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EXHIBIT 10.1
AMENDED AND RESTATED
CREDIT AGREEMENT
among
MARINER ENERGY, INC.,
as Borrower,
NATIONSBANK, N.A.,
dba BANK OF AMERICA, N.A.,
as Administrative Agent
TORONTO DOMINION (TEXAS), INC.,
as Co-Agent
and
The Financial Institutions Listed on Schedule 1 Hereto,
as Banks
as to which Banc of America Securities LLC has served as
Lead Arranger and Sole Book Manager
$150,000,000
dated
June 28, 1999
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TABLE OF CONTENTS
Page
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ARTICLE I - TERMS DEFINED ................................................. 2
SECTION 1.1. Definitions ........................................ 2
SECTION 1.2. Accounting Terms and Determinations ................ 22
SECTION 1.3. Petroleum Terms .................................... 23
ARTICLE II - THE CREDIT ................................................... 23
SECTION 2.1. Commitments ........................................ 23
SECTION 2.2. Method of Borrowing ................................ 25
SECTION 2.3. Method of Requesting Letters of Credit ............. 26
SECTION 2.4. Notes .............................................. 27
SECTION 2.5. Interest Rates; Payments ........................... 27
SECTION 2.6. Prepayments ........................................ 29
SECTION 2.7. Reduction of Commitments ........................... 29
SECTION 2.8. Termination of Commitments; Final Maturity ......... 30
SECTION 2.9. Application of Payments ............................ 30
SECTION 2.10. Commitment Fee ..................................... 30
SECTION 2.11. Extension Fee ...................................... 30
SECTION 2.12. Agency and other Fees .............................. 30
ARTICLE III - GENERAL PROVISIONS .......................................... 31
SECTION 3.1. Delivery and Endorsement of Notes .................. 31
SECTION 3.2. General Provisions as to Payments .................. 31
SECTION 3.3. Funding Losses ..................................... 32
SECTION 3.4. Foreign Lenders, Participants, and Assignees ....... 33
ARTICLE IV - BORROWING BASE ............................................... 33
SECTION 4.1. Reserve Report; Proposed Borrowing Base ............ 33
SECTION 4.2. Scheduled Redeterminations of the
Borrowing Base; Procedures and Standards ........... 33
SECTION 4.3 Special Redeterminations ........................... 34
SECTION 4.4. Borrowing Base Deficiency .......................... 35
SECTION 4.5. Initial Borrowing Base ............................. 35
ARTICLE V - COLLATERAL AND GUARANTYS ...................................... 36
SECTION 5.1. Security ........................................... 36
SECTION 5.2 Guarantys .......................................... 37
(i)
3
ARTICLE VI - CONDITIONS PRECEDENT .................................................. 37
SECTION 6.1. Conditions to Initial Borrowing and
Participation in Letter of Credit Exposure .................. 37
SECTION 6.2. Conditions to Each Borrowing and each Letter of Credit ...... 39
SECTION 6.3. Materiality of Conditions ................................... 40
ARTICLE VII - REPRESENTATIONS AND WARRANTIES ....................................... 40
SECTION 7.1. Borrower's Corporate Existence and Power .................... 40
SECTION 7.2. Guarantor's Corporate Existence and Power ................... 41
SECTION 7.3. Corporate Authority and Governmental
Authorization; Contravention ................................ 41
SECTION 7.4. Binding Effect .............................................. 41
SECTION 7.5. Financial Information ....................................... 41
SECTION 7.6. Litigation .................................................. 42
SECTION 7.7. ERISA ....................................................... 42
SECTION 7.8. Taxes and Filing of Tax Returns ............................. 43
SECTION 7.9. Ownership of Properties Generally ........................... 43
SECTION 7.10. Mineral Interests ........................................... 43
SECTION 7.11. Licenses, Permits, Etc ...................................... 44
SECTION 7.12. Compliance with Law ......................................... 44
SECTION 7.13. Full Disclosure ............................................. 44
SECTION 7.14. Organizational Structure; Nature of Business ................ 45
SECTION 7.15. Environmental Matters ....................................... 35
SECTION 7.16. Burdensome Obligations ...................................... 46
SECTION 7.17. Fiscal Year ................................................. 46
SECTION 7.18. No Default .................................................. 46
SECTION 7.19. Government Regulation ....................................... 46
SECTION 7.20. Insider ..................................................... 46
SECTION 7.21. Gas Balancing Agreements and Advance Payment Contracts ...... 47
SECTION 7.22. Year 2000 ................................................... 47
SECTION 7.23. Prior Credit Agreement ...................................... 47
ARTICLE VIII - AFFIRMATIVE COVENANTS ............................................... 48
SECTION 8.1. Information ................................................. 48
SECTION 8.2. Business of Borrower and Guarantor .......................... 51
SECTION 8.3. Maintenance of Existence .................................... 51
SECTION 8.4. Title Data .................................................. 51
SECTION 8.5. Right of Inspection ......................................... 51
SECTION 8.6. Maintenance of Insurance .................................... 52
(ii)
4
SECTION 8.7. Payment of Taxes and Claims ................................. 52
SECTION 8.8. Compliance with Laws and Documents .......................... 53
SECTION 8.9. Maintenance and Operation of Properties and Equipment ....... 53
SECTION 8.10. Environmental Law Compliance ................................ 54
SECTION 8.11. ERISA Reporting Requirements ................................ 54
SECTION 8.12. Additional Documents ........................................ 55
ARTICLE IX - NEGATIVE COVENANTS .................................................... 55
SECTION 9.1. Incurrence of Debt .......................................... 55
SECTION 9.2. Restricted Payments ......................................... 56
SECTION 9.3. Negative Pledge ............................................. 56
SECTION 9.4. Consolidations, Mergers and Subsidiaries .................... 56
SECTION 9.5. Asset Dispositions .......................................... 56
SECTION 9.6. State and Federal Leases .................................... 57
SECTION 9.7. Use of Proceeds ............................................. 57
SECTION 9.8. Investments ................................................. 57
SECTION 9.9. Transactions with Affiliates ................................ 57
SECTION 9.10. ERISA ....................................................... 57
SECTION 9.11. Oil and Gas Hedge Transactions .............................. 57
SECTION 9.12. Fiscal Year ................................................. 58
SECTION 9.13. Change in Business .......................................... 58
ARTICLE X - FINANCIAL COVENANTS .................................................... 58
SECTION 10.1. Fixed Charge Coverage Ratio ................................. 58
SECTION 10.2. Interest Coverage Ratio ..................................... 58
ARTICLE XI - DEFAULTS AND REMEDIES ................................................. 59
SECTION 11.1. Events of Default ........................................... 59
SECTION 11.2. Remedies .................................................... 61
ARTICLE XII - ADMINISTRATIVE AGENT ................................................. 62
SECTION 12.1. Appointment and Authorization ............................... 62
SECTION 12.2. Administrative Agent and Affiliates ......................... 62
SECTION 12.3. Action by Administrative Agent .............................. 62
SECTION 12.4. Consultation with Experts ................................... 63
SECTION 12.5. LIABILITY OF ADMINISTRATIVE AGENT ........................... 63
SECTION 12.6. Delegation of Duties ........................................ 64
SECTION 12.7. Indemnification ............................................. 64
SECTION 12.8. Credit Decision ............................................. 64
SECTION 12.9. Successor Administrative Agent .............................. 64
(iii)
5
ARTICLE XIII - PROTECTION OF YIELD; CHANGE IN LAWS ................................. 65
SECTION 13.1. Inadequate Basis for Determining Interest
Rate Applicable to Eurodollar Tranches ..................... 65
SECTION 13.2. Illegality of Eurodollar Tranches .......................... 65
SECTION 13.3. Increased Cost of Eurodollar Tranche ....................... 66
SECTION 13.4. Adjusted Base Rate Tranche Substituted
for Affected Eurodollar Tranche ............................ 67
SECTION 13.5. Capital Adequacy ........................................... 67
SECTION 13.6. Taxes ...................................................... 68
SECTION 13.7. Discretion of Banks as to Manner of Funding ................ 69
SECTION 13.8. Limitations ................................................ 69
ARTICLE XIV - MISCELLANEOUS ........................................................ 70
SECTION 14.1. Notices .................................................... 70
SECTION 14.2. No Waivers ................................................. 70
SECTION 14.3. Expenses; Documentary Taxes; Indemnification ............... 70
SECTION 14.4. Right and Sharing of Set-Offs .............................. 72
SECTION 14.5. Amendments and Waivers ..................................... 73
SECTION 14.6. Survival ................................................... 73
SECTION 14.7. Limitation on Interest ..................................... 73
SECTION 14.8. Invalid Provisions ......................................... 74
SECTION 14.9. Waiver of Consumer Credit Laws ............................. 74
SECTION 14.10. Successors and Assigns ..................................... 74
SECTION 14.11. TEXAS LAW .................................................. 76
SECTION 14.12. Consent to Jurisdiction; Waiver of Immunities .............. 76
SECTION 14.13. Counterparts; Effectiveness ................................ 77
SECTION 14.14. No Third Party Beneficiaries ............................... 77
SECTION 14.15. Confidentiality ............................................ 77
SECTION 14.16. COMPLETE AGREEMENT ......................................... 77
SECTION 14.17. WAIVER OF JURY TRIAL ....................................... 78
SECTION 14.18. Prior Credit Agreement Superseded .......................... 78
EXHIBITS
EXHIBIT A FORM OF NOTE
EXHIBIT B FORM OF GUARANTY
EXHIBIT C FORM OF REQUEST FOR BORROWING
EXHIBIT D FORM OF REQUEST FOR LETTER OF CREDIT
EXHIBIT E FORM OF ROLLOVER NOTICE
EXHIBIT F FORM OF FINANCIAL OFFICER'S CERTIFICATE
EXHIBIT G FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
(iv)
6
SCHEDULES
SCHEDULE 1 FINANCIAL INSTITUTIONS
SCHEDULE 2 EXISTING PROVED PRODUCING MINERAL INTERESTS
SCHEDULE 3 LITIGATION
SCHEDULE 4 CORPORATE INFORMATION
(iv)
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AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement") is
entered into as of the ____ day of June, 1999, among MARINER ENERGY, INC., a
Delaware corporation ("Borrower"), NATIONSBANK, N.A., dba BANK OF AMERICA, N.A.,
as Administrative Agent ("Administrative Agent"), TORONTO DOMINION (TEXAS),
INC., as Co-Agent ("Co-Agent"), and the financial institutions listed on
Schedule 1 hereto (individually a "Bank" and collectively "Banks").
W I T N E S S E T H:
WHEREAS, Borrower, Administrative Agent, Co-Agent and the Banks are
parties to the Prior Credit Agreement (hereinafter defined); and
WHEREAS, Borrower has requested that Administrative Agent, Co-Agent and
Banks amend and restate the provisions of the Prior Credit Agreement and provide
Borrower with a revolving credit facility, and Administrative Agent, Co-Agent
and Banks are willing to do so and to provide such facility on the terms and
subject to the conditions hereinafter set forth; and
WHEREAS, pursuant to Article XII of this Agreement, NationsBank, N.A.,
dba Bank of America, N.A., has been appointed Administrative Agent for Banks
hereunder; and
WHEREAS, Toronto Dominion (Texas), Inc. is serving as Co-Agent
hereunder; and
WHEREAS, Banc of America Securities LLC is serving as Lead Arranger and
Sole Book Manager hereunder.
NOW, THEREFORE, in consideration of the premises, the representations,
warranties, covenants and agreements contained herein, and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Borrower, Administrative Agent, Co-Agent and Banks agree as
follows:
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ARTICLE I
TERMS DEFINED
SECTION 1.1. Definitions. The following terms, as used herein, have
the following meanings:
"Adjusted Base Rate" means, on any day, the greater of (a) the Base
Rate in effect on such day, or (b) the sum of (i) the Federal Funds Rate in
effect on such day, plus (ii) one-half of one percent (.5%). Each change in the
Adjusted Base Rate shall become effective automatically and without notice to
Borrower or any Bank upon the effective date of each change in the Federal Funds
Rate or the Base Rate, as the case may be.
"Adjusted Base Rate Tranche" means the portion of the principal of the
Loan bearing interest with reference to the Adjusted Base Rate.
"Adjusted Eurodollar Rate" applicable to any Interest Period, means a
rate per annum equal to the quotient obtained (rounded upwards, if necessary to
the next higher 1/16 of 1%) by dividing (i) the applicable Eurodollar Rate by
(ii) 1.00 minus the Eurodollar Reserve Percentage.
"Administrative Agent" means NationsBank, N.A., dba Bank of America,
N.A., in its capacity as administrative agent for Banks hereunder, or any
successor thereto.
"Advance Payment Contract" means any contract whereby Borrower either
(a) receives or becomes entitled to receive (either directly or indirectly) any
payment (an "Advance Payment") to be applied toward payment of the purchase
price of Hydrocarbons produced or to be produced from Mineral Interests owned by
Borrower and which Advance Payment is paid or to be paid in advance of actual
delivery of such production to or for the account of the purchaser regardless of
such production, or (b) grants an option or right of refusal to the purchaser to
take delivery of such production in lieu of payment, and, in either of the
foregoing instances, the Advance Payment is, or is to be, applied as payment in
full for such production when sold and delivered or is, or is to be, applied as
payment for a portion only of the purchase price thereof or of a percentage or
share of such production; provided that inclusion of the standard "take or pay"
provision in any gas sales or purchase contract or any other similar contract
shall not, in and of itself, constitute such contract as an Advance Payment
Contract for the purposes hereof.
"Affiliate" means, as to any Person, any Subsidiary of such Person, or
any other Person which, directly or indirectly, controls, is controlled by, or
is under common control with, such Person and, with respect to Borrower and
Guarantor, means, any director or executive officer of Borrower or Guarantor,
and any Person who holds ten percent (10%) or more of the voting stock of
Borrower or Guarantor. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlled by"
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and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or partnership interests, or by contract or
otherwise. With respect to any Person who is an individual, the term "Affiliate"
shall include any parent, spouse, sibling or lineal descendant of such Person,
and any trust as to which such Person (or any of the Affiliates described in
this sentence) is a trustee or beneficiary. The term "Affiliate" shall expressly
exclude ECT, Enron Corp. and the California Public Employees' Retirement System
and any Person, other than JEDI, that controls, is controlled by, or is under
common control with ECT, Enron Corp. or the California Public Employees'
Retirement System.
"Agreement" means this Agreement as the same may hereafter be modified,
amended or supplemented from time to time.
"Applicable Environmental Law" means any federal, state or local law,
common law, ordinance, regulation or policy, as well as order, decree, permit,
judgment or injunction issued, promulgated, approved, or entered thereunder,
relating to the environment or the transportation, disposal, discharge or
storage of Hazardous Substances, or the environmental conditions on, under, or
about any real property owned, leased or operated at any time by Borrower or
Guarantor including, without limitation, soil and groundwater conditions.
"Applicable Margin" means, for any Fiscal Quarter (or shorter period
for which such a determination is made), with respect to each Type of Tranche,
an amount determined by reference to the Average Borrowing Base Utilization
during such period, in accordance with the table below:
====================================================================================================================
Average Borrowing Applicable Margin Applicable Margin for
Base Utilization for Adjusted Base Rate Tranches Eurodollar Tranches
--------------------------------------------------------------------------------------------------------------------
< or = .50 to 1 0% 1.25%
--------------------------------------------------------------------------------------------------------------------
> .50 to 1 < or = .75 to 1 0% 1.50%
--------------------------------------------------------------------------------------------------------------------
> .75 to 1 < or = .90 to 1 0% 1.75%
--------------------------------------------------------------------------------------------------------------------
> .90 to 1 0% 2.00%
====================================================================================================================
"Approved Petroleum Engineer" means Xxxxx Xxxxx Company or any other
reputable firm of independent petroleum engineers as shall be selected by
Borrower and approved by Required Banks, such approval not to be unreasonably
withheld.
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"Arranger" means Banc of America Securities LLC in its capacity as Lead
Arranger and Sole Book Manager hereunder, or any successor thereto.
"Assignee" has the meaning given such term in Section 14.10(c).
"Assignment and Assumption Agreement" has the meaning given such term
in Section 14.10(c).
"Authorized Officer" means, as to any Person, its Chief Executive
Officer, its President, its Chief Financial Officer, any of its Vice Presidents,
its Treasurer or its corporate Secretary or any equivalent officer.
"Availability" means, as of any date, the remainder of (a) the
Borrowing Base in effect on such date, minus (b) the Outstanding Credit on such
date.
"Average Borrowing Base Utilization" means, for any Fiscal Quarter (or
shorter period as to which such a determination is made) the ratio of the
average Outstanding Credit during such period to the average Borrowing Base
during such period.
"Bank" means any financial institution reflected on Schedule 1 hereto
as having a Commitment and its successors and permitted Assignees, and "Banks"
shall mean all Banks.
"Base Rate" means the floating rate of interest established from time
to time by Administrative Agent as its "prime rate" of interest, which rate is
not the lowest rate of interest charged by Administrative Agent, each change in
the Base Rate to become effective without notice to Borrower on the effective
date of each such change.
"Borrower" means Mariner Energy, Inc., a Delaware corporation.
"Borrowing" means any disbursement to Borrower under, or to satisfy the
obligations of Borrower or Guarantor under, any of the Loan Papers. Any
Borrowing which will constitute an Adjusted Base Rate Tranche is referred to
herein as an "Adjusted Base Rate Borrowing," and any Borrowing which will
constitute a Eurodollar Tranche is referred to herein as a "Eurodollar
Borrowing."
"Borrowing Base" means the amount determined from time to time by
Administrative Agent (and approved by Banks) pursuant to Article IV as the
Borrowing Base hereunder.
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"Borrowing Base Deficiency" means, as of any date, the amount, if any,
by which the Outstanding Credit on such date exceeds the Borrowing Base in
effect on such date; provided, that, for purposes of determining the existence
and amount of any Borrowing Base Deficiency, Letter of Credit Exposure will not
be deemed to be outstanding to the extent it is secured by cash or U.S. Treasury
securities in the manner contemplated by Section 2.1(b).
"borrowing base deficiency payment date" shall have the meaning given
such term in Section 4.4.
"Borrowing Date" means the Eurodollar Business Day or the Domestic
Business Day, as the case may be, upon which the proceeds of any Borrowing are
made available to Borrower or to satisfy any obligation of Borrower or
Guarantor.
"Closing Date" means the date of this Agreement.
"Co-Agent" means Toronto Dominion (Texas), Inc., in its capacity as
co-agent for the Banks hereunder, or any successor thereto.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commitment" means, with respect to any Bank, the commitment of such
Bank to lend its Commitment Percentage of the Total Commitment to Borrower
pursuant to Section 2.1. The amount of each Bank's Commitment is the amount set
forth opposite such Bank's name on Schedule 1 hereto, as such Commitment may be
terminated or reduced from time to time in accordance with the provisions
hereof.
"Commitment Fee Percentage" means, for any Fiscal Quarter (or shorter
period for which such a determination is made), an amount determined by
reference to the Average Borrowing Base Utilization during such period, in
accordance with the table below:
================================================================================
Average Borrowing Commitment Fee
Base Utilization Percentage
--------------------------------------------------------------------------------
< or = .50 to 1 .250%
--------------------------------------------------------------------------------
> .50 to 1 < or = .75 to 1 .375%
--------------------------------------------------------------------------------
> .75 to 1 .500%
================================================================================
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"Commitment Percentage" means, with respect to each Bank, the
Commitment Percentage for such Bank set forth on Schedule 1 hereto.
"contract rate" has the meaning given such term in Section 2.5(g).
"Conversion Date" has the meaning given such term in Section 2.5(c).
"Debt" means, for any Person at any time, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (c)
all other indebtedness (including capitalized lease obligations, other than
usual and customary oil and gas leases) of such Person on which interest charges
are customarily paid or accrued, except for de minimis indebtedness associated
with company credit cards, (d) all Guarantees by such Person, (e) the unfunded
or unreimbursed portion of all letters of credit issued for the account of such
Person, (f) any amount owed by such Person representing the deferred purchase
price of property or services other than accounts payable incurred in the
ordinary course of business and in accordance with customary trade terms and
which are not more than ninety (90) days past the invoice date, and (g) all
liability of such Person as a general partner of a partnership for obligations
of such partnership of the nature described in (a) through (f) preceding.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice, lapse of time or both would, unless
cured or waived, become an Event of Default.
"Distribution" by any Person, means (a) with respect to any stock
issued by such Person or any partnership, joint venture, limited liability
company, membership or other equity interest of such Person, the retirement,
redemption, purchase, or other acquisition for value of any such stock or
partnership, joint venture, limited liability company, membership or other
equity interest, (b) the declaration or payment of any dividend or other
distribution (other than distributions in kind) on or with respect to any stock,
partnership, joint venture, limited liability company, membership or other
equity interest of any Person, and (c) any other payment (other than
distributions in kind) by such Person with respect to such stock, partnership,
joint venture, limited liability company, membership or other equity interest of
such Person.
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which national banks in Houston, Texas, are authorized to close.
"Domestic Lending Office" means, as to each Bank, its office located at
its address identified on Schedule 1 hereto as its Domestic Lending Office or
such other
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office as such Bank may hereafter designate as its Domestic Lending Office by
notice to Borrower and Administrative Agent.
"EBITDA" means net income before provision for income tax, plus
depreciation, depletion, amortization and other non-cash charges, less net
income attributable to gain or loss on the disposition of assets.
"ECT" means Enron Capital & Trade Resources Corp., a Delaware
corporation.
"Environmental Complaint" means any complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, proceeding,
judgment, letter or other formal communication from any federal, state or
municipal authority or any other party against Borrower or Guarantor involving
(a) a Hazardous Discharge from, onto or about any real property owned, leased or
operated at any time by Borrower or Guarantor, (b) a Hazardous Discharge caused,
in whole or in part, by Borrower or Guarantor or by any Person acting on behalf
of or at the instruction of Borrower or Guarantor in connection with the
operation thereof, or (c) any violation of any Applicable Environmental Law by
Borrower or Guarantor.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any corporation or trade or business under
common control with Borrower or Guarantor as determined under section
4001(a)(14) of ERISA.
"Eurodollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in the applicable eurodollar interbank market.
"Eurodollar Lending Office" means, as to each Bank, its office, branch
or affiliate located at its address identified on Schedule 1 hereto as its
Eurodollar Lending Office or such other office, branch or affiliate of such Bank
as it may hereafter designate as its Eurodollar Lending Office by notice to
Borrower and Administrative Agent.
"Eurodollar Rate" applicable to any Interest Period means the rate per
annum (rounded upward, if necessary, to the next higher 1/16th of 1%) reported,
at approximately 10:00 a.m. (Houston, Texas time) on the date that is two (2)
Eurodollar Business Days before the first day of such Interest Period, on
Telerate Access Service Page 3750 (British Bankers Association Settlement Rate)
as the London InterBank Offered Rate for dollar deposits having a term
comparable to such Interest Period and in an amount of $1,000,000 or more (or,
if such page on such service ceases to display such information, such other page
as may replace it on that service for the purpose of
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displaying such information); provided that if such rate does not appear on the
Telerate, then such rate shall be equal to the arithmetic mean (rounded upward,
if necessary, to the next higher one-sixteenth percent (1/16%)) of the interest
rates that appear at 10:00 a.m. (Houston, Texas time) on the date that is two
(2) Eurodollar Business Days before the first day of such Interest Period on
Reuters Screen page "LIBO" as offered quotations for dollar deposits for a
period equal to that of such Interest Period (or if such page on such service
ceases to display such information, such other page as may replace it on that
service for the purpose of displaying such information); provided that if such
rate does not appear on Telerate or Reuters, then such rate shall be equal to
the rate Administrative Agent determines to be the arithmetic mean (rounded
upward, if necessary, to the next higher one-sixteenth percent (1/16%)) of the
interest rates at which deposits in dollars in an amount approximately equal to
the principal amount of, and for a length of time approximately equal to the
Interest Period for, the Eurodollar Borrowing sought by Borrower are offered to
Administrative Agent in immediately available funds in the London interbank
market at 10:00 a.m. (Houston, Texas time) on the date that is two (2)
Eurodollar Business Days before the first day of such Interest Period.
"Eurodollar Reserve Percentage" means, for any day, that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in Dallas, Texas in respect of "Eurocurrency liabilities" (or in
respect of any other category of liabilities which includes deposits by
reference to which the interest rate on Eurodollar Tranches is determined or any
category of extensions of credit or other assets which includes loans by a
non-United States office of any Bank to United States residents). The Adjusted
Eurodollar Rate shall be adjusted automatically on and as of the effective date
of any change in the Eurodollar Reserve Percentage, regardless of whether one or
more fixed Eurodollar Tranches are then outstanding.
"Eurodollar Tranche" means, with respect to any Interest Period, any
portion of the principal amount outstanding under the Loan which bears interest
at a rate computed by reference to the Adjusted Eurodollar Rate for such
Interest Period.
"Event of Default" has the meaning set forth in Section 11.1.
"Exhibit" refers to an "exhibit" attached to this Agreement and
incorporated herein by reference, unless specifically provided otherwise.
"Existing Mineral Interests" means the Mineral Interests owned by
Borrower on the date hereof.
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"Facility Guaranty" means a Guaranty substantially in the form of
Exhibit B hereto to be executed by Guarantor in favor of a Bank pursuant to
which Guarantor guarantees to such Bank payment and performance in full of the
Obligations owing to such Bank, and "Facility Guarantys" shall mean all of such
Facility Guarantys collectively.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the next higher 1/16 of 1%) equal to the weighted
average of the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business Day
next succeeding such day, provided that (a) if the day for which such rate is to
be determined is not a Domestic Business Day, the Federal Funds Rate for such
day shall be such rate on such transactions on the next preceding Domestic
Business Day as so published on the next succeeding Domestic Business Day, and
(b) if such rate is not so published on such next succeeding Domestic Business
Day, the Federal Funds Rate for any day shall be the average rate charged to
Administrative Agent on such day on such transactions as determined by
Administrative Agent.
"Financial Officer" of any Person means its Chief Financial Officer;
provided, that if no Person serves in such capacity, "Financial Officer" shall
mean the highest ranking executive officer of such Person with responsibility
for accounting, financial reporting, cash management and similar functions.
"Fiscal Quarter" means the three (3) month periods ending on March 31,
June 30, September 30 and December 31 of each Fiscal Year.
"Fiscal Year" means each fiscal year of Borrower or Guarantor, as the
case may be.
"Fixed Charge Coverage Ratio" means the ratio of EBITDA for the four
(4) previous Fiscal Quarters to the sum of (a) interest expense, including
interest which may be required to be capitalized, for the previous four (4)
Fiscal Quarters, (b) the applicable maintenance capital expenditures for the
previous four (4) Fiscal Quarters and (c) income taxes paid during the previous
four (4) Fiscal Quarters. For purposes of this definition, the term "applicable
maintenance capital expenditures" shall mean, with respect to each Fiscal
Quarter, one-fourth (1/4th) of the amount of the annual maintenance capital
expenditures set forth in the then most recent Reserve Report prepared by the
Approved Petroleum Engineer and delivered to Administrative Agent with respect
to all Proved Producing Mineral Interests of Borrower.
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"GAAP" means generally accepted accounting principles and practices
which are recognized as such by the American Institute of Public Accountants
acting through its Accounting Principles Board or by the Financial Accounting
Standards Board, and which are consistently applied for all periods after the
date hereof so as to properly reflect the financial condition, and the results
of operations and changes in financial position, of Guarantor, Borrower and
their respective consolidated subsidiaries, except that any accounting principle
or practice required to be changed by the said Accounting Principles Board or
Financial Accounting Standards Board in order to continue as a generally
accepted accounting principle or practice may be so changed.
"Gas Balancing Agreement" means any agreement or arrangement whereby
Borrower, or any other party having an interest in any Hydrocarbons to be
produced from Mineral Interests in which Borrower owns an interest, has a right
to take more than its proportionate share of production therefrom.
"Governmental Authority" means any court or governmental department,
commission, board, bureau, agency, or instrumentality of any nation or of any
province, state, commonwealth, nation, territory, possession, county, parish, or
municipality, whether now or hereafter constituted or existing.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt of any
other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (a) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt (whether arising by virtue of partnership arrangements, by agreement to
keep-well, to purchase assets, goods, securities or services, to take-or-pay, or
to maintain financial statement conditions, by "comfort letter" or other similar
undertaking of support or otherwise) or (b) entered into for the purpose of
assuring in any other manner the obligee of such Debt of the payment thereof or
to protect such obligee against loss in respect thereof (in whole or in part),
provided that the term Guarantee shall not include endorsements for collection
or deposit in the ordinary course of business. The term "Guarantee" shall not
include any guarantee by Guarantor of any Debt of Borrower permitted hereunder.
"Guarantor" means Mariner Holdings, Inc., a Delaware corporation, which
is the owner and holder of 100% of the issued and outstanding capital stock (of
every class) of Borrower.
"Hazardous Discharge" means any releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
disposing or dumping of
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any Hazardous Substance from or onto any real property owned, leased or operated
at any time by Borrower or Guarantor.
"Hazardous Substance" means any pollutant, toxic substance, hazardous
waste, compound, element or chemical that is defined as hazardous, toxic,
noxious, dangerous or infectious pursuant to any Applicable Environmental Law or
which is otherwise regulated by any Applicable Environmental Law.
"Hedge Transaction" means any commodity, interest rate, currency or
other swap, option, collar, futures contract or other contract pursuant to which
a Person xxxxxx risks related to commodity prices, interest rates, currency
exchange rates, securities prices or financial market conditions. The term
"Hedge Transaction" expressly includes Oil and Gas Hedge Transactions.
"Hydrocarbons" means oil, gas, casinghead gas, drip gasolines, natural
gasoline, condensate, distillate, and all other liquid and gaseous hydrocarbons
produced or to be produced in conjunction therewith, and all products,
by-products and all other substances derived therefrom or the processing
thereof, and all other minerals and substances, including, but not limited to,
sulphur, lignite, coal, uranium, thorium, iron, geothermal steam, water, carbon
dioxide, helium, and any and all other minerals, ores, or substances of value,
and the products and proceeds therefrom, including, without limitation, all gas
resulting from the in-situ combustion of coal or lignite.
"Immaterial Title Deficiencies" means, with respect to Borrower's
Proved Mineral Interests, defects or clouds on title, discrepancies in reported
net revenue and working interest ownership percentages and other Liens, defects,
discrepancies and similar matters which do not, individually or in the
aggregate, affect Proved Mineral Interests with a Recognized Value greater than
two percent (2%) of the Recognized Value of all of Borrower's Proved Mineral
Interests.
"Initial Borrowing Base" means $60,000,000.
"Initial Reserve Report" means the engineering analysis of the Existing
Mineral Interests prepared by Xxxxx Xxxxx Company as of January 1, 1999.
"Interest Coverage Ratio" means the ratio of EBITDA during the previous
four (4) Fiscal Quarters to interest expense, including interest which may be
required to be capitalized, for the previous four (4) Fiscal Quarters.
"Interest Option" has the meaning given such term in Section 2.5(c).
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"Interest Period" means, with respect to each Borrowing comprised of
Eurodollar Tranches, the period commencing on the date of such Borrowing and
ending one (1), two (2) or three (3) months thereafter, as Borrower may elect in
the applicable Request for Borrowing; provided that:
(i) any Interest Period which would otherwise end on a day
which is not a Eurodollar Business Day shall be extended to
the next succeeding Eurodollar Business Day unless such
Eurodollar Business Day falls in another calendar month, in
which case such Interest Period shall end on the next
preceding Eurodollar Business Day;
(ii) any Interest Period which begins on the last Eurodollar
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, subject to clause
(iii) below, end on the last Eurodollar Business Day of a
calendar month; and
(iii) if any Interest Period includes a date on which any
payment of principal of the Loan subject to such Eurodollar
Tranche is required to be made hereunder, but does not end on
such date, then (A) the principal amount of each Eurodollar
Tranche required to be repaid on such date shall have an
Interest Period ending on such date, and (B) the remainder of
each such Eurodollar Tranche shall have an Interest Period
determined as set forth above; and
(iv) no Interest Period shall extend past the Maturity Date.
"Investment" means, with respect to any Person, any loan, advance,
extension of credit, capital contribution to, investment in or purchase of the
stock or other securities of, or interests in, any other Person; provided, that
"Investment" shall not include current customer and trade accounts which are
payable in accordance with customary trade terms.
"JEDI" means Joint Energy Development Investments Limited Partnership,
a Delaware limited partnership which owns, as of the date of this Agreement,
approximately 96% of the issued and outstanding capital stock of Guarantor.
"Laws" means all applicable statutes, laws, ordinances, regulations,
orders, writs, injunctions, or decrees of any state, commonwealth, nation,
territory, possession, county, township, parish, municipality or Governmental
Authority.
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"Lending Office" means as to any Bank its Domestic Lending Office or
its Eurodollar Lending Office, as the context may require.
"Letters of Credit" means letters of credit issued for the account of
Borrower pursuant to Section 2.1(b).
"Letter of Credit Exposure" of any Bank means such Bank's aggregate
participation in the unfunded portion and the funded but unreimbursed portion of
Letters of Credit outstanding at any time.
"Letter of Credit Fee" means, with respect to any Letter of Credit
issued hereunder, a fee in an amount equal to the greater of (a) $500 per annum,
or (b) for any Fiscal Quarter (or shorter period for which such a determination
is made), a percentage (calculated on a per annum basis) of the stated amount of
such Letter of Credit, determined by reference to the Average Borrowing Base
Utilization during such period, in accordance with the table below:
================================================================================
Per Annum
Average Borrowing Letter of Credit
Base Utilization Fee Percentage
--------------------------------------------------------------------------------
< or = .50 to 1 1.125%
--------------------------------------------------------------------------------
> .50 to 1 < or = .75 to 1 1.375%
--------------------------------------------------------------------------------
> .75 to < or = .90 to 1 1.625%
--------------------------------------------------------------------------------
> .90 to 1 1.875%
================================================================================
"Letter of Credit Fronting Fee" means, with respect to any Letter of
Credit issued hereunder, a fee equal to one tenth of one percent (.10%) per
annum of the stated amount of such Letter of Credit.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, a Person shall be deemed to own subject to a
Lien any asset which is acquired or held subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease or other title
retention agreement relating to such asset.
"LLC" means Mariner Energy LLC, a Delaware limited liability company,
which is the owner and holder of 100% of the issued and outstanding capital
stock (of every class) of Guarantor.
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"Loan" means the revolving credit facility in an amount outstanding at
any time not to exceed the amount of the Total Commitment then in effect to be
made by Banks to Borrower in accordance with Section 2.1.
"Loan Papers" means this Agreement, the Notes, the Facility Guarantys,
all Mortgages and all other certificates, documents or instruments delivered in
connection with this Agreement, as the foregoing may be amended from time to
time.
"Margin Regulations" means Regulations G, T, U and X of the Board of
Governors of the Federal Reserve System, as in effect from time to time.
"Margin Stock" means "margin stock" as defined in Regulation U.
"Material Adverse Effect" means a material adverse effect on (a) the
assets, liabilities, financial condition, results of operations, taken as a
whole, of Borrower and Guarantor, (b) the right or ability of Borrower or
Guarantor to fully, completely and timely perform its obligations under the Loan
Papers, (c) the validity or enforceability of any Loan Papers against Borrower
or Guarantor or (d) the validity, perfection or priority of any material Lien
intended to be created under or pursuant to any Loan Paper to secure the
Obligations.
"Material Agreement" means any material written or oral agreement,
contract, commitment, or understanding to which a Person is a party, by which
such Person is directly or indirectly bound, or to which any assets of such
Person may be subject, which is not cancelable by such Person upon notice of
thirty (30) days or less without liability for further payment other than
nominal penalty.
"Material Gas Imbalance" means, with respect to all Gas Balancing
Agreements to which Borrower is a party or by which any Mineral Interest owned
by Borrower is bound, a net gas imbalance to Borrower in excess of $2,000,000.
"Maturity Date" means October 1, 2002.
"Maximum Lawful Rate" means, for each Bank, the maximum rate (or, if
the context so permits or requires, an amount calculated at such rate) of
interest which, at the time in question would not cause the interest charged on
the portion of the Loan owed to such Bank at such time to exceed the maximum
amount which such Bank would be allowed to contract for, charge, take, reserve,
or receive under applicable Laws after taking into account, to the extent
required by applicable Laws, any and all relevant payments or charges under the
Loan Papers. To the extent the Laws of the State of Texas are applicable for
purposes of determining the "Maximum Lawful Rate," such term shall mean the
"applicable weekly ceiling" as defined in the Texas Finance
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Code, as supplemented and amended by Art. 1D.003 of the Texas Credit Title, as
amended.
"Mineral Interests" means rights, estates, titles, and interests in and
to oil and gas leases and any oil and gas interests, royalty and overriding
royalty interest, production payment, net profits interests, oil and gas fee
interests, and other rights therein, including, without limitation, any
reversionary or carried interests relating to the foregoing, together with
rights, titles, and interests created by or arising under the terms of any
unitization, communization, and pooling agreements or arrangements, and all
properties, rights and interests covered thereby, whether arising by contract,
by order, or by operation of Laws, which now or hereafter include all or any
part of the foregoing.
"Mortgage" and "Mortgages" have the meanings given such terms in
Section 5.1(a).
"Note" means a promissory note of Borrower payable to the order of a
Bank, in substantially the form of Exhibit A hereto, in the amount of such
Bank's Commitment, evidencing the obligation of Borrower to repay to such Bank
its Commitment Percentage of the Loan, together with all modifications,
extensions, renewals, and rearrangements thereof and "Notes" means all of such
Notes collectively.
"Obligations" means all present and future indebtedness, obligations
and liabilities, and all renewals and extensions thereof, or any part thereof,
of Borrower or Guarantor to Administrative Agent or to any Bank or any Affiliate
of any Bank arising pursuant to the Loan Papers or pursuant to any Hedge
Transaction entered into with any Bank or any Affiliate of any Bank, and all
interest accrued thereon and costs, expenses, and attorneys' fees incurred in
the enforcement or collection thereof, regardless of whether such indebtedness,
obligations and liabilities are direct, indirect, fixed, contingent, liquidated,
unliquidated, joint, several or joint and several.
"Oil and Gas Hedge Transaction" means a Hedge Transaction pursuant to
which any Person xxxxxx the price to be received by it for future production of
Hydrocarbons.
"Outstanding Credit" means, on any date, the sum of (a) the aggregate
outstanding Letter of Credit Exposure on such date, including the aggregate
Letter of Credit Exposure related to Letters of Credit to be issued on such
date, plus (b) the outstanding principal balance of the Loan on such date,
including the amount of any Borrowing to be made on such date.
"Participant" has the meaning given such term in Section 14.10(b).
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"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Affiliate Transaction" means (a) any transaction permitted
by that certain Stockholders' Agreement dated April 2, 1996, among ECT, Xxxxxx
X. Xxxxxxxxx, Xxxxxxx X. Xxxxx, Xxxxxxx X. Xxxxxxxxx, X. X. Xxxxx and Guarantor
(then known as Mystery Acquisition, Inc.) as amended by that certain
Stockholders' Agreement Amendment No. 1 dated May 16, 1996 among such parties
and JEDI and by that certain Stockholders' Agreement Amendment No. 2 dated as of
May 31, 1996 among such parties and JEDI, as further amended and restated by
that certain Amended and Restated Shareholders' Agreement dated October 12, 1998
among LLC, Guarantor, ECT, JEDI and the other shareholders of LLC (as amended,
the "Stockholders' Agreement"), (b) the grant of options to purchase or sales of
equity securities by Borrower or Guarantor to the directors, officers,
employees, agents or consultants of Borrower or Guarantor and (c) any assignment
or conveyance to individuals (or their nominees) previously or now or hereafter
employed by Borrower or who are or were consultants to Borrower of overriding
royalty interests in individual oil or gas xxxxx or prospects now or hereafter
owned by Borrower or in which Borrower has or will have an interest pursuant to
any employee incentive compensation program of Borrower, as amended from time to
time, entered into by Borrower in such form and amounts as are not uncommon for
corporations of established reputation engaged in the same or similar business
and owning and operating similar properties, and any payment of any such
overriding royalty, provided that (i) no such assignment or conveyance shall
reduce the net revenue interest of Borrower in any individual oil or gas well or
prospect which has not paid out (for purposes of the relevant employee incentive
compensation program) by more than 5%, or in any such well or prospect which has
paid out (for purposes of the relevant employee incentive compensation program)
by more than 10%, and (ii) any such compensation program shall not otherwise be
in violation of the terms of this Agreement.
"Permitted Distributions" means, so long as no Default or Event of
Default has occurred and is continuing, (a) Distributions by Borrower to
Guarantor in an amount not to exceed $200,000.00 during each Fiscal Year of
Borrower, to be utilized by Guarantor for general corporate and overhead
expenses incurred by Guarantor during such Fiscal Year, (b) to the extent the
same constitute a Distribution, payments pursuant to the Stockholders'
Agreement, (c) any Distribution received by Borrower or any Subsidiary of
Borrower and (d) payment by Borrower of any Subordinated Debt (but only to the
extent not limited or prohibited by the subordination provisions of the
documents evidencing such Subordinated Debt).
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"Permitted Encumbrances" means with respect to any asset:
(a) Liens (if any) securing the Notes in favor of
Administrative Agent or Banks;
(b) Minor defects in title which do not secure the payment of
money and otherwise have no material adverse effect on the value or the
operation of the subject property, and for the purposes of this Agreement, a
minor defect in title shall include, without limitation, (i) easements,
rights-of-way, servitudes, permits, licenses, surface leases and other similar
rights in respect of surface operations, and easements for pipelines, streets,
alleys, highways, telephone lines, power lines, railways and other easements,
rights-of-way and licenses, on, over or in respect of any of the properties of
Borrower that are customarily granted in the oil and gas industry and (ii)
encroachments, restrictive covenants and zoning and other similar restrictions;
(c) Inchoate statutory or operators' liens securing
obligations for labor, services, materials and supplies furnished to Mineral
Interests which are not delinquent (except to the extent permitted by Section
8.7);
(d) Mechanic's, materialmen's, warehouseman's, landlord's,
journeyman's and carrier's liens and other similar liens arising by operation of
Law in the ordinary course of business which are not delinquent (except to the
extent permitted by Section 8.7);
(e) Liens for Taxes or assessments not yet due or not yet
delinquent, or, if delinquent, that are being contested in good faith in the
normal course of business by appropriate action, as required by Section 8.7;
(f) Lease and other Mineral Interest burdens payable to third
parties which are deducted in the calculation of discounted present value in the
Reserve Report including, without limitation, any royalty, overriding royalty,
net profits interest, production payment, carried interest or reversionary
working interest;
(g) purchase money Liens on assets acquired after the date
hereof to the extent the acquisition of such assets and the financing thereof
are permitted by the other provisions of this Agreement;
(h) with respect to any property from which Hydrocarbons may
be severed or extracted in commercial quantities, Liens for farmout, farmin,
joint operating, and area of mutual interest agreements and/or similar
arrangements that Borrower
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determines in good faith to be necessary for the economic development of such
property and are customary and usual for the area in which such property is
located;
(i) rights reserved to or vested in any municipality or other
Governmental Authority by the terms of any right, power, franchise, grant,
license or permit, or by any provision of law, to terminate such right, power,
franchise, grant, license or permit or to purchase, condemn, expropriate or
recapture, or to designate a purchaser of, any of the property of Borrower;
(j) rights reserved to or vested in any municipality or other
Governmental Authority to control or regulate any property of Borrower, or to
use such property in a manner which does not materially impair the use of such
property for the purposes for which it is held by Borrower;
(k) any obligations or duties affecting the property of
Borrower to any municipality or other Governmental Authority with respect to any
franchise, grant, license or permit;
(l) rights of a common owner of any interest in real estate,
right-of-way or easement held by Borrower and such common owner as tenants in
common or through other common ownership;
(m) rights of set-off or banker's liens created by law in
favor of commercial banks;
(n) Liens to secure obligations of Borrower permitted by
Section 9.6;
(o) in addition to those Liens permitted under paragraphs (a)
through (m), Liens, charges and encumbrances upon Borrower's assets which in the
aggregate do not have a value in excess of $1,000,000; and
(p) any extension, renewal or replacement of the foregoing.
"Permitted Investments" means (a) readily marketable direct obligations
of the United States of America, (b) fully insured time deposits and
certificates of deposit with maturities of one year or less of any commercial
bank operating in the United States having capital and surplus in excess of
$50,000,000, (c) commercial paper of a domestic issuer if at the time of
purchase such paper is rated in one of the two highest ratings categories of
Standard and Poor's Corporation or Xxxxx'x Investors Service, (d) mutual funds
that are restricted to investing in the types of investments described in (a),
(b) and (c) above, (e) loans to officers of Borrower or Guarantor which do not,
at
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any time, exceed $250,000 in the aggregate, (f) with respect to Guarantor, its
investment in Borrower, including any further capital contributions to Borrower
by Guarantor and (g) other Investments; provided that, the aggregate amount of
all other Investments made pursuant to this clause (g) outstanding at any time
shall not exceed $5,000,000 (measured on a cost basis) in the aggregate.
"Permitted Subsidiary" means a subsidiary of Borrower not prohibited by
Section 9.4.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a Government
Authority.
"Plan" means an employee benefit plan within the meaning of section
3(3) of ERISA, and any other similar plan, policy or arrangement, including an
employment contract, whether formal or informal and whether legally binding or
not, under which Borrower or Guarantor and/or an ERISA Affiliate has any current
or future obligation or liability or under which any present or former employee
of Borrower or Guarantor and/or an ERISA Affiliate, or such present or former
employee's dependents or beneficiaries, has any current or future right to
benefits resulting from the present or former employee's employment relationship
with Borrower or Guarantor and/or an ERISA Affiliate.
"Prior Credit Agreement" means that certain Credit Agreement dated June
28, 1996 among Borrower and NationsBank of Texas, N.A., as Agent and in its
individual capacity as a Bank, as amended by that certain First Amendment to
Credit Agreement dated August 12, 1996 among Borrower, NationsBank of Texas,
N.A., as Agent, Toronto Dominion (Texas), Inc., as Co-Agent, and the Banks
defined therein, and by that certain Second Amendment to Credit Agreement dated
as of August 11, 1998 among Borrower, NationsBank, N.A., as Agent, Toronto
Dominion (Texas), Inc., as Co-Agent, and the Banks defined therein.
"Proved Mineral Interests" means, collectively, Proved Producing
Mineral Interests, Proved Nonproducing Mineral Interests, and Proved Undeveloped
Mineral Interests.
"Proved Nonproducing Mineral Interests" means all Mineral Interests
which constitute proved developed nonproducing reserves.
"Proved Producing Mineral Interests" means all Mineral Interests which
constitute proved developed producing reserves.
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"Proved Undeveloped Mineral Interests" means all Mineral Interests
which constitute proved undeveloped reserves.
"Quarterly Date" means each March 31, June 30, September 30 and
December 31.
"Recognized Value" means, with respect to oil and gas properties, the
pre-tax value of such properties determined in accordance with Financial
Accounting Standards Board Statement 69, generally known as the "standardized
measure of discounted cash flow".
"Redetermination" means any Scheduled Redetermination or Special
Redetermination.
"Redetermination Date" means (a) with respect to any Scheduled
Redetermination, a day designated by Administrative Agent which is not more than
thirty (30) days following receipt by Administrative Agent of the Reserve Report
required to be delivered by Borrower for use in connection with such Scheduled
Redetermination, (b) with respect to any Special Redetermination requested by
Borrower, a day designated by Administrative Agent which is not more than thirty
(30) days following the date of a request for a Special Redetermination and (c)
with respect to any Special Redetermination made by Administrative Agent, a day
designated by Administrative Agent which is not less than ten (10) days nor more
than thirty (30) days following Administrative Agent's delivery of notice to
Borrower of Administrative Agent's intent to make a Special Redetermination.
"Refunding Borrowing" means a Borrowing made solely for the purpose of
refinancing a Eurodollar Tranche on the expiration of the Interest Period
applicable thereto or for the purpose of converting all or any part of an
Adjusted Base Rate Tranche to a Eurodollar Tranche, in each case in the manner
contemplated by Section 2.5(c) and which does not result in any increase in the
outstanding principal balance of the Loan. Refunding Borrowings may be Adjusted
Base Rate Borrowings or Eurodollar Borrowings.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, 12 C.F.R. Part 221, as in effect from time to time.
"Request for Borrowing" has the meaning set forth in Section 2.2(a).
"Request for Letter of Credit" has the meaning set forth in Section
2.3(a).
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"Required Banks" means Banks holding at least two-thirds (2/3) of the
Total Commitment.
"Required Recognized Value" means Mineral Interests owned by Borrower
having an aggregate Recognized Value of at least 85% of the Recognized Value of
all Mineral Interests owned by Borrower.
"Reserve Report" means an unsuperseded engineering analysis of the
Mineral Interests owned by Borrower, in form and substance acceptable to
Administrative Agent, prepared in accordance with customary and prudent
practices in the petroleum engineering industry and Financial Accounting
Standards Board Statement 69. Each Reserve Report required to be delivered by
February 28 of each year pursuant to Section 4.1 shall be prepared by the
Approved Petroleum Engineer. Each other Reserve Report shall be prepared by
Borrower's in-house engineering staff. Notwithstanding the foregoing, in
connection with any Special Redetermination requested by Borrower, the Reserve
Report shall be in form and scope mutually acceptable to Borrower and
Administrative Agent. The term "Reserve Report" expressly includes the Initial
Reserve Report.
"Restricted Payment" means, with respect to any Person, unless the same
constitutes a Permitted Distribution (a) any Distribution by such Person, or (b)
the retirement, redemption or prepayment prior to scheduled maturity by such
Person of any Debt of such Person owed to an Affiliate of such Person.
"Rollover Notice" has the meaning given such term in Section 2.5(c).
"Schedule" refers to a "schedule" attached to this Agreement and
incorporated herein by reference, unless specifically indicated otherwise.
"Scheduled Redetermination" means any Redetermination of the Borrowing
Base pursuant to Section 4.2.
"Section" refers to a "section" or "subsection" of this Agreement,
unless specifically indicated otherwise.
"Special Redetermination" means any Redetermination of the Borrowing
Base pursuant to Section 4.3.
"Stockholders' Agreement" has the meaning given such term in the
definition of "Permitted Affiliate Transaction".
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"Subordinated Debt" means indebtedness of Borrower up to $100,000,000,
so long as the same is subordinated in a manner, and is otherwise, reasonably
satisfactory to Required Banks.
"Subsidiary" means, for any Person, any corporation or other entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions (including that of a general partner) are at the time directly or
indirectly owned, collectively, by such Person and any Subsidiaries of such
Person.
"Taxes" means all taxes, assessments, filing or other fees, levies,
imposts, duties, deductions, withholdings, stamp taxes, capital transaction
taxes, foreign exchange taxes or other charges, or other charges of any nature
whatsoever, from time to time or at any time imposed by Law or any Governmental
Authority. "Tax" means any one of the foregoing.
"Total Commitment" means the Commitments of all Banks in an initial
aggregate amount of $150,000,000 as such amount may be reduced from time to time
pursuant to Section 2.7.
"Tranche" means an Adjusted Base Rate Tranche or a Eurodollar Tranche
and "Tranches" means Adjusted Base Rate Tranches or Eurodollar Tranches or any
combination thereof.
"Type" means, with reference to a Tranche, the characterization of such
Tranche as an Adjusted Base Rate Tranche or a Eurodollar Tranche, based on the
method by which the accrual of interest on such Tranche is calculated.
"Unrestricted Subsidiary Debt" means any Debt of any Permitted
Subsidiary for which neither Borrower nor Guarantor has any direct or indirect
liability and as to which no properties or assets of Borrower or Guarantor serve
as security.
SECTION 1.2. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
of any Person required to be delivered hereunder shall be expressed in U.S.
Dollars and shall be prepared in accordance with GAAP, applied on a basis
consistent with the most recent audited consolidated financial statements of
such Person delivered to Banks except for changes concurred in by such Person's
independent certified public accountants and which are disclosed to
Administrative Agent on the next date on which financial statements are required
to be delivered to Banks hereunder; provided that, unless
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Required Banks shall otherwise agree in writing, no such change shall modify or
affect the manner in which compliance with the covenants contained in Article IX
are computed such that all such computations shall be conducted utilizing
financial information presented consistently with prior periods.
SECTION 1.3. Petroleum Terms. As used herein, the terms "proved
reserves," "proved developed reserves," "proved developed producing reserves,"
"proved developed nonproducing reserves," and "proved undeveloped reserves" have
the meaning given such terms from time to time and at the time in question by
the Society of Petroleum Engineers of the American Institute of Mining
Engineers.
ARTICLE II
THE CREDIT
SECTION 2.1. Commitments.
(a) Each Bank severally agrees, subject to Section 2.1(c) and
the other terms and conditions set forth in this Agreement, to lend to
Borrower from time to time prior to the Maturity Date, amounts not to
exceed in the aggregate at any one time outstanding, the amount of such
Bank's Commitment reduced by an amount equal to such Bank's Letter of
Credit Exposure. Each Borrowing shall be in an aggregate principal
amount of $1,000,000 or any larger integral multiple of $100,000
(except that any Adjusted Base Rate Borrowing may be in an amount equal
to the Availability at such time), and (ii) shall be made from Banks
ratably in accordance with their respective Commitment Percentages.
Subject to the foregoing limitations and the other provisions of this
Agreement, prior to the Maturity Date, Borrower may borrow under this
Section 2.1(a), repay amounts borrowed and request new Borrowings
hereunder.
(b) Administrative Agent will, from time to time prior to the
Maturity Date, upon request by Borrower, issue Letters of Credit for
the account of Borrower so long as (i) the sum of (A) the aggregate
Letter of Credit Exposure then existing, and (B) the amount of the
requested Letter of Credit does not exceed $5,000,000, and (ii)
Borrower would be entitled to a Borrowing under Sections 2.1(a) and (c)
in the amount of the requested Letter of Credit. Not less than three
(3) Domestic Business Days prior to the requested date of issuance of
any such Letter of Credit, Borrower shall execute and deliver to
Administrative Agent, Administrative Agent's customary letter of credit
application. Each Letter of Credit shall be in the minimum amount of
$10,000 and shall be in form and
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substance acceptable to Administrative Agent. No Letter of Credit shall
have an expiration date later than the Maturity Date. Upon the date of
issuance of a Letter of Credit, Administrative Agent shall be deemed to
have sold to each other Bank, and each other Bank shall be deemed to
have unconditionally and irrevocably purchased from Administrative
Agent, a non-recourse participation in the related Letter of Credit and
Letter of Credit Exposure equal to such Bank's Commitment Percentage of
such Letter of Credit and Letter of Credit Exposure. Upon request of
any Bank, but not more often than quarterly, Administrative Agent shall
provide notice to each Bank by telephone, teletransmission or telex
setting forth each Letter of Credit issued and outstanding pursuant to
the terms hereof and specifying the beneficiary and expiration date of
each such Letter of Credit, and each Bank's percentage of each such
Letter of Credit. If any Letter of Credit is presented for payment by
the beneficiary thereof, Administrative Agent shall cause an Adjusted
Base Rate Borrowing to be made to reimburse Administrative for the
payment under the Letter of Credit, whether or not Borrower would then
be entitled to a Borrowing pursuant to the terms hereof, and each Bank
shall be obligated to lend its Commitment Percentage of such Adjusted
Base Rate Borrowing. On each Quarterly Date, subject to the provisions
of Section 14.7, if applicable, Borrower shall pay to Administrative
Agent (a) the Letter of Credit Fee and (b) the Letter of Credit
Fronting Fee with respect to each Letter of Credit which was
outstanding during the Fiscal Quarter ending on such Quarterly Date.
Administrative Agent shall distribute each Letter of Credit Fee to
Banks in accordance with their respective Commitment Percentages, and
Administrative Agent shall retain each Letter of Credit Fronting Fee
for its own account.
Upon the occurrence of an Event of Default, Borrower shall, on the next
succeeding Domestic Business Day, deposit with Administrative Agent
cash in such amounts as Administrative Agent may request, up to a
maximum amount equal to the aggregate existing Letter of Credit
Exposure of all Banks. Any amounts so deposited shall be held by
Administrative Agent for the ratable benefit of all Banks as security
for the aggregate existing Letter of Credit Exposure and the other
Obligations, and Borrower will, in connection therewith, execute and
deliver such security agreements in form and substance satisfactory to
Administrative Agent which it may, in its discretion, require. As
drafts or demands for payment are presented under any Letter of Credit,
Administrative Agent shall apply such cash to satisfy such drafts or
demands. When all Letters of Credit have expired and the Obligations
have been repaid in full (and no Bank has any obligation to lend
hereunder and Administrative Agent has no obligation to issue Letters
of Credit hereunder) or such Event of Default has been cured to the
satisfaction of Required Banks, Administrative Agent shall release to
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Borrower any remaining cash and securities deposited under this Section
2.1(b). Whenever Borrower is required to make deposits under this
Section 2.1(b) and fails to do so on the day such deposit is due,
Administrative Agent or any Bank may, without notice to Borrower, make
such deposit (whether by application of proceeds of any collateral for
the Obligation, by transfers from other accounts maintained with any
Bank or otherwise) using any funds then available to any Bank of
Borrower or Guarantor.
(c) No Bank will be obligated to lend to Borrower hereunder or
incur Letter of Credit Exposure, and Borrower shall not be entitled to
borrow hereunder or obtain Letters of Credit hereunder in an amount
which would cause the Outstanding Credit to exceed the Borrowing Base
then in effect under Article IV. No Bank shall be obligated to fund
Borrowings hereunder and Borrower shall not be entitled to Borrowings
hereunder during the existence of a Borrowing Base Deficiency. Nothing
in this Section 2.1(c) shall be deemed to limit any Bank's obligation
to fund Adjusted Base Rate Borrowings with respect to its participation
in Letters of Credit in connection with any Borrowing comprised of
Adjusted Base Rate Borrowings made as a result of the drawing under any
Letter of Credit.
SECTION 2.2. Method of Borrowing.
(a) In order to request any Borrowing other than Borrowings
outstanding on the date hereof, Borrower shall hand deliver or telecopy
to Administrative Agent a duly completed Request for Borrowing (herein
so called) prior to 12:00 noon (Houston, Texas time), (i) at least one
(1) Domestic Business Day before the Borrowing Date specified for a
proposed Adjusted Base Rate Borrowing, and (ii) at least three (3)
Eurodollar Business Days before the Borrowing Date of a proposed
Eurodollar Borrowing. Each such Request for Borrowing shall be
substantially in the form of Exhibit C hereto, and shall specify:
(i) the Borrowing Date of such Borrowing, which shall
be a Domestic Business Day in the case of an Adjusted Base
Rate Borrowing or a Eurodollar Business Day in the case of a
Eurodollar Borrowing;
(ii) the aggregate amount of such Borrowing;
(iii) whether such Borrowing is to be in Adjusted
Base Rate Borrowing or a Eurodollar Borrowing; and
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(iv) in the case of a Eurodollar Borrowing, the
duration of the Interest Period applicable thereto, subject to
the provisions of the definition of Interest Period.
(b) Upon receipt of a Request for Borrowing, Administrative
Agent shall promptly notify each Bank of the contents thereof and the
amount of the Borrowing to be loaned by such Bank pursuant thereto, and
such Request for Borrowing shall not thereafter be revocable by
Borrower.
(c) Not later than 12:00 noon (Houston, Texas time) on the
date of each Borrowing, each Bank shall make available its Commitment
Percentage of such Borrowing, in Federal or other funds immediately
available in Houston, Texas to Administrative Agent at its address set
forth on Schedule 1 hereto. Unless Administrative Agent determines that
any applicable condition specified in Section 6.2 has not been
satisfied, Administrative Agent will make the funds so received from
Banks available to Borrower at Administrative Agent's aforesaid
address.
SECTION 2.3. Method of Requesting Letters of Credit.
(a) In order to request the issuance of any Letter of Credit
hereunder, Borrower shall hand deliver or telecopy to Administrative
Agent a duly completed Request for Letter of Credit (herein so called)
prior to 12:00 noon (Houston, Texas time) at least three (3) Domestic
Business Days before the date specified for issuance of such Letter of
Credit. Each Request for Letter of Credit shall be substantially in the
form of Exhibit D hereto, shall be accompanied by Administrative
Agent's duly completed and executed letter of credit application and
agreement and shall specify:
(i) the requested date for issuance of such Letter of
Credit;
(ii) the terms of such requested Letter of Credit,
including the name and address of the beneficiary, the stated
amount, the expiration date and the conditions under which
drafts under such Letter of Credit are to be available; and
(iii) the purpose of such Letter of Credit.
(b) Upon receipt of a Request for Letter of Credit,
Administrative Agent shall promptly notify each Bank of the contents
thereof, including the amount of
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the requested Letter of Credit, and such Request for Letter of Credit
shall not thereafter be revocable by Borrower.
(c) No later than 12:00 noon (Houston, Texas time) on the date
of issuance of each Letter of Credit as set forth in the applicable
Request for Letter of Credit, unless Administrative Agent determines
that any applicable condition precedent set forth in Section 6.2 has
not been satisfied, Administrative Agent will issue and deliver such
Letter of Credit pursuant to the instructions of Borrower.
SECTION 2.4. Notes. Each Bank's Commitment Percentage of the Loan
shall be evidenced by a single Note payable to the order of such Bank in an
amount equal to such Bank's Commitment.
SECTION 2.5. Interest Rates; Payments.
(a) The principal amount of the Loan outstanding from day to
day which is the subject of an Adjusted Base Rate Tranche shall bear
interest at a rate per annum equal to the lesser of (x) the sum of the
Applicable Margin plus the Adjusted Base Rate in effect from day to day
and (y) the Maximum Lawful Rate. Interest on any portion of the
principal of the Loan subject to an Adjusted Base Rate Tranche shall be
payable as it accrues on each Quarterly Date.
(b) The principal amount of the Loan outstanding from day to
day which is the subject of a Eurodollar Tranche shall bear interest
for the Interest Period applicable thereto at a rate per annum equal to
the lesser of (x) the sum of the Applicable Margin plus the applicable
Adjusted Eurodollar Rate and (y) the Maximum Lawful Rate. Interest on
any portion of the principal of any Loan subject to a Eurodollar
Tranche shall be payable on the last day of the Interest Period
applicable thereto.
(c) So long as no Default or Event of Default shall be
continuing, but subject to the provisions of this Section 2.5, Borrower
shall have the option of having all or any portion of the principal
outstanding under the Loan be the subject of an Adjusted Base Rate
Tranche or up to four (4) Eurodollar Tranches, which shall bear
interest at rates based upon the Adjusted Base Rate and the Adjusted
Eurodollar Rate, respectively (each such option is referred to herein
as an "Interest Option"); provided, that each Eurodollar Tranche shall
be in a minimum amount of $1,000,000 and shall be in an amount which is
an integral multiple of $100,000. Each change in an Interest Option
made pursuant to this Section 2.5(c) shall be deemed both a payment in
full of the portion of the
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principal of the Loan which was the subject of the Adjusted Base Rate
Tranche or Eurodollar Tranche from which such change was made and a
Borrowing (notwithstanding that the unpaid principal amount of the
applicable Loan is not changed thereby) of the portion of the principal
of the applicable Loan which is the subject of the Adjusted Base Rate
Tranche or Eurodollar Tranche into which such change was made. Prior to
the termination of each Interest Period with respect to each Eurodollar
Tranche, Borrower shall give written notice (a "Rollover Notice") in
the form of Exhibit E attached hereto to Administrative Agent of the
Interest Option which shall be applicable to such portion of the
principal of the Loan upon the expiration of such Interest Period. Such
Rollover Notice shall be given to Administrative Agent at least one (1)
Domestic Business Day, in the case of an Adjusted Base Rate Tranche
selection and three (3) Eurodollar Business Days, in the case of a
Eurodollar Tranche selection, prior to the termination of the Interest
Period then expiring. If Borrower shall specify a Eurodollar Tranche,
such Rollover Notice shall also specify the length of the succeeding
Interest Period (subject to the definition of such term) selected by
Borrower. Each Rollover Notice shall be irrevocable and effective upon
notification thereof to Administrative Agent. If the required Rollover
Notice shall not have been timely received by Administrative Agent,
Borrower shall be deemed to have elected that the principal of the Loan
subject to the Interest Period then expiring be the subject of an
Adjusted Base Rate Tranche upon the expiration of such Interest Period
and Borrower will be deemed to have given Administrative Agent notice
of such election. Subject to the limitations set forth in this Section
2.5(c) on the minimum amount of Eurodollar Tranches, Borrower shall
have the right to convert each Adjusted Base Rate Tranche to a
Eurodollar Tranche by giving Administrative Agent a Rollover Notice of
such election at least three (3) Eurodollar Business Days prior to the
date on which Borrower elects to make such conversion (a "Conversion
Date"). The Conversion Date selected by Borrower shall be a Eurodollar
Business Day. Notwithstanding anything in this Section 2.5 to the
contrary, no portion of the principal of a Loan which is the subject of
an Adjusted Base Rate Tranche may be converted to a Eurodollar Tranche
and no Eurodollar Tranche may be continued as such when any Default or
Event of Default has occurred and is continuing, but each such Tranche
shall be automatically converted to an Adjusted Base Rate Tranche on
the last day of each applicable Interest Period.
(d) Interest payable hereunder with respect to each Adjusted
Base Rate Tranche shall be based on the number of actual days elapsed
and the number of actual days in the then current calendar year.
Interest payable hereunder with respect to each Eurodollar Tranche
shall be computed based on
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the number of actual days elapsed and assuming that each calendar year
consisted of four ninety (90) day quarters.
(e) Notwithstanding anything to the contrary set forth in
Section 2.5(a), (b) or (c) above, all overdue principal of and, to the
extent permitted by law, overdue interest, shall bear interest from the
date due, payable on demand, for each day until paid at a rate per
annum equal to the lesser of (a) the sum of (i) four percent (4%), plus
(ii) the Adjusted Base Rate in effect from day to day, and (b) the
Maximum Lawful Rate.
(f) Administrative Agent shall determine each interest rate
applicable to each Borrowing in accordance with the terms hereof. Upon
the request of Borrower or any Bank, Administrative Agent shall
promptly notify such requesting party, by telephone or telecopy of each
rate of interest so determined, and its determination thereof shall be
conclusive in the absence of manifest error.
(g) Notwithstanding the foregoing, if at any time the rate of
interest calculated with reference to the Adjusted Base Rate or the
Eurodollar Rate hereunder (the "contract rate") is limited to the
Maximum Lawful Rate, any subsequent reductions in the contract rate
shall not reduce the rate of interest on the affected Loan below the
Maximum Lawful Rate until the total amount of interest accrued equals
the amount of interest which would have accrued if the contract rate
had at all times been in effect. In the event that at maturity (stated
or by acceleration), or at final payment of any Note, the total amount
of interest paid or accrued on such Note is less than the amount of
interest which would have accrued if the contract rate had at all times
been in effect with respect thereto, then at such time, to the extent
permitted by law, Borrower shall pay to the holder of such Note an
amount equal to the difference between (i) the lesser of the amount of
interest which would have accrued if the contract rate had at all times
been in effect and the amount of interest which would have accrued if
the Maximum Lawful Rate had at all times been in effect, and (ii) the
amount of interest actually paid on such Note.
SECTION 2.6. Prepayments. Borrower may, subject to Section 3.3 and the
other provisions of this Agreement, upon three (3) Domestic Business Days
advance notice to Administrative Agent, prepay the principal of Loan in whole or
in part. Any partial prepayment shall be in an integral multiple of $500,000.
Borrower shall not be entitled to make more than one (1) prepayment in any
calendar week.
SECTION 2.7. Reduction of Commitments. Borrower may, by notice to
Administrative Agent five (5) Domestic Business Days prior to the effective date
of any
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such reduction, reduce the Total Commitment (and thereby reduce the Commitment
of each Bank ratably) in whole or in part. Any reduction shall be in a minimum
amount of $5,000,000 and shall be in an integral multiple of $1,000,000. On the
effective date of any such reduction, Borrower shall, to the extent required as
a result of such reduction, make a principal payment on the Loan in an amount
sufficient to cause the principal balance of the Loan then outstanding to be
equal to or less than the Total Commitment as thereby reduced. Notwithstanding
the foregoing, Borrower shall not be permitted to reduce the Total Commitment to
an amount less than the aggregate Letter of Credit Exposure of all Banks.
SECTION 2.8. Termination of Commitments; Final Maturity. The Total
Commitment (and the Commitment of each Bank) shall terminate, and the entire
outstanding principal balance of the Loan, all interest accrued thereon, all
accrued but unpaid fees hereunder and all other outstanding Obligations shall be
due and payable in full on the Maturity Date.
SECTION 2.9. Application of Payments. Each repayment pursuant to
Sections 2.6, 2.7, and 4.4 shall be made together with accrued interest on the
amount repaid to the date of payment, and shall be applied in accordance with
Section 3.2 and the other provisions of this Agreement.
SECTION 2.10. Commitment Fee. On each Quarterly Date and, in the event
the Commitments are terminated in their entirety, on the date of such
termination, Borrower shall pay to Administrative Agent, for the ratable benefit
of each Bank based on each Bank's Commitment Percentage, a commitment fee equal
to the Commitment Fee Percentage (applied on a per annum basis and computed on
the number of actual days elapsed and assuming that each calendar year consisted
of three hundred sixty (360) days) of the average daily Availability for the
Fiscal Quarter (or portion thereof) ending on such Quarterly Date or other date.
SECTION 2.11. Extension Fee. Subject to the limitations provided by
Section 14.7, if any, on the Closing Date, Borrower shall pay to Administrative
Agent, for the benefit of each Bank having a Commitment of $45,000,000.00, an
extension fee of $54,000.00, and Borrower shall pay to Administrative Agent for
the benefit of each Bank having a Commitment of $30,000,000.00, an extension fee
of $24,000.00, resulting in the payment of an aggregate extension fee in the
amount of $156,000.00.
SECTION 2.12. Agency and other Fees. Subject to the limitations
provided by Section 14.7, if any, Borrower shall pay to Administrative Agent,
Arranger and their Affiliates such other fees and amounts as Borrower shall be
required to pay to Administrative Agent, Arranger and their Affiliates from time
to time pursuant to any
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separate agreement between Borrower and Administrative Agent, Arranger or such
Affiliates. Such fees and other amounts shall be retained by Administrative
Agent, Arranger and their Affiliates, and no Bank (other than Administrative
Agent) shall have any interest therein.
ARTICLE III
GENERAL PROVISIONS
SECTION 3.1. Delivery and Endorsement of Notes. Immediately after the
execution of this Agreement, Administrative Agent shall deliver to each Bank the
Note payable to such Bank and the Facility Guaranty for the benefit of such
Bank. Each Bank may endorse (and prior to any transfer of its Note shall
endorse) on the schedules attached and forming a part thereof appropriate
notations to evidence the date and amount of its Commitment Percentage of each
Borrowing, the Interest Period applicable thereto, and the date and amount of
each payment of principal made by Borrower with respect thereto; provided that
the failure by any Bank to so endorse its Note shall not affect the liability of
Borrower for the repayment of all amounts outstanding under such Note together
with interest thereon. Each Bank is hereby irrevocably authorized by Borrower to
endorse its Note and to attach to and make a part of any Note a continuation of
any such schedule as required.
SECTION 3.2. General Provisions as to Payments.
(a) Borrower shall make each payment of principal of, and
interest on, the Loan and all fees payable hereunder not later than
12:00 noon (Houston, Texas time) on the date when due, in Federal or
other funds immediately available in Houston, Texas, to Administrative
Agent at its address set forth on Schedule 1 hereto. Administrative
Agent will promptly distribute to each Bank its Commitment Percentage
of each such payment received by Administrative Agent for the account
of Banks. Whenever any payment of principal of, or interest on, any
portion of the Loan subject to an Adjusted Base Rate Tranche or of fees
shall be due on a day which is not a Domestic Business Day, the date
for payment thereof shall be extended to the next succeeding Domestic
Business Day. Whenever any payment of principal of, or interest on, any
portion of the Loan subject to an Eurodollar Tranche shall be due on a
day which is not a Eurodollar Business Day, the date for payment
thereof shall be extended to the next succeeding Eurodollar Business
Day (subject to the definition of Interest Period). If the date for any
payment of principal is extended by operation of Law or otherwise,
interest thereon shall be payable for such extended time. Borrower
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hereby authorizes Administrative Agent to charge from time to time
against Borrower's accounts with Administrative Agent any amount then
due.
(b) So long as no Event of Default has occurred and is then
continuing, all principal payments received by Administrative Agent or
any Bank with respect to the Loan shall be applied first to Eurodollar
Tranches outstanding with Interest Periods ending on the date of such
payment, then to Adjusted Base Rate Tranches, and then to Eurodollar
Tranches next maturing until such principal payment is fully applied.
(c) During the continuance of an Event of Default, all amounts
collected or received by Administrative Agent or any Bank with respect
to the Loan shall be applied first to the payment of all proper costs
incurred by Administrative Agent in connection with the collection
thereof (including reasonable expenses and disbursements of
Administrative Agent), second to the payment of all proper costs
incurred by Banks in connection with the collection thereof (including
reasonable expenses and disbursements of Banks), third to the
reimbursement of any advances made by Banks to effect performance of
any unperformed covenants of Borrower under any of the Loan Papers,
fourth to the payment of any unpaid fees required pursuant to Section
2.12, fifth to the payment of any unpaid fees required pursuant to
Sections 2.1(b), 2.10 and 2.11, sixth, to payment to each Bank of its
Commitment Percentage of outstanding principal of the Loan and accrued
but unpaid interest thereon, and seventh to establish the deposits
required in Section 2.1(b). All payments received by a Bank after the
occurrence of an Event of Default for application to the principal of
the Loan shall be applied by such Bank in the manner provided in
Section 3.2(b).
SECTION 3.3. Funding Losses. If Borrower makes any payment of principal
subject to a Eurodollar Tranche (whether pursuant to Sections 2.6, 2.7, 2.8,
Article XI or Article XIII, and whether as a voluntary or mandatory prepayment
or otherwise) on any day other than the last day of the Interest Period
applicable thereto, or if Borrower fails to borrow any Eurodollar Borrowing
after notice has been given to any Bank in accordance with Section 2.5, Borrower
shall reimburse each Bank on demand for any resulting loss or expense actually
incurred by it, including (without limitation) any loss actually incurred in
obtaining, liquidating or employing deposits from third parties, or any loss
arising from the reemployment of funds at rates lower than the cost to such Bank
of such funds and related costs, which in the case of the payment or prepayment
prior to the end of the Interest Period for any Eurodollar Tranche shall include
the amount, if any, by which (i) the interest which such Bank would have
received from Borrower, absent such payment or prepayment for the applicable
Interest Period exceeds (ii) the interest which such Bank would receive if its
Commitment Percentage of the amount of
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such Eurodollar Borrowing were deposited, loaned, or placed by such Bank in the
interbank eurodollar market on the date of such payment or prepayment for the
remainder of the applicable Interest Period. Such Bank shall promptly deliver to
Borrower and Administrative Agent a certificate as to the amount of such loss or
expense, which certificate shall be conclusive in the absence of manifest error.
SECTION 3.4. Foreign Lenders, Participants, and Assignees. Each Bank,
Participant (by accepting a participation interest under this Agreement) and
Assignee (by executing an Assignment and Assumption Agreement) that is not
organized under the laws of the United States of America or one of its states
(a) represents to Administrative Agent and Borrower that (i) no Taxes are
required to be withheld by Administrative Agent or Borrower with respect to any
payments to be made to it in respect of the Obligations and (ii) it has
furnished to Administrative Agent and Borrower two (2) duly completed copies of
either U.S. Internal Revenue Service Form 4224, Form 1001, Form W-8, or other
form acceptable to Administrative Agent that entitles it to exemption from U.S.
federal withholding Tax on all interest payments under the Loan Papers, and (b)
covenants to (i) provide Administrative Agent and Borrower a new Form 4224, Form
1001, Form W-8, or other form acceptable to Administrative Agent upon the
expiration or obsolescence of any previously delivered form according to
applicable laws and regulations, duly executed and completed by it, and (ii)
comply from time to time with all applicable laws and regulations with regard to
the withholding Tax exemption. If any of the foregoing is not true or the
applicable forms are not provided, then Borrower and Administrative Agent
(without duplication) may deduct and withhold from interest payments under the
Loan Papers any United States federal income Tax at the maximum rate applicable
to such Bank, Participant or Assignee under the Code.
ARTICLE IV
BORROWING BASE
SECTION 4.1. Reserve Report; Proposed Borrowing Base. As soon as
available and in any event by February 28 and August 31 of each year, commencing
August 31, 1999, Borrower shall deliver to Administrative Agent a Reserve Report
prepared as of the immediately preceding December 31 and June 30 respectively.
Simultaneously with the delivery to Administrative Agent of each Reserve Report,
Borrower shall notify Administrative Agent of the amount of the Borrowing Base
which Borrower requests become effective on the next Redetermination Date.
SECTION 4.2. Scheduled Redeterminations of the Borrowing Base;
Procedures and Standards. Based in part on the Reserve Reports made available
to
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Administrative Agent pursuant to Section 4.1, Administrative Agent shall make a
redetermination of the Borrowing Base to be effective on the next
Redetermination Date (or such date promptly thereafter as reasonably possible
based on the engineering and other information available to Administrative
Agent). Any Borrowing Base which becomes effective as a result of any
Redetermination of the Borrowing Base shall be subject to the following
restrictions: (a) such Borrowing Base shall not exceed the Borrowing Base
requested by Borrower pursuant to Sections 4.1 or 4.3 (as applicable) and (b)
such Borrowing Base shall not exceed the Total Commitment then in effect. Each
Redetermination shall be made by Administrative Agent, in its sole discretion,
taking into account, among other matters (i) its standards for similar credits,
including, without limitation, such assumptions regarding appropriate existing
and projected pricing for Hydrocarbons as Administrative Agent deems appropriate
in its sole discretion, (ii) such assumptions regarding projected rates and
quantities of future production of Hydrocarbons from the Mineral Interests owned
by Borrower as Administrative Agent deems appropriate in its sole discretion,
(iii) the capital structure and projected cash requirements of Borrower and
Guarantor, and (iv) such other assumptions, considerations and exclusions as
Administrative Agent deems appropriate in its sole discretion. It is further
acknowledged and agreed that Administrative Agent may consider such other credit
factors as it deems appropriate in the exercise of its sole discretion and shall
have no obligation in connection with any Redetermination to approve any
increase from the Borrowing Base in effect prior to such Redetermination. Any
change in the Borrowing Base shall not be effective until the same has been
approved by all Banks. Promptly following any Redetermination of the Borrowing
Base, Administrative Agent shall notify Borrower of the amount of the Borrowing
Base as redetermined, which Borrowing Base shall be effective as of the date of
such notice, and shall remain in effect for all purposes of this Agreement until
a new Borrowing Base has been approved in accordance with the requirements
hereof.
SECTION 4.3 Special Redeterminations. In addition to Scheduled
Redeterminations, Administrative Agent shall be permitted to make a Special
Redetermination of the Borrowing Base once in each Fiscal Year and Borrower
shall be permitted to request a Special Redetermination of the Borrowing Base
once in each Fiscal Year. Any change in the Borrowing Base shall not be
effective until the same has been approved by all Banks. Administrative Agent
shall provide Banks and Borrower with notice of its intention to make a Special
Redetermination or notice of Borrower's request for a Special Redetermination.
Each request for a Special Redetermination by Borrower shall be accompanied by a
Reserve Report and notice from Borrower of the amount of the Borrowing Base
which Borrower requests become effective as a result of such Special
Redetermination. In addition to Special Redeterminations, Administrative Agent
shall be permitted to redetermine the Borrowing Base by excluding from the
calculation thereof any Mineral Interest on which Borrower would be required to
grant a
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Lien in favor of Administrative Agent pursuant to Article V, but for the
application of Section 5.1(d). Any change in the Borrowing Base shall not be
effective until the same has been approved by all Banks. The Borrowing Base so
redetermined will become effective immediately upon written notice from
Administrative Agent to Borrower that such redetermined Borrowing Base has been
approved by Banks.
SECTION 4.4. Borrowing Base Deficiency. If a Borrowing Base Deficiency
exists after giving effect to any Redetermination or any redetermination
pursuant to the last sentence of Section 4.3, Borrower shall be obligated to
eliminate such Borrowing Base Deficiency over a period not to exceed six (6)
months from the effective date of such Redetermination or other redetermination
by making two (2) mandatory, equal payments of principal on the Loan, each of
which shall be in the amount of one-half (1/2) of such Borrowing Base
Deficiency, or in the event that the remaining principal outstanding under the
Loan is less than the Borrowing Base Deficiency, then the amount of one-half
(1/2) of the remaining principal outstanding under the Loan. The first of such
payments shall be due on the date that is three (3) months following the
effective date of such Redetermination or other redetermination and the second
of such payments shall be due on the date that is six (6) months following the
effective date of such Redetermination or other redetermination (or if there is
no corresponding day of any subsequent month, then on the last day of such
month) (each such date is referred to herein as a "borrowing base deficiency
payment date"). If a Borrowing Base Deficiency cannot be eliminated pursuant to
this Section 4.4 by prepayment of the Loan in full (as a result of outstanding
Letter of Credit Exposure), on each borrowing base deficiency payment date,
Borrower shall also deposit cash with Administrative Agent, to be held by
Administrative Agent to secure outstanding Letter of Credit Exposure in the
manner contemplated by Section 2.1(b), in an amount at least equal to one-half
(1/2) of the balance of such Borrowing Base Deficiency (i.e., one-half of the
difference between the Borrowing Base Deficiency and the remaining outstanding
principal under the Loan on the effective date of such Redetermination or other
redetermination).
SECTION 4.5. Initial Borrowing Base. The Borrowing Base shall be
$60,000,000 for the period commencing on the Closing Date and ending on the
earlier to occur of (i) October 31, 1999 and (ii) the first Redetermination Date
after the Closing Date.
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ARTICLE V
COLLATERAL AND GUARANTYS
SECTION 5.1. Security.
(a) Borrower shall, subject to the provisions of Section
5.1(d), secure repayment of the Obligations by granting to
Administrative Agent first and prior Liens (subject only to Permitted
Encumbrances) on, covering and encumbering Mineral Interests owned by
Borrower having, in the aggregate, the Required Recognized Value.
Borrower will promptly upon the preparation thereof by Administrative
Agent, deliver to Administrative Agent for the ratable benefit of each
Bank, a Deed of Trust, Security Agreement, Financing Statement and
Assignment of Production (or similar instrument with respect to
properties situated in states other than the State of Texas) in form
reasonably satisfactory to Administrative Agent (individually, a
"Mortgage" and collectively, the "Mortgages"), together with such other
instruments of conveyance and agreement, including, without limitation,
UCC-1 financing statements (each duly authorized and executed) as
Administrative Agent shall reasonably deem necessary or appropriate to
confirm, evidence and perfect the Liens on Borrower's Mineral
Properties having, in the aggregate, subject to the provisions of
Section 5.1(d), the Required Recognized Value.
(b) On or before each Redetermination Date and at such other
times as Administrative Agent or Required Banks shall request
(including, without limitation, when required pursuant to Section 4.3),
Borrower shall execute and deliver to Administrative Agent, for the
ratable benefit of each Bank, Mortgages in form and substance
reasonably acceptable to Administrative Agent to grant, evidence and
perfect, subject to the provisions of Section 5.1(d), the Liens
required by Section 5.1(a) with respect to Mineral Interests acquired
by Borrower subsequent to the last date on which Borrower was required
to execute and deliver Mortgages pursuant to this Section 5.1(b), or
which, for any other reason are required to be but are not the subject
of valid, enforceable, perfected first priority Liens (subject only to
Permitted Encumbrances) in favor of Administrative Agent for the
ratable benefit of Banks (or subsequent to the Closing Date in the case
of the first request pursuant to this Section 5.1(b)).
(c) At any time Borrower is required to execute and deliver
Mortgages to Administrative Agent pursuant to this Section 5.1,
Borrower shall also deliver to Administrative Agent (i) such opinions
of counsel (addressed to Administrative Agent) and other evidence of
title as Administrative Agent shall reasonably deem necessary or
appropriate to verify (A) Borrower's title to the Proved Mineral
Interests which are subject to such Mortgages, and (B) the validity,
perfection and priority of the Liens created by such Mortgages and (ii)
a request or report obtained by Borrower setting forth the results of a
Phase I environmental review of such Mineral Interests and related
properties, all of which must be reasonably satisfactory in form and
substance to Administrative Agent.
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(d) Notwithstanding the other provisions of this Section 5.1,
Borrower shall not be required to grant Administrative Agent a Lien on
any Mineral Interest owned by Borrower as to which the consent of any
third party is required if Borrower fails, having made a good faith
attempt, to obtain such third-party consent, so long as the Recognized
Value of all Mineral Interests subject to Mortgages required pursuant
to this Section 5.1 (without regard to this Section 5.1(d)) is at all
times at least eighty-five percent (85%) of the Recognized Value of all
Mineral Interests of Borrower.
SECTION 5.2 Guarantys. Payment and performance of the Obligations
shall be fully guaranteed by Guarantor pursuant to Facility Guarantys duly
executed and delivered by Guarantor.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1. Conditions to Initial Borrowing and Participation in
Letter of Credit Exposure. The obligation of each Bank to loan its Commitment
Percentage of the initial Borrowing, and the obligation of Administrative Agent
to issue the initial Letter of Credit issued hereunder, is subject to the
satisfaction of each of the following conditions:
(a) Closing Deliveries. Administrative Agent shall have
received each of the following documents, instruments and agreements,
each of which shall be in form and substance and executed in such
counterparts as shall be acceptable to Administrative Agent and each
Bank and each of which shall, unless otherwise indicated, be dated the
Closing Date:
(i) a Note payable to the order of each Bank, each in
the amount of such Bank's Commitment, duly executed by
Borrower;
(ii) a Facility Guaranty for the benefit of each
Bank, duly executed by Guarantor;
(iii) supplements to each Mortgage, in form and
substance satisfactory to Administrative Agent, duly executed
and acknowledged by Borrower;
(iv) a copy of the Certificate of Incorporation, and
all amendments thereto, of each of Borrower or Guarantor
accompanied by a certificate that such copy is true, correct
and complete, and dated within
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ten (10) days of the Closing Date, issued by the appropriate
Governmental Authority of the State of Delaware and
accompanied by a certificate of the Secretary of each of
Borrower and Guarantor that such copy is true, correct and
complete on the Closing Date;
(v) a copy of the Bylaws, and all amendments thereto,
of each of Borrower and Guarantor, accompanied by a
certificate of the Secretary of each of Borrower and Guarantor
that such copy is true, correct and complete as of the date
hereof;
(vi) certain certificates and other documents issued
by the appropriate Governmental Authorities (A) of the State
of Delaware relating to the existence and good standing with
respect to the payment of franchise and similar Taxes of each
of Borrower and Guarantor and (B) of the jurisdictions listed
on Schedule 4 hereto, to the effect that Borrower is duly
qualified to do business, and is in good standing, in such
jurisdictions;
(vii) a certificate of incumbency of all officers of
each of Borrower and Guarantor who will be authorized to
execute or attest to any Loan Paper, dated the date hereof,
executed by the Secretary of each of Borrower and Guarantor;
(viii) copies of resolutions approving the Loan
Papers and authorizing the transactions contemplated by this
Agreement and the other Loan Papers, duly adopted by the Board
of Directors of each of Borrower and Guarantor, accompanied by
certificates of the Secretary of each of Borrower and
Guarantor that such copies are true and correct copies of
resolutions duly adopted at a meeting of or (if permitted by
applicable Law and, if required by such Law, by its
Certificate of Incorporation or Bylaws) by the unanimous
written consent of the Board of Directors of each of Borrower
and Guarantor, and that such resolutions constitute all the
resolutions adopted with respect to such transactions, have
not been amended, modified, or revoked in any respect, and are
in full force and effect as of the date hereof;
(ix) a Notice of Final Agreement duly executed by
Borrower and Guarantor;
(x) an opinion of Fulbright & Xxxxxxxx L.L.P.,
counsel for Borrower and Guarantor, dated the date hereof,
favorably opining as to the due authority, execution, and
delivery of the Loan Papers by Borrower
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and Guarantor, and as to the enforceability of each of the
Loan Papers, and otherwise in form and substance satisfactory
to Administrative Agent and Banks;
(xi) an opinion of Gardere Xxxxx Xxxxxx & Xxxxx,
L.L.P., special counsel for Administrative Agent, dated the
date hereof in form and substance satisfactory to
Administrative Agent; and
(xii) a certificate signed by a Financial Officer of
Borrower stating that, to the best of his knowledge without
specific inquiry (a) the representations and warranties
contained in this Agreement and the other Loan Papers are true
and correct in all material respects, and (b) no Default or
Event of Default has occurred and is continuing, and (c) all
conditions set forth in this Section 6.1 have been satisfied
or waived.
(b) Fees. Borrower shall have paid to Administrative Agent the
fees required to be paid on the Closing Date pursuant to Section 2.11
and 2.12.
(c) No Material Adverse Effect. In the sole discretion of each
Bank, no event has occurred which has a Material Adverse Effect on
Borrower or Guarantor since December 31, 1998.
(d) No Legal Prohibition. The transactions contemplated by
this Agreement shall be permitted by applicable Law and regulation and
shall not subject Administrative Agent, any Bank, Borrower or Guarantor
to any material adverse change in its assets, liabilities, financial
condition, operations or prospects.
(e) No Litigation. No litigation, arbitration or similar
proceeding shall be pending or threatened which calls into question the
validity or enforceability of this Agreement, the other Loan Papers or
the transactions contemplated hereby or thereby.
(f) Other Matters. All matters related to this Agreement, the
other Loan Papers and Borrower and Guarantor shall be acceptable to
each Bank in its sole discretion, and Borrower and Guarantor shall have
delivered to Administrative Agent and each Bank such evidence as they
shall request to substantiate any matters related to this Agreement or
the other Loan Papers.
SECTION 6.2. Conditions to Each Borrowing and each Letter of Credit.
The obligation of each Bank to loan its Commitment Percentage of each Borrowing,
and the
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obligation of Administrative Agent to issue a Letter of Credit on the date such
Letter of Credit is to be issued, is subject to the further satisfaction of the
following conditions:
(a) timely receipt by Administrative Agent of a Request for
Borrowing or a Request for Letter of Credit (as applicable);
(b) immediately before and after giving effect to such
Borrowing or issuance of such Letter of Credit, no Default or Event of
Default shall have occurred and be continuing and the making of any
Loan in connection with such Borrowing or the issuance of the requested
Letter of Credit (as applicable) shall not cause a Default or Event of
Default;
(c) the amount of the requested Borrowing or the amount of the
requested Letter of Credit (as applicable) shall not exceed the
Availability;
(d) no Material Adverse Effect shall have occurred since the
date of the most recent Financial Statements of Borrower and Guarantor
delivered to Administrative Agent; and
(e) the making of such Loan or the issuance of such Letter of
Credit (as applicable) shall be permitted by applicable Law.
Each Borrowing and the issuance of each Letter of Credit hereunder shall be
deemed to be a representation and warranty by Borrower on the date of such
Borrowing and the date of issuance of such Letter of Credit as to the facts
specified in Sections 6.2(b) through (e).
SECTION 6.3. Materiality of Conditions. Each condition precedent herein
is material to the transactions contemplated herein, and time is of the essence
in respect of each thereof.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Administrative Agent and each Bank
that each of the following statements is true and correct on the date hereof:
SECTION 7.1. Borrower's Corporate Existence and Power. Borrower (a) is
a corporation duly incorporated, validly existing and in good standing under the
laws of
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the State of Delaware, (b) has all corporate power and all material governmental
licenses, authorizations, consents and approvals required to carry on its
businesses as now conducted and as proposed to be conducted, and (c) is duly
qualified to transact business as a foreign corporation in each jurisdiction
where a failure to be so qualified could have a Material Adverse Effect.
SECTION 7.2. Guarantor's Corporate Existence and Power. Guarantor (a)
is a corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware, (b) has all corporate power and all material
governmental licenses, authorizations, consents and approvals required to carry
on its businesses as now conducted and as proposed to be conducted, and (c) is
duly qualified to transact business as a foreign corporation in each
jurisdiction where a failure to be so qualified could have a Material Adverse
Effect.
SECTION 7.3. Corporate Authority and Governmental Authorization;
Contravention. The execution, delivery and performance of this Agreement and
the other Loan Papers by Borrower and Guarantor are within the corporate powers
of Borrower and Guarantor, when executed will be duly authorized by all
necessary corporate action, require no action by or in respect of, or filing
with, any Governmental Authority, do not contravene, or constitute a default
under, any provision of applicable Law (including, without limitation, the
Margin Regulations) or of the Certificate of Incorporation or Bylaws of either
Borrower or Guarantor or of any agreement, judgment, injunction, order, decree
or other instrument binding upon Borrower or Guarantor, and will not result in
the creation or imposition of any Lien on any asset of Borrower or Guarantor
other than as contemplated by Article V.
SECTION 7.4. Binding Effect. This Agreement constitutes the valid and
binding agreement of Borrower and Guarantor and the other Loan Papers, when
executed and delivered in accordance with this Agreement, will constitute valid
and binding obligations of Borrower and Guarantor. Each Loan Paper is, or when
executed and delivered will be, enforceable against Borrower and Guarantor in
accordance with its terms except as (i) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditors rights
generally, and (ii) the availability of equitable remedies may be limited by
equitable principles of general applicability.
SECTION 7.5. Financial Information.
(a) The most recent annual audited consolidated balance sheet
of Borrower and the related consolidated statements of operations and
cash flows for the Fiscal Year then ended, copies of which have been
delivered to each Bank, fairly present, in conformity with GAAP, the
consolidated financial position
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of Borrower as of the end of such Fiscal Year and its consolidated
results of operations and cash flows for such Fiscal Year.
(b) The most recent quarterly unaudited consolidated balance
sheet of Borrower and the related unaudited consolidated statements of
operations and cash flows for Borrower's fiscal quarter then ended,
copies of which have been delivered to each Bank, fairly present, in
conformity with GAAP, consistently applied, the consolidated financial
position of Borrower as of such date and its consolidated results of
operations and cash flows for such quarter.
SECTION 7.6. Litigation. Except for matters disclosed on Schedule 3
attached hereto, there is no action, suit or proceeding pending or, to the best
knowledge of Borrower, threatened against or affecting Borrower or Guarantor
before any Governmental Authority in which could reasonably be expected to have
a Material Adverse Effect or which could in any manner draw into question the
validity of the Loan Papers.
SECTION 7.7. ERISA. Neither Borrower nor Guarantor maintains or has
ever maintained or been obligated to contribute to any Plan covered by Title IV
of ERISA or subject to the funding requirements of Section 412 of the Code or
Section 302 of ERISA. Each Plan maintained by Borrower or Guarantor is in
compliance in all material respects with all applicable Laws. Except in such
instances where an omission or failure would not have a Material Adverse Effect
(a) all returns, reports and notices required to be filed with any regulatory
agency with respect to any Plan have been filed timely, and (b) neither Borrower
nor Guarantor has failed to make any contribution or pay any amount due or owing
as required by the terms of any Plan. There are no pending or, to the best of
Borrower's knowledge, threatened claims, lawsuits, investigations or actions
(other than routine claims for benefits in the ordinary course) asserted or
instituted against, and Borrower has no knowledge of any threatened litigation
or claims against, the assets of any Plan or its related trust or against any
fiduciary of a Plan with respect to the operation of such Plan that are likely
to result in liability of Borrower or Guarantor having a Material Adverse
Effect. Except in such instances where an omission or failure would not have a
Material Adverse Effect, each Plan that is intended to be "qualified" within the
meaning of section 401(a) of the Code is, and has been during the period from
its adoption to date, so qualified, both as to form and operation and all
necessary governmental approvals, including a favorable determination as to the
qualification under the Code of such Plan and each amendment thereto, have been
or will be timely obtained. Neither Borrower nor Guarantor has engaged in any
prohibited transactions, within the meaning of section 406 of ERISA or section
4975 of the Code, in connection with any Plan which would result in liability of
Borrower or Guarantor having a Material Adverse Effect. Neither Borrower nor
Guarantor maintains or contributes to any Plan that provides a post-employment
health benefit, other than a benefit required under Section 601 of ERISA, or
maintains or contributes to a Plan that provides health benefits that is not
fully funded except where the failure to fully fund such Plan would not have a
Material Adverse Effect. Neither Borrower nor
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Guarantor maintains, has established or has ever participated in a multiple
employer welfare benefit arrangement within the meaning of section 3(40)(A) of
ERISA. Borrower has no knowledge that any of the foregoing representations or
warranties would be untrue if applied to any ERISA Affiliate.
SECTION 7.8. Taxes and Filing of Tax Returns. Each of Borrower and
Guarantor has filed all tax returns required to have been filed and has paid all
Taxes shown to be due and payable on such returns, including interest and
penalties, and all other Taxes which are payable by such party, to the extent
the same have become due and payable, other than Taxes with respect to which a
failure to pay would not have a Material Adverse Effect. Borrower has no
knowledge of any proposed material Tax assessment against it or Guarantor and
all Tax liabilities of Borrower and Guarantor are adequately provided for.
Except as disclosed in writing to Banks prior to the date hereof, no income tax
liability of Borrower or Guarantor has been asserted by the Internal Revenue
Service or other Governmental Authority for Taxes in excess of those already
paid. Borrower's federal tax identification number is 00-0000000 and Guarantor's
federal tax identification number is 00-0000000.
SECTION 7.9. Ownership of Properties Generally. Each of Borrower and
Guarantor has good and valid fee simple or leasehold title to all material
properties and assets purported to be owned by it, including, without
limitation, all assets reflected in the balance sheets referred to in Section
7.5 (a) and (b) and all assets which are used by Borrower and Guarantor in the
operation of their respective businesses, and none of such properties or assets
is subject to any Lien other than Permitted Encumbrances.
SECTION 7.10. Mineral Interests. Borrower has good and defensible
title to all Proved Mineral Interests described in the Reserve Report, free and
clear of all Liens except Permitted Encumbrances and Immaterial Title
Deficiencies. With the exception of Immaterial Title Deficiencies, all such
Proved Mineral Interests are valid, subsisting, and in full force and effect,
and all rentals, royalties, and other amounts due and payable in respect thereof
have been duly paid. Without regard to any consent or non-consent provisions of
any joint operating agreement covering any of Borrower's Proved Mineral
Interests, and with the exception of Immaterial Title Deficiencies, Borrower's
share of (a) the costs for each Proved Mineral Interest described in the Reserve
Report is not greater than the decimal fraction set forth in the Reserve Report,
before and after payout, as the case may be, and described therein by the
respective designations "working interests", "WI", "gross working interest",
"GWI", or similar terms, and (b)
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production from, allocated to, or attributed to each such Proved Mineral
Interest is not less than the decimal fraction set forth in the Reserve Report,
before and after payout, as the case may be, and described therein by the
designations "net revenue interest", "NRI", or similar terms. Each well drilled
in respect of each Proved Producing Mineral Interest described in the Reserve
Report (y) is capable of producing Hydrocarbons in commercially profitable
quantities, and Borrower is currently receiving payments for its share of
production, with no funds in respect of any thereof being presently held in
suspense, other than any such funds being held in suspense pending delivery of
appropriate division orders, and (z) has been drilled, bottomed, completed and
operated or, as to xxxxx not operated by Borrower, has been drilled, bottomed,
completed and operated, to Borrower's knowledge, in compliance with all
applicable Laws and no such well which is currently producing Hydrocarbons is
subject to any penalty in production by reason of such well having produced in
excess of its allowable production, to the extent that failure to comply with
such laws or the imposition of such penalty could reasonably be expected to have
a Material Adverse Effect. Schedule 2 hereto describes Proved Producing Mineral
Interests owned by Borrower having, in the aggregate, a Recognized Value of at
least 98% of the Recognized Value of all Proved Producing Mineral Interests
owned by Borrower on the date hereof.
SECTION 7.11. Licenses, Permits, Etc. Each of Borrower and Guarantor
possesses such valid franchises, certificates of convenience and necessity,
operating rights, licenses, permits, consents, authorizations, exemptions and
orders of Governmental Authorities, as are necessary to carry on its business as
now conducted and as proposed to be conducted, except to the extent a failure to
obtain any such item would not have a Material Adverse Effect.
SECTION 7.12. Compliance with Law. The business and operations of each
of Borrower and Guarantor have been and are being conducted in accordance with
all applicable Laws other than violations of Laws which do not (either
individually or collectively) have a Material Adverse Effect.
SECTION 7.13. Full Disclosure. All information heretofore furnished to
Administrative Agent or any Bank for purposes of or in connection with this
Agreement, any Loan Paper or any transaction contemplated hereby or thereby is,
and all such information hereafter furnished by or on behalf of Borrower or
Guarantor to Administrative Agent or any Bank will be, on the date of delivery
thereof, true, complete and accurate in every material respect insofar as the
information is purported to be shown thereby. To the best knowledge of Borrower,
there are no facts which have not been disclosed in writing to Banks which might
reasonably be expected to materially and adversely affect the assets,
liabilities, financial condition, operations of either
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Borrower or Guarantor, taken as a whole, or the ability of Borrower or Guarantor
to perform its obligations under this Agreement and the other Loan Papers.
SECTION 7.14. Organizational Structure; Nature of Business.
Guarantor's sole asset consists of one hundred percent (100%) of the issued and
outstanding capital stock of Borrower. Guarantor conducts no business and has no
operations other than (a) the issuance of equity and debt securities not
prohibited pursuant to the provisions of this Agreement, (b) the ownership of
the issued and outstanding capital stock of Borrower, and (c) activities
reasonably related to the foregoing. Guarantor has no Subsidiaries other than
Borrower. Borrower has no Subsidiaries. Borrower is engaged only in the business
of acquiring, exploring, developing and operating Mineral Interests and the
production and marketing of Hydrocarbons therefrom, including the processing and
transportation thereof and, to the extent such activities are not prohibited or
limited by this Agreement, other activities reasonably related or incidental
thereto. Schedule 4 hereto accurately reflects (i) each jurisdiction in which
Borrower or Guarantor is qualified to transact business as a foreign
corporation, (ii) the authorized, issued and outstanding stock of each of
Borrower and Guarantor and (iii) all outstanding warrants, options, subscription
rights, convertible securities or other rights to purchase capital stock of each
of Borrower and Guarantor.
SECTION 7.15. Environmental Matters. No operation conducted by
Borrower or Guarantor and no real property now or previously owned or leased by
Borrower or Guarantor (including, without limitation, Borrower's Mineral
Interests) and no operations conducted thereon by Borrower or Guarantor, and to
the best of Borrower's knowledge, no operations of any prior owner, lessee or
operator of any such properties, is or has been in violation of any Applicable
Environmental Law other than violations which neither individually nor in the
aggregate will have a Material Adverse Effect. To the best of Borrower's
knowledge, neither Borrower nor Guarantor, nor any real property owned, leased
or operated by Borrower or Guarantor, nor any operation conducted by Borrower or
Guarantor, is the subject of any existing, pending or, to the best of Borrower's
knowledge, threatened Environmental Complaint which could, individually or in
the aggregate, have a Material Adverse Effect. All notices, permits, licenses,
and similar authorizations required to be obtained or filed in connection with
the ownership of each portion of real property owned by, or the operations of,
Borrower and Guarantor, including, without limitation, notices, licenses,
permits and authorizations required in connection with any past or present
treatment, storage, disposal, or release of Hazardous Substances into the
environment, have been duly obtained or filed except to the extent the failure
to obtain or file such notices, licenses, permits and authorizations would not
have a Material Adverse Effect. After reasonable inquiry, to Borrower's
knowledge, all Hazardous Substances generated at each tract of real property
owned, leased or operated by Borrower or Guarantor have been transported,
treated, and
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disposed of only by carriers or facilities maintaining valid permits under all
Applicable Environmental Laws for the conduct of such activities except in such
cases where the failure to obtain such permits would not, individually or in the
aggregate, have a Material Adverse Effect. There have been no Hazardous
Discharges for which Borrower or Guarantor could be held responsible under
Applicable Environmental Laws which were not in compliance with Applicable
Environmental Laws other than Hazardous Discharges which would not, individually
or in the aggregate, have a Material Adverse Effect.
SECTION 7.16. Burdensome Obligations. Neither Borrower nor Guarantor,
nor any of the properties of Borrower or Guarantor, is subject to any Law or any
pending or threatened change of Law or subject to any restriction under its
Certificate of Incorporation or Bylaws, or under any agreement or instrument to
which Borrower or Guarantor is a party, or by which Borrower or Guarantor or any
of their properties may be subject or bound, which is so unusual or burdensome
as to be likely in the foreseeable future to have a Material Adverse Effect.
Without limiting the foregoing, neither Borrower nor Guarantor is a party to or
bound by any agreement (other than the Loan Papers) or subject to any order of
any Governmental Authority which prohibits or restricts in any way the right of
Borrower or Guarantor to make Distributions.
SECTION 7.17. Fiscal Year. Borrower's Fiscal Year is January 1 through
December 31.
SECTION 7.18. No Default. Neither a Default nor an Event of Default
will exist after giving effect to the transactions contemplated by this
Agreement or the other Loan Papers.
SECTION 7.19. Government Regulation. Neither Borrower nor Guarantor is
subject to regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, the Interstate Commerce Act, the Investment Company Act of
1940 (as any of the preceding acts have been amended) or any other law which
regulates the incurring by Borrower or Guarantor of Debt, including, but not
limited to laws relating to common contract carriers or the sale of electricity,
gas, stream, water or other public utility services.
SECTION 7.20. Insider. Neither Borrower nor Guarantor is an "executive
officer", "director" or "principal shareholder" (as such terms are defined in 12
U.S.C. Section 375b) of any Bank or any bank holding company of which any Bank
is a Subsidiary or of any Subsidiary of such bank holding company.
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SECTION 7.21. Gas Balancing Agreements and Advance Payment Contracts.
There is no Material Gas Imbalance, and the aggregate amount of all Advance
Payments received by Borrower under Advance Payment Contracts which have not
been satisfied by delivery of production does not exceed $2,000,000.
SECTION 7.22. Year 2000.
(a) Borrower has (i) begun analyzing the operations of
Borrower and its subsidiaries and affiliates that could be adversely
affected by failure to become Year 2000 compliant (that is, that
computer applications, embedded microchips and other systems will be
able to perform date-sensitive functions prior to and after December
31, 1999), and (ii) developed a plan for becoming Year 2000 compliant
in a timely manner, the implementation of which is on schedule in all
material respects. Borrower reasonably believes that it will become
Year 2000 compliant for its operations and those of its subsidiaries
and affiliates on a timely basis, except to the extent that a failure
to do so could not reasonably expected to have a material adverse
affect upon the financial condition of Borrower;
(b) Borrower reasonably believes any suppliers and vendors
that are material to the operations of Borrower or its subsidiaries and
affiliates will be Year 2000 compliant for their own computer
applications except to the extent that a failure to do so could not
reasonably be expected to have a material adverse affect upon the
financial condition of Borrower; and
(c) Borrower will promptly notify Administrative Agent in the
event Borrower determines that any computer application which is
material to the operations of Borrower, its subsidiaries or any of its
material vendors or suppliers will not be fully Year 2000 compliant on
a timely basis, except to the extent that such failure could not
reasonably be expected to have a material adverse affect upon the
financial condition of Borrower.
SECTION 7.23. Prior Credit Agreement. No Default or Event of Default
(as such terms are defined in the Prior Credit Agreement) has occurred and is
continuing under the Prior Credit Agreement immediately prior to the execution
of this Agreement.
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ARTICLE VIII
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, so long as any Bank has any
commitment to lend or participate in Letter of Credit Exposure hereunder or any
amount payable under any Note remains unpaid or any Letter of Credit remains
outstanding:
SECTION 8.1. Information. Borrower will deliver, or cause to be
delivered, to Administrative Agent:
(a) As soon as available and in any event within one hundred
twenty (120) days after the end of each Fiscal Year, consolidated
balance sheets of Borrower as of the end of such Fiscal Year and the
related consolidated statements of income and statements of cash flow
for such Fiscal Year, setting forth in each case in comparative form
the figures for the previous Fiscal Year, all reported by Borrower in
accordance with GAAP and audited by Deloitte & Touche LLP or another
firm of independent public accountants of nationally recognized
standing acceptable to Administrative Agent;
(b) As soon as available and in any event within sixty (60)
days after the end of each Fiscal Quarter, consolidated balance sheets
of Borrower as of the end of such Fiscal Quarter and the related
consolidated statements of income and statements of cash flow for such
Fiscal Quarter and for the portion of Borrower's Fiscal Year ended at
the end of such Fiscal Quarter, setting forth in each case in
comparative form the figures for the corresponding quarter and the
corresponding portion of Borrower's previous Fiscal Year, all of which
shall be certified by a Financial Officer of Borrower as to fairness of
presentation, GAAP and consistency;
(c) simultaneously with the delivery of each set of financial
statements referred to in Sections 8.1(a) and (b), a certificate of a
Financial Officer of Borrower in the form of Exhibit F attached hereto,
(i) setting forth in reasonable detail the calculations required to
establish whether Borrower was in compliance with the requirements of
Article X on the date of such financial statements, (ii) stating
whether, to the best of his knowledge without specific inquiry, there
exists on the date of such certificate any Default or Event of Default
and, if any Default or Event of Default then exists, setting forth the
details thereof and the action which Borrower is taking or proposes to
take with respect thereto, (iii) stating whether or not such financial
statements fairly reflect the results of operations and financial
condition of Borrower as of the date of the delivery of such financial
statements and for the period covered thereby, (iv) setting forth (A)
whether as of
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such date there is a Material Gas Imbalance and, if so, setting forth
the amount of net gas imbalances under Gas Balancing Agreements to
which Borrower is a party or by which any Mineral Interests owned by
Borrower is bound, and (B) the aggregate amount of all Advance Payments
received under Advance Payment Contracts to which Borrower is a party
or by which any Mineral Interests owned by Borrower is bound which have
not been satisfied by delivery of production, if any, and (v) a summary
of the Hedge Transactions to which Borrower is a party on such date;
(d) promptly after the effectiveness thereof, notice of any
amendment to the Certificate of Incorporation or Bylaws of Borrower or
Guarantor;
(e) promptly upon the filing thereof, copies of all final
registration statements, post-effective amendments thereto and annual,
quarterly or special reports which Borrower or Guarantor or any
Subsidiary of Borrower or Guarantor shall have filed with the
Securities and Exchange Commission;
(f) promptly upon receipt of same, any notice or other
information received by Borrower or Guarantor indicating (i) any actual
or alleged non-compliance with or violation of the requirements of any
Applicable Environmental Law which could reasonably be expected to
result in liability to Borrower or Guarantor for fines, clean up or any
other remediation obligations or any other liability in excess of
$100,000 in the aggregate; (ii) the occurrence of a Hazardous Discharge
which would impose on Borrower or Guarantor a duty to report to a
Governmental Authority or to pay cleanup costs or to take remedial
action under any Applicable Environmental Law and which could
reasonably be expected to result in liability to Borrower or Guarantor
for fines, clean up and other remediation obligations or any other
liability in excess of $100,000 in the aggregate; or (iii) the
existence of any Lien arising under any Applicable Environmental Law
securing any obligation to pay fines, clean up or other remediation
costs or any other liability in excess of $100,000 in the aggregate.
Without limiting the foregoing, Borrower and Guarantor shall provide to
Banks promptly upon receipt of same by Borrower or Guarantor copies of
all environmental consultants or engineers reports received by Borrower
or Guarantor which would render the representation and warranty
contained in Section 7.15 untrue or inaccurate in any respect;
(g) In the event any notification is provided to any Bank or
Administrative Agent pursuant to Section 8.1(f) or Administrative Agent
or any Bank otherwise learns of any event or condition under which any
such notice would be required, then, upon request of Required Banks,
Borrower shall, within thirty (30) days of such request,
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cause to be furnished to Administrative Agent and each Bank, at the
sole cost and expense of Borrower, a report by an environmental
consulting firm acceptable to Administrative Agent and Required Banks,
stating that a review of such event, condition or circumstance has been
undertaken (the scope of which shall be acceptable to Administrative
Agent and Required Banks) and detailing the findings, conclusions and
recommendations of such consultant;
(h) promptly upon any Authorized Officer of Borrower becoming
aware of the occurrence of any Default, a certificate of an Authorized
Officer of Borrower setting forth the details thereof and the action
which Borrower is taking or proposes to take with respect thereto;
(i) no later than February 28, and August 31 of each year,
reports (prepared on an accrual basis and reported on a well by well
basis) of production volumes, revenue, expenses and product prices for
each Mineral Interest owned by Borrower with a Recognized Value of
$100,000 or more for the periods of six (6) months ending the preceding
December 31, and June 30, respectively;
(j) promptly upon the occurrence thereof, notice of any
Material Adverse Effect;
(k) at the times required therein, the items described in
Section 8.11;
(l) promptly, but in any event within thirty (30) days after
receipt of service thereof, notice of any litigation against Borrower
or Guarantor or any Subsidiary of Borrower or Guarantor which could
reasonably be expected to result in liability to Borrower or Guarantor
or any Subsidiary of Borrower or Guarantor in excess of $1,000,000;
(m) once the ongoing equity contribution program of management
of Borrower and Guarantor is complete, a final schedule describing the
capital structure of Borrower and Guarantor;
(n) promptly after the incurrence thereof, notice of each
incurrence of $1,000,000 or more of Unrestricted Subsidiary Debt and,
promptly thereafter if requested by Administrative Agent, copies of all
documents and instruments evidencing or securing such Unrestricted
Subsidiary Debt; and
(o) from time to time such additional information regarding
the financial position or business of Borrower and Guarantor as
Administrative Agent may reasonably request.
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SECTION 8.2. Business of Borrower and Guarantor. The sole business of
Guarantor shall continue to be (a) the issuance of equity and debt securities
not prohibited pursuant to the provisions of this Agreement, (b) the ownership
of the issued and outstanding capital stock of Borrower, and (c) activities
reasonably related to the foregoing. The sole business of Borrower shall
continue to be the acquisition, exploration, development and operation of
Mineral Interests and the production and marketing of Hydrocarbons therefrom,
including the processing and transportation thereof and, to the extent such
activities are not prohibited or limited by this Agreement, other activities
reasonably related or incidental thereto.
SECTION 8.3. Maintenance of Existence. Borrower and Guarantor shall,
at all times (a) maintain their corporate existence and good standing in the
State of Delaware and (b) maintain their respective good standing and
qualification to transact business in all jurisdictions where the failure to
maintain good standing or qualification to transact business could reasonably be
expected to have a Material Adverse Effect; provided, however, that Guarantor
may be merged into Borrower or into any wholly-owned Subsidiary of Borrower,
provided that simultaneously with such merger (a) such surviving entity executes
such documents or instruments as Administrative Agent may reasonably require to
evidence the continuing subordination of all Subordinated Debt owed by Guarantor
prior to such merger and (b) Borrower and such surviving entity (if not
Borrower) execute an amendment to this Agreement and the other Loan Papers as
Administrative Agent may deem necessary to effect conforming changes hereto and
thereto to reflect such merger.
SECTION 8.4. Title Data. In addition to the title information required
by Section 5.1, Borrower shall, upon the request of Administrative Agent, cause
to be delivered to Administrative Agent such title opinions and other
information regarding title to Mineral Interests owned by Borrower as are
appropriate to determine the status thereof; provided, however, that
Administrative Agent may not require Borrower to furnish title opinions (except
pursuant to Section 5.1) unless (a) an Event of Default shall have occurred and
be continuing or (b) Administrative Agent has reason to believe that there is a
defect in or encumbrance upon Borrower's title to such Mineral Interests that is
not a Permitted Encumbrance.
SECTION 8.5. Right of Inspection. Each of Borrower and Guarantor will
permit any officer, employee or agent of Administrative Agent or of any Bank to
visit and inspect its assets, examine its books of record and accounts, take
copies and extracts therefrom, and discuss its affairs, finances and accounts
with its officers, accountants and auditors, all at such reasonable times and as
often as Administrative Agent or any Bank may desire, provided that Borrower
shall not be required to disclose to
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Administrative Agent, any Bank or any officer, employee or agent thereof any
information that is the subject of attorney-client privilege or attorney's
work-product privilege properly asserted by Borrower to prevent the loss of such
privilege in connection with such information.
SECTION 8.6. Maintenance of Insurance. Each of Borrower and Guarantor
will at all times maintain or cause to be maintained insurance covering such
risks as are customarily carried by businesses similarly situated, including,
without limitation, the following: (a) workmen's compensation insurance; (b)
employer's liability insurance; (c) comprehensive general public liability and
property damage insurance; (d) insurance against losses as a result of damage by
fire, lightning, hail, tornado, explosion and other similar risk; and (e)
comprehensive automobile liability insurance. All loss payable clauses or
provisions in all policies of insurance maintained by either Borrower or
Guarantor pursuant to this Section 8.6 with respect to any assets securing the
Obligations shall be endorsed in favor of and made payable to Administrative
Agent for the ratable benefit of Banks, as their interests may appear.
Administrative Agent shall have the right, for the ratable benefit of Banks, to
collect, and each of Borrower and Guarantor hereby assigns to Administrative
Agent for the ratable benefit of Banks any and all monies that may become
payable under any such policies of insurance by reason of damage, loss or
destruction of any of property which stands as security for the Obligations or
any part thereof, and Administrative Agent may, at its election, either apply
for the ratable benefit of Banks all or any part of the sums so collected toward
payment of the Obligations, whether or not such Obligations are then due and
payable, in such manner as Administrative Agent may elect or release same to
Borrower.
SECTION 8.7. Payment of Taxes and Claims. Each of Borrower and
Guarantor will pay (a) all Taxes imposed upon it or any of its assets or with
respect to any of its franchises, business, income or profits before any
material penalty or interest accrues thereon and (b) all material claims
(including, without limitation, claims for labor, services, materials and
supplies) for sums which have become due and payable and which by law have or
might become a Lien (other than a Permitted Encumbrance) on any of its assets;
provided, however, no payment of Taxes or claims shall be required if (i) the
amount, applicability or validity thereof is currently being contested in good
faith by appropriate action promptly initiated and diligently conducted in
accordance with good business practices and no part of the property or assets of
Borrower or Guarantor is then subject to any pending levy or execution, (ii)
Borrower and Guarantor, as and to the extent required in accordance with GAAP,
shall have set aside on their books reserves (segregated to the extent required
by GAAP) deemed by them to be adequate with respect thereto, and (iii) Borrower
has notified Administrative Agent of such circumstances, if the same could
reasonably be expected to have a Material Adverse Effect, in detail satisfactory
to Administrative Agent.
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SECTION 8.8. Compliance with Laws and Documents. Each of Borrower and
Guarantor will comply with all Laws, their respective Certificate of
Incorporation and Bylaws, and all Material Agreements to which Borrower or
Guarantor is a party, unless such violation, alone or when combined with all
other such violations, could reasonably be expected not to have a Material
Adverse Effect.
SECTION 8.9. Maintenance and Operation of Properties and Equipment.
(a) To the extent the failure to do so could reasonably be
expected to have a Material Adverse Effect, Borrower will maintain,
develop and operate its Mineral Interests in a good and workmanlike
manner, and observe and comply with all of the terms and provisions,
express or implied, of all oil and gas leases relating to such Mineral
Interests (including, without limitation, the payment of all royalty
burden associated therewith) so long as such Mineral Interests are
capable of producing Hydrocarbons and accompanying elements in paying
quantities; provided, however, that (i) nothing in this subsection (a)
shall be deemed (x) to require Borrower to perpetuate or renew any oil
and gas lease or other lease by payment of rental or delay rental or by
commencement or continuation of operations nor to prevent Borrower from
abandoning or releasing any oil and gas lease or other lease when in
any of such events, in the opinion of Borrower exercised in good faith,
it is uneconomic or otherwise not in the best interests of Borrower so
to perpetuate the same or (y) to prohibit Borrower from assigning, by
customary farmout or farmin agreements, oil and gas leases in the
ordinary course of business, (ii) in the event of such a termination of
any such lease described in clause (i)(a)(x) above, upon the request
and at the expense of Borrower, Administrative Agent shall execute and
deliver a recordable instrument releasing the Liens (if any) of
Administrative Agent therein and (iii) in the event of an assignment by
Borrower of an oil and gas lease subject to a customary farmout or
farmin agreement in the ordinary course of business as described in
clause (i)(a)(y) above, upon the request and at the expense of
Borrower, Administrative Agent shall execute and deliver a recordable
instrument partially releasing the Liens (if any) of Administrative
Agent in the interest of Borrower so assigned, but expressly not
releasing the Liens of Administrative Agent in the interest of Borrower
retained therein, if any.
(b) Borrower will comply in all respects with all contracts
and agreements applicable to or relating to its Mineral Interests or
the production and sale of Hydrocarbons and accompanying elements
therefrom, except to the extent a failure to so comply would not have a
Material Adverse Effect.
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(c) Borrower will at all times maintain, preserve and keep all
operating equipment used with respect to its Mineral Interests in
proper repair, working order and condition, and make all necessary or
appropriate repairs, renewals, replacements, additions and improvements
thereto so that the efficiency of such operating equipment shall at all
times be properly preserved and maintained, except where such failure
to comply would not have a Material Adverse Effect; provided further
that no item of operating equipment need be so repaired, renewed,
replaced, added to or improved if Borrower shall in good faith
determine that such action is not necessary or desirable for the
continued efficient and profitable operation of the business of
Borrower.
SECTION 8.10. Environmental Law Compliance. To the extent a failure to
comply could reasonably be expected to have a Material Adverse Effect, each of
Borrower and Guarantor will comply with all Applicable Environmental Laws,
including, without limitation, (a) all licensing, permitting, notification and
similar requirements of Applicable Environmental Laws, and (b) all provisions of
all Applicable Environmental Laws regarding storage, discharge, release,
transportation, treatment and disposal of Hazardous Substances. Each of Borrower
and Guarantor will promptly pay and discharge when due all legal debts, claims,
liabilities and obligations with respect to any clean up or remediation measures
necessary to comply with Applicable Environmental Laws.
SECTION 8.11. ERISA Reporting Requirements. Borrower and Guarantor
will furnish, or cause to be furnished, to Administrative Agent:
(a) Promptly and in any event (i) within thirty (30) days
after Borrower or Guarantor receives notice from any regulatory agency
of the commencement of an audit, investigation or similar proceeding
with respect to a Plan, and (ii) within ten (10) days after Borrower or
Guarantor contacts the Internal Revenue Service for the purpose of
participation in a closing agreement or any voluntary resolution
program with respect to a Plan which could have a Material Adverse
Effect or knows or has reason to know that any event with respect to
any Plan of Borrower, Guarantor or any ERISA Affiliate (other than
JEDI) has occurred that could have a Material Adverse Effect;
(b) Promptly and in any event within thirty (30) days after
the receipt by Borrower of a request therefor by a Bank, copies of any
annual and other report (including Schedule B thereto) with respect to
a Plan filed by Borrower, Guarantor or any ERISA Affiliate with the
United States Department of Labor, the Internal Revenue Service or the
PBGC;
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(c) Notification within thirty (30) days of the effective date
thereof of any material increases in the benefits, or material change
in the funding method, of any existing Plan which is not a
multiemployer plan (as defined in section 4001(a)(3) of ERISA), or the
establishment of any material new Plans, or the commencement of
contributions to any Plan to which Borrower or Guarantor was not
previously contributing; and
(d) Promptly after receipt of written notice of commencement
thereof, notice of all (i) claims made by participants or beneficiaries
with respect to any Plan and (ii) actions, suits and proceedings before
any court or governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign, affecting Borrower or
Guarantor with respect to any Plan, except those which, in the
aggregate, if adversely determined could not have a Material Adverse
Effect.
SECTION 8.12. Additional Documents. Each of Borrower and Guarantor
will cure promptly any defects in the creation and issuance of each Note, and
the execution and delivery of this Agreement and the other Loan Papers and, at
their expense, Borrower and Guarantor shall promptly and duly execute and
deliver to each Bank, upon reasonable request, all such other and further
documents, agreements and instruments in compliance with or accomplishment of
the covenants and agreements of Borrower and Guarantor in this Agreement and the
other Loan Papers as may be reasonably necessary or appropriate in connection
therewith.
ARTICLE IX
NEGATIVE COVENANTS
Borrower covenants and agrees that, so long as any Bank has any
commitment to lend or participate in Letter of Credit Exposure hereunder or any
amount payable under any Note remains unpaid or any Letter of Credit remains
outstanding:
SECTION 9.1. Incurrence of Debt. Neither Borrower nor Guarantor nor
any Subsidiary of Borrower or Guarantor will incur, become or remain liable for
any Debt other than (a) the Obligations, (b) Subordinated Debt, (c) Unrestricted
Subsidiary Debt in an aggregate amount outstanding at any time not to exceed
$50,000,000 and (d) other Debt in an aggregate amount outstanding at any time
not to exceed $1,000,000.
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SECTION 9.2. Restricted Payments. Neither Borrower nor Guarantor nor
any Subsidiary of Borrower or Guarantor will, directly or indirectly, declare or
pay, or incur any liability to declare or pay, any Restricted Payment.
SECTION 9.3. Negative Pledge. Neither Borrower nor Guarantor will
create, assume or suffer to exist any Lien on any of their respective assets,
other than Permitted Encumbrances. No Subsidiary of Borrower or Guarantor will
create, assume or suffer to exist any Lien on any of their respective assets,
other than Permitted Encumbrances or Liens securing permitted Unrestricted
Subsidiary Debt. Neither Borrower nor Guarantor will enter into or become bound
by any agreement (other than this Agreement and any document evidencing any
Subordinated Debt) that prohibits or otherwise restricts the right of Borrower
or Guarantor to create, assume or suffer to exist any Lien on any of their
respective assets.
SECTION 9.4. Consolidations, Mergers and Subsidiaries. Except to the
extent permitted by Section 8.3, neither Borrower nor Guarantor will consolidate
or merge with or into any other Person. Neither Borrower nor Guarantor will
create any Subsidiary after the date of this Agreement unless the same
constitutes a Permitted Investment.
SECTION 9.5. Asset Dispositions. Neither Borrower nor Guarantor will
sell, lease, transfer, abandon or otherwise dispose of any asset other than (a)
sales in the ordinary course of business, (b) assignments and conveyances to
individuals (or their nominees) previously or now or hereafter employed by
Borrower or who are or were consultants to Borrower of overriding royalty
interests in individual oil or gas xxxxx or prospects now or hereafter owned by
Borrower or in which Borrower has or will have an interest pursuant to any
employee incentive compensation program of Borrower, as amended from time to
time, entered into by Borrower in such form and amounts as are not uncommon for
corporations of established reputation engaged in the same or a similar business
and owning and operating similar properties, provided that (i) no such
assignment or conveyance shall reduce the net revenue interest of Borrower in
any individual oil or gas well or prospect which has not paid out (for purposes
of the relevant employee incentive compensation program) by more than 5%, or in
any such well or prospect which has paid out (for purposes of the relevant
employee incentive compensation program) by more than 10%, and (ii) any such
compensation program shall not otherwise be in violation of the terms of this
Agreement, and (c) the sale, lease, transfer, abandonment or other disposition
of other assets (including, without limitation, pursuant to Advance Payment
Contracts), provided that the aggregate value of all assets, sold, leased,
transferred or disposed of pursuant to this clause (c) in any Fiscal Year of
Borrower shall not exceed $5,000,000.
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SECTION 9.6. State and Federal Leases. Borrower will not incur or
allow to exist at any time obligations which may be enforced by specific
performance by any Governmental Authority in connection with any Mineral
Interest if the aggregate of all such specific performance obligations exceeds
$5,000,000.
SECTION 9.7. Use of Proceeds. The proceeds of all Borrowings will be
used only for (a) working capital, (b) acquisition of leasehold interests,
undeveloped properties and producing properties, (c) exploration, development
and production of Mineral Interests, (d) making Permitted Distributions, and (e)
general corporate purposes, and for no other purpose. None of such proceeds
(including, without limitation, proceeds of Letters of Credit issued hereunder)
will be used, directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of purchasing or carrying any Margin Stock, and none of
such proceeds will be used in violation of applicable Law (including, without
limitation, the Margin Regulations). Letters of Credit will be issued hereunder
only for the purpose of securing bids, tenders, bonds, contracts and other
obligations entered into in the ordinary course of Borrower's business.
SECTION 9.8. Investments. Neither Borrower nor Guarantor will,
directly or indirectly, have outstanding any Investment other than Permitted
Investments.
SECTION 9.9. Transactions with Affiliates. Neither Borrower nor
Guarantor nor any Subsidiary of Borrower or Guarantor will engage in any
transaction with an Affiliate of Borrower, Guarantor or such Subsidiary, or with
ECT, Enron Corp. or any entity which controls, is controlled by or is under
common control with ECT or Enron Corp., providing for the rendering of services
or sale of property, unless such transaction (i) is a Permitted Affiliate
Transaction or (ii) is as favorable to such party as could be obtained in an
arm's length transaction with an unaffiliated Person in accordance with
prevailing industry customs and practices.
SECTION 9.10. ERISA. Except in such instances where an omission or
failure would not have a Material Adverse Effect, neither Borrower nor Guarantor
will (a) take any action or fail to take any action which would result in a
violation of ERISA, the Code or other laws applicable to the Plans maintained or
contributed to by it or any ERISA Affiliate, or (b) modify the term of, or the
funding obligations or contribution requirements under any existing Plan,
establish a new Plan, or become obligated or incur any liability under a Plan
that is not maintained or contributed to by Borrower, Guarantor or any ERISA
Affiliate as of the Closing Date.
SECTION 9.11. Oil and Gas Hedge Transactions. Neither Borrower nor
Guarantor will enter into any Oil and Gas Hedge Transaction which would cause,
as of any date, the amount of Hydrocarbons which are the subject of Oil and Gas
Hedge
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Transactions in existence at such time to exceed (i) eighty-five percent (85%)
of Borrower's aggregate anticipated production from Proved Producing Mineral
Interests for the one (1) year period commencing on the date of determination,
(ii) sixty percent (60%) of Borrower's aggregate anticipated production from
Proved Producing Mineral Interests for the one (1) year period commencing on the
date that is one (1) year after the date of determination, (iii) forty percent
(40%) of Borrower's aggregate anticipated production from Proved Producing
Mineral Interests for the one (1) year period commencing on the date that is two
(2) years after the date of determination, (iv) twenty-five percent (25%) of
Borrower's aggregate anticipated production from Proved Producing Mineral
Interest for the one (1) year period commencing on the date that is three (3)
years after the date of determination or (v) twenty-five percent (25%) of
Borrower's aggregate anticipated production from Proved Producing Mineral
Interests for the one (1) year period commencing on the date that is four (4)
years after the date of determination.
SECTION 9.12. Fiscal Year. Borrower will not change its Fiscal Year.
SECTION 9.13. Change in Business. Neither Borrower nor Guarantor nor
any Subsidiary of Borrower or Guarantor will engage in any business other than
the businesses engaged in by such parties on the date hereof as described in
Section 7.14.
ARTICLE X
FINANCIAL COVENANTS
Borrower covenants and agrees that, so long as any Bank has any
commitment to lend or participate in Letter of Credit Exposure hereunder or any
amount payable under any Note remains unpaid or any Letter of Credit remains
outstanding:
SECTION 10.1. Fixed Charge Coverage Ratio. Borrower will not permit
the consolidated Fixed Charge Coverage Ratio of Borrower and Guarantor as of the
end of any Fiscal Quarter to be less than 1.5 to 1.0.
SECTION 10.2. Interest Coverage Ratio. Borrower will not permit the
consolidated Interest Coverage Ratio of Borrower and Guarantor as of the end of
any Fiscal Quarter to be less than 2.25 to 1.0.
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ARTICLE XI
DEFAULTS AND REMEDIES
SECTION 11.1. Events of Default. It shall constitute an "Event of
Default" if one or more of the following events shall have occurred and be
continuing:
(a) Borrower shall fail to pay when due any principal on any
Note and such failure continues for a period of three (3) Domestic
Business Days following the due date;
(b) Borrower shall fail to pay when due accrued interest on
any Note or any fees or any other amount payable hereunder and such
failure continues for a period of three (3) Domestic Business Days
following the due date;
(c) Borrower or Guarantor or any Subsidiary of Borrower or
Guarantor shall fail to observe or perform any covenant or agreement
contained in Article IX or Article X of this Agreement that is
applicable to such Person, and such failure continues for a period of
fifteen (15) days after the earlier of (i) the date any Authorized
Officer of Borrower or Guarantor or any Subsidiary of Borrower or
Guarantor acquires knowledge of such failure, or (ii) written notice of
such failure has been given to Borrower or Guarantor by Administrative
Agent or any Bank;
(d) Borrower or Guarantor shall fail to observe or perform any
covenant or agreement contained in this Agreement or the other Loan
Papers (other than those referenced in Sections 11.1(a), (b) and (c))
and such failure continues for a period of thirty (30) days after the
earlier of (i) the date any Authorized Officer of Borrower or Guarantor
acquires knowledge of such failure, or (ii) written notice of such
failure has been given to Borrower or Guarantor by Administrative Agent
or any Bank;
(e) any representation, warranty, certification or statement
made or deemed to have been made by or with respect to Borrower or
Guarantor in any certificate, financial statement or other document
delivered pursuant to this Agreement shall prove to have been incorrect
in any material respect when made;
(f) Borrower or Guarantor shall fail to make any payment when
due on any of its Debt in a principal amount equal to or greater than
$500,000 or any other event or condition shall occur which (i) results
in the acceleration of the
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maturity of any such Debt, or (ii) entitles the holder of such Debt to
accelerate the maturity thereof;
(g) Borrower or Guarantor shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment
of a trustee, receiver, liquidator, custodian or other similar official
of it or any substantial part of its property, or shall consent to any
such relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against
it, or shall make a general assignment for the benefit of creditors, or
shall fail generally to pay its debts as they become due, or shall take
any corporate action to authorize any of the foregoing;
(h) an involuntary case or other proceeding shall be commenced
against Borrower or Guarantor seeking liquidation, reorganization or
other relief with respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking
the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, and
such involuntary case or other proceeding shall remain undismissed and
unstayed for a period of sixty (60) days; or an order for relief shall
be entered against Borrower or Guarantor under the federal bankruptcy
Laws as now or hereafter in effect;
(i) one (1) or more judgments or orders for the payment of
money aggregating in excess of $100,000 shall be rendered against
Borrower or Guarantor and such judgment or order shall continue
unsatisfied and unstayed for thirty (30) days;
(j) any event occurs with respect to any Plan or Plans
pursuant to which Borrower or Guarantor could reasonably be expected to
incur a liability due and owing at the time of such event, without
existing funding therefor, for benefit payments under such Plan or
Plans in excess of $100,000; or (ii) Borrower or Guarantor and/or any
ERISA Affiliate, or any other "party-in-interest" or "disqualified
person", as such terms are defined in section 3(14) of ERISA and
section 4975(e)(2) of the Code, shall engage in transactions which in
the aggregate would reasonably result in a direct or indirect liability
to Borrower or Guarantor in excess of $100,000 under section 409 or 502
of ERISA or section 4975 of the Code;
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(k) as of any date, JEDI, Enron Corp., ECT, the California
Public Employees' Retirement System, any Affiliate (without giving
effect to the last sentence of the definition thereof) of any of the
foregoing, or any combination of the foregoing entities, shall cease to
own, directly or indirectly, outstanding capital stock of Borrower (on
either an undiluted or a fully diluted basis) which in the aggregate
permits such entities to elect a majority of the directors of Borrower;
or
(l) this Agreement or any other Loan Paper shall cease to be
in full force and effect or shall be declared null and void or the
validity or enforceability thereof shall be contested or challenged by
Borrower or Guarantor, or Borrower or Guarantor shall deny that it has
any further liability or obligation under any of the Loan Papers, or
any Lien created by the Loan Papers shall for any reason (other than
the release thereof in accordance with the Loan Papers) cease to be a
valid, first priority, perfected Lien upon any of the Proved Mineral
Interests purported to be covered thereby.
SECTION 11.2. Remedies. Upon the occurrence and during the continuance
of any Event of Default, without presentment, notice or demand (unless expressly
provided for herein) of any kind (including, without limitation, notice of
intention to accelerate and notice of acceleration), all of which are hereby
waived, Administrative Agent shall, if requested by Required Banks, (a)
terminate the Commitments and they shall thereupon terminate, and (b) take such
other actions as may be permitted by the Loan Papers, including declaring the
Notes (together with accrued interest thereon) to be, and the Notes shall
thereupon become, immediately due and payable; provided, however, in the case of
any of the Events of Default specified in Sections 11.1(g) or (h), without any
notice to Borrower or Guarantor or any other act by Administrative Agent or
Banks, the Commitments shall thereupon terminate and the Notes (together with
accrued interest thereon) shall become immediately due and payable.
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ARTICLE XII
ADMINISTRATIVE AGENT
SECTION 12.1. Appointment and Authorization. Each Bank irrevocably
appoints and authorizes Administrative Agent to take such action as
Administrative Agent on its behalf and to exercise such powers under this
Agreement, the Notes and the other Loan Papers as are delegated to
Administrative Agent by the terms hereof or thereof, together with all such
powers as are reasonably incidental thereto, provided that, as between and among
Banks, Administrative Agent will not prosecute, settle or compromise any claim
against Borrower or release or institute enforcement proceedings, except with
the consent of Required Banks. Each Bank, Borrower and Guarantor agree that
Administrative Agent is not a fiduciary for any Bank, Borrower or Guarantor but
simply is acting in the capacity described herein to alleviate administrative
burdens for Borrower, Guarantor and Banks, and that Administrative Agent has no
duties or responsibilities to Banks, Borrower or Guarantor except those
expressly set forth herein.
SECTION 12.2. Administrative Agent and Affiliates. NationsBank, N.A.,
dba Bank of America, N.A., shall have the same rights and powers under this
Agreement as any other Bank and may exercise or refrain from exercising the same
as though it were not Administrative Agent, and NationsBank, N.A., dba Bank of
America, N.A., and its Affiliates may accept deposits from, lend money to, and
generally engage in any kind of business with Borrower and Guarantor or any of
their Affiliates as if it were not Administrative Agent hereunder.
SECTION 12.3. Action by Administrative Agent. The obligations of
Administrative Agent hereunder are only those expressly set forth herein.
Without limiting the generality of the foregoing, Administrative Agent shall not
be required to take any action with respect to any Default or Event of Default,
except as expressly provided in Article XI. Notwithstanding the administrative
authority delegated to Administrative Agent, Administrative Agent shall not
without the prior written approval of all Banks cause or permit any modification
of the Loan Papers which would (a) increase the Commitment of any Bank or
subject any Bank to any additional obligation, (b) forgive any of the principal
or reduce the rate of interest on the Loan or any fees hereunder (c) postpone
the Maturity Date or any other date fixed for payment of principal of or
interest on the Loan or any fees hereunder, (d) change any Bank's percentage of
the Total Commitment (except as otherwise provided for in this Agreement), (e)
change the aggregate unpaid principal amount of the Notes, (f) change the
Borrowing Base, (g) change the definition of "Required Banks", (h) permit
Borrower to assign any of its rights hereunder or under any Loan Paper, (i)
materially amend or waive any of the
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provisions of Articles IV or V or the definitions contained in Section 1.1
applicable thereto, or (j) provide for the release or substitution of any
material amount of collateral for the Obligations other than releases required
pursuant to sales of collateral which are expressly permitted under Section 9.5.
Subject to the foregoing, Administrative Agent shall make such requests, take
such actions, and grant such waivers and consents in respect of Borrower as it
shall determine or, if required by this Agreement, as Required Banks shall
direct.
SECTION 12.4. Consultation with Experts. Administrative Agent may
consult with legal counsel (who may be counsel for Borrower or Guarantor),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken by it in good faith in
accordance with the advice of such counsel, accountants or experts.
SECTION 12.5. LIABILITY OF ADMINISTRATIVE AGENT. NEITHER
ADMINISTRATIVE AGENT NOR ANY OF ITS DIRECTORS, OFFICERS, AGENTS, OR EMPLOYEES
SHALL BE LIABLE FOR ANY ACTION TAKEN OR NOT TAKEN BY IT IN CONNECTION HEREWITH
(A) WITH THE CONSENT OR AT THE REQUEST OF REQUIRED BANKS OR (B) IN THE ABSENCE
OF ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, IT BEING THE INTENTION OF
BANKS THAT SUCH PARTIES SHALL NOT BE LIABLE FOR THE CONSEQUENCES OF THEIR OWN
ORDINARY NEGLIGENCE. Neither Administrative Agent nor any of its directors,
officers, agents or employees shall be responsible for or have any duty to
ascertain, inquire into or verify (a) any statement, warranty or representation
made in connection with this Agreement or any Borrowing hereunder, (b) the
performance or observance of any of the covenants or agreements of Borrower or
Guarantor, (c) the satisfaction of any condition specified in Article VI, except
receipt of items required to be delivered to Administrative Agent, or (d) the
validity, effectiveness or genuineness of this Agreement, the Notes or any other
instrument or writing furnished in connection herewith. Administrative Agent
shall not incur any liability by acting in reliance upon any notice, consent,
certificate, statement, or other writing (which may be a bank wire, telex or
similar writing) believed by it to be genuine or to be signed by the proper
party or parties or upon any oral notice which Administrative Agent believes
will be confirmed in writing by the proper party or parties. If Administrative
Agent fails to take any action required to be taken by it under the Loan Papers
after a default and within a reasonable time after being requested to do so by
any Bank (after such requesting Bank has obtained the approval of such other
Banks as required), Administrative Agent shall not suffer or incur any liability
as a result thereof, but such requesting Bank may request Administrative Agent
to resign, whereupon Administrative Agent shall so resign pursuant to Section
12.9.
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SECTION 12.6. Delegation of Duties. Administrative Agent may execute
any of its duties hereunder by or through officers, directors, employees,
attorneys, or agents.
SECTION 12.7. Indemnification. EACH BANK SHALL, RATABLY IN ACCORDANCE
WITH ITS COMMITMENT, INDEMNIFY ADMINISTRATIVE AGENT (TO THE EXTENT NOT
REIMBURSED BY BORROWER AND GUARANTOR) AGAINST ANY COST, EXPENSE (INCLUDING
COUNSEL FEES AND DISBURSEMENTS), CLAIM, DEMAND, ACTION, LOSS OR LIABILITY
(EXCEPT SUCH AS RESULT FROM ADMINISTRATIVE AGENT'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT) THAT ADMINISTRATIVE AGENT MAY SUFFER OR INCUR IN CONNECTION WITH
THIS AGREEMENT OR ANY ACTION TAKEN OR OMITTED BY ADMINISTRATIVE AGENT HEREUNDER,
INCLUDING, WITHOUT LIMITATION, MATTERS ARISING OUT OF ADMINISTRATIVE AGENT'S OWN
ORDINARY NEGLIGENCE. IT IS THE EXPRESS INTENTION OF EACH BANK THAT
ADMINISTRATIVE AGENT SHALL BE INDEMNIFIED HEREUNDER FOR THE CONSEQUENCES OF ITS
OWN ORDINARY NEGLIGENCE.
SECTION 12.8. Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon Administrative Agent or any other Bank,
and based on such 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 will, independently and without reliance upon
Administrative 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 any action under this Agreement.
SECTION 12.9. Successor Administrative Agent. Agent may resign at any
time by giving written notice thereof to Banks and Borrower. Upon such
resignation, Required Banks shall have the right to appoint a successor
Administrative Agent, which shall be one of Banks and, except during the
continuance of an Event of Default, shall be approved by Borrower, such approval
to not be unreasonably withheld. If no successor Administrative Agent shall have
been so appointed by Required Banks, so approved by Borrower (if necessary), and
accepted such appointment within thirty (30) days after the retiring Agent's
giving of notice of resignation, then the retiring Administrative Agent may, on
behalf of Banks, appoint a successor Administrative Agent, which shall (i) be 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 and (ii) unless an Event of Default is continuing, be approved by
Borrower (such approval to not be unreasonably withheld). Upon the acceptance of
its appointment as a successor Administrative Agent hereunder, such successor
Administrative Agent shall thereupon succeed to and become vested with all the
rights and duties of the retiring Agent, and the retiring Administrative Agent
shall be
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discharged from its duties and obligations hereunder. After any Agent's
resignation hereunder as Agent, the provisions of this Article XII shall
continue to inure to its benefit as to any actions taken or omitted to be taken
by it while it was Administrative Agent.
ARTICLE XIII
PROTECTION OF YIELD; CHANGE IN LAWS
SECTION 13.1. Inadequate Basis for Determining Interest Rate Applicable
to Eurodollar Tranches. If on or prior to the first day of any Interest Period
with respect to a Borrowing, (a) Agent is advised by any Bank that deposits in
dollars (in the applicable amounts) are not being offered to such Bank in the
relevant market for such Interest Period, or (b) any Bank advises Administrative
Agent that the Adjusted Eurodollar Rate as determined by Administrative Agent
will not adequately and fairly reflect the cost to such Bank of funding its
share of the requested Borrowing which will be subject to a Eurodollar Tranche
for such Interest Period, then in any such event Administrative Agent shall give
notice thereof to Borrower and Banks, whereupon the obligations of Banks to
allow interest to be computed by reference to the Adjusted Eurodollar Rate shall
be suspended until Administrative Agent notifies Borrower that the circumstances
giving rise to such suspension no longer exist. Unless Borrower notifies
Administrative Agent at least two (2) Domestic Business Days before the date of
any Borrowing for which a Request for Borrowing has previously been given that
it elects not to borrow on such date, such Borrowing shall instead be made as an
Adjusted Base Rate Borrowing.
SECTION 13.2. Illegality of Eurodollar Tranches.
(a) If, after the date of this Agreement, the adoption of any
applicable Law, rule or regulation, or any change therein, or any
change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with
the interpretation or administration thereof, or compliance by any Bank
(or its Eurodollar Lending Office) with any request or directive
(whether or not having the force of Law) of any such authority, central
bank or comparable agency shall make it unlawful or impossible for any
Bank (or its Eurodollar Lending Office) to make, maintain or fund any
portion of the Loan subject to a Eurodollar Tranche and such Bank shall
so notify Administrative Agent, Administrative Agent shall forthwith
give notice thereof to the other Banks and Borrower. Until such Bank
notifies Borrower and Administrative Agent that the circumstances
giving rise to such suspension no longer exist, the obligation of such
Bank to maintain or fund any portion of the Loan subject to a
Eurodollar Tranche shall be suspended. Before giving any notice to
Administrative Agent pursuant to this Section 13.2, such Bank shall
designate a different Eurodollar
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Lending Office if such designation will avoid the need for giving such
notice and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank. If such Bank shall determine that it may
not lawfully continue to maintain and fund any portion of an
outstanding Loan subject to a Eurodollar Tranche to maturity and shall
so specify in such notice, Borrower shall immediately convert the
principal amount of the Loan which is subject to a Eurodollar Tranche
to an Adjusted Base Rate Tranche of an equal principal amount from such
Bank (on which interest and principal shall be payable
contemporaneously with the unaffected Eurodollar Tranches of the other
Banks).
(b) No Bank shall be required to fund its Commitment
Percentage of any Borrowing hereunder if the funding of such Borrowing
would be in violation of any Law applicable to such Bank.
SECTION 13.3. Increased Cost of Eurodollar Tranche. If after the date
hereof, the adoption of any applicable Law, rule or regulation, or any change
therein, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or its
Lending Office) with any request or directive (whether or not having the force
of Law) of any such authority, central bank or comparable agency:
(a) shall subject any Bank (or its Lending Office) to any tax,
duty or other charge with respect to maintaining or funding any portion
of its Loans subject to a Eurodollar Tranche, its Note or its
obligation to allow interest to be computed by reference to the
Adjusted Eurodollar Rate shall change the basis of taxation of payments
to any Bank (or its Lending Office) of the principal of or interest on
the Loan which is subject to any Eurodollar Tranche or any other
amounts due under this Agreement in respect of any Eurodollar Tranche
or its obligation to allow interest to be computed by reference to the
Adjusted Eurodollar Rate (except for changes in the rate of Tax on the
overall net income of such Bank or its Lending Office imposed by the
jurisdiction in which such Bank's principal executive office or Lending
Office is located); or
(b) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement (including, without limitation,
any such requirement imposed by the Board of Governors of the Federal
Reserve System, but excluding with respect to any Eurodollar Tranche
any such requirement included in an applicable Eurodollar Reserve
Percentage) against assets of, deposits with or for the account of or
credit extended by, any Bank's Lending Office or shall impose on any
Bank (or its Lending Office) or the applicable interbank Eurodollar
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market any other condition affecting Eurodollar Tranches, its Note or
its obligation to allow interest to be computed by reference to the
Adjusted Eurodollar Rate;
and the result of any of the foregoing is to increase the cost to such Bank (or
its Lending Office) of funding or maintaining any Eurodollar Tranche, or to
reduce the amount of any sum received or receivable by such Bank (or its Lending
Office) under this Agreement or under its Note with respect thereto, then,
within five (5) days after demand by such Bank (with a copy to Agent), Borrower
shall pay to such Bank such additional amount or amounts as will compensate such
Bank for such increased cost or reduction. Each Bank will promptly notify
Borrower and Administrative Agent of any event of which it has knowledge,
occurring after the date hereof, which will entitle such Bank to compensation
pursuant to this Section 13.3 and will designate a different Lending Office if
such designation will avoid the need for, or reduce the amount of, such
compensation and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank. A certificate of any Bank claiming compensation
under this Section 13.3 and setting forth the additional amount or amounts to be
paid to it hereunder shall be conclusive in the absence of manifest error. In
determining such amount, such Bank may use any reasonable averaging and
attribution methods.
SECTION 13.4. Adjusted Base Rate Tranche Substituted for Affected
Eurodollar Tranche. If (i) the obligation of any Bank to fund or maintain any
portion of any Loan subject to a Eurodollar Tranche has been suspended pursuant
to Section 13.2 or (ii) any Bank has demanded compensation under Section 13.3
and, in either event, Borrower shall, by at least five (5) Eurodollar Business
Days prior notice to such Bank through Administrative Agent, have elected that
the provisions of this Section 13.4 shall apply to such Bank, then, unless and
until such Bank notifies Borrower that the circumstances giving rise to such
suspension or demand for compensation no longer apply:
(a) any Tranche which would otherwise be characterized by such
Bank as Eurodollar Tranche shall instead be deemed an Adjusted Base
Rate Tranche (on which interest and principal shall be payable
contemporaneously with the unaffected Eurodollar Tranches of the other
Banks); and
(b) after all of its Eurodollar Tranches have been repaid, all
payments of principal which would otherwise be applied to repay
Eurodollar Tranches shall be applied to repay its Adjusted Base Rate
Tranches instead.
SECTION 13.5. Capital Adequacy. If after the date hereof, the adoption
of any applicable Law, rule or regulation, or any change therein, or any change
in the
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interpretation or administration thereof, by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or its Lending Office) with any request or
directive (whether or not having the force of Law) shall:
(a) impose, modify or deem applicable any reserve, special
deposit, compensatory loan, deposit insurance, capital adequacy,
minimum capital, capital ratio or similar requirement against all or
any assets held by, deposits or accounts with, credit extended by or
to, or commitments to extend credit or any other acquisition of funds
by any Bank (or its Lending Office), or impose on any Bank (or its
Lending Office) any other condition, with respect to the maintenance by
such Bank of all or any part of its Commitment; or
(b) subject any Bank (or its Lending Office) to, or cause the
termination or reduction of a previously granted exemption with respect
to, any Tax with respect to the maintenance by such Bank of all or any
part of its Commitment (other than Taxes assessed against such Bank's
overall net income, gross receipts or capital and franchise taxes);
and the result of any of the foregoing is to increase the cost to such Bank (or
its Lending Office) of maintaining its Commitment or to reduce the amount of any
sums received or receivable by such Bank (or its Lending Office) under this
Agreement or any other Loan Paper, or to reduce the rate of return on such
Bank's equity in connection with this Agreement, as the case may be, then, in
any such case, within five (5) days of demand by such Bank (or its Lending
Office) (with a copy to Agent), Borrower shall pay to such Bank (or its Lending
Office) such additional amount or amounts as will compensate such Bank for any
additional cost, reduced benefit, reduced amount received or reduced rate of
return. Each Bank will promptly notify Borrower and Administrative Agent of any
event of which it has knowledge, occurring after the date hereof, which will
entitle such Bank to compensation pursuant to this Section 13.5. A certificate
of any Bank claiming compensation under this Section 13.5 and setting forth the
additional amount or amounts to be paid to it hereunder shall be conclusive in
the absence of manifest error. In determining such amount, such Bank may use any
reasonable averaging and attribution methods.
SECTION 13.6. Taxes. All amounts payable by Borrower under the Loan
Papers (whether principal, interest, fees, expenses, or otherwise) to or for the
account of each Bank shall be paid in full, free of any deductions or
withholdings for or on account of any Taxes. If Borrower is prohibited by Law
from paying any such amount free of any such deductions and withholdings, then
(at the same time and in the same manner that such original amount is otherwise
due under the Loan Papers) Borrower
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shall pay to or for the account of such Bank such additional amount as may be
necessary in order that the actual amount received by such Bank after deduction
and/or withholding (and after payment of any additional Taxes due as a
consequence of the payment of such additional amount, and so on) will equal the
amount such Bank would have received if such deduction or withholding were not
made. The covenants of Borrower set for this Section to make payments to or for
the account of a Bank shall not apply if Borrower's requirement to pay such
amounts to such Bank is caused by the failure of such Bank to comply with the
provisions of Section 3.4.
SECTION 13.7. Discretion of Banks as to Manner of Funding.
Notwithstanding any provisions of this Agreement to the contrary, each Bank
shall be entitled to fund and maintain its funding of all or any part of its
Commitment in any manner it sees fit, it being understood, however, that for the
purposes of this Agreement all determinations hereunder shall be made as if such
Bank had actually funded and maintained each Eurodollar Tranche during the
Interest Period for such Eurodollar Tranche through the purchase of deposits
having a maturity corresponding to the last day of such Interest Period and
bearing an interest rate equal to the Adjusted Eurodollar Rate for such Interest
Period.
SECTION 13.8. Limitations.
(a) No Bank shall demand any compensation, payment or penalty
from Borrower under this Article XIII unless such Bank shall also make
the same demand of all borrowers from such Bank that are similarly
situated to Borrower.
(b) Each Bank shall give notice to Borrower of any event
occurring after the date of this Agreement that will entitle such Bank
to demand any compensation, payment or penalty from Borrower under this
Article XIII (which notice shall include the amount of such demand and
the reasons therefor) within six (6) months after the date such Bank
obtains knowledge of the occurrence of such event, and Borrower shall
not be liable for any such compensation, payment or penalty for which
such required notice was not timely given.
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ARTICLE XI
MISCELLANEOUS
SECTION 14.1. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including bank wire, telecopy or
similar writing) and shall be given, if to Administrative Agent or any Bank, at
its address or telecopier number set forth on Schedule 1 hereto, and if given to
Borrower or Guarantor, at their respective addresses or telecopy numbers set
forth on the signature pages hereof (or in any case, at such other address or
telecopy number as such party may hereafter specify for the purpose by notice to
the other parties hereto). Each such notice, request or other communication
shall be effective (a) if given by telecopy, when such telecopy is transmitted
to the telecopy number specified in this Section 14.1 and the appropriate
answerback is received or receipt is otherwise confirmed, (b) if given by mail,
three (3) Domestic Business Day after deposit in the mails with first class
postage prepaid, addressed as aforesaid or (c) if given by any other means, when
delivered at the address specified in this Section 14.1; provided that notices
to Administrative Agent under Article II or III shall not be effective until
received.
SECTION 14.2. No Waivers. No failure or delay by Administrative Agent
or any Bank in exercising any right, power or privilege hereunder or under any
Note or other Loan Paper shall operate as a waiver thereof nor shall any single
or partial exercise thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or remedies
provided by Law or in any of the other Loan Papers.
SECTION 14.3. Expenses; Documentary Taxes; Indemnification.
(a) Borrower shall pay counsel for Administrative Agent the
previously agreed sum for fees and disbursements in connection with the
preparation, negotiation and execution of those Loan Papers being
executed simultaneously with this Agreement. In addition, Borrower
shall pay (i) all out-of-pocket expenses of Administrative Agent,
including reasonable fees and disbursements of counsel for
Administrative Agent, in connection with any waiver or consent
hereunder or any amendment hereof or supplement hereto or any Default
or Event of Default, or alleged Default or Event of Default, (ii)
reasonable fees and disbursements of counsel for Administrative Agent
in connection with the granting of any Mortgages pursuant to Section
5.1 and any title review and environmental review associated therewith,
and (iii) if a Default or Event of Default occurs, all out-of-pocket
expenses incurred by Administrative Agent or any Bank, including fees
and disbursements of counsel in connection with such Default or Event
of Default and collection and other enforcement proceedings resulting
therefrom, fees of auditors and consultants incurred in connection
therewith and investigation expenses incurred by Administrative Agent
or
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any Bank in connection therewith. Borrower shall indemnify each Bank
against any Taxes imposed by reason of the execution and delivery of
this Agreement or the Notes (other than Taxes imposed on the overall
net income of such Bank or its Lending Office imposed by the
jurisdiction in which such Bank's principal executive office or Lending
office is located).
(b) BORROWER AGREES TO INDEMNIFY ADMINISTRATIVE AGENT AND EACH
BANK AND HOLD ADMINISTRATIVE AGENT AND EACH BANK HARMLESS FROM AND
AGAINST ANY AND ALL LIABILITIES, LOSSES, DAMAGES, COSTS AND EXPENSES OF
ANY KIND (INCLUDING, WITHOUT LIMITATION, THE REASONABLE FEES AND
DISBURSEMENTS OF COUNSEL FOR ADMINISTRATIVE AGENT AND EACH BANK IN
CONNECTION WITH ANY INVESTIGATIVE, ADMINISTRATIVE OR JUDICIAL
PROCEEDING, WHETHER OR NOT ADMINISTRATIVE AGENT OR SUCH BANK SHALL BE
DESIGNATED A PARTY THERETO) WHICH MAY BE INCURRED BY ANY BANK OR BY
ADMINISTRATIVE AGENT RELATING TO OR ARISING OUT OF (I) THE EXISTENCE OF
THIS AGREEMENT OR ANY OF THE LOAN PAPERS, INCLUDING THE PERFORMANCE BY
BORROWER, ADMINISTRATIVE AGENT OR ANY BANK OF ITS OBLIGATIONS
HEREUNDER, (II) ANY TRANSACTIONS CONTEMPLATED HEREBY OR BY ANY OF THE
OTHER LOAN PAPERS, (III) THE EXERCISE OF ANY RIGHTS OR REMEDIES BY
ADMINISTRATIVE AGENT OR ANY BANK UNDER THIS AGREEMENT OR APPLICABLE LAW
FOLLOWING ANY DEFAULT OR EVENT OF DEFAULT HEREUNDER; (IV) ANY ACTUAL OR
PROPOSED USE OF PROCEEDS OF THE LOAN OR LETTERS OF CREDIT HEREUNDER OR
(V) ANY ENVIRONMENTAL COMPLAINT, HAZARDOUS DISCHARGE OR VIOLATION OF
ANY APPLICABLE ENVIRONMENTAL LAW RELATING TO BORROWER, GUARANTOR, ANY
SUBSIDIARY OF BORROWER OR GUARANTOR, OR ANY OF THEIR RESPECTIVE
PROPERTIES; PROVIDED THAT NEITHER ADMINISTRATIVE AGENT NOR ANY BANK
SHALL HAVE THE RIGHT TO BE INDEMNIFIED HEREUNDER FOR (A) ITS OWN GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT, IT BEING THE EXPRESS INTENTION OF
BORROWER THAT EACH BANK AND ADMINISTRATIVE AGENT SHALL BE INDEMNIFIED
FOR THE CONSEQUENCES OF ITS OWN ORDINARY NEGLIGENCE OR (B) ACTIONS
TAKEN BY ADMINISTRATIVE AGENT OR ANY BANK AFTER SUCH FORECLOSURE WITH
RESPECT TO
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ANY PROPERTIES OF BORROWER ACQUIRED BY ADMINISTRATIVE AGENT OR ANY BANK
AT FORECLOSURE.
SECTION 14.4. Right and Sharing of Set-Offs.
(a) Upon the occurrence and during the continuance of a
Default or Event of Default, 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 such Bank to or for the credit or the account of Borrower
or Guarantor against any and all of the Obligations now or hereafter
existing under this Agreement and the other Loan Papers held by such
Bank, irrespective of whether or not such Bank shall have made any
demand under this Agreement or such Note and although such Obligations
may be unmatured. Each Bank agrees promptly to notify Borrower after
any such setoff and application made by such Bank, provided that the
failure to give such notice shall not affect the validity of such
setoff and application. The rights of each Bank under this Section
14.4(a) are in addition to other rights and remedies (including,
without limitation, other rights of setoff) which such Bank may have.
(b) Each Bank agrees that if it shall, by exercising any right
of setoff or counterclaim or otherwise, receive payment of a proportion
of the aggregate amount of principal and interest due with respect to
any Note held by it which is greater than the proportion received by
any other Bank in respect of the aggregate amount of principal and
interest due with respect to any Note held by such other Bank, Bank
receiving such proportionately greater payment shall purchase such
participations in the Notes held by the other Banks, and such other
adjustments shall be made, as may be required, so that all such
payments of principal and interest with respect to the Notes held by
Banks shall be shared by Banks ratably; provided that nothing in this
Section 14.4 shall impair the right of any Bank to exercise any right
of setoff or counterclaim it may have and to apply the amount subject
to such exercise to the payment of indebtedness of Borrower or
Guarantor other than its indebtedness under the Notes. Borrower and
Guarantor acknowledge their agreement with the foregoing provisions and
further agree, to the fullest extent each may effectively do so under
applicable Law, that any holder of a participation in a Note may
exercise rights of setoff or counterclaim and other rights with respect
to such participation as fully as if such holder of a participation
were a direct creditor of Borrower or Guarantor, as applicable, in the
amount of such participation.
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SECTION 14.5. Amendments and Waivers. Any provision of this Agreement,
the Notes or the other Loan Papers may be amended or waived if, but only if,
such amendment or waiver is in writing and is signed by Borrower and Required
Banks (and, if the rights or duties of Administrative Agent are affected
thereby, by Agent); provided that no such amendment or waiver shall, unless
signed by all Banks, (a) increase the Commitment of any Bank or subject any Bank
to any additional obligation, (b) forgive any of the principal of or reduce the
rate of interest on the Loan or any fees hereunder, (c) postpone the Maturity
Date or any other date fixed for any payment of principal of or interest on any
Loan or any fees hereunder, (d) change any Bank's percentage of the Total
Commitment, (e) change the aggregate unpaid principal amount of the Notes, (f)
change the Borrowing Base, (g) change the definition of "Required Banks", (h)
permit Borrower to assign any of its rights hereunder or under any Loan Paper,
(i) materially amend or waive any of the provisions of Articles IV or V or the
definitions contained in Section 1.1 applicable thereto, or (j) provide for the
release or substitution of any material amount of collateral for the Obligations
or any part thereof other than releases or required pursuant to sales of
collateral which are expressly permitted by Section 9.5.
SECTION 14.6. Survival. All representations, warranties and covenants
made by or with respect to Borrower or any Guarantor herein or in any
certificate or other instrument delivered by or on behalf of Borrower or
Guarantor under the Loan Papers shall be considered to have been relied upon by
Administrative Agent and Banks and shall survive the delivery to Administrative
Agent and Banks of such Loan Papers or the extension of the Loan (or any part
thereof), regardless of any investigation made by or on behalf of Banks. The
indemnity provided in Section 14.3(b) herein shall survive the repayment of all
credit advances hereunder and/or the discharge or release of any Lien granted
hereunder or in any other Loan Paper, contract or agreement between Borrower or
Guarantor and Administrative Agent or any Bank.
SECTION 14.7. Limitation on Interest. Regardless of any provision
contained in the Loan Papers, no Bank shall ever be entitled to receive,
collect, or apply, as interest on the Loan, any amount in excess of the Maximum
Lawful Rate, and in the event any Bank ever receives, collects or applies as
interest any such excess, such amount which would be deemed excessive interest
shall be deemed a partial prepayment of principal and treated hereunder as such;
and if the Loan is paid in full, any remaining excess shall promptly be paid to
Borrower. In determining whether or not the interest paid or payable under any
specific contingency exceeds the Maximum Lawful Rate, Borrower and Banks shall,
to the extent permitted under applicable Law, (a) characterize any nonprincipal
payment as an expense, fee or premium rather than as interest, (b) exclude
voluntary prepayments and the effects thereof and (c) amortize, prorate,
allocate and spread, in equal parts, the total amount of the interest throughout
the entire contemplated term of the Notes, so that the interest rate is the
Maximum Lawful Rate
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throughout the entire term of the Notes; provided, however, that if the unpaid
principal balance thereof is paid and performed in full prior to the end of the
full contemplated term thereof, and if the interest received for the actual
period of existence thereof exceeds the Maximum Lawful Rate, Banks shall refund
to Borrower the amount of such excess and, in such event, Banks shall not be
subject to any penalties provided by any laws for contracting for, charging,
taking, reserving or receiving interest in excess of the Maximum Lawful Rate.
SECTION 14.8. Invalid Provisions. If any provision of the Loan Papers
is held to be illegal, invalid, or unenforceable under present or future Laws
effective during the term thereof, such provision shall be fully severable, the
Loan Papers shall be construed and enforced as if such illegal, invalid, or
unenforceable provision had never comprised a part thereof, and the remaining
provisions thereof shall remain in full force and effect and shall not be
affected by the illegal, invalid, or unenforceable provision or by its severance
therefrom. Furthermore, in lieu of such illegal, invalid, or unenforceable
provision there shall be added automatically as a part of the Loan Papers a
provision as similar in terms to such illegal, invalid, or unenforceable
provision as may be possible and be legal, valid and enforceable.
SECTION 14.9. Waiver of Consumer Credit Laws. Pursuant to Article
15.10(b) of Chapter 15, Subtitle 79, Revised Civil Statutes of Texas, 1925, as
amended, Borrower agrees that such Chapter 15 shall not govern or in any manner
apply to the Loan.
SECTION 14.10. Successors and Assigns.
(a) Each Loan Paper binds and inures to the parties to it, any
intended beneficiary of it, and each of their respective successors and
permitted assigns. Neither Borrower nor Guarantor shall assign or
transfer any rights or obligations under any Loan Paper without first
obtaining all Banks' consent, and any purported assignment or transfer
without all Banks' consent is void. No Bank may transfer, pledge,
assign, sell any participation in, or otherwise encumber its portion of
the Obligations except as permitted by clause (b) or (c) below.
(b) Any Bank may at any time (subject to the provisions of
this section) sell to one or more Persons (each a "Participant")
participating interests in its portion of the Obligations. The selling
Bank remains a "Bank" under the Loan Papers, the Participant does not
become a "Bank" under the Loan Papers, and the selling Bank's
obligations under the Loan Papers remain unchanged. The selling Bank
remains solely responsible for the performance of its obligations and
remains the holder of its share of the outstanding Loan for all
purposes under the
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Loan Papers. Borrower and Administrative Agent shall continue to deal
solely and directly with the selling Bank in connection with that
Bank's rights and obligations under the Loan Papers, and each Bank must
retain the sole right and responsibility to enforce due obligations of
Borrower and Guarantor. Participants have no rights under the Loan
Papers except certain voting rights as provided below. Subject to the
following, each Bank may obtain (on behalf of its Participants) the
benefits of Article XII with respect to all participations in its part
of the Obligations outstanding from time to time so long as Borrower is
not obligated to pay any amount in excess of the amount that would be
due to that Bank under Article XII calculated as though no
participations have been made. No Bank may sell any participating
interest under which the Participant has any rights to approve any
amendment, modification, or waiver of any Loan Paper except as to
matters in clauses (b), (c), (e), (f), (g) or (h) of Section 14.5.
(c) Any Bank may at any time pledge and assign all or any
portion of its rights under this Agreement and the other Loan Papers to
any Federal Reserve Bank without notice to or consent of Borrower,
Guarantor, Administrative Agent or any other Bank. No such pledge or
assignment shall release the transferor Bank from its obligations
hereunder. Each Bank may also assign to one or more assignees (each an
"Assignee") all or any part of its rights and obligations under the
Loan Papers so long as (i) the assignor Bank and Assignee execute and
deliver to Administrative Agent and Borrower for their consent and
acceptance (which may not be unreasonably withheld by either) an
assignment and assumption agreement in substantially the form of
Exhibit G (an "Assignment and Assumption Agreement"), (ii) the
conditions (including, without limitation, minimum amounts of the Total
Commitment that must be retained) for that assignment set forth in the
applicable Assignment and Assumption Agreement are satisfied and (iii)
the assignor Bank shall pay to Administrative Agent a processing fee of
$2,500. The "Effective Date" in each Assignment and Assumption
Agreement must (unless a shorter period is agreeable to Borrower and
Agent) be at least five Domestic Business Days after it is executed and
delivered by the assignor Bank and the Assignee to Administrative Agent
and Borrower for acceptance. Once that Assignment and Assumption
Agreement is accepted by Administrative Agent and Borrower, then, from
and after the Effective Date stated in it (i) the Assignee
automatically becomes a party to this agreement and, to the extent
provided in that Assignment and Assumption Agreement, has the rights
and obligations of a Bank under the Loan Papers, (ii) the assignor
Bank, to the extent provided in that Assignment and Assumption
Agreement, is released from its obligations to fund Borrowings under
this Agreement and its reimbursement obligations under this Agreement
and, in the case of an Assignment and Assumption Agreement covering all
of the remaining
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portion of the assignor Bank's rights and obligations under the Loan
Papers, that Bank ceases to be a party to the Loan Papers, (iii)
Borrower shall execute and deliver to the assignor Bank and the
Assignee the appropriate Notes in accordance with this Agreement
following the transfer, (iv) upon delivery of the Notes under clause
(iii) preceding, the assignor Bank shall return to Borrower all Notes
previously delivered to that Bank under this agreement, and (v)
Schedule 1 shall be automatically deemed to be amended to reflect the
name, address, telecopy number, and Commitment of the Assignee and the
remaining Commitment (if any) of the assignor Bank, and Administrative
Agent shall prepare and circulate to Borrower and Banks an amended
Schedule 1 reflecting those changes. In no event may any Bank assign
its rights and obligations under the Loan Papers if so doing would
cause such Bank to retain less than the greater of $5,000,000 or ten
percent (10%) of the Borrowing Base outstanding on the date of such
Assignment.
SECTION 14.11. TEXAS LAW. THIS AGREEMENT, EACH NOTE AND THE OTHER LOAN
PAPERS HAVE BEEN EXECUTED AND DELIVERED IN THE STATE OF TEXAS AND SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND
THE LAWS OF THE UNITED STATES OF AMERICA, EXCEPT TO THE EXTENT THAT THE LAWS OF
ANY STATE IN WHICH ANY PROPERTY INTENDED AS SECURITY FOR THE OBLIGATIONS IS
LOCATED NECESSARILY GOVERN (A) THE PERFECTION AND PRIORITY OF THE LIENS IN FAVOR
OF ADMINISTRATIVE AGENT AND BANKS WITH RESPECT TO SUCH PROPERTY, AND (B) THE
EXERCISE OF ANY REMEDIES (INCLUDING FORECLOSURE) WITH RESPECT TO SUCH PROPERTY.
SECTION 14.12. Consent to Jurisdiction; Waiver of Immunities.
(a) Borrower and Guarantor each hereby irrevocably submit to
the jurisdiction of any Texas State or Federal court sitting in the
Southern District of Texas over any action or proceeding arising out of
or relating to this Agreement or any other Loan Papers, and Borrower
and Guarantor hereby irrevocably agree that all claims in respect of
such action or proceeding may be heard and determined in such Texas
State or Federal court. As an alternative, Borrower and Guarantor each
irrevocably consent to the service of any and all process in any such
action or proceeding by the mailing of copies of such process to such
Person at its address specified in Section 14.1. Borrower and Guarantor
each agree that a final judgment on any such action or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.
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(b) Nothing in this Section 14.12 shall affect any right of
Banks to serve legal process in any other manner permitted by law or
affect the right of any Bank to bring any action or proceeding against
Borrower or Guarantor, or their properties, in the courts of any other
jurisdictions.
(c) To the extent that Borrower or Guarantor has or hereafter
may acquire any immunity from jurisdiction of any court or from any
legal process (whether through service or notice, attachment prior to
judgment, attachment in aid of execution, execution or otherwise) with
respect to itself or its property, such Person hereby irrevocably
waives such immunity in respect of its obligations under this Agreement
and the other Loan Papers.
SECTION 14.13. Counterparts; Effectiveness. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when Administrative Agent
shall have received counterparts hereof signed by all of the parties hereto or,
in the case of any Bank as to which an executed counterpart shall not have been
received, Administrative Agent shall have received telegraphic or other written
confirmation from such Bank of execution of a counterpart hereof by such Bank.
SECTION 14.14. No Third Party Beneficiaries. It is expressly intended
that there shall be no third party beneficiaries of the covenants, agreements,
representations or warranties herein contained other than third party
beneficiaries permitted pursuant to Section 14.10(b).
SECTION 14.15. Confidentiality. Administrative Agent and Banks agree
to hold any non-public information which they may receive from Borrower or
Guarantor in connection with this Agreement in confidence, except for disclosure
(i) to legal counsel, accountants and other professional advisors, (ii) to
regulatory officials, (iii) required by Law or legal process or in connection
with any legal proceeding and (iv) to any Participant, Assignee, potential
Participant or potential Assignee of the Loan or any part thereof.
SECTION 14.16. COMPLETE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN
PAPERS COLLECTIVELY REPRESENT THE FINAL AGREEMENT BY AND AMONG BANKS,
ADMINISTRATIVE AGENT, BORROWER AND GUARANTOR AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF BANKS,
ADMINISTRATIVE AGENT, BORROWER OR GUARANTOR. THERE ARE NO
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UNWRITTEN ORAL AGREEMENTS AMONG ANY OF BANKS, ADMINISTRATIVE AGENT, BORROWER OR
GUARANTOR.
SECTION 14.17. WAIVER OF JURY TRIAL. BORROWER, GUARANTOR,
ADMINISTRATIVE AGENT AND BANKS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE
TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR
ANY OF THE OTHER LOAN PAPERS AND FOR ANY COUNTERCLAIM THEREIN.
SECTION 14.18. Prior Credit Agreement Superseded. Borrower,
Administrative Agent, Co-Agent and the Banks hereby agree that this Agreement
amends, restates and supersedes the Prior Credit Agreement, but in no way acts
as a release or a relinquishment of the Liens securing payment of the
indebtedness advanced pursuant to the Prior Credit Agreement, and such Liens are
hereby renewed, extended, ratified, confirmed and carried forward by Borrower in
all respects to secure the Notes and other obligations under the Loan Papers.
All amounts outstanding under the Prior Credit Agreement shall be deemed, upon
execution of this Agreement, to be outstanding under, and subject to the
provisions of, this Agreement. Any Eurodollar Tranche outstanding as of the date
hereof shall continue to bear interest at the Adjusted Eurodollar Rate
applicable to such Eurodollar Tranche for the applicable Interest Period.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers on the day and year first
above written.
BORROWER:
MARINER ENERGY, INC.
By: /s/ Xxxxx Xxxx
--------------------------------------
Name: Xxxxx Xxxx
-------------------------------
Title: VP Finance & CFO
-------------------------------
Address for Notice:
000 XxxxXxxx Xxxx Xxxx., Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Fax No. (000) 000-0000
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ADMINISTRATIVE AGENT:
NATIONSBANK, N.A., dba BANK OF AMERICA, N.A.
By: /s/ Xxxxx Xxxxxx
--------------------------------------
Name: Xxxxx Xxxxxx
-------------------------------
Title: Managing Director
-------------------------------
CO-AGENT:
TORONTO DOMINION (TEXAS), INC.
By: /s/ Xxxx X Xxxxx
--------------------------------------
Name: Xxxx X Xxxxx
-------------------------------
Title: Vice President
-------------------------------
BANKS:
NATIONSBANK, N.A., dba BANK OF AMERICA, N.A.
By: /s/ Xxxxx Xxxxxx
--------------------------------------
Name: Xxxxx Xxxxxx
-------------------------------
Title: Managing Director
-------------------------------
TORONTO DOMINION (TEXAS), INC.
By: /s/ Xxxxx Xxxxxx
--------------------------------------
Name: Xxxxx Xxxxxx
-------------------------------
Title: Vice President
-------------------------------
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XXX XXXX XX XXXX XXXXXX
By: /s/ FCH Xxxxx
--------------------------------------
Name: FCH Xxxxx
-------------------------------
Title: Senior Manger Loan Operations
-------------------------------
ABN AMRO BANK N.V.
By: /s/ Xxxxxx X. Xxxxxxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
-------------------------------
Title: Group Vice Presidnet
-------------------------------
By: /s/ Xxxxx X Xxxx
--------------------------------------
Name: Xxxxx X Xxxx
-------------------------------
Title: Vice President
-------------------------------
GUARANTOR:
The undersigned Guarantor, Mariner Holdings, Inc., executes this
Agreement to evidence its acknowledgment of the terms and provisions hereof and
to evidence its agreements to the matters set forth herein which purport to be
applicable to or binding upon it.
MARINER HOLDINGS, INC.
By: /s/ Xxxxx Xxxx
--------------------------------------
Name: Xxxxx Xxxx
-------------------------------
Title: VP Finance & CFO
-------------------------------
Address for notice:
000 XxxxXxxx Xxxx Xxxx., Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Fax No. (000) 000-0000
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EXHIBIT A
NOTE
$ Houston, Texas ,
---------------- ------------------ ----
FOR VALUE RECEIVED, the undersigned, Mariner Energy, Inc., a Delaware
corporation ("Maker"), promises to pay to the order of [Name of Bank or Lending
Office] ("Payee"), at the offices of NationsBank, N.A., dba Bank of America,
N.A., as Administrative Agent (herein so called), at 000 Xxxxxxxxx, 0xx Xxxxx,
Xxxxxxx, Xxxxx 00000, for Payee, the principal sum of [Amount of such Bank's
Commitment] ($___________), or so much thereof as may be advanced and
outstanding, together with interest, as hereinafter described.
This Note has been executed and delivered pursuant to, and is subject
to and governed by, the terms of that certain Amended and Restated Credit
Agreement dated as of June ____, 1999 among Maker, Administrative Agent, Toronto
Dominion (Texas), Inc., as Co-Agent, Payee and the other Banks named therein
(said Amended and Restated Credit Agreement, as it may be hereafter renewed,
extended, amended or supplemented, is referred to herein as the "Agreement"),
and this Note is one of the "Notes" referred to therein and is entitled to the
security afforded by the "Mortgages" referred to therein. Unless otherwise
defined herein or unless the context hereof otherwise requires, each term used
herein with its initial letter capitalized has the meaning given to such term in
the Agreement.
Maker also promises to pay interest on the unpaid principal amount
hereof in like money at the offices of Administrative Agent above referenced
from the date hereof at the rates applicable to amounts outstanding under the
Loan provided in the Agreement and on the dates specified in the Agreement.
The principal balance of this Note shall be paid at the times and in
the amounts required by the Agreement. The entire outstanding principal balance
hereof and all accrued but unpaid interest thereon shall be due and payable in
full on the Maturity Date.
Upon and subject to the terms and conditions of the Agreement, Maker
shall be entitled to prepay the principal of or interest on this Note from time
to time and at any time, in whole or in part.
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Upon the occurrence and continuance of an Event of Default, and upon
the conditions stated in the Agreement, Administrative Agent may, at its option,
and shall, to the extent required in accordance with the terms of the Agreement,
declare the entire unpaid principal of and accrued interest on this Note
immediately due and payable (provided that, upon the occurrence of certain
Events of Default, and upon the conditions stated in the Agreement, such
acceleration shall be automatic), without notice (except as otherwise required
by the Agreement), demand, or presentment, all of which are hereby waived, and
the holder hereof shall have the right to offset against this Note any sum or
sums owed by the holder hereof to Maker. All past-due principal of and, to the
extent permitted by law, accrued interest on this Note shall, at the option of
the holder hereof, bear interest at the lesser of (a) the Maximum Lawful Rate or
(b) the Adjusted Base Rate plus 4% per annum until paid from the due date.
Notwithstanding the foregoing, if at any time, any rate of interest
calculated under Section 2.5 of the Agreement (the "Contract Rate") exceeds the
Maximum Lawful Rate, the rate of interest hereunder shall be limited to the
Maximum Lawful Rate, but any subsequent reductions in the Contract Rate shall
not reduce the rate of interest on this Note below the Maximum Lawful Rate until
the total amount of interest accrued equals the amount of interest which would
have accrued (including the amount of interest which would have accrued prior to
the payment or prepayment of any portion of this Note) if the Contract Rate had
at all times been in effect. In the event that at maturity (stated or by
acceleration), or at final payment of this Note, the total amount of interest
paid or accrued on this Note is less than the amount of interest which would
have accrued if the Contract Rate had at all times been in effect with respect
thereto, then at such time the Maker shall pay to the holder of this Note an
amount equal to the difference between (a) the lesser of the amount of interest
which would have accrued if the Contract Rate had at all times been in effect
and the amount of interest which would have accrued if the Maximum Lawful Rate
had at all times been in effect, and (b) the amount of interest actually paid or
accrued on this Note.
THIS NOTE HAS BEEN EXECUTED AND DELIVERED IN THE STATE OF TEXAS, IS
PAYABLE IN THE STATE OF TEXAS, AND SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO THE PRINCIPLES
OF CONFLICTS OF LAW.
MARINER ENERGY, INC., a Delaware corporation
By:
------------------------------------
Name:
-----------------------------
Title:
----------------------------
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LOANS, MATURITIES, AND
PAYMENTS OF PRINCIPAL AND INTEREST
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Payee's
Commitment Expiration of Rate of Interest Unpaid
Borrowing Percentage of Interest Applicable to Amount of Amount of Principal Notation Made
Date Borrowing Period Tranche Principal Paid Interest Paid Balance By
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EXHIBIT B
GUARANTY
THIS GUARANTY (this "Guaranty") is dated as of the _____ day of
___________, _____, by Mariner Holdings, Inc., a corporation incorporated under
the laws of the State of Delaware ("Guarantor"), in favor of [Name of Bank or
Lending Officer] ("Noteholder").
W I T N E S S E T H:
WHEREAS, Mariner Energy, Inc., a Delaware corporation ("Borrower"),
NationsBank, N.A., dba Bank of America, N.A., as Administrative Agent
("Administrative Agent"), Toronto Dominion (Texas), Inc., as Co-Agent,
Noteholder and the other Banks named therein are parties to that certain
Amended and Restated Credit Agreement dated June ____, 1999 (said Amended and
Restated Credit Agreement, as it may be hereafter renewed, extended, amended or
supplemented, is referred to herein as the "Credit Agreement"), pursuant to
which Noteholder and the other Banks have agreed to (i) make a revolving credit
loan to Borrower, and (ii) issue and participate in Letters of Credit issued on
behalf of Borrower (unless otherwise defined herein, all terms used herein with
their initial letter capitalized shall have the meaning given such terms in the
Credit Agreement); and
WHEREAS, the Banks have required, as a condition to making Loans under
the Credit Agreement, that Guarantor execute and deliver this Guaranty; and
WHEREAS, Guarantor has determined that valuable benefits will be
derived by it as a result of the Credit Agreement and the Loans to be made by
Banks thereunder; and
WHEREAS, Guarantor has further determined that the anticipated benefits
accruing to it from the Credit Agreement exceed Guarantor's anticipated
liability under this Guaranty.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged and confessed, Guarantor hereby covenants and
agrees as follows:
1. Guarantor hereby absolutely and unconditionally guarantees to
Noteholder, the prompt, complete and full payment when due, no matter how such
shall
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become due, of the Obligations, and further guarantees that Borrower will
properly and timely perform the Obligations.
2. If Guarantor is or becomes liable for any indebtedness owing by
Borrower to Noteholder by endorsement or otherwise than under this Guaranty,
such liability shall not be in any manner impaired or affected hereby, and the
rights of Noteholder hereunder shall be cumulative of any and all other rights
that Noteholder may ever have against Guarantor. The exercise by Noteholder of
any right or remedy hereunder or under any other instrument, at law or in
equity, shall not preclude the concurrent or subsequent exercise of any other
right or remedy.
3. In the event of default by Borrower in payment of the Obligations,
or any part thereof, when such Obligations become due, either by their terms or
as the result of the exercise of any power to accelerate, Guarantor shall, on
demand, and without further notice of dishonor and without any notice having
been given to Guarantor previous to such demand of the acceptance by Noteholder
of this Guaranty, and without any notice having been given to such Guarantor
previous to such demand of the creating or incurring of such Obligations, pay
the amount due thereon to Noteholder at the Administrative Agent's office as set
forth in the Credit Agreement, and it shall not be necessary for Noteholder, in
order to enforce such payment by Guarantor, first, to institute suit or exhaust
its remedies against Borrower or others liable on such Obligations, to have
Borrower joined with Guarantor in any suit brought under this Guaranty or to
enforce its rights against any security which shall ever have been given to
secure such indebtedness; provided, however, that in the event Noteholder elects
to enforce and/or exercise any remedies it may possess with respect to any
security for the Obligations prior to demanding payment from Guarantor,
Guarantor shall nevertheless be obligated hereunder for any and all sums still
owing to Noteholder on the Obligations and not repaid or recovered incident to
the exercise of such remedies.
4. Notice to Guarantor of the acceptance of this Guaranty and of the
making, renewing or assignment of the Obligations and each item thereof, are
hereby expressly waived by Guarantor.
5. Each payment on the Obligations shall be deemed to have been made by
Borrower unless express written notice is given to Administrative Agent at the
time of such payment that such payment is made by Guarantor as specified in such
notice.
6. If all or any part of the Obligations at any time are secured,
Guarantor agrees that Noteholder may at any time and from time to time, at its
discretion and the discretion of Administrative Agent, and with or without
valuable consideration, allow substitution or withdrawal of collateral or other
security and release collateral or other security or compromise or settle any
amount due or owing under the Credit Agreement or amend or modify in whole or in
part the Credit Agreement or any Loan Papers
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executed in connection with same without impairing or diminishing the
obligations of Guarantor hereunder. Guarantor further agrees that if Borrower
executes in favor of Noteholder or Administrative Agent any collateral
agreement, mortgage or other security instrument, the exercise by Noteholder or
Administrative Agent of any right or remedy thereby conferred on Noteholder or
Administrative Agent shall be wholly discretionary with Noteholder or
Administrative Agent as the case may be, and that the exercise or failure to
exercise any such right or remedy shall in no way impair or diminish the
obligation of Guarantor hereunder. Guarantor further agrees that Noteholder and
Administrative Agent shall not be liable for their failure to use diligence in
the collection of the Obligations or in preserving the liability of any person
liable for the Obligations, and Guarantor hereby waives presentment for
payment, notice of nonpayment, protest and notice thereof (including, notice of
acceleration), and diligence in bringing suits against any Person liable on the
Obligations, or any part thereof.
7. Guarantor agrees that Noteholder, in its discretion, may (i) bring
suit against all guarantors (including, without limitation, Guarantor hereunder)
of the Obligations jointly and severally or against any one or more of them,
(ii) compound or settle with any one or more of such guarantors for such
consideration as the Noteholder may deem proper, and (iii) release one or more
of such guarantors from liability hereunder, and that no such action shall
impair the rights of Noteholder to collect the Obligations (or the unpaid
balance thereof) from other such guarantors of the Obligations, or any of them,
not so sued, settled with or released. Guarantor agrees, however, that nothing
contained in this paragraph, and no action by Noteholder permitted under this
paragraph, shall in any way affect or impair the rights or obligations of such
guarantors among themselves.
8. Guarantor represents and warrants to Noteholder that (i) Guarantor
is a corporation duly organized and validly existing under the laws of the
jurisdiction of its incorporation or formation; and (ii) Guarantor possesses all
requisite authority and power to authorize, execute, deliver and comply with the
terms of this Guaranty; this Guaranty has been duly authorized and approved by
all necessary action on the part of Guarantor and constitutes a valid and
binding obligation of Guarantor enforceable in accordance with its terms, except
as the enforcement thereof may be limited by applicable Debtor Relief Laws; and
no approval or consent of any court or governmental entity is required for the
authorization, execution, delivery or compliance with this Guaranty which has
not been obtained (and copies thereof delivered to Noteholder). As used in this
Paragraph 8, "Debtor Relief Laws" means the Bankruptcy Code of the United States
of America and all other applicable liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, receivership, insolvency, reorganization, suspension
of payments or similar debtor relief laws from time to time in effect affecting
the rights of creditors generally.
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9. Guarantor covenants and agrees that until the Obligations are paid
and performed in full, except as otherwise provided in the Credit Agreement or
unless Noteholder gives its prior written consent to any deviation therefrom, it
will (i) at all times maintain its existence and authority to transact business
in any State or jurisdiction where Guarantor has assets and operations; and (ii)
promptly deliver to Noteholder and to Administrative Agent such information
respecting its business affairs, assets and liabilities as Noteholder or
Administrative Agent may reasonably request.
10. This Guaranty is for the benefit of Noteholder, its successors and
assigns, and in the event of an assignment by Noteholder (or its successors or
assigns) of the Obligations, or any part thereof, the rights and benefits
hereunder, to the extent applicable to the Obligations so assigned, may be
transferred with such Obligations. This Guaranty is binding upon Guarantor and
its successors and assigns.
11. No modification, consent, amendment or waiver of any provision of
this Guaranty, nor consent to any departure by Guarantor therefrom, shall be
effective unless the same shall be in writing and signed by Required Banks, and
then shall be effective only in the specific instance and for the purpose for
which given. No notice to or demand on Guarantor in any case shall, of itself,
entitle Guarantor to any other or further notice or demand in similar or other
circumstances. No delay or omission by Noteholder in exercising any power or
right hereunder shall impair any such right or power or be construed as a waiver
thereof or any acquiescence therein, nor shall any single or partial exercise of
any such power preclude other or further exercise thereof, or the exercise of
any other right or power hereunder. All rights and remedies of Noteholder
hereunder are cumulative of each other and of every other right or remedy which
Noteholder may otherwise have at law or in equity or under any other contract or
document, and the exercise of one or more rights or remedies shall not prejudice
or impair the concurrent or subsequent exercise of other rights or remedies.
12. No provision herein or in any promissory note, instrument or any
other Loan Paper executed by Borrower or Guarantor evidencing the Obligations
shall require the payment or permit the collection of interest in excess of the
Maximum Lawful Rate. If any excess of interest in such respect is provided for
herein or in any such promissory note, instrument, or any other Loan Paper, the
provisions of this paragraph shall govern, and neither Borrower nor Guarantor
shall be obligated to pay the amount of such interest to the extent that it is
in excess of the amount permitted by law. The intention of the parties being to
conform strictly to any applicable federal or state usury laws now in force, all
promissory notes, instruments and other Loan Papers executed by Borrower or
Guarantor evidencing the Obligations shall be held subject to reduction to the
amount allowed under said usury laws as now or hereafter construed by the courts
having jurisdiction.
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94
13. If Guarantor should breach or fail to perform any provision of this
Guaranty, Guarantor agrees to pay Noteholder all costs and expenses (including
court costs and reasonable attorneys fees) incurred by Noteholder in the
enforcement hereof.
14. (a) The liability of Guarantor under this Guaranty shall in no
manner be impaired, affected or released by the insolvency, bankruptcy, making
of an assignment for the benefit of creditors, arrangement, compensation,
composition or readjustment of Borrower, or any proceedings affecting the
status, existence or assets of Borrower or other similar proceedings instituted
by or against Borrower and affecting the assets of Borrower.
(b) Guarantor acknowledges and agrees that any interest on any
portion of the Obligations which accrues after the commencement of any
proceeding referred to in clause (a) above (or, if interest on any portion of
the Obligations ceases to accrue by operation of law by reason of the
commencement of said proceeding, such interest as would have accrued on such
portion of the Obligations if said proceedings had not been commenced) shall be
included in the Obligations because it is the intention of Guarantor, Noteholder
and Administrative Agent that the Obligations which are guaranteed by Guarantor
pursuant to this Guaranty should be determined without regard to any rule of law
or order which may relieve Borrower of any portion of such Obligations.
Guarantor will permit any trustee in bankruptcy, receiver, debtor in possession,
assignee for the benefit of creditors or similar person to pay Noteholder or
Administrative Agent, or allow the claim of Noteholder or Administrative Agent
in respect of, any such interest accruing after the date on which such
proceeding is commenced.
(c) In the event that all or any portion of the Obligations
are paid by Borrower, the obligations of Guarantor hereunder shall continue and
remain in full force and effect or be reinstated, as the case may be, in the
event that all or any part of such payment(s) are rescinded or recovered
directly or indirectly from Administrative Agent, Noteholder or any other Bank
as a preference, fraudulent transfer or otherwise, and any such payments which
are so rescinded or recovered shall constitute Obligations for all purposes
under this Guaranty.
15. Guarantor understands and agrees that any amounts of Guarantor on
account with Noteholder may be offset to satisfy the obligations of Guarantor
hereunder.
16. Guarantor hereby subordinates and makes inferior any and all
indebtedness now or at any time hereafter owed by Borrower to Guarantor to the
Obligations evidenced by the Credit Agreement and agrees after the occurrence of
a Default or Event of Default under the Credit Agreement not to permit Borrower
to repay, or to accept payment from Borrower of, such indebtedness or any part
thereof without the prior written consent of all Banks.
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95
17. Guarantor hereby waives any and all rights of subrogation to which
Guarantor may otherwise be entitled against Borrower, or any other guarantor of
the Obligations, as a result of any payment made by Guarantor pursuant to this
Guaranty.
18. Guarantor hereby represents and warrants to Noteholder that, as of
the date hereof, the fair saleable value of the property of Guarantor is greater
than the total amount of liabilities (including contingent and unliquidated
liabilities) of Guarantor, and Guarantor is able to pay all of its liabilities
as such liabilities mature and Guarantor does not have unreasonably small
capital within the meaning of Xxxxxxx 000, Xxxxx 00, Xxxxxx Xxxxxx Code, as
amended. In computing the amount of contingent or liquidated liabilities, such
liabilities have been computed at the amount which, in light of all the facts
and circumstances existing as of the date hereof, represents the amount that can
reasonably be expected to become an actual or matured liability.
19. If any provision of this Guaranty is held to be illegal, invalid,
or unenforceable, such provision shall be fully severable; this Guaranty shall
be construed and enforced as if such illegal, invalid, or unenforceable
provision had never comprised a part hereof; and the remaining provisions hereof
shall remain in full force and effect and shall not be affected by the illegal,
invalid, or unenforceable provision or by its severance herefrom. Furthermore,
in lieu of such illegal, invalid, or unenforceable provision there shall be
added automatically as a part of this Guaranty a provision as similar in terms
to such illegal, invalid, or unenforceable provision as may be possible and be
legal, valid and enforceable.
20. (a) Except to the extent required for the exercise of the remedies
provided in the other security instruments, Guarantor hereby irrevocably submits
to the nonexclusive jurisdiction of any Texas state or federal court over any
action or proceeding arising out of or relating to this Guaranty or any other
Loan Paper, and Guarantor hereby irrevocably agrees that all claims in respect
of such action or proceeding may be heard and determined in such Texas state or
federal court. Guarantor hereby irrevocably waives, to the fullest extent
permitted by Law, any objection which it may now or hereafter have to the laying
of venue of any Litigation arising out of or in connection with this Guaranty or
any of the Loan Papers brought in district courts of Xxxxxx County, Texas, or in
the United States District Court for the Southern District of Texas, Houston
Division. Guarantor hereby irrevocably waives any claim that any Litigation
brought in any such court has been brought in an inconvenient forum. Guarantor
hereby irrevocably consents to the service of process out of any of the
aforementioned courts in any such Litigation by the mailing of copies thereof by
certified mail, return receipt requested, postage prepaid, to Guarantor's
address set forth on the signature page hereof. Guarantor irrevocably agrees
that any legal proceeding against Noteholder shall be brought in the district
courts of Xxxxxx County,
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96
Texas, or in the United States District Court for the Southern District of
Texas, Houston Division. Nothing herein shall affect the right of Noteholder to
commence legal proceedings or otherwise proceed against Guarantor in any
jurisdiction or to serve process in any manner permitted by applicable law. As
used herein, the term "Litigation" means any proceeding, claim, lawsuit or
investigation (i) conducted or threatened by or before any court or
governmental department, commission, board, bureau, agency or instrumentality
of the United States or of any state, commonwealth, nation, territory,
possession, county, parish, or municipality, whether now or hereafter
constituted or existing, or (ii) pending before any public or private
arbitration board or panel.
(b) Nothing in this Paragraph 20 shall affect any right of
Noteholder to serve legal process in any other manner permitted by law or
affect the right of Noteholder to bring any action or proceeding against
Guarantor in the courts of any other jurisdictions.
(c) To the extent that Guarantor has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property,
Guarantor hereby irrevocably waives such immunity in respect of its obligations
under this Guaranty and the other Loan Papers.
21. THIS GUARANTY AND THE OTHER LOAN PAPERS COLLECTIVELY REPRESENT THE
FINAL AGREEMENT BY AND AMONG NOTEHOLDER, THE OTHER BANKS, ADMINISTRATIVE AGENT,
BORROWER AND GUARANTOR AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF NOTEHOLDER, THE OTHER BANKS,
ADMINISTRATIVE AGENT, BORROWER AND GUARANTOR. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG NOTEHOLDER, THE OTHER BANKS, ADMINISTRATIVE AGENT, BORROWER AND
GUARANTOR.
22. GUARANTOR, FOR ITSELF, ITS SUCCESSORS AND ASSIGNS, AND NOTEHOLDER
HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, THEIR RIGHT TO
A JURY TRIAL, IN ANY LITIGATION ARISING OUT OF OR IN CONNECTION WITH THIS
GUARANTY OR ANY OF THE OTHER LOAN PAPERS.
23. THIS GUARANTY AND THE OTHER LOAN PAPERS HAVE BEEN EXECUTED AND
DELIVERED IN THE STATE OF TEXAS AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND THE LAWS OF THE UNITED STATES OF
AMERICA,
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EXCEPT TO THE EXTENT THAT THE LAWS OF ANY STATE IN WHICH ANY PROPERTY INTENDED
AS SECURITY FOR THE OBLIGATIONS IS LOCATED NECESSARILY GOVERN (A) THE
PERFECTION AND PRIORITY OF THE LIENS IN FAVOR OF ADMINISTRATIVE AGENT AND BANKS
WITH RESPECT TO SUCH PROPERTY, AND (B) THE EXERCISE OF ANY REMEDIES (INCLUDING
FORECLOSURE) WITH RESPECT TO SUCH PROPERTY.
EXECUTED and effective as of the date first above written.
GUARANTOR:
MARINER HOLDINGS, INC.
By:
----------------------------
Name:
----------------------
Title:
---------------------
Address for Notice:
--------------------------------
--------------------------------
--------------------------------
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EXHIBIT C
REQUEST FOR BORROWING
Reference is made to that certain Amended and Restated Credit Agreement
dated as of June ____, 1999, (as from time to time amended, the "Agreement") by
and among Mariner Energy, Inc. ("Borrower"), NationsBank, N.A., dba Bank of
America, N.A., as Administrative Agent, Toronto Dominion (Texas), Inc., as
Co-Agent, and certain Banks as named and defined therein. Terms which are
defined in the Agreement and which are used but not defined herein are used
herein with the meanings given them in the Agreement. Pursuant to the terms of
the Agreement, Borrower hereby requests a Borrowing in the amount of
$_____________ to be advanced on ___________, ____.
Borrower requests that the Borrowing to be made hereunder shall be [AN
ADJUSTED BASE RATE BORROWING] [A EURODOLLAR BORROWING] and shall have the
Interest Periods all as set forth below:
Type of Borrowing Aggregate Amount Interest Period
----------------- ---------------- ---------------
--------------------------- --------------------------- -----------------------
--------------------------- --------------------------- -----------------------
--------------------------- --------------------------- -----------------------
Borrower hereby certifies that:
(a) The Authorized Officer of Borrower signing this instrument
is a duly elected, qualified and acting officer of Borrower as
indicated below such officer's signature hereto.
(b) Except as the Administrative Agent has been notified in
writing prior to the date hereof or contemporaneously herewith, no
Material Adverse Effect has occurred since the date of the last
financial reports delivered to Banks pursuant to Section 8.1 of the
Agreement.
(c) Except as the Administrative Agent has been notified in
writing prior to the date hereof or contemporaneously herewith, there
does not exist on the date hereof, any condition or event which
constitutes a Default or Event of Default, nor will any such Default or
Event of Default exist upon Borrower's receipt and application of the
proceeds requested hereby. Borrower will use the proceeds hereby
requested in compliance with the applicable provisions of the
Agreement.
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(d) Each of the conditions precedent to the Borrowing
contained in Section 6.2 remain satisfied in all material respects.
(e) After giving effect to the Borrowing requested hereby, the
Outstanding Credit will not be in excess of the Borrowing Base on the
date requested for the making of such Borrowing.
IN WITNESS WHEREOF, this instrument is executed as of
, .
----------------- ------
MARINER ENERGY, INC., a Delaware
corporation
By:
------------------------------
Name:
-----------------------
Title:
----------------------
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100
EXHIBIT D
REQUEST FOR LETTER OF CREDIT
Reference is made to that certain Amended and Restated Credit Agreement
dated as of June ____, 1999 (as from time to time amended, the "Agreement"), by
and among Mariner Energy, Inc. ("Borrower"), NationsBank, N.A., dba Bank of
America, N.A., as Administrative Agent, Toronto Dominion (Texas), Inc., as
Co-Agent, and certain Banks as named and defined therein. Terms which are
defined in the Agreement and which are used but not defined herein are used
herein with the meanings given them in the Agreement.
Pursuant to the terms of the Agreement, Borrower hereby requests
Administrative Agent to issue a Letter of Credit for the account of Borrower as
follows:
Type of Commitment:
-------------------
Requested Amount $
-------------------------
Requested Date of Issuance
-------------------------
Requested Expiration Date
-------------------------
Summary of Terms
-------------------------
(provide a brief description
of the purpose of such Letter
of Credit and the conditions
under which the drafts under
such Letter of Credit are
to be available)
-------------------------
Beneficiary (Name/Address)
-------------------------
-------------------------
-------------------------
-------------------------
Such Letter of Credit is more particularly described in the Letter of
Credit Application and Agreement of Administrative Agent which is attached
hereto.
Borrower hereby certifies that:
(a) The Authorized Officer of Borrower signing this instrument
is a duly elected, qualified and acting officer of Borrower as
indicated below such officer's signature hereto.
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(b) Except as the Administrative Agent has been notified in
writing prior to the date hereof or contemporaneously herewith, no
Material Adverse Effect has occurred since the date of the last
financial reports delivered to Banks pursuant to Section 8.1 of the
Agreement.
(c) Except as the Administrative Agent has been notified in
writing prior to the date hereof or contemporaneously herewith, there
does not exist on the date hereof any condition or event which
constitutes a Default or Event of Default, nor will any such Default or
Event of Default exist upon the issuance of the Letter of Credit
requested hereby. Borrower will use the Letter of Credit solely for
purposes permitted by the Agreement.
(d) Each of the conditions precedent to the issuance of
Letters of Credit contained in Section 6.2 remain satisfied in all
material respects.
(e) After the issuance of the Letter of Credit requested
hereby, (i) the aggregate existing Letter of Credit Exposure will not
be in excess of $5,000,000 and (ii) the sum of (A) the outstanding
principal balance of the Loan, plus (B) the aggregate existing Letter
of Credit Exposure, will not be in excess of the Borrowing Base in
effect on the date requested for the issuance of such Letter of Credit.
IN WITNESS WHEREOF, this instrument is executed as of ____ June 28,
1999.
MARINER ENERGY, INC., a Delaware
corporation
By:
------------------------------
Name:
-----------------------
Title:
----------------------
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102
EXHIBIT E
ROLLOVER NOTICE
Reference is made to that certain Amended and Restated Credit Agreement
dated as of June __ 28 ______, 1999 (as from time to time amended, the
"Agreement"), by and among Mariner Energy, Inc. ("Borrower"), NationsBank,
N.A., dba Bank of America, N.A., as Administrative Agent, Toronto Dominion
(Texas), Inc., as Co-Agent, and certain Banks as named and defined therein.
Terms which are defined in the Agreement and which are used but not defined
herein are used herein with the meanings given them in the Agreement.
Reference is hereby made to the existing Eurodollar Tranche
outstanding under the Loan in the amount of $________ which
is subject to an Interest Period expiring on
_________________, _____. Borrower hereby requests that on
the expiration of such Interest Period the portion of the
principal of such Loan which is subject to such Tranche be
made the subject of an Adjusted Base Rate Tranche or a
Eurodollar Tranche having an Interest Period of ____ days.
Borrower hereby requests that on _________ ___, _____, a
portion of the principal of the applicable Loan in the amount
of $____________ which is currently the subject of an Adjusted
Base Rate Tranche be made the subject of a Eurodollar Tranche
having an Interest Period of _________ (___) days.
Borrower hereby certifies that:
(a) The Authorized Officer of Borrower signing this instrument
is a duly elected, qualified and acting officer of Borrower as
indicated below such officer's signature hereto;
(b) Except as the Administrative Agent has been notified in
writing prior to the date hereof or contemporaneously herewith, there
does not exist on the date hereof any condition or event which
constitutes a Default or Event of Default; and
IN WITNESS WHEREOF, this instrument is executed as of
, .
----------------- ------
MARINER ENERGY, INC., a Delaware
corporation
By:
------------------------------
Name:
-----------------------
Title:
----------------------
1
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EXHIBIT F
MARINER ENERGY, INC.
FINANCIAL OFFICER'S CERTIFICATE
The undersigned, the Chief Financial Officer of Mariner Energy, Inc., a
corporation incorporated under the laws of the State of Delaware ("Borrower"),
hereby (a) delivers this Certificate pursuant to Section 8.1(c) of that certain
Amended and Restated Credit Agreement ("Credit Agreement") dated as of June
____, 1999, by and among Borrower, NationsBank, N.A., dba Bank of America, N.A.,
as Administrative Agent ("Administrative Agent"), Toronto Dominion (Texas),
Inc., as Co-Agent, and the financial institutions listed on Schedule 1 thereto,
as Banks ("Banks"), and (b) certifies to Banks, with the knowledge and intent
that Banks may, without any independent investigation, rely fully on the matters
herein in connection with the Credit Agreement, as follows:
1. Attached hereto as Schedule I are the financial statements of
Borrower as of and for the Fiscal Year Quarter (check one) ended ____________,
_____.
2. To the best knowledge of the undersigned without specific inquiry,
such financial statements are true and correct in all material respects, have
been prepared on a consistent basis in accordance with GAAP (except as otherwise
noted therein) and fairly present the financial condition of Borrower as of the
date indicated therein and the results of operations for the respective periods
indicated therein.
3. Attached hereto as Schedule II are detailed calculations used by
Borrower to establish whether Borrower was in compliance with the requirements
of Article X of the Credit Agreement on the date of the financial statements
attached as Schedule I hereto.
4. Unless otherwise disclosed on Schedule III attached hereto and
incorporated herein by reference for all purposes, to the best knowledge of the
undersigned without specific inquiry, neither a Default nor an Event of Default
has occurred which is in existence on the date hereof; provided, that for any
Default or Event of Default disclosed on Schedule III attached hereto, Borrower
is taking or proposes to take the action to cure such Default or Event of
Default set forth on Schedule III.
5. To the best knowledge of the undersigned without specific inquiry,
on the date of the financial statements attached hereto as Schedule I (a) (check
one) there is no Material Gas Imbalance or the amount of the net gas imbalances
under Gas Balancing Agreements to which Borrower is a party or by which any
Mineral Interests owned by Borrower is bound is ____________, and (b) the
aggregate amount of all Advance Payments received under Advance Payment
Contracts to which Borrower is a party or by which any Mineral Interests owned
by Borrower is bound which have not been satisfied by delivery of production, if
any, is ______________.
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6. Attached hereto as Schedule IV is a summary of the Hedge
Transactions to which, to the best knowledge of the undersigned without specific
inquiry, Borrower is a party on the date of the financial statements attached
hereto as Schedule I.
Unless otherwise defined herein, all capitalized terms used herein
shall have the meaning given such terms in the Credit Agreement.
IN WITNESS WHEREOF, the undersigned has duly executed this Financial
Officer's Certificate as of ___________, _____.
---------------------------------------
CHIEF FINANCIAL
--------------------,
OFFICER OF MARINER ENERGY, INC.
2
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Schedule I
Financial Statements
(to be attached)
3
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Schedule II
Compliance Calculations
(to be attached)
4
107
Schedule III
Defaults/Remedial Action
(to be attached)
5
108
Schedule IV
Summary of Hedge Transactions
(to be attached)
6
109
EXHIBIT G
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement") is dated
_____________________, _____, among __________________________ ("Assignor") and
______________________________ ("Assignee"), NationsBank, N.A., dba Bank of
America, N.A., as Administrative Agent for the Banks ("Administrative Agent"),
and Mariner Energy, Inc.,
a Delaware Corporation ("Borrower").
BACKGROUND.
A. Reference is made to that certain Amended and Restated Credit
Agreement dated as of June ____, 1999 (as it may hereafter be amended or
otherwise modified from time to time, being referred to as the "Credit
Agreement") among Borrower, Administrative Agent, Toronto Dominion (Texas),
Inc., as Co-Agent, and the financial institutions parties thereto as Banks
thereunder. Unless otherwise defined, terms are used herein as defined in the
Credit Agreement.
B. This Agreement is made with reference to the following facts:
(i) Assignor is a Bank under and as defined in the Credit
Agreement and, as such, presently holds a percentage of the rights and
obligations of Banks under the Credit Agreement.
(ii) As of the date hereof, the Total Commitment is
$__________, Assignor's Commitment is $______________, and Assignor's
Commitment Percentage is _______%.
(iii) On the terms and conditions set forth below, Assignor
desires to sell and assign to Assignee, and Assignee desires to
purchase and assume from Assignor, as of the Effective Date (as defined
below) ___________ percent (_______%) (the "Assigned Percentage") of
the Total Commitment (such Assigned Percentage constitutes ____ percent
(__%) of Assignor's Commitment).
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AGREEMENT.
NOW, THEREFORE, Assignor and Assignee hereby agree as follows:
1. By this Agreement, and effective as of _____________, _____ (which
must be at least five (5) Domestic Business Days after the execution and
delivery of this Agreement to Borrower and Administrative Agent for
acceptance), Assignor hereby sells and assigns to Assignee, without recourse
and, except as provided in paragraph 2 of this Agreement, without
representation and warranty, and Assignee hereby purchases and assumes from
Assignor, Assignor's rights and obligations under the Credit Agreement, to the
extent of the Assigned Percentage of the Loan, the Letter of Credit Exposure,
and the Commitment as in effect on the Effective Date.
2. Assignor (a) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (b) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit
Agreement, any other Loan Paper or any other instrument or document furnished
pursuant thereto, or with respect to the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit Agreement or
any other Loan Paper or any other instrument or document furnished pursuant
thereto; and (c) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of Borrower or any
Person or the performance or observance by Borrower or any Person of any of its
obligations under the Loan Papers or any other instrument or document furnished
pursuant thereto.
3. Assignee (a) confirms that it has received a copy of the Credit
Agreement, together with copies of the most recent financial statements
delivered to Assignor pursuant to Section 8 of the Credit Agreement, and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Agreement; (b) agrees that it
will, independently and without reliance upon Administrative Agent, Assignor 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 the Credit Agreement and the other Loan Papers; (c)
appoints and authorizes Administrative Agent to take such action as agent on
its behalf and to exercise such powers under the Credit Agreement and the other
Loan Papers as are delegated to Administrative Agent by the terms thereof,
together with such powers as are reasonably incidental thereto; (d) agrees that
it will perform in accordance with their terms all of the obligations which, by
the terms of the Credit Agreement and the other Loan Papers, are required to be
performed by it as a Bank; (e) specifies, as its address for notice and
Domestic Lending Office and Eurodollar
2
111
Lending Office, the offices set forth beneath its name on the signature pages
hereof, and (f) if Assignee is not organized under the laws of the United
States of America or one of its states, Assignee (a) represents and warrants to
Assignor, Administrative Agent and Borrower that (i) no Taxes are required to
be withheld by Administrative Agent or Borrower with respect to any payments to
be made to Assignee in respect of the Obligations and (ii) Assignee has
furnished to Administrative Agent and Borrower two (2) duly completed copies of
either U.S. Internal Revenue Service Form 4224, Form 1001, Form W-8, or other
form acceptable to Administrative Agent that entitles Assignee to exemption
from U.S. federal withholding Tax on all interest payments under the Loan
Papers, (b) covenants to (i) provide Administrative Agent and Borrower a new
form 4224, Form 1001, Form W-8, or other form acceptable to Administrative
Agent upon the expiration or obsolescence of any previously delivered form
according to applicable laws and regulations, duly executed and completed by
Assignee, and (ii) comply from time to time with all applicable laws and
regulations with regard to the withholding Tax exemption, and (c) agrees that
if any of the foregoing is not true or the applicable forms are not provided,
then Borrower and Administrative Agent (without duplication) may deduct and
withhold from interest payments under the Loan Papers any United States federal
income Tax at the maximum rate under the Code.
4. Borrower acknowledges its obligations under the Credit Agreement,
and agrees, within five (5) Domestic Business Days after receiving an executed
copy of this Agreement to execute and deliver to Administrative Agent, in
exchange for the Notes originally delivered to Assignor, new Notes to the order
of Assignor and Assignee in amounts equal to their respective amounts of the
Commitments.
5. As of the Effective Date, (a) Assignee shall be a party to the
Credit Agreement and, to the extent provided in this Agreement, have the rights
and obligations of a Bank thereunder, (b) Assignor shall, to the extent provided
in this Agreement, relinquish its rights and be released from its obligations
under the Credit Agreement and other Loan Papers, and (c) Assignor's Commitment
Percentage shall be ______% (which represents at least the greater of $5,000,000
or 10% of the Borrowing Base in effect of the date hereof), and Assignee's
Commitment Percentage shall be _____%.
6. From and after the Effective Date, Administrative Agent shall make
all payments under the Credit Agreement in respect of the interest assigned
hereby (including, without limitation, all payments of principal, interest, fees
and other amounts with respect thereto) to Assignee. Assignor and Assignee shall
make all appropriate adjustments in payments under the Credit Agreement for
periods prior to the Effective Date directly between themselves.
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7. This Agreement shall not become effective until (a) counterparts of
this Agreement are executed and delivered by Assignor and Assignee to Borrower,
Administrative Agent and each Bank, (b) Borrower, Administrative Agent and each
Bank execute such counterparts, and (c) Agent receives a processing fee of
$2,500 from Assignor or Assignee.
8. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Texas, without reference to principles of
conflict of laws.
ASSIGNOR:
---------------------------------------
By:
-----------------------------------
Name:
---------------------------
Title:
---------------------------
ASSIGNEE:
---------------------------------------
Address for Notice:
By:
---------------------------------- -----------------------------------
---------------------------------- Name:
---------------------------
---------------------------------- Title:
---------------------------
Attn:
------------------------------
Tel:
------------------------------
Fax:
------------------------------
Domestic Lending Office:
----------------------------------
----------------------------------
----------------------------------
Eurodollar Lending Office:
----------------------------------
----------------------------------
----------------------------------
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Attn:
------------------------------
Tel:
------------------------------
Fax:
------------------------------
ADMINISTRATIVE AGENT:
NATIONSBANK, N.A., dba BANK OF AMERICA,
N.A., as Administrative Agent
By:
----------------------------------
Name:
-----------------------------
Title:
---------------------------
BORROWER:
Accepted and approved this _____ day
of ________________________, _____:
MARINER ENERGY, INC.
By:
------------------------------
Name:
------------------------
Title:
-----------------------
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SCHEDULE 1
Financial Institutions
Financial Domestic Eurodollar Lending Commitment
Institution Lending Office Office Percentage Commitment
----------- -------------- ------------------ ---------- ----------
NationsBank, N.A., 700 Louisiana, 000 Xxxxxxxxx, 0xx Xxxxx 30% $45,000,000
dba Bank of America, 0xx Xxxxx Xxxxxxx, Xxxxx 00000
N.A. Xxxxxxx, Xxxxx 00000
Toronto Dominion 000 Xxxxxx, Xxxxx 0000 000 Xxxxxx, Xxxxx 0000 30% $45,000,000
(Texas), Inc. Xxxxxxx, Xxxxx 00000 Xxxxxxx, Xxxxx 00000
The Bank of Nova 000 Xxxxxxxxx Xx., 000 Xxxxxxxxx Xx., N.E., 20% $30,000,000
Scotia N.E., Xxxxx 0000 Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000 Xxxxxxx, Xxxxxxx 00000
ABN AMRO Bank N.V. Three Riverway, Three Riverway, 20% $30,000,000
Xxxxx 0000 Xxxxx 0000
Xxxxxxx, Xxxxx 00000 Xxxxxxx, Xxxxx 00000
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SCHEDULE 2
Existing Mineral Interests
2
116
SCHEDULE 3
Litigation
NONE
3
117
SCHEDULE 4
Corporate Information
Borrower Guarantor
-------- ---------
Jurisdictions where qualified as a
foreign corporation
Authorized, Issued and Outstanding
capital stock
Outstanding warrants, etc.
4
