borrower agrees, unless the Majority Banks
shall otherwise consent in writing, to comply with the following covenants.
Section 5.1. Compliance with Laws, Etc. The Borrower shall comply, and
cause each of its Subsidiaries to comply, in all material respects with all
Legal Requirements. Without limiting the generality and coverage of the
foregoing, the Borrower shall comply, and shall cause each of its Subsidiaries
to comply, in all material respects, with all Environmental Laws and all
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laws, regulations, or directives with respect to equal employment opportunity
and employee safety in all jurisdictions in which the Borrower, or any of its
Subsidiaries do business; provided, however, that this Section 5.1 shall not
prevent the Borrower, or any of its Subsidiaries from, in good faith and with
reasonable diligence, contesting the validity or application of any such laws or
regulations by appropriate legal proceedings.
Section 5.2. Maintenance of Insurance. The Borrower shall maintain, and
cause each of its Subsidiaries to maintain, insurance with responsible and
reputable insurance companies or associations in such amounts and covering such
risks as are usually carried by companies engaged in similar businesses and
owning similar properties in the same general areas in which the Borrower or
such Subsidiary operates, provided that the Borrower or such Subsidiary may
self-insure to the extent and in the manner normal for similarly situated
companies of like size, type and financial condition that are part of a group of
companies under common control.
Section 5.3. Preservation of Corporate Existence, Etc. The Borrower
shall preserve and maintain, and cause each of its Subsidiaries to preserve and
maintain, its corporate existence, rights, franchises, and privileges in the
jurisdiction of its incorporation, and qualify and remain qualified, and cause
each such Subsidiary to qualify and remain qualified, as a foreign corporation
in each jurisdiction in which qualification is necessary or desirable in view of
its business and operations or the ownership of its properties, and, in each
case, where failure to qualify or preserve and maintain its rights and
franchises could reasonably be expected to cause a Material Adverse Change;
provided, however, that nothing herein contained shall prevent any transaction
permitted by Section 6.4.
Section 5.4. Payment of Taxes, Etc. The Borrower shall pay and
discharge, and cause each of its Subsidiaries to pay and discharge, before the
same shall become delinquent, (a) all taxes, assessments, and governmental
charges or levies imposed upon it or upon its income or profits or Property that
are material in amount, prior to the date on which penalties attach thereto and
(b) all lawful claims that are material in amount which, if unpaid, might by law
become a Lien upon its Property; provided, however, that neither the Borrower
nor any such Subsidiary shall be required to pay or discharge any such tax,
assessment, charge, levy, or claim which is being contested in good faith and by
appropriate proceedings, and with respect to which reserves in conformity with
GAAP have been provided.
Section 5.5. Visitation Rights. At any reasonable time and from time to
time, upon reasonable notice, the Borrower shall, and shall cause its
Subsidiaries to, permit the Agent and any Bank or any of its agents or
representatives thereof, to (a) examine and make copies of and abstracts from
the records and books of account of, and visit and inspect at its reasonable
discretion the properties of, the Borrower and any such Subsidiary, and (b)
discuss the affairs, finances and accounts of the Borrower and any such
Subsidiary with any of their respective officers or directors; provided however,
the Agent or the Bank for whose benefit such inspection and visitation is made
assumes sole responsibility for the condition of any property of the Borrower or
its Subsidiaries so visited and inspected, the access and egress thereto
(including, but not limited to wharves, docks, and helicopter landing areas),
and any vice or defect therein or thereon, and assumes all responsibility for
and hereby releases and indemnifies the Borrower, its Affiliates, and their
officers, directors, employees, and agents against any claim for damage or
injury to or by the Agent or such Bank (or the representatives thereof) or to
the Borrower's or its
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Subsidiaries' property which may be occasioned by such inspection and visitation
of the Borrower's or its Subsidiaries' property.
Section 5.6. Reporting Requirements. The Borrower shall furnish to the
Agent and each Bank:
(a) Annual Financials. As soon as available and in any event not later
than 120 days after the end of each fiscal year of the Borrower, (i) a copy of
the annual audit report for such year for the Borrower and its Subsidiaries,
including therein consolidated balance sheet of the Borrower and its
Subsidiaries as of the end of such fiscal year and consolidated statements of
operations, cash flows, and stockholders' equity of the Borrower and its
Subsidiaries for such fiscal year, in each case certified by Xxxxxx Xxxxxxxx
L.L.P. or other independent certified public accountants of national standing
and including any management letters delivered by such accountants to the
Borrower in connection with such audit, (ii) a Compliance Certificate executed
by the Chief Financial Officer or Chief Accounting Officer of the Borrower, and
(iii) a copy of the annual financial budget for the current fiscal year;
(b) Quarterly Financials. As soon as available and in any event not
later than 90 days after the end of each of the first three quarters of each
fiscal year of the Borrower, the unaudited consolidated balance sheet of
Borrower and its Subsidiaries as of the end of such quarter and the consolidated
statements of operations and cash flows of the Borrower and its Subsidiaries for
the period commencing at the end of the previous year and ending with the end of
such quarter, all in reasonable detail and duly certified with respect to such
consolidated statements (subject to year-end audit adjustments) by the Chief
Financial Officer or Chief Accounting Officer of the Borrower as having been
prepared in accordance with GAAP (or in compliance with the regulations
promulgated by the United States Securities and Exchange Commission), together
with a Compliance Certificate executed by the Chief Financial Officer or Chief
Accounting Officer of the Borrower;
(c) Oil and Gas Reserve Reports.
(i) As soon as available but in any event on or before March
31 of each year, an engineering report in form and substance meeting
the requirements of the Securities and Exchange Commission for
financial reporting purposes, certified by Atwater Consultants, Ltd.,
Xxxxxx, Xxxxxxxxx and Associates, Inc., or other firm of independent
consulting petroleum engineers approved by the Agent, as fairly setting
forth (A) the proved and producing, shut in, behind pipe, and
undeveloped oil and gas reserves (separately classified as such)
attributable to the Borrower's consolidated Oil and Gas Properties as
of the last day of the previous year, (B) the aggregate present value,
determined on the basis of stated pricing assumptions, of the future
net income with respect to such Oil and Gas Properties, discounted at a
stated per annum discount rate, and (C) projections of the annual rate
of production, gross income, and net income with respect to such Oil
and Gas Properties.
(ii) As soon as available but in any event on or before
September 30 of each year beginning with September 30, 2002, an
internal engineering report in form and substance satisfactory to the
Agent setting forth (A) the proved and producing, shut in,
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behind pipe, and undeveloped oil and gas reserves (separately
classified as such) attributable to the Borrower's consolidated Oil and
Gas Properties as of June 30 of such year (B) the aggregate present
value, determined on the basis of stated pricing assumptions, of the
future net income with respect to such Oil and Gas Properties,
discounted at a stated per annum discount rate and (C) projections of
the annual rate of production, gross income, and net income with
respect to such Oil and Gas Properties.
(iii) The Agent and the Banks acknowledge that the Oil and Gas
Reserve Reports contain certain proprietary information including
geological and geophysical data, maps, models, and interpretations
necessary for determining the Borrowing Base and the creditworthiness
of the Borrower and the Guarantors. The Agent and the Banks agree to
maintain the confidentiality of such information except as required by
law. The Agent and the Banks may share such information with potential
transferees of their interests under this Agreement if such transferees
agree to maintain the confidentiality of such information.
(d) Defaults. As soon as possible and in any event within five days
after the occurrence of each Default known to a Responsible Officer of the
Borrower or any of its Subsidiaries which is continuing on the date of such
statement, a statement of the Chief Financial Officer of the Borrower setting
forth the details of such Default and the actions which the Borrower has taken
and proposes to take with respect thereto;
(e) Securities Law Filings. Except as provided in paragraphs (a) and
(b) above, promptly and in any event within 15 days after the sending or filing
thereof, copies of all proxy material, reports and other information which the
Borrower or any of its Subsidiary sends to or files with the United States
Securities and Exchange Commission or sends to any shareholder of the Borrower;
(f) Termination Events. As soon as possible and in any event (i) within
30 days after the Borrower or any member of the Controlled Group knows or has
reason to know that any Termination Event described in clause (a) of the
definition of Termination Event with respect to any Plan has occurred, and (ii)
within 10 days after the Borrower or any of its Affiliates knows or has reason
to know that any other Termination Event with respect to any Plan has occurred,
a statement of the Chief Financial Officer of the Borrower describing such
Termination Event and the action, if any, which the Borrower or such Affiliate
proposes to take with respect thereto;
(g) Termination of Plans. Promptly and in any event within two Business
Days after receipt thereof by the Borrower or any member of the Controlled Group
from the PBGC, copies of each notice received by the Borrower or any such member
of the Controlled Group of the PBGC's intention to terminate any Plan or to have
a trustee appointed to administer any Plan;
(h) Other ERISA Notices. Promptly and in any event within five Business
Days after receipt thereof by the Borrower or any member of the Controlled Group
from a Multiemployer Plan sponsor, a copy of each notice received by the
Borrower or any member of the Controlled Group concerning the imposition or
amount of withdrawal liability pursuant to Section 4202 of ERISA;
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(i) Environmental Notices. Promptly upon the receipt thereof by the
Borrower or any of its Subsidiaries, a copy of any form of notice, summons or
citation received from the EPA, or any other Governmental Authority, concerning
(i) violations or alleged violations of Environmental Laws, which seeks to
impose liability therefor, (ii) any action or omission on the part of the
Borrower or any of its present or former Subsidiaries in connection with
Hazardous Waste or Hazardous Substances which could reasonably result in the
imposition of liability therefor, including without limitation any notice of
potential responsibility under CERCLA, or (iii) concerning the filing of a Lien
upon, against or in connection with the Borrower, its present or former
Subsidiaries, or any of their leased or owned Property, wherever located;
(j) Other Governmental Notices. Promptly and in any event within five
Business Days after receipt thereof by the Borrower or any Subsidiary, a copy of
any notice, summons, citation, or proceeding seeking to modify in any material
respect, revoke, or suspend any material contract, license, or Agreement with
any Governmental Authority;
(k) Material Changes. Prompt written notice of any condition or event
of which the Borrower has knowledge, which condition or event has resulted or
may reasonably be expected to result in (i) a Material Adverse Change or (ii) a
breach of or noncompliance with any material term, condition, or covenant of any
material contract to which the Borrower or any of its Subsidiaries is a party or
by which they or their properties may be bound;
(l) Disputes, Etc. Prompt written notice of any claims, proceedings, or
disputes, or to the knowledge of the Borrower threatened, or affecting the
Borrower, or any of its Subsidiaries which, if adversely determined, could
reasonably be expected to cause a Material Adverse Change, or any material labor
controversy of which the Borrower or any of its Subsidiaries has knowledge
resulting in or reasonably considered to be likely to result in a strike against
the Borrower or any of its Subsidiaries; and
(m) Other Information. Such other information respecting the business
or Properties, or the condition or operations, financial or otherwise, of the
Borrower, or any of its Subsidiaries, as any Bank through the Agent may from
time to time reasonably request. The Agent agrees to provide the Banks with
copies of any material notices and information delivered solely to the Agent
pursuant to the terms of this Agreement.
Section 5.7. Maintenance of Property. Borrower shall, and shall cause
each of its Subsidiaries to, maintain their owned, leased, or operated property,
equipment, buildings, and fixtures in good condition and repair; and shall
abstain, and cause each of its Subsidiaries to abstain from, and not knowingly
or willfully permit the commission of waste or other injury, destruction, or
loss of natural resources, or the occurrence of pollution, contamination, or any
other condition in, on or about the owned or operated property involving the
Environment that could reasonably be expected to result in Response activities
the costs of which would exceed the accrual established by Borrower or by any of
its Subsidiaries for those purposes.
Section 5.8. New Subsidiaries. Upon the creation or acquisition of any
Material Subsidiary after the date of this Agreement or if an existing
Subsidiary becomes a Material Subsidiary after the date of this Agreement, the
Borrower shall cause such Subsidiary to execute and deliver to the Agent (a) a
Guaranty with such changes as the Agent may reasonably request
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and (b) evidence of corporate authority to enter into such Guaranty as the Agent
may reasonably request, including, without limitation, a legal opinion regarding
the enforceability of such Guaranty; except that Conoco Offshore Inc. or its
successor shall not be required to execute and deliver a Guaranty until March
15, 2002.
ARTICLE VI
NEGATIVE COVENANTS
So long as any Note or any amount under any Credit Document shall
remain unpaid, any Letter of Credit shall remain outstanding, or any Bank shall
have any Commitment, the Borrower agrees, unless the Majority Banks otherwise
consent in writing, to comply with the following covenants.
Section 6.1. Liens, Etc. The Borrower shall not create, assume, incur,
or suffer to exist, or permit any of its Subsidiaries to create, assume, incur,
or suffer to exist, any Lien on or in respect of any of its Property whether now
owned or hereafter acquired, or assign any right to receive income, except that
the Borrower and its Subsidiaries may create, incur, assume, or suffer to exist:
(a) Liens securing the Obligations;
(b) Liens specified in the attached Schedule 6.1 on the Property owned
by the Borrower and its Subsidiaries which is specified therein securing only
the Debt disclosed to be secured by such Liens therein;
(c) Liens securing purchase money indebtedness permitted under Section
6.2(c), provided that each such Lien encumbers only the property acquired in
connection with the creation of any such purchase money indebtedness;
(d) Liens for taxes, assessments, or other governmental charges or
levies not yet due or that (provided foreclosure, distraint, sale, or other
similar proceedings shall not have been initiated) are being contested in good
faith by appropriate proceedings, and such reserve as may be required by GAAP
shall have been made therefor;
(e) Liens in favor of vendors, carriers, warehousemen, repairmen,
mechanics, workmen, materialmen, construction, or similar Liens arising by
operation of law in the ordinary course of business in respect of obligations
that are not yet due or that are being contested in good faith by appropriate
proceedings, provided such reserve as may be required by GAAP shall have been
made therefor;
(f) Liens to operators and non-operators under joint operating
agreements arising in the ordinary course of the business of the Borrower or the
relevant Subsidiary to secure amounts owing, which amounts are not yet due or
are being contested in good faith by appropriate proceedings, if such reserve as
may be required by GAAP shall have been made therefor;
(g) easements, rights-of-way, restrictions, and other similar
encumbrances, and minor defects in the chain of title that are customarily
accepted in the oil and gas financing industry,
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none of which interfere with the ordinary conduct of the business of Borrower or
the relevant Subsidiary or materially detract from the value or use of the
Property to which they apply;
(h) Liens of record under terms and provisions of the leases, unit
agreements, assignments, and other transfer of title documents in the chain of
title under which the Borrower or the relevant Subsidiary acquired the Property,
which have been disclosed to the Agent;
(i) Liens to secure plugging and abandonment obligations; and
(j) Liens to secure surety bonds in an aggregate amount not to exceed
$5,000,000.
Section 6.2. Debts, Guaranties, and Other Obligations. The Borrower
shall not, and shall not permit any of its Subsidiaries to, create, assume,
suffer to exist, or in any manner become or be liable in respect of, any Debt
except:
(a) Debt of the Borrower and its Subsidiaries under the Credit
Documents;
(b) Debt of the Borrower existing on the date hereof and disclosed in
the attached Schedule 6.2 and any extensions, rearrangements, and modifications
thereof which do not increase the principal amount thereof or the interest rate
charged thereon above a market rate of interest;
(c) Debt existing in connection with Property or assets acquired by the
Borrower after date of this Agreement not to exceed $5,000,000.00 in outstanding
principal amount (excluding gas balancing liabilities assumed in the acquisition
of Oil and Gas Properties);
(d) Debt for borrowed money owed by any Subsidiary of the Borrower to
the Borrower;
(e) Debt in the form of obligations for the deferred purchase price of
property or services incurred in the ordinary course of business which are not
yet due and payable or are being contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP have been
established; and
(f) in addition to any Debt permitted under paragraph (b) of this
Section 6.2, up to $50,000,000.00 of unsecured senior subordinated notes with
terms satisfactory to the Agent and the Majority Banks.
Section 6.3. Agreements Restricting Liens and Distributions. The
Borrower shall not, nor shall it permit any of its Subsidiaries to, enter into
any agreement (other than a Credit Document) which (a) except with respect to
specific Property encumbered to secure payment of Debt related to such Property,
imposes restrictions upon the creation or assumption of any Lien upon its
Properties, revenues or assets, whether now owned or hereafter acquired or (b)
limits Restricted Payments to or any advance by any of the Borrower's
Subsidiaries to the Borrower.
Section 6.4. Merger or Consolidation; Asset Sales. The Borrower shall
not, and shall not permit any of its Subsidiaries to:
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(a) merge or consolidate with or into any other Person, except that the
Borrower may merge with any of its wholly-owned Subsidiaries and any of the
Borrower's wholly-owned Subsidiaries may merge with another of the Borrower's
wholly-owned Subsidiaries, provided that immediately after giving effect to any
such proposed transaction no Default would exist and, in the case of any such
merger to which the Borrower is a party, the Borrower is the surviving
corporation; or
(b) sell, lease, transfer, or otherwise dispose of any of its Property
outside of the ordinary course of business, except (i) sales of assets outside
the ordinary course of business in an aggregate amount for any fiscal year not
to exceed $5,000,000.00 and (ii) sales of assets outside the ordinary course of
business which the Borrower has provided the Agent and the Banks with 10 days'
advance notice of, provided that such proposed sales will not in the judgment of
the Majority Banks cause the aggregate outstanding amount of the Advances plus
the sum of the Letter of Credit Exposure and the Existing Letter of Credit
Exposure to exceed the Borrowing Base after removing such assets from the
Borrowing Base under Section 2.2(e).
Section 6.5. Restricted Payments. The Borrower shall not, and shall not
permit any of its Subsidiaries to, make or pay any Restricted Payment other than
Restricted Payments from a Subsidiary of the Borrower to the Borrower.
Section 6.6. Investments. The Borrower shall not, and shall not permit
any of its Subsidiaries to, make or permit to exist any loans, advances, or
capital contributions to, or make any investment in, or purchase or commit to
purchase any stock or other securities or evidences of indebtedness of or
interests in any Person, except:
(a) Liquid Investments;
(b) trade and customer accounts receivable which are for goods
furnished or services rendered in the ordinary course of business and are
payable in accordance with customary trade terms;
(c) ordinary course of business contributions, loans, or advances to,
or investments in, (i) a directly or indirectly wholly-owned Subsidiary of the
Borrower, or (ii) the Borrower;
(d) oil and gas farm-ins, oil and gas development joint ventures and
limited partnerships, and similar transactions, in each case in the ordinary
course of business; and
(e) investments not covered by clauses (a) through (d) above in an
aggregate outstanding amount not to exceed $2,000,000.00.
Section 6.7. Limitation on Speculative Hedging. The Borrower shall not,
and shall not permit any of its Subsidiaries to, purchase, assume, or hold a
speculative position in any commodities market or futures market. Borrower may
continue its current production hedging program policy, including swaps, puts,
and collars, to reduce price risk on quantities less than its total production.
Section 6.8. Affiliate Transactions. Except as expressly permitted
elsewhere in this Agreement or otherwise approved in writing by the Agent, and
except as described in
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Schedule 6.8, the Borrower shall not, and shall not permit any of its
Subsidiaries to, make, directly or indirectly: (a) any investment in any
Affiliate (other than a wholly-owned Subsidiary of the Borrower); (b) any
transfer, sale, lease, assignment, or other disposal of any assets to any such
Affiliate or any purchase or acquisition of assets from any such Affiliate; or
(c) any arrangement or other transaction directly or indirectly with or for the
benefit of any such Affiliate (including without limitation, guaranties and
assumptions of obligations of an Affiliate); provided that the Borrower and its
Subsidiaries may enter into any arrangement or other transaction with any such
Affiliate providing for the leasing of property, the rendering or receipt of
services or the purchase or sale of inventory and other assets in the ordinary
course of business if the monetary or business consideration arising therefrom
would be substantially as advantageous to the Borrower and its Subsidiaries as
the monetary or business consideration which it would obtain in a comparable
arm's length transaction with a Person not such an Affiliate.
Section 6.9. Compliance with ERISA. The Borrower shall not, and shall
not permit any of its Subsidiaries to, (a) terminate, or permit any Affiliate to
terminate, any Plan so as to result in any material (in the opinion of the
Majority Banks) liability of the Borrower or any of its Affiliates to the PBGC
or (b) permit to exist any occurrence of any Reportable Event (as defined in
Title IV of ERISA), or any other event or condition, which presents a material
(in the opinion of the Majority Banks) risk of such a termination by the PBGC of
any Plan.
Section 6.10. Maintenance of Ownership of Subsidiaries. Except as
permitted by Section 6.4, the Borrower shall not, and shall not permit any of
its Subsidiaries to, sell or otherwise dispose of any shares of capital stock of
any of the Borrower's Subsidiaries or permit any Subsidiary to issue, sell, or
otherwise dispose of any shares of its capital stock or the capital stock of any
of the Borrower's Subsidiaries.
Section 6.11. Sale-and-Leaseback. The Borrower shall not, nor shall it
permit any of its Subsidiaries to, sell or transfer to a Person (other than the
Borrower or a Subsidiary of the Borrower) any property, whether now owned or
hereafter acquired, if at the time or thereafter the Borrower or a Subsidiary of
the Borrower shall lease as lessee such property or any part thereof or other
property which the Borrower or a Subsidiary of the Borrower intends to use for
substantially the same purpose as the property sold or transferred except such
transactions (a) incident to transactions permitted by Section 6.4(b), and (b)
from which arise lease obligations and other rental obligations not exceeding
$3,000,000.00 during any fiscal year of the Borrower.
Section 6.12. Change of Business. The Borrower shall not, nor shall it
permit any of its Subsidiaries to, materially change the character of their
business as presently and normally conducted or engage in any type of business
not related to their business as presently and normally conducted.
Section 6.13. Debt to EBITDA Ratio. The Borrower shall not permit the
ratio of the Borrower's (a) consolidated Debt at any time to (b) consolidated
EBITDA for the four-quarter-period ending on or immediately preceding such time
to be greater than 3.25 to 1.00.
Section 6.14. Tangible Net Worth. The Borrower shall not permit the
consolidated Tangible Net Worth of the Borrower to be less than the sum of (a)
$350,000,000.00, plus (b) an
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amount equal to 50% of the cumulative consolidated quarterly Net Income of the
Borrower from October 1, 2001, through the end of the Borrower's most recently
ended fiscal quarter, but excluding consolidated Net Income for any fiscal
quarter in which consolidated Net Income is not positive, plus (c) an amount
equal to 100% of the net cash proceeds from any sale of stock or other equity
interests in the Borrower since October 1, 2001.
Section 6.15. Subordinated Debt. The Borrower (a) shall not violate the
subordination terms governing any Debt which is by its terms subordinated to the
Obligations and (b) shall not amend the subordination terms governing any such
Debt without prior written consent of the Majority Banks.
ARTICLE VII
REMEDIES
Section 7.1. Events of Default. The occurrence of any of the following
events shall constitute an "Event of Default" under any Credit Document:
(a) Payment. The Borrower shall fail to pay when due (i) any interest
or fees payable hereunder or under the Notes within five days after the same
becomes due and payable or (ii) any principal, reimbursements, indemnifications,
or other amounts (other than interest and fees described in clause (i)) payable
hereunder or under any other Credit Document;
(b) Representation and Warranties. Any representation or warranty made
or deemed to be made (i) by the Borrower in this Agreement or in any other
Credit Document, (ii) by the Borrower (or any of its officers) in connection
with this Agreement or any other Credit Document, or (iii) by any Subsidiary of
the Borrower in any Credit Document shall prove to have been incorrect in any
material respect when made or deemed to be made;
(c) Covenant Breaches. (i)The Borrower shall (A) fail to perform or
observe any covenant contained in Section 5.1, 5.2, 5.5, 5.6, 5.7, or 5.8 or
Article VI of this Agreement or (B) fail to perform or observe any other term or
covenant set forth in this Agreement or in any other Credit Document which is
not covered by clause (i)(A) above or any other provision of this Section 7.1 if
such failure shall remain unremedied for 30 days after the earlier of written
notice of such default shall have been given to such Person by the Agent or any
Bank or such Person's actual knowledge of such default or (ii) any Guarantor
shall fail to perform or observe any covenant contained in its Guaranty;
(d) Cross-Defaults. (i) The Borrower or any its Subsidiaries shall fail
to pay any principal of or premium or interest on its Debt which is outstanding
in a principal amount of at least $2,500,000.00 individually or when aggregated
with all such Debt of the Borrower or its Subsidiaries so in default (but
excluding Debt evidenced by the Notes) when the same becomes due and payable
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise), and such failure shall continue after the applicable grace period,
if any, specified in the agreement or instrument relating to such Debt; (ii) any
other event shall occur or condition shall exist under any agreement or
instrument relating to Debt which is outstanding in a principal amount of at
least $2,500,000.00 individually or when aggregated with all such Debt of the
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Borrower and its Subsidiaries so in default, and shall continue after the
applicable grace period, if any, specified in such agreement or instrument, if
the effect of such event or condition is to accelerate, or to permit the
acceleration of, the maturity of such Debt; or (iii) any such Debt shall be
declared to be due and payable, or required to be prepaid (other than by a
regularly scheduled required prepayment), prior to the stated maturity thereof;
(e) Insolvency. The Borrower or any of its Subsidiaries shall generally
not pay its debts as such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a general assignment for the
benefit of creditors; or any proceeding shall be instituted by or against the
Borrower or any of its Subsidiaries seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee or other similar official for it or for any substantial part of its
property and, in the case of any such proceeding instituted against the Borrower
or any such Subsidiary, either such proceeding shall remain undismissed for a
period of 30 days or any of the actions sought in such proceeding shall occur;
or the Borrower or any of its Subsidiaries shall take any corporate action to
authorize any of the actions set forth above in this paragraph (e);
(f) Judgments. Any judgment or order for the payment of money in excess
of $2,500,000.00 shall be rendered against the Borrower or any of its
Subsidiaries and either (i) enforcement proceedings shall have been commenced by
any creditor upon such judgment or order or (ii) there shall be any period of 30
consecutive days during which a stay of enforcement of such judgment or order,
by reason of a pending appeal or otherwise, shall not be in effect;
(g) Termination Events. Any Termination Event with respect to a Plan
shall have occurred, and, 30 days after notice thereof shall have been given to
the Borrower by the Agent, (i) such Termination Event shall not have been
corrected and (ii) the then present value of such Plan's vested benefits exceeds
the then current value of assets accumulated in such Plan by more than the
amount of $2,500,000.00 (or in the case of a Termination Event involving the
withdrawal of a "substantial employer" (as defined in Section 4001(a)(2) of
ERISA), the withdrawing employer's proportionate share of such excess shall
exceed such amount);
(h) Plan Withdrawals. The Borrower or any member of the Controlled
Group as employer under a Multiemployer Plan shall have made a complete or
partial withdrawal from such Multiemployer Plan and the plan sponsor of such
Multiemployer Plan shall have notified such withdrawing employer that such
employer has incurred a withdrawal liability in an annual amount exceeding
$2,500,000.00;
(i) Borrowing Base. Any failure to cure any Borrowing Base deficiency
in accordance with Section 2.4, including any failure of the dedicated cash flow
from the production of the Borrower's and its Subsidiaries' Oil and Gas
Properties to cure the Borrowing Base deficiency within the time period
specified by and in accordance with Section 2.4(b);
(j) Guaranties. Any provision of any Guaranty shall for any reason
cease to be valid and binding on the applicable Guarantor or the applicable
Guarantor shall so state in writing; or
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(k) Change of Control. (i) As a result of one or more transactions
after the date of this Agreement, any "person" or "group" of persons shall have
"beneficial ownership" of more than 20% of the outstanding common stock of the
Borrower (within the meaning of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended, and the applicable rules and regulations
thereunder), provided that the relationships among the officers and directors of
the Borrower and among the respective shareholders of the Borrower on the date
of this Agreement shall not be deemed to constitute all or any combination of
them as a "group" or (ii) during any period of 12 consecutive months, beginning
with and after the date of this Agreement, individuals who at the beginning of
such 12-month period were directors of the Borrower shall cease for any reason
to constitute a majority of the board of directors of the Borrower at any time
during such period.
Section 7.2. Optional Acceleration of Maturity. If any Event of Default
(other than an Event of Default pursuant to paragraph (e) of Section 7.1) shall
have occurred and be continuing, then, and in any such event,
(a) the Agent (i) shall at the request, or may with the consent, of the
Majority Banks, by notice to the Borrower, declare the obligation of each Bank
and the Issuing Bank to make extensions of credit hereunder, including making
Advances and issuing Letters of Credit, to be terminated, whereupon the same
shall forthwith terminate, and (ii) shall at the request, or may with the
consent, of the Majority Banks, by notice to the Borrower, declare all
principal, interest, fees, reimbursements, indemnifications, and all other
amounts payable under this Agreement, the Notes, and the other Credit Documents
to be forthwith due and payable, whereupon all such amounts shall become and be
forthwith due and payable in full, without notice of intent to demand, demand,
presentment for payment, notice of nonpayment, protest, notice of protest,
grace, notice of dishonor, notice of intent to accelerate, notice of
acceleration, and all other notices, all of which are hereby expressly waived by
the Borrower;
(b) the Borrower shall, on demand of the Agent at the request or with
the consent of the Majority Banks, deposit with the Agent into the Cash
Collateral Account an amount of cash equal to the Letter of Credit Exposure as
security for the Obligations; and
(c) the Agent shall at the request of, or may with the consent of, the
Majority Banks proceed to enforce its rights and remedies under the Guaranties
and any other Credit Document for the ratable benefit of the Banks by
appropriate proceedings.
Section 7.3. Automatic Acceleration of Maturity. If any Event of
Default pursuant to paragraph (e) of Section 7.1 shall occur,
(a) (i) the obligation of each Bank and the Issuing Bank to make
extensions of credit hereunder, including making Advances and issuing Letters of
Credit, shall terminate, and (ii) all principal, interest, fees, reimbursements,
indemnifications, and all other amounts payable under this Agreement, the Notes,
and the other Credit Documents shall become and be forthwith due and payable in
full, without notice of intent to demand, demand, presentment for payment,
notice of nonpayment, protest, notice of protest, grace, notice of dishonor,
notice of intent to accelerate, notice of acceleration, and all other notices,
all of which are hereby expressly waived by the Borrower;
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(b) the Borrower shall deposit with the Agent into the Cash Collateral
Account an amount of cash equal to the outstanding Letter of Credit Exposure as
security for the Obligations; and
(c) the Agent shall at the request of, or may with the consent of, the
Majority Banks proceed to enforce its rights and remedies under the Guaranties
and any other Credit Document for the ratable benefit of the Banks by
appropriate proceedings.
Section 7.4. Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default, the Agent and each Bank is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by the Agent or such Bank to or for the credit or the account of the
Borrower against any and all of the obligations of the Borrower now or hereafter
existing under this Agreement, the Notes held by the Agent or such Bank, and the
other Credit Documents, irrespective of whether or not the Agent or such Bank
shall have made any demand under this Agreement, such Notes, or such other
Credit Documents, and although such obligations may be unmatured. The Agent and
each Bank agrees to promptly notify the Borrower after any such set-off and
application made by the Agent or such Bank, provided that the failure to give
such notice shall not affect the validity of such set-off and application. The
rights of the Agent and each Bank under this Section 7.4 are in addition to any
other rights and remedies (including, without limitation, other rights of
set-off) which the Agent or such Bank may have. Notwithstanding the foregoing,
Bank One, NA may not set off and apply any accounts held by the Affiliate of
Bank One, NA in Lafayette so long as the funds in such accounts represent unpaid
amounts due to royalty and working interest holders (including limited
partnerships sponsored by the Borrower and its Subsidiaries) and other
segregated funds of the Borrower and its Subsidiaries (but not any general
corporate funds of the Borrower or its Subsidiaries).
Section 7.5. Actions Under Credit Documents. Following an Event of
Default, the Agent shall at the request, or may with the consent, of the
Majority Banks, take any and all actions permitted under the other Credit
Documents, including enforcing it rights under the Guaranties for the ratable
benefit of the Banks.
Section 7.6. Non-exclusivity of Remedies. No remedy conferred upon the
Agent is intended to be exclusive of any other remedy, and each remedy shall be
cumulative of all other remedies existing by contract, at law, in equity, by
statute or otherwise.
ARTICLE VIII
THE AGENT AND THE ISSUING BANK
Section 8.1. Authorization and Action. Each Bank hereby appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
hereof and of the other Credit Documents, together with such powers as are
reasonably incidental thereto. As to any matters not expressly provided for by
this Agreement or any other Credit Document (including, without limitation,
enforcement or collection of the Notes), the Agent shall not be required to
exercise any
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discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Majority Banks, and such instructions shall be
binding upon all Banks and all holders of Notes; provided, however, that the
Agent shall not be required to take any action which exposes the Agent to
personal liability or which is contrary to this Agreement, any other Credit
Document, or applicable law.
Section 8.2. Agent's Reliance, Etc. Neither the Agent nor any of its
directors, officers, agents, or employees shall be liable for any action taken
or omitted to be taken (INCLUDING THE AGENT'S OWN NEGLIGENCE) by it or them
under or in connection with this Agreement or the other Credit Documents, except
for its or their own gross negligence or willful misconduct. Without limitation
of the generality of the foregoing, the Agent: (a) may treat the payee of any
Note as the holder thereof until the Agent receives written notice of the
assignment or transfer thereof signed by such payee and in form satisfactory to
the Agent; (b) may consult with legal counsel (including counsel for the
Borrower), independent public accountants, and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants, or experts; (c)
makes no warranty or representation to any Bank and shall not be responsible to
any Bank for any statements, warranties, or representations made in or in
connection with this Agreement or the other Credit Documents; (d) shall not have
any duty to ascertain or to inquire as to the performance or observance of any
of the terms, covenants or conditions of this Agreement or any other Credit
Document on the part of the Borrower or its Subsidiaries or to inspect the
property (including the books and records) of the Borrower or its Subsidiaries;
(e) shall not be responsible to any Bank for the due execution, legality,
validity, enforceability, genuineness, sufficiency, or value of this Agreement
or any other Credit Document; and (f) shall incur no liability under or in
respect of this Agreement or any other Credit Document by acting upon any
notice, consent, certificate, or other instrument or writing (which may be by
telecopier or telex) believed by it to be genuine and signed or sent by the
proper party or parties.
Section 8.3. The Agent and Its Affiliates. With respect to its
Commitments, the Advances made by it and the Notes issued to it, the Agent shall
have the same rights and powers under this Agreement as any other Bank and may
exercise the same as though it were not the Agent. The term "Bank" or "Banks"
shall, unless otherwise expressly indicated, include the Agent in its individual
capacity. The Agent and its Affiliates may accept deposits from, lend money to,
act as trustee under indentures of, and generally engage in any kind of business
with, the Borrower or any of its Subsidiaries, and any Person who may do
business with or own securities of the Borrower or any such Subsidiary, all as
if the Agent were not an agent hereunder and without any duty to account
therefor to the Banks.
Section 8.4. Bank Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank and based on
the Financial Statements and the Interim Financial Statements and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Bank also acknowledges
that it shall, independently and without reliance upon the Agent or any other
Bank and based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or not taking
action under this Agreement.
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Section 8.5. Indemnification. THE BANKS SEVERALLY AGREE TO INDEMNIFY
THE AGENT AND THE ISSUING BANK AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE
DIRECTORS, OFFICERS, EMPLOYEES, AND AGENTS (TO THE EXTENT NOT REIMBURSED BY THE
BORROWER), ACCORDING TO THEIR RESPECTIVE PRO RATA SHARES FROM AND AGAINST ANY
AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, COSTS, EXPENSES, OR DISBURSEMENTS OF ANY KIND OR NATURE
WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST THE AGENT
AND THE ISSUING BANK IN ANY WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT OR
ANY ACTION TAKEN OR OMITTED BY THE AGENT OR THE ISSUING BANK UNDER THIS
AGREEMENT OR ANY OTHER CREDIT DOCUMENT (INCLUDING THE AGENT'S AND THE ISSUING
BANK'S OWN NEGLIGENCE), PROVIDED THAT NO BANK SHALL BE LIABLE FOR ANY PORTION OF
SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS,
SUITS, COSTS, EXPENSES, OR DISBURSEMENTS RESULTING FROM THE AGENT'S AND THE
ISSUING BANK'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. WITHOUT LIMITATION OF THE
FOREGOING, EACH BANK AGREES TO REIMBURSE THE AGENT PROMPTLY UPON DEMAND FOR ITS
RATABLE SHARE OF ANY OUT-OF-POCKET EXPENSES (INCLUDING COUNSEL FEES) INCURRED BY
THE AGENT IN CONNECTION WITH THE PREPARATION, EXECUTION, DELIVERY,
ADMINISTRATION, MODIFICATION, AMENDMENT, OR ENFORCEMENT (WHETHER THROUGH
NEGOTIATIONS, LEGAL PROCEEDINGS, OR OTHERWISE) OF, OR LEGAL ADVICE IN RESPECT OF
RIGHTS OR RESPONSIBILITIES UNDER, THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT,
TO THE EXTENT THAT THE AGENT IS NOT REIMBURSED FOR SUCH BY THE BORROWER.
Section 8.6. Successor Agent and Issuing Bank. The Agent or the Issuing
Bank may resign at any time by giving written notice thereof to the Banks and
the Borrower and may be removed at any time with or without cause by the
Majority Banks upon receipt of written notice from the Majority Banks to such
effect. Upon receipt of notice of any such resignation or removal, the Majority
Banks shall have the right to appoint a successor Agent or Issuing Bank only
with the consent of the Borrower, which consent shall not be unreasonably
withheld. If no successor Agent or Issuing Bank shall have been so appointed by
the Majority Banks with the consent of the Borrower, and shall have accepted
such appointment, within 30 days after the retiring Agent's or Issuing Bank's
giving of notice of resignation or the Majority Banks' removal of the retiring
Agent or Issuing Bank, then the retiring Agent or Issuing Bank may, on behalf of
the Banks and the Borrower, appoint a successor Agent or Issuing Bank, which
shall be, in the case of a successor agent, a commercial bank organized under
the laws of the United States of America or of any State thereof and having a
combined capital and surplus of at least $500,000,000.00 and, in the case of the
Issuing Bank, a Bank. Upon the acceptance of any appointment as Agent or Issuing
Bank by a successor Agent or Issuing Bank, such successor Agent or Issuing Bank
shall thereupon succeed to and become vested with all the rights, powers,
privileges, and duties of the retiring Agent or Issuing Bank, and the retiring
Agent or Issuing Bank shall be discharged from its duties and obligations under
this Agreement and the other Credit Documents, except that the retiring Issuing
Bank shall remain the Issuing Bank with respect to any Letters of Credit
outstanding on the effective date of its resignation or removal and the
provisions affecting the Issuing Bank with respect to such Letters of Credit
shall inure to the
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benefit of the retiring Issuing Bank until the termination of all such Letters
of Credit. After any retiring Agent's or Issuing Bank's resignation or removal
hereunder as Agent or Issuing Bank, the provisions of this Article VIII shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent or Issuing Bank under this Agreement and the other Credit
Documents.
ARTICLE IX
MISCELLANEOUS
Section 9.1. Amendments, Etc. No amendment or waiver of any provision
of this Agreement, the Notes, or any other Credit Document, nor consent to any
departure by the Borrower or any Guarantor therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Majority Banks
and the Borrower, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that no amendment, waiver, or consent shall, unless in writing and
signed by all the Banks, do any of the following: (a) waive any of the
conditions specified in Section 3.1 or 3.2, (b) increase the Commitment of the
Banks, (c) reduce the principal of, or interest on, the Notes or any fees or
other amounts payable hereunder or under any other Credit Document, (d) postpone
any date fixed for any payment of principal of, or interest on, the Notes or any
fees or other amounts payable hereunder or extend the Maturity Date, (e) change
the percentage of Banks which shall be required for the Banks or any of them to
take any action hereunder or under any other Credit Document, (f) amend Section
2.10 or this Section 9.1, (g) amend the definition of "Majority Banks," (h)
release any Guarantor from its obligations under any Guaranty, or (i) release
any collateral securing the Obligations; and provided, further, that no
amendment, waiver or consent shall, unless in writing and signed by the Agent or
the Issuing Bank in addition to the Banks required above to take such action,
affect the rights or duties of the Agent or the Issuing Bank, as the case may
be, under this Agreement or any other Credit Document.
Section 9.2. Notices, Etc. All notices and other communications shall
be in writing (including, without limitation, telecopy or telex) and mailed by
certified mail, return receipt requested, telecopied, telexed, hand delivered,
or delivered by a nationally recognized overnight courier, at the address for
the appropriate party specified in Schedule 1 or at such other address as shall
be designated by such party in a written notice to the other parties. All such
notices and communications shall, when so mailed, telecopied, telexed, or hand
delivered or delivered by a nationally recognized overnight courier, be
effective when received if mailed, when telecopy transmission is completed, when
confirmed by telex answer-back, or when delivered by such messenger or courier,
respectively, except that notices and communications to the Agent pursuant to
Article II or VIII shall not be effective until received by the Agent.
Section 9.3. No Waiver; Remedies. No failure on the part of any Bank,
the Agent, or the Issuing Bank to exercise, and no delay in exercising, any
right hereunder or under any Note shall operate as a waiver thereof; nor shall
any single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
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Section 9.4. Costs and Expenses. The Borrower agrees to pay on demand
(a) all reasonable out-of-pocket costs and expenses of the Agent in connection
with the preparation, execution, delivery, administration, modification, and
amendment of this Agreement, the Notes, the Guaranties, and the other Credit
Documents including, without limitation, the reasonable fees and out-of-pocket
expenses of counsel for the Agent with respect to advising the Agent as to its
rights and responsibilities under this Agreement, and (b) all out-of-pocket
costs and expenses, if any, of the Agent, the Issuing Bank, and each Bank
(including, without limitation, reasonable counsel fees and expenses of the
Agent, the Issuing Bank, and each Bank) in connection with the enforcement
(whether through negotiations, legal proceedings, or otherwise) of this
Agreement, the Notes, the Guaranties, and the other Credit Documents.
Section 9.5. Binding Effect. This Agreement shall become effective when
it shall have been executed by the Borrower and the Agent, and when the Agent
shall have, as to each Bank, either received a counterpart hereof executed by
such Bank or been notified by such Bank that such Bank has executed it and
thereafter shall be binding upon and inure to the benefit of the Borrower, the
Agent, the Issuing Bank, and each Bank and their respective successors and
assigns, except that the Borrower shall not have the right to assign its rights
or delegate its duties under this Agreement or any interest in this Agreement
without the prior written consent of each Bank.
Section 9.6. Bank Assignments and Participations.
(a) Assignments. Any Bank may assign to one or more banks or other
entities all or any portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitments, the
Advances owing to it, the Notes held by it, and the participation interest in
the Letter of Credit Obligations held by it); provided, however, that (i) each
such assignment shall be of a constant, and not a varying, percentage of all of
such Bank's rights and obligations under this Agreement, (ii) the amount of the
Commitments and Advances of such Bank being assigned pursuant to each such
assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall be, if to an entity other than a Bank, not
less than $5,000,000.00 and shall be an integral multiple of $1,000,000.00,
(iii) each such assignment shall be to an Eligible Assignee, (iv) the parties to
each such assignment shall execute and deliver to the Agent, for its acceptance
and recording in the Register, an Assignment and Acceptance, together with the
Notes subject to such assignment, and (v) each Eligible Assignee (other than the
Eligible Assignee of the Agent) shall pay to the Agent a $3,500.00
administrative fee. Upon such execution, delivery, acceptance and recording,
from and after the effective date specified in each Assignment and Acceptance,
which effective date shall be at least three Business Days after the execution
thereof, (A) the assignee thereunder shall be a party hereto for all purposes
and, to the extent that rights and obligations hereunder have been assigned to
it pursuant to such Assignment and Acceptance, have the rights and obligations
of a Bank hereunder and (B) such Bank thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of such Bank's rights and
obligations under this Agreement, such Bank shall cease to be a party hereto).
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(b) Term of Assignments. By executing and delivering an Assignment and
Acceptance, the Bank thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such Bank makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency of
value of this Agreement or any other instrument or document furnished pursuant
hereto; (ii) such Bank makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or the
Guarantors or the performance or observance by the Borrower or the Guarantors of
any of their obligations under this Agreement or any other instrument or
document furnished pursuant hereto; (iii) such assignee confirms that it has
received a copy of this Agreement, together with copies of the financial
statements referred to in Section 4.5 and such other documents and information
as it has deemed appropriate to make its own credit analysis and decision to
enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon the Agent, such Bank or any other Bank
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement; (v) such assignee appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise such powers under this
Agreement as are delegated to the Agent by the terms hereof, together with such
powers as are reasonably incidental thereto; and (vi) such assignee agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of this Agreement are required to be performed by it as a Bank.
(c) The Register. The Agent shall maintain at its address referred to
in Section 9.2 a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and addresses of
the Banks and the Commitments of, and principal amount of the Advances owing to,
each Bank from time to time (the "Register"). The entries in the Register shall
be conclusive and binding for all purposes, absent manifest error, and the
Borrower, the Agent, the Issuing Bank, and the Banks may treat each Person whose
name is recorded in the Register as a Bank hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or any
Bank at any reasonable time and from time to time upon reasonable prior notice.
(d) Procedures. Upon its receipt of an Assignment and Acceptance
executed by a Bank and an Eligible Assignee, together with the Notes subject to
such assignment, the Agent shall, if such Assignment and Acceptance has been
completed and is in substantially the form of the attached Exhibit A, (i) accept
such Assignment and Acceptance, (ii) record the information contained therein in
the Register, and (iii) give prompt notice thereof to the Borrower. Within five
Business Days after its receipt of such notice, the Borrower shall execute and
deliver to the Agent in exchange for the surrendered Notes (A) a new Note to the
order of such Eligible Assignee in an amount equal to the Commitment assumed by
it pursuant to such Assignment and Acceptance and (B) if such Bank has retained
any Commitment hereunder, a new Note to the order of such Bank in an amount
equal to the Commitment retained by it hereunder. Such new Notes shall be dated
the effective date of such Assignment and Acceptance and shall otherwise be in
substantially the form of the attached Exhibit D.
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(e) Participations. Each Bank may sell participations to one or more
banks or other entities in or to all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Commitments, the Advances owing to it, its participation interest in the Letter
of Credit Obligations, and the Notes held by it); provided, however, that (i)
such Bank's obligations under this Agreement (including, without limitation, its
Commitments to the Borrower hereunder) shall remain unchanged, (ii) such Bank
shall remain solely responsible to the other parties hereto for the performance
of such obligations, (iii) such Bank shall remain the holder of any such Notes
for all purposes of this Agreement, (iv) the Borrower, the Agent, and the
Issuing Bank and the other Banks shall continue to deal solely and directly with
such Bank in connection with such Bank's rights and obligations under this
Agreement, and (v) such Bank shall not require the participant's consent to any
matter under this Agreement, except for change in the principal amount of the
Notes, reductions in fees or interest, releasing any collateral, or extending
the Maturity Date. The Borrower hereby agrees that participants shall have the
same rights under Sections 2.11, 2.12, 2.13(c), and 9.7 as a Bank to the extent
of their respective participations.
Section 9.7. Indemnification. THE BORROWER SHALL INDEMNIFY THE AGENT,
THE BANKS, THE ISSUING BANK, AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE
DIRECTORS, OFFICERS, EMPLOYEES, AND AGENTS FROM, AND DISCHARGE, RELEASE, AND
HOLD EACH OF THEM HARMLESS AGAINST, ANY AND ALL LOSSES, LIABILITIES, CLAIMS, OR
DAMAGES WHICH MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST THEM IN ANY
WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY ACTION TAKEN OR OMITTED
BY THEM UNDER THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT (INCLUDING ANY SUCH
LOSSES, LIABILITIES, CLAIMS, DAMAGES, OR EXPENSE INCURRED BY REASON OF THE
PERSON BEING INDEMNIFIED'S OWN NEGLIGENCE), BUT EXCLUDING ANY SUCH LOSSES,
LIABILITIES, CLAIMS, DAMAGES, OR EXPENSES INCURRED BY REASON OF THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF THE PERSON TO BE INDEMNIFIED.
Section 9.8. Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Section 9.9. Survival of Representations, Etc. All representations and
warranties contained in this Agreement or made in writing by or on behalf of the
Borrower in connection herewith shall survive the execution and delivery of this
Agreement and the Credit Documents, the making of the Advances and any
investigation made by or on behalf of the Banks, none of which investigations
shall diminish any Bank's right to rely on such representations and warranties.
All obligations of the Borrower provided for in Sections 2.11, 2.12, 2.13(c),
9.4, and 9.7 and all of the obligations of the Banks in Section 8.5 shall
survive any termination of this Agreement and repayment in full of the
Obligations.
Section 9.10. Severability. In case one or more provisions of this
Agreement or the other Credit Documents shall be invalid, illegal or
unenforceable in any respect under any
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applicable law, the validity, legality, and enforceability of the remaining
provisions contained herein or therein shall not be affected or impaired
thereby.
Section 9.11. Business Loans. The Borrower warrants and represents that
the Loans evidenced by the Notes are and shall be for business, commercial,
investment, or other similar purposes and not primarily for personal, family,
household, or agricultural use, as such terms are used in Chapter One ("Chapter
One") of the Texas Credit Code. At all such times, if any, as Chapter One shall
establish a Maximum Rate, the Maximum Rate shall be the "indicated rate ceiling"
(as such term is defined in Chapter One) from time to time in effect.
Section 9.12. Governing Law. This Agreement, the Notes and the other
Credit Documents shall be governed by, and construed and enforced in accordance
with, the laws of the State of Texas. Without limiting the intent of the parties
set forth above, Chapter 346 the Texas Finance Code, as amended, shall not apply
to this Agreement, the Notes, or the transactions contemplated hereby. Each
Letter of Credit shall be governed by the Uniform Customs and Practice for
Documentary Credits, International Chamber of Commerce Publication No. 500 (1993
version).
THE BORROWER, THE BANKS, THE ISSUING BANK AND THE AGENT HEREBY
IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN RESPECT OF ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER CREDIT
DOCUMENT, OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY, AND IRREVOCABLY SUBMIT
TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF XXXXXX COUNTY, TEXAS, AND THE
SOUTHERN DISTRICT OF TEXAS FOR THE RESOLUTION OF ANY DISPUTES UNDER THIS
AGREEMENT AND THE CREDIT DOCUMENTS, AND HEREBY IRREVOCABLY WAIVE ANY CLAIM THAT
SUCH JURISDICTION IS IMPRACTICAL OR INCONVENIENT.
THIS WRITTEN AGREEMENT AND THE CREDIT DOCUMENTS, AS DEFINED IN THIS
AGREEMENT, REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
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EXECUTED as of the date first above written.
BORROWER:
STONE ENERGY CORPORATION
By: /s/ D. XXXXX XXXXX
----------------------------------------
Name: D. Xxxxx Xxxxx
---------------------------------------
Title: President and
Chief Executive Officer
--------------------------------------
By: /s/ XXXXX X. XXXXXX
----------------------------------------
Name: Xxxxx X. Xxxxxx
---------------------------------------
Title: Vice President and
Chief Financial Officer
--------------------------------------
AGENT:
BANK OF AMERICA, N.A.
By: /s/ XXXXXXX X. XXXXX
----------------------------------------
Name: Xxxxxxx X. Xxxxx
--------------------------------------
Title: Vice President
-------------------------------------
BANKS:
BANK OF AMERICA, N.A.
By: /s/ XXXXXXX X. XXXXX
----------------------------------------
Name: Xxxxxxx X. Xxxxx
--------------------------------------
Title: Vice President
-------------------------------------
BANK ONE, NA
By: /s/ XXXXX XXXXXXXXX-XXXXX
----------------------------------------
Name: Xxxxx Xxxxxxxxx-Xxxxx
--------------------------------------
Title: First Vice President
-------------------------------------
FLEET NATIONAL BANK
By: /s/ XXXXXXXX XXXXX
----------------------------------------
Name: Xxxxxxxx Xxxxx
--------------------------------------
Title: Managing Director
-------------------------------------
U.S. BANK NATIONAL ASSOCIATION
By: /s/ XXXXXXX X. XXXXXX
----------------------------------------
Name: Xxxxxxx X. Xxxxxx
--------------------------------------
Title: Vice President
-------------------------------------
FORTIS CAPITAL CORP.
By: /s/ XXXXX XXXXXXXXXX
----------------------------------------
Name: Xxxxx Xxxxxxxxxx
--------------------------------------
Title: Vice President
-------------------------------------
By: /s/ XXXXXXX XXXXXX
----------------------------------------
Name: Xxxxxxx Xxxxxx
--------------------------------------
Title: Managing Director
-------------------------------------
BANK OF MONTREAL
By: /s/ XXXXX X. XXXXXX
----------------------------------------
Name: Xxxxx X. Xxxxxx
--------------------------------------
Title: Director
-------------------------------------
WHITNEY NATIONAL BANK
By: /s/ XXXXXX X. XXXXX
----------------------------------------
Name: Xxxxxx X. Xxxxx
--------------------------------------
Title: Senior Vice President
-------------------------------------
THE FUJI BANK, LIMITED
By: /s/ XXXXXXXXX XXX
----------------------------------------
Name: Xxxxxxxxx Xxx
--------------------------------------
Title: Vice President and Manager
-------------------------------------
HIBERNIA NATIONAL BANK
By: /s/ XXXXX X. XXXX
----------------------------------------
Name: Xxxxx X. Xxxx
--------------------------------------
Title: Senior Vice President
-------------------------------------
SCHEDULE 1
COMMITMENTS;
BORROWER, AGENT, AND BANK NOTICE INFORMATION;
LENDING OFFICES AND WIRE INSTRUCTIONS
I. COMMITMENTS
Bank of America, N.A. $70,000,000.00
Bank One, NA $52,500,000.00
Fleet National Bank $52,500,000.00
U.S. Bank National Association $35,000,000.00
Bank of Montreal $35,000,000.00
Fortis Capital Corp. $35,000,000.00
Whitney National Bank $25,000,000.00
The Fuji Bank, Limited $25,000,000.00
Hibernia National Bank $20,000,000.00
Total Commitments $350,000,000.00
[REMAINDER OF SCHEDULE 1 DELETED]
