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EXHIBIT D
SUBORDINATED CREDIT AGREEMENT
Dated as of October 31, 2000
Among
XXXXXXX OIL & GAS, L.P.
as Borrower,
SHELL CAPITAL INC.,
as Agent,
and
THE LENDERS SIGNATORY HERETO
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ARTICLE 1 DEFINITIONS AND ACCOUNTING MATTERS.................................................................1
Section 1.01 Terms Defined Above.................................................................1
Section 1.02 Certain Defined Terms...............................................................2
Section 1.03 Accounting Terms and Determinations................................................17
ARTICLE 2 COMMITMENTS.......................................................................................17
Section 2.01 Loans..............................................................................17
Section 2.02 Borrowings, Continuations and Conversions..........................................17
Section 2.03 Changes of Commitments.............................................................18
Section 2.04 Fees...............................................................................19
Section 2.05 Several Obligations................................................................19
Section 2.06 Notes..............................................................................19
Section 2.07 Prepayments........................................................................19
Section 2.08 Lending Offices....................................................................20
ARTICLE 3 PAYMENTS OF PRINCIPAL AND INTEREST................................................................20
Section 3.01 Repayment of Loans.................................................................20
Section 3.02 Interest...........................................................................20
ARTICLE 4 PAYMENTS; PRO RATA TREATMENT; COMPUTATIONS; ETC...................................................21
Section 4.01 Payments...........................................................................21
Section 4.02 Pro Rata Treatment.................................................................21
Section 4.03 Computations.......................................................................22
Section 4.04 Non-receipt of Funds by the Agent..................................................22
Section 4.05 Set-off, Sharing of Payments, Etc..................................................22
Section 4.06 Taxes..............................................................................23
ARTICLE 5 [INTENTIONALLY OMITTED]...........................................................................27
ARTICLE 6 CONDITIONS PRECEDENT..............................................................................27
Section 6.01 Initial Funding....................................................................27
Section 6.02 Initial, Subsequent Loans..........................................................29
Section 6.03 Conditions Precedent for the Benefit of Lenders....................................29
Section 6.04 No Waiver..........................................................................30
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ARTICLE 7 REPRESENTATIONS AND WARRANTIES....................................................................30
Section 7.01 Corporate Existence................................................................30
Section 7.02 Financial Condition................................................................30
Section 7.03 Litigation.........................................................................31
Section 7.04 No Breach..........................................................................31
Section 7.05 Authority..........................................................................31
Section 7.06 Approvals..........................................................................31
Section 7.07 Use of Loans.......................................................................31
Section 7.08 ERISA..............................................................................32
Section 7.09 Taxes..............................................................................33
Section 7.10 Titles, etc........................................................................33
Section 7.11 No Material Misstatements..........................................................34
Section 7.12 Investment Company Act.............................................................34
Section 7.13 Public Utility Holding Company Act.................................................34
Section 7.14 Subsidiaries.......................................................................35
Section 7.15 Location of Business and Offices...................................................35
Section 7.16 Defaults...........................................................................35
Section 7.17 Environmental Matters..............................................................35
Section 7.18 Compliance with the Law............................................................36
Section 7.19 Insurance..........................................................................37
Section 7.20 Hedging Agreements.................................................................37
Section 7.21 Restriction on Liens...............................................................37
Section 7.22 Material Agreements................................................................38
Section 7.23 Gas Imbalances.....................................................................38
Section 7.24 Partnership Agreement..............................................................38
ARTICLE 8 AFFIRMATIVE COVENANTS.............................................................................38
Section 8.01 Financial Statements and Other Reports.............................................38
Section 8.02 Litigation.........................................................................41
Section 8.03 Maintenance, Etc...................................................................42
Section 8.04 Environmental Matters..............................................................43
Section 8.05 Further Assurances.................................................................44
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Section 8.06 Performance of Obligations.........................................................44
Section 8.07 Engineering Reports................................................................44
Section 8.08 Reserved...........................................................................46
Section 8.09 Additional Collateral..............................................................46
Section 8.10 ERISA Information and Compliance...................................................47
Section 8.11 Subsidiary Security................................................................47
Section 8.12 Payment of Trade Payables..........................................................48
ARTICLE 9 NEGATIVE COVENANTS................................................................................48
Section 9.01 Debt...............................................................................48
Section 9.02 Liens..............................................................................49
Section 9.03 Investments, Loans and Advances....................................................49
Section 9.04 Dividends, Distributions and Redemptions...........................................50
Section 9.05 Sales and Leasebacks...............................................................51
Section 9.06 Nature of Business.................................................................51
Section 9.07 Limitation on Leases...............................................................51
Section 9.08 Mergers, Etc.......................................................................51
Section 9.09 Proceeds of Notes..................................................................51
Section 9.10 ERISA Compliance...................................................................51
Section 9.11 Sale or Discount of Receivables....................................................53
Section 9.12 [Intentionally Omitted]............................................................53
Section 9.13 Sale of Oil and Gas Properties.....................................................53
Section 9.14 Environmental Matters..............................................................53
Section 9.15 Transactions with Affiliates.......................................................53
Section 9.16 Subsidiaries.......................................................................53
Section 9.17 Negative Pledge Agreements.........................................................54
Section 9.18 Gas Imbalances, Take-or-Pay or Other Prepayments...................................54
Section 9.19 Borrower as Operator...............................................................54
Section 9.20 Restrictions While Outstanding Indebtedness Exceeds the Borrowing Base.............54
Section 9.21 Debt to RAPRV......................................................................55
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ARTICLE 10 EVENTS OF DEFAULT; REMEDIES......................................................................55
Section 10.01 Events of Default..................................................................55
Section 10.02 Remedies...........................................................................58
Section 10.03 Production and Proceeds............................................................58
ARTICLE 11 THE AGENT........................................................................................59
Section 11.01 Appointment, Powers and Immunities.................................................59
Section 11.02 Reliance by Agent..................................................................60
Section 11.03 Defaults...........................................................................60
Section 11.04 Rights as a Lender.................................................................60
Section 11.05 INDEMNIFICATION....................................................................60
Section 11.06 Non-Reliance on Agent and other Lenders............................................61
Section 11.07 Action by Agent....................................................................61
Section 11.08 Resignation or Removal of Agent....................................................62
ARTICLE 12 MISCELLANEOUS....................................................................................62
Section 12.01 Waiver.............................................................................62
Section 12.02 Notices............................................................................62
Section 12.03 Payment of Expenses, Indemnities, etc..............................................63
Section 12.04 Amendments, Etc....................................................................65
Section 12.05 Successors and Assigns.............................................................66
Section 12.06 Assignments and Participations.....................................................66
Section 12.07 Invalidity.........................................................................68
Section 12.08 Counterparts.......................................................................68
Section 12.09 References.........................................................................68
Section 12.10 Survival...........................................................................68
Section 12.11 Captions...........................................................................68
Section 12.12 NO ORAL AGREEMENTS.................................................................68
Section 12.13 GOVERNING LAW; SUBMISSION TO JURISDICTION..........................................69
Section 12.14 Interest...........................................................................70
Section 12.15 Confidentiality....................................................................71
Section 12.16 Effectiveness......................................................................71
Section 12.17 EXCULPATION PROVISIONS.............................................................72
Section 12.18 RELEASE............................................................................72
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THIS CREDIT AGREEMENT dated as of October 31, 2000 is among:
XXXXXXX OIL & GAS, L.P., a limited partnership formed under the laws of the
State of Delaware (the "Borrower") and Shell Capital Inc., individually ("SCI"),
and any other lender which becomes a signatory hereto as provided in Section
12.06 (individually, together with its successors and assigns, a "Lender" and
collectively, "the Lenders"), and SCI, in its capacity as agent for the Lenders
(in such capacity, together with its successors in such capacity, the "Agent").
R E C I T A L S
A. Reference is made to that certain Amended and Restated
Credit Agreement (the "Senior Credit Agreement") dated as of February 17, 2000,
as amended by that certain First Amendment to Amended and Restated Credit
Agreement of even date herewith and as further amended or supplemented from time
to time in accordance with the Subordination Agreement described below, among
the Borrower, BANK OF MONTREAL, a Canadian bank, in its individual capacity (in
its individual capacity, "BMO"), and BMO, in its capacity as agent (in such
capacity, together with its successors in such capacity, the "Senior Agent"),
Societe Generale, Southwest Agency ("Soc-Gen") and SCI. BMO, Soc-Gen and SCI and
their respective successors and assigns in the capacity as lenders under the
Senior Credit Agreement are herein collectively called "Senior Lenders".
B. The Lenders have agreed to provide senior subordinated debt
in the amount of up to $20,000,000 (plus any amount of interest paid in kind
pursuant to Section 3.02(b) hereof) consisting of advances to the Borrower for
purposes set out below, and the Borrower, the Agent and the Lenders now desire
to set forth their agreements with respect to such credit facility.
C. Pursuant to that certain Intercreditor and Subordination
Agreement dated as of October 31, 2000, among BMO, Soc-Gen, SCI, Senior Agent,
Lenders and Agent (as from time to time amended or supplemented, the
"Subordination Agreement") the Indebtedness (as hereinafter defined) is
expressly subordinated to the Senior Indebtedness (as hereinafter defined).
D. In consideration of the mutual covenants and agreements
herein contained and of the loans, extensions of credit and commitments
hereinafter referred to, the parties hereto agree as follows:
ARTICLE 1
Definitions and Accounting Matters
Section 1.01 Terms Defined Above. As used in this Agreement,
the terms "Agent," "BMO," "Borrower," "Lender," "Lenders," "Senior Credit
Agreement," "Prior Notes",
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"SCI", "Senior Agent", "Senior Lenders", "Soc-Gen" and Subordination Agreement
shall have the meanings indicated above.
Section 1.02 Certain Defined Terms. As used herein, the
following terms shall have the following meanings (all terms defined in this
Article I or in other provisions of this Agreement in the singular to have the
same meanings when used in the plural and vice versa):
"Affiliate" of any Person shall mean (i) any Person directly
or indirectly controlled by, controlling or under common control with such first
Person, (ii) any director or officer of such first Person or of any Person
referred to in clause (i) above and (iii) if any Person in clause (i) above is
an individual, any member of the immediate family (including parents, spouse and
children) of such individual and any trust whose principal beneficiary is such
individual or one or more members of such immediate family and any Person who is
controlled by any such member or trust. For purposes of this definition, any
Person which owns directly or indirectly 20% or more of the securities having
ordinary voting power for the election of directors or other governing body of a
corporation or 20% or more of the partnership or other ownership interests of
any other Person (other than as a limited partner of such other Person) will be
deemed to "control" (including, with its correlative meanings, "controlled by"
and "under common control with") such corporation or other Person.
"Agent's Fee Letter" shall mean that certain letter agreement
from the Agent to the Borrower dated of even date with this Agreement concerning
certain fees in connection with this Agreement and any agreements or instruments
executed in connection therewith, as the same may be amended or replaced from
time to time.
"Agreement" shall mean this Subordinated Credit Agreement, as
the same may from time to time be amended or supplemented.
"Aggregate Commitments" at any time shall equal the amount
calculated in accordance with Section 2.03 hereof.
"Aggregate Maximum Credit Amounts" shall mean the amount of
$20,000,000, plus any amount of interest paid in kind pursuant to Section
3.02(b) hereof, as the same may be reduced pursuant to Section 2.03(b) and
Section 2.07(c).
"Applicable Lending Office" shall mean, for each Lender, the
lending office of such Lender (or an Affiliate of such Lender) designated on the
signature pages hereof or such other offices of such Lender (or of an Affiliate
of such Lender) as such Lender may from time to time specify to the Agent and
the Borrower as the office by which its Loans are to be made and maintained.
"Assignment" shall have the meaning assigned such term in
Section 12.06(b).
"Borrowing Base" has the meaning assigned to it now and from
time to time hereafter in the Senior Credit Agreement.
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"Xxxxxxx Exploration" shall mean Xxxxxxx Exploration Company,
a Delaware corporation and owner of 100% of the capital stock of the General
Partner.
"Business Day" shall mean any day other than a day on which
commercial banks are authorized or required to close in Houston, Texas.
"CAPEX Plan" shall mean each Capital Expenditures Plan
detailing the projected capital expenditures of the Borrower for the twelve
month period covered thereby the first of which is to be submitted on the
Closing Date with similar plans for each succeeding twelve month period to be
submitted in accordance with Section 8.01(l).
"Closing Date" shall mean October 31, 2000, or any date
thereafter acceptable to Borrower and Agent.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time and any successor statute.
"Commitment" shall mean, for any Lender, its obligation to
make Loans up to such Lender's Maximum Credit Amount .
"Consolidated Net Income" shall mean with respect to Xxxxxxx
Exploration and its Consolidated Subsidiaries, for any period, the aggregate of
the net income (or loss) of Xxxxxxx Exploration and its Consolidated
Subsidiaries after allowances for taxes for such period, determined on a
consolidated basis in accordance with GAAP; provided that there shall be
excluded from the calculation of such net income (to the extent otherwise
included therein) the following: (i) the net income of any Person in which
Xxxxxxx Exploration or any Consolidated Subsidiary has an interest (which
interest does not cause the net income of such other Person to be consolidated
with the net income of Xxxxxxx Exploration and its Consolidated Subsidiaries in
accordance with GAAP), except to the extent of the amount of dividends or
distributions actually paid in such period by such other Person to Xxxxxxx
Exploration or to a Consolidated Subsidiary, as the case may be; (ii) the net
income (but not loss) of any Consolidated Subsidiary to the extent that the
declaration or payment of dividends or similar distributions or transfers or
loans by that Consolidated Subsidiary is not at the time permitted by operation
of the terms of its charter or any agreement, instrument or Governmental
Requirement applicable to such Consolidated Subsidiary, or is otherwise
restricted or prohibited in each case determined in accordance with GAAP; (iii)
the net income (or loss) of any Person acquired in a pooling-of-interests
transaction for any period prior to the date of such transaction; (iv) any
extraordinary gains or losses, including gains or losses attributable to
Property sales not in the ordinary course of business; and (v) the cumulative
effect of a change in accounting principles and any gains or losses attributable
to writeups or writedowns of assets.
"Consolidated Subsidiaries" shall mean each Subsidiary of
Xxxxxxx Exploration (whether now existing or hereafter created or acquired) the
financial statements of which shall be (or should have been) consolidated with
the financial statements of Xxxxxxx Exploration in accordance with GAAP,
including, without limitation, the Borrower.
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"Conversion Agreement" shall mean that certain Equity
Conversion Agreement dated as of February 17, 2000 by and among Borrower,
Xxxxxxx Exploration and SCI.
"Covenant Release Date" means the first Borrowing Base
Redetermination Date on which the outstanding Senior Indebtedness (excluding any
obligation of any kind under any Hedging Agreement) is less than or equal to the
Borrowing Base set by the Senior Lenders pursuant to the Senior Credit
Agreement.
"Credit Advances Termination Date" shall mean, unless the
Commitments are sooner terminated pursuant to Sections 2.03(b) or 10.02 hereof,
the Covenant Release Date.
"Debt" shall mean, for any Person the sum of the following
(without duplication): (i) all obligations of such Person for borrowed money or
evidenced by bonds, debentures, notes or other similar instruments (including
principal, interest, fees and charges); (ii) all obligations of such Person
(whether contingent or otherwise) in respect of bankers' acceptances, letters of
credit, surety or other bonds and similar instruments; (iii) all obligations of
such Person to pay the deferred purchase price of Property or services (other
than for borrowed money) excluding Trade Payables; (iv) all obligations under
leases which shall have been, or should have been, in accordance with GAAP,
recorded as capital leases in respect of which such Person is liable (whether
contingent or otherwise); (v) all obligations under leases (other than capital
leases and oil and gas leases) which require such Person or its Affiliate to
make payments exceeding $100,000 over the term of such lease, including payments
at termination, which are substantially equal to at least eighty percent (80%)
of the purchase price of the Property subject to such lease plus interest at an
imputed market rate of interest; (vi) all Debt (as described in the other
clauses of this definition) of others secured by a Lien on any asset of such
Person, whether or not such Debt is assumed by such Person; (vii) all Debt (as
described in the other clauses of this definition) of others guaranteed by such
Person or in which such Person otherwise assures a creditor against loss of the
Debt of others; (viii) all obligations or undertakings of such Person to
maintain or cause to be maintained the financial position or covenants of others
including without limitation agreements expressed as an agreement to purchase
the Debt or Property of others or otherwise; (ix) obligations to deliver
Hydrocarbons in consideration of advance payments; (x) obligations to pay for
goods or services whether or not such goods or services are actually received or
utilized by such Person; (xi) any capital stock of such Person in which such
Person has a mandatory obligation to redeem such stock; (xii) any Debt of a
Special Entity for which such Person is liable either by agreement or because of
a Governmental Requirement; (xiii) the undischarged balance of any production
payment created by such Person or for the creation of which such Person directly
or indirectly received payment; and (xiv) all obligations of such Person under
Hedging Agreements.
"Default" shall mean an Event of Default or an event which
with notice or lapse of time or both would become an Event of Default.
"Dollars" and "$" shall mean lawful money of the United States
of America.
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"EBITDA" shall mean, for any period, the sum of Consolidated
Net Income for such period PLUS the following expenses or charges to the extent
deducted from Consolidated Net Income in such period: interest, taxes,
depreciation, depletion and amortization, and other noncash charges, MINUS (i)
all non cash income added to Consolidated Net Income in such period and (ii)
capitalized general and administrative charges for such period.
"ECT" shall mean Enron Capital & Trade Resources Corp., a
Delaware corporation.
"ECT Merchant" shall mean ECT Merchant Investments Corp., a
Delaware corporation.
"Effective Date" shall have the meaning assigned such term in
Section 12.16.
"Enron Indebtedness" shall mean any and all Debt incurred
under the Indenture and/or secured by the Enron Mortgages.
"Enron Mortgages" shall mean the Mortgage, Deed of Trust,
Assignment of Production, Security Agreement and Financing Statement agreements
executed by Borrower pursuant to the terms and provisions of the Indenture.
"Enron Notes" means the promissory notes issued pursuant to
the Indenture or the Securities Purchase Agreement.
"Enron Shares" shall mean both (a) the 263,158 shares of
common stock in Xxxxxxx Exploration that Xxxxxxx Exploration issued to ECT
pursuant to the Securities Purchase Agreement, as evidenced by certificate
number 0089, as replaced by certificate number 0131 issued in favor of ECT
Merchant evidencing the change in Ownership from ECT to ECT Merchant and (b) the
789,474 shares in Xxxxxxx Exploration that Xxxxxxx Exploration issued to
JEDI-II, as evidenced by certificate number 0131.
"Enron Warrants" shall mean the warrants issued by Xxxxxxx
Exploration to ECT (as predecessor to ECT Merchant) and JEDI-II pursuant to the
Securities Purchase Agreement for the purchase of an aggregate of 1,000,000
shares of common stock of Xxxxxxx Exploration, and any warrants issued upon the
transfer thereof or in substitution therefore, pursuant to any warrant
certificates issued in accordance with the Securities Purchase Agreement.
"Environmental Laws" shall mean any and all Governmental
Requirements pertaining to the environment in effect in any and all
jurisdictions in which the Borrower or any Subsidiary is conducting or at any
time has conducted business, or where any Property of the Borrower or any
Subsidiary is located, including without limitation, the Oil Pollution Act of
1990 ("OPA"), the Clean Air Act, as amended, the Comprehensive Environmental,
Response, Compensation, and Liability Act of 1980 ("CERCLA"), as amended, the
Federal Water Pollution Control Act, as amended, the Occupational Safety and
Health Act of 1970, as amended, the Resource Conservation and Recovery Act of
1976 ("RCRA"), as amended, the Safe Drinking
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Water Act, as amended, the Toxic Substances Control Act, as amended, the
Superfund Amendments and Reauthorization Act of 1986, as amended, the Hazardous
Materials Transportation Act, as amended, and other environmental conservation
or protection laws. As used in the provisions hereof relating to Environmental
Laws, the term "oil" shall have the meaning specified in OPA, the terms
"hazardous substance" and "release" (or "threatened release") have the meanings
specified in CERCLA, and the terms "solid waste" and "disposal" (or "disposed")
have the meanings specified in RCRA; provided, however, that (i) in the event
either OPA, CERCLA or RCRA is amended so as to broaden the meaning of any term
defined thereby, such broader meaning shall apply subsequent to the effective
date of such amendment and (ii) to the extent the laws of the state in which any
Property of the Borrower or any Subsidiary is located establish a meaning for
"oil," "hazardous substance," "release," "solid waste" or "disposal" which is
broader than that specified in either OPA, CERCLA or RCRA, such broader meaning
shall apply.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time and any successor statute.
"ERISA Affiliate" shall mean each trade or business (whether
or not incorporated) which together with the Borrower or any Subsidiary of the
Borrower would be deemed to be a "single employer" within the meaning of section
4001(b)(1) of ERISA or subsections (b), (c), (m) or (o) of section 414 of the
Code.
"ERISA Event" shall mean (i) a "Reportable Event" described in
Section 4043 of ERISA and the regulations issued thereunder (other than such an
event with respect to which the requirement to give notice has been waived),
(ii) the withdrawal of the Borrower or any ERISA Affiliate from a Plan during a
plan year in which it was a "substantial employer" as defined in Section
4001(a)(2) of ERISA, (iii) the filing of a notice of intent to terminate a Plan
(other than a defined contribution Plan) or the treatment of an amendment to
such a Plan as a termination under Section 4041 of ERISA, (iv) the institution
of proceedings to terminate a Plan by the PBGC or (v) any other event or
condition which might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan.
"Event of Default" shall have the meaning assigned such term
in Section 10.01.
"Excepted Liens" shall mean: (i) Liens for taxes, assessments
or other governmental charges or levies not yet due or which are being contested
in good faith by appropriate action and for which adequate reserves have been
maintained in accordance with GAAP; (ii) Liens in connection with workmen's
compensation, unemployment insurance or other social security, old age pension
or public liability obligations not yet due or which are being contested in good
faith by appropriate action and for which adequate reserves have been maintained
in accordance with GAAP; (iii) operators', vendors', carriers', warehousemen's,
repairmen's, mechanics', workmen's, materialmen's, construction or other like
Liens arising by operation of law in the ordinary course of business or incident
to the exploration, development, operation and maintenance of Oil and Gas
Properties or customary landlord's liens, each of
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which is in respect of obligations that have not been outstanding more than 90
days or which are being contested in good faith by appropriate proceedings and
for which adequate reserves have been maintained in accordance with GAAP; (iv)
any Liens reserved in leases or farmout agreements for rent or royalties and for
compliance with the terms of the farmout agreements or leases in the case of
leasehold estates, to the extent that any such Lien referred to in this clause
does not materially impair the use of the Property covered by such Lien for the
purposes for which such Property is held or materially impair the value of such
Property subject thereto; (v) encumbrances (other than to secure the payment of
borrowed money or the deferred purchase price of Property or services),
easements, restrictions, servitudes, permits, conditions, covenants, exceptions
or reservations in any rights of way or other Property for the purpose of roads,
pipelines, transmission lines, transportation lines, distribution lines for the
removal of gas, oil, coal or other minerals or timber, and other like purposes,
or for the joint or common use of real estate, rights of way, facilities and
equipment, and defects, irregularities, zoning restrictions and deficiencies in
title of any rights of way or other Property which in the aggregate do not
materially impair the use of such rights of way or other Property for the
purposes of which such rights of way and other Property are held or materially
impair the value of such Property subject thereto; (vi) deposits of cash or
securities to secure the performance of bids, trade contracts, leases, statutory
obligations and other obligations of a like nature incurred in the ordinary
course of business; (vii) Liens permitted by the Loan Documents; and (viii)
Liens securing the Senior Indebtedness; and (ix) liens securing any Debt
described in Section 9.01(f) hereof that is owing, at the time such Debt is
incurred, to either a Senior Lender, a Lender, an Affiliate of a Senior Lender
or an Affiliate of a Lender.
"Federal Funds Rate" shall mean, for any day, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight federal funds transactions with a
member of the Federal Reserve System arranged by federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (i) if the date for which such rate is
to be determined is not a Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (ii) if such rate is not so
published for any day, the Federal Funds Rate for such day shall be the average
rate charged to the Agent on such day on such transactions as determined by the
Agent.
"Final Maturity Date" means October 31, 2005.
"Financial Statements" shall mean the financial statement or
statements described or referred to in Section 7.02.
"Fixed Rate" means 10.75% per annum, but in no event to exceed
the Highest Lawful Rate.
"GAAP" shall mean generally accepted accounting principles in
the United States of America in effect from time to time.
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"General Partner" shall mean Xxxxxxx, Inc., a Nevada
corporation, general partner of the Borrower.
"Governmental Authority" shall include the country, the state,
county, city and political subdivisions in which any Person or such Person's
Property is located or which exercises valid jurisdiction over any such Person
or such Person's Property, and any court, agency, department, commission, board,
bureau or instrumentality of any of them including monetary authorities which
exercises valid jurisdiction over any such Person or such Person's Property.
Unless otherwise specified, all references to Governmental Authority herein
shall mean a Governmental Authority having jurisdiction over, where applicable,
the Borrower, the Subsidiaries or any of their Property or the Agent, any Lender
or any Applicable Lending Office.
"Governmental Requirement" shall mean any law, statute, code,
ordinance, order, determination, rule, regulation, judgment, decree, injunction,
franchise, permit, certificate, license, authorization or other directive or
requirement (in the case of banking regulatory authorities whether or not having
the force of law), including, without limitation, Environmental Laws, energy
regulations and occupational, safety and health standards or controls, of any
Governmental Authority.
"Guarantors" shall mean Xxxxxxx Exploration, the General
Partner, Xxxxxxx Holdings I, LLC and Xxxxxxx Holdings II, LLC and any other
Person who becomes party to a Guaranty Agreement pursuant to the terms of
Section 8.11.
"Guaranty Agreements" shall mean the agreements executed by
the Guarantors in form and substance satisfactory to the Agent guarantying,
unconditionally, payment of the Indebtedness, as the same may be amended,
modified or supplemented from time to time.
"Hedging Agreements" shall mean any commodity, interest rate
or currency swap, cap, floor, collar, forward agreement or other exchange or
protection agreements or any option with respect to any such transaction.
"Highest Lawful Rate" shall mean, with respect to each Lender,
the maximum nonusurious interest rate, if any, that at any time or from time to
time may be contracted for, taken, reserved, charged or received on the Notes or
on other Indebtedness under laws applicable to such Lender which are presently
in effect or, to the extent allowed by law, under such applicable laws which may
hereafter be in effect and which allow a higher maximum nonusurious interest
rate than applicable laws now allow.
"Hydrocarbon Interests" shall mean all rights, titles,
interests and estates now or hereafter acquired in and to oil and gas leases,
oil, gas and mineral leases, or other liquid or gaseous hydrocarbon leases,
mineral fee interests, overriding royalty and royalty interests, net profit
interests and production payment interests, including any reserved or residual
interests of whatever nature.
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"Hydrocarbons" shall mean oil, gas, casinghead gas, drip
gasoline, natural gasoline, condensate, distillate, liquid hydrocarbons, gaseous
hydrocarbons and all products refined or separated therefrom.
"Indebtedness" shall mean any and all amounts owing or to be
owing by the Borrower to the Agent and/or Lenders in connection with the Loan
Documents.
"Indemnified Parties" shall have the meaning assigned such
term in Section 12.03(b).
"Indemnity Matters" shall mean any and all actions, suits,
proceedings (including any investigations, litigation or inquiries), claims,
demands and causes of action made or threatened against a Person and, in
connection therewith, all losses, liabilities, damages (including, without
limitation, consequential damages) or reasonable costs and expenses of any kind
or nature whatsoever incurred by such Person whether caused by the sole or
concurrent negligence of such Person seeking indemnification.
"Indenture" shall mean that certain Indenture dated as of
August 20, 1998 between Xxxxxxx Exploration, as the issuer of the Subordinated
Debt, and Chase Bank of Texas, National Association, as the trustee as amended
by that First Amendment to Indenture dated March 26, 1999 and that Second
Amendment to Indenture dated as of February 17, 2000.
"Initial Funding" shall mean the funding of the initial Loans
pursuant to Section 6.01 hereof.
"Initial Reserve Report" shall mean the report of Xxxxxx,
Xxxxxxxxx & Associates with respect to the Oil and Gas Properties of the
Borrower as of December 31, 1999, a copy of which has been delivered to the
Agent.
"Interest Coverage Ratio" shall have the meaning assigned such
term in the Guaranty Agreement dated as of the date hereof, as from time to time
amended, executed by Xxxxxxx Exploration.
"Interest Payment Dates" has the meaning assigned to it in
Section 3.02.
"JEDI-II" shall mean Joint Energy Development Investments II
Limited Partnership, a Delaware limited partnership.
"Lending Relationship" shall refer to this Agreement and the
other Loan Documents, together with any and all negotiations, discussions, acts,
omissions, renewals, extensions, and other agreements or events related to this
Agreement and such other Loan Documents, the parties' obligations thereunder and
the transactions contemplated thereby, including, without limitation, any such
negotiations, discussions, acts, omissions, renewals, extensions, other
agreements or events that may occur on the date hereof and the instruments and
documents executed and delivered in connection herewith or relating hereto.
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"Lien" shall mean any interest in Property securing an
obligation owed to, or a claim by, a Person other than the owner of the
Property, whether such interest is based on the common law, statute or contract,
and whether such obligation or claim is fixed or contingent, and including but
not limited to (i) the lien or security interest arising from a mortgage,
encumbrance, pledge, security agreement, conditional sale or trust receipt or a
lease, consignment or bailment for security purposes or (ii) production payments
and the like payable out of Oil and Gas Properties. The term "Lien" shall
include reservations, exceptions, encroachments, easements, rights of way,
covenants, conditions, restrictions, leases and other title exceptions and
encumbrances affecting Property. For the purposes of this Agreement, a Person
shall be deemed to be the owner of any Property which it has acquired or holds
subject to a conditional sale agreement, or leases under a financing lease or
other arrangement pursuant to which title to the Property has been retained by
or vested in some other Person in a transaction intended to create a financing.
"Loan Documents" shall mean this Agreement, the Subordination
Agreement, the Notes, the Agent's Fee Letter, the Warrant Agreement (and any
warrants issued pursuant thereto), the agreements or instruments described or
referred to in Exhibit D, and any and all other agreements or instruments now or
hereafter executed and delivered by the Borrower or any Subsidiary or Affiliate
of the Borrower including, without limitation, Xxxxxxx Exploration (other than
assignments, participation or similar agreements between any Lender and any
other lender or creditor with respect to any Indebtedness pursuant to this
Agreement) in connection with, or as security for the payment or performance of
the Notes, or this Agreement, as such agreements may be amended, supplemented or
restated from time to time.
"Loans" shall mean the loans as provided for by Section 2.01.
"Majority Lenders" means at any time while no Loans are
outstanding, Lenders having at least seventy-five percent (75%) of the Aggregate
Commitments of the Lenders and, at any time while Loans are outstanding, Lenders
holding at least seventy-five percent (75%) of the outstanding aggregate
principal amount of the portion of the Loans allocable to the Lenders (without
regard to any sale by a Lender of a participation in any Loan under Section
12.06(c)).
"Material Adverse Effect" shall mean any material and adverse
effect on (i) the assets, liabilities, financial condition, business, operations
or affairs of Xxxxxxx Exploration and its Subsidiaries taken as a whole or the
Borrower and its Subsidiaries taken as a whole, from those reflected in the
Financial Statements or from the facts represented or warranted in any Loan
Document, or (ii) the ability of Xxxxxxx Exploration or the Borrower or Xxxxxxx
Exploration or the Borrower and their respective Subsidiaries taken as a whole
to carry out their business as at the Closing Date or as proposed as of the
Closing Date to be conducted or meet their obligations under the Loan Documents
on a timely basis.
"Maximum Credit Amount" shall mean, as to each Lender, the
amount set forth opposite such Lender's name on Annex I under the caption
"Maximum Credit Amounts" plus such Lender's Percentage Share of any amount of
interest paid in kind pursuant to Section
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3.02(b) hereof (as the same may be reduced pursuant to Section 2.03(b) hereof as
modified from time to time to reflect any assignments permitted by Sections
12.06(b) and (c)).
"Mortgages" shall mean, collectively, any Standard Mortgages
and any New Mortgages.
"Mortgaged Property" shall mean the Property owned by the
Borrower and which is subject to the Liens existing and to exist under the terms
of the Loan Documents.
"Multiemployer Plan" shall mean a Plan defined as such in
Section 3(37) or 4001(a)(3) of ERISA.
"Net Seismic and Land Expenditures" shall mean those costs
incurred after the Closing Date for seismic services, seismic data, and
acquisition of undeveloped Hydrocarbon Interests, less the net proceeds, if any,
received after the Closing Date through the sale or licensing of interests in
undeveloped Hydrocarbon Interests and/or seismic data.
"New Mortgage" shall mean, collectively, the "New Mortgages"
referred to in item 11 of Exhibit D and any mortgages and supplements executed
pursuant to Section 8.09 (a) hereof.
"Notes" shall mean the Notes provided for by Section 2.06,
together with any and all renewals, extensions for any period, increases,
rearrangements, substitutions or modifications thereof.
"NSLE Limit" shall have the meaning set forth in Section
9.20(a).
"Oil and Gas Properties" shall mean Hydrocarbon Interests; the
Properties now or hereafter pooled or unitized with Hydrocarbon Interests; all
presently existing or future unitization, pooling agreements and declarations of
pooled units and the units created thereby (including without limitation all
units created under orders, regulations and rules of any Governmental Authority)
which may affect all or any portion of the Hydrocarbon Interests; all operating
agreements, contracts and other agreements which relate to any of the
Hydrocarbon Interests or the production, sale, purchase, exchange or processing
of Hydrocarbons from or attributable to such Hydrocarbon Interests; all
Hydrocarbons in and under and which may be produced and saved or attributable to
the Hydrocarbon Interests, including all oil in tanks, the lands covered thereby
and all rents, issues, profits, proceeds, products, revenues and other incomes
from or attributable to the Hydrocarbon Interests; all tenements, hereditaments,
appurtenances and Properties in any manner appertaining, belonging, affixed or
incidental to the Hydrocarbon Interests; and all Properties, rights, titles,
interests and estates described or referred to above, including any and all
Property, real or personal, now owned or hereinafter acquired and situated upon,
used, held for use or useful in connection with the operating, working or
development of any of such Hydrocarbon Interests or Property (excluding drilling
rigs, automotive equipment or other personal property which may be on such
premises for the purpose of drilling a well or for other similar temporary uses)
and including any and all oil xxxxx, gas
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xxxxx, injection xxxxx or other xxxxx, buildings, structures, fuel separators,
liquid extraction plants, plant compressors, pumps, pumping units, field
gathering systems, tanks and tank batteries, fixtures, valves, fittings,
machinery and parts, engines, boilers, meters, apparatus, appliances, tools,
implements, cables, wires, towers, casing, tubing and rods, similar equipment,
surface leases, rights-of-way, easements and servitudes together with all
additions, substitutions, replacements, accessions and attachments to any and
all of the foregoing.
"Other Taxes" shall have the meaning assigned such term in
Section 4.06(b).
"Partners" shall mean the General Partner, Xxxxxxx Holdings I,
LLC and Xxxxxxx Holdings II, LLC.
"Partnership Agreement" shall mean the written partnership
agreement of the Borrower among the Partners dated December 30, 1997, as amended
from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any entity succeeding to any or all of its functions.
"PDNP Reserves" shall mean proved, developed, non-producing
Hydrocarbon reserves, as determined in conformity with the guidelines in effect
from time to time as promulgated by the Society of Petroleum Engineers or its
successor association.
"PDP Reserves" shall mean proved, developed, producing
Hydrocarbon reserves, as determined in conformity with the guidelines in effect
from time to time as promulgated by the Society of Petroleum Engineers or its
successor association.
"Percentage Share" shall mean the percentage of the Aggregate
Commitments to be provided by a Lender under this Agreement as indicated on
Annex I hereto, as modified from time to time to reflect any assignments
permitted by Section 12.06(b) or (c).
"Person" shall mean any individual, corporation, company,
voluntary association, partnership, joint venture, trust, limited liability
company, unincorporated organization or government or any agency,
instrumentality or political subdivision thereof, or any other form of entity.
"Plan" shall mean any employee pension benefit plan, as
defined in Section 3(2) of ERISA, which (i) is currently or hereafter sponsored,
maintained or contributed to by the Borrower, any Subsidiary or an ERISA
Affiliate or (ii) was at any time during the preceding six calendar years
sponsored, maintained or contributed to, by the Borrower, any Subsidiary or an
ERISA Affiliate.
"Post-Default Rate" shall mean, in respect of any principal of
any Loan or any other amount payable by the Borrower under this Agreement or any
Note, a rate per annum during the period commencing on the date of an Event of
Default until such amount is paid in
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full or all Events of Default are cured or waived equal to 2% per annum above
the Fixed Rate, but in no event to exceed the Highest Lawful Rate.
"Principal Office" shall mean the principal office of the
Agent, presently located at 000 Xxxxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000.
"Property" shall mean any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"Proved Reserves" means PDP, PDNP and PUD Reserves.
"PUD Reserves" shall mean proved, undeveloped Hydrocarbon
reserves, as determined in conformity with the guidelines in effect from time to
time as promulgated by the Society of Petroleum Engineers or its successor
association.
"PV7%" shall mean the present value, determined utilizing the
Agent's price forecast (which will take into account any Hedging Agreements of
Xxxxxxx Exploration, Borrower or any Subsidiary) and applying the Agent's
reasonable adjustments (positive or negative) to the engineering analysis
prepared by Xxxxxxx Exploration's independent reserve engineers or in-house
reserve engineers, whichever the case may be, of the forecasted future cash flow
attributable to the subject Hydrocarbon reserves, discounted at an annual rate
of 7%.
"PV10%" shall mean the present value, determined utilizing the
Agent's price forecast (which will take into account any Hedging Agreements of
Xxxxxxx Exploration, Borrower or any Subsidiary) and applying the Agent's
reasonable adjustments (positive or negative) to the engineering analysis
prepared by Xxxxxxx Exploration's independent reserve engineers or in-house
reserve engineers, whichever the case may be, of the forecasted future cash flow
attributable to the subject Hydrocarbon reserves, discounted at an annual rate
of 10%.
"RAPRV 10%" means the risk adjusted proved reserve value which
is equal to the lesser of (i) 100% of the PV10% of the Borrower's and any
Guarantor's PDP Reserves, and (ii) the sum of 65% of the PV10% of the Borrower's
and any Guarantor's PDP Reserves, plus 43% of the PV10% of the Borrower's and
any Guarantor's PDNP Reserves, plus 33% of the PV7% of the Borrower's and any
Guarantor's PUD Reserves. For purposes of this definition, only Proved Reserves
subject to a Mortgage shall be included.
"RAPRV 7%" means the risk adjusted proved reserve value which
is equal to the lesser of (i) 100% of the PV7% of the Borrower's and any
Guarantor's PDP Reserves, and (ii) the sum of 65% of the PV7% of the Borrower's
and any Guarantor's PDP Reserves, plus 43% of the PV7% of the Borrower's and any
Guarantor's PDNP Reserves, plus 33% of the PV7% of the Borrower's and any
Guarantor's PUD Reserves. For purposes of this definition, only Proved Reserves
subject to a Mortgage shall be included.
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"Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System (or any successor), as the same may be
amended or supplemented from time to time.
"Regulatory Change" shall mean, with respect to any Lender,
any change after the Closing Date in any Governmental Requirement (including
Regulation D) or the adoption or making after such date of any interpretations,
directives or requests applying to a class of lenders (including such Lender or
its Applicable Lending Office) of or under any Governmental Requirement (whether
or not having the force of law) by any Governmental Authority charged with the
interpretation or administration thereof.
"Released Claims" shall mean any and all claims (including
without limitation any liabilities, damages, demands and causes of action
arising therefrom), whether (a) at law or in equity, (b) on the alleged
commission of a tort, (c) on the alleged breach (or anticipatory breach or
repudiation) of any contract, duty, or warranty (whether oral or written,
express or implied), (d) on the alleged violation of any statute, tariff, or
regulation (whether promulgated by the United States, any state thereof, any
foreign state or country, or any other governmental agency or entity, wherever
located), or (e) on any other factual, legal or equitable theory, including,
without limitation, any claim for damages of any type or nature, for injunctive
or other relief, for attorneys' fees, interest or any other liability whatsoever
on any theory, including without limitation any loss, cost or damage in
connection with or based upon "lender liability", unfair dealing, duress,
coercion, control or undue influence, extortion or commercial bribery, breach of
an implied covenant or duty of good faith and fair dealing, material
misrepresentation or omission, overreaching, unconscionability, conflict of
interest, bad faith, malpractice, disparate bargaining position, detrimental
reliance, promissory estoppel, estoppel by deed, waiver, laches, or any other
equitable theory, equitable subordination, breach of fiduciary duty or any other
duty, or tortious inducement to commit such breach, tortious interference with
contract or prospective business relations, negligent performance of contractual
obligations, or other theories of negligence, negligent or intentional
infliction of emotional distress, slander, libel, other defamation, fraudulent
transfer, conversion, trespass to (or clouding the title of) property, usury,
violations of the Racketeer Influenced and Corrupt Organizations Act, deceptive
trade practices, conspiracy, or any theory of liability as partners or joint
venturers, that any Releasing Party may have as of the date hereof against any
Released Party with respect to the Lending Relationship.
"Released Party" shall mean each of the Agent, the Lenders and
their respective predecessors, successors, assigns, directors, officers,
partners, employees, agents, attorneys, principals and Affiliates and all other
Persons liable or who might be claimed to be liable on their behalf
(collectively, the "Released Parties").
"Releasing Party" shall mean each of the Borrower and the
Guarantors and their respective predecessors, successors, assigns, directors,
officers, partners, employees, agents, attorneys, principals, Affiliates and all
other Persons who might have a claim against any Released Party (collectively,
the "Releasing Parties").
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"Required Payment" shall have the meaning assigned such term
in Section 4.04.
"Reserve Report" shall mean a report, in form satisfactory to
the Agent, setting forth, as of the dates set forth in Section 8.07(a) and (b)
(or such other date in the event of an unscheduled redetermination); (i) the
proved oil and gas reserves attributable to the Borrower's and its Subsidiaries'
Hydrocarbon Interests together with a projection of the rate of production and
future net income, taxes, operating expenses and capital expenditures with
respect thereto as of such date, based upon the pricing assumptions consistent
with SEC reporting requirements at the time (or other pricing provided by the
Agent) and (ii) such other information as the Agent may reasonably request. The
term "Reserve Report" shall also include the Initial Reserve Report, the
supplemental Reserve Reports described in Section 8.07(a), and the information
to be provided by the Borrower of each year pursuant to Section 8.07(c).
"Responsible Officer" shall mean, as to any Person, the Chief
Executive Officer, the President or any Vice President of such Person and the
Chief Financial Officer of such Person. Unless otherwise specified, all
references to a Responsible Officer herein shall mean a Responsible Officer of
the Borrower.
"SEC" shall mean the Securities and Exchange Commission or any
successor Governmental Authority.
"Securities Purchase Agreement" shall mean that certain
Securities Purchase Agreement dated August 20, 1998 among Xxxxxxx Exploration,
ECT (as predecessor to ECT Merchant) and JEDI-II, as agent for such purchasers
regarding the Subordinated Debt, as heretofore amended.
"Senior Indebtedness" shall mean any and all amounts owing or
to be owing by Borrower, Xxxxxxx Exploration or any Subsidiary of Borrower or
Xxxxxxx Exploration in connection with (a) the Senior Loan Documents, and/or (b)
any Hedging Agreements now or hereafter existing between (i) Borrower and BMO
and its successors or assigns (a "BMO Hedge Party") and Soc-Gen and its
successors or assigns (a "Soc-Gen Hedge Party") entered into while such BMO
Hedge Party or such Soc-Gen Hedge Party is a Senior Lender; and (ii) Borrower
and SCI and its successors or assigns (with Loans or Commitments of $20 million
or more) or any Affiliate of SCI (SCI and any Affiliate of SCI a "SCI Hedge
Party") entered into while such SCI Hedge Party or Fathom Energy Capital I,
L.L.C, is a Senior Lender and permitted by the terms of the Senior Credit
Agreement and all renewals, extensions and/or rearrangements of any of the
above.
"Senior Loan Documents" means the "Loan Documents" as such
term is at this time and from time to time defined in the Senior Credit
Agreement.
"Special Entity" shall mean any joint venture, limited
liability company or partnership, general or limited partnership or any other
type of partnership or company other than a corporation in which a Person or one
or more of its other Subsidiaries is a member, owner, partner or joint venturer
and owns, directly or indirectly, at least a majority of the equity of such
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entity or controls such entity, but excluding any tax partnerships that are not
classified as partnerships under state law. For purposes of this definition, any
Person which owns directly or indirectly an equity investment in another Person
which allows the first Person to manage or elect managers who manage the normal
activities of such second Person will be deemed to "control" such second Person
(e.g. a sole general partner controls a limited partnership).
"Standard Mortgage" shall mean, collectively, the "Standard
Mortgages" referred to in item 10 of Exhibit D and any mortgages and supplements
executed pursuant to Section 8.09 (b) hereof.
"Subordination Agreement" means that certain Intercreditor and
Subordination Agreement of even date herewith by and between Borrower, Senior
Agent, Senior Lenders, Agent and Lenders, as from time to time amended,
supplemented or modified.
"Subsidiary" shall mean (i) any corporation of which at least
a majority of the outstanding shares of stock having by the terms thereof
ordinary voting power to elect a majority of the board of directors of such
corporation (irrespective of whether or not at the time stock of any other class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time directly or indirectly owned
or controlled by a Person or one or more of its Subsidiaries or by a Person and
one or more of its Subsidiaries and (ii) any Special Entity. Unless otherwise
indicated herein, each reference to the term "Subsidiary" shall mean a
Subsidiary of the Borrower.
"Tangible Net Worth" shall mean, as at any date, the sum of
the following for Xxxxxxx Exploration and its Consolidated Subsidiaries
determined (without duplication) in accordance with GAAP (determined without
regard to any write up or write down resulting from any changes in GAAP
subsequent to September 30, 1999):
(i) the amount of preferred stock and common stock
at par plus the amount of surplus of Xxxxxxx
Exploration, plus
(ii) the retained earnings (or, in the case of
retained earnings deficit, minus the amount of
such deficit), minus
(iii) the sum of the following: cost of treasury
shares and the book value of all assets of
Xxxxxxx Exploration and its Consolidated
Subsidiaries which should be classified as
intangibles (without duplication of deductions
in respect of items already deducted in
arriving at surplus and retained earnings) but
in any event including as such intangibles the
following: goodwill, research and development
costs, trademarks, trade names, copyrights,
patents and franchises, unamortized debt
discount and expense, all reserves and any
writeup in the book value of assets resulting
from a revaluation thereof.
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"Taxes" shall have the meaning assigned such term in Section
4.06(a).
"Term ORRI" shall mean the term overriding royalty interest
created pursuant to that certain Conveyance of Adjustable Term Overriding
Royalty Interest between Borrower, ECT Merchant and JEDI-II.
"Trade Payables" shall mean customary trade payables incurred
in the ordinary course of business.
"Warrant Agreement" means as agreement in substantially the
form attached hereto as Schedule 6.01(o).
"Wholly-Owned Subsidiary" shall mean, as to a Person, any
Subsidiary of which all of the outstanding shares of stock (or other ownership
interests) having by the terms thereof ordinary voting power to elect the board
of directors (or other managing persons) of such entity, other than directors'
qualifying shares, are owned or controlled by such Person or one or more of the
Wholly-Owned Subsidiaries or by such Person and one or more of the Wholly-Owned
Subsidiaries.
Section 1.03 Accounting Terms and Determinations. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all determinations with respect to accounting matters hereunder
shall be made, and all financial statements and certificates and reports as to
financial matters required to be furnished to the Agent or the Lenders hereunder
shall be prepared, in accordance with GAAP, applied on a basis consistent with
the audited financial statements of the Borrower referred to in Section 7.02
(except for changes concurred with by the Borrower's independent public
accountants).
ARTICLE 2
COMMITMENTS
Section 2.01 Loans. Each Lender severally agrees, on the terms
of this Agreement, to make Loans to the Borrower during the period from and
including (i) the Closing Date or (ii) such later date that such Lender becomes
a party to this Agreement as provided in Section 12.06(b), to but excluding, the
Credit Advances Termination Date in an aggregate principal amount at any one
time outstanding up to but not exceeding the amount of such Lender's Commitment
as then in effect; provided, however, that the aggregate principal amount of all
such Loans by all Lenders hereunder at any one time outstanding shall not exceed
the Aggregate Commitments. The principal amount of the Loans which are repaid
may not be reborrowed.
Section 2.02 Borrowings, Continuations and Conversions.
(a) Borrowings. The Borrower shall give the Agent
(which shall promptly notify the Lenders) advance notice as
hereinafter provided of each borrowing
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hereunder, which shall specify the aggregate amount of such
borrowing, and the date (which shall be a Business Day) of the
Loans to be borrowed.
(b) Minimum Amounts. Any borrowings shall be in
amounts of at least $1,000,000 or any whole multiple of
$1,000,000 in excess thereof.
(c) Notices. All borrowings, continuations and
conversions shall require advance written notice to the Agent
(which shall promptly notify the Lenders) in the form of
Exhibit B hereto (or telephonic notice promptly confirmed by
such a written notice), which in each case shall be
irrevocable, from the Borrower to be received by the Agent not
later than 11:00 a.m. Houston, Texas time at least three
Business Days prior to the date of each borrowing. Without in
any way limiting the Borrower's obligation to confirm in
writing any telephonic notice, the Agent may act without
liability upon the basis of telephonic notice believed by the
Agent in good faith to be from the Borrower prior to receipt
of written confirmation. In each such case, the Borrower
hereby waives the right to dispute the Agent's record of the
terms of such telephonic notice except in the case of gross
negligence or willful misconduct by the Agent.
(d) Advances. Not later than 11:00 a.m. Houston,
Texas time on the date specified for each borrowing hereunder,
each Lender shall make available the amount of the Loan to be
made by it on such date to the Agent, to an account which the
Agent shall specify, in immediately available funds for the
account of the Borrower. The amounts so received by the Agent
shall, subject to the terms and conditions of this Agreement,
be made available to the Borrower by depositing the same, in
immediately available funds, in an account of the Borrower,
designated by the Borrower and maintained at the Principal
Office.
Section 2.03 Changes of Commitments.
(a) The Aggregate Commitments shall at all times be
equal to the Aggregate Maximum Credit Amounts.
(b) The Borrower shall have the right to terminate or
to reduce the amount of the Aggregate Maximum Credit Amounts
at any time or from time to time upon not less than three (3)
Business Days' prior notice to the Agent (which shall promptly
notify the Lenders) of each such termination or reduction,
which notice shall specify the effective date thereof and the
amount of any such reduction (which shall not be less than
$1,000,000 or any whole multiple of $1,000,000 in excess
thereof) and shall be irrevocable and effective only upon
receipt by the Agent.
(c) The Aggregate Maximum Credit Amounts once
terminated or reduced may not be reinstated.
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Section 2.04 Fees.
(a) Commitment Fee. The Borrower shall pay to the
Agent (to be allocated to the Lenders) a commitment fee on the
daily average unused amount of the Aggregate Commitments for
the period from and including the Closing Date up to but
excluding the earlier of the date the Aggregate Commitments
are terminated or the Credit Advances Termination Date at a
rate per annum equal to 5/8 of 1%. Accrued commitment fees
shall be payable quarterly in arrears on each Quarterly Date
and on the earlier of the date the Aggregate Commitments are
terminated or the Credit Advances Termination Date.
(b) The Borrower shall pay to the Agent for its
account such other fees as are set forth in the Agent's Fee
Letter on the dates specified therein to the extent not paid
prior to the Closing Date.
Section 2.05 Several Obligations. The failure of any Lender to
make any Loan to be made by it on the date specified therefor shall not relieve
any other Lender of its obligation to make its Loan or provide funds on such
date, but no Lender shall be responsible for the failure of any other Lender to
make a Loan to be made by such other Lender or to provide funds to be provided
by such other Lender.
Section 2.06 Notes. The Loans made by each Lender shall be
evidenced by a single promissory note of the Borrower in substantially the form
of Exhibit A hereto, dated (i) the Closing Date or (ii) the effective date of an
Assignment pursuant to Sections 12.06(b) and (c), payable to the order of such
Lender in a principal amount equal to its Maximum Credit Amount as in effect
plus such Lender's Percentage Share of $3,000,000 (to accommodate deemed
advances through payment in kind pursuant to Section 3.02(b) hereof) and
otherwise duly completed and such substitute Notes as required by Section
12.06(d). The date, amount, interest rate and Interest Period of each Loan made
by each Lender, and all payments made on account of the principal thereof, shall
be recorded by such Lender on its books for its Note, and, prior to any
transfer, may be endorsed by such Lender on a schedule attached to such Note or
any continuation thereof or on any separate record maintained by such Lender.
Failure to make any such notation or to attach a schedule shall not affect any
Lender's or the Borrower's rights or obligations in respect of such Loans or
affect the validity of such transfer by any Lender of its Note.
Section 2.07 Prepayments.
(a) The Borrower may prepay the Loans upon not less
than one (1) Business Day's prior notice to the Agent (which
shall promptly notify the Lenders), which notice shall specify
the prepayment date (which shall be a Business Day) and the
amount of the prepayment (which shall be at least $1,000,000
or the remaining aggregate principal balance outstanding on
the Notes) and shall be irrevocable and effective only upon
receipt by the Agent,
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provided that interest on the principal prepaid, accrued to
the prepayment date, shall be paid on the prepayment date.
(b) If, after giving effect to any termination or
reduction of the Aggregate Maximum Credit Amounts pursuant to
Section 2.03, the outstanding aggregate principal amount of
the Loans exceeds the Aggregate Maximum Credit Amounts, the
Borrower shall prepay the Loans on the date of such
termination or reduction in an aggregate principal amount
equal to the excess, together with interest on the principal
amount paid to the date of such prepayment.
(c) Prepayments permitted or required under this
Section 2.07 shall be without premium or penalty. All payments
of principal on the Loans shall reduce the Aggregate Maximum
Credit Amounts.
Section 2.08 Lending Offices. The Loans made by each Lender
shall be made and maintained at such Lender's Applicable Lending Office.
ARTICLE 3
PAYMENTS OF PRINCIPAL AND INTEREST
Section 3.01 Repayment of Loans. On the Final Maturity Date
the Borrower shall repay the outstanding aggregate principal and accrued and
unpaid interest under the Notes.
Section 3.02 Interest.
(a) The Borrower will pay to the Agent, for the account of
each Lender, interest on the unpaid principal amount of each Loan made by such
Lender for the period commencing on the date such Loan is made to but excluding
the date such Loan shall be paid in full, either in cash or, if permitted under
Section 3.02 (b) in kind, at the Fixed Rate.
Notwithstanding the foregoing, the Borrower will pay to the Agent, for the
account of each Lender interest at the applicable Post-Default Rate on any
principal of any Loan made by such Lender, and (to the fullest extent permitted
by law) on any other amount payable by the Borrower hereunder, under any Loan
Document or under any Note held by such Lender to or for account of such Lender,
for the period commencing on the date of an Event of Default until the same is
paid in full or all such Events of Default are cured or waived. Accrued interest
on Loans shall be payable on the last day of each January, April, July and
October, through the Final Maturity Date, starting January 31, 2001
(individually, an "Interest Payment Date" and, collectively, the "Interest
Payment Dates"), except that interest payable at the Post-Default Rate shall be
payable from time to time on demand.
The foregoing rates shall apply to interest paid in cash and to interest paid in
kind.
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(b) On any Interest Payment Date occurring on or before
October, 2002, Borrower shall have the absolute right to pay 50% of all accrued
interest on the Notes in kind, instead of in cash, as provided in this Section
3.02(b). In the event any accrued interest due on any particular Interest
Payment Date is paid in kind, it shall be deemed an advance of principal under
the Notes and, as of the Interest Payment Date, shall be added to the
outstanding principal balance of the Notes (notwithstanding that the outstanding
principal balance may exceed, in the aggregate, the face amount of the Notes).
In order to exercise its option to pay interest in kind under this Section
3.02(b), the Borrower shall, on or, at any time, before the applicable Interest
Payment Date, deliver written notice to the Agent, executed by a Responsible
Officer, specifying its election to pay interest in kind. Should Borrower fail
to deliver such written notice in a timely fashion, Borrower shall be deemed to
have irrevocably elected to make payment of such accrued interest in cash. In
the event Borrower elects to pay interest in kind, such interest shall be
calculated at the Fixed Rate.
ARTICLE 4
PAYMENTS; PRO RATA TREATMENT; COMPUTATIONS; ETC.
Section 4.01 Payments. Except to the extent otherwise provided
herein, all payments of principal, interest and other amounts to be made by the
Borrower under the Loan Documents shall be made in Dollars, in immediately
available funds, to the Agent at such account as the Agent shall specify by
notice to the Borrower from time to time, not later than noon Houston, Texas
time on the date on which such payments shall become due (each such payment made
after such time on such due date to be deemed to have been made on the next
succeeding Business Day). Such payments shall be made without (to the fullest
extent permitted by applicable law) defense, set-off or counterclaim. Each
payment received by the Agent under this Agreement or any Note for account of a
Lender shall be paid promptly to such Lender in immediately available funds. If
the due date of any payment under this Agreement or any Note would otherwise
fall on a day which is not a Business Day such date shall be extended to the
next succeeding Business Day and interest shall be payable for any principal so
extended for the period of such extension.
Section 4.02 Pro Rata Treatment. Except to the extent as
otherwise provided herein each Lender agrees that: (i) each borrowing from the
Lenders under Section 2.01 shall be made from the Lenders pro rata in accordance
with their Percentage Share, each payment of commitment fee or other fees under
Sections 2.04(a) and (b) shall be made for account of the Lenders pro rata in
accordance with their Percentage Share, and each termination or reduction of the
amount of the Aggregate Maximum Credit Amounts under Section 2.03(b) shall be
applied to the Commitment of each Lender, pro rata according to the amounts of
its respective Commitment; (ii) each payment of principal of Loans by the
Borrower shall be made for account of the Lenders pro rata in accordance with
the respective unpaid principal amount of the Loans held by the Lenders; and
(iii) each payment of interest on Loans by the Borrower shall be made for
account of the Lenders pro rata in accordance with the amounts of interest due
and payable to the respective Lenders.
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Section 4.03 Computations. Interest on Loans shall be computed
on the basis of a year of 365 or 366 days, as the case may be, and actual days
elapsed (including the first day but excluding the last day) occurring in the
period for which such interest is payable.
Section 4.04 Non-receipt of Funds by the Agent. Unless the
Agent shall have been notified by a Lender or the Borrower prior to the date on
which such notifying party is scheduled to make payment to the Agent (in the
case of a Lender) of the proceeds of a Loan or (in the case of the Borrower) a
payment to the Agent for account of one or more of the Lenders hereunder (such
payment being herein called the "Required Payment"), which notice shall be
effective upon receipt, that it does not intend to make the Required Payment to
the Agent, the Agent may assume that the Required Payment has been made and may,
in reliance upon such assumption (but shall not be required to), make the amount
thereof available to the intended recipient(s) on such date and, if such Lender
or the Borrower (as the case may be) has not in fact made the Required Payment
to the Agent, the recipient(s) of such payment shall, on demand, repay to the
Agent the amount so made available together with interest thereon in respect of
each day during the period commencing on the date such amount was so made
available by the Agent until but excluding the date the Agent recovers such
amount at a rate per annum which, for any Lender as recipient, will be equal to
the Federal Funds Rate, and for the Borrower as recipient, will be equal to the
Fixed Rate.
Section 4.05 Set-off, Sharing of Payments, Etc.
(a) The Borrower agrees that, in addition to (and
without limitation of) any right of set-off, bankers' lien or
counterclaim a Lender may otherwise have, each Lender shall
have the right and be entitled (after consultation with the
Agent), at its option, to offset balances held by it or by any
of its Affiliates for account of the Borrower at any of its
offices, in Dollars or in any other currency, against any
principal of or interest on any of such Lender's Loans, or any
other amount payable to such Lender hereunder, which is not
paid when due (regardless of whether such balances are then
due to the Borrower), in which case it shall promptly notify
the Borrower and the Agent thereof, provided that such
Lender's failure to give such notice shall not affect the
validity thereof.
(b) If any Lender shall obtain payment of any
principal of or interest on any Loan made by it to the
Borrower under this Agreement through the exercise of any
right of set-off, banker's lien or counterclaim or similar
right or otherwise, and, as a result of such payment, such
Lender shall have received a greater percentage of the
principal or interest then due hereunder by the Borrower to
such Lender than the percentage received by any other Lenders,
it shall promptly (i) notify the Agent and each other Lender
thereof and (ii) purchase from such other Lenders
participations in (or, if and to the extent specified by such
Lender, direct interests in) the Loans made by such other
Lenders (or in interest due thereon, as the case may be) in
such amounts, and make such other adjustments from time to
time as shall be equitable, to the end that all the Lenders
shall share
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the benefit of such excess payment (net of any expenses which
may be incurred by such Lender in obtaining or preserving such
excess payment) pro rata in accordance with the unpaid
principal and/or interest on the Loans held by each of the
Lenders. To such end all the Lenders shall make appropriate
adjustments among themselves (by the resale of participations
sold or otherwise) if such payment is rescinded or must
otherwise be restored. The Borrower agrees that any Lender so
purchasing a participation (or direct interest) in the Loans
made by other Lenders (or in interest due thereon, as the case
may be) may exercise all rights of set-off, banker's lien,
counterclaim or similar rights with respect to such
participation as fully as if such Lender were a direct holder
of Loans in the amount of such participation. Nothing
contained herein shall require any Lender to exercise any such
right or shall affect the right of any Lender to exercise, and
retain the benefits of exercising, any such right with respect
to any other indebtedness or obligation of the Borrower. If
under any applicable bankruptcy, insolvency or other similar
law, any Lender receives a secured claim in lieu of a set-off
to which this Section 4.05 applies, such Lender shall, to the
extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the
Lenders entitled under this Section 4.05 to share the benefits
of any recovery on such secured claim.
Section 4.06 Taxes.
(a) Payments Free and Clear. Any and all payments by
the Borrower hereunder shall be made, in accordance with
Section 4.01, free and clear of and without deduction for any
and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of each Lender and the Agent,
taxes imposed on its income, and franchise or similar taxes
imposed on it, by (i) any jurisdiction (or political
subdivision thereof) of which the Agent or such Lender, as the
case may be, is a citizen or resident or in which such Lender
has an Applicable Lending Office, (ii) the jurisdiction (or
any political subdivision thereof) in which the Agent or such
Lender is organized, or (iii) any jurisdiction (or political
subdivision thereof) in which such Lender or the Agent is
presently doing business in which taxes are imposed solely as
a result of doing business in such jurisdiction (all such
non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as
"Taxes"). If the Borrower shall be required by law to deduct
any Taxes from or in respect of any sum payable hereunder to
the Lenders or the Agent (i) the sum payable shall be
increased by the amount necessary so that after making all
required deductions (including deductions applicable to
additional sums payable under this Section 4.06) such Lender
or the Agent (as the case may be) shall receive an amount
equal to the sum it would have received had no such deductions
been made, (ii) the Borrower shall make such deductions and
(iii) the Borrower shall pay the full amount deducted to the
relevant taxing authority or other Governmental Authority in
accordance with applicable law.
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(b) Other Taxes. In addition, to the fullest extent
permitted by applicable law, the Borrower agrees to pay any
present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies that arise
from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to,
this Agreement, any Assignment or any other Loan Document
(hereinafter referred to as "Other Taxes").
(c) INDEMNIFICATION. TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, THE BORROWER WILL INDEMNIFY EACH LENDER AND
THE AGENT FOR THE FULL AMOUNT OF TAXES AND OTHER TAXES
(INCLUDING, BUT NOT LIMITED TO, ANY TAXES OR OTHER TAXES
IMPOSED BY ANY GOVERNMENTAL AUTHORITY ON AMOUNTS PAYABLE UNDER
THIS SECTION 4.06) PAID BY SUCH LENDER OR THE AGENT (ON THEIR
BEHALF OR ON BEHALF OF ANY LENDER), AS THE CASE MAY BE, AND
ANY LIABILITY (INCLUDING PENALTIES, INTEREST AND EXPENSES)
ARISING THEREFROM OR WITH RESPECT THERETO, WHETHER OR NOT SUCH
TAXES OR OTHER TAXES WERE CORRECTLY OR LEGALLY ASSERTED UNLESS
THE PAYMENT OF SUCH TAXES WAS NOT CORRECTLY OR LEGALLY
ASSERTED AND SUCH LENDER'S PAYMENT OF SUCH TAXES OR OTHER
TAXES WAS THE RESULT OF ITS GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT. ANY PAYMENT PURSUANT TO SUCH INDEMNIFICATION SHALL
BE MADE WITHIN THIRTY (30) DAYS AFTER THE DATE ANY LENDER OR
THE AGENT, AS THE CASE MAY BE, MAKES WRITTEN DEMAND THEREFOR.
IF ANY LENDER OR THE AGENT RECEIVES A REFUND OR CREDIT IN
RESPECT OF ANY TAXES OR OTHER TAXES FOR WHICH SUCH LENDER OR
THE AGENT HAS RECEIVED PAYMENT FROM THE BORROWER IT SHALL
PROMPTLY NOTIFY THE BORROWER OF SUCH REFUND OR CREDIT AND
SHALL, IF NO DEFAULT HAS OCCURRED AND IS CONTINUING, WITHIN
THIRTY (30) DAYS AFTER RECEIPT OF A REQUEST BY THE BORROWER
(OR PROMPTLY UPON RECEIPT, IF THE BORROWER HAS REQUESTED
APPLICATION FOR SUCH REFUND OR CREDIT PURSUANT HERETO), PAY AN
AMOUNT EQUAL TO SUCH REFUND OR CREDIT TO THE BORROWER WITHOUT
INTEREST (BUT WITH ANY INTEREST SO REFUNDED OR CREDITED),
PROVIDED THAT THE BORROWER, UPON THE REQUEST OF SUCH LENDER OR
THE AGENT, AGREES TO RETURN SUCH REFUND OR CREDIT (PLUS
PENALTIES, INTEREST OR OTHER CHARGES) TO SUCH LENDER OR THE
AGENT IN THE EVENT SUCH LENDER OR THE AGENT IS REQUIRED TO
REPAY SUCH REFUND OR CREDIT.
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(d) Lender Representations.
(i) Each Lender represents that it is either (1) a
corporation or banking association organized
under the laws of the United States of America or
any state thereof or (2) it is entitled to
complete exemption from United States withholding
tax imposed on or with respect to any payments,
including fees, to be made to it pursuant to this
Agreement (A) under an applicable provision of a
tax convention to which the United States of
America is a party or (B) because it is acting
through a branch, agency or office in the United
States of America and any payment to be received
by it hereunder is effectively connected with a
trade or business in the United States of
America. Each Lender that is not a corporation or
banking association organized under the laws of
the United States of America or any state thereof
agrees to provide to the Borrower and the Agent
on the Closing Date, or on the date of its
delivery of the Assignment pursuant to which it
becomes a Lender, and at such other times as
required by United States law or as the Borrower
or the Agent shall reasonably request, two
accurate and complete original signed copies of
either (A) Internal Revenue Service Form 4224 (or
successor form) certifying that all payments to
be made to it hereunder will be effectively
connected to a United States trade or business
(the "Form 4224 Certification") or (B) Internal
Revenue Service Form 1001 (or successor form)
certifying that it is entitled to the benefit of
a provision of a tax convention to which the
United States of America is a party which
completely exempts from United States withholding
tax all payments to be made to it hereunder (the
"Form 1001 Certification"). In addition, each
Lender agrees that if it previously filed a Form
4224 Certification, it will deliver to the
Borrower and the Agent a new Form 4224
Certification prior to the first payment date
occurring in each of its subsequent taxable
years; and if it previously filed a Form 1001
Certification, it will deliver to the Borrower
and the Agent a new certification prior to the
first payment date falling in the third year
following the previous filing of such
certification. Each Lender also agrees to deliver
to the Borrower and the Agent such other or
supplemental forms as may at any time be required
as a result of changes in applicable law or
regulation in order to confirm or maintain in
effect its entitlement to exemption from United
States withholding tax on any payments hereunder,
provided that the circumstances of
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such Lender at the relevant time and applicable
laws permit it to do so. If a Lender determines,
as a result of any change in either (i) a
Governmental Requirement or (ii) its
circumstances, that it is unable to submit any
form or certificate that it is obligated to
submit pursuant to this Section 4.06, or that it
is required to withdraw or cancel any such form
or certificate previously submitted, it shall
promptly notify the Borrower and the Agent of
such fact. If a Lender is organized under the
laws of a jurisdiction outside the United States
of America, unless the Borrower and the Agent
have received a Form 1001 Certification or Form
4224 Certification satisfactory to them
indicating that all payments to be made to such
Lender hereunder are not subject to United States
withholding tax, the Borrower shall withhold
taxes from such payments at the applicable
statutory rate. Each Lender agrees to indemnify
and hold harmless the Borrower or Agent, as
applicable, from any United States taxes,
penalties, interest and other expenses, costs and
losses incurred or payable by (i) the Agent as a
result of such Lender's failure to submit any
form or certificate that it is required to
provide pursuant to this Section 4.06 or (ii) the
Borrower or the Agent as a result of their
reliance on any such form or certificate which
such Lender has provided to them pursuant to this
Section 4.06.
(ii) For any period with respect to which a Lender has
failed to provide the Borrower with the form
required pursuant to this Section 4.06, if any,
(other than if such failure is due to a change in
a Governmental Requirement occurring subsequent
to the date on which a form originally was
required to be provided), such Lender shall not
be entitled to indemnification under Section 4.06
with respect to taxes imposed by the United
States which taxes would not have been imposed
but for such failure to provide such forms;
provided, however, that should a Lender, which is
otherwise exempt from or subject to a reduced
rate of withholding tax becomes subject to taxes
because of its failure to deliver a form required
hereunder, the Borrower shall take such steps as
such Lender shall reasonably request to assist
such Lender to recover such taxes.
(iii) Any Lender claiming any additional amounts
payable pursuant to this Section 4.06 shall use
reasonable efforts (consistent with legal and
regulatory restrictions) to file any certificate
or document requested by the Borrower or the
Agent or to change the jurisdiction of its
Applicable Lending Office or to contest any tax
imposed if the making of such a filing or change
or contesting such
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tax would avoid the need for or reduce the amount
of any such additional amounts that may
thereafter accrue and would not, in the sole
determination of such Lender, be otherwise
disadvantageous to such Lender.
ARTICLE 5
[INTENTIONALLY OMITTED]
ARTICLE 6
CONDITIONS PRECEDENT
Section 6.01 Initial Funding.
The obligation of the Lenders to make the Initial Funding is
subject to the receipt by the Agent and the Lenders of all fees payable pursuant
to Section 2.04 on or before the Closing Date and the receipt by the Agent of
the following documents and satisfaction of the other conditions provided in
this Section 6.01, each of which shall be satisfactory to the Agent in form and
substance:
(a) A certificate of the Secretary or an Assistant
Secretary of each of Xxxxxxx Exploration, the General Partner
and the manager of each other Guarantor setting forth (i)
resolutions of its board of directors with respect to its
authorization to execute and deliver the Loan Documents to
which it is a party and to enter into the transactions
contemplated in those documents, (ii) the officers (y) who are
authorized to sign the Loan Documents to which it is a party
and (z) who will, until replaced by another officer or
officers duly authorized for that purpose, act as its
representative for the purposes of signing documents and
giving notices and other communications in connection with
this Agreement and the transactions contemplated hereby, (iii)
specimen signatures of its authorized officers, and (iv) its
articles or certificate of incorporation and bylaws or
operating agreement, certified as being true and complete. The
Agent and the Lenders may conclusively rely on such
certificate until the Agent receives notice in writing from
the Borrower to the contrary.
(b) Certificates of the appropriate state agencies
with respect to the existence, qualification and good standing
of the Borrower and the Guarantors.
(c) A compliance certificate which shall be
substantially in the form of Exhibit C-1, duly and properly
executed by a Responsible Officer and dated as of the Closing
Date.
(d) The Notes, duly completed and executed.
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(e) The Loan Documents listed on Exhibit D hereto,
duly completed and, where necessary or appropriate, executed
in sufficient counterparts for recording.
(f) Evidence satisfactory to the Agent that the Enron
Indebtedness has been paid and satisfied in full, the Enron
Mortgages and all other Liens securing the Enron Indebtedness
have been fully released in proper recordable form, the Term
ORRI has be reconveyed to the Borrower, the Enron Warrants
have been cancelled, and the Enron Shares returned to Xxxxxxx
Exploration by payment by Xxxxxxx Exploration of a sum not to
exceed $20,000,000 plus reasonable Enron legal fees.
(g) Execution and delivery of the Subordination
Agreement.
(h) An opinion of Xxxxxxxx & Knight LLP, special
counsel to the Borrower and the Guarantors in form reasonably
satisfactory to the Agent.
(i) A certificate of insurance coverage of the
Borrower evidencing that the Borrower is carrying insurance in
accordance with Section 7.19 hereof.
(j) The Agent shall be reasonably satisfied with the
environmental condition of the Mortgaged Properties.
(k) Appropriate UCC search certificates reflecting no
prior liens or security interests, except those securing the
Senior Indebtedness.
(l) Borrower shall have submitted to the Lenders the
initial CAPEX Plan, which CAPEX Plan shall be satisfactory in
form and substance to the Majority Lenders.
(m) Borrower shall have submitted to the Lenders the
Hedging Agreements described on Schedule 7.20, which Hedging
Agreements shall be satisfactory in form and substance to the
Majority Lenders.
(n) Execution and delivery of the Agent's Fee Letter.
(o) The Warrant Agreement, duly executed and
delivered.
(p) Execution and delivery of the Ancillary Agreement
between SCI and Borrower pertaining to the reduction, under
certain circumstances, of a portion of SCI's outstanding
indebtedness under the Senior Credit Agreement.
(q) The issuance by Xxxxxxx Exploration of preferred
equity securities for a consideration of not less than
$20,000,000, before deduction of fees and commissions, and
otherwise on terms reasonably acceptable to the Agent.
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(r) Such other documents as the Agent or any Lender
or special counsel to the Agent may reasonably request.
Notwithstanding the foregoing, the execution and delivery of the Loan
Documents may occur at any time on or before November 3, 2000 and, in connection
therewith, Borrower will deliver a supplementary or replacement opinion of
counsel that supplements or replaces the original opinion delivered pursuant to
subsection (h) above, with such opinion to cover Xxxxxxx Holdings I, LLC and
Xxxxxxx Holdings II, LLC additionally and to the same effect as the original
opinion delivered pursuant to subsection (h) above. Failure to deliver the
documents described in this paragraph shall constitute an "Event of Default"
under this Agreement.
Section 6.02 Initial, Subsequent Loans. The obligation of the
Lenders to make Loans to the Borrower upon the occasion of each borrowing
hereunder (including the Initial Funding) is subject to the further conditions
precedent that, as of the date of such Loans and after giving effect thereto:
(a) no Default shall have occurred and be continuing;
(b) no Material Adverse Effect shall have occurred
and be continuing; and
(c) the representations and warranties made by the
Borrower in Article VII and in the Loan Documents or by any
Guarantor in any other Loan Document shall be true in all
material respects on and as of the date of the making of such
Loans with the same force and effect as if made on and as of
such date and following such new borrowing, except to the
extent such representations and warranties (i) are expressly
limited to an earlier date or the Majority Lenders may
expressly consent in writing to the contrary or (ii) in the
case only of the representations and warranties made by the
Borrower in subsections 7.09 and 7.22 of Article VII, if not
true in all material respects, such failure does not give rise
a Material Adverse Effect or a Default.
Each request for a borrowing by the Borrower hereunder shall
constitute a certification by the Borrower to the effect set forth in Section
6.02(a), (b) and (c) above (as of the date of such notice and, unless the
Borrower otherwise notifies the Agent prior to the date of and immediately
following such borrowing).
Section 6.03 Conditions Precedent for the Benefit of Lenders.
All conditions precedent to the obligations of the Lenders to make any Loan are
imposed hereby solely for the benefit of the Lenders, and no other Person may
require satisfaction of any such condition precedent or be entitled to assume
that the Lenders will refuse to make any Loan in the absence of strict
compliance with such conditions precedent.
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Section 6.04 No Waiver. No waiver of any condition precedent
shall preclude the Agent or the Lenders from requiring such condition to be met
prior to making any subsequent Loan or preclude the Lenders from thereafter
declaring that a subsequent failure of the Borrower to satisfy such condition
precedent constitutes a Default.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Agent and the
Lenders that (each representation and warranty herein is given as of the Closing
Date and shall be deemed repeated and reaffirmed on the dates of each borrowing
as provided in Section 6.02):
Section 7.01 Corporate Existence. The Borrower: (i) is a
limited partnership duly organized, legally existing and in good standing under
the laws of the jurisdiction of its formation; (ii) has all requisite power, and
has all material governmental licenses, authorizations, consents and approvals
necessary to own its assets and carry on its business as now being or as
proposed to be conducted; and (iii) is qualified to do business in all
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary and where failure so to qualify would have a Material
Adverse Effect.
Section 7.02 Financial Condition. The audited consolidated
balance sheet of Xxxxxxx Exploration and its Consolidated Subsidiaries as at
December 31, 1999 and the related consolidated statement of income,
stockholders' equity and cash flow of Xxxxxxx Exploration and its Consolidated
Subsidiaries for the fiscal year ended on said date, with the opinion thereon of
Price Waterhouse heretofore furnished to each of the Lenders and the unaudited
consolidated balance sheet of Xxxxxxx Exploration and its Consolidated
Subsidiaries as at June 30, 2000, and their related consolidated statements of
income, stockholders' equity and cash flow of Xxxxxxx Exploration and its
Consolidated Subsidiaries for the six-month period ended on such date heretofore
furnished to the Agent, are complete and correct and fairly present the
consolidated financial condition of Xxxxxxx Exploration and its Consolidated
Subsidiaries as at said dates and the results of its operations for the fiscal
year and the six-month period on said dates, all in accordance with GAAP, as
applied on a consistent basis (subject, in the case of the interim financial
statements, to normal year-end adjustments). Neither Xxxxxxx Exploration nor any
Consolidated Subsidiary has on the Closing Date any material Debt, Trade
Payables, contingent liabilities, liabilities for taxes, unusual forward or
long-term commitments or unrealized or anticipated losses from any unfavorable
commitments, except as referred to or reflected or provided for in the Financial
Statements or in Schedule 7.02. Since December 31, 1999, there has been no
change or event having a Material Adverse Effect, except as disclosed to the
Agent in writing. Since the date of the Financial Statements, neither the
business nor the Properties of Xxxxxxx Exploration Consolidated Subsidiaries,
taken as a whole, have been materially and adversely affected as a result of any
fire, explosion, earthquake, flood, drought, windstorm, accident, strike or
other labor disturbance, embargo, requisition or taking of Property or
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cancellation of contracts, permits or concessions by any Governmental Authority,
riot, activities of armed forces or acts of God or of any public enemy.
Section 7.03 Litigation. Except as disclosed to the Lenders in
Schedule 7.03 hereto, at the Closing Date there is no litigation, legal,
administrative or arbitral proceeding, investigation or other action of any
nature pending or, to the knowledge of the Borrower threatened against or
affecting the Borrower or any Subsidiary which both (a) involves the possibility
of any judgment or liability against the Borrower or any Subsidiary not fully
covered by insurance (except for normal deductibles), and (b) would be more
likely than not to have a Material Adverse Effect.
Section 7.04 No Breach. Neither the execution and delivery of
the Loan Documents, nor compliance with the terms and provisions hereof will
conflict with or result in a breach of, or require any consent which has not
been obtained as of the Closing Date under, the Partnership Agreement, the
respective charter or by-laws of any Subsidiary or any Governmental Requirement
or any material agreement or instrument to which the Borrower or any Subsidiary
is a party or by which it is bound or to which it or its Properties are subject,
or constitute a default under any such agreement or instrument, or result in the
creation or imposition of any Lien upon any of the material revenues or assets
of the Borrower or any Subsidiary pursuant to the terms of any such agreement or
instrument other than the Liens created by the Loan Documents.
Section 7.05 Authority. The Borrower and each Subsidiary has
all necessary power and authority to execute, deliver and perform its
obligations under the Loan Documents to which it is a party; and the execution,
delivery and performance by the Borrower and each Subsidiary of the Loan
Documents to which it is a party, have been duly authorized by all necessary
action on its part; and the Loan Documents constitute the legal, valid and
binding obligations of the Borrower and each Subsidiary, enforceable in
accordance with their terms, except as such enforceability may be limited by
bankruptcy, insolvency, fraudulent transfer and similar laws affecting
creditors' rights generally or by general principles of equity.
Section 7.06 Approvals. No authorizations, approvals or
consents of, and no filings or registrations with, any Governmental Authority
are necessary for the execution, delivery or performance by the Borrower or any
Subsidiary of the Loan Documents or for the validity or enforceability thereof.
Section 7.07 Use of Loans. Subject to the terms and conditions
elsewhere herein, the proceeds of the Loans shall be used (a) to pay fees and
payables, (b) to provide additional drilling capital and (c) for general working
capital purposes; provided, however, the proceeds of the Loans shall not be used
to pay any of the Senior Indebtedness. In no event shall the proceeds of the
Loans be used to finance in whole or in part any hostile acquisition. The
Borrower is not engaged principally, or as one of its important activities, in
the business of extending credit for the purpose, whether immediate, incidental
or ultimate, of buying or carrying margin stock (within the meaning of
Regulation U or X of the Board of Governors of
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the Federal Reserve System) and no part of the proceeds of any Loan hereunder
will be used to buy or carry any margin stock.
Section 7.08 ERISA.
(a) The Borrower and each ERISA Affiliate have
complied in all material respects with ERISA and, where
applicable, the Code regarding each Plan.
Each Plan is, and has been, maintained in substantial
compliance with ERISA and, where applicable, the Code.
No act, omission or transaction has occurred which
could result in imposition on the Borrower or any ERISA
Affiliate (whether directly or indirectly) of an amount of
$100,000 or more as (i) either a civil penalty assessed
pursuant to section 502(c), (i) or (1) of ERISA or a tax
imposed pursuant to Chapter 43 of Subtitle D of the Code or
(ii) breach of fiduciary duty liability damages under section
409 of ERISA.
No Plan (other than a defined contribution plan) or
any trust created under any such Plan has been terminated
since September 2, 1974. No liability to the PBGC in excess of
$100,000 (other than for the payment of current premiums which
are not past due) by the Borrower or any ERISA Affiliate has
been or is expected by the Borrower or any ERISA Affiliate to
be incurred with respect to any Plan. No ERISA Event with
respect to any Plan has occurred which could reasonably be
expected to result in liabilities of $100,000 or more.
Full payment when due has been made of all amounts
which the Borrower or any ERISA Affiliate is required under
the terms of each Plan or applicable law to have paid as
contributions to such Plan, and no accumulated funding
deficiency in an amount of $100,000 or more (as defined in
section 302 of ERISA and section 412 of the Code), whether or
not waived, exists with respect to any Plan.
The actuarial present value of the benefit
liabilities under each Plan which is subject to Title IV of
ERISA does not, as of the end of the Borrower's most recently
ended fiscal year, exceed the current value of the assets
(computed on a plan termination basis in accordance with Title
IV of ERISA) of such Plan allocable to such benefit
liabilities by $100,000 or more. The term "actuarial present
value of the benefit liabilities" shall have the meaning
specified in section 4041 of ERISA.
None of the Borrower or any ERISA Affiliate sponsors,
maintains, or contributes to an employee welfare benefit plan,
as defined in section 3(1) of ERISA, including, without
limitation, any such plan maintained to provide benefits to
former employees of such entities, that may not be terminated
by the
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Borrower or any ERISA Affiliate in its sole discretion at any
time without any material liability.
None of the Borrower or any ERISA Affiliate sponsors,
maintains or contributes to, or has at any time in the
preceding six calendar years, sponsored, maintained or
contributed to, any Multiemployer Plan.
None of the Borrower or any ERISA Affiliate is
required to provide security under section 401(a)(29) of the
Code due to a Plan amendment that results in an increase in
current liability for the Plan.
Section 7.09 Taxes. Except as set out in Schedule 7.09, the
Borrower has filed all United States Federal income tax returns and all other
tax returns which are required to be filed by it and has paid all material taxes
due pursuant to such returns or pursuant to any assessment received by the
Borrower, except for any taxes which are being contested in good faith and by
proper proceedings and against which adequate reserves are being maintained. The
charges, accruals and reserves on the books of the Borrower in respect of taxes
and other governmental charges are, in the opinion of the Borrower, adequate. No
tax lien has been filed and, to the knowledge of the Borrower, no claim is being
asserted with respect to any such tax, fee or other charge, except for any
taxes, fees or other charges which are being contested in good faith and by
proper proceedings and against which adequate reserves are being maintained.
Section 7.10 Titles, etc.
(a) Subject to the matters set out in Schedule 7.10,
each of the Borrower and the Subsidiaries has good and
defensible title to (i) the Oil and Gas Properties that are
both evaluated (A) in the most recently delivered Reserve
Report and (B) described in a Standard Mortgage, free and
clear of all Liens except Liens permitted by Section 9.02, and
(ii) to the best of Borrower's knowledge, the balance of
Borrower's material (individually or in the aggregate) Oil and
Gas Properties (and/or those of the Subsidiaries) that are
described in any other Mortgage or that are otherwise
evaluated in the most recently delivered Reserve Report, free
and clear (to the best of Borrower's knowledge) of all Liens
except Liens permitted by Section 9.02. Except for immaterial
divergences, after giving full effect to the Excepted Liens
and the matters set forth in Schedule 7.10, the Borrower owns
the net interests in production attributable to the
Hydrocarbon Interests that are both (A) evaluated in the most
recently delivered Reserve Report and (b) reflected in a
Standard Mortgage, and the ownership of such Hydrocarbon
Interests shall not in any material respect obligate the
Borrower to bear the costs and expenses relating to the
maintenance, development and operations of each such
Hydrocarbon Interest in an amount in excess of the working
interest of such Hydrocarbon Interest set forth in a Standard
Mortgage (without a corresponding increase in net revenue
interest). The Borrower does not believe, based upon
information in its possession, that its most recently
delivered Reserve Report
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materially overstates its oil and gas reserves, bearing in
mind that reserves are evaluated based upon estimates and
assumptions with respect to which reasonable minds of
competent reserve engineers may differ.
(b) All leases and agreements necessary for the
conduct of the business of the Borrower and the Subsidiaries
are valid and subsisting, in full force and effect and there
exists no default or event or circumstance which with the
giving of notice or the passage of time or both would give
rise to a default under any such lease or leases, which would
affect in any material respect the conduct of the business of
the Borrower and the Subsidiaries.
(c) The Properties presently owned, leased or
licensed by the Borrower and the Subsidiaries, including,
without limitation, all easements and rights of way, include
all Properties necessary to permit the Borrower and the
Subsidiaries to conduct their business in all material
respects in the same manner as its business has been conducted
prior to the Closing Date.
(d) All of the Properties of the Borrower and the
Subsidiaries which are reasonably necessary for the operation
of their business are in good working condition in all
material respects and are maintained in accordance with
prudent business standards.
Section 7.11 No Material Misstatements. Taken as a whole, the
written information, statements, exhibits, certificates, documents and reports
furnished to SCI by the Borrower or any Guarantor in connection with the
negotiation of this Agreement do not contain any material misstatement of fact
or omit to state a material fact or any fact necessary to make the statements
contained therein not materially misleading in the light of the circumstances in
which made and with respect to the Borrower or any Guarantor. As of the Closing
Date, there is no fact peculiar to the Borrower or Guarantor which has a
Material Adverse Effect or in the future is reasonably likely to have (so far as
the Borrower can now foresee) a Material Adverse Effect and which has not been
set forth in this Agreement or the other documents, certificates and statements
furnished to SCI by or on behalf of the Borrower or any Guarantor prior to, or
on, the Closing Date in connection with the transactions contemplated hereby or
the Senior Loan Documents.
Section 7.12 Investment Company Act. Neither the Borrower nor
any Subsidiary is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
Section 7.13 Public Utility Holding Company Act. Neither the
Borrower nor any Subsidiary is a "holding company," or a "subsidiary company" of
a "holding company," or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company," or a "public utility" within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
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Section 7.14 Subsidiaries. Except as set forth on Schedule
7.14 or as allowed by Section 9.16, the Borrower has no Subsidiaries.
Section 7.15 Location of Business and Offices. As of the
Closing Date, the Borrower's principal place of business and chief executive
offices are located at the address stated on the signature page of this
Agreement. The principal place of business and chief executive office of each
Subsidiary are located at the addresses stated on Schedule 7.14.
Section 7.16 Defaults. The Borrower is not in default nor has
any event or circumstance occurred which, but for the expiration of any
applicable grace period or the giving of notice, or both, would constitute a
default under any material agreement or instrument to which the Borrower is a
party or by which the Borrower is bound which default would have a Material
Adverse Effect. No Default hereunder or under the Senior Credit Agreement has
occurred and is continuing or will result from the execution, delivery and
performance of this Agreement and the other Loan Documents.
Section 7.17 Environmental Matters. Except as provided in
Schedule 7.17 or for matters which are more likely than not to not to have a
Material Adverse Effect (or with respect to (c), (d) and (e) below, where the
failure to take such actions is more likely than not to not have a Material
Adverse Effect):
(a) Neither any Property of Xxxxxxx Exploration or
any of its Subsidiaries nor the operations conducted thereon
violate any order or requirement of any court or Governmental
Authority or any Environmental Laws;
(b) Without limitation of clause (a) above, no
Property of Xxxxxxx Exploration or any of its Subsidiaries nor
the operations currently conducted thereon or, to the best
knowledge of the Borrower, by any prior owner or operator of
such Property or operation, are in violation of or subject to
any existing, pending or threatened action, suit,
investigation, inquiry or proceeding by or before any court or
Governmental Authority or to any remedial obligations under
Environmental Laws;
(c) All notices, permits, licenses or similar
authorizations, if any, required to be obtained or filed by
Xxxxxxx Exploration or any of its Subsidiaries in connection
with the operation or use of any and all Property of Xxxxxxx
Exploration and each of its Subsidiaries, including without
limitation present, or to the best of Borrower's knowledge,
past treatment, storage, disposal or release of a hazardous
substance or solid waste into the environment, have been duly
obtained or filed, and Xxxxxxx Exploration and each Subsidiary
thereof are in compliance with the terms and conditions of all
such notices, permits, licenses and similar authorizations;
(d) All hazardous substances, solid waste, and oil
and gas exploration and production wastes, if any, generated
at any and all Property of Xxxxxxx
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Exploration and each of its Subsidiaries have in the past,
during the tenure of ownership of Xxxxxxx Exploration and its
Subsidiaries and to the best of Borrower's knowledge, prior
thereto, been transported, treated and disposed of in
accordance with Environmental Laws and so as not to pose an
imminent and substantial endangerment to public health or
welfare or the environment, and, to the best knowledge of the
Borrower, all such transport carriers and treatment and
disposal facilities have been and are operating in compliance
with Environmental Laws and so as not to pose an imminent and
substantial endangerment to public health or welfare or the
environment, and are not the subject of any existing, pending
or threatened action, investigation or inquiry by any
Governmental Authority in connection with any Environmental
Laws;
(e) The Borrower has taken all steps reasonably
necessary to determine and has determined that no hazardous
substances, solid waste, or oil and gas exploration and
production wastes, have been disposed of or otherwise released
and there has been no threatened release of any hazardous
substances on or to any Property of Xxxxxxx Exploration or any
of its Subsidiaries except in compliance with Environmental
Laws and so as not to pose an imminent and substantial
endangerment to public health or welfare or the environment;
(f) To the extent applicable, all Property of Xxxxxxx
Exploration and each of its Subsidiaries currently satisfies
all design, operation, and equipment requirements imposed by
the OPA or scheduled as of the Closing Date to be imposed by
OPA during the term of this Agreement, and the Borrower does
not have any reason to believe that such Property, to the
extent subject to OPA, will not be able to maintain compliance
with the OPA requirements during the term of this Agreement;
and
(g) Neither Xxxxxxx Exploration nor any of its
Subsidiaries has any known contingent liability in connection
with any release or threatened release of any oil, hazardous
substance or solid waste into the environment.
Section 7.18 Compliance with the Law. Neither the Borrower nor
any Subsidiary has violated any Governmental Requirement or failed to obtain any
license, permit, franchise or other governmental authorization necessary for the
ownership of any of its Properties or the conduct of its business, which
violation or failure would have (in the event such violation or failure were
asserted by any Person through appropriate action) a Material Adverse Effect.
Except for such acts or failures to act as would not have a Material Adverse
Effect, the Oil and Gas Properties (and properties unitized therewith) have been
maintained, operated and developed in a good and workmanlike manner and in
conformity with all applicable laws and all rules, regulations and orders of all
duly constituted authorities having jurisdiction and in conformity with the
provisions of all leases, subleases or other contracts comprising a part of the
Hydrocarbon Interests and other contracts and agreements forming a part of the
Oil and Gas Properties; specifically in this connection, but subject to the
Material Adverse Effect
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qualification set forth above, (i) after the Closing Date, no Oil and Gas
Property is subject to having allowable production reduced below the full and
regular allowable (including the maximum permissible tolerance) because of any
overproduction (whether or not the same was permissible at the time) prior to
the Closing Date and (ii) none of the xxxxx comprising a part of the Oil and Gas
Properties (or properties unitized therewith) are deviated from the vertical
more than the maximum permitted by applicable laws, regulations, rules and
orders, and such xxxxx are, in fact, bottomed under and are producing from, and
the well bores are wholly within, the Oil and Gas Properties (or in the case of
xxxxx located on properties unitized therewith, such unitized properties).
Section 7.19 Insurance. Schedule 7.19 attached hereto contains
an accurate and complete description of all material policies of fire,
liability, workmen's compensation and other forms of insurance owned or held by
the Borrower and each Subsidiary as of the Closing Date. Schedule 7.19 shall be
updated by the Borrower as appropriate from time to time and the representations
in this Section 7.19 shall apply to such updated Schedules. All such policies
are in full force and effect, all premiums with respect thereto covering all
periods up to and including the Closing Date have been paid, and no notice of
cancellation or termination has been received with respect to any such policy.
Such policies are sufficient for compliance with all requirements of law and of
all agreements to which the Borrower or any Subsidiary is a party; are valid,
outstanding and enforceable policies; provide adequate insurance coverage in at
least such amounts and against at least such risks (but including in any event
public liability) as are usually insured against in the same general area by
companies engaged in the same or a similar business for the assets and
operations of the Borrower and each Subsidiary; will remain in full force and
effect through the respective dates set forth in Schedule 7.19 without the
payment of additional premiums; and will not in any way be affected by, or
terminate or lapse by reason of, the transactions contemplated by this
Agreement. Schedule 7.19 identifies all material risks, if any, which the
General Partner of the Borrower, the Subsidiaries and their respective Board of
Directors or officers have designated as being self insured. Neither the
Borrower nor any Subsidiary has been refused any insurance with respect to its
assets or operations, nor has its coverage been limited below usual and
customary policy limits, by an insurance carrier to which it has applied for any
such insurance or with which it has carried insurance during the last three
years.
Section 7.20 Hedging Agreements. Schedule 7.20 sets forth, as
of the Closing Date, a true and complete list of all Hedging Agreements
(including commodity price swap agreements, forward agreements or contracts of
sale which provide for prepayment for deferred shipment or delivery of oil, gas
or other commodities) of the Borrower and each Subsidiary, the material terms
thereof (including the type, term, effective date, termination date and notional
amounts or volumes), the net xxxx to market value thereof, all credit support
agreements relating thereto (including any margin required or supplied), and the
counterparty to each such agreement.
Section 7.21 Restriction on Liens. Neither the Borrower nor
any Subsidiary is a party to or subject to any agreement or arrangement (other
than the Loan Documents, the Senior
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Loan Documents, the Indenture, and any other documents permitted under Section
9.02(f)), or subject to any order, judgment, writ or decree, which either
restricts or purports to restrict its ability to grant Liens to other Persons on
or in respect of their respective assets or Properties.
Section 7.22 Material Agreements. Set forth on Schedule 7.22
hereto is a complete and correct list of all material agreements, leases,
indentures, purchase agreements, obligations in respect of letters of credit,
guarantees, joint venture agreements, and other instruments in effect or to be
in effect as of the Closing Date (other than Hedging Agreements) providing for,
evidencing, securing or otherwise relating to any material Debt of the Borrower
or any Subsidiary, and all obligations of the Borrower or any Subsidiary to
issuers of surety or appeal bonds (excluding operator's bonds, plugging and
abandonment bonds, and similar surety obligations obtained in the ordinary
course of business) issued for account of the Borrower or any such Subsidiary,
and such list correctly sets forth the names of the debtor or lessee and
creditor or lessor with respect to the Debt or lease obligations outstanding or
to be outstanding and the property subject to any Lien securing such Debt or
lease obligation.
Section 7.23 Gas Imbalances. As of the Closing Date, except as
set forth in the most recent Reserve Report furnished to Agent or on Schedule
7.23 or on the most recent certificate delivered pursuant to Section 8.07(b), on
a net basis there are no gas imbalances, take or pay or other prepayments with
respect to the Borrower's or any Subsidiary's Hydrocarbon Interests which would
require the Borrower or such Subsidiary to deliver five percent (5%) or more of
the monthly production from the Borrower's and its Subsidiaries' Hydrocarbons
produced on a monthly basis from the Hydrocarbon Interests, at some future time
without then or thereafter receiving full payment therefor.
Section 7.24 Partnership Agreement. The Partnership Agreement
has not been terminated, is in full force and effect as of the date hereof and
no default has occurred and is in continuance thereunder which would have a
Material Adverse Effect.
ARTICLE 8
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that, so long as any of the
Commitments are in effect and until payment in full of all Indebtedness
hereunder, all interest thereon and all other amounts payable by the Borrower
hereunder:
Section 8.01 Financial Statements and Other Reports. The
Borrower shall deliver, or shall cause to be delivered, to the Agent with
sufficient copies of each for the Lenders:
(a) Annual Financial Statements. As soon as available
and in any event within 90 days after the end of each fiscal
year of Xxxxxxx Exploration, the audited consolidated
statements of income, stockholders' equity, changes in
financial position and cash flow of Xxxxxxx Exploration and
its Consolidated
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Subsidiaries for such fiscal year, and the related
consolidated and unaudited consolidating balance sheets of
Xxxxxxx Exploration and its Consolidated Subsidiaries as at
the end of such fiscal year, and setting forth in each case in
comparative form the corresponding figures for the preceding
fiscal year, and accompanied by the related opinion of
independent public accountants of recognized national standing
acceptable to the Agent which opinion shall state that said
financial statements fairly present the consolidated financial
condition and results of operations of Xxxxxxx Exploration and
its Consolidated Subsidiaries as at the end of, and for, such
fiscal year and that such financial statements have been
prepared in accordance with GAAP except for such changes in
such principles with which the independent public accountants
shall have concurred and such opinion shall not contain a
"going concern" or like qualification or exception.
(b) Quarterly Financial Statements. As soon as
available and in any event within 60 days after the end of
each of the first three fiscal quarterly periods of each
fiscal year of Xxxxxxx Exploration, consolidated statements of
income, stockholders' equity, changes in financial position
and cash flow of Xxxxxxx Exploration and its Consolidated
Subsidiaries for such period and for the period from the
beginning of the respective fiscal year to the end of such
period, and the related consolidated and consolidating balance
sheets as at the end of such period, and setting forth in each
case in comparative form the corresponding figures for the
corresponding period in the preceding fiscal year, accompanied
by the certificate of a Responsible Officer, which certificate
shall state that said financial statements fairly present the
consolidated financial condition and results of operations of
Xxxxxxx Exploration and its Consolidated Subsidiaries in
accordance with GAAP, as at the end of, and for, such period
(subject to normal year-end audit adjustments).
(c) Monthly Financial Statements. As soon as
available and in any event within forty-five (45) days after
the end of each calendar month that is not also the end of one
of Xxxxxxx Exploration's first three fiscal quarterly periods
or of Xxxxxxx Exploration's fiscal year, consolidated
statements of income and changes in financial position of
Xxxxxxx Exploration and its Consolidated Subsidiaries for such
period and for the period from the beginning of the respective
fiscal year to the end of such period, and the related
consolidated balance sheets as at the end of such period and
beginning statements setting forth in each case in comparative
form the corresponding figures for the corresponding period in
the preceding fiscal year, accompanied by the certificate of a
Responsible Officer, which certificate shall state that such
financial statements fairly present the consolidated financial
condition and results of operations of Xxxxxxx Exploration and
its Consolidated Subsidiaries in accordance with GAAP, as at
the end of, and for, such period (subject to normal year-end
audit adjustments).
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(d) Notice of Default. Promptly after the Borrower
knows that any Default or any Material Adverse Effect has
occurred, a notice of such Default or Material Adverse Effect,
describing the same in reasonable detail and the action the
Borrower proposes to take with respect thereto.
(e) Other Accounting Reports. Promptly upon receipt
thereof, a copy of each other report or letter (excluding
routine correspondence) submitted to the Borrower or Xxxxxxx
Exploration by independent accountants in connection with any
annual, interim or special audit made by them of the books of
the Borrower or Xxxxxxx Exploration, and a copy of any
response by the Borrower or Xxxxxxx Exploration to such letter
or report.
(f) SEC Filings, Etc. Promptly, upon its becoming
available, each financial statement, report, notice or proxy
statement sent by Xxxxxxx Exploration to stockholders
generally and each regular or periodic report and any
registration statement, prospectus or written communication
(other than transmittal letters) in respect thereof filed by
Xxxxxxx Exploration with or received by Xxxxxxx Exploration in
connection therewith from any securities exchange or the SEC
or any successor agency.
(g) Notices Under Other Loan Agreements. Promptly
after the furnishing thereof, copies of any statement, report
or notice furnished to any Person pursuant to the terms of any
indenture, loan or credit or other similar agreement
including, but not limited to, any statement, report or notice
furnished to any Person pursuant to the Senior Credit
Agreement, other than this Agreement and not otherwise
required to be furnished to the Lenders pursuant to any other
provision of this Section 8.01.
(h) Other Matters. Subject to any applicable
restrictions on disclosure, from time to time such other
information regarding the business, affairs or financial
condition of the Borrower or Xxxxxxx Exploration (including,
without limitation, any Plan or Multiemployer Plan and any
reports or other information required to be filed under ERISA)
as any Lender or the Agent may reasonably request.
(i) Annual Budgets. On or before January 31 of each
year, a one-year financial projection for Xxxxxxx Exploration
and its Subsidiaries in form acceptable to the Agent, which
projection shall include revenues, expenses and capital
expenditures.
(j) Monthly Operating Statements. As soon as
available and in any event within 30 days after the end of
each month, monthly operating statements of the Borrower for
the month preceding the month during which the written request
was received, including, without limitation, production
reports and general and
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administrative cost summaries by lease for its Oil and Gas
Properties, which reports shall include quantities or volume
of production, revenue, realized product prices, taxes,
capital expenditures by category and lease operating costs
which have accrued to the Borrower's accounts in such period,
and such other information with respect thereto as the Agent
may require.
(k) Weekly Cash Budgets. For the period required
under the Senior Credit Agreement, the Borrower will cause
Xxxxxxx Exploration to deliver weekly cash budgets reasonably
satisfactory to the Agent and each Lender and weekly cash flow
statements reasonably satisfactory to the Agent and each
Lender based on such form, with variance analysis to budget
(including accounts receivables and accounts payables
reporting) not later than the Friday following the week to
which such budgets and statements relate.
(l) CAPEX Plans. A CAPEX Plan, delivered
simultaneously with each of the Reserve Reports to be
delivered in March and September of each year; the first such
CAPEX Plan, to be submitted on the Closing Date, shall be for
the twelve month period beginning September 1, 2000, and
ending August 31, 2000, and each subsequent CAPEX Plan shall
cover the next succeeding twelve-month period. Each such CAPEX
Plan shall include a blended risk profile that does not
deviate materially from the risk profile of the CAPEX Plan
required under the Senior Credit Agreement for so long as the
Senior Lenders require a CAPEX Plan and, thereafter, from that
submitted on the Closing Date.
The Borrower will furnish to the Agent, at the time it furnishes each set of
financial statements pursuant to paragraph (a) or (b) above, a certificate
substantially in the form of Exhibit C-2 hereto executed by a Responsible
Officer (i) certifying as to the matters set forth therein and stating that no
Default has occurred and is continuing (or, if any Default has occurred and is
continuing, describing the same in reasonable detail), (ii) setting forth in
reasonable detail the computations necessary to determine whether Xxxxxxx
Exploration is in compliance with Sections 5.2(q), (r) and (s) of its Guaranty
Agreement as of the end of the respective fiscal quarter or fiscal year, and
(iii) certifying that said financial statements fairly present the consolidated
and consolidating financial condition and consolidated results of operations in
accordance with GAAP, as at the end of, and for, such period (subject to normal
year-end audit adjustments).
Section 8.02 Litigation. The Borrower shall promptly give to
the Agent notice of: (i) all legal or arbitral proceedings, and of all
proceedings before any Governmental Authority involving the Borrower or any
Guarantor, except proceedings which, if adversely determined within any
reasonable range of loss, would not have a Material Adverse Effect, and (ii) of
any material litigation or material proceeding against the Borrower or any
Guarantor in which the amount involved is not covered in full by insurance
(subject to normal and customary deductibles), or in which injunctive or similar
relief is sought. The Borrower will, and will cause each of the Guarantors to,
promptly notify the Agent and each of the Lenders of any claim,
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judgment, Lien or other encumbrance affecting any Property of the Borrower or
any Guarantor if the value of the claim, judgment, Lien, or other encumbrance
affecting such Property shall exceed $1,000,000.
Section 8.03 Maintenance, Etc.
(a) The Borrower shall and shall cause each
Subsidiary to: preserve and maintain its corporate existence
and all of its material rights, privileges and franchises;
keep books of record and account in which full, true and
correct entries will be made of all dealings or transactions
in relation to its business and activities; comply with all
Governmental Requirements if failure to comply with such
requirements will have a Material Adverse Effect; pay and
discharge all taxes, assessments and governmental charges or
levies imposed on it or on its income or profits or on any of
its Property prior to the date on which penalties attach
thereto, except for any such tax, assessment, charge or levy
the payment of which is being contested in good faith and by
proper proceedings and against which adequate reserves are
being maintained; upon reasonable notice, permit
representatives of the Agent or any Lender (accompanied by the
Agent), during normal business hours, to examine, copy and
make extracts from its financial books and records, to inspect
its Properties, and to discuss its business and affairs with
its officers, all to the extent reasonably requested by such
Lender or the Agent (as the case may be); and keep, or cause
to be kept, insured by financially sound and reputable
insurers all Property of a character usually insured by
Persons engaged in the same or similar business similarly
situated against loss or damage of the kinds and in the
amounts customarily insured against by such Persons and carry
such other insurance as is usually carried by such Persons
including, without limitation, environmental risk insurance to
the extent reasonably available.
(b) Contemporaneously with the delivery of the
financial statements required by Section 8.01(a) to be
delivered for each year, the Borrower will furnish or cause to
be furnished to the Agent and the Lenders a certificate of
insurance coverage from the insurer in form and substance
satisfactory to the Agent and, if requested by the Agent, will
furnish the Agent and the Lenders copies of the applicable
policies.
(c) The Borrower will and will cause each Subsidiary
to operate its Oil and Gas Properties or cause such Oil and
Gas Properties to be operated in a good and workmanlike manner
in accordance with the practices of the industry and in
compliance in all material respects with all applicable
contracts and agreements and in compliance in all material
respects with all Governmental Requirements.
(d) The Borrower will and will cause each Subsidiary
to, at its own expense, do or cause to be done (to the extent
it has the power to do so) all things
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reasonably necessary to preserve and keep in good repair,
working order and efficiency all of its Oil and Gas Properties
and other material Properties including, without limitation,
all equipment, machinery and facilities, and from time to time
will make all the reasonably necessary repairs, renewals and
replacements so that at all times the state and condition of
its Oil and Gas Properties and other material Properties will
be fully preserved and maintained, except to the extent a
portion of such Properties is not capable of producing
Hydrocarbons in economically reasonable amounts. The Borrower
will and will cause each Subsidiary to promptly: (i) pay and
discharge, or make reasonable and customary efforts to cause
to be paid and discharged, all delay rentals, royalties,
expenses and indebtedness accruing under the leases or other
agreements affecting or pertaining to its Oil and Gas
Properties, (ii) perform or make reasonable and customary
efforts to cause to be performed, in accordance with industry
standards, the obligations required by each and all of the
assignments, deeds, leases, sub-leases, contracts and
agreements affecting its interests in its Oil and Gas
Properties and other material Properties, (iii) will and will
cause each Subsidiary to do all other things necessary to keep
unimpaired, except for Liens described in Section 9.02, its
rights with respect to its Oil and Gas Properties and other
material Properties and prevent any forfeiture thereof or a
default thereunder, except to the extent a portion of such
Properties is no longer capable of producing Hydrocarbons in
economically reasonable amounts. The Borrower will and will
cause each Subsidiary to operate its Oil and Gas Properties
and other material Properties or cause or make reasonable and
customary efforts to cause such Oil and Gas Properties and
other material Properties to be operated in a good and
workmanlike manner in accordance with the practices of the
industry and in compliance with all applicable contracts and
agreements and in compliance in all material respects with all
Governmental Requirements. The covenants contained in this
Section 8.03(d) shall not apply to insignificant Properties
unless a failure of such covenant could have a Material
Adverse Effect.
(e) The Borrower will provide to the Agent from time
to time upon request by the Agent the certificate of a
Responsible Officer of the Borrower stating that, except as
disclosed in a schedule thereto, the Borrower has not received
written notice that any mechanics' liens have been filed or
will be filed on the Mortgaged Properties; provided that mere
receipt of an invoice for services rendered shall not
constitute written notice that a mechanics' lien will be
filed.
Section 8.04 Environmental Matters.
(a) To the extent that a reasonably prudent owner or
operator would do so under the same or similar circumstances,
the Borrower will and will cause each Subsidiary to establish
and implement such procedures as may be reasonably necessary
to periodically determine and assure that any failure of the
following does not have a Material Adverse Effect: (i) all
Property of the Borrower and the
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Subsidiaries and the operations conducted thereon and other
activities of the Borrower and the Subsidiaries are in
compliance with and do not violate the requirements of any
Environmental Laws, (ii) no oil, hazardous substances or solid
wastes are disposed of or otherwise released on or to any
Property owned by any such party except in compliance with
Environmental Laws, (iii) no hazardous substance will be
released on or to any such Property in a quantity equal to or
exceeding that quantity which requires reporting pursuant to
Section 103 of CERCLA, and (iv) no oil, oil and gas
exploration and production wastes or hazardous substance is
released on or to any such Property so as to pose an imminent
and substantial endangerment to public health or welfare or
the environment.
(b) The Borrower will promptly notify the Agent and
the Lenders in writing of any threatened action, investigation
or inquiry by any Governmental Authority of which the Borrower
has knowledge in connection with any Environmental Laws with
respect to the Property of the Borrower or any Subsidiary,
excluding routine testing, compliance and corrective action.
Section 8.05 Further Assurances. The Borrower will and will
cause each Guarantor to cure promptly any defects in the creation and issuance
of the Notes and the execution and delivery of the Loan Documents. The Borrower
at its expense will and will cause each Guarantor to promptly execute and
deliver to the Agent upon request all such other documents, agreements and
instruments to comply with or accomplish the covenants and agreements of the
Borrower or any Guarantor, as the case may be, in the Loan Documents, or to
further evidence and more fully describe the collateral intended as security for
the Notes, or to correct any omissions in the Loan Documents, or to state more
fully the security obligations set out herein or in any of the Loan Documents,
or to perfect, protect or preserve any Liens created pursuant to any of the Loan
Documents, or to make any recordings, to file any notices or obtain any
consents, all as may be necessary or appropriate in connection therewith.
Section 8.06 Performance of Obligations. The Borrower will pay
the Notes according to the reading, tenor and effect thereof; and the Borrower
will and will cause each Guarantor to do and perform every act and discharge all
of the obligations to be performed and discharged by them under the Loan
Documents, at the time or times and in the manner specified.
Section 8.07 Engineering Reports.
(a) Not later than March 30 and September 30 of each
year, the Borrower shall furnish to the Agent and the Lenders
a Reserve Report as of the preceding December 31 and June 30,
respectively. The Reserve Report to be furnished in March of
each year shall be prepared by certified independent petroleum
engineers or other independent petroleum consultant(s)
acceptable to the Agent and the Reserve Reports to be
furnished in September of each year shall be prepared by or
under the supervision of the chief engineer or Vice President
of
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Operations of the Borrower who shall certify such Reserve
Report to have been prepared in accordance with the procedures
used in the immediately preceding March Reserve Report. At
Borrower's option, the Reserve Report to be furnished in
September of each year may instead consist of a report from
the independent petroleum engineers referred to above on any
new xxxxx and a roll-forward by Borrower on any xxxxx
previously reported in the Reserve Report described in the
immediately preceding March.
(b) In the event of an unscheduled Borrowing Base
redetermination, under the Senior Credit Agreement, the
Borrower shall furnish to the Agent and the Lenders a copy of
any Reserve Report that is furnished to the Senior Agent.
(c) With the delivery of each Reserve Report, the
Borrower shall provide to the Agent and the Lenders:
(A) a certificate from a Responsible Officer
certifying that, to the best of his knowledge and in
all material respects: (i) the most recently
delivered Reserve Report does not in the belief of
such officer and based upon information in the
Borrower's possession, materially overstate the oil
and gas reserves of the Borrower and the Subsidiaries
as a whole bearing in mind that reserves are
evaluated based upon estimates and assumptions with
respect to which reasonable minds of competent
engineers may differ, (ii) except as set forth in
such Reserve Report or on an exhibit to the
certificate, on a net basis there are no gas
imbalances, take or pay or other prepayments with
respect to its Oil and Gas Properties evaluated in
such Reserve Report which would violate Section 9.18,
(iii) none of its proved Hydrocarbon Interests have
been sold since the date of the last Borrowing Base
determination except as set forth on an exhibit to
the certificate, which certificate shall list all of
its proved Hydrocarbon Interests sold and in such
detail as reasonably required by the Majority
Lenders, (iv) attached to the certificate is a list
of its proved Hydrocarbon Interests added to and
deleted from the immediately prior Reserve Report and
a list showing any change in working interest or net
revenue interest in its Hydrocarbon Interests
occurring, (v) at the Agent's request, attached to
the certificate is a list of all Persons disbursing
proceeds to the Borrower from its Oil and Gas
Properties and (vi) except as set forth on a schedule
attached to the certificate all of proved Hydrocarbon
Interests evaluated by such Reserve Report are
Mortgaged Property; and
(B) a certificate from a Responsible Officer
certifying that, to the best of his knowledge and in
all material respects (i) the representations of the
Borrower in Section 7.10 are true and correct and
apply to the Hydrocarbon Interests evaluated in the
Reserve Report that are described in a Standard
Mortgage and (ii) the Borrower has, with respect to
those
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material Hydrocarbon Interests that are evaluated in
the most recently delivered Reserve Report, but that
are not covered by a Standard Mortgage, conducted
overall title due diligence that, in all material
respects, equals or exceeds industry standards given
the applicable facts and circumstances.
Section 8.08 Reserved.
Section 8.09 Additional Collateral.
(a) The Borrower will grant and will cause each of
its Subsidiaries to grant to the Agent as security for the
Indebtedness a perfected Lien on the Borrower's or such
Subsidiary's interest in any Oil and Gas Properties that are
(i) acquired after the date hereof at the cash acquisition
cost to the Borrower or such Subsidiary equal to or exceeding
$1,000,000, and (ii) do not constitute Proved Reserves, which
Lien will be created and perfected by and in accordance with
the provisions of deeds of trust, security agreements and
financing statements, or other Loan Documents, all in form
substantially the same as the New Mortgage (subject to such
changes as are necessary as a result of, to reflect and/or to
account for changes in applicable law) and in sufficient
executed (and acknowledged where necessary or appropriate)
counterparts for recording purposes.
(b) The Borrower will grant and will cause each of
its Subsidiaries to grant to the Agent as security for the
Indebtedness a Lien interest (subject only to Excepted Liens
and the matters set forth on Schedule 7.10 hereto) on the
Borrower's or such Subsidiary's interest in any Oil and Gas
Properties identified after the Closing Date as containing
Proved Reserves, which Lien will be created and perfected by
and in accordance with the provisions of deeds of trust,
security agreements and financing statements, or other Loan
Documents, all in form substantially the same as the Standard
Mortgage (subject to such changes as are necessary as a result
of, to reflect and/or to account for changes in applicable
law) and in sufficient executed (and acknowledged where
necessary or appropriate) counterparts for recording purposes.
(c) Concurrently with the granting of the Lien or
other action referred to in Section 8.09(b) above, the
Borrower will provide to the Agent title information in form
and substance satisfactory to the Agent in its sole discretion
with respect to the Borrower's and its Subsidiaries' interests
in such Oil and Gas Properties to the extent needed to cause
the Agent to have received, together with title information
previously delivered to the Agent, satisfactory title
information on at least 90% of the value of the proved
Hydrocarbon Interests evaluated by the most recent Reserve
Report.
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(d) Also, promptly after the filing of any new Loan
Document in any state, other than the New Mortgage and any
other mortgage filed pursuant to subsection (a) of this
Section 8.09 or any other mortgage substantially in the form
of the New Mortgage, upon the reasonable request of the Agent,
the Borrower will provide to the Agent an opinion addressed to
the Agent for the benefit of the Lenders in form and substance
reasonably satisfactory to the Agent in its sole discretion
from counsel acceptable to Agent, stating that such Loan
Document is valid, binding and enforceable in accordance with
its terms and in legally sufficient form for such
jurisdiction.
Section 8.10 ERISA Information and Compliance. The Borrower
will promptly furnish and will cause any ERISA Affiliate to promptly furnish to
the Agent with sufficient copies to the Lenders (i) if requested by the Agent
promptly after the filing thereof with the United States Secretary of Labor, the
Internal Revenue Service or the PBGC, copies of each annual and other report
with respect to each Plan or any trust created thereunder, (ii) immediately upon
becoming aware of the occurrence of any ERISA Event or of any "prohibited
transaction," as described in section 406 of ERISA or in section 4975 of the
Code, in connection with any Plan or any trust created thereunder, a written
notice signed by a Responsible Officer specifying the nature thereof, what
action the Borrower or the ERISA Affiliate is taking or proposes to take with
respect thereto, and, when known, any action taken or proposed by the Internal
Revenue Service, the Department of Labor or the PBGC with respect thereto, and
(iii) immediately upon receipt thereof, copies of any notice of the PBGC's
intention to terminate or to have a trustee appointed to administer any Plan.
With respect to each Plan (other than a Multiemployer Plan), the Borrower will,
and will cause each ERISA Affiliate to, (i) satisfy in full and in a timely
manner, without incurring any late payment or underpayment charge or penalty and
without giving rise to any lien, all of the contribution and funding
requirements of section 412 of the Code (determined without regard to
subsections (d), (e), (f) and (k) thereof) and of section 302 of ERISA
(determined without regard to sections 303, 304 and 306 of ERISA), and (ii) pay,
or cause to be paid, to the PBGC in a timely manner, without incurring any late
payment or underpayment charge or penalty, all premiums required pursuant to
sections 4006 and 4007 of ERISA.
Section 8.11 Subsidiary Security. Should the Borrower create
or acquire any Subsidiary pursuant to Section 9.16 hereof it will promptly grant
to the Agent for the benefit of the Lenders a security interest and pledge of
all the capital stock of such Subsidiary in form and substance satisfactory to
the Agent, such security interest and pledge to be second to any such security
interest and pledge granted to secure the Senior Indebtedness and the Borrower
will cause such Subsidiary to enter into a guaranty of the Indebtedness in form
and substance satisfactory to the Agent, and such guaranty to be subordinate to
any similar guaranty guaranteeing the Senior Indebtedness. The delivery of such
security and guaranty shall be accompanied by such back up corporate authority
and opinions of counsel (addressed to the Agent as well as the Senior Agent) as
furnished to the Senior Agent, or as the Agent may reasonably request.
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Section 8.12 Payment of Trade Payables. The Borrower will pay
and cause all of its Subsidiaries to pay all of their Trade Payables now or
hereafter incurred within 60 days of the date the invoice is received by
Borrower, unless subject to legal offset or unless being contested in good faith
by appropriate proceedings and reserves adequate under GAAP shall have been
established therefor.
ARTICLE 9
NEGATIVE COVENANTS
The Borrower covenants and agrees that, so long as any of the
Commitments are in effect and until payment in full of the Indebtedness
hereunder, all interest thereon and all other amounts payable by the Borrower
hereunder, without the prior written consent of the Majority Lenders:
Section 9.01 Debt. Neither the Borrower nor any Subsidiary
will incur, create, assume or suffer to exist any Debt, except:
(a) the Notes or other Indebtedness arising under the
Loan Documents or any guaranty of or suretyship arrangement
for the Notes or other Indebtedness arising under the Loan
Documents;
(b) Debt of the Borrower existing on the Closing Date
which is reflected in the Financial Statements or is disclosed
in Schedule 9.01, and any renewals or extensions (but not
increases) thereof;
(c) accounts payable for the deferred purchase price
of Property or services (other than Trade Payables) from time
to time incurred in the ordinary course of business which, if
greater than 60 days past the date the invoice is received by
Borrower, are being contested in good faith by appropriate
proceedings if reserves adequate under GAAP shall have been
established therefor;
(d) Debt owing to the Borrower or a Guarantor which
is subordinated to the Indebtedness.
(e) Debt of the Borrower under capital leases (as
required to be reported on the financial statements of the
Borrower pursuant to GAAP) not to exceed $2,000,000;
(f) Debt of the Borrower under Hedging Agreements
made with a Person that is made (i) with a Person that is, at
the time such Hedging Agreement is made, either a Senior
Lender or an Affiliate of a Senior Lender, or (ii) with
another investment grade counterparty, provided that the
aggregate notional amounts under all such Hedging Agreements
do not exceed 80% of Borrower's
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anticipated oil and/or gas production to be produced during
the term of such Hedging Agreements and that such Hedging
Agreements are entered into as a part of its normal business
operations as a risk management strategy and/or hedge against
changes resulting from market conditions related to the
Borrower's and its Subsidiaries' operations;
(g) Debt associated with bonds or surety obligations
required by Governmental Requirements in connection with the
operation of the Oil and Gas Properties; and
(h) Debt of the Borrower described on Schedule
9.01(h) and such other Debt of the Borrower related to the
acquisition of software and licensing rights related thereto
that does not exceed $100,000 at any one time outstanding.
(i) The Senior Indebtedness and any other Debt
arising under or otherwise in relation to the Senior Loan
Documents.
Section 9.02 Liens. Neither the Borrower nor any Subsidiary
will create, incur, assume or permit to exist any Lien on any of its Properties
(now owned or hereafter acquired), except:
(a) Liens securing the payment of any Indebtedness;
(b) Excepted Liens;
(c) Liens securing leases allowed under Section
9.01(e) but only on the Property under lease;
(d) Liens disclosed on Schedule 9.02;
(e) Any Permitted Encumbrances as described in any
Mortgage.
(f) Liens securing the Senior Indebtedness.
Section 9.03 Investments, Loans and Advances. Neither the
Borrower nor any Subsidiary will make or permit to remain outstanding any loans
or advances to or investments in any Person, except that the foregoing
restriction shall not apply to:
(a) investments, loans or advances reflected in the
Financial Statements or which are disclosed to the Lenders in
Schedule 9.03;
(b) accounts receivable arising in the ordinary
course of business;
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(c) for the Borrower only, direct obligations of the
United States or any agency thereof, or obligations guaranteed
by the United States or any agency thereof, in each case
maturing within one year from the date of creation thereof;
(d) for the Borrower only, commercial paper maturing
within one year from the date of creation thereof rated in the
highest grade by Standard & Poors Corporation or Xxxxx'x
Investors Service, Inc.;
(e) for the Borrower only, deposits maturing within
one year from the date of creation thereof with, including
certificates of deposit issued by, any Lender or any office
located in the United States, Canada, or England of any other
bank or trust company which is organized under the laws of the
United States, Canada or England or any state or province
thereof, has capital, surplus and undivided profits
aggregating at least $100,000,000.00 (as of the date of such
Lender's or bank or trust company's most recent financial
reports) and has a short term deposit rating of no lower than
A2 or P2, as such rating is set forth from time to time, by
Standard & Poors Corporation or Xxxxx'x Investors Service,
Inc., respectively;
(f) for the Borrower only, deposits in money market
funds investing exclusively in investments described in
Section 9.03(c), 9.03(d) or 9.03(e);
(g) intentionally omitted.;
(h) investments by the Borrower in direct or indirect
(through a Subsidiary to the extent permitted by Section 9.16
below) ownership interests in additional Oil and Gas
Properties and gas gathering systems, gas plants, and similar
assets related thereto;
(i) investments, distributions, loans and advances by
a Subsidiary to the Borrower; and
(j) investments, distributions, loans and advances by
the Borrower:
(a) to Xxxxxxx Exploration,
Xxxxxxx, Inc., Xxxxxxx Holdings I, LLC and/or
Xxxxxxx Holdings II, LLC to pay Federal or
State taxes owing by any of them, payroll and
payroll related taxes and other reasonable
general and administrative expenses, or
consisting of forgiveness of indebtedness;
and
(b) to Subsidiaries which are
Guarantors.
Section 9.04 Dividends, Distributions and Redemptions. The
Borrower will not declare or pay any dividend, purchase, redeem or otherwise
acquire for value any of its stock
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now or hereafter outstanding, return any capital to its stockholders or make any
distribution of its assets to its partners, except as permitted under Section
9.03(j)(a) above.
Section 9.05 Sales and Leasebacks. Neither the Borrower nor
any Subsidiary will enter into any arrangement, directly or indirectly, with any
Person whereby the Borrower or any Subsidiary shall sell or transfer any of its
Property, whether now owned or hereafter acquired, and whereby the Borrower or
any Subsidiary shall then or thereafter rent or lease as lessee such Property or
any part thereof or other Property which the Borrower or any Subsidiary intends
to use for substantially the same purpose or purposes as the Property sold or
transferred.
Section 9.06 Nature of Business. Neither the Borrower nor any
Subsidiary will allow any material change to be made in the character of its
business as an independent oil and gas exploration and production company. Among
other things, a transfer of a substantial portion of Borrower's seismic data and
Hydrocarbon Interests which do not contain identified proved Hydrocarbon
reserves (other than transfers to participants of any participation interest
earned by them in the ordinary course of Borrower's business and abandonment of
prospects) shall be considered a material change in Borrower's business.
Section 9.07 Limitation on Leases. Neither the Borrower nor
any Subsidiary will create, incur, assume or suffer to exist any obligation for
the payment of rent or hire of Property of any kind whatsoever (real or personal
including capital leases but excluding leases of Hydrocarbon Interests and the
equipment used thereon), under leases or lease agreements which would cause the
aggregate amount of all payments made by the Borrower and the Subsidiaries
pursuant to all such leases or lease agreements to exceed $2,000,000 in any
period of twelve consecutive calendar months during the life of such leases.
Section 9.08 Mergers, Etc.. The Borrower will not and will not
permit any Subsidiary to merge into or with or consolidate with any other Person
or sell, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its Property or assets to
any other Person unless the Borrower, Xxxxxxx Exploration or any Guarantor whose
Guaranty Agreement is in full force and effect is the surviving entity and no
Default exists or will be created thereby.
Section 9.09 Proceeds of Notes. The Borrower will not permit
the proceeds of the Notes to be used for any purpose other than those permitted
by Section 7.07. Neither the Borrower nor any Person acting on behalf of the
Borrower has taken or will take any action which might cause any of the Loan
Documents to violate Regulation U or X or any other regulation of the Board of
Governors of the Federal Reserve System or to violate Section 7 of the
Securities Exchange Act of 1934 or any rule or regulation thereunder, in each
case as now in effect or as the same may hereinafter be in effect.
Section 9.10 ERISA Compliance. The Borrower will not at any
time:
(a) Engage in, or permit any ERISA Affiliate to
engage in, any transaction in connection with which the
Borrower or any ERISA Affiliate could be subjected
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to either a civil penalty assessed pursuant to section 502(c),
(i) or (1) of ERISA or a tax imposed by Chapter 43 of Subtitle
D of the Code in excess of $100,000;
(b) Terminate, or permit any ERISA Affiliate to
terminate, any Plan in a manner, or take any other action with
respect to any Plan, which could reasonably be expected to
result in any liability of the Borrower or any ERISA Affiliate
to the PBGC in excess of $100,000;
(c) Fail to make, or permit any ERISA Affiliate to
fail to make, full payment when due of all amounts under the
provisions of any Plan, agreement relating thereto or
applicable law, the Borrower or any ERISA Affiliate is
required to pay as contributions thereto;
(d) Permit to exist, or allow any ERISA Affiliate to
permit to exist, any accumulated funding deficiency in excess
of $100,000 within the meaning of Section 302 of ERISA or
section 412 of the Code, whether or not waived, with respect
to any Plan;
(e) Permit, or allow any ERISA Affiliate to permit,
the actuarial present value of the benefit liabilities under
any Plan maintained by the Borrower or any ERISA Affiliate
which is regulated under Title IV of ERISA to exceed the
current value of the assets (computed on a plan termination
basis in accordance with Title IV of ERISA) of such Plan
allocable to such benefit liabilities by an amount in excess
of $100,000. The term "actuarial present value of the benefit
liabilities" shall have the meaning specified in section 4041
of ERISA;
(f) Contribute to or assume an obligation to
contribute to, or permit any ERISA Affiliate to contribute to
or assume an obligation to contribute to, any Multiemployer
Plan;
(g) Acquire, or permit any ERISA Affiliate to
acquire, an interest in any Person that causes such Person to
become an ERISA Affiliate with respect to the Borrower or any
ERISA Affiliate if such Person sponsors, maintains or
contributes to, or at any time in the six-year period
preceding such acquisition has sponsored, maintained, or
contributed to, (1) any Multiemployer Plan, or (2) any other
Plan that is subject to Title IV of ERISA under which the
actuarial present value of the benefit liabilities under such
Plan exceeds the current value of the assets (computed on a
plan termination basis in accordance with Title IV of ERISA)
of such Plan allocable to such benefit liabilities;
(h) Incur, or permit any ERISA Affiliate to incur, a
liability to or on account of a Plan under sections 515, 4062,
4063, 4064, 4201 or 4204 of ERISA which the aggregate for all
such liability exceeds $100,000;
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(i) Contribute to or assume an obligation to
contribute to, or permit any ERISA Affiliate to contribute to
or assume an obligation to contribute to, any employee welfare
benefit plan, as defined in section 3(1) of ERISA, including,
without limitation, any such plan maintained to provide
benefits to former employees of such entities, that may not be
terminated by such entities in their sole discretion at any
time without any material liability; or
(j) Amend or permit any ERISA Affiliate to amend, a
Plan resulting in an increase in current liability such that
the Borrower or any ERISA Affiliate is required to provide
security to such Plan under section 401(a)(29) of the Code.
Section 9.11 Sale or Discount of Receivables. Neither the
Borrower nor any Subsidiary will discount or sell (with or without recourse) any
of its notes receivable or accounts receivable.
Section 9.12 [INTENTIONALLY OMITTED]
Section 9.13 Sale of Oil and Gas Properties. The Borrower will
not, and will not permit any Subsidiary to, sell, assign, farm-out, convey or
otherwise transfer any Hydrocarbon Interests except for (i) the sale of
Hydrocarbons in the ordinary course of business; and (ii) the sale or transfer
of equipment that is no longer necessary for the business of the Borrower or
such Subsidiary or is replaced by equipment of at least comparable value and
use.
Section 9.14 Environmental Matters. Neither the Borrower nor
any Subsidiary will knowingly cause or permit any of its Property to be in
violation of, or knowingly do anything or permit anything to be done which will
subject any such Property to any remedial obligations under any Environmental
Laws, assuming disclosure to the applicable Governmental Authority of all
relevant facts, conditions and circumstances, if any, pertaining to such
Property where such violations or remedial obligations would have a Material
Adverse Effect.
Section 9.15 Transactions with Affiliates. Neither the
Borrower nor any Subsidiary will enter into any transaction, including, without
limitation, any purchase, sale, lease or exchange of Property or the rendering
of any service, with any Affiliate unless such transactions are otherwise not in
violation of this Agreement, are in the ordinary course of its business and are
upon fair and reasonable terms no less favorable to it than it would obtain in a
comparable arm's length transaction with a Person not an Affiliate.
Section 9.16 Subsidiaries. The Borrower will not, and will not
permit any Subsidiary to, create any additional Subsidiaries or make any
additional investment in a Subsidiary. All Subsidiaries together at no time
shall own or hold Oil and Gas Properties having proved reserves with a net
discounted present value calculated in the same manner as in the most recent
Reserve Report in excess of 10% of the total net discounted present value of
Proved Reserves of the Borrower and its Subsidiaries as reflected in said
Reserve Report (plus such Subsidiaries' proved reserves not included in such
Reserve Report). No Subsidiary may enter into any agreement other than the Loan
Documents or the Senior Loan Documents which limits upstream transfer of
dividends to the Borrower No assets may be transferred to a Subsidiary which is
not a Guarantor.
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Section 9.17 Negative Pledge Agreements. The Borrower will not
and will not permit any Subsidiary to create, incur, assume or suffer to exist
any contract, agreement or understanding (other than the Loan Documents and the
Senior Loan Documents) which in any way prohibits or restricts (i) the granting,
conveying, creation or imposition of any Lien on any of its Property or (ii) any
Subsidiary from paying dividends or making any other distribution to the
Borrower or which requires the consent of or notice to other Persons in
connection with any of the foregoing.
Section 9.18 Gas Imbalances, Take-or-Pay or Other Prepayments.
The Borrower will not allow gas imbalances, take-or-pay or other prepayments
with respect to the Hydrocarbon Interests of the Borrower and its Subsidiaries
which would require the Borrower or its Subsidiaries to deliver five percent
(5%) or more of the Borrower's and its Subsidiaries' Hydrocarbons produced on a
monthly basis from the Hydrocarbon Interests at some future time without then or
thereafter receiving full payment therefor.
Section 9.19 Borrower as Operator. The Borrower will not and
will not permit any of the Subsidiaries to voluntarily resign as operator of
more than twenty-five percent (25%) of their currently operated Oil and Gas
Properties unless the new operator is acceptable to the Senior Agent.
Section 9.20 Restrictions While Outstanding Indebtedness
Exceeds the Borrowing Base. The Borrower covenants and agrees that until the
Covenant Release Date without prior written consent of the Majority Lenders:
(a) The Borrower will not permit Net Seismic and Land
Expenditures to exceed three million dollars (the NSLE Limit).
Beginning December 31, 2000, the NSLE Limit will increase at
the beginning of each succeeding quarter of a year by an
amount equal to 15% of the total projected capital
expenditures for such quarter. This limitation in this
subsection (a)shall only be in place at any time that
Indebtedness at the end of the quarter plus actual Net Seismic
and Land Expenditures for such quarter divided by such
quarter's EBITDA minus capitalized general and administrative
expenses is greater than 16:1 (or 4:1 on an annualized basis).
(b) For so long as SCI remains a "SCI Lender", as
such term is defined in the Senior Credit Agreement, Borrower
will not permit its capital expenditures to deviate materially
from the then current CAPEX Plan under the Senior Credit
Agreement, with the materiality of any such deviation to be
determined by the SCI Lenders in their sole but reasonable
discretion and at any point when SCI does not remain an SCI
Lender, the Borrower will not permit its capital expenditures
to deviate materially from the then current CAPEX Plan
submitted
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hereunder, with the materiality of any such deviation to be
determined by the Majority Lenders, in their sole but
reasonable discretion.
(c) The Borrower will not allow growth in general and
administrative expenses to exceed the amount which is
reasonable and necessary to retain key employees and to
execute the Borrower's business plan to maximize growth in
resources, net assets, cash flow and equity value.
(d) Borrower will not permit any new xxxxx to be
spudded for which the weekly cash budget indicates that there
will be insufficient working capital to complete, after taking
into account availability under this Agreement and the Senior
Credit Agreement.
Section 9.21 Debt to RAPRV. Upon receipt of the reports
required by Section 8.07 and such other reports, data and supplemental
information as may from time to time be reasonably requested by the Agent (the
"Engineering Reports"), the Agent will determine or redetermine, as appropriate,
the RAPRV 10% and the RAPRV 7%. The Agent shall propose to the Lenders the RAPRV
10% and the RAPRV 7% within ten (10) Business Days following receipt by the
Agent and the Lenders of the Engineering Reports in a timely and complete
manner.
(a) The Borrower will not permit RAPRV 7% to fall
below a value of (i) from January 1, 2001 to July 30, 2001,
$62,500,000; (ii) from July 31, 2001 to January 30, 2002,
$67,500,000; and (iii) on and after January 31, 2002, the
amount of the Senior Indebtedness actually outstanding under
the Senior Credit Agreement, excluding any obligations of any
kind under any Hedging Agreement.
(b) If the "Aggregate Commitments" under the Senior
Credit Agreement, determined without regard to any Debt
arising under or in relation to Hedging Agreements, exceed
$75,000,000, the Borrower will not permit RAPRV 10% to fall
below the amount of the Senior Indebtedness actually
outstanding under the Senior Credit Agreement, excluding any
obligations of any kind under any Hedging Agreement.
ARTICLE 10
EVENTS OF DEFAULT; REMEDIES
Section 10.01 Events of Default. One or more of the following
events shall constitute an "Event of Default":
(a) the Borrower shall default in the payment or
prepayment when due of any principal of or interest on any
Loan or any fees or other amount payable by it hereunder or
under any other Loan Document and such default, other than a
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default of a payment or prepayment of principal (which shall
have no cure period), shall continue unremedied for a period
of three (3) Business Days; or
(b) the Borrower or any Guarantor shall default in
the payment when due of any principal of or interest on any of
its other Debt aggregating $1,000,000 or more, or any event
specified in any note, agreement, indenture or other document
evidencing or relating to any such Debt shall occur if the
effect of such event is to cause, or (with the giving of any
notice or the lapse of time or both) to permit the holder or
holders of such Debt (or a trustee or agent on behalf of such
holder or holders) to cause, such Debt to become due prior to
its stated maturity; or
(c) any representation, warranty, or certification
made or deemed made herein or in any other Loan Document by
the Borrower or any Guarantor, or any certificate furnished by
the Borrower or any Guarantor to any Lender or the Agent
pursuant to the provisions hereof or any Loan Document, shall
prove to have been false or misleading as of the time made or
furnished in any material and adverse respect; or
(d) the Borrower shall default in the performance of
any of its obligations under Article IX or Section 8.01(c) of
this Agreement; or the Borrower shall default in the
performance of any of its obligations under any other Article
of the Agreement or under or any other Loan Document to which
it is a party (other than the payment of amounts due which
shall be governed by Section 10.01(a)) and such default shall
continue unremedied for a period of thirty (30) days after
notice thereof to the Borrower by the Agent or any of the
Lenders (through the Agent); or
(e) any Guarantor shall default in the performance of
its obligation to pay the Liabilities (as defined therein) at
maturity or, with respect to Xxxxxxx Exploration, performance
of any covenant under Section 5.1(i) or Section 5.2 of its
Guaranty Agreement; or any Guarantor shall default in the
performance of any of its other obligations under its Guaranty
Agreement and such default shall continue unremedied for a
period of thirty (30) days after notice thereof to the
Guarantor by the Agent or the any of the Lenders (through the
Agent); or
(f) the Borrower shall admit in writing its inability
to, or be generally unable to, pay its debts as such debts
become due; or
(g) the Borrower shall (i) apply for or consent to
the appointment of, or the taking of possession by, a
receiver, custodian, trustee or liquidator of itself or of all
or a substantial part of its property, (ii) make a general
assignment for the benefit of its creditors, (iii) commence a
voluntary case under the Federal Bankruptcy Code (as now or
hereafter in effect), (iv) tile a petition seeking to take
advantage of any other law relating to bankruptcy, insolvency,
reorganization,
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winding-up, liquidation or composition or readjustment of
debts, (v) fail to controvert in a timely and appropriate
manner, or acquiesce in writing to, any petition filed against
it in an involuntary case under the Federal Bankruptcy Code,
or (vi) take any corporate action for the purpose of effecting
any of the foregoing; or
(h) a proceeding or case shall be commenced, without
the application or consent of the Borrower, in any court of
competent jurisdiction, seeking (i) its liquidation,
reorganization, dissolution or winding-up, or the composition
or readjustment of its debts, (ii) the appointment of a
trustee, receiver, custodian, liquidator or the like of the
Borrower of all or any substantial part of its assets, or
(iii) similar relief in respect of the Borrower under any law
relating to bankruptcy, insolvency, reorganization,
winding-up, or composition or adjustment of debts, and such
proceeding or case shall continue undismissed, or an order,
judgment or decree approving or ordering any of the foregoing
shall be entered and continue unstayed and in effect, for a
period of 60 days; or an order for relief against the Borrower
shall be entered in an involuntary case under the Federal
Bankruptcy Code; or
(i) a judgment or judgments for the payment of money
in excess of $1,000,000 in the aggregate shall be rendered by
a court against the Borrower and the same shall not be
discharged (or provision shall not be made for such
discharge), or a stay of execution thereof shall not be
procured, within thirty (30) days from the date of entry
thereof and the Borrower shall not, within said period of 30
days, or such longer period during which execution of the same
shall have been stayed, appeal therefrom and cause the
execution thereof to be stayed during such appeal; or
(j) the Loan Documents after delivery thereof shall
for any reason, except to the extent permitted by the terms
thereof, cease to be in full force and effect and valid,
binding and enforceable in all material respects in accordance
with their terms, or cease in any material respect to create a
valid and perfected Lien of the priority required thereby on
any of the collateral purported to be covered thereby, except
to the extent permitted by the terms of this Agreement, or the
Borrower or any Guarantor shall so state in writing; or
(k) any Guarantor discontinues its usual business or
suffers to exist any material change in its ownership, control
or management; or
(l) any Guarantor takes, suffers or permits to exist
any of the events or conditions referred to in paragraphs (f),
(g), (h) or (i) hereof or if any guaranty agreement related
thereto shall for any reason cease to be valid and binding on
such Guarantor in all material respects or if such Guarantor
shall so state in writing; or
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(m) Xxxxxxx Exploration ceases to own (directly or
indirectly) 100% of the Borrower; or
(n) the Borrower ceases to be the primary operating
entity for Xxxxxxx Exploration and its Subsidiaries and the
Borrower and its Subsidiaries cease to be the only Xxxxxxx
Exploration entities owning Oil and Gas Properties.
Section 10.02 Remedies. Subject to any contrary or other
provisions of the Subordination Agreement:
(a) At any time during the continuance of an Event of
Default other than one referred to in clauses (f), (g) or (h)
of Section 10.01 or in clause (l) to the extent it relates to
clauses (f), (g) or (h), the Agent, upon request of the
Majority Lenders, shall, by notice to the Borrower, cancel the
Commitments and/or declare the principal amount then
outstanding of, and the accrued interest on, the Loans and all
other amounts payable by the Borrower hereunder and under the
Notes to be forthwith due and payable, whereupon such amounts
shall be immediately due and payable without presentment,
demand, protest, notice of intent to accelerate, notice of
acceleration or other formalities of any kind, all of which
are hereby expressly waived by the Borrower. Once an
acceleration has been declared pursuant to the foregoing, no
subsequent cure of the Event of Default shall negate such
acceleration or the rights and remedies of the Agent and the
Lenders with respect thereto without the express written
consent of all of the Lenders.
(b) In the case of the occurrence of an Event of
Default referred to in clauses (f), (g) or (h) of Section
10.01 or in clause (l) to the extent it relates to clauses
(f), (g) or (h), the Commitments shall be automatically
canceled and the principal amount then outstanding of, and the
accrued interest on, the Loans and all other amounts payable
by the Borrower hereunder and under the Notes shall become
automatically immediately due and payable without presentment,
demand, protest, notice of intent to accelerate, notice of
acceleration or other formalities of any kind, all of which
are hereby expressly waived by the Borrower.
(c) All proceeds received after maturity of the
Notes, whether by acceleration or otherwise shall be applied
first to reimbursement of expenses and indemnities provided
for in the Loan Documents; second to accrued interest on the
Notes; third to fees of the Lenders; fourth pro rata to
principal outstanding on the Notes and other Indebtedness of
the Lenders; and any excess shall be paid to the Borrower or
as otherwise required by any Governmental Requirement.
Section 10.03 Production and Proceeds. Notwithstanding that,
by the terms of the various Mortgages and other Loan Documents, the Borrower and
any other mortgagors are and will be assigning to Agent all of the Hydrocarbons
covered thereby and all of the products
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thereof and proceeds and revenues attributable thereto and all payments in lieu
of such Hydrocarbons (in this section collectively called the "Production and
Proceeds"), so long as no Default has occurred and is continuing (a) the
Borrower and such mortgagors may continue to receive all such Production and
Proceeds, subject, however, to the Liens created under the Mortgages and other
Loan Documents, and (b) upon the Borrower's request the Agent will confirm to
any purchasers of Hydrocarbons, title examiners, or other Persons that the
Borrower and such mortgagors continue to have the right so to receive such
Production and Proceeds until notification by the Agent of the occurrence of a
Default. During the continuance of a Default, however, the Agent may exercise
its rights and remedies granted under the Mortgages and the other Loan
Documents, including the rights and remedies granted under the Mortgages and the
other Loan Documents, including the right to obtain possession of all Production
and Proceeds then held by the Borrower and such mortgagors and to receive
directly from the purchasers of Hydrocarbons all other Production Proceeds,
subject in each instance to the terms of the Subordination Agreement. In no case
shall any failure by the Agent to collect directly any such Production and
Proceeds constitute in any way a release of any of its rights under the Loan
Documents.
ARTICLE 11
THE AGENT
Section 11.01 Appointment, Powers and Immunities. Each Lender
hereby irrevocably appoints and authorizes the Agent to act as its agent
hereunder and under the other Loan Documents with such powers as are
specifically delegated to the Agent by the terms of this Agreement and the other
Loan Documents, together with such other powers as are reasonably incidental
thereto. The Agent (which term as used in this sentence and in Section 11.05 and
the first sentence of Section 11.06 shall include reference to its Affiliates
and its and its Affiliates' officers, directors, employees, attorneys,
accountants, experts and agents): (i) shall have no duties or responsibilities
except those expressly set forth in the Loan Documents, and shall not by reason
of the Loan Documents be a trustee or fiduciary for any Lender; (ii) makes no
representation or warranty to any Lender and shall not be responsible to the
Lenders for any recitals, statements, representations or warranties contained in
this Agreement, or in any certificate or other document referred to or provided
for in, or received by any of them under, this Agreement, or for the value,
validity, effectiveness, genuineness, execution, effectiveness, legality,
enforceability or sufficiency of this Agreement, any Note or any other document
referred to or provided for herein or for any failure by the Borrower or any
other Person (other than the Agent) to perform any of its obligations hereunder
or thereunder or for the existence, value, perfection or priority of any
collateral security or the financial or other condition of the Borrower, the
Subsidiaries or any other obligor or guarantor; (iii) except pursuant to Section
11.07 shall not be required to initiate or conduct any litigation or collection
proceedings hereunder; and (IV) SHALL NOT BE RESPONSIBLE FOR ANY ACTION TAKEN OR
OMITTED TO BE TAKEN BY IT HEREUNDER OR UNDER ANY OTHER DOCUMENT OR INSTRUMENT
REFERRED TO OR PROVIDED FOR HEREIN OR IN CONNECTION HEREWITH INCLUDING ITS OWN
ORDINARY NEGLIGENCE, EXCEPT FOR ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
The Agent may employ agents, accountants, attorneys and
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experts and shall not be responsible for the negligence or misconduct of any
such agents, accountants, attorneys or experts selected by it in good faith or
any action taken or omitted to be taken in good faith by it in accordance with
the advice of such agents, accountants, attorneys or experts. The Agent may deem
and treat the payee of any Note as the holder thereof for all purposes hereof
unless and until a written notice of the assignment or transfer thereof
permitted hereunder shall have been filed with the Agent. The Agent is
authorized to release any collateral that is permitted to be sold or released
pursuant to the terms of the Loan Documents.
Section 11.02 Reliance by Agent. The Agent shall be entitled
to rely upon any certification, notice or other communication (including any
thereof by telephone, telex, telecopier, telegram or cable) believed by it to be
genuine and correct and to have been signed or sent by or on behalf of the
proper Person or Persons, and upon advice and statements of legal counsel,
independent accountants and other experts selected by the Agent.
Section 11.03 Defaults. The Agent shall not be deemed to have
knowledge of the occurrence of a Default (other than the non-payment of
principal of or interest on Loans or of fees) unless the Agent has received
notice from a Lender or the Borrower specifying such Default and stating that
such notice is a "Notice of Default." In the event that the Agent receives such
a notice of the occurrence of a Default, the Agent shall give prompt notice
thereof to the Lenders. In the event of a payment Default, the Agent shall give
each Lender prompt notice of each such payment Default.
Section 11.04 Rights as a Lender. With respect to its
Commitments and the Loans made by it, Agent shall have the same rights and
powers hereunder as any other Lender and may exercise the same as though it were
not acting as the Agent, and the term "Lender" or "Lenders" shall, unless the
context otherwise indicates, include the Agent in its individual capacity. Agent
and its Affiliates may (without having to account therefor to any Lender) accept
deposits from, lend money to and generally engage in any kind of banking, trust
or other business with the Borrower (and any of its Affiliates) as if it were
not acting as the Agent, and Agent and its Affiliates may accept fees and other
consideration from the Borrower for services in connection with this Agreement
or otherwise without having to account for the same to the Lenders.
Section 11.05 INDEMNIFICATION. THE LENDERS AGREE TO INDEMNIFY
THE AGENT RATABLY IN ACCORDANCE WITH THEIR PERCENTAGE SHARES FOR THE INDEMNITY
MATTERS AS DESCRIBED IN SECTION 12.03 TO THE EXTENT NOT INDEMNIFIED OR
REIMBURSED BY THE BORROWER UNDER SECTION 12.03, BUT WITHOUT LIMITING THE
OBLIGATIONS OF THE BORROWER UNDER SAID SECTION 12.03 AND FOR ANY AND ALL OTHER
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS,
COSTS, EXPENSES OR DISBURSEMENTS OF ANY KIND AND NATURE WHATSOEVER WHICH MAY BE
IMPOSED ON, INCURRED BY OR ASSERTED AGAINST THE AGENT IN ANY WAY RELATING TO OR
ARISING OUT OF: (I) THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR ANY OTHER
DOCUMENTS
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CONTEMPLATED BY OR REFERRED TO HEREIN OR THE TRANSACTIONS CONTEMPLATED HEREBY,
BUT EXCLUDING, UNLESS A DEFAULT HAS OCCURRED AND IS CONTINUING, NORMAL
ADMINISTRATIVE COSTS AND EXPENSES INCIDENT TO THE PERFORMANCE OF ITS AGENCY
DUTIES HEREUNDER OR (II) THE ENFORCEMENT OF ANY OF THE TERMS OF THIS AGREEMENT,
ANY OTHER LOAN DOCUMENT OR OF ANY SUCH OTHER DOCUMENTS; WHETHER OR NOT ANY OF
THE FOREGOING SPECIFIED IN THIS SECTION 11.05 ARISES FROM THE SOLE OR CONCURRENT
NEGLIGENCE OF THE AGENT, PROVIDED THAT NO LENDER SHALL BE LIABLE FOR ANY OF THE
FOREGOING TO THE EXTENT THEY ARISE FROM THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF THE AGENT.
Section 11.06 Non-Reliance on Agent and other Lenders. Each
Lender acknowledges and agrees that it has, independently and without reliance
on the Agent or any other Lender, and based on such documents and information as
it has deemed appropriate, made its own credit analysis of the Borrower and its
decision to enter into this Agreement, and that it will, independently and
without reliance upon the Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own analysis and decisions in taking or not taking action under this Agreement.
The Agent shall not be required to keep itself informed as to the performance or
observance by the Borrower of the Loan Documents or any other document referred
to or provided for herein or to inspect the properties or books of the Borrower.
Except for notices, reports and other documents and information expressly
required to be furnished to the Lenders by the Agent hereunder, the Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the affairs, financial condition or business of the
Borrower (or any of its Affiliates) which may come into the possession of the
Agent or any of its Affiliates. In this regard, each Lender acknowledges that
Xxxxxx & Xxxxxx is acting in this transaction as special counsel to the Agent
only, except to the extent otherwise expressly stated in any legal opinion or
any Loan Document. Each Lender will consult with its own legal counsel to the
extent that it deems necessary in connection with the Loan Documents and the
matters contemplated therein.
Section 11.07 Action by Agent. Except for action or other
matters expressly required of the Agent hereunder, the Agent shall in all cases
be fully justified in failing or refusing to act hereunder unless it shall (i)
receive written instructions from the Majority Lenders (or all of the Lenders as
expressly required by Section 12.04) specifying the action to be taken, and (ii)
be indemnified to its satisfaction by the Lenders against any and all liability
and expenses which may be incurred by it by reason of taking or continuing to
take any such action. The instructions of the Majority Lenders (or all of the
Lenders as expressly required by Section 12.04) and any action taken or failure
to act pursuant thereto by the Agent shall be binding on all of the Lenders. If
a Default has occurred and is continuing, the Agent shall take such action with
respect to such Default as shall be directed by the Majority Lenders (or all of
the Lenders as required by Section 12.04) in the written instructions (with
indemnities) described in this Section 11.07, provided that, unless and until
the Agent shall have received such directions, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default as it shall deem advisable in the best interests of the
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Lenders. In no event, however, shall the Agent be required to take any action
which exposes the Agent to personal liability or which is contrary to this
Agreement and the other Loan Documents or applicable law.
Section 11.08 Resignation or Removal of Agent. Subject to the
appointment and acceptance of a successor Agent as provided below, the Agent may
resign at any time by giving notice thereof to the Lenders and the Borrower, and
the Agent may be removed at any time with or without cause by the Majority
Lenders. Upon any such resignation or removal, the Majority Lenders shall have
the right to appoint a successor Agent. If no successor Agent shall have been so
appointed by the Majority Lenders and shall have accepted such appointment
within thirty (30) days after the retiring Agent's giving of notice of
resignation or the Majority Lenders' removal of the retiring Agent, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent from
among the Lenders. Upon the acceptance of such appointment hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation or removal hereunder as Agent,
the provisions of this Article XI and Section 12.03 shall continue in effect for
its benefit in respect of any actions taken or omitted to be taken by it while
it was acting as the Agent.
ARTICLE 12
MISCELLANEOUS
Section 12.01 Waiver. No failure on the part of the Agent or
any Lender to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power or privilege under any of the Loan Documents shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege under any of the Loan Documents preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
Section 12.02 Notices. All notices and other communications
provided for herein and in the other Loan Documents (including, without
limitation, any modifications of, or waivers or consents under, this Agreement
or the other Loan Documents) shall be given or made by telex, telecopy, courier
or U.S. Mail or in writing and telexed, telecopied, mailed or delivered to the
intended recipient at the "Address for Notices" specified below its name on the
signature pages hereof or in the Loan Documents or, as to any party, at such
other address as shall be designated by such party in a notice to each other
party. Except as otherwise provided in this Agreement or in the other Loan
Documents, all such communications shall be deemed to have been duly given when
transmitted, if transmitted before 1:00 p.m. Houston time on a Business Day
(otherwise on the next succeeding Business Day) by telex or telecopier and
evidence or confirmation of receipt is obtained, or personally delivered or, in
the case of a mailed notice, three (3) Business Days after the date deposited in
the mails, postage prepaid, in each case given or addressed as aforesaid.
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Section 12.03 Payment of Expenses, Indemnities, etc. The
Borrower agrees:
(a) whether or not the transactions hereby
contemplated are consummated, to pay all reasonable expenses
of the Agent in the administration (both before and after the
execution hereof and including advice of counsel as to the
rights and duties of the Agent and the Lenders with respect
thereto) of, and in connection with the negotiation,
syndication, investigation, preparation, execution and
delivery of, recording or filing of, preservation of rights
under, enforcement of, and refinancing, renegotiation or
restructuring of, the Loan Documents and any amendment, waiver
or consent relating thereto (including, without limitation,
the reasonable fees and disbursements of counsel and other
outside consultants for the Agent and, in the case of
enforcement, the reasonable fees and disbursements of counsel
for the Agent and any of the Lenders); and promptly reimburse
the Agent for all amounts expended, advanced or incurred by
the Agent or the Lenders to satisfy any obligation of the
Borrower under this Agreement or any other Loan Document,
including without limitation, all costs and expenses of
foreclosure;
(b) TO INDEMNIFY THE AGENT AND EACH LENDER AND EACH
OF THEIR AFFILIATES AND EACH OF THEIR OFFICERS, DIRECTORS,
EMPLOYEES, REPRESENTATIVES, AGENTS, ATTORNEYS, ACCOUNTANTS AND
EXPERTS ("INDEMNIFIED PARTIES") FROM, HOLD EACH OF THEM
HARMLESS AGAINST AND PROMPTLY UPON DEMAND PAY OR REIMBURSE
EACH OF THEM FOR, THE INDEMNITY MATTERS WHICH MAY BE INCURRED
BY OR ASSERTED AGAINST OR INVOLVE ANY OF THEM (WHETHER OR NOT
ANY OF THEM IS DESIGNATED A PARTY THERETO) AS A RESULT OF,
ARISING OUT OF OR IN ANY WAY RELATED TO (I) ANY ACTUAL OR
PROPOSED USE BY THE BORROWER OF THE PROCEEDS OF ANY OF THE
LOANS, (II) THE EXECUTION, DELIVERY AND PERFORMANCE OF THE
LOAN DOCUMENTS, (III) THE OPERATIONS OF THE BUSINESS OF THE
BORROWER AND THE SUBSIDIARIES, (IV) THE FAILURE OF THE
BORROWER OR ANY GUARANTOR TO COMPLY WITH THE TERMS OF ANY
OTHER LOAN DOCUMENT OR THIS AGREEMENT, OR WITH ANY
GOVERNMENTAL REQUIREMENT, (V) ANY INACCURACY OF ANY
REPRESENTATION OR ANY BREACH OF ANY WARRANTY OF THE BORROWER
OR ANY GUARANTOR SET FORTH IN ANY OF THE LOAN DOCUMENTS, (VI)
ANY ASSERTION THAT THE LENDERS WERE NOT ENTITLED TO RECEIVE
THE PROCEEDS RECEIVED PURSUANT TO THE LOAN DOCUMENTS OR (VII)
ANY OTHER ASPECT OF THE LOAN DOCUMENTS, INCLUDING, WITHOUT
LIMITATION, THE REASONABLE FEES AND DISBURSEMENTS OF COUNSEL
AND ALL OTHER REASONABLE EXPENSES INCURRED IN CONNECTION WITH
INVESTIGATING,
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DEFENDING OR PREPARING TO DEFEND ANY SUCH ACTION, SUIT,
PROCEEDING (INCLUDING ANY INVESTIGATIONS, LITIGATION OR
INQUIRIES) OR CLAIM AND INCLUDING ALL INDEMNITY MATTERS
ARISING BY REASON OF THE ORDINARY NEGLIGENCE OF ANY
INDEMNIFIED PARTY, BUT EXCLUDING ALL INDEMNITY MATTERS ARISING
SOLELY BY REASON OF CLAIMS BETWEEN THE LENDERS OR ANY LENDER
AND THE AGENT OR A LENDER'S SHAREHOLDERS AGAINST THE AGENT OR
LENDER OR BY REASON OF THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT ON THE PART OF ANY INDEMNIFIED PARTY; AND
(c) TO INDEMNIFY AND HOLD HARMLESS FROM TIME TO TIME
THE INDEMNIFIED PARTY FROM AND AGAINST ANY AND ALL LOSSES,
CLAIMS, COST RECOVERY ACTIONS, ADMINISTRATIVE ORDERS OR
PROCEEDINGS, DAMAGES AND LIABILITIES TO WHICH ANY SUCH PERSON
MAY BECOME SUBJECT (I) UNDER ANY ENVIRONMENTAL LAW APPLICABLE
TO THE BORROWER OR ANY OF ITS PROPERTIES, INCLUDING WITHOUT
LIMITATION, THE TREATMENT OR DISPOSAL OF HAZARDOUS SUBSTANCES
ON ANY OF THEIR PROPERTIES, (II) AS A RESULT OF THE BREACH OR
NONCOMPLIANCE BY THE BORROWER WITH ANY ENVIRONMENTAL LAW
APPLICABLE TO THE BORROWER, (III) DUE TO PAST OWNERSHIP BY THE
BORROWER OF ANY OF ITS PROPERTIES OR PAST ACTIVITY ON ANY OF
ITS PROPERTIES WHICH, THOUGH LAWFUL AND FULLY PERMISSIBLE AT
THE TIME, RESULTS IN PRESENT LIABILITY, (IV) THE PRESENCE,
USE, RELEASE, STORAGE, TREATMENT OR DISPOSAL OF HAZARDOUS
SUBSTANCES ON OR AT ANY OF THE PROPERTIES OWNED OR OPERATED BY
THE BORROWER OR (V) ANY OTHER ENVIRONMENTAL, HEALTH OR SAFETY
CONDITION IN CONNECTION WITH THE LOAN DOCUMENTS, PROVIDED,
HOWEVER, NO INDEMNITY SHALL BE AFFORDED UNDER THIS SECTION
12.03(c) IN RESPECT OF ANY PROPERTY FOR ANY -------- -------
OCCURRENCE ARISING FROM THE ACTS OR OMISSIONS OF THE AGENT OR
ANY LENDER DURING THE PERIOD AFTER WHICH SUCH PERSON, ITS
SUCCESSORS OR ASSIGNS, OR THEIR AGENTS OR REPRESENTATIVES,
SHALL HAVE OBTAINED POSSESSION OF SUCH PROPERTY (WHETHER BY
FORECLOSURE OR DEED IN LIEU OF FORECLOSURE, AS
MORTGAGEE-IN-POSSESSION OR OTHERWISE).
(d) No Indemnified Party may settle any claim to be
indemnified without the consent of the indemnitor, such
consent not to be unreasonably withheld; provided, that the
indemnitor may not reasonably withhold consent to any
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settlement that an Indemnified Party proposes, if the
indemnitor does not have the financial ability to pay all its
obligations outstanding and asserted against the indemnitor at
that time, including, without limitation, the maximum
potential claims against the Indemnified Party to be
indemnified pursuant to this Section 12.03.
(e) In the case of any indemnification hereunder, the
Agent or Lender, as appropriate shall give notice to the
Borrower of any such claim or demand being made against the
Indemnified Party and the Borrower shall have the
non-exclusive right to join in the defense against any such
claim or demand provided that if the Borrower provides a
defense, the Indemnified Party shall bear its own cost of
defense unless there is a conflict between the Borrower and
such Indemnified Party.
(f) THE FOREGOING INDEMNITIES SHALL EXTEND TO THE
INDEMNIFIED PARTIES NOTWITHSTANDING THE SOLE OR CONCURRENT
NEGLIGENCE OF EVERY KIND OR CHARACTER WHATSOEVER, WHETHER
ACTIVE OR PASSIVE, WHETHER AN AFFIRMATIVE ACT OR AN OMISSION,
INCLUDING WITHOUT LIMITATION, ALL TYPES OF NEGLIGENT CONDUCT
IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF ONE OR MORE
OF THE INDEMNIFIED PARTIES OR BY REASON OF STRICT LIABILITY
IMPOSED WITHOUT FAULT ON ANY ONE OR MORE OF THE INDEMNIFIED
PARTIES. TO THE EXTENT THAT AN INDEMNIFIED PARTY IS FOUND TO
HAVE COMMITTED AN ACT OF GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT, THIS CONTRACTUAL OBLIGATION OF INDEMNIFICATION
SHALL CONTINUE BUT SHALL ONLY EXTEND TO THE PORTION OF THE
CLAIM THAT IS DEEMED TO HAVE OCCURRED BY REASON OF EVENTS
OTHER THAN THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH
INDEMNIFIED PARTY.
(g) The Borrower's obligations under this Section
12.03 shall survive any termination of this Agreement and the
payment of the Notes and shall continue thereafter in full
force and effect.
(h) The Borrower shall pay any amounts due under this
Section 12.03 within thirty (30) days of the receipt by the
Borrower of notice of the amount due.
Section 12.04 Amendments, Etc. Any provision of this Agreement
or any other Loan Document may be amended, modified or waived with the
Borrower's and the Majority Lenders' written consent; provided that (i) no
amendment, modification or waiver which extends the final maturity of the Loans,
increases the Aggregate Maximum Credit Amounts, forgives the principal amount of
any Indebtedness outstanding under this Agreement, releases any guarantor
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of the Indebtedness or releases all or substantially all of the collateral,
reduces the interest rate applicable to the Loans or the fees payable to the
Lenders generally, affects Section 2.03(a), this Section 12.04 or Section
12.06(a) or modifies the definition of "Majority Lenders" shall be effective
without consent of all Lenders; (ii) no amendment, modification or waiver which
increases the Maximum Credit Amount of any Lender shall be effective without the
consent of such Lender; and (iii) no amendment, modification or waiver which
modifies the rights, duties or obligations of the Agent shall be effective
without the consent of the Agent.
Section 12.05 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
Section 12.06 Assignments and Participations
(a) The Borrower may not assign its rights or
obligations hereunder or under the Notes without the prior
consent of all of the Lenders and the Agent.
(b) Any Lender may sell, assign, transfer or
negotiate to one or more other lenders, commercial banks,
insurance companies, other financial institutions or any other
Person all or any portion of its rights and obligations
hereunder pursuant to an Assignment Agreement substantially in
the form of Exhibit E hereto ("Assignment"), and acceptance of
such Assignment by any assignee shall constitute the agreement
of such assignee to be bound by the terms of this Agreement
applicable to the assigning Lender.
(c) Promptly after receiving evidence of an
assignment under Section 12.06(b), the Agent shall send a
notice of such assignment to the Borrower. Upon receipt of
such notice and of the Notes that are the subject thereof, the
Borrower will, at its own expense, execute and deliver new
Notes to the assignor and/or assignee, as appropriate, in
accordance with their respective interests. Upon receipt of
such executed Assignment and of the Notes which are the
subject thereof, the Borrower will, at its own expense,
execute and deliver new Notes to the assignor and/or assignee,
as appropriate, in accordance with their respective interests
as they appear. Upon the effectiveness of any assignment
pursuant to Section 12.06(b) the assignee will become a
"Lender," if not already a "Lender," for all purposes of this
Agreement and the other Loan Documents. The assignor shall be
relieved of its obligations hereunder to the extent of such
assignment (and if the assigning Lender no longer holds any
rights or obligations under this Agreement, such assigning
Lender shall cease to be a "Lender" hereunder except that its
rights under Sections 4.06, 5.01, 5.05 and 12.03 shall not be
affected). The Agent will prepare on the last Business Day of
each month during which an assignment has become effective
pursuant to Section 12.06(b) a new Annex I giving effect to
all such assignments effected
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during such month, and will promptly provide the same to the
Borrower and each of the Lenders.
(d) Each Lender may transfer, grant or assign
participations in all or any part of such Lender's interests
hereunder pursuant to this Section 12.06(d) to any Person,
provided that: (i) such Lender shall remain a "Lender" for all
purposes of this Agreement and the transferee of such
participation shall not constitute a "Lender" hereunder; and
(ii) no participant under any such participation shall have
rights to approve any amendment to or waiver of any of the
Loan Documents except to the extent such amendment or waiver
would (x) forgive any principal owing on any Indebtedness or
extend the final maturity of the Loans, (y) reduce the
interest rate (other than as a result of waiving the
applicability of any post-default increases in interest rates)
or fees applicable to any of the Commitments or Loans in which
such participant is participating, or postpone the payment of
any thereof, or (z) release any guarantor of the Indebtedness
or release all or substantially all of the collateral (except
as provided in the Loan Documents) supporting any of the
Commitments or Loans in which such participant is
participating. In the case of any such participation, the
participant shall not have any rights under this Agreement or
any of the other Loan Documents (the participant's rights
against the granting Lender in respect of such participation
to be those set forth in the agreement with such Lender
creating such participation), and all amounts payable by the
Borrower hereunder shall be determined as if such Lender had
not sold such participation, provided that such participant
shall be entitled to receive additional amounts under Article
V on the same basis as if it were a Lender and be indemnified
under Section 12.03 as if it were a Lender. In addition, each
agreement creating any participation must include an agreement
by the participant to be bound by the provisions of Section
12.15.
(e) The Lenders may furnish any information
concerning the Borrower in the possession of the Lenders from
time to time to assignees and participants (including
prospective assignees and participants; provided that, such
Persons agree to be bound by the provisions of Section 12.15
hereof.
(f) Notwithstanding anything in this Section 12.06 to
the contrary, any Lender may assign and pledge its Note to any
Federal Reserve Bank or the United States Treasury as
collateral security pursuant to Regulation A of the Board of
Governors of the Federal Reserve System and any operating
circular issued by such Federal Reserve System and/or such
Federal Reserve Bank. No such assignment and/or pledge shall
release the assigning and/or pledging Lender from its
obligations hereunder.
(g) Notwithstanding any other provisions of this
Section 12.06, no transfer or assignment of the interests or
obligations of any Lender or any grant of
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participations therein shall be permitted if such transfer,
assignment or grant would require the Borrower to file a
registration statement with the SEC or to qualify the Loans
under the "Blue Sky" laws of any state.
Section 12.07 Invalidity. In the event that any one or more of
the provisions contained in any of the Loan Documents shall, for any reason, be
held invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision of the
Notes, this Agreement or any other Loan Document.
Section 12.08 Counterparts. This Agreement may be executed in
any number of counterparts, all of which taken together shall constitute one and
the same instrument and any of the parties hereto may execute this Agreement by
signing any such counterpart.
Section 12.09 References. The words "herein," "hereof,"
"hereunder" and other words of similar import when used in this Agreement refer
to this Agreement as a whole, and not to any particular article, section or
subsection. Any reference herein to a Section shall be deemed to refer to the
applicable Section of this Agreement unless otherwise stated herein. Any
reference herein to an exhibit or schedule shall be deemed to refer to the
applicable exhibit or schedule attached hereto unless otherwise stated herein.
Section 12.10 Survival. The obligations of the parties under
Section 4.06, Article V, and Sections 11.05 and 12.03 shall survive the
repayment of the Loans and the termination of the Commitments. To the extent
that any payments on the Indebtedness or proceeds of any collateral are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, debtor in possession, receiver or other
Person under any bankruptcy law, common law or equitable cause, then to such
extent, the Indebtedness so satisfied shall be revived and continue as if such
payment or proceeds had not been received and the Agent's and the Lenders'
Liens, security interests, rights, powers and remedies under this Agreement and
each other Loan Document shall continue in full force and effect. In such event,
each Loan Document shall be automatically reinstated and the Borrower shall take
such action as may be reasonably requested by the Agent and the Lenders to
effect such reinstatement.
Section 12.11 Captions. Captions and section headings
appearing herein are included solely for convenience of reference and are not
intended to affect the interpretation of any provision of this Agreement.
Section 12.12 NO ORAL AGREEMENTS. THE LOAN DOCUMENTS EMBODY
THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES AND SUPERSEDE ALL
OTHER AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH PARTIES RELATING TO THE SUBJECT
MATTER HEREOF AND THEREOF. THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
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Section 12.13 GOVERNING LAW; SUBMISSION TO JURISDICTION.
(a) THIS AGREEMENT, THE LOANS AND THE NOTES SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF TEXAS EXCEPT TO THE EXTENT THAT UNITED STATES FEDERAL
LAW PERMITS ANY LENDER TO CHARGE INTEREST AT THE RATE ALLOWED
BY THE LAWS OF THE STATE WHERE SUCH LENDER IS LOCATED. CHAPTER
346 OF THE TEXAS FINANCE CODE (WHICH REGULATES CERTAIN
REVOLVING LOAN ACCOUNTS AND REVOLVING TRI-PARTY ACCOUNTS)
SHALL NOT APPLY TO THIS AGREEMENT, THE LOANS, OR THE NOTES.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THE LOAN DOCUMENTS SHALL BE BROUGHT IN THE COURTS OF THE STATE
OF TEXAS OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF TEXAS, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, THE BORROWER HEREBY ACCEPTS FOR ITSELF AND (TO THE
EXTENT PERMITTED BY LAW) IN RESPECT OF ITS PROPERTY, GENERALLY
AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS.
THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS. THIS
SUBMISSION TO JURISDICTION IS NON-EXCLUSIVE AND DOES NOT
PRECLUDE THE AGENT OR ANY LENDER FROM OBTAINING JURISDICTION
OVER THE BORROWER IN ANY COURT OTHERWISE HAVING JURISDICTION.
(c) EACH OF THE BORROWER AND EACH LENDER HEREBY (I)
IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE FULLEST EXTENT
PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN; (II) IRREVOCABLY
WAIVE, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT
IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY
SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
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DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES; (III) CERTIFY THAT NO PARTY HERETO NOR ANY
REPRESENTATIVE OR AGENT OF COUNSEL FOR ANY PARTY HERETO HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH
PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE
THE FOREGOING WAIVERS, AND (IV) ACKNOWLEDGE THAT IT HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS
AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED
IN THIS SECTION 12.13.
Section 12.14 Interest. It is the intention of the parties
hereto that each Lender shall conform strictly to usury laws applicable to it.
Accordingly, if the transactions contemplated hereby would be usurious as to any
Lender under laws applicable to it (including the laws of the United States of
America and the State of Texas or any other jurisdiction whose laws may be
mandatorily applicable to such Lender notwithstanding the other provisions of
this Agreement), then, in that event, notwithstanding anything to the contrary
in any of the Loan Documents or any agreement entered into in connection with or
as security for the Loans, it is agreed as follows: (i) the aggregate of all
consideration which constitutes interest under law applicable to any Lender that
is contracted for, taken, reserved, charged or received by such Lender under any
of the Loan Documents or agreements or otherwise in connection with the Loans
shall under no circumstances exceed the maximum amount allowed by such
applicable law, and any excess shall be cancelled automatically and if
theretofore paid shall be credited by such Lender on the principal amount of the
Indebtedness (or, to the extent that the principal amount of the Indebtedness
shall have been or would thereby be paid in full, refunded by such Lender to the
Borrower), and (ii) in the event that the maturity of the Notes is accelerated
resulting from any Event of Default under this Agreement or otherwise, or in the
event of any required or permitted prepayment, then such consideration that
constitutes interest under law applicable to any Lender may never include more
than the maximum amount allowed by such applicable law, and excess interest, if
any, provided for in this Agreement or otherwise shall be cancelled
automatically by such Lender as of the date of such acceleration or prepayment
and, if theretofore paid, shall be credited by such Lender on the principal
amount of the Indebtedness (or, to the extent that the principal amount of the
Indebtedness shall have been or would thereby be paid in full, refunded by such
Lender to the Borrower). All sums paid or agreed to be paid to any Lender for
the use, forbearance or detention of sums due hereunder or under any other Loan
Document shall, to the extent permitted by law applicable to such Lender, be
amortized, prorated, allocated and spread throughout the full term of the Loans
evidenced by the Notes until payment in full so that the rate or amount of
interest on account of any Loans hereunder does not exceed the maximum amount
allowed by such applicable law. If at any time and from time to time (i) the
amount of interest payable to any Lender on any date shall be computed at the
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Highest Lawful Rate applicable to such Lender pursuant to this Section 12.14 and
(ii) in respect of any subsequent interest computation period the amount of
interest otherwise payable to such Lender would be less than the amount of
interest payable to such Lender computed at the Highest Lawful Rate applicable
to such Lender, then the amount of interest payable to such Lender in respect of
such subsequent interest computation period shall continue to be computed at the
Highest Lawful Rate applicable to such Lender until the total amount of interest
payable to such Lender shall equal the total amount of interest which would have
been payable to such Lender if the total amount of interest had been computed
without giving effect to this Section 12.14. To the extent that Chapter 303 of
the Texas Finance Code is relevant for the purpose of determining the Highest
Lawful Rate, such Lender elects to determine the applicable rate ceiling under
such Article by the weekly ceiling from time to time in effect.
Section 12.15 Confidentiality. In the event that the Borrower
or any Guarantor (hereinafter called the "Subject Entities") provides to the
Agent or the Lenders written confidential information or, if communicated as
confidential, oral confidential information belonging to any Subject Entity, the
Agent and the Lenders shall thereafter maintain such information in confidence
in accordance with the standards of care and diligence that each utilizes in
maintaining its own confidential information. This obligation of confidence
shall not apply to such portions of the information which (i) are in the public
domain, (ii) hereafter become part of the public domain without the Agent or the
Lenders breaching their obligation of confidence to any Subject Entity, (iii)
are previously known by the Agent or the Lenders from some source other than any
Subject Entity, (iv) are hereafter developed by the Agent or the Lenders without
using a Subject Entity's information, (v) are hereafter obtained by or available
to the Agent or the Lenders from a third party who owes no obligation of
confidence to any Subject Entity with respect to such information, (vi) are
disclosed with a Subject Entity's consent, (vii) must be disclosed either
pursuant to any Governmental Requirement or to Persons regulating the activities
of the Agent or the Lenders, or (viii) as may be required by law or regulation
or order of any Governmental Authority in any judicial, arbitration or
governmental proceeding. Further, the Agent or a Lender may disclose any such
information to any other Lender, any independent petroleum engineers or
consultants, any independent certified public accountants, any legal counsel
employed by such Person in connection with this Agreement or any other Loan
Document, including without limitation, the enforcement or exercise of all
rights and remedies thereunder, or, subject to Section 12.06, any assignee or
participant (including prospective assignees to which the Borrower has consented
and participants) in the Loans; provided, however, that the Agent or the Lenders
shall receive a confidentiality agreement from the Person to whom such
information is disclosed such that said Person shall have the same obligation to
maintain the confidentiality of such information as is imposed upon the Agent or
the Lenders hereunder. Notwithstanding anything to the contrary provided herein,
this obligation of confidence shall cease three (3) years from the date the
information was furnished, unless the Borrower requests in writing at least
thirty (30) days prior to the expiration of such three year period, to maintain
the confidentiality of such information for an additional three year period.
Section 12.16 Effectiveness. This Agreement shall be effective
on the Closing Date (the "Effective Date") upon its execution and delivery by
Borrower and SCI. Although Xxxxxxx Exploration, Xxxxxxx, Inc., Xxxxxxx Holdings
I, LLC and Xxxxxxx Holdings II, LLC, are not parties to this Agreement they are
executing this Agreement as Releasing Parties under Section 12.18 below and
Section 12.18 will become effective as to each Releasing Party as described in
Section 12.18(c).
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Section 12.17 EXCULPATION PROVISIONS. EACH OF THE PARTIES
HERETO SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS AND AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF
THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; THAT IT HAS IN FACT
READ THIS AGREEMENT AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF
THE TERMS, CONDITIONS AND EFFECTS OF THIS AGREEMENT; THAT IT HAS BEEN
REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT THE
NEGOTIATIONS PRECEDING ITS EXECUTION OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS; AND HAS RECEIVED THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND THAT IT RECOGNIZES THAT CERTAIN OF
THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS RESULT IN ONE PARTY
ASSUMING THE LIABILITY INHERENT IN SOME ASPECTS OF THE TRANSACTION AND RELIEVING
THE OTHER PARTY OF ITS RESPONSIBILITY FOR SUCH LIABILITY. EACH PARTY HERETO
AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF
ANY EXCULPATORY PROVISION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS ON THE
BASIS THAT THE PARTY HAD NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE
PROVISION IS NOT "CONSPICUOUS."
Section 12.18 RELEASE.
(a) Each of the Releasing Parties desires and intends
fully to compromise, release and settle any and all of the
Released Claims; and each of the Releasing Parties hereby
covenants, warrants and represents unto each of the Released
Parties that such Releasing Party does hereby FOREVER RELEASE,
ACQUIT, WAIVE AND DISCHARGE each of the Released Parties of
and from the Released Claims and each of the Releasing Parties
hereby declares the same FOREVER RELEASED, ACQUITTED, WAIVED,
SETTLED AND DISCHARGED. This release is effective without
regard to whether (i) such Released Claims are known or
unknown, (ii) damages arising out of such Released Claims have
yet accrued, (iii) such Released Claims arose collaterally,
directly, derivatively, or otherwise between the parties
hereto or (iv) an ordinary person in the same or similar
circumstances would or would not, through the exercise of due
care, have discovered such claims by the date of this
Agreement. In connection with the foregoing release:
(b) Borrower and each of the Guarantors represents
and warrants that it has the full power and authority to
perform the release granted in this
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Section 12.18 and that it has not in any manner made any
assignment of any Released Claim to any third party.
(c) The release granted in this Section 12.18 by each
Releasing Party will be effective upon execution of this
Agreement by such Releasing Party hereto.
(d) Each party executing this Agreement understands
and agrees that the release granted in this Section 12.18 is a
full, final and complete release of the Released Claims and
that such release may be pleaded as an absolute and final bar
to any or all suits which may hereafter be filed or prosecuted
by any one or more of the Releasing Parties or anyone claiming
by, through or under any one or more of the Releasing Parties
in respect of any of the matters released hereby, and that no
recovery on account of the Released Claims may hereafter be
had from any of the Released Parties; and that the
consideration given for such release is not an admission of
liability or fault on the part of any of the Released Parties
(it being the express intent of the parties hereto to obtain
peace of mind and avoid the expense and uncertainty of
potential litigation), and that none of the Releasing Parties
or those claiming by, through or under any of them will ever
claim that it is.
(e) The parties hereto acknowledge that the release
granted by this Section 12.18 does not have any effect with
respect to relationships between the Borrower and each of the
Guarantors and the Lenders and the Agent other than in
connection with the Lending Relationship.
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The parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
BORROWER: XXXXXXX OIL & GAS, L.P.
By: Xxxxxxx, Inc., its General Partner
By: /s/ XXXXXX X. XXXXXXX
--------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chief Financial Officer
Address for Notices:
0000 Xxxxxx Xxxxx Xxxxxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxxx, Xxxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
GUARANTOR: XXXXXXX EXPLORATION COMPANY
(for purposes of Section 12.18)
By: /s/ XXXXXX X. XXXXXXX
--------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chief Financial Officer
GUARANTOR: XXXXXXX, INC.
(for purposes of Section 12.18)
By: /s/ XXXXXX X. XXXXXXX
--------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chief Financial Officer
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GUARANTOR: XXXXXXX HOLDINGS I, LLC
(for purposes of Section 12.18)
By: /s/ XXX X. XXXXXXX
--------------------------------
Name: Xxx X. Xxxxxxx
Title: President
GUARANTOR: XXXXXXX HOLDINGS II, LLC
(for purposes of Section 12.18)
By: /s/ XXX X. XXXXXXX
--------------------------------
Name: Xxx X. Xxxxxxx
Title: President
AGENT AND LENDER: SHELL CAPITAL INC.
By: /s/ XXXXXX X. XXXXXXX
--------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
Address for Notices:
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
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ANNEX 1
LIST OF MAXIMUM CREDIT AMOUNTS
Maximum Credit
Name of Lender Percentage Share Amount
-------------- ---------------- --------------
SCI 100.00000000% $20,000,000
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EXHIBIT A
FORM OF PROMISSORY NOTE
THIS INSTRUMENT IS SUBORDINATED TO THE EXTENT AND IN
THE MANNER PROVIDED IN THE SUBORDINATION AGREEMENT
REFERRED TO BELOW.
PROMISSORY NOTE
$
---------------- --------------
FOR VALUE RECEIVED, XXXXXXX OIL & GAS, L.P., a Delaware limited
partnership (the "Borrower") hereby promises to pay to the order of
____________________. (the "Lender" and "Agent"), at its Principal Office at
_________________________________, the principal sum of
____________________________ ($______________) (or such lesser amount as shall
equal the aggregate unpaid principal amount of the Loans made by the Lender to
the Borrower under the Subordinated Credit Agreement, as hereinafter defined),
in lawful money of the United States of America and in immediately available
funds, on the dates and in the principal amounts provided in the Subordinated
Credit Agreement, and to pay interest on the unpaid principal amount of each
such Loan, at such office, in like money and funds, for the period commencing on
the date of such Loan until such Loan shall be paid in full, at the rates per
annum and on the dates provided in the Subordinated Credit Agreement.
The date, amount, interest rate and maturity of each Loan made by the
Lender to the Borrower, and each payment made on account of the principal
thereof, shall be recorded by the Lender on its books and, prior to any transfer
of this Note, may be endorsed by the Lender on the schedules attached hereto or
any continuation thereof or on any separate record maintained by the Lender.
This Note is a Note referred to in the Subordinated Credit Agreement
dated as of October 31, 2000, among the Borrower, the Lenders which are or
become parties thereto (including the Lender) and the Agent, and evidences Loans
made by the Lender thereunder (the same may be amended or supplemented from time
to time, the "Subordinated Credit Agreement"). Capitalized terms used in this
Note have the respective meanings assigned to them in the Subordinated Credit
Agreement.
In connection with the execution and delivery of the Subordinated
Credit Agreement, Shell Capital Inc., as Agent under that certain Subordinated
Credit Agreement, Bank of Montreal, as Agent ("Senior Agent") under that certain
Amended and Restated Credit Agreement dated as of February 17, 2000 between the
Borrower, Senior Agent and the Lenders thereto (as the same may be amended or
supplemented from time to time, the "Senior Credit Agreement"), the Lenders
under the Senior Credit Agreement, Borrower, Xxxxxxx Exploration Company,
Xxxxxxx, Inc., Xxxxxxx Holdings I, LLC and Xxxxxxx Holdings II, LLC have entered
into that certain Intercreditor and Subordination Agreement dated as of October
31, 2000 (as the same may be amended or supplemented from time to time, the
"Subordination Agreement"). Payments of principal and interest on this Note are
subordinated to the extent provided in the Subordination Agreement.
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This Note is issued pursuant to the Subordinated Credit Agreement and
is entitled to the benefits provided for in the Subordinated Credit Agreement
and the other Loan Documents. The Subordinated Credit Agreement provides for the
acceleration of the maturity of this Note upon the occurrence of certain events,
for prepayments of Loans upon the terms and conditions specified therein and
other provisions relevant to this Note.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS.
XXXXXXX OIL & GAS, L.P.
By: Xxxxxxx, Inc., its General Partner
By:
------------------------------
Name:
Title:
iii
