364-DAY CREDIT AGREEMENT
$300,000,000 CREDIT
AND COMPETITIVE BID FACILITY
AMONG
OCEAN ENERGY, INC.,
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION,
Individually and as Administrative Agent,
THE CHASE MANHATTAN BANK,
as Auction Administrative Agent,
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
Individually, and as Syndication Agent,
BANK ONE, TEXAS, N.A.,
Individually, and as Documentation Agent,
SOCIETE GENERALE, SOUTHWEST AGENCY,
Individually, and as Managing Agent,
BANK OF MONTREAL,
Individually, and as Managing Agent,
AND
THE OTHER BANKS SIGNATORY HERETO
March 30, 1999
-----------------
CHASE SECURITIES INC.,
as Lead Arranger and Sole Book Manager
TABLE OF CONTENTS
Section 1. Definitions and Accounting Matters......................................................... 1
1.1 Certain Defined Terms...................................................................... 1
1.2 Accounting Terms and Determinations........................................................ 19
1.3 Types of Loans............................................................................. 19
1.4 Miscellaneous.............................................................................. 19
Section 2. Commitments; Competitive Bid Facility...................................................... 19
2.1 Committed Loans............................................................................ 19
(a) Revolving Loans..................................................................... 19
(b) Term Loans.......................................................................... 19
2.2 Extension of Revolving Commitment Termination Date
and Revolving Commitments.................................................................. 20
2.3 Reductions and Changes of Commitments...................................................... 22
2.4 Fees....................................................................................... 23
2.5 Affiliates; Lending Offices................................................................ 23
2.6 Several Obligations........................................................................ 23
2.7 Repayment of Loans; Evidence of Debt....................................................... 24
2.8 Use of Proceeds............................................................................ 24
2.9 Competitive Bid Procedure.................................................................. 24
Section 3. Borrowings, Prepayments and Selection of Interest Rates.................................... 26
3.1 Borrowings................................................................................. 26
3.2 Prepayments................................................................................ 27
3.3 Selection of Interest Rates................................................................ 27
Section 4. Payments of Principal and Interest......................................................... 27
4.1 Repayment of Loans......................................................................... 27
4.2 Interest................................................................................... 28
Section 5. Payments; Pro Rata Treatment; Computations, Etc............................................ 28
5.1 Payments................................................................................... 28
5.2 Pro Rata Treatment......................................................................... 29
5.3 Computations............................................................................... 29
5.4 Minimum and Maximum Amounts................................................................ 29
5.5 Certain Actions, Notices, Etc.............................................................. 30
5.6 Non-Receipt of Funds by Administrative Agent............................................... 31
5.7 Sharing of Payments, Etc................................................................... 31
Section 6. Yield Protection and Illegality............................................................ 32
(1)
6.1 Additional Costs.............................................................................32
6.2 Limitation on Types of Loans.................................................................33
6.3 Illegality...................................................................................34
6.4 Substitute Alternate Base Rate Loans.........................................................34
6.5 Compensation.................................................................................35
6.6 [Intentionally omitted]......................................................................35
6.7 Capital Adequacy.............................................................................35
6.8 Limitation on Additional Charges; Substitute Banks; Non-Discrimination.......................36
Section 7. Conditions Precedent.........................................................................36
7.1 Initial Loans................................................................................36
7.2 Initial and Subsequent Loans.................................................................39
Section 8. Representations and Warranties...............................................................40
8.1 Corporate Existence..........................................................................40
8.2 Corporate Power and Authorization............................................................40
8.3 Binding Obligations..........................................................................40
8.4 No Legal Bar or Resultant Lien...............................................................40
8.5 No Consent...................................................................................40
8.6 Financial Condition..........................................................................41
8.7 Investments and Guaranties...................................................................41
8.8 Liabilities and Litigation...................................................................41
8.9 Taxes and Governmental Charges...............................................................42
8.10 Title to Properties..........................................................................42
8.11 Defaults.....................................................................................42
8.12 Location of Businesses and Offices...........................................................42
8.13 Compliance with Law..........................................................................42
8.14 Margin Stock.................................................................................43
8.15 Subsidiaries.................................................................................43
8.16 ERISA........................................................................................43
8.17 Investment Company Act.......................................................................43
8.18 Public Utility Holding Company Act...........................................................44
8.19 Environmental Matters........................................................................44
8.20 Claims and Liabilities.......................................................................45
8.21 Solvency.....................................................................................45
8.22 Year 2000....................................................................................45
Section 9. Affirmative Covenants........................................................................46
9.1 Financial Statements and Reports.............................................................46
9.2 Officers' Certificates.......................................................................47
9.3 Taxes and Other Liens........................................................................48
9.4 Maintenance..................................................................................48
(2)
9.5 Further Assurances...........................................................................48
9.6 Performance of Obligations...................................................................48
9.7 Reimbursement of Expenses....................................................................48
9.8 Insurance....................................................................................49
9.9 Accounts and Records.........................................................................50
9.10 Notice of Certain Events.....................................................................50
9.11 ERISA Information and Compliance.............................................................51
Section 10. Negative Covenants...........................................................................52
10.1 Debts, Guaranties and Other Obligations......................................................52
10.2 Liens........................................................................................55
10.3 Dividend Payment Restrictions................................................................58
10.4 Mergers and Sales of Assets..................................................................58
10.5 Proceeds of Loans............................................................................59
10.6 ERISA Compliance.............................................................................59
10.7 Total Leverage Ratio.........................................................................59
10.8 Senior Leverage Ratio........................................................................59
10.9 Minimum Net Worth............................................................................59
10.10 Nature of Business...........................................................................60
10.11 Covenants in Other Agreements................................................................60
Section 11. Defaults.....................................................................................60
11.1 Events of Default............................................................................60
11.2 [Intentionally omitted]......................................................................63
11.3 [Intentionally omitted]......................................................................63
11.4 Right of Setoff..............................................................................63
Section 12. Agents.......................................................................................63
12.1 Appointment, Powers and Immunities...........................................................63
12.2 Reliance by Agents...........................................................................64
12.3 Defaults.....................................................................................64
12.4 Rights as a Bank.............................................................................65
12.5 Indemnification..............................................................................65
12.6 Non-Reliance on Agents and Other Banks.......................................................65
12.7 Failure to Act...............................................................................66
12.8 Resignation or Removal of Administrative Agent...............................................66
Section 13. Miscellaneous................................................................................67
13.1 Waiver.......................................................................................67
13.2 Notices......................................................................................67
13.3 Indemnification..............................................................................67
13.4 Amendments, Etc..............................................................................68
(3)
13.5 Successors and Assigns.......................................................................69
13.6 Limitation of Interest.......................................................................71
13.7 Survival.....................................................................................72
13.8 Captions.....................................................................................72
13.9 Counterparts.................................................................................73
13.10 GOVERNING LAW; FORUM SELECTION;
CONSENT TO JURISDICTION......................................................................73
13.11 WAIVER OF JURY TRIAL; PUNITIVE DAMAGES.......................................................74
13.12 Severability.................................................................................74
13.13 Chapter 15 Not Applicable....................................................................74
13.14 Confidential Information.....................................................................74
13.15 Tax Forms....................................................................................75
13.16 Entire Agreement.............................................................................75
(4)
EXHIBITS:
Exhibit A Unrestricted Subsidiaries
Exhibit B Form of Request for Extension of Credit
Exhibit C Subsidiaries (with Addresses)
Exhibit D Form of Compliance Certificate
Exhibit E Assignment and Acceptance
Exhibit F Form of Competitive Bid Request
Exhibit G Form of Notice to Banks of Competitive Bid Request
Exhibit H Form of Competitive Bid
Exhibit I Form of Competitive Bid Administrative Questionnaire
Exhibit J Form of Certificate of Extension
Exhibit K Form of Guaranty Agreement
Exhibit L Disclosure Statement
Exhibit M Commitments
(5)
364-DAY CREDIT AGREEMENT
This 364-DAY CREDIT AGREEMENT, dated as of March 30, 1999 (the
"Effective Date"), is by and among OCEAN ENERGY, INC. (the "Company"), a
corporation duly organized and validly existing under the laws of the State of
Texas, each of the banks which is or which may from time to time become a
signatory hereto (individually, a "Bank" and, collectively, the "Banks"), BANK
OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION ("Bank of America"), as
Syndication Agent for the Banks (in such capacity, the "Syndication Agent"),
BANK ONE, TEXAS, N.A. ("Bank One"), as Documentation Agent for the Banks (in
such capacity, the "Documentation Agent"), SOCIETE GENERALE, SOUTHWEST AGENCY
("Societe Generale") and BANK OF MONTREAL ("Bank of Montreal"), as Managing
Agents for the Banks (in such capacity, the "Managing Agents"), THE CHASE
MANHATTAN BANK, as Auction Administrative Agent for the Banks (in such capacity,
the "Auction Administrative Agent"), and CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION ("Chase"), as Administrative Agent for the Banks (in such capacity,
together with its successors in such capacity, "Administrative Agent").
The parties hereto agree as follows:
Section 1. Definitions and Accounting Matters.
1.1 Certain Defined Terms. As used herein, the following terms shall
have the following meanings (all terms defined in this Section 1.1 or in other
provisions of this Agreement in the singular to have the same meanings when used
in the plural and vice versa):
"Accepting Banks" shall have the meaning set forth in Section 2.2(c).
"Additional Costs" shall have the meaning ascribed to such term in
Section 6.1 hereof.
"Affiliate" shall mean, as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person and, if such Person is an individual, any member of
the immediate family (including parents, siblings, spouse, children,
stepchildren, grandchildren, nephews and nieces) 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. As used in this definition, "control" (including, with correlative
meanings, "controlled by" and "under common control with") shall mean
possession, directly or indirectly, of power to direct or cause the direction of
management or policies (whether through ownership of securities or partnership
or other ownership interests, by contract or otherwise).
"Agents" shall mean the Administrative Agent, the Auction
Administrative Agent, the Documentation Agent, the Syndication Agent and the
Managing Agents, together with any successors in any such capacities.
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"Agreement" shall mean this 364-Day Credit Agreement, as such agreement
from time to time may be amended, amended and restated, supplemented or
otherwise modified.
"Alternate Base Rate" shall mean, for any day, a rate per annum equal
to the higher of (a)the Prime Rate in effect on such day or (b) 1/2 of 1% plus
the Federal Funds Rate in effect for such day (rounded upwards, if necessary, to
the nearest 1/16th of 1%). For purposes hereof, "Federal Funds Rate" shall mean,
for any period, a fluctuating interest rate per annum equal for each day during
such period to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day which is a Business Day, the
average of the quotations for such day on such transactions received by
Administrative Agent from three Federal funds brokers of recognized standing
selected by it. For purposes of this Agreement, any change in the Alternate Base
Rate due to a change in the Federal Funds Rate shall be effective on the
effective date of such change in the Federal Funds Rate. If for any reason
Administrative Agent shall have determined (which determination shall be
conclusive and binding, absent manifest error) that it is unable to ascertain
the Federal Funds Rate for any reason, including, without limitation, the
inability or failure of Administrative Agent to obtain sufficient bids or
publications in accordance with the terms hereof, the Alternate Base Rate shall
be the Prime Rate until the circumstances giving rise to such inability no
longer exist. For the purposes hereof, "Prime Rate" shall mean the prime rate as
announced from time to time by Administrative Agent, and thereafter entered in
the minutes of Administrative Agent's Loan and Discount Committee. Without
notice to the Company or any other Person, the Prime Rate shall change
automatically from time to time as and in the amount by which said prime rate
shall fluctuate. The Prime Rate is a reference rate and does not necessarily
represent the lowest or best rate actually charged to any customer.
Administrative Agent may make commercial loans or other loans at rates of
interest at, above or below the Prime Rate. For purposes of this Agreement any
change in the Alternate Base Rate due to a change in the Prime Rate shall be
effective on the date such change in the Prime Rate is announced.
"Alternate Base Rate Loans" shall mean Loans which bear interest at a
rate based upon the Alternate Base Rate.
"APC" shall mean Alaska Pipeline Company, an Alaska corporation, a
Subsidiary of the Company.
"Applicable Lending Office" shall mean, for each Bank and for each Type
of Loan, such office of such Bank (or of an affiliate of such Bank) as such Bank
may from time to time specify to Administrative Agent and the Company as the
office by which its Loans of such Type are to be made and/or issued and
maintained.
"Applicable Margin" shall mean, on any day, with respect to any
Alternate Base Rate Loan or Eurodollar Loan, the applicable per annum percentage
set forth at the appropriate intersection in
2
the table shown below, based on the Rating as of the close of business on the
preceding Business Day:
Alternate Base Rate Eurodollar Loan
Rating Loan Applicable Margin Applicable Margin
------ ---------------------- -----------------
BBB-/Baa3 and higher 0.000% 1.075%
BB+/Ba1 0.250% 1.250%
BB/Ba2 0.500% 1.500%
BB-/Ba3 and lower 0.750% 1.750%
=============================== ================================= =============================
"Bankruptcy Code" shall mean the United States Bankruptcy Code, as
amended, and any successor statute.
"Business Day" shall mean any day other than a day on which commercial
banks are authorized or required to close in Houston, Texas or New York, New
York, and where such term is used in the definition of "Quarterly Date" in this
Section 1.1 or if such day relates to a borrowing of, a payment or prepayment of
principal of or interest on, or an Interest Period for, a Eurodollar Loan or a
notice by the Company with respect to any such borrowing, payment, prepayment or
Interest Period, a day which is also a day on which dealings in Dollar deposits
are carried out in the relevant interbank market.
"Capital Lease Obligations" shall mean, as to any Person, the
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) real and/or personal property which
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP and, for purposes of this
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.
"Certificate of Extension" shall mean a certificate of Company,
executed by a Responsible Officer and delivered to the Administrative Agent, in
substantially the form of Exhibit J, which requests an extension of the then
scheduled Revolving Commitment Termination Date pursuant to Section 2.2.
"Change of Control" shall mean a change resulting when any Unrelated
Person or any Unrelated Persons acting together which would constitute a Group
together with any Affiliates or Related Persons thereof (in each case also
constituting Unrelated Persons) shall at any time either (i) Beneficially Own
more than 35% of the aggregate voting power of all classes of Voting Stock of
the Company or (ii) during any period of two consecutive years ending on or
after the Effective Date, as determined as of the last day of each calendar
quarter after the Effective Date, the individuals (the "Incumbent Directors")
who at the beginning of such period constituted the Board
3
of Directors of the Company (other than additions thereto or removals therefrom
from time to time thereafter approved by a vote of the Board of Directors in
accordance with the Company's by-laws) shall cease for any reason to constitute
51% or more of the Board of Directors of the Company. As used herein
(a)"Beneficially Own" means "beneficially own" as defined in Rule 13d-3 of the
Securities Exchange Act of 1934, as amended, or any successor provision thereto;
provided, however, that, for purposes of this definition, a Person shall not be
deemed to Beneficially Own securities tendered pursuant to a tender or exchange
offer made by or on behalf of such Person or any of such Person's Affiliates
until such tendered securities are accepted for purchase or exchange; (b)"Group"
means a "group" for purposes of Section 13(d) of the Securities Exchange Act of
1934, as amended; (c)"Unrelated Person" means at any time any Person other than
the Company or any Subsidiary and other than any trust for any employee benefit
plan of the Company or any Subsidiary of the Company; (d) "Related Person" of
any Person shall mean any other Person owning (1) 5% or more of the outstanding
common stock of such Person or (2) 5% or more of the Voting Stock of such
Person; and (e) "Voting Stock" of any Person shall mean capital stock of such
Person which ordinarily has voting power for the election of directors (or
persons performing similar functions) of such Person, whether at all times or
only so long as no senior class of securities has such voting power by reason of
any contingency.
"Chapter 1D" shall mean Chapter 1D of Article 5069 of the Texas Credit
Title, Title 79, Vernon's Texas Civil Statutes, as amended (formerly Article
5069-1.04, Vernon's Texas Civil Statutes, as amended).
"Code" shall mean the Internal Revenue Code of 1986, as amended, or any
successor statute, together with all regulations, rulings and interpretations
thereof or thereunder by the Internal Revenue Service.
"Commitment Percentage" shall mean, as to any Bank, the percentage
equivalent of a fraction the numerator of which is the amount of such Bank's
Commitment and the denominator of which is the aggregate amount of the
Commitments of all Banks.
"Commitment" shall mean, as to any Bank, such Bank's Revolving
Commitment or Term Commitment then in effect, as the case may be.
"Committed Loans" shall mean the Revolving Loans and the Term Loans
provided for in Section 2.1 hereof.
"Competitive Bid" shall mean an offer by a Bank to make a Competitive
Loan pursuant to Section 2.9 hereof.
"Competitive Bid Administrative Questionnaire" shall mean a
questionnaire substantially in the form of Exhibit I hereto.
4
"Competitive Bid Rate" shall mean, as to any Competitive Bid made by a
Bank pursuant to Section 2.9 hereof, the fixed rate of interest, in each case,
offered by the Bank making such Competitive Bid.
"Competitive Bid Request" shall have the meaning ascribed to such term
in Section 2.9 hereof.
"Competitive Loans" shall mean loans provided for in Section 2.9
hereof.
"Consolidated Net Worth" means, with respect to the Company and its
Subsidiaries, the sum of preferred stock (if any), par value of common stock,
capital in excess of par value of common stock and retained earnings, less
treasury stock (if any), goodwill, cost in excess of fair value of net assets
acquired and all other assets that are properly classified as intangible assets,
but plus any expenses associated with the Merger occurring prior to December 31,
1999 and not in excess of $30,000,000 in the aggregate, and the amount of
noncash write downs occurring on or after January1, 1999 of long-lived assets in
compliance with GAAP or SEC guidelines, and excluding any extraordinary or
non-recurring net gains or losses together with any related provision for taxes
on such gain or loss, realized in connection with any extraordinary or
nonrecurring gains or losses, and plus or minus, as appropriate, foreign
currency translation adjustments, all as determined on a consolidated basis.
"Credit Obligations" shall mean, as at any date of determination
thereof, the aggregate principal amount of Loans outstanding hereunder.
"Declining Banks" shall have the meaning set forth in Section 2.2(c).
"Default" shall mean an Event of Default or an event which with notice
or lapse of time or both would, unless cured or waived, become an Event of
Default.
"Disclosure Statement" shall mean the Disclosure Statement delivered to
Administrative Agent by the Company and attached as Exhibit L hereto.
"Dividend Payment" shall mean, with respect to any Person, dividends
(in cash, property or obligations) on, or other payments or distributions on
account of, or the redemption of, or the setting apart of money for a sinking or
other analogous fund for the purchase, redemption, retirement or other
acquisition of, any shares of any class of capital stock of such Person, or the
exchange or conversion of any shares of any class of capital stock of such
Person for or into any obligations of or shares of any other class of capital
stock of such Person or any other property, but excluding dividends to the
extent payable in, or exchanges or conversions for or into, shares of common
stock of the Company or options or warrants to purchase common stock of the
Company.
"Dollars" and "$" shall mean lawful money of the United States of
America.
5
"EBITDAX" shall mean net earnings (excluding material gains and losses
on sales and retirement of assets, non-cash write downs, charges resulting from
accounting convention changes and deductions for exploration expenses) before
deduction for federal and state taxes, interest expense (including capitalized
interest), operating lease rentals or depreciation, depletion and amortization
expense, all determined in accordance with GAAP; provided, however, for the
purpose of any calculation, that (i) for the fiscal quarter ending March 31,
1998, EBITDAX shall be deemed to equal $159,765,000, (ii) for the fiscal quarter
ending June 30, 1998, EBITDAX shall be deemed to equal $142,023,000, (iii) for
the fiscal quarter ending September 30, 1998, EBITDAX shall be deemed to equal
$107,171,000, and (iv) for the fiscal quarter ending December31, 1998, EBITDAX
shall be deemed to equal $122,134,000.
"ENSTAR Alaska" shall collectively mean (i) the gas distribution system
in south-central Alaska known as ENSTAR Natural Gas Company, a division of the
Company, and (ii) APC.
"Environmental Claim" means any third party (including Governmental
Authorities and employees) action, lawsuit, claim or proceeding (including
claims or proceedings at common law or under the Occupational Safety and Health
Act or similar laws relating to safety of employees) which seeks to impose
liability for (i) noise; (ii) pollution or contamination of the air, surface
water, ground water or land or the clean-up of such pollution or contamination;
(iii) solid, gaseous or liquid waste generation, handling, treatment, storage,
disposal or transportation; (iv) exposure to Hazardous Substances; (v) the
safety or health of employees or (vi) the manufacture, processing, distribution
in commerce or use of Hazardous Substances. An "Environmental Claim" includes,
but is not limited to, a common law action, as well as a proceeding to issue,
modify or terminate an Environmental Permit, or to adopt or amend a regulation
to the extent that such a proceeding attempts to redress violations of an
applicable permit, license, or regulation as alleged by any Governmental
Authority.
"Environmental Liabilities" includes all liabilities arising from any
Environmental Claim, Environmental Permit or Requirement of Environmental Law
under any theory of recovery, at law or in equity, and whether based on
negligence, strict liability or otherwise, including but not limited to:
remedial, removal, response, abatement, investigative, monitoring, personal
injury and damage to property or injuries to persons, and any other related
costs, expenses, losses, damages, penalties, fines, liabilities and obligations,
and all costs and expenses necessary to cause the issuance, reissuance or
renewal of any Environmental Permit including reasonable attorneys' fees and
court costs.
"Environmental Permit" means any permit, license, approval or other
authorization under any applicable Legal Requirement relating to pollution or
protection of health or the environment, including laws, regulations or other
requirements relating to emissions, discharges, releases or threatened releases
of pollutants, contaminants or hazardous substances or toxic materials or wastes
into ambient air, surface water, ground water or land, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants or Hazardous Substances.
6
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and all rules, regulations and interpretations by
the Internal Revenue Service or the Department of Labor thereunder.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) which is a member of a group of which any Obligor is a member and
which is under common control within the meaning of the regulations under
Section 414 of the Code.
"Eurodollar Base Rate" shall mean, with respect to any Interest Period
for any Eurodollar Loan, the lesser of (A) the rate per annum (rounded upwards,
if necessary, to the nearest 1/16th of 1%) equal to the average of the offered
quotations appearing on Telerate Page 3750 (or if such Telerate Page shall not
be available, any successor or similar service as may be selected by
Administrative Agent and the Company) as of 11:00 a.m., Houston, Texas time (or
as soon thereafter as practicable) on the day two Business Days prior to the
first day of such Interest Period for Dollar deposits having a term comparable
to such Interest Period and in an amount comparable to the principal amount of
the Eurodollar Loan to which such Interest Period relates or (B) the Highest
Lawful Rate. If none of such Telerate Page 3750 nor any successor or similar
service is available, then the "Eurodollar Base Rate" shall mean, with respect
to any Interest Period for any applicable Eurodollar Loan, the lesser of (A) the
rate per annum (rounded upwards, if necessary, to the nearest 1/16th of 1%)
determined by Administrative Agent to be the average of the rates quoted by the
Reference Banks at approximately 11:00 a.m., Houston, Texas time (or as soon
thereafter as practicable) on the day two Business Days prior to the first day
of such Interest Period for the offering by such Reference Banks to leading
banks in the London interbank market of Dollar deposits having a term comparable
to such Interest Period and in an amount comparable to the principal amount of
the Eurodollar Loan to which such Interest Period relates or (B) the Highest
Lawful Rate. If any Reference Bank does not furnish a timely quotation,
Administrative Agent shall determine the relevant interest rate on the basis of
the quotation or quotations furnished by the remaining Reference Bank or Banks;
if none of such quotations is available on a timely basis, the provisions of
Section 6.2 shall apply. Each determination of the Eurodollar Base Rate shall be
conclusive and binding, absent manifest error, and may be computed using any
reasonable averaging and attribution method.
"Eurodollar Loans" shall mean Loans the interest on which is determined
on the basis of rates referred to in the definition of "Eurodollar Base Rate" in
this Section 1.1.
"Eurodollar Rate" shall mean, for any Interest Period for any
Eurodollar Loan, a rate per annum determined by Administrative Agent to be equal
to the Eurodollar Base Rate for such Loan for such Interest Period.
"Event of Default" shall have the meaning assigned to such term in
Section11 hereof.
"Existing Seagull Credit Facility" shall mean that certain Amended and
Restated Credit Agreement, dated as of December 24, 1997, by and among Seagull,
each of the banks which is or
7
which may from time to time become a signatory thereto, Morgan Guaranty Trust
Company of New York, as Documentation Agent, NationsBank of Texas, N.A., as
Syndication Agent, and The Chase Manhattan Bank, as Administrative Agent, as
such agreement from time to time may be amended, amended and restated,
supplemented or otherwise modified.
"Existing Old Ocean Bridge Facility" shall mean that certain Letter
Agreement, dated February 3, 1999, among The Chase Manhattan Bank, Morgan
Guaranty Trust Company of New York, Old Ocean Energy, the Guarantor, and Lion
GPL, S.A. and the "Security Instruments" as defined therein, as each is amended,
waived or otherwise modified to the date hereof.
"Existing Old Ocean Credit Facility" shall mean that certain Second
Amended and Restated Global Credit Agreement, dated as of November 20, 1998, by
and among Old Ocean Energy, each of the lenders which is or which may from time
to time become a signatory thereto, Morgan Guaranty Trust Company of New York,
as Syndication Agent, Bank of America National Trust & Savings Association, as
Documentation Agent, Barclays Bank PLC, as Managing Agent, Paribas, Societe
Generale, Southwest Agency, and Credit Suisse First Boston, as Co-Agents, and
Chase Bank of Texas, National Association, as Administrative Agent, as such
agreement from time to time may be amended, amended and restated, supplemented
or otherwise modified.
"Facility Amount" shall mean the aggregate amount of the Commitments
(which amount shall initially be $300,000,000), as such amount may be reduced
from time to time pursuant to the terms of this Agreement.
"Facility Fee Percentage" shall mean, on any date, the applicable per
annum percentage set forth at the appropriate intersection in the table shown
below, based on the Rating as of the close of business on the preceding Business
Day:
Rating Facility Fee Percentage
BBB-/Baa3 and higher 0.175%
BB+/Ba1 and lower 0.250%
=================================== ==================================
"Financial Statements" shall mean the financial statement or
statements, together with the notes and schedules thereto, described or referred
to in Sections8.6 and 9.1.
"GAAP" shall mean as to a particular Person, such accounting practice
as, in the opinion of KPMG Peat Marwick or other independent accountants of
recognized national standing retained by such Person and acceptable to the
Majority Banks, conforms at the time to generally accepted accounting
principles, consistently applied. Generally accepted accounting principles means
those principles and practices (a) which are recognized as such by the Financial
Accounting Standards Board, (b) which are applied for all periods after the date
hereof in a manner consistent with the manner in which such principles and
practices were applied to the most recent audited financial
8
statements of the relevant Person furnished to the Banks, except only for such
changes in principles and practices with which the applicable independent public
accountants concur and which are disclosed to the Banks in writing, and (c)
which are consistently applied for all periods after the date hereof so as to
reflect properly the financial condition and results of operations of such
Person.
"Governmental Authority" shall mean any sovereign governmental
authority, the United States of America, any State of the United States and any
political subdivision of any of the foregoing, and any central bank, agency,
instrumentality, department, commission, board, bureau, authority, court or
other tribunal or quasi-governmental authority in each case whether executive,
legislative, judicial, regulatory or administrative, having jurisdiction over
the Company, any of its Subsidiaries, any of their respective property,
Administrative Agent or any Bank.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of any such Person directly or indirectly guaranteeing any
Indebtedness of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness (whether arising by virtue of partnership
arrangements, by agreement to keep-well, to purchase assets, goods, securities
or services, to take-or-pay, or to maintain financial statement conditions or
otherwise, other than agreements to purchase assets, goods, securities or
services at an arm's length price in the ordinary course of business) or (ii)
entered into for the purpose of assuring in any other manner the holder of such
Indebtedness of the payment thereof or to protect such holder against loss in
respect thereof (in whole or in part), provided that the term "Guarantee" shall
not include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
"Guarantor" shall mean Ocean Energy, Inc., a Louisiana corporation.
"Guaranty Agreement" shall mean the guaranty agreement substantially in
the form of Exhibit K, with appropriate insertions and deletions, executed or to
be executed by the Guarantor, as such agreement from time to time may be
amended, amended and restated, supplemented or otherwise modified.
"Havre" shall mean Havre Pipeline Company, LLC, a Texas limited
liability company.
"Hazardous Substance" shall mean petroleum products, and any hazardous
or toxic waste or substance defined or regulated as such from time to time by
any law, rule, regulation or order described in the definition of "Requirements
of Environmental Law".
"Highest Lawful Rate" shall mean, on any day, the maximum nonusurious
rate of interest permitted for that day by whichever of applicable federal or
Texas law permits the higher interest rate, stated as a rate per annum. On each
day, if any, that Chapter 1D establishes the Highest Lawful Rate, the Highest
Lawful Rate shall be the "applicable interest rate ceiling" (as defined in
Chapter1D) for that day.
9
"Hydrocarbons" shall mean oil, gas, casinghead gas, drip gasoline,
natural gasoline, condensate and all other liquid or gaseous hydrocarbons and
related minerals, in each case whether in a natural or a processed state.
"Indebtedness" shall mean, as to any Person: (i) indebtedness of such
Person for borrowed money (whether by loan or the issuance and sale of debt
securities) or for the deferred purchase or acquisition price of property or
services, including, without limitation, obligations payable out of Hydrocarbon
production; (ii) obligations, whether fixed or contingent, of such Person in
respect of letters of credit, acceptances or similar instruments issued or
accepted by banks and other financial institutions for the account of such
Person or any other Person; (iii) Capital Lease Obligations of such Person; (iv)
Redemption Obligations of such Person and other obligations of such Person to
redeem or otherwise retire shares of capital stock of such Person or any other
Person, in each case to the extent that the redemption obligations will arise
prior to the stated maturity of the Obligations; (v) indebtedness of others of
the type described in clause (i), (ii), (iii) or (iv) above secured by a Lien on
the property of such Person, whether or not the respective obligation so secured
has been assumed by such Person, to the extent of the fair market value of such
property; and (vii) indebtedness of others of the type described in clause (i),
(ii), (iii) or (iv) above Guaranteed by such Person, to the extent of such
Guarantee.
"Interest Period" shall mean:
(a) With respect to any Eurodollar Loan, the period commencing on (i)
the date such Loan is made or converted into or continued as a Eurodollar Loan
or (ii) in the case of a roll-over to a successive Interest Period, the last day
of the immediately preceding Interest Period and ending on the numerically
corresponding day in the first, second, third or sixth calendar month
thereafter, as the Company may select as provided in Section 5.5 hereof, except
that each such Interest Period which commences on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month shall
end on the last Business Day of the appropriate subsequent calendar month.
(b) With respect to any other Competitive Loan, the period commencing
on the date such Loan is made and ending on the date specified in the
Competitive Bid in which the offer to make the Competitive Loan was extended;
provided, however, that each such period shall have a duration of not less than
seven calendar days or more than 180 calendar days.
Notwithstanding the foregoing: (i) no Interest Period applicable to any
Eurodollar Loan or any Competitive Loan may commence before and end after the
date of any scheduled reduction in the Commitments if, after giving effect
thereto, the aggregate principal amount of the Eurodollar Loans or Competitive
Loans which have Interest Periods which end after such reduction date shall be
greater than the aggregate principal amount of the Commitments scheduled to be
in effect after such reduction date; (ii) each Interest Period which would
otherwise end on a day which is not a Business Day shall end on the next
succeeding Business Day (or, in the case of an Interest Period for Eurodollar
Loans, if such next succeeding Business Day falls in the next succeeding
calendar month,
10
on the next preceding Business Day); (iii) with respect to each Bank, no
Interest Period applicable to any Eurodollar Loan or any Competitive Loan shall
extend beyond the then scheduled Stated Maturity Date applicable to each such
Bank, and (iv)no Interest Period for any Eurodollar Loans shall have a duration
of less than one month and, if the Interest Period therefor would otherwise be a
shorter period, such Loans shall not be available hereunder.
"Investments" shall mean with respect to any Person any advance, loan
or other extension of credit or capital contribution (other than prepaid
expenses in the ordinary course of business) to (by means of transfers of
property or assets or otherwise) purchase or own any stocks, bonds, notes,
debentures or other securities of, or incur contingent liability with respect to
(except for the endorsement of checks in the ordinary course of business and
except for the Indebtedness and Liens permitted under this Agreement), any other
Person.
"Legal Requirement" shall mean any law, statute, ordinance, decree,
requirement, order, judgment, rule, regulation (or interpretation of any of the
foregoing) of, and the terms of any license or permit issued by, any
Governmental Authority, now or hereafter in effect.
"Lien" shall mean, with respect to any asset, any mortgage, lien,
pledge, charge, collateral assignment, security interest or encumbrance of any
kind in respect of such asset. For the purposes of this Agreement, a Person
shall be deemed to own subject to a Lien any asset which it has acquired or
holds subject to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement relating to such
asset.
"Loan Documents" shall mean this Agreement, the Guaranty Agreement, all
instruments, certificates and agreements now or hereafter executed or delivered
to Administrative Agent or any Bank pursuant to any of the foregoing, and all
amendments, modifications, renewals, extensions, increases and rearrangements
of, and substitutions for, any of the foregoing.
"Loans" shall mean Committed Loans and Competitive Loans.
"Majority Banks" shall mean (a) prior to the termination of the
Commitments, Banks having greater than 50% of the aggregate amount of the
Commitments and (b) after the termination of the Commitments, Banks having
greater than 50% of the aggregate principal amount of the Loans.
"Margin Regulations" shall mean, as applicable, Regulations U and X of
the Board of Governors of the Federal Reserve System, as from time to time in
effect.
"Material Adverse Effect" shall mean a material adverse effect on the
business, condition (financial or otherwise), operations or properties
(including proven oil and gas reserves) of the Company and its Subsidiaries,
taken as a whole, or on the ability of the Company to perform its material
obligations under any Loan Document to which it is a party.
"Merger" shall have the meaning set forth in Section 7.1(j).
11
"Merger Agreement" shall have the meaning set forth in Section 7.1(j).
"Net Cash Proceeds" shall mean the cash or cash equivalent proceeds
received by the Company or any Subsidiary as a result of a sale of property or
other asset of Company or any Subsidiary, in each case after deducting all of
the following, as applicable, (i) all brokerage commissions, legal fees,
accounting fees and other fees, costs and expenses paid, reimbursed or accrued
by the Company or any of its Subsidiaries and allocable to such transaction,
(ii) all taxes and governmental charges paid, reimbursed or accrued by the
Company or any of its Subsidiaries in connection with such transaction, (iii)
payment of any outstanding obligations secured by such property or asset, (iv)
payment in satisfaction of all minority interests in such property or asset, and
(v) any reserves maintained by the Company or any of its Subsidiaries for any
purchase price adjustments, closing adjustments, indemnity or other obligations
in connection with such transaction. Proceeds of any such transaction consisting
of notes, stock, securities or other non-cash assets or property shall not be
included as Net Cash Proceeds; provided, however, any cash or cash equivalents
received as a result of the sale, pledge or transfer of any such note, stock,
securities or other non-cash assets or property or as a payment on account of or
otherwise realized on account of principal or capital of any note, stock,
securities or other non-cash assets or property (but not dividends, interest or
operating income in respect of any assets or property) shall be treated as cash
or cash equivalent proceeds received by Company or any Subsidiary at the time
such cash or cash equivalent is received by Company or any Subsidiary.
"95 Indenture" shall mean that certain Indenture among the Company (as
successor by merger to Old Ocean Energy), as issuer, Guarantor (as successor by
merger to UMC), as initial subsidiary guarantor, and U.S. Bank Trust National
Association (formerly known as First Bank of New York, National Association), as
trustee, dated as of October 30, 1995, providing for the issuance of the
Company's $150,000,000 10-3/8% Senior Subordinated Notes due 2005, as amended by
(i) the First Supplemental Indenture thereto dated as of November 4, 1997, (ii)
the Second Supplemental Indenture thereto dated as of March 27, 1998 and (iii)
the Third Supplemental Indenture thereto dated as of March 30, 1999, and all
notes or securities issued under any of the foregoing, any subsidiary guarantees
issued pursuant to the terms of any of the foregoing, and all amendments and
supplements to the foregoing permitted hereunder.
"96 Indenture" shall mean that certain indenture dated as of September
26, 1996 among the Company (as successor by merger to Old Ocean Energy), as
issuer, the subsidiary guarantor named therein, and State Street Bank and Trust
Company, as trustee, providing for the issuance of the Company's $160,000,000
9-3/4% Senior Subordinated Notes due 2006, as amended by (i) the First
Supplemental Indenture thereto dated as of March 27, 1998 and (ii) the Second
Supplemental Indenture thereto dated as of March 30, 1999, and all notes or
securities issued under any of the foregoing, any subsidiary guarantees issued
pursuant to the terms of any of the foregoing, and all amendments and
supplements to the foregoing permitted hereunder.
"97 Indenture" shall mean that certain Indenture dated as of July 2,
1997 among the Company (as successor by merger to Old Ocean Energy), as issuer,
the subsidiary guarantor named
12
therein, and State Street Bank and Trust Company, as trustee, providing for the
issuance of the Company's $200,000,000 8-7/8% Senior Subordinated Notes due
2007, as amended by (i) the First Supplemental Indenture thereto dated as of
March 27, 1998 and (ii) the Second Supplemental Indenture thereto dated as of
March 30, 1999, and all notes or securities issued under any of the foregoing,
any subsidiary guarantees issued pursuant to the terms of any of the foregoing,
and all amendments and supplements to the foregoing permitted hereunder.
"98 Senior Subordinated Indenture" shall mean that certain Indenture
dated as of July 8, 1998 among the Company (as successor by merger to Old Ocean
Energy), as issuer, the subsidiary guarantor named therein, U.S. Bank Trust
National Association, as trustee, providing for the issuance of the Company's
$250,000,000 8-3/8% Senior Subordinated Notes due 2008, as amended by the First
Supplemental Indenture thereto dated as of March 30, 1999, and all notes or
securities issued under any of the foregoing, any subsidiary guarantees issued
pursuant to the terms of any of the foregoing, and all amendments and
supplements to the foregoing permitted hereunder.
"Obligations" shall mean, as at any date of determination thereof, the
sum of the following: (i) the aggregate principal amount of Loans outstanding
hereunder plus (ii) all other liabilities, obligations and indebtedness of the
Company, any Subsidiary of the Company or any other Obligor under any Loan
Document.
"Obligor" shall mean the Company and the Guarantor.
"Old Ocean Energy" shall mean Ocean Energy, Inc., a Delaware
corporation.
"Organizational Documents" shall mean, with respect to a corporation,
the certificate of incorporation, articles of incorporation and bylaws of such
corporation; with respect to a partnership, the partnership agreement
establishing such partnership; with respect to a joint venture, the joint
venture agreement establishing such joint venture; with respect to a limited
liability company, the certificate of formation and operating agreement (or
comparable documents) of such limited liability company; and with respect to a
trust, the instrument establishing such trust; in each case including any and
all modifications thereof as of the date of the Loan Document referring to such
Organizational Document.
"Original Revolving Commitment Termination Date" means March 28, 2000.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Person" shall mean an individual, a corporation, a company, a bank, a
voluntary association, a partnership, a trust, an unincorporated organization,
any Governmental Authority or any other entity.
13
"Plan" shall mean an employee pension benefit plan which is covered by
TitleIV of ERISA or subject to the minimum funding standards under Section412 of
the Code and is either (a)maintained by the Company or any ERISA Affiliate for
employees of the Company or any ERISA Affiliate or (b) maintained pursuant to a
collective bargaining agreement or any other arrangement under which more than
one employer makes contributions and to which the Company or any ERISA Affiliate
is then making or accruing an obligation to make contributions or has within the
preceding five plan years made contributions.
"Post-Default Rate" shall mean, in respect of any principal of any Loan
or any other amount payable by the Company under this Agreement or any other
Loan Document which is not paid when due (whether at stated maturity, by
acceleration, or otherwise), a rate per annum during the period commencing on
the due date until such amount is paid in full equal to the lesser of (a) the
sum of (x) with respect to Eurodollar Loans, 2% per annum plus the applicable
Eurodollar Rate then in effect plus the Applicable Margin for Eurodollar Loans
until the expiration of the applicable Interest Period, (y) with respect to
Competitive Loans, 2% per annum plus the applicable fixed rate offered by the
applicable Bank and accepted by the Company in accordance with Section 2.9
hereof, and (z) with respect to Alternate Base Rate Loans and with respect to
Eurodollar Loans after the expiration of the applicable Interest Period (and
also with respect to indebtedness other than Loans), 2% plus the Alternate Base
Rate as in effect from time to time plus the Applicable Margin for Alternate
Base Rate Loans or (b) the Highest Lawful Rate.
"Principal Office" shall mean the principal office of Administrative
Agent, presently located at 1 Chase Manhattan Plaza, 8th Floor, New York,
New York 10081, Attention: Agent Services.
"Quarterly Dates" shall mean the last day of each March, June,
September and December, provided that, if any such date is not a Business Day,
then the relevant Quarterly Date shall be the next succeeding Business Day.
"Rating" shall mean the senior unsecured debt rating for the Company
publicly announced by Standard & Poor's Ratings Group or Moody's Investors
Service, Inc., or their respective successors. In the event the ratings are not
equivalent, the higher rating shall be treated as the "Rating" hereunder;
provided, that if such ratings differ by more than one (1) level, the Rating
shall be the average, rounded upwards, of the two ratings. In the event that
there is no Rating published by either Standard & Poor's Ratings Group or
Moody's Investors Service, Inc. or their respective successors, then the Rating
shall be deemed to be BB-/Ba3.
"Redemption Obligations" shall mean with respect to any Person all
mandatory redemption obligations of such Person with respect to preferred stock
or other equity securities issued by such Person or put rights in favor of the
holder of such preferred stock or other equity securities, to the extent that
such redemption obligations or put rights will arise prior to the stated
maturity of the Obligations. Notwithstanding the foregoing, customary redemption
obligations and put rights associated with a Change of Control or sale of assets
shall not constitute Redemption Obligations.
14
"Reference Banks" shall mean Chase and such other Banks (up to a
maximum of two (2) additional Banks) as the Company, with the approval of
Administrative Agent (which approval shall not be unreasonably withheld), may
from time to time designate.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time and any successor or other regulation relating to reserve requirements.
"Regulatory Change" shall mean, with respect to any Bank, any change on
or after the date of this Agreement in Legal Requirements (including Regulation
D) or the adoption or making on or after such date of any interpretation,
directive or request applying to a class of banks including such Bank under any
Legal Requirements (whether or not having the force of law) by any Governmental
Authority.
"Relevant Party" shall mean the Company and each other party to any of
the Loan Documents other than (a) the Banks and (b) the Agents.
"Replacement Banks" shall have the meaning set forth in Section 2.2(c)
(ii).
"Request for Extension of Credit" shall mean a request for extension of
credit duly executed by any Responsible Officer of the Company, appropriately
completed and substantially in the form of ExhibitB attached hereto.
"Requirements of Environmental Law" means all requirements imposed by
any law (including for example and without limitation The Resource Conservation
and Recovery Act and The Comprehensive Environmental Response, Compensation, and
Liability Act), rule, regulation, or order of any federal, state or local
executive, legislative, judicial, regulatory or administrative agency, board or
authority in effect at the applicable time which relate to (i) noise; (ii)
pollution, protection or clean-up of the air, surface water, ground water or
land; (iii) solid, gaseous or liquid waste generation, treatment, storage,
disposal or transportation; (iv)exposure to Hazardous Substances; (v) the safety
or health of employees or (vi) regulation of the manufacture, processing,
distribution in commerce, use, discharge or storage of Hazardous Substances.
"Reserve Requirement" shall mean, for any Eurodollar Loan for any
Interest Period therefor, the stated maximum rate for all reserves (including
any marginal, supplemental or emergency reserves) required to be maintained
during such Interest Period under Regulation D by any member bank of the Federal
Reserve System or any Bank against "Eurocurrency liabilities" (as such term is
used in Regulation D). Without limiting the effect of the foregoing, the Reserve
Requirement shall reflect and include any other reserves required to be
maintained by such member banks by reason of any Regulatory Change against (i)
any category of liabilities which includes deposits by reference to which the
Eurodollar Rate is to be determined as provided in the definition of "Eurodollar
Base Rate" in this Section 1.1 or (ii) any category of extensions of credit or
other assets which include Eurodollar Loans. Any determination by Administrative
Agent of the Reserve
15
Requirement shall be conclusive and binding, absent manifest error, and may be
made using any reasonable averaging and attribution method.
"Responsible Officer" shall mean the chairman of the board, the
president, any executive vice president, the vice president of finance and
administration, the chief executive officer or the chief operating officer or
any equivalent officer (regardless of title) and in the case of the Company, any
other vice president, and in respect of financial or accounting matters, shall
also include the chief financial officer, the treasurer and the controller or
any equivalent officer (regardless of title).
"Restricted Subsidiary" shall mean each Subsidiary of the Company that,
at the particular time in question, (i)owns directly or indirectly any material
assets or any interest in any other Restricted Subsidiary and (ii) has been
designated as a Restricted Subsidiary by the Company or has not been designated
as an Unrestricted Subsidiary by the Company either (a)on Exhibit A attached
hereto or (b) in accordance with the terms and provisions of this Agreement. The
Unrestricted Subsidiaries on the Effective Date are listed on Exhibit A attached
hereto and each other Subsidiary of Company as of the Effective Date shall be a
Restricted Subsidiary. A Restricted Subsidiary shall remain such (even if it no
longer owns directly or indirectly any interest in any of the material assets or
any interest in any other Restricted Subsidiary) until designated as an
Unrestricted Subsidiary in accordance with the terms and provisions of this
Agreement.
"Revolving Commitment" shall mean, as to any Bank, the obligation, if
any, of such Bank to make Revolving Loans in an aggregate principal amount at
any one time outstanding up to but not exceeding the amount, if any, set forth
opposite such Bank's name on Exhibit M under the caption "Commitment" (as the
same may be reduced from time to time pursuant to Section2.3).
"Revolving Commitment Termination Date" shall mean the earliest of:
(a) the Original Revolving Commitment Termination Date, or
such other later date as may result from any extension requested by
Company and consented to by the Banks pursuant to Section2.2;
(b) the date on which the Facility Amount is terminated in
full or reduced to zero pursuant to Section 2.3; and
(c) the date on which the Commitments otherwise are
terminated in full and reduced to zero pursuant to the terms of
Section11.1.
Upon the occurrence of any event described in clause (b) or (c), the Revolving
Commitments shall terminate automatically and without any further action.
"Revolving Credit Agreement" shall mean that certain Revolving Credit
Agreement of even date herewith by and among the Company, each of the banks
which is or which may from time to time become a signatory thereto, Bank of
America National Trust and Savings Association, as
16
Documentation Agent, Bank One, Texas, N.A., as Syndication Agent, Societe
Generale, Southwest Agency and Bank of Montreal, as Managing Agents for the
Banks, The Chase Manhattan Bank, as Auction Administrative Agent for the Banks,
and Chase Bank of Texas, National Association, as Administrative Agent, as such
agreement from time to time may be amended, amended and restated, supplemented
or otherwise modified.
"Revolving Loans" shall mean the loans provided for in Section 2.1(a)
hereof.
"Seagull" shall mean Seagull Energy Corporation, a Texas corporation.
"Senior Debt" shall mean Total Debt, other than Subordinated
Indebtedness.
"Senior Leverage Ratio" shall mean the ratio of (a) Senior Debt to (b)
EBITDAX of the Company and its Restricted Subsidiaries on a consolidated basis
for the last four rolling fiscal quarters.
"Specified Assets" shall have the meaning set forth in Section 10.4.
"Stated Maturity Date" shall mean the date occurring 364 days after the
Term Commitment Termination Date.
"Subordinated Indebtedness" shall mean all unsecured Indebtedness of
the Company which is subordinated, upon terms satisfactory to the Administrative
Agent, in right of payment to the payment in full in cash of all Obligations.
"Subsidiary" shall mean, with respect to any Person (the "parent"), (a)
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 the parent or one or more of the
Subsidiaries of the parent or by the parent and one or more of the Subsidiaries
of the parent, and (b) any partnership, limited partnership, joint venture or
other form of entity, the majority of the legal or beneficial ownership of which
is at the time directly or indirectly owned or controlled by the parent or one
or more of the Subsidiaries of the parent or by the parent and one or more of
the Subsidiaries of the parent.
"Tangible Net Worth" shall mean with respect to any Person the sum of
the redemption price of preferred stock, par value of common stock, capital in
excess of par value of common stock (additional paid-in capital) and retained
earnings, less treasury stock, goodwill, deferred development costs, franchises,
licenses, patents, trademarks and copyrights and all other assets which are
properly classified as intangible assets in accordance with GAAP less any
Redemption Obligations.
17
"Term Commitment" shall mean, as to any Bank, such Bank's obligation to
make Term Loans pursuant to Section 2.1(b) of this Agreement in an aggregate
principal amount equal to the lesser of (i) the aggregate Revolving Loans
outstanding to all Banks as of the Revolving Commitment Termination Date or (ii)
the Revolving Commitments in effect as of the Revolving Commitment Termination
Date.
"Term Commitment Termination Date" shall mean the earlier of
(a) the Business Day after the Revolving Commitment
Termination Date; and
(b) the date on which the Commitments otherwise are
terminated in full and reduced to zero pursuant to the terms of
Section11.1.
Upon the occurrence of any event described in clause (b), the Term Commitments
shall terminate automatically and without any further action.
"Term Loans" shall mean the loans provided for in Section 2.1(b)
hereof.
"Total Debt" shall mean all Indebtedness of the Company and its
Restricted Subsidiaries on a consolidated basis, but excluding (i) Indebtedness
of the Company or any Restricted Subsidiary of the types described in Section
10.1, part (i), clauses (c) through (g), (j), (k) and (l), (ii) fifty percent
(50%) of the amount of (A) obligations in respect of letters of credit or
similar instruments not supporting indebtedness for borrowed money and (B)
obligations in connection with bank guarantees, bonds, surety or similar
obligations required or requested by Governmental Authorities in connection with
the usual and customary operation of and the obtaining of oil and gas
properties, and (iii)Indebtedness of the Company or any Restricted Subsidiary of
the types described in Section10.1, part (i), clause (h), up to an aggregate
amount of $10,000,000.
"Total Leverage Ratio" shall mean the ratio of (a) Total Debt to (b)
EBITDAX of the Company and its Restricted Subsidiaries on a consolidated basis
for the last four rolling fiscal quarters.
"Type" shall have the meaning assigned to such term in Section 1.3
hereof.
"Unfunded Liabilities" shall mean, with respect to any Plan, at any
time, the amount (if any) by which (a) the present value of all benefits under
such Plan exceeds (b) the fair market value of all Plan assets allocable to such
benefits, all determined as of the then most recent actuarial valuation report
for such Plan, but only to the extent that such excess represents a potential
liability of any ERISA Affiliate to the PBGC or a Plan under Title IV of ERISA.
"United States" or "U.S." shall mean the United States of America, its
fifty states and the District of Columbia.
18
"Unrestricted Subsidiary" shall mean each Subsidiary of the Company
which is (i)designated as an Unrestricted Subsidiary on ExhibitA attached hereto
or (ii) designated as an Unrestricted Subsidiary by the Company at any time
after the Effective Date and either (A) such Subsidiary has a Tangible Net Worth
of less than $25,000,000 or (B) with the consent of the Administrative Agent and
the Majority Banks. An Unrestricted Subsidiary shall remain such until
designated as a Restricted Subsidiary in accordance with the terms and
provisions of this Agreement.
1.2 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 delivered hereunder shall be prepared, in accordance with GAAP.
To enable the ready determination of compliance with the provisions hereof, the
Company will not change from December31 in each year the date on which its
fiscal year ends, nor from March 31, June 30 and September 30 the dates on which
the first three fiscal quarters in each fiscal year end.
1.3 Types of Loans. Loans hereunder are distinguished by "Type". The
"Type" of a Loan refers to the determination whether such Loan is a Eurodollar
Loan, a Competitive Loan or an Alternate Base Rate Loan.
1.4 Miscellaneous. The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement. Any
reference to Sections shall refer to Sections of this Agreement.
Section 2. Commitments; Competitive Bid Facility.
2.1 Committed Loans. From time to time on or after the date hereof on
the terms and subject to the conditions of this Agreement, each Bank shall make
Committed Loans described in this Section 2.1.
(a) Revolving Loans. From time to time on or after the date hereof and
prior to the Revolving Commitment Termination Date, each Bank shall make
Revolving Loans under this Section to the Company in an aggregate principal
amount at any one time outstanding up to but not exceeding such Bank's
Commitment Percentage of the amount by which the Facility Amount exceeds the
aggregate unpaid principal balance of all Competitive Loans from time to time
outstanding. Subject to the conditions herein, any such Revolving Loan repaid
prior to the Revolving Commitment Termination Date may be reborrowed pursuant to
the terms of this Agreement.
(b) Term Loans. On the Revolving Commitment Termination Date (unless
such date shall occur as a result of clause (c) of the definition thereof), each
Bank will make one Term Loan to the Company equal to such Bank's Commitment
Percentage of the Term Commitment. No amounts paid or prepaid with respect to
the Term Loan may be reborrowed. Eurodollar Loans and
19
Competitive Loans for which the Interest Period shall not have terminated as of
the Revolving Commitment Termination Date shall be continued as Eurodollar Loans
or Competitive Loans, as the case may be, for the applicable Interest Period and
Alternate Base Rate Loans shall be continued as Alternate Base Rate Loans after
the Revolving Commitment Termination Date, unless the Company shall have elected
otherwise by delivery of a Request for Extension of Credit. Any principal
repayments received on the Revolving Commitment Termination Date for Revolving
Loans not converted into Term Loans shall be applied first to Alternate Base
Rate Loans and, after Alternate Base Rate Loans have been paid in full, to
either Eurodollar Loans and Competitive Loans, unless the Company shall have
otherwise instructed the Administrative Agent in writing. Upon a Bank making
such Term Loan, its Term Commitment shall terminate and it shall have no further
Commitment to make Loans.
2.2 Extension of Revolving Commitment Termination Date and Revolving
Commitments.
(a) Subject to the other provisions of this Agreement, the Revolving
Commitments shall be effective for an initial period from the date hereof to the
Original Revolving Commitment Termination Date; provided that the Revolving
Commitment Termination Date, and concomitantly the Revolving Commitments, may be
extended for successive 364 day periods expiring on the date which is 364 days
from the then scheduled Revolving Commitment Termination Date. If Company shall
request in a Certificate of Extension delivered to the Administrative Agent not
more than 60 days and not less than 45 days prior to the Revolving Commitment
Termination Date that the Revolving Commitment Termination Date be extended for
364 days from the then scheduled Revolving Credit Termination Date, then the
Administrative Agent shall promptly notify each Bank of such request and each
Bank shall notify the Administrative Agent, no later than 30 days prior to the
Revolving Credit Termination Date, whether such Bank, in the exercise of its
sole discretion, will extend the Revolving Commitment Termination Date for such
364 day period. Any Bank which shall not timely notify the Administrative Agent
whether it will extend the Revolving Commitment Termination Date shall be deemed
to not have agreed to extend the Revolving Commitment Termination Date. No Bank
shall have any obligation whatsoever to agree to extend the Revolving Commitment
Termination Date. Any agreement to extend the Revolving Commitment Termination
Date by any Bank shall be irrevocable, except as provided in clause (c) of this
Section.
(b) If all Banks notify the Administrative Agent pursuant to clause (a)
of this Section of their agreement to extend the Revolving Commitment
Termination Date, then the Administrative Agent shall so notify each Bank and
Company, and such extension shall be effective without other or further action
by any party hereto for such additional 364 day period.
(c) If Banks constituting at least the Majority Banks approve the
extension of the then scheduled Revolving Commitment Termination Date (such
Banks agreeing to extend the Revolving Commitment Termination Date herein called
the "Accepting Banks") and if one or more Banks shall notify, or be deemed to
notify, the Administrative Agent pursuant to clause (a) of this Section that
they will not extend the then scheduled Revolving Commitment Termination Date
(such Banks
20
herein called the "Declining Banks"), then (A) the Administrative Agent shall
promptly so notify Company and the Accepting Banks, (B) the Accepting Banks
shall, upon Company's election to extend the then scheduled Revolving Commitment
Termination Date in accordance with clause (i) or (ii) below, extend the then
scheduled Revolving Commitment Termination Date and (C)Company shall, pursuant
to a notice delivered to the Administrative Agent, the Accepting Banks and the
Declining Banks, no later than the tenth (10th) day following the date by which
each Bank is required, pursuant to clause (a) of this Section, to approve or
disapprove the requested extension of the Revolving Commitment Termination Date,
either:
(i) elect to extend the Revolving Commitment Termination
Date with respect to the Accepting Banks and direct the Declining Banks
to terminate their Revolving Commitments, which termination shall
become effective on the date which would have been the Revolving
Commitment Termination Date except for the operation of this Section.
On such date, (x) Company shall deliver a notice of the effectiveness
of the termination of the Revolving Commitments of such Declining Banks
to the Declining Banks with a copy to the Administrative Agent and (y)
Company shall request a Term Loan from such Declining Banks (other than
Declining Banks that are replaced by Replacement Banks pursuant to
paragraph (ii) below) pursuant to the terms of Section 2.1(b) (and each
such Declining Bank shall make such Term Loan), and (z) upon the
payment in full in immediately available funds of all Obligations of
Company owing to such Declining Banks in connection with such Term
Loans on the Stated Maturity Date in effect at the time each such
Declining Bank made its election to be a Declining Bank (i.e., 364 days
after the date of such Term Loan), including any amounts required
pursuant to Section6, the Declining Banks shall each cease to be Banks
hereunder for all purposes, other than for purposes of Sections 6 and
13, and shall cease to have any obligations or any Commitment
hereunder, other than to the Agents pursuant to Section 12, and the
Administrative Agent shall promptly notify the Accepting Banks and
Company of the new Revolving Commitment Termination Date applicable to
such Accepting Banks; or
(ii) elect to extend the Revolving Commitment Termination
Date with respect to the Accepting Banks and, prior to or no later than
the then scheduled Revolving Commitment Termination Date, (A) to
replace one or more of the Declining Banks with another lender or
lenders reasonably acceptable to the Administrative Agent (such lenders
herein called the "Replacement Banks") and (B) Company shall pay in
full in immediately available funds all Obligations of Company owing to
any Declining Bank that is not being replaced pursuant to this
paragraph (other than Obligations being purchased by the Replacement
Banks); provided that (x) the Replacement Bank or Replacement Banks
shall purchase, and the Declining Bank or Declining Banks shall sell,
the Declining Bank's or Declining Banks' rights and obligations
hereunder without recourse or expense to, or warranty by, such
Declining Bank or Declining Banks being replaced for a purchase price
equal to the aggregate outstanding principal amount of the Obligations
payable to such Declining Bank or Declining Banks plus any accrued but
unpaid interest on such Obligations and accrued but unpaid fees or
other amounts owing in respect of such Declining Bank's or
21
Declining Banks' Loans and Commitments hereunder, and (y) upon the
payment of such amounts referred to in clause(x) and the execution of
an Assignment and Acceptance agreement by the Replacement Bank or
Replacement Banks and the Declining Bank or Declining Banks (which each
such Declining Bank agrees to execute promptly), the Replacement Bank
or Replacement Banks shall each constitute a Bank hereunder and the
Declining Bank or Declining Banks being so replaced shall no longer
constitute a Bank (other than for purposes of Sections6 and 13), and
shall no longer have any obligations hereunder, other than to the
Agents pursuant to Section 12; or
(iii) elect to revoke and cancel the extension request in
such Certificate of Extension by giving notice of such revocation and
cancellation to the Administrative Agent (which shall promptly notify
the Banks thereof) no later than the tenth (10th) day following the
date by which each Bank is required, pursuant to clause (a) of this
Section, to approve or disapprove the requested extension of the
Revolving Commitment Termination Date, and concomitantly the total
Revolving Commitments.
If Company fails to timely provide the election notice referred to in
this clause(c), Company shall be deemed to have revoked and canceled the
extension request in the Certificate of Extension and to have elected not to
extend the Revolving Commitment Termination Date.
2.3 Reductions and Changes of Commitments.
(a) Mandatory.
(i) On the Stated Maturity Date, all Commitments shall be terminated in
their entirety unless terminated at an earlier date pursuant to Section11.1.
(ii) Upon the sale, transfer, conveyance or assignments of any
properties or other assets of Company or its Subsidiaries (other than a sale,
transfer, conveyance or assignment (A) in the ordinary course of business, (B)
to the Company or any of its Subsidiaries or (C) of any Specified Assets),
(i)the Revolving Commitment or the Term Commitment, as applicable, automatically
and permanently shall be reduced by, and (ii) the Commitment of each Bank
automatically and permanently shall be reduced on a pro-rata basis in an amount
sufficient to reduce the aggregate amount of such Commitments by, 75% of the
amount by which Net Cash Proceeds exceeds $100,000,000 in the aggregate for all
such sales during any calendar year received by Company or any of its
Subsidiaries in connection with such sale, transfer, assignment or conveyance
and the Company shall make mandatory prepayments on the Loans on or within ten
(10) days after receipt of such Net Cash Proceeds to the extent necessary so
that after giving effect to such mandatory prepayments the sum of all Loans
(including any Loan to be made but not yet made pursuant to a Request for
Extension of Credit) outstanding at any time would not exceed the total
Commitments.
(b) Optional. The Company shall have the right to terminate or reduce
the unused portion of the Commitments at any time or from time to time, provided
that: (i) the Company shall
22
give notice of each such termination or reduction to Administrative Agent as
provided in Section5.5 hereof and (ii) each such partial reduction shall be
permanent and in an aggregate amount equal to an integral multiple of $1,000,000
which equals or exceeds $5,000,000.
(c) No Reinstatement. Any reduction in or termination of the
Commitments may not be reinstated without the approval of Administrative Agent
and any Bank whose Commitment (or the applicable part thereof) is to be so
reinstated.
2.4 Fees.
(a) The Company shall pay to Administrative Agent for the account of
each Bank a facility fee accruing from the Effective Date, computed for each day
at a rate per annum equal to the Facility Fee Percentage times such Bank's pro
rata share (based on its respective Commitment) of the Facility Amount on such
day. Such facility fees shall be payable on the Quarterly Dates and on the
earlier of the date the Commitments are terminated in their entirety or the
Stated Maturity Date.
(b) The Company agrees to pay to Administrative Agent fees as provided
in the separate letter agreements executed by and between Administrative Agent
and the Company.
2.5 Affiliates; Lending Offices.
(a) Any Bank may, if it so elects, fulfill any obligation to make a
Eurodollar Loan or Competitive Loan by causing a branch, foreign or otherwise,
or Affiliate of such Bank to make such Loan and may transfer and carry such Loan
at, to or for the account of any branch office or Affiliate of such Bank;
provided that, in such event for the purposes of this Agreement such Loan shall
be deemed to have been made by such Bank and the obligation of the Company to
repay such Loan shall nevertheless be to such Bank and shall be deemed to be
held by such Bank and, to the extent of such Loan, to have been made for the
account of such branch or Affiliate.
(b) Notwithstanding any provision of this Agreement to the contrary,
each Bank shall be entitled to fund and maintain its funding of all or any part
of its Loans hereunder in any manner it sees fit, it being understood, however,
that for the purposes of this Agreement all determinations hereunder shall be
made as if such Bank had actually funded and maintained each Eurodollar Loan
during each Interest Period through the purchase of deposits having a maturity
corresponding to such Interest Period and bearing an interest rate equal to the
Eurodollar Rate for such Interest Period.
2.6 Several Obligations. The failure of any Bank to make any Loan to be
made by it on the date specified therefor shall not relieve any other Bank of
its obligation to make its Loan on such date, but neither Administrative Agent
nor any Bank shall be responsible for the failure of any other Bank to make a
Loan to be made by such other Bank.
23
2.7 Repayment of Loans; Evidence of Debt.
(a) Each Bank shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of Company to such Bank
resulting from each Loan made by such Bank, including the amounts of principal
and interest payable and paid to such Bank from time to time hereunder.
(b) Administrative Agent shall maintain accounts in which it shall
record (i)the amount of each Loan made hereunder and, if applicable, the
Interest Period applicable thereto, (ii)the amount of any principal or interest
due and payable or to become due and payable from Company to each Bank hereunder
and (iii)the amount of any sum received by Administrative Agent hereunder for
the account of the Banks and each Bank's share thereof.
(c) The entries made in the accounts maintained pursuant to
paragraph(a) or(b) of this Section shall be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided that the
failure of any Bank or Administrative Agent to maintain such accounts or any
error therein shall not in any manner affect the obligation of any Obligor to
repay the Loans or other Obligations in accordance with the terms of this
Agreement or the other Loan Documents.
(d) Any Bank may request that Loans made by it be evidenced by a
promissory note. In such event, Company shall prepare, execute and deliver to
such Bank promissory notes payable to the order of such Bank (or, if requested
by such Bank, to such Bank and its registered assigns and in a form approved by
Administrative Agent). Thereafter, the Loans evidenced by such promissory notes
and interest thereon may (including after assignment pursuant to Section 13.5)
be represented by one or more promissory notes in such form payable to the order
of the payee named therein.
2.8 Use of Proceeds. The proceeds of the Loans shall be used for
general corporate purposes.
2.9 Competitive Bid Procedure.
(a) In order to request Competitive Bids, the Company shall hand
deliver, telex or telecopy to Auction Administrative Agent a duly completed
request substantially in the form of Exhibit F, with the blanks appropriately
completed (a "Competitive Bid Request"), to be received by Auction
Administrative Agent not later than 11:00 a.m., Houston, Texas time, five (5)
Business Days before the date specified for a proposed Competitive Loan. No
Alternate Base Rate Loan shall be requested in, or, except pursuant to Section
6, made pursuant to, a Competitive Bid Request. A Competitive Bid Request that
does not conform substantially to the format of Exhibit F may be rejected at
Auction Administrative Agent's sole discretion, and Auction Administrative Agent
shall promptly notify the Company of such rejection by telecopier. Each
Competitive Bid Request shall in each case refer to this Agreement and specify
(x) the date of such Competitive Loans (which shall be a Business Day) and the
aggregate principal amount thereof (which shall not be less than $25,000,000 or
greater than the unused portion of the Facility Amount on such date and shall be
an
24
integral multiple of $5,000,000) and (y) the Interest Period with respect
thereto (which may not end after the termination of the then scheduled Stated
Maturity Date). Promptly after its receipt of a Competitive Bid Request that is
not rejected as aforesaid, Auction Administrative Agent shall invite by
telecopier (in substantially the form set forth in Exhibit H hereto) the Banks
to bid, on the terms and conditions of this Agreement, to make Competitive Loans
pursuant to such Competitive Bid Request. Notwithstanding the foregoing, Auction
Administrative Agent shall have no obligation to invite any Bank to make a
Competitive Bid pursuant to this Section until such Bank has delivered a
properly completed Competitive Bid Administrative Questionnaire to Auction
Administrative Agent.
(b) Each Bank may, in its sole discretion, make one or more Competitive
Bids to the Company responsive to each Competitive Bid Request. Each Competitive
Bid by a Bank must be received by Auction Administrative Agent via telecopier,
in the form of Exhibit H hereto, not later than 11:00a.m., Houston, Texas time,
four (4) Business Days before the date specified for a proposed Competitive
Loan. Competitive Bids that do not conform substantially to the format of
Exhibit H may be rejected by Auction Administrative Agent after conferring with,
and upon the instruction of, the Company, and Auction Administrative Agent shall
notify the Bank of such rejection as soon as practicable. Each Competitive Bid
shall refer to this Agreement and (x) specify the principal amount (which shall
be in a minimum principal amount of $5,000,000 and in an integral multiple of
$1,000,000 and which may equal the entire aggregate principal amount of the
Competitive Loan requested by the Company) of the Competitive Loan that the Bank
is willing to make to the Company, (y) specify the Competitive Bid Rate at which
the Bank is prepared to make the Competitive Loan and (z)confirm the Interest
Period with respect thereto specified by the Company in its Competitive Bid
Request. A Competitive Bid submitted by a Bank pursuant to this paragraph (b)
shall be irrevocable.
(c) Auction Administrative Agent shall, by 2:00 p.m. four (4) Business
Days before the date specified for a proposed Competitive Loan, notify the
Company by telecopier of all the Competitive Bids made, the Competitive Bid Rate
and the maximum principal amount of each Competitive Loan in respect of which a
Competitive Bid was made and the identity of the Bank that made each bid.
Auction Administrative Agent shall send a copy of all Competitive Bids to the
Company for its records as soon as practicable after completion of the bidding
process set forth in this Section 2.9.
(d) The Company may in its sole and absolute discretion, subject only
to the provisions of this Section 2.9(d), accept or reject any Competitive Bid
referred to in Section 2.9(c); provided, however, that the aggregate amount of
the Competitive Bids so accepted by the Company may not exceed the principal
amount of the Competitive Loan requested by the Company. The Company shall
notify Auction Administrative Agent by telecopier whether and to what extent it
has decided to accept or reject any or all of the bids referred to in Section
2.9(c), not later than 11:00 a.m., Houston, Texas time, three (3) Business Days
before the date specified for a proposed Competitive Loan; provided, however,
that (w) the failure by the Company to give such notice shall be deemed to be a
rejection of all the bids referred to in Section 2.9(c) and (x) no bid shall be
accepted for a
25
Competitive Loan unless such Competitive Loan is in a minimum principal amount
of $5,000,000 and an integral multiple of $1,000,000. Notwithstanding the
foregoing, if the Company accepts more than one bid made in response to a
Competitive Bid Request and the available principal amount of Competitive Loans
to be allocated among the Banks is not sufficient to enable Competitive Loans to
be allocated to each Bank in a minimum principal amount of $5,000,000 and in
integral multiples of $1,000,000, then the Company shall select the Banks to be
allocated such Competitive Loans and shall round allocations up or down to the
next higher or lower multiple of $1,000,000 as it shall deem appropriate. In
addition, the Company shall be permitted under the foregoing procedures to
accept a bid or bids in a principal amount of less than $5,000,000 (i) in order
to enable the Company to accept bids equal to (but not in excess of) the
principal amount of the Competitive Loan requested by the Company or (ii) in
order to enable the Company to accept all remaining bids, or all remaining bids
at a particular Competitive Bid Rate. A notice given by Company pursuant to this
paragraph(d) shall be irrevocable.
(e) Auction Administrative Agent shall promptly notify each bidding
Bank whether or not its Competitive Bid has been accepted (and if so, in what
amount and at what Competitive Bid Rate) by telex or telecopier sent by Auction
Administrative Agent, and each successful bidder will thereupon become bound,
subject to the other applicable conditions hereof, to make the Competitive Loan
in respect of which its bid has been accepted. After completing the
notifications referred to in the immediately preceding sentence, Auction
Administrative Agent shall (i) notify Administrative Agent of each Competitive
Bid that has been accepted, the amount thereof and the Competitive Bid Rate
therefor and (ii) notify each Bank of the aggregate principal amount of all
Competitive Bids accepted.
(f) No Competitive Loan shall be made within five (5) Business Days of
the date of any other Competitive Loan, unless the Company and Auction
Administrative Agent shall mutually agree otherwise.
(g) If Administrative Agent shall at any time have a Commitment
hereunder and shall elect to submit a Competitive Bid in its capacity as a Bank,
it shall submit such bid directly to the Company one quarter of an hour earlier
than the latest time at which the other Banks are required to submit their bids
to Auction Administrative Agent pursuant to paragraph (b) above.
(h) All notices required by this Section 2.9 shall be made in
accordance with Section13.2 and the Competitive Bid Administrative Questionnaire
most recently placed on file by each Bank with Auction Administrative Agent.
Section 3. Borrowings, Prepayments and Selection of Interest Rates.
3.1 Borrowings. The Company shall give Administrative Agent notice of
each borrowing to be made hereunder as provided in Sections 2.9 and 5.5 hereof.
Not later than 2:00 p.m. Houston, Texas time on the date specified for each such
borrowing hereunder, each Bank shall make available the amount of the Loan, if
any, to be made by it on such date to Administrative Agent, at
26
its Principal Office, in immediately available funds, for the account of the
Company. The amount so received by Administrative Agent shall, subject to the
terms and conditions of this Agreement, be made available to the Company by
depositing the same, in immediately available funds, in an account designated by
the Company maintained with Administrative Agent at the Principal Office.
3.2 Prepayments.
(a) Optional Prepayments. Subject to the provisions of Sections4, 5 and
6, the Company shall have the right to prepay, on any Business Day, in whole or
in part, without the payment of any penalty or fee, Loans at any time or from
time to time, provided that, the Company shall give Administrative Agent notice
of each such prepayment as provided in Section 5.5 hereof. Eurodollar Loans and
Competitive Loans may be prepaid on the last day of an Interest Period
applicable thereto. Neither Eurodollar Loans nor Competitive Loans may be
otherwise prepaid unless prepayment is accompanied by payment of all
compensation required by Section 6.
(b) Mandatory Prepayments. Subject to Section 2.3(a)(ii), the Company
shall from time to time on demand by Administrative Agent prepay the Loans in
such amounts as shall be necessary so that at all times the aggregate
outstanding principal amount of all Credit Obligations shall not be in excess of
the aggregate amount of the Commitments, as reduced from time to time pursuant
to Section 2.3 hereof.
3.3 Selection of Interest Rates. Subject to the terms and provisions of
this Agreement, the Company shall have the right either to convert any Loan (in
whole or in part) into a Loan of another Type (provided that no such conversion
of Eurodollar Loans or Competitive Loans shall be permitted other than on the
last day of an Interest Period applicable thereto) or to continue such Loan (in
whole or in part) as a Loan of the same Type. In the event the Company fails to
so give such notice prior to the end of the applicable Interest Period with
respect to any Eurodollar Loan or Competitive Loan, such Loan shall become an
Alternate Base Rate Loan on the last day of such Interest Period.
Notwithstanding any other provision of this Agreement, if a Default shall have
occurred and be continuing on the last day of an Interest Period applicable to a
Eurodollar Loan or Competitive Loan, such Loan shall automatically be converted
to an Alternate Base Rate Loan.
Section 4. Payments of Principal and Interest.
4.1 Repayment of Loans. The Company hereby unconditionally promises to
pay to Administrative Agent for the account of each Bank (a) each Loan in full
at the end of the Interest Period applicable to such Loan unless such Loan is
continued or converted in accordance with the terms hereof, and (b)the then
unpaid principal amount of all outstanding Loans on the then scheduled Stated
Maturity Date.
27
4.2 Interest.
(a) Subject to Section13.6 hereof, the Company will pay to
Administrative Agent for the account of each Bank interest on the unpaid
principal amount of each Loan made by such Bank for the period commencing on the
date of such Loan to but excluding the date such Loan shall be paid in full, at
the lesser of (I) the following rates per annum:
(i) if such Loan is an Alternate Base Rate Loan, the
Alternate Base Rate plus the Applicable Margin,
(ii) if such Loan is a Eurodollar Loan, the applicable
Eurodollar Rate plus the Applicable Margin, and
(iii) if such Loan is a Competitive Loan, the applicable
fixed rate offered by the applicable Bank and accepted by the Company in
accordance with Section 2.9 hereof,
or (II) the Highest Lawful Rate.
(b) Notwithstanding any of the foregoing but subject to Section 13.6
hereof, the Company will pay to Administrative Agent for the account of each
Bank interest at the applicable Post-Default Rate on any principal of any Loan
made by such Bank and on any other amount payable by the Company hereunder to or
for the account of such Bank (but, if such amount is interest, only to the
extent legally allowed), which shall not be paid in full when due (whether at
stated maturity, by acceleration or otherwise), for the period commencing on the
due date thereof until the same is paid in full.
(c) Accrued interest on each Alternate Base Rate Loan shall be payable
on each Quarterly Date. Accrued interest on each Eurodollar Loan or Competitive
Bid Loan shall be payable on the last day of each Interest Period for such Loan
(and, if such Interest Period exceeds three months' duration, on the last day of
each three month period, commencing on the first three month anniversary of such
Interest Period). Notwithstanding the foregoing, (i) accrued interest payable at
the Post-Default Rate shall be due and payable from time to time on demand of
Administrative Agent or the Majority Banks (through Administrative Agent) and
(ii)accrued interest on any amount prepaid or converted pursuant to Section 6
hereof shall be paid on the amount so prepaid or converted.
Section 5. Payments; Pro Rata Treatment; Computations, Etc.
5.1 Payments.
(a) Except to the extent otherwise provided herein, all payments of
principal, interest and other amounts to be made by the Company or any other
Obligor hereunder shall be made in Dollars, in immediately available funds, to
Administrative Agent at the Principal Office (or in the
28
case of a successor Administrative Agent, at the principal office of such
successor Administrative Agent in the United States), not later than 11:00 a.m.,
Houston, Texas time on the date on which such payment 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).
(b) The Company or such other Obligor shall, at the time of making each
payment hereunder, specify to Administrative Agent the Loans or other amounts
payable by the Company or such Obligor hereunder or thereunder to which such
payment is to be applied. Each payment received by Administrative Agent
hereunder or any other Loan Document for the account of a Bank shall be paid
promptly to such Bank, in immediately available funds for the account of such
Bank's Applicable Lending Office.
(c) If the due date of any payment hereunder or any other Loan Document
falls on a day which is not a Business Day, the due date for such payment
(subject to the definition of Interest Period) 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.
5.2 Pro Rata Treatment. Except to the extent otherwise provided herein:
(a) each borrowing from the Banks under Section 2.1 hereof shall be made ratably
from the Banks on the basis of their respective Commitments and each payment of
commitment or facility fees shall be made for the account of the Banks, and each
termination or reduction of the Commitments of the Banks under Section 2.3
hereof shall be applied, pro rata, according to the Banks' respective
Commitments; and (b) each payment by the Company of principal of or interest on
Loans of a particular Type shall be made to Administrative Agent for the account
of the Banks pro rata in accordance with the respective unpaid principal amounts
of such Loans held by the Banks.
5.3 Computations. Interest on Competitive Loans and interest based on
the Eurodollar Base Rate or the Federal Funds Rate will be computed on the basis
of a year of 360 days and actual days elapsed (including the first day but
excluding the last day) occurring in the period for which payable, unless the
effect of so computing shall be to cause the rate of interest to exceed the
Highest Lawful Rate, in which case interest shall be calculated on the basis of
the actual number of days elapsed in a year composed of 365 or 366 days, as the
case may be. All other interest and fees shall be computed on the basis of a
year of 365 (or 366) days and actual days elapsed (including the first day but
excluding the last day) occurring in the period for which payable.
5.4 Minimum and Maximum Amounts. Except for prepayments made pursuant
to Section 3.2(b) hereof, and subject to the provisions of Section 2.9 hereof
with respect to Competitive Loans, each borrowing and repayment of principal of
Loans, each termination or reduction of Commitments, each optional prepayment
and each conversion of Type shall be in an aggregate principal amount at least
equal to (a)in the case of Eurodollar Loans and Competitive Loans, $5,000,000,
and (b)in the case of Alternate Base Rate Loans, $1,000,000 (borrowings or
prepayments of Loans of different Types or, in the case of Eurodollar Loans and
Competitive Loans, having different Interest Periods at the same time hereunder
to be deemed separate borrowings and
29
prepayments for purposes of the foregoing, one for each Type or Interest
Period). Upon any mandatory prepayment that would reduce Eurodollar Loans or
Competitive Loans, respectively, having the same Interest Period to less than
$5,000,000 such Loans shall automatically be converted into Alternate Base Rate
Loans on the last day of the applicable Interest Period. Notwithstanding
anything to the contrary contained in this Agreement, there shall not be, at any
one time, more than eight (8) Interest Periods in effect with respect to
Eurodollar Loans or Competitive Loans, in the aggregate.
5.5 Certain Actions, Notices, Etc. Notices to Administrative Agent of
any termination or reduction of Commitments, of borrowings and prepayments,
conversions and continuations of Loans and of the duration of Interest Periods
shall be irrevocable and shall be effective only if received by Administrative
Agent not later than 11:00 a.m., Houston, Texas time on the number of Business
Days prior to the date of the relevant termination, reduction, borrowing and/or
repayment, conversion or continuance specified below:
Notice Number of Business Days Prior
------ -----------------------------
Termination or Reduction of 2
Commitments
Borrowing or prepayment of or same day
conversion into Alternate Base Rate
Loans
Borrowing or prepayment of or 3
conversion into or continuance of
Eurodollar Loans
=============================================== =========================================
Each such notice of termination or reduction shall specify the amount of the
Commitments to be terminated or reduced. Each such notice of borrowing or
prepayment shall specify the amount and Type of the Loans to be borrowed or
prepaid (subject to Sections 3.2(a) and 5.4 hereof), the date of borrowing or
prepayment (which shall be a Business Day) and, in the case of Eurodollar Loans,
the duration of the Interest Period therefor (subject to the definition of
"Interest Period"). Each such notice of conversion of a Loan into a Loan of
another Type shall identify such Loan (or portion thereof) being converted and
specify the Type of Loan into which such Loan is being converted (subject to
Section 5.4 hereof) and the date for conversion (which shall be a Business Day)
and, unless such Loan is being converted into an Alternate Base Rate Loan, the
duration (subject to the definition of "Interest Period") of the Interest Period
therefor which is to commence as of the last day of the then current Interest
Period therefor (or the date of conversion, if such Loan is being converted from
an Alternate Base Rate Loan). Each such notice of continuation of a Loan (or
portion thereof) as the same Type of Loan shall identify such Loan (or portion
thereof) being continued (subject to Section 5.4 hereof) and the duration
(subject to the definition of "Interest Period") of the Interest Period therefor
which is to commence as of the last day of the then current
30
Interest Period therefor. Administrative Agent shall promptly notify the
affected Banks of the contents of each such notice. Notice of any prepayment
having been given, the principal amount specified in such notice, together with
interest thereon to the date of prepayment, shall be due and payable on such
prepayment date. Section 2.9 hereof shall control the time periods applicable to
Competitive Loans.
5.6 Non-Receipt of Funds by Administrative Agent. Unless Administrative
Agent shall have been notified by a Bank or the Company (the "Payor") prior to
the date on which such Bank is to make payment to Administrative Agent of the
proceeds of a Loan to be made by it hereunder or the Company is to make a
payment to Administrative Agent for the account of one or more of the Banks, as
the case may be (such payment being herein called the "Required Payment"), which
notice shall be effective upon receipt, that the Payor does not intend to make
the Required Payment to Administrative Agent, Administrative 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 on such date and, if the Payor has not in fact made the
Required Payment to Administrative Agent on or before such date, the recipient
of such payment shall, on demand, pay to Administrative Agent the amount made
available to it together with interest thereon in respect of the period
commencing on the date such amount was so made available by Administrative Agent
until the date Administrative Agent recovers such amount at a rate per annum
equal to the Federal Funds Rate for such period.
5.7 Sharing of Payments, Etc. If a Bank shall obtain payment of any
principal of or interest on any Loan made by it under this Agreement, or on any
other obligation then due to such Bank hereunder, through the exercise of any
right of set-off, banker's lien, counterclaim or similar right, or otherwise, it
shall promptly purchase from the other Banks participations in the Loans made,
or other obligations held, by the other Banks in such amounts, and make such
other adjustments from time to time as shall be equitable to the end that all
the Banks shall share the benefit of such payment (net of any expenses which may
be incurred by such Bank in obtaining or preserving such benefit) pro rata in
accordance with the unpaid principal and interest on the Obligations then due to
each of them (provided, however, that the foregoing shall not apply to payments
of Competitive Loans made prior to the termination of the Commitments following
the occurrence of an Event of Default). To such end all the Banks 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
Company agrees, to the fullest extent it may effectively do so under applicable
law, that any Bank so purchasing a participation in the Loans made, or other
obligations held, by other Banks may exercise all rights of set-off, bankers'
lien, counterclaim or similar rights with respect to such participation as fully
as if such Bank were a direct holder of Loans and other obligations in the
amount of such participation. Nothing contained herein shall require any Bank to
exercise any such right or shall affect the right of any Bank to exercise, and
retain the benefits of exercising, any such right with respect to any other
Indebtedness or obligation of any Obligor.
31
Section 6. Yield Protection and Illegality.
6.1 Additional Costs.
(a) Subject to Section 13.6, the Company shall pay to Administrative
Agent, on demand for the account of each Bank from time to time such amounts as
such Bank may determine to be necessary to compensate it for any costs incurred
by such Bank which such Bank determines are attributable to its making or
maintaining of any Eurodollar Loan or any Competitive Loan hereunder or its
obligation to make any such Loan hereunder, or any reduction in any amount
receivable by such Bank hereunder in respect of any of such Loans or such
obligation (such increases in costs and reductions in amounts receivable being
herein called "Additional Costs"), in each case resulting from any Regulatory
Change which:
(i) subjects such Bank (or makes it apparent that such Bank
is subject) to any tax (including without limitation any United States
interest equalization tax), levy, impost, duty, charge or fee
(collectively, "Taxes"), or any deduction or withholding for any Taxes
on or from the payment due under any Eurodollar Loan or any Competitive
Loan or other amounts due hereunder, other than income and franchise
taxes of each jurisdiction (or any subdivision thereof) in which such
Bank has an office or its Applicable Lending Office; or
(ii) changes the basis of taxation of any amounts payable to
such Bank under this Agreement in respect of any of such Loans (other
than changes which affect taxes measured by or imposed on the overall
net income or franchise taxes of such Bank or of its Applicable Lending
Office for any of such Loans by each jurisdiction (or any subdivision
thereof) in which such Bank has an office or such Applicable Lending
Office); or
(iii) imposes or modifies or increases or deems applicable
any reserve, special deposit or similar requirements (including,
without limitation, any such requirement imposed by the Board of
Governors of the Federal Reserve System) relating to any extensions of
credit or other assets of, or any deposits with or other liabilities
of, such Bank or loans made by such Bank, or against any other funds,
obligations or other property owned or held by such Bank (including any
of such Loans or any deposits referred to in the definition of
"Eurodollar Base Rate" in Section 1.1 hereof) and such Bank actually
incurs such additional costs.
Each Bank (if so requested by the Company through Administrative Agent) will
designate a different available Applicable Lending Office for the Eurodollar
Loans or the Competitive Loans of such Bank or take such other action as the
Company may request if such designation or action will avoid the need for, or
reduce the amount of, such compensation and will not, in the sole opinion of
such Bank exercised in good faith, be disadvantageous to such Bank (provided
that such Bank shall have no obligation so to designate an Applicable Lending
Office for Eurodollar Loans located in the United States of America). Each Bank
will furnish the Company with a statement setting forth the basis and amount of
each request by such Bank for compensation under this Section 6.1(a);
32
subject to Section6.8, such certificate shall be conclusive, absent manifest
error, and may be prepared using any reasonable averaging and attribution
methods.
(b) Without limiting the effect of the foregoing provisions of this
Section 6.1, in the event that, by reason of any Regulatory Change, any Bank
either (i) incurs Additional Costs based on or measured by the excess above a
specified level of the amount of a category of deposits or other liabilities of
such Bank which includes deposits by reference to which the interest rate on
Eurodollar Loans is determined as provided in this Agreement or a category of
extensions of credit or other assets of such Bank which includes Eurodollar
Loans or Competitive Loans or (ii) becomes subject to restrictions on the amount
of such a category of liabilities or assets which it may hold, then, if such
Bank so elects by notice to the Company (with a copy to Administrative Agent),
the obligation of such Bank to make Eurodollar Loans or Competitive Loans, as
the case may be, hereunder shall be suspended until the date such Regulatory
Change ceases to be in effect (in which case the provisions of Section6.4 hereof
shall be applicable).
(c) Good faith determinations and allocations by any Bank for purposes
of this Section6.1 of the effect of any Regulatory Change on its costs of
maintaining its obligations to make Loans or of making or maintaining Loans or
on amounts receivable by it in respect of Loans, and of the additional amounts
required to compensate such Bank in respect of any Additional Costs, shall be
conclusive, absent manifest error.
(d) The Company's obligation to pay Additional Costs and compensation
with regard to each Eurodollar Loan and each Competitive Loan shall survive
termination of this Agreement.
6.2 Limitation on Types of Loans. Anything herein to the contrary
notwithstanding, if, with respect to any Eurodollar Loans:
(a) Administrative Agent determines in good faith (which determination
shall be conclusive) that quotations of interest rates for the relevant deposits
referred to in the definition of "Eurodollar Base Rate" in Section 1.1 hereof
are not being provided by the Reference Banks in the relevant amounts or for the
relevant maturities for purposes of determining the rate of interest for such
Loans for Interest Periods therefor as provided in this Agreement; or
(b) the Majority Banks determine in good faith (which determination
shall be conclusive) and notify Administrative Agent that the relevant rates of
interest referred to in the definition of "Eurodollar Base Rate" in Section 1.1
hereof upon the basis of which the rates of interest for such Loans are to be
determined do not accurately reflect the cost to such Banks of making or
maintaining such Loans for Interest Periods therefor; or
(c) Administrative Agent determines in good faith (which determination
shall be conclusive) that by reason of circumstances affecting the interbank
Dollar market generally, deposits in United States dollars in the relevant
interbank Dollar market are not being offered for the
33
applicable Interest Period and in an amount equal to the amount of the
Eurodollar Loan requested by the Company;
then Administrative Agent shall promptly notify the Company and each Bank
thereof, and, so long as such condition remains in effect, the Banks shall be
under no obligation to make Eurodollar Loans (but shall maintain until the end
of the Interest Period then in effect the Eurodollar Loans then outstanding).
6.3 Illegality. Notwithstanding any other provision of this Agreement
to the contrary, if (x)by reason of the adoption of any applicable Legal
Requirement or any change in any applicable Legal Requirement or in the
interpretation or administration thereof by any Governmental Authority or
compliance by any Bank with any request or directive (whether or not having the
force of law) of any central bank or other Governmental Authority or (y)
circumstances affecting the relevant interbank Dollar market or the position of
a Bank therein shall at any time make it unlawful or impracticable in the sole
discretion of a Bank exercised in good faith for such Bank or its Applicable
Lending Office to (a) honor its obligation to make Eurodollar Loans or
Competitive Loans hereunder, or (b) maintain Eurodollar Loans or Competitive
Loans hereunder, then such Bank shall promptly notify the Company thereof
through Administrative Agent and such Bank's obligation to make or maintain
Eurodollar Loans or Competitive Loans, as the case may be, hereunder shall be
suspended until such time as such Bank may again make and maintain Eurodollar
Loans or Competitive Loans, as the case may be (in which case the provisions of
Section 6.4 hereof shall be applicable). Before giving such notice pursuant to
this Section 6.3, such Bank will designate a different available Applicable
Lending Office for the Eurodollar Loans or the Competitive Loans, as the case
may be, of such Bank or take such other action as the Company may request if
such designation or action will avoid the need to suspend such Bank's obligation
to make Eurodollar Loans or Competitive Loans, as the case may be, hereunder and
will not, in the sole opinion of such Bank exercised in good faith, be
disadvantageous to such Bank (provided, that such Bank shall have no obligation
so to designate an Applicable Lending Office for Eurodollar Loans located in the
United States of America).
6.4 Substitute Alternate Base Rate Loans. If the obligation of any Bank
to make or maintain Eurodollar Loans or Competitive Loans, as the case may be,
shall be suspended pursuant to Section 6.1, 6.2 or 6.3 hereof, all Loans which
would otherwise be made by such Bank as Eurodollar Loans or Competitive Loans,
as the case may be, shall be made instead as Alternate Base Rate Loans (and, if
an event referred to in Section 6.1(b) or 6.3 hereof has occurred and such Bank
so requests by notice to the Company with a copy to Administrative Agent, each
Eurodollar Loan or each Competitive Loan, as the case may be, of such Bank then
outstanding shall be automatically converted into an Alternate Base Rate Loan on
the date specified by such Bank in such notice) and, to the extent that
Eurodollar Loans or Competitive Loans, as the case may be, are so made as (or
converted into) Alternate Base Rate Loans, all payments of principal which would
otherwise be applied to such Eurodollar Loans or such Competitive Loans, as the
case may be, shall be applied instead to such Alternate Base Rate Loans.
34
6.5 Compensation. Subject to Section 13.6 hereof, the Company shall pay
to Administrative Agent for the account of each Bank, within four (4) Business
Days after demand therefor by such Bank through Administrative Agent, such
amount or amounts as shall be sufficient (in the reasonable opinion of such
Bank) to compensate it for any loss, cost or expense actually incurred by it
(exclusive of any lost profits or opportunity costs) as a result of:
(a) any payment, prepayment or conversion of a Eurodollar Loan or a
Competitive Loan made by such Bank on a date other than the last day of an
Interest Period for such Loan; or
(b) any failure by the Company to borrow a Eurodollar Loan or a
Competitive Loan to be made by such Bank on the date for such borrowing
specified in the relevant notice of borrowing under Section 5.5 or Section 2.9
hereof;
such compensation to include, without limitation, any loss or expense actually
incurred (exclusive of any lost profits or opportunity costs) by reason of the
liquidation or reemployment of deposits or other funds acquired by the
applicable Bank to fund or maintain its share of any Loan. Subject to
Section6.8, each determination of the amount of such compensation by a Bank
shall be conclusive and binding, absent manifest error, and may be computed
using any reasonable averaging and attribution method.
6.6 [Intentionally omitted].
6.7 Capital Adequacy. If any Bank shall have determined that a
Regulatory Change resulting in the adoption after the date hereof or
effectiveness after the date hereof (whether or not previously announced) of any
applicable law, rule, regulation or treaty regarding capital adequacy, or any
change therein after the date hereof, or any change in the interpretation or
administration thereof after the date hereof by any Governmental Authority
charged with the interpretation or administration thereof, or compliance by any
Bank (or its Applicable Lending Office) with any request or directive after the
date hereof regarding capital adequacy (whether or not having the force of law)
of any such Governmental Authority has or would have the effect of reducing the
rate of return on such Bank's capital as a consequence of such Bank's
obligations hereunder and under the Loans made by it to a level below that which
such Bank could have achieved but for such adoption, change or compliance
(taking into consideration such Bank's policies with respect to capital
adequacy) by an amount deemed by such Bank to be material, then from time to
time, upon satisfaction of the conditions precedent set forth in this Section
6.7, upon demand by such Bank (with a copy to Administrative Agent), the Company
(subject to Section 13.6 hereof) shall pay to such Bank such additional amount
or amounts as will compensate such Bank for such reduction. A certificate as to
such amounts, submitted to the Company and Administrative Agent by such Bank,
setting forth the basis for such Bank's determination of such amounts, shall
constitute a demand therefor and shall be conclusive and binding for all
purposes, absent manifest error. The Company shall pay the amount shown as due
on any such certificate within four (4) Business Days after delivery of such
certificate. Subject to Section6.8, in preparing such certificate, a Bank may
employ
35
such assumptions and allocations of costs and expenses as it shall in good faith
deem reasonable and may use any reasonable averaging and attribution method.
6.8 Limitation on Additional Charges; Substitute Banks;
Non-Discrimination. Anything in this Section 6 notwithstanding:
(a) the Company shall not be required to pay to any Bank reimbursement
with regard to any costs or expenses, unless such Bank notifies the Company of
such costs or expenses within 90 days after the date paid or incurred;
(b) none of the Banks shall be permitted to pass through to the Company
charges and costs under this Section 6 on a discriminatory basis (i.e., which
are not also passed through by such Bank to other customers of such Bank
similarly situated where such customer is subject to documents providing for
such pass through); and
(c) if any Bank elects to pass through to the Company any material
charge or cost under this Section 6 or elects to terminate the availability of
Eurodollar Loans for any material period of time, the Company may, within 60
days after the date of such event and so long as no Default shall have occurred
and be continuing, elect to terminate such Bank as a party to this Agreement;
provided that, concurrently with such termination the Company shall (i) if
Administrative Agent and each of the other Banks shall consent, pay that Bank
all principal, interest and fees and other amounts owed to such Bank through
such date of termination or (ii) have arranged for another financial institution
approved by Administrative Agent (such approval not to be unreasonably withheld)
as of such date, to become a substitute Bank for all purposes under this
Agreement in the manner provided in Section 13.5; provided further that, prior
to substitution for any Bank, the Company shall have given written notice to
Administrative Agent of such intention and the Banks shall have the option, but
no obligation, for a period of 60 days after receipt of such notice, to increase
their Commitments in order to replace the affected Bank in lieu of such
substitution.
Section 7. Conditions Precedent.
7.1 Initial Loans. The obligation of each Bank to make its initial
Loans on or after the date hereof is subject to the following conditions
precedent, each of which shall have been fulfilled or waived to the satisfaction
of the Administrative Agent:
(a) Corporate Action and Status. Administrative Agent shall have
received from the appropriate Governmental Authorities certified copies of the
Organizational Documents (other than bylaws) of the Company and the Guarantor,
and evidence satisfactory to Administrative Agent of all corporate action taken
by the Company and the Guarantor authorizing the execution, delivery and
performance of the Loan Documents and all other documents related to this
Agreement to which it is a party (including, without limitation, a certificate
of the secretary of each such party setting forth the resolutions of its Board
of Directors authorizing the transactions contemplated thereby and attaching a
copy of its bylaws), together with such certificates as may be appropriate to
demonstrate
36
the qualification and good standing of and payment of taxes by the Company and
the Guarantor in Texas, Louisiana, Montana, Oklahoma, New Mexico and Wyoming, as
applicable.
(b) Incumbency. The Company, the Guarantor and each other Relevant
Party shall have delivered to Administrative Agent a certificate in respect of
the name and signature of each of the officers (i)who is authorized to sign on
its behalf the applicable Loan Documents related to any Loan and (ii) 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 any Loan. Administrative
Agent and each Bank may conclusively rely on such certificates until they
receive notice in writing from the Company, the Guarantor or the appropriate
Relevant Party to the contrary.
(c) Revolving Credit Agreement. Administrative Agent shall have
received counterparts of the Revolving Credit Agreement executed and delivered
by or on behalf of each of the parties thereto or the Administrative Agent shall
have received evidence satisfactory to it of the execution and delivery by each
such Person of a counterpart of such Revolving Credit Agreement.
(d) Loan Documents. The Company and each other Relevant Party shall
have duly executed and delivered the other Loan Documents to which it is a party
(in such number of copies as Administrative Agent shall have requested) and each
such Loan Document shall be in form satisfactory to the Administrative Agent.
Each such Loan Document shall be in substantially the form furnished to the
Banks prior to their execution of this Agreement, together with such changes
therein as the Administrative Agent may approve.
(e) Fees and Expenses. The Company shall have paid to Administrative
Agent for the account of each Bank all accrued and unpaid commitment fees and
other fees in the amounts previously agreed upon in writing among the Company
and Administrative Agent; and shall have in addition paid to each Agent all
amounts payable under the letter agreements referred to in Section2.4(b) hereof
and under Section 9.7 hereof on or before the date of this Agreement.
(f) Opinions of Counsel. Administrative Agent shall have received (1)
an opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P., counsel to the Company
and the Guarantor, in form and substance reasonably satisfactory to the Agents,
and (2) such opinions of counsel to the Company and other Relevant Parties as
the Agents shall reasonably request with respect to the Company, the Guarantor
and the Loan Documents.
(g) Execution by Banks and Agents. Administrative Agent shall have
received counterparts of this Agreement executed and delivered by or on behalf
of each of the Banks and the Agents or Administrative Agent shall have received
evidence satisfactory to it of the execution and delivery by each of the Banks
and Agents of a counterpart hereof.
(h) Consents. Administrative Agent shall have received evidence
satisfactory to it that, except as disclosed in the Disclosure Statement, all
material consents of each Governmental
37
Authority and of each other Person, if any, reasonably required in connection
with (a) the Loans, (b) the execution, delivery and performance of this
Agreement and the other Loan Documents have been satisfactorily obtained, and
(c) the consummation of the Merger and all related transactions. All applicable
appeal periods shall have expired and there shall be, in the judgment of the
Administrative Agent, in its sole discretion, no governmental or judicial
action, actual or threatened, restraining, preventing or imposing burdensome
conditions on the Merger and all related transactions, including, without
limitation, the issuance, closing and funding of this Agreement and the
facilities thereunder.
(i) Margin Regulations. After giving effect to such Loan, the Company
and Banks shall be in compliance with the Margin Regulations.
(j) Consummation of Merger. The merger among Seagull and Old Ocean
Energy (the "Merger") shall have been consummated as contemplated by and
pursuant to that certain Agreement and Plan of Merger, dated November 24, 1998,
as amended by Amendment No. 1 to Agreement and Plan of Merger, dated as of
December 9, 1998 (as amended, the "Merger Agreement"), among such parties, and
Administrative Agent shall have received (i) satisfactory evidence of the
consummation of such Merger and (ii) a certificate from a Responsible Officer of
the Company certifying that the Merger has been consummated.
(k) Financial Reports; Filings. Administrative Agent shall have
received copies of (i)all financial statements, reports, notices and proxy
statements either (A) requested by the Administrative Agent or any Bank or (B)
sent by the Company, Seagull or Old Ocean Energy to its stockholders and (ii)
all SEC filings concerning the Merger.
(l) Litigation. No litigation or administrative proceeding or other
legal or regulatory developments prohibiting or enjoining the consummation of
the Merger shall exist.
(m) Event of Default under Existing Credit Facilities. Exclusive of the
Merger, no "Event of Default" (as defined in the Existing Seagull Credit
Facility) for Seagull or "Event of Default" (as defined in the Existing Old
Ocean Credit Facility) for Old Ocean Energy shall have occurred and be
continuing.
(n) Termination of Existing Credit Facilities. Administrative Agent
shall have received evidence satisfactory to it that all obligations under (i)
the Existing Seagull Credit Facility, (ii) the Existing Old Ocean Credit
Facility and (iii) the Existing Old Ocean Bridge Facility, have been paid,
fulfilled or satisfied in full or otherwise terminated.
(o) Lien Searches. Administrative Agent shall have received certified
copies of Uniform Commercial Code Requests for Information or Copies (Form
UCC-11), or a similar search report certified by a party acceptable to the
Administrative Agent, dated a date reasonably near to the date of the initial
Loan, listing all effective financing statements which name the Company,
Seagull, the Guarantor or, at the request of the Administrative Agent, any other
Subsidiary (under
38
its present name and any previous names) as the debtor and which are filed in
the following jurisdictions: Delaware, Texas, Louisiana, Montana, Oklahoma, New
Mexico and Wyoming, together with copies of such financing statements.
(p) Other Documents. Administrative Agent shall have received such
other documents consistent with the terms of this Agreement and relating to the
transactions contemplated hereby as Administrative Agent may reasonably request.
All provisions and payments required by this Section 7.1 are subject to
the provisions of Section 13.6.
7.2 Initial and Subsequent Loans. The obligation of each Bank to make
any Loan (including, without limitation, its initial Loan) to be made by it
hereunder (excluding conversions of Loans to Alternate Base Rate Loans or Term
Loans made pursuant to Section 2.1(b), in each case as to which no conditions
precedent exist) is subject to the additional conditions precedent that
(i)Administrative Agent shall have received a Request for Extension of Credit
and such other certifications as Administrative Agent may reasonably require,
(ii) in the case of Competitive Loans, the Company shall have complied with the
provisions of Section 2.9 hereof and (iii) as of the date of such Loan, and
after giving effect thereto:
(a) no Default shall have occurred and be continuing;
(b) except for facts timely disclosed to Administrative Agent from time
to time in writing, which facts (i) are not materially more adverse to the
Company and its Subsidiaries or any other Obligor, (ii) do not materially
decrease the ability of the Banks to collect the Obligations as and when due and
payable and (iii) do not materially increase the liability of any Agent or any
of the Banks, in each case compared to those facts existing on the date hereof
and the material details of which have been set forth in the Financial
Statements delivered to Administrative Agent prior to the date hereof or in the
Disclosure Statement, and except for the representations set forth in the Loan
Documents which, by their terms, are expressly (or by means of similar phrasing)
made as of the Effective Date or as of the date hereof, as the case may be,
only, the representations and warranties made in each Loan Document shall be
true and correct in all material respects on and as of the date of the making of
such Loan, with the same force and effect as if made on and as of such date;
(c) the making of such Loan shall not violate any Legal Requirement
applicable to any Bank; and
(d) no event or condition shall have occurred since the effectiveness
of this Agreement which reasonably could be expected to result in a Material
Adverse Effect.
Each Request for Extension of Credit by the Company hereunder shall
include a representation and warranty by the Company to the effect set forth in
Subsections 7.2(a) and (b)
39
(both as of the date of such notice and, unless the Company otherwise notifies
Administrative Agent prior to the date of such borrowing, as of the date of such
borrowing).
Section 8. Representations and Warranties. To induce the Banks to enter
into this Agreement and to make the Loans, the Company represents and warrants
(such representations and warranties to survive any investigation and the making
of the Loans) to the Banks and the Agents as follows:
8.1 Corporate Existence. The Company, the Guarantor and each Subsidiary
of the Company are corporations duly incorporated and organized, legally
existing and in good standing under the laws of the respective jurisdictions in
which they are incorporated, and are duly qualified as foreign corporations in
all jurisdictions wherein the property owned or the business transacted by them
makes such qualification necessary and the failure to so qualify could
reasonably be expected to result in a Material Adverse Effect.
8.2 Corporate Power and Authorization. Each of the Company, the
Guarantor and each Subsidiary of the Company is duly authorized and empowered to
execute, deliver, and perform this Agreement and the other Loan Documents to
which it is a party; and all corporate action on the Company's part and on the
part of the Guarantor and each Subsidiary of the Company for the due execution,
delivery, and performance of this Agreement and the other Loan Documents to
which each of the Company, the Guarantor and each such Subsidiary is a party has
been duly and effectively taken.
8.3 Binding Obligations. This Agreement and the other Loan Documents
constitute legal, valid and binding obligations of the Company and its
Subsidiaries and the Guarantor, to the extent each is a party thereto,
enforceable against the Company and its Subsidiaries and the Guarantor, to the
extent each is a party thereto, in accordance with their respective terms,
except as may be limited by any bankruptcy, insolvency, moratorium or other
similar laws or judicial decisions affecting creditors' rights generally and
general principles of equity whether considered at law or in equity.
8.4 No Legal Bar or Resultant Lien. The Company's and each of its
Subsidiaries' and the Guarantor's creation, issuance, execution, delivery and
performance of this Agreement and the other Loan Documents, to the extent they
are parties thereto, do not and will not violate any provisions of the
Organizational Documents of the Company, the Guarantor or any Subsidiary of the
Company or any Legal Requirement to which the Company, the Guarantor or any
Subsidiary of the Company is subject or by which its property may be presently
bound or encumbered, or result in the creation or imposition of any Lien upon
any properties of the Company, the Guarantor or any Subsidiary of the Company,
other than those permitted by this Agreement.
8.5 No Consent. Except as set forth in the Disclosure Statement, the
Company's and each of its Subsidiaries' and the Guarantor's execution, delivery,
and performance of this Agreement, the Merger Agreement and the other Loan
Documents to which they are parties do not
40
and will not require the consent or approval of any Person other than such
consents and/or approvals obtained by the Company contemporaneously with or
prior to the execution of this Agreement, including, without limitation, any
Governmental Authorities, other than those consents the failure to obtain which
could not be reasonably expected to have a Material Adverse Effect.
8.6 Financial Condition.
(a) The audited consolidated annual financial statements of Seagull and
its Subsidiaries for the year ended December31,1998, which have been delivered
to the Banks, have been prepared in accordance with GAAP, and present fairly the
financial condition and results of the operations of Seagull and its
Subsidiaries for the period or periods stated. The audited consolidated annual
financial statements of Old Ocean Energy and its Subsidiaries for the year ended
December31,1998, which have been delivered to the Banks, have been prepared in
accordance with GAAP, and present fairly the financial condition and results of
the operations of Old Ocean Energy and its Subsidiaries for the period or
periods stated. No Material Adverse Effect has occurred since December 31, 1998,
except as disclosed to the Banks in the Disclosure Statement.
(b) The unaudited pro forma consolidated annual financial statements of
the Company and its Subsidiaries for the year ended December31,1998, which are
presented to give effect to the Merger and which have been delivered to the
Banks, have been prepared in accordance with GAAP. No material adverse change,
either in any case or in the aggregate, has occurred since December 31, 1998 in
the assets, liabilities, financial condition, business, operations, affairs or
circumstances of the Company and its Subsidiaries taken as a whole, except as
disclosed to the Banks in the Disclosure Statement.
8.7 Investments and Guaranties. As of the Effective Date, no Subsidiary
of the Company had made Investments in or advances to, and neither the Company,
Seagull or Old Ocean Energy nor any Subsidiary of any of them had made
Guarantees of, the obligations of any Person, except as (a) disclosed to the
Banks in the Disclosure Statement or (b) not prohibited by applicable provisions
of Section10.
8.8 Liabilities and Litigation. Neither the Company or any Subsidiary
of the Company, Seagull or any Subsidiary of Seagull, nor Old Ocean Energy or
any Subsidiary of Old Ocean Energy, respectively, has any material (individually
or in the aggregate) liabilities, direct or contingent, except as (a)disclosed
or referred to in the Financial Statements, (b) disclosed to the Banks in the
Disclosure Statement, (c) disclosed in a notice to Administrative Agent pursuant
to Section9.10 with respect to such as could reasonably be expected to have a
Material Adverse Effect or (d) not prohibited by applicable provisions of
Section10. Except as (a) described in the Financial Statements, (b)otherwise
disclosed to the Banks in the Disclosure Statement, (c) disclosed in a notice to
Administrative Agent pursuant to Section9.10 with respect to such as could
reasonably be expected to have a Material Adverse Effect or (d) not prohibited
by applicable provisions of Section10, no litigation, legal, administrative or
arbitral proceeding, investigation, or other action of any nature exists or (to
the knowledge of the Company) is threatened against or affecting the
41
Company or any Subsidiary of the Company, Seagull or any Subsidiary of Seagull,
or Old Ocean Energy or any Subsidiary of Old Ocean Energy, respectively, which
could reasonably be expected to result in any judgment which could reasonably be
expected to have a Material Adverse Effect, or which in any manner challenges or
may challenge or draw into question the validity of this Agreement or any other
Loan Document, or enjoins or threatens to enjoin or otherwise restrain any of
the transactions contemplated by any of them.
8.9 Taxes and Governmental Charges. The Company and its Subsidiaries,
Seagull and its Subsidiaries, and Old Ocean Energy and its Subsidiaries,
respectively, have filed, or obtained extensions with respect to the filing of,
all material tax returns and reports required to be filed and have paid all
material taxes, assessments, fees and other governmental charges levied upon any
of them or upon any of their respective properties or income which are due and
payable, including interest and penalties, or have provided adequate reserves
for the payment thereof.
8.10 Title to Properties. The Company and its Subsidiaries and the
Guarantor have good and defensible title to their respective properties
(including, without limitation, all fee and leasehold interests), free and clear
of all Liens except (a) those referred to in the Financial Statements, (b) as
disclosed to the Banks in the Disclosure Statement or (c) as permitted by
Section10.2.
8.11 Defaults. Neither the Company or any Subsidiary of the Company,
Seagull or any Subsidiary of Seagull nor Old Ocean Energy or any Subsidiary of
Old Ocean Energy is in default, which default could reasonably be expected to
have a Material Adverse Effect, under any indenture, mortgage, deed of trust,
agreement or other instrument to which the Company or any Subsidiary of the
Company, Seagull or any Subsidiary of Seagull or Old Ocean Energy or any
Subsidiary of Old Ocean Energy, respectively, is a party or by which the Company
or any Subsidiary of the Company, Seagull or any Subsidiary of Seagull or Old
Ocean Energy or any Subsidiary of Old Ocean Energy, respectively, or the
property of the Company or any Subsidiary of the Company, Seagull or any
Subsidiary of Seagull or Old Ocean Energy or any Subsidiary of Old Ocean Energy,
respectively, is bound, except as (a) disclosed to the Banks in the Disclosure
Statement, (b) disclosed in a notice to Administrative Agent pursuant to
Section9.10 with respect to such as could reasonably be expected to have a
Material Adverse Effect or (c) specifically permitted by applicable provisions
of Section10. No Default under this Agreement or any other Loan Document has
occurred and is continuing.
8.12 Location of Businesses and Offices. Except to the extent that
Administrative Agent has been furnished written notice to the contrary or of
additional locations, pursuant to Section9.10, the Company's principal place of
business and chief executive offices are located at the address stated on the
signature page hereof and the principal places of business and chief executive
offices of the Guarantor and each other Subsidiary are described on ExhibitC
hereto.
8.13 Compliance with Law. Neither the Company or any Subsidiary of the
Company, Seagull or any Subsidiary of Seagull nor Old Ocean Energy or any
Subsidiary of Old Ocean Energy (except as (a)disclosed to the Banks in the
Disclosure Statement, (b) disclosed in a notice to
42
Administrative Agent pursuant to Section9.10 with respect to such as could
reasonably be expected to have a Material Adverse Effect or (c) not prohibited
by applicable provisions of Section10):
(a) is in violation of any Legal Requirement; or
(b) has failed to obtain any license, permit, franchise or other
governmental authorization necessary to the ownership of any of their respective
properties or the conduct of their respective business;
which violation or failure could reasonably be expected to have a Material
Adverse Effect.
8.14 Margin Stock. None of the proceeds of the Loans will be used for
the purpose of, and neither the Company, the Guarantor nor any Subsidiary of the
Company is engaged in the business of extending credit for the purpose of (a)
purchasing or carrying any "margin stock" as defined in Regulation U of the
Board of Governors of the Federal Reserve System (12 C.F.R. Part 221) or (b)
reducing or retiring any indebtedness which was originally incurred to purchase
or carry margin stock, if such purpose under either (a) or (b) above would
constitute this transaction a "purpose credit" within the meaning of said
Regulation U, or for any other purpose which would constitute this transaction a
"purpose credit". Neither the Company, the Guarantor nor any Subsidiary of the
Company is engaged principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing or carrying margin
stocks. Neither the Company, the Guarantor nor any Subsidiary of the Company nor
any Person acting on behalf of the Company, the Guarantor or any Subsidiary of
the Company has taken or will take any action which might cause any of the Loan
Documents, including this Agreement, to violate RegulationU or any other
regulation of the Board of Governors of the Federal Reserve System, or to
violate any similar provision of the Securities Exchange Act of 1934 or any rule
or regulation under any such provision thereof.
8.15 Subsidiaries. The Company has no Subsidiaries as of the date of
this Agreement except those shown in ExhibitC hereto.
8.16 ERISA. With respect to each Plan, the Company and each ERISA
Affiliate have fulfilled their obligations, including obligations under the
minimum funding standards of ERISA and the Code, and are in compliance in all
material respects with the provisions of ERISA and the Code. The Company has no
knowledge of any event which could result in a liability of the Company or any
ERISA Affiliate to the PBGC or a Plan (other than to make contributions in the
ordinary course). Since the effective date of TitleIV of ERISA, there have not
been any nor are there now existing any events or conditions that would cause
the Lien provided under Section 4068 of ERISA to attach to any property of the
Company or any ERISA Affiliate. There are no Unfunded Liabilities with respect
to any Plan. No "prohibited transaction" has occurred with respect to any Plan.
8.17 Investment Company Act. Neither the Company nor any of its
Subsidiaries is an investment company within the meaning of the Investment
Company Act of 1940, as amended, or,
43
directly or indirectly, controlled by or acting on behalf of any Person which is
an investment company, within the meaning of said Act.
8.18 Public Utility Holding Company Act. Neither the Company nor any of
its Subsidiaries (i) is subject to regulation under the Public Utility Holding
Company Act of 1935, as amended (the "PUHC Act"), except as to Section 9(a)(2)
thereof (15 U.S.C.A. ss.79(i)(a)(2)), or (ii)is in violation of any of the
provisions, rules, regulations or orders of or under the PUHC Act. Further, none
of the transactions contemplated under this Agreement, including without
limitation, the making of the Loans, shall cause or constitute a violation of
any of the provisions, rules, regulations or orders of or under the PUHC Act and
the PUHC Act does not in any manner impair the legality, validity or
enforceability of this Agreement. The Company has duly filed with the Securities
and Exchange Commission good faith applications (each a "PUHCA Application")
under Section 2(a)(8) of the PUHC Act (15 U.S.C.A. ss.79(b)(a)(8)) for a
declaration of non-subsidiary status pursuant to such Section 2(a)(8) with
respect to each Person (each a "Specified Shareholder") which owns, controls or
holds with power to vote, directly or indirectly, a sufficient quantity of the
voting securities of the Company to be construed as a "holding company", as such
term is defined in the PUHC Act, in respect of the Company. All of the
information contained in such PUHCA Applications, as amended, was true as of the
most recent filing date with respect thereto (provided that the Company may,
unless it has actual current knowledge to the contrary, rely solely upon written
information furnished by any Specified Shareholder with respect to background
information about the Specified Shareholder and the nature of the ownership by
such Specified Shareholder or its Affiliates of the voting securities of the
Company), and the Company knows of no reason why each such PUHCA Application, if
acted upon by the Securities and Exchange Commission, would not be approved.
True and correct copies of each such PUHCA Application and any amendments
thereto, as filed, have been furnished to Administrative Agent. The Company has
not received any written notice from the Securities and Exchange Commission with
respect to any such PUHCA Application other than as disclosed in writing to
Administrative Agent.
8.19 Environmental Matters. Except as disclosed in the Disclosure
Statement, (i) the Company and its Subsidiaries have obtained and maintained in
effect all Environmental Permits (or has initiated the necessary steps to
transfer the Environmental Permits into its name), the failure to obtain which
could reasonably be expected to have a Material Adverse Effect, (ii) the Company
and its Subsidiaries and their properties, assets, business and operations have
been and are in compliance with all applicable Requirements of Environmental Law
and Environmental Permits failure to comply with which could reasonably be
expected to have a Material Adverse Effect, (iii) the Company and its
Subsidiaries and their properties, assets, business and operations are not
subject to any (A) Environmental Claims or (B) Environmental Liabilities, in
either case direct or contingent, and whether known or unknown, arising from or
based upon any act, omission, event, condition or circumstance occurring or
existing on or prior to the date hereof which could reasonably be expected to
have a Material Adverse Effect, and (iv) no Responsible Officer of the Company
or any of its Subsidiaries has received any notice of any violation or alleged
violation of any Requirements of Environmental Law or Environmental Permit or
any Environmental Claim in connection with its assets, properties, business or
operations which could reasonably be expected
44
to have a Material Adverse Effect. The liability (including without limitation
any Environmental Liability and any other damage to persons or property), if
any, of the Company and its Subsidiaries and with respect to their properties,
assets, business and operations which is reasonably expected to arise in
connection with Requirements of Environmental Laws currently in effect and other
environmental matters presently known by a Responsible Officer of the Company
will not have a Material Adverse Effect. No Responsible Officer of the Company
knows of any event or condition with respect to Environmental Matters with
respect to any of its properties or the properties of any of its Subsidiaries
which could reasonably be expected to have a Material Adverse Effect. For
purposes of this Section 8.19, "Environmental Matters" shall mean matters
relating to pollution or protection of the environment, including, without
limitation, emissions, discharges, releases or threatened releases of Hazardous
Substances into the environment (including, without limitation, ambient air,
surface water or ground water, or land surface or subsurface), or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Substances.
8.20 Claims and Liabilities. Except as disclosed to the Banks in
writing, neither the Company or any of its Subsidiaries nor the Guarantor has
accrued any liabilities under gas purchase contracts for gas not taken, but for
which it is liable to pay if not made up and which, if not paid, would have a
Material Adverse Effect. Except as disclosed to the Banks in writing, no claims
exist against the Company or its Subsidiaries or the Guarantor for gas
imbalances which claims if adversely determined would have a Material Adverse
Effect. No purchaser of product supplied by the Company or any of its
Subsidiaries or the Guarantor has any claim against the Company or any of its
Subsidiaries for product paid for, but for which delivery was not taken as and
when paid for, which claim if adversely determined would have a Material Adverse
Effect.
8.21 Solvency. Neither the Company, the Guarantor nor the Company and
its Subsidiaries, on a consolidated basis, is "insolvent", as such term is used
and defined in (i) the Bankruptcy Code and (ii) the Texas Uniform Fraudulent
Transfer Act, Tex. Bus. & Com. Code Ann. ss.24.001 et seq.
8.22 Year 2000. Any reprogramming required to permit the proper
functioning, in and following the year 2000, of (i) the computer systems of the
Company and its Subsidiaries and (ii)equipment containing embedded microchips
(including systems and equipment supplied by others or with which the systems
interface of the Company and its Subsidiaries) and the testing of all such
systems and equipment, as so reprogrammed, will be completed by September 30,
1999. The cost to the Company and its Subsidiaries of such reprogramming and
testing and of the reasonably foreseeable consequences of year 2000 to the
Company and its Subsidiaries (including, without limitation, reprogramming
errors and the failure of others' systems or equipment) will not result in a
Default or a Material Adverse Effect. Except for such of the reprogramming
referred to in the preceding sentence as may be necessary, the computer and
management information systems of the Company and its Subsidiaries are and, with
ordinary course upgrading and maintenance, will continue for the term of this
Agreement to be, sufficient to permit the Company to conduct its business
without Material Adverse Effect.
45
Section 9. Affirmative Covenants. A deviation from the provisions of
this Section9 will not constitute a Default under this Agreement if such
deviation is consented to in writing by the Majority Banks. Without the prior
written consent of the Majority Banks, the Company agrees with the Banks and the
Agents that, so long as any of the Commitments is in effect and until payment in
full of all Obligations:
9.1 Financial Statements and Reports. The Company will promptly furnish
to any Bank from time to time upon request such information regarding the
business and affairs and financial condition of the Company and its Subsidiaries
and the Guarantor as such Bank may reasonably request, and will furnish to the
Agents and each of the Banks:
(a) Annual Reports - promptly after becoming available and in any event
within 100days after the close of each fiscal year of the Company:
(i) the audited consolidated balance sheet of the Company
and its Subsidiaries as of the end of such year;
(ii) the audited consolidated statement of earnings of the
Company and its Subsidiaries for such year;
(iii) the audited consolidated statement of cash flows of
the Company and its Subsidiaries for such year;
setting forth in each case in comparative form the corresponding figures for the
preceding fiscal year, and, in the case of the audited Financial Statements,
audited and accompanied by the related opinion of KPMG Peat Marwick or other
independent certified public accountants of recognized national standing
acceptable to the Majority Banks, which opinion shall state that such audited
balance sheets and statements have been prepared in accordance with GAAP
consistently followed throughout the period indicated and fairly present the
consolidated financial condition and results of operations of the applicable
Persons as at the end of, and for, such fiscal year; and
(b) Quarterly Reports - as soon as available and in any event within 50
days after the end of each of the first three quarterly periods in each fiscal
year of the Company:
(i) the unaudited consolidated balance sheet of the
Company and its Subsidiaries as of the end of such
quarter;
(ii) the unaudited consolidated statement of earnings of
the Company and its Subsidiaries for such quarter and
for the period from the beginning of the fiscal year
to the close of such quarter;
46
(iii) the unaudited consolidated statement of cash flows of
the Company and its Subsidiaries for such quarter and
for the period from the beginning of the fiscal year
to the close of such quarter;
all of items (i) through (iii) above prepared on substantially the same
accounting basis as the annual reports described in Subsection9.1(a), subject to
normal changes resulting from year-end adjustments; and
(c) [Intentionally omitted]; and
(d) SEC and Other Reports - promptly upon their becoming publicly
available, one copy of each financial statement, report, notice or definitive
proxy statement sent by the Company or any Subsidiary to shareholders generally,
and of each regular or periodic report and any registration statement,
prospectus or written communication (other than transmittal letters) in respect
thereof filed by the Company or any of its Subsidiaries with, or received by the
Company or any of its Subsidiaries in connection therewith from, any securities
exchange or the Securities and Exchange Commission or any successor agency.
All of the balance sheets and other financial statements referred to in
this Section9.1 will be in such detail as any Bank may reasonably request and
will conform to GAAP applied on a basis consistent with those of the Financial
Statements as of December31,1998. In addition, if GAAP shall change with respect
to any matter relative to determination of compliance with this Agreement, the
Company will also provide financial information necessary for the Banks to
determine compliance with this Agreement.
9.2 Officers' Certificates.
(a) Concurrently with the furnishing of the annual financial statements
pursuant to Subsection9.1(a), commencing with the annual financial statements
required to be delivered in 1999, the Company will furnish or cause to be
furnished to Administrative Agent certificates of compliance, as follows:
(i) a certificate signed by the principal financial
officer of the Company in the form of ExhibitD; and
(ii) a certificate from the independent public accountants
stating that their audit has not disclosed the
existence of any condition which constitutes a
Default, or if their audit has disclosed the
existence of any such condition, specifying the
nature and period of existence.
(b) Concurrently with the furnishing of the quarterly financial
statements pursuant to Subsection9.1(b), the Company will furnish to
Administrative Agent a principal financial officer's certificate in the form of
Exhibit D.
47
9.3 Taxes and Other Liens. The Company will and will cause each
Subsidiary of the Company to pay and discharge promptly all taxes, assessments
and governmental charges or levies imposed upon the Company or such Subsidiary,
or upon the income or any property of the Company or such Subsidiary, as well as
all claims of any kind (including claims for labor, materials, supplies, rent
and payment of proceeds attributable to Hydrocarbon production) which, if
unpaid, might result in or become a Lien upon any or all of the property of the
Company or such Subsidiary; provided, however, that neither the Company nor such
Subsidiary will be required to pay any such tax, assessment, charge, levy or
claims if the amount, applicability or validity thereof will currently be
contested in good faith by appropriate proceedings diligently conducted and if
the Company or such Subsidiary will have set up reserves therefor adequate under
GAAP.
9.4 Maintenance. Except as referred to in Sections8.1 and 8.13 and
except as permitted under Section 10.4 the Company will and will cause each
Subsidiary of the Company to: (i)maintain its corporate existence; (ii) maintain
its rights and franchises, except for any mergers or consolidations otherwise
permitted by this Agreement and except to the extent failure to so maintain the
same would not have a Material Adverse Effect; (iii) observe and comply (to the
extent that any failure would have a Material Adverse Effect) with all valid
Legal Requirements (including without limitation Requirements of Environmental
Law); and (iv) maintain (except to the extent failure to so maintain the same
would not have a Material Adverse Effect) its properties (and any properties
leased by or consigned to it or held under title retention or conditional sales
contracts) consistent with the standards of a reasonably prudent operator at all
times and make all repairs, replacements, additions, betterments and
improvements to its properties consistent with the standards of a reasonably
prudent operator.
9.5 Further Assurances. The Company will, and will cause each
Subsidiary of the Company to, cure promptly any defects in the execution and
delivery of the Loan Documents, including this Agreement. The Company at its
expense will promptly execute and deliver to Administrative Agent upon request
all such other and further documents, agreements and instruments (or cause any
of its Subsidiaries to take such action) in compliance with or accomplishment of
the covenants and agreements of the Company or any of its Subsidiaries in the
Loan Documents, including this Agreement, or to correct any omissions in 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.
9.6 Performance of Obligations. The Company will pay the Loans
according to the reading, tenor and effect of this Agreement; and the Company
will do and perform every act and discharge all of the obligations provided to
be performed and discharged by the Company under this Agreement and the other
Loan Documents at the time or times and in the manner specified, and cause each
of its Subsidiaries to take such action with respect to their obligations to be
performed and discharged under the Loan Documents to which they respectively are
parties.
9.7 Reimbursement of Expenses. Whether or not any Loan is ever
made, the Company agrees to pay or reimburse Administrative Agent for paying the
reasonable fees and expenses of
48
Mayer, Brown & Platt, special counsel to the Agents, together with the
reasonable fees and expenses of local counsel engaged by the Agents, in
connection with the negotiation of the terms and structure of the Obligations,
the preparation, execution and delivery of this Agreement and the other Loan
Documents and the making of the Loans hereunder, as well as any modification,
supplement or waiver of any of the terms of this Agreement and the other Loan
Documents. The Company will promptly upon request and in any event within 30
days from the date of receipt by the Company of a copy of a bill for such
amounts, reimburse any Bank or any Agent for all amounts reasonably expended,
advanced or incurred by such Bank or such Agent to satisfy any obligation of the
Company under this Agreement or any other Loan Document, to protect the
properties or business of the Company or any Subsidiary of the Company, to
collect the Obligations, or to enforce the rights of such Bank or such Agent
under this Agreement or any other Loan Document, which amounts will include
without limitation all court costs, attorneys' fees (but not including allocated
costs of in-house counsel), any engineering fees and expenses, fees of auditors,
accountants and appraisers, investigation expenses, all transfer, stamp,
documentary or similar taxes, assessments or charges levied by any governmental
or revenue authority in respect of any of the Loan Documents or any other
document referred to therein, all costs, expenses, taxes, assessments and other
charges incurred in connection with any filing, registration, recording or
perfection of any lien contemplated by any of the Loan Documents or any document
referred to therein, fees and expenses incurred in connection with such Bank's
participation as a member of a creditors' committee in a case commenced under
the Bankruptcy Code or other similar law of the United States or any state
thereof, fees and expenses incurred in connection with lifting the automatic
stay prescribed in ss.362 Title 11 of the United States Code, and fees and
expenses incurred in connection with any action pursuant to ss.1129 Title 11 of
the United States Code and all other customary out-of-pocket expenses incurred
by such Bank or such Agent in connection with such matters, together with
interest after the expiration of the 30-day period stated above in this Section
if no Event of Default has occurred and is continuing, or from the date of the
request to the Company if an Event of Default has occurred and is continuing, at
either (i) the Post-Default Rate on each such amount until the date of
reimbursement to such Bank or such Agent, or (ii) if no Event of Default will
have occurred and be continuing, the Alternate Base Rate plus the highest
Applicable Margin for Alternate Base Rate Loans (not to exceed the Highest
Lawful Rate) on each such amount until the date of the Company's receipt of
written demand or request by such Bank or such Agent for the reimbursement of
same, and thereafter at the applicable Post-Default Rate until the date of
reimbursement to such Bank or such Agent. The obligations of the Company under
this Section are compensatory in nature, shall be deemed liquidated as to amount
upon receipt by the Company of a copy of any invoice therefor, and will survive
the non-assumption of this Agreement in a case commenced under the Bankruptcy
Code or other similar law of the United States or any state thereof, and will
remain binding on the Company and any trustee, receiver, or liquidator of the
Company appointed in any such case.
9.8 Insurance. The Company and its Subsidiaries will maintain, with
financially sound and reputable insurers, insurance with respect to their
respective properties and business against such liabilities, casualties, risks
and contingencies and in such types and amounts as is customary in the case of
corporations engaged in the same or similar businesses and similarly situated.
Upon the request of Administrative Agent acting at the instruction of the
Majority Banks, the Company will
49
furnish or cause to be furnished to Administrative Agent from time to time a
summary of the insurance coverage of the Company and its Subsidiaries in form
and substance satisfactory to the Majority Banks in their reasonable judgment,
and if requested will furnish Administrative Agent copies of the applicable
policies. In the case of any fire, accident or other casualty causing loss or
damage to any properties of the Company or any of its Subsidiaries, the proceeds
of such policies will be used (i)to repair or replace the damaged property, (ii)
to prepay the Obligations, or (iii) so long as no Default has occurred and is
continuing, for general corporate purposes, at the election of the Company.
9.9 Accounts and Records. The Company will keep and will cause each
Subsidiary of the Company to keep books of record and account which fairly
reflect all dealings or transactions in relation to their respective businesses
and activities, in accordance with GAAP, which books of record and account will
be maintained, to the extent necessary to enable compliance with all provisions
of this Agreement, separately for each such Subsidiary, the Company and any
division of the Company.
9.10 Notice of Certain Events. The Company will promptly notify
Administrative Agent (and Administrative Agent will then notify all of the Banks
and other Agents) if a Responsible Officer of the Company learns of the
occurrence of, or if the Company causes or intends to cause, as the case may be:
(i) any event which constitutes a Default, together with a
detailed statement by a Responsible Officer of the Company of the steps being
taken to cure the effect of such Default; or
(ii) the receipt of any notice from, or the taking of any
other action by, the holder of any promissory note, debenture or other evidence
of indebtedness of the Company or any Subsidiary of the Company or of any
security (as defined in the Securities Act of 1933, as amended) of the Company
or any Subsidiary of the Company with respect to a claimed default, together
with a detailed statement by a Responsible Officer of the Company specifying the
notice given or other action taken by such holder and the nature of the claimed
default and what action the Company or such Subsidiary is taking or proposes to
take with respect thereto; or
(iii) any legal, judicial or regulatory proceedings
affecting the Company or any Subsidiary of the Company or any of the properties
of the Company or any Subsidiary of the Company in which the amount involved is
materially adverse to the Company and its Subsidiaries taken as a whole, and is
not covered by insurance or which, if adversely determined, would have a
Material Adverse Effect; or
(iv) any dispute between the Company or any Subsidiary of
the Company and any Governmental Authority or any other Person which, if
adversely determined, could reasonably be expected to have a Material Adverse
Effect; or
50
(v) the occurrence of a default or event of default by the
Company or any Subsidiary of the Company under any other agreement to which it
is a party, which default or event of default could reasonably be expected to
have a Material Adverse Effect; or
(vi) any change in the accuracy of the representations and
warranties of the Company or any Subsidiary contained in this Agreement or any
other Loan Document; or
(vii) any material violation or alleged material violation
of any Requirements of Environmental Law or Environmental Permit or any
Environmental Claim or any Environmental Liability; or
(viii) any tariff and rate cases and other material reports
filed by the Company or any of its Subsidiaries with any Governmental Authority
and any notice to the Company or any of its Subsidiaries from any Governmental
Authority concerning noncompliance with any applicable Legal Requirement; or
(ix) within 10 days after the date on which a Responsible
Officer of the Company has actual knowledge thereof, the receipt of any notice
by the Company or any of its Subsidiaries of any claim of nonpayment of, or any
attempt to collect or enforce, accounts payable of the Company or any of its
Subsidiaries exceeding, in the case of any one account payable at one time
outstanding, $5,000,000 and in the case of all accounts payable in the aggregate
at any one time outstanding, $10,000,000; or
(x) any requirement for the payment of all or any portion of
any Indebtedness of the Company or any of its Subsidiaries prior to the stated
maturity thereof (whether by acceleration or otherwise) or as the result of any
failure to maintain or the reaching of any threshold amount provided in any
promissory note, bond, debenture, or other evidence of Indebtedness or under any
credit agreement, loan agreement, indenture or similar agreement executed in
connection with any of the foregoing; or
(xi) any notice from the Securities and Exchange Commission
with respect to any Application (as defined in Section 8.18 hereof).
9.11 ERISA Information and Compliance. The Company will promptly
furnish to Administrative Agent (i) immediately upon receipt, a copy of any
notice of complete or partial withdrawal liability under Title IV of ERISA and
any notice from the PBGC under Title IV of ERISA of an intent to terminate or
appoint a trustee to administer any Plan, (ii) if requested by Administrative
Agent, acting on the instruction of the Majority Banks, promptly after the
filing thereof with the United States Secretary of Labor or the PBGC or the
Internal Revenue Service, copies of each annual and other report with respect to
each Plan or any trust created thereunder, (iii)immediately upon becoming aware
of the occurrence of any "reportable event", as such term is defined in Section
4043 of ERISA, for which the disclosure requirements of Regulation Section2615.3
promulgated by the PBGC have not been waived, or of any "prohibited
transaction",
51
as such term is defined in Section 4975 of the Code, in connection with any Plan
or any trust created thereunder, a written notice signed by the President or the
principal financial officer of the Company or the applicable ERISA Affiliate
specifying the nature thereof, what action the Company or the applicable ERISA
Affiliate is taking or proposes to take with respect thereto, and, when known,
any action taken by the PBGC, the Internal Revenue Service or the Department of
Labor with respect thereto, (iv) promptly after the filing or receiving thereof
by the Company or any ERISA Affiliate of any notice of the institution of any
proceedings or other actions which may result in the termination of any Plan,
and (v) each request for waiver of the funding standards or extension of the
amortization periods required by Sections 303 and 304 of ERISA or Section 412 of
the Code promptly after the request is submitted by the Company or any ERISA
Affiliate to the Secretary of the Treasury, the Department of Labor or the
Internal Revenue Service, as the case may be. To the extent required under
applicable statutory funding requirements, the Company will fund, or will cause
each ERISA Affiliate to fund, all current service pension liabilities as they
are incurred under the provisions of all Plans from time to time in effect, and
comply with all applicable provisions of ERISA, except to the extent that any
such failure to comply could not reasonably be expected to have a Material
Adverse Effect. The Company covenants that it shall and shall cause each ERISA
Affiliate to (1) make contributions to each Plan in a timely manner and in an
amount sufficient to comply with the contribution obligations under such Plan
and the minimum funding standards requirements of ERISA; (2) prepare and file in
a timely manner all notices and reports required under the terms of ERISA
including but not limited to annual reports; and (3) pay in a timely manner all
required PBGC premiums, in each case, to the extent failure to do so would have
a Material Adverse Effect.
Section 10. Negative Covenants. A deviation from the provisions of this
Section10 will not constitute a Default under this Agreement if such deviation
is consented to in writing by the Majority Banks. The Company agrees with the
Banks and the Agents that, so long as any of the Commitments is in effect and
until payment in full of all Obligations:
10.1 Debts, Guaranties and Other Obligations.
(i) Of Restricted Subsidiaries. The Company will not permit any of its
Restricted Subsidiaries to incur, create, assume or in any manner become or be
liable in respect of any Indebtedness (including obligations for the payment of
rentals); and the Company will not permit any of its Restricted Subsidiaries to
Guarantee or otherwise in any way become or be responsible for obligations of
any other Person, whether by agreement to purchase the Indebtedness of any other
Person or agreement for the furnishing of funds to any other Person through the
purchase or lease of goods, supplies or services (or by way of stock purchase,
capital contribution, advance or loan) for the purpose of paying or discharging
the Indebtedness of any other Person, or otherwise, except that the foregoing
restrictions will not apply to:
(a) Indebtedness pursuant to (1) the Loan Documents and (2) the
Revolving Credit Agreement and the "Loan Documents" referred
to therein;
52
(b) Indebtedness of any Restricted Subsidiary existing on the
date of this Agreement which is described in the
Disclosure Statement, and (A)with respect to any such
Indebtedness which constitutes Senior Debt, any
extensions, renewals or replacements of such Indebtedness
upon terms no more onerous to such Restricted Subsidiary
than the terms of this Agreement or the terms of the
instruments evidencing such Senior Debt as of the
effective date of this Agreement, and (B) with respect to
any such Indebtedness which constitutes Subordinated
Indebtedness, any extensions, renewals or replacements of
such Indebtedness which (I) remains Subordinated
Indebtedness and (II) does not require principal
repayment of such Subordinated Indebtedness prior to the
then scheduled Stated Maturity Date;
(c) endorsements of negotiable or similar instruments for
collection or deposit in the ordinary course of business;
(d) trade payables, lease acquisition and lease maintenance
obligations, extensions of credit from suppliers or
contractors, liabilities incurred in exploration,
development and operation of any Restricted Subsidiary's oil
and gas properties or similar obligations from time to
time incurred in the ordinary course of business, other than
for borrowed money, which are paid within 90 days after the
invoice date (inclusive of applicable grace periods) or
(i) are being contested in good faith, if such reserve
as required by GAAP has been made therefor or (ii) trade
accounts payable of any Restricted Subsidiaries (with
respect to which no legal proceeding to enforce
collection has been commenced or, to the knowledge of any
Responsible Officer of the Company, threatened) not
exceeding, in the aggregate at any time outstanding,
$50,000,000;
(e) taxes, assessments or other government charges which are not
yet due or are being contested in good faith by appropriate
action promptly initiated and diligently conducted, if such
reserve as will be required by GAAP will have been made
therefor;
(f) intercompany Indebtedness owed to the Company by any
Restricted Subsidiary and intercompany Indebtedness owed to
any Restricted Subsidiary by any other Restricted
Subsidiary;
(g) any Guarantee existing on the date of this Agreement of
payment or performance by any Person under any agreement so
long as the obligation guaranteed does not constitute
Indebtedness for borrowed money;
(h) obligations of any Restricted Subsidiary under gas purchase
contracts for gas not taken, as to which such Restricted
Subsidiary is liable to pay if not made up;
53
(i) obligations of any Restricted Subsidiary under any contract
for sale for future delivery of oil or gas (whether or not
the subject oil or gas is to be delivered) or other similar
agreement;
(j) obligations of any Restricted Subsidiary under any hedging
contract, forward contract, swap agreement, futures contract
or other similar agreement;
(k) obligations of any Restricted Subsidiary under any interest
rate or currency swap agreement, or any contract
implementing any interest rate or currency cap, collar or
floor, or any similar interest rate or currency hedging
contract;
(l) obligations in connection with gas imbalances arising in the
ordinary course of business;
(m) Guarantees of obligations of Havre by Guarantor in an amount
not exceeding $20,000,000 in the aggregate in connection
with Indebtedness of Havre;
(n) liabilities under capital leases and lease agreements which
do not cover oil and gas properties to the extent (i) the
incurrence and existence of such liabilities will still
enable each Restricted Subsidiary to comply with all
requirements of this Agreement and (ii) not exceeding, in
the aggregate at any time outstanding, $35,000,000;
(o) until such time as the Guaranty Agreement is no longer in
effect, any Guarantee by Guarantor of the payment or
performance of the Company with respect to Indebtedness of
Company permitted by Section 10.1(iii);
(p) obligations in connection with bank guarantees, bonds,
surety or similar obligations required or requested by
Governmental Authorities in connection with the usual and
customary operation of and the obtaining of oil and gas
properties; and
(q) in addition to Indebtedness permitted by clauses (a) through
(p) above, Indebtedness of any Restricted Subsidiary in an
aggregate principal amount not exceeding $10,000,000 at any
time outstanding.
(ii) Of Unrestricted Subsidiaries. The Company will not permit any of
its Unrestricted Subsidiaries to (a) incur, create, assume or in any manner
become or be liable in respect of any Indebtedness (including obligations for
the payment of rentals), or (b) Guarantee or otherwise in any way become or be
responsible for obligations of any other Person, whether by agreement to
purchase the Indebtedness of any other Person or agreement for the furnishing of
funds to any other Person through the purchase or lease of goods, supplies or
services (or by way of stock purchase, capital contribution, advance or loan)
for the purpose of paying or discharging the Indebtedness of
54
any other Person, or otherwise, except that the foregoing restrictions will not
apply to any Indebtedness not exceeding $200,000,000 in the aggregate for all
Unrestricted Subsidiaries.
(iii) Of the Company. The Company may incur Indebtedness for borrowed
money only if such Indebtedness is at prevailing market rates of interest and
contains covenants, conditions and events of default not materially more onerous
to the Company than the covenants, conditions and event of default set forth in
one or more of the various indentures and other debt instruments of the Company
in existence on the Effective Date.
10.2 Liens. The Company will not and will not permit any of its
Restricted Subsidiaries to create, incur, assume or permit to exist any Lien on
any of its or their properties (now owned or hereafter acquired), except:
(a) Liens securing (i) the Loans or other obligations under the
Loan Documents, and (ii) the "Loans" (as defined in the
Revolving Credit Agreement) and other obligations under the
Revolving Credit Agreement and the "Loan Documents" referred
to therein, provided that such Liens (A) are for the equal
and ratable benefit of the Agents and the Banks under each
of this Agreement and the Revolving Credit Agreement and (B)
cover the same collateral;
(b) Liens for taxes, assessments or other governmental charges
or levies not yet due or which are being contested in good
faith by appropriate action promptly initiated and
diligently conducted, if such reserve as will be required by
GAAP will have been made therefor;
(c) Liens of landlords, vendors, contractors, subcontractors,
carriers, warehousemen, mechanics, laborers or materialmen
or other like Liens arising by law or contract in the
ordinary course of business for sums not yet due or being
contested in good faith by appropriate action promptly
initiated and diligently conducted, if such reserve as will
be required by GAAP will have been made therefor;
(d) Liens existing on property owned by the Company or any of
its Restricted Subsidiaries on the date of this Agreement
which have been disclosed to the Banks in the Disclosure
Statement, together with any renewals, extensions,
amendments, refinancings, rearrangements, modifications,
restatements or supplements, but not increases, thereof from
time to time;
(e) pledges or deposits made in the ordinary course of business
in connection with worker's compensation, unemployment
insurance, social security and other like laws;
(f) inchoate liens arising under ERISA to secure the contingent
liability of the Company permitted by Section9.11;
55
(g) Liens in the ordinary course of business, not to exceed in
the aggregate $25,000,000 as to the Company and its
Restricted Subsidiaries at any time in effect, regarding (i)
the performance of bids, tenders, contracts (other than for
the repayment of borrowed money or the deferred purchase
price of property or services) or leases, (ii) statutory
obligations, (iii) surety appeal bonds or (iv) Liens to
secure progress or partial payments made to the Company or
any of its Restricted Subsidiaries and other Liens of like
nature;
(h) covenants, restrictions, easements, servitudes, permits,
conditions, exceptions, reservations, minor rights, minor
encumbrances, minor irregularities in title or conventional
rights of reassignment prior to abandonment which do not
materially interfere with the occupation, use and enjoyment
by the Company or any Restricted Subsidiary of its
respective assets in the normal course of business as
presently conducted, or materially impair the value thereof
for the purpose of such business;
(i) Liens of operators under joint operating agreements or
similar contractual arrangements with respect to the
relevant entity's proportionate share of the expense of
exploration, development and operation of oil, gas and
mineral leasehold or fee interests owned jointly with
others, to the extent that same relate to sums not yet due
or which are being contested in good faith by appropriate
action promptly initiated and diligently conducted, if such
reserve as will be required by GAAP will have been made
therefor;
(j) Liens created pursuant to the creation of trusts or other
arrangements funded solely with cash, cash equivalents or
other marketable investments or securities of the type
customarily subject to such arrangements in customary
financial practice with respect to long-term or medium-term
indebtedness for borrowed money, the sole purpose of which
is to make provision for the retirement or defeasance,
without prepayment, of Indebtedness permitted under
Section10.1;
(k) Liens in favor of the Company on the assets or properties of
ENSTAR Alaska;
(l) Liens securing purchase money Indebtedness or Capital Lease
Obligations incurred in compliance with Section 10.1 of this
Agreement;
(m) Liens on the capital stock or other equity interest of any
Unrestricted Subsidiary securing obligations of such
Unrestricted Subsidiary;
(n) any Lien existing on any real or personal property of any
corporation or partnership at the time it becomes a
Restricted Subsidiary or of any other Restricted Subsidiary,
or existing prior to the time of acquisition upon any real
or personal property acquired by the Company or any of its
Restricted Subsidiaries;
56
(o) legal or equitable encumbrances deemed to exist by reason of
the existence of any litigation or other legal proceeding or
arising out of a judgment or award with respect to which an
appeal is being prosecuted in good faith by appropriate
action promptly initiated and diligently conducted, if such
reserve as will be required by GAAP will have been made
therefor;
(p) any Liens securing Indebtedness neither assumed nor
guaranteed by the Company or any of its Restricted
Subsidiaries nor on which it customarily pays interest,
existing upon real estate or rights in or relating to
real estate acquired by the Company or any of its
Restricted Subsidiaries for substation, metering station,
pump station, storage, gathering line, transmission line,
transportation line, distribution line or right-of-way
purposes, and any Liens reserved in leases for rent
and full compliance with the terms of the leases in the
case of leasehold estates, to the extent that any such
Lien referred to in this clause arises in the normal course
of business as presently conducted and does not materially
impair the use of the property covered by such Lien for the
purposes for which such property is held by the Company
or its applicable Restricted Subsidiary;
(q) rights reserved to or vested in any municipality or
governmental, statutory or public authority by the terms of
any right, power, franchise, grant, license or permit, or by
any provision of law, to terminate such right, power,
franchise, grant, license or permit or to purchase, condemn,
expropriate or recapture or to designate a purchaser of any
of the property of the Company or any of its Restricted
Subsidiaries;
(r) rights reserved to or vested in any municipality or
governmental, statutory or public authority to control or
regulate any property of the Company or any of its
Restricted Subsidiaries, or to use such property in a manner
which does not materially impair the use of such property
for the purposes for which it is held by the Company or its
applicable Restricted Subsidiary;
(s) any obligations or duties affecting the property of the
Company or any of its Restricted Subsidiaries to any
municipality, governmental, statutory or public authority
with respect to any franchise, grant, license or permit;
(t) rights of a common owner of any interest in real estate,
rights-of-way or easements held by the Company or any of its
Restricted Subsidiaries and such common owner as tenants in
common or through other common ownership;
(u) as to assets located in Canada, reservations, limitations,
provisos and conditions in any original grant from the Crown
or freehold lessor of any of the properties of the Company
or its Subsidiaries;
57
(v) other Liens securing Indebtedness not exceeding, in the
aggregate, $10,000,000 at any one time outstanding;
(w) Liens covering cash collateral accounts relating to
obligations pursuant to Letters of Credit issued in
connection with the Revolving Credit Agreement;
(x) Liens securing Indebtedness of the Company or any Restricted
Subsidiary of the types described in Section 10.1(i)(p)
covering the oil and gas properties to which such
Indebtedness relates, provided that the aggregate amount of
all such Indebtedness so secured under this Section10.2(x)
shall not exceed $50,000,000 in the aggregate at any one
time outstanding; and
(y) Liens (i) granted to or existing in favor of third parties
on margin accounts of the Company or any of its
Restricted Subsidiaries relating to exchange traded
contracts for the delivery of natural gas pursuant to
which the Company or any such Restricted Subsidiary
intends to take actual delivery of such natural gas within
forty (40) days from the then current date in the ordinary
course of business and not for speculative purposes, and
(ii) on margin accounts of the Company or any of its
Restricted Subsidiaries relating to exchange traded
contracts for the delivery of natural gas, provided,
however, the aggregate balance of the margin accounts
subject to the Liens permitted by this clause (ii) shall not
exceed from time to time $10,000,000.
10.3 Dividend Payment Restrictions. The Company will not declare or
make any Dividend Payment if any Default or Event of Default has occurred and is
continuing or would result therefrom.
10.4 Mergers and Sales of Assets. Except for sales of the assets
described in the Disclosure Statement (the "Specified Assets"), the Company will
not (a) merge or consolidate with, or sell, assign, lease or otherwise dispose
of, whether in one transaction or in a series of transactions, more than (i) ten
percent (10%) in the aggregate (not including Specified Assets) of the Company's
and its Restricted Subsidiaries' consolidated total assets (whether now owned or
hereafter acquired) to any Person or Persons during any twelve month period or
(ii) twenty-five percent (25%) in the aggregate (not including Specified Assets)
of the Company's and its Restricted Subsidiaries' consolidated total assets as
of the date hereof to any Person or Persons prior to the Stated Maturity Date,
or permit any Restricted Subsidiary to do so (other than to the Company or
another Restricted Subsidiary or the issuance by any Restricted Subsidiary of
any stock to the Company or another Restricted Subsidiary), or (b) sell, assign,
lease or otherwise dispose of, whether in one transaction or in a series of
transactions, any other properties if receiving therefor consideration other
than cash or other consideration readily convertible to cash or which is less
than the fair market value of the relevant properties, or permit any Restricted
Subsidiary to do so; provided that the Company or any Restricted Subsidiary may
merge or consolidate with any other Person and any Restricted Subsidiary may
transfer properties to any other Restricted Subsidiary or to the Company so long
as, in each
58
case, (i) immediately thereafter and giving effect thereto, no event will occur
and be continuing which constitutes a Default, (ii) in the case of any such
merger or consolidation to which the Company is a party, the Company is the
surviving Person, (iii) in the case of any such merger or consolidation to which
any Restricted Subsidiary is a party (but not the Company), after giving effect
to all transactions closing concurrently relating to such merger or
consolidation, the surviving Person is a Restricted Subsidiary and (iv) the
surviving Person ratifies each applicable Loan Document and provided further
that any Restricted Subsidiary may merge or consolidate with any other
Restricted Subsidiary so long as, in each case (i) immediately thereafter and
giving effect thereto, no event will occur and be continuing which constitutes a
Default and (ii) the surviving Person ratifies each applicable Loan Document.
10.5 Proceeds of Loans. The Company will not permit the proceeds of the
Loans to be used for any purpose other than those permitted by this Agreement.
10.6 ERISA Compliance. The Company will not at any time permit any Plan
maintained by it or any Restricted Subsidiary to:
(a) engage in any "prohibited transaction" as such term is
defined in Section 4975 of the Code;
(b) incur any "accumulated funding deficiency" as such term is
defined in Section 302 of ERISA; or
(c) terminate or be terminated in a manner which could result in
the imposition of a Lien on the property of the Company or
any Restricted Subsidiary pursuant to Section 4068 of ERISA,
in each case, to the extent that permitting the Plan to do so would have a
Material Adverse Effect.
10.7 Total Leverage Ratio. The Company will not permit its Total
Leverage Ratio to be (i) at any time through March 31, 2001, more than 4.25 to
1.00, (ii) at any time from April 1, 2001 through March 31, 2002, more than 4.00
to 1.00, (iii) at any time on or after April 1, 2002, more than 3.75 to 1.00.
10.8 Senior Leverage Ratio. The Company will not permit its
Senior Leverage Ratio to be at any time more than 3.00 to 1.00.
10.9 Minimum Net Worth. The Company will not permit its Consolidated
Net Worth as of the end of any fiscal quarter to be less than (i)$770,000,000
plus (ii)an amount equal to 50% of the sum of the Company's and its Restricted
Subsidiaries' consolidated net income for each calendar quarter, beginning with
the calendar quarter ending March 31, 1999, during which such consolidated net
income is greater than $0 plus (iii) an amount equal to 50% of the net cash
proceeds received by the Company and its Restricted Subsidiaries from the
issuance of any common stock,
59
preferred stock or other equity for each calendar quarter, beginning with the
calendar quarter ending March 31, 1999.
10.10 Nature of Business. The Company will not engage in, and will not
permit any Restricted Subsidiary to engage in, businesses other than oil and gas
exploration and production, gas processing, transmission, distribution,
marketing and storage and gas and liquids pipeline operations and activities
related or ancillary thereto; provided, that if the Company acquires one or more
Restricted Subsidiaries in transactions otherwise permitted by the terms hereof,
any such Restricted Subsidiary may be engaged in businesses other than those
listed in this Section so long as the assets of such Restricted Subsidiaries
which are used in the conduct of such other businesses do not constitute more
than five percent (5%) of the consolidated total assets of the Company
(inclusive of the assets of the Restricted Subsidiary so acquired).
10.11 Covenants in Other Agreements. The Company will not and will not
permit any of its Restricted Subsidiaries to become a party to or to agree that
it or any of its property is bound by any agreement, indenture, mortgage, deed
of trust or any other instrument ("Instruments") directly or indirectly (i)
restricting any loans, advances or any other Investments to or in the Company by
any of its Restricted Subsidiaries, (ii) restricting the ability of any
Restricted Subsidiary to make tax payments or management fee payments to the
Company, or (iii) restricting the ability or capacity of any Restricted
Subsidiary to make Dividend Payments to the Company, except for (a) instruments
in existence on the date hereof and (b) instruments entered into after the date
hereof containing restrictions not materially more restrictive than the
restrictions permitted under clause (a) above.
Section 11. Defaults.
11.1 Events of Default. If one or more of the following events (herein
called "Events of Default") shall occur and be continuing:
(a) Payments - (i) the Company or any other Relevant Party fails to
make any payment or prepayment of any installment of principal on the Loans
payable under this Agreement or the other Loan Documents when due or (ii) the
Company or any other Relevant Party fails to make any payment or prepayment of
interest with respect to the Loans or any other fee, amount or Obligation under
this Agreement or the other Loan Documents and such failure to pay continues
unremedied for a period of five (5) Business Days; or
(b) Representations and Warranties - any representation or warranty
made by the Company or any other Relevant Party in this Agreement or in any
other Loan Document or in any instrument executed in connection herewith or
therewith proves to have been incorrect in any material respect as of the date
thereof; or any representation, statement (including Financial Statements),
certificate or data furnished or made by the Company or any other Relevant Party
(or any officer of the Company or any other Relevant Party) under or in
connection with this Agreement or any other Loan Document, including without
limitation in the Disclosure Statement, proves to
60
have been untrue in any material respect, as of the date as of which the facts
therein set forth were stated or certified; or
(c) Affirmative Covenants - (i) default shall be made in the due
observance or performance of any of the covenants or agreements contained in
Sections9.10 (or in Section9.6 to the extent such default is considered an Event
of Default under the other Subsections of this Section11.1) or (ii) default is
made in the due observance or performance of any of the other covenants or
agreements contained in Section9 of this Agreement or any other affirmative
covenant of the Company or any other Relevant Party contained in this Agreement
or any other Loan Document and such default continues unremedied for a period of
30 days after (x) notice thereof is given by Administrative Agent to the Company
or (y) such default otherwise becomes known to the Company, whichever is
earlier; or
(d) Negative Covenants - default is made in the due observance or
performance by the Company of any of the covenants or agreements contained in
Section10 of this Agreement or of any other negative covenant of the Company or
any other Relevant Party contained in this Agreement or any other Loan Document;
or
(e) Other Obligations - default is made in the due observance or
performance by the Company or any of its Restricted Subsidiaries (as principal
or guarantor or other surety) of any of the covenants or agreements contained in
any bond, debenture, note or other evidence of Indebtedness in excess of
$25,000,000 (singly or aggregating several such bonds, debentures, notes or
other evidence of Indebtedness) which default gives the holder the right to
accelerate the maturity of such Indebtedness, other than the Loan Documents, or
under any credit agreement, loan agreement, indenture, promissory note or
similar agreement or instrument executed in connection with any of the
foregoing, to which it (respectively) is a party and such default is unwaived or
continues unremedied beyond the expiration of any applicable grace period which
may be expressly allowed under such instrument or agreement; or
(f) Involuntary Bankruptcy or Receivership Proceedings - a receiver,
conservator, liquidator or trustee of the Company, the Guarantor, any Restricted
Subsidiary or of any of their property is appointed by the order or decree of
any court or agency or supervisory authority having jurisdiction, and such
decree or order remains in effect for more than 60 days; or the Company, the
Guarantor or any Restricted Subsidiary is adjudicated bankrupt or insolvent; or
any of its property is sequestered by court order and such order remains in
effect for more than 60 days; or a petition is filed against the Company, the
Guarantor or any Restricted Subsidiary under any state or federal bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution,
liquidation or receivership law of any jurisdiction, whether now or hereafter in
effect, and is not dismissed within 60 days after such filing; or
(g) Voluntary Petitions or Consents - the Company, the Guarantor or any
Restricted Subsidiary commences a voluntary case or other proceeding seeking
liquidation, reorganization, arrangement, insolvency, readjustment of debt,
dissolution, liquidation or other relief with respect
61
to itself or its debt or other liabilities under any bankruptcy, insolvency or
other similar law nor or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or consents to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or fails generally to, or cannot, pay
its debts generally as they become due or takes any corporate action to
authorize or effect any of the foregoing; or
(h) Assignments for Benefit of Creditors or Admissions of Insolvency
the Company, the Guarantor or any Restricted Subsidiary makes an assignment for
the benefit of its creditors, or admits in writing its inability to pay its
debts generally as they become due, or consents to the appointment of a
receiver, trustee, or liquidator of the Company, the Guarantor, any Restricted
Subsidiary or of all or any part of their property; or
(i) Undischarged Judgments - judgments (individually or in the
aggregate) for the payment of money in excess of $10,000,000 in excess of
insurance coverage are rendered by any court or other governmental body against
the Company or any of its Restricted Subsidiaries or the Guarantor and the
Company or such Restricted Subsidiary or the Guarantor does not discharge the
same or provide for its discharge in accordance with its terms, or procure a
stay of execution thereof within 60 days from the date of entry thereof, and
within said period of 60 days from the date of entry thereof or such longer
period during which execution of such judgment will have been stayed, the
Company, such Restricted Subsidiary or the Guarantor fails to appeal therefrom
and cause the execution thereof to be stayed during such appeal while providing
such reserves therefor as may be required under GAAP; or
(j) Subsidiary Defaults - the Guarantor or any Restricted Subsidiary of
the Company takes, suffers, or permits to exist any of the events or conditions
referred to in Subsections11.1(f), (g) or (h); or
(k) Change in Control - there should occur any Change of Control.
THEREUPON: Administrative Agent may (and, if directed by the Majority Banks,
shall) (a) declare the Commitments terminated (whereupon the Commitments shall
be terminated) and/or (b) declare the principal amount then outstanding of and
the accrued interest on the Loans and all fees and all other Obligations to be
forthwith due and payable, whereupon such amounts shall be and become
immediately due and payable, without notice (including without limitation notice
of acceleration and notice of intent to accelerate), presentment, demand,
protest or other formalities of any kind, all of which are hereby expressly
waived by the Company; provided that in the case of the occurrence of an Event
of Default with respect to the Company referred to in clause (f) or (g) of this
Section 11.1 or in clause(j) of this Section11.1 to the extent it refers to
clauses(f) or (g), the Commitments shall be automatically terminated and the
principal amount then outstanding of and the accrued interest on the Loans and
all fees and all other Obligations payable hereunder shall be and become
automatically and immediately due and payable, without notice (including but not
limited to notice of intent to accelerate and notice of acceleration) and
without presentment, demand, protest or other
62
formalities of any kind, all of which are hereby expressly waived by the Company
and/or (d)exercise any and all other rights available to it under the Loan
Documents, at law or in equity.
11.2 [Intentionally omitted].
11.3 [Intentionally omitted].
11.4 Right of Setoff. Upon (i) the occurrence and during the
continuance of any Event of Default referred to in clauses (f), (g) or (h) of
Section11.1, or in clause (j) of Section11.1 to the extent it refers to clauses
(f), (g) or (h), or upon (ii) the occurrence and continuance of any other Event
of Default and upon the making of the notice specified in Section11.1 to
authorize Administrative Agent to declare the Loans due and payable pursuant to
the provisions of this Agreement, or if (iii) the Company or any of its
Subsidiaries becomes insolvent, however evidenced, the Banks are hereby
authorized at any time and from time to time, without notice to the Company or
any of its Subsidiaries (any such notice being expressly waived by the Company
and its Subsidiaries), to setoff and apply any and all deposits (general or
special, time or demand, provisional or final, whether or not such setoff
results in any loss of interest or other penalty, and including without
limitation all certificates of deposit) at any time held, and any other funds or
property at any time held, and other Indebtedness at any time owing by any Bank
to or for the credit or the account of the Company against any and all of the
Obligations irrespective of whether or not such Bank will have made any demand
under this Agreement and although such obligations may be unmatured. Should the
right of any Bank to realize funds in any manner set forth hereinabove be
challenged and any application of such funds be reversed, whether by court order
or otherwise, the Banks shall make restitution or refund to the Company pro rata
in accordance with their Commitments. The Banks agree promptly to notify the
Company and Administrative Agent after any such setoff and application, provided
that the failure to give such notice will not affect the validity of such setoff
and application. The rights of the Agents and the Banks under this Section are
in addition to other rights and remedies (including without limitation other
rights of setoff) which the Agents or the Banks may have.
Section 12. Agents.
12.1 Appointment, Powers and Immunities. Each Bank hereby irrevocably
appoints and authorizes each Agent to act as its agent hereunder and under the
other Loan Documents with such powers as are specifically delegated to such
Agent by the terms hereof and thereof, together with such other powers as are
reasonably incidental thereto. Each Agent (which term as used in this Section 12
shall include reference to its affiliates and its own and their affiliates'
officers, directors, employees and agents) shall not (a) have any duties or
responsibilities except those expressly set forth in this Agreement and the
other Loan Documents, or shall by reason of this Agreement or any other Loan
Document be a trustee or fiduciary for any Bank; (b) be responsible to any Bank
for any recitals, statements, representations or warranties contained in this
Agreement or any other Loan Document, or in any certificate or other document
referred to or provided for in, or received by any of them under, this Agreement
or any other Loan Document, or for the value, validity, effectiveness,
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genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document or any other document referred to or provided for herein or therein or
any property covered thereby or for any failure by any Relevant Party or any
other Person to perform any of its obligations hereunder or thereunder; (c) be
required to initiate or conduct any litigation or collection proceedings
hereunder or any other Loan Document except to the extent such Agent is so
requested by the Majority Banks, or (d) be responsible for any action taken or
omitted to be taken by it hereunder or any other Loan Document or any other
document or instrument referred to or provided for herein or therein or in
connection herewith or therewith, INCLUDING, WITHOUT LIMITATION, PURSUANT TO
THEIR OWN NEGLIGENCE, except for its own gross negligence or willful misconduct.
Each Agent may employ agents and attorneys-in-fact and shall not be responsible
for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. In any foreclosure proceeding concerning
any collateral for the Loans, each holder of a Loan if bidding for its own
account or for its own account and the accounts of other Banks is prohibited
from including in the amount of its bid an amount to be applied as a credit
against Obligations owing to such Bank or the Obligations owing to the other
Banks; instead, such holder must bid in cash only; provided that this provision
is for the sole benefit of the Agents and the Banks and shall not inure to the
benefit of the Company or any of its Subsidiaries. However, in any such
foreclosure proceeding, Administrative Agent may (but shall not be obligated to)
submit a bid for all Banks (including itself) in the form of a credit against
the Obligations of all of the Banks, and Administrative Agent or its designee
may (but shall not be obligated to) accept title to such collateral for and on
behalf of all Banks.
12.2 Reliance by Agents. Each Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, telex, 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 (which may be counsel for the
Company), independent accountants and other experts selected by such Agent. As
to any matters not expressly provided for by this Agreement or any other Loan
Document, each Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder and thereunder in accordance with instructions
of the Majority Banks (or, where unanimous consent is required by the terms
hereof or of the other Loan Documents, all of the Banks), and any action taken
or failure to act pursuant thereto shall be binding on all of the Banks.
Pursuant to instructions of the Majority Banks (except as otherwise provided in
Section 13.4 hereof), Administrative Agent shall have the authority to execute
releases of security documents on behalf of the Banks without the joinder of any
Bank. The Company and any third-party may conclusively rely upon any such
release delivered by Administrative Agent without investigation as to whether
such release has been approved by the Majority Banks.
12.3 Defaults. Administrative 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) unless it has received notice from a Bank or
the Company specifying such Default and stating that such notice is a "Notice of
Default". In the event that Administrative Agent receives such a notice of the
occurrence of a Default, Administrative Agent shall give prompt notice thereof
to the Banks (and
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shall give each Bank prompt notice of each such non-payment). Administrative
Agent shall (subject to Section 12.7 hereof) take such action with respect to
such Default as shall be directed by the Majority Banks and within its rights
under the Loan Documents and at law or in equity, provided that, unless and
until Administrative Agent shall have received such directions, Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, permitted hereby with respect to such Default as it shall
deem advisable in the best interests of the Banks and within its rights under
the Loan Documents, at law or in equity.
12.4 Rights as a Bank. With respect to its Commitments and the Loans
made, Chase, Bank of America, Bank One, Societe Generale and Bank of Montreal,
respectively, each in its capacity as a Bank hereunder, shall have the same
rights and powers hereunder as any other Bank and may exercise the same as
though it were not acting as an Agent and the term "Bank" or "Banks" shall,
unless the context otherwise indicates, include Chase, Bank of America, Bank
One, Societe Generale and Bank of Montreal, respectively, each in its individual
capacity. Administrative Agent may (without having to account therefor to any
Bank) accept deposits from, lend money to and generally engage in any kind of
banking, trust, letter of credit, agency or other business with the Company (and
any of its Affiliates) as if it were not acting as Administrative Agent, and
Administrative Agent may accept fees and other consideration from the Company
and its Affiliates (in addition to the fees heretofore agreed to between the
Company and Administrative Agent) for services in connection with this Agreement
or otherwise without having to account for the same to the Banks.
12.5 Indemnification. The Banks agree to indemnify each Agent (to the
extent not reimbursed under Section 9.7 or Section 13.3 hereof, but without
limiting the obligations of the Company under said Sections 9.7 and 13.3),
ratably in accordance with their respective Commit ments, for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind and nature whatsoever (INCLUDING,
BUT NOT LIMITED TO, THE CONSEQUENCES OF THE NEGLIGENCE OF AGENT) which may be
imposed on, incurred by or asserted against such Agent in any way relating to or
arising out of this Agreement or any other Loan Document or any other documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby (including, without limitation, the costs and
expenses which the Company is obligated to pay under Sections 9.7 and 13.3
hereof but excluding, unless a Default has occurred and is continuing, normal
administrative costs and expenses incident to the performance of their
respective agency duties hereunder) or the enforcement of any of the terms
hereof or thereof or of any such other documents, provided that no Bank shall be
liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the party to be indemnified. The obligations
of the Banks under this Section 12.5 shall survive the termination of this
Agreement and the repayment of the Obligations.
12.6 Non-Reliance on Agents and Other Banks. Each Bank agrees that it
has received current financial information with respect to the Company and that
it has, independently and without reliance on any Agent or any other Bank and
based on such documents and information as it has deemed appropriate, made its
own credit analysis of the Company and decision to enter into this
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Agreement and that it will, independently and without reliance upon any Agent or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement or any of the other Loan
Documents. Each Agent shall not be required to keep itself informed as to the
performance or observance by any Relevant Party of this Agreement or any of the
other Loan Documents or any other document referred to or provided for herein or
therein or to inspect the properties or books of the Company or any Relevant
Party. Except for notices, reports and other documents and information expressly
required to be furnished to the Banks by Administrative Agent hereunder, under
the other Loan Documents, the Agents shall not have any duty or responsibility
to provide any Bank with any credit or other information concerning the affairs,
financial condition or business of the Company or any other Relevant Party (or
any of their affiliates) which may come into the possession of such Agent.
12.7 Failure to Act. Except for action expressly required of
Administrative Agent hereunder and under the other Loan Documents,
Administrative Agent shall in all cases be fully justified in failing or
refusing to act hereunder and thereunder unless it shall receive further
assurances to its satisfaction by the Banks of their indemnification obligations
under Section 12.5 hereof against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any such action.
12.8 Resignation or Removal of Administrative Agent. Subject to the
appointment and acceptance of a successor Administrative Agent as provided
below, Administrative Agent may resign at any time by giving notice thereof to
the Banks and the Company, and Administrative Agent may be removed at any time
with or without cause by the Majority Banks. Upon any such resignation or
removal, the Majority Banks shall have the right to appoint a successor
Administrative Agent (subject to the consent of the Company, which consent shall
not be unreasonably withheld), provided deposits with a successor Administrative
Agent shall be insured by the Federal Deposit Insurance Corporation or its
successor. If no successor Administrative Agent shall have been so appointed by
the Majority Banks and shall have accepted such appointment within 30 days after
the retiring Administrative Agent's giving of notice of resignation or the
Majority Banks' removal of the retiring Administrative Agent, then the retiring
Administrative Agent may, on behalf of the Banks, appoint a successor
Administrative Agent (subject to the consent of the Company, which consent shall
not be unreasonably withheld). Any successor Administrative Agent shall be a
bank which has an office in the United States and a combined capital and surplus
of at least $1,000,000,000. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its duties
and obligations hereunder. A successor Administrative Agent shall promptly
specify by notice to the Company and the Banks its Principal Office referred to
in Sections 3.1 and 5.1. After any retiring Administrative Agent's resignation
or removal hereunder as Administrative Agent, the provisions of this Section 12
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 an Administrative Agent.
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Section 13. Miscellaneous.
13.1 Waiver. No waiver of any Default shall be a waiver of any other
Default. No failure on the part of any Agent or any Bank to exercise and no
delay in exercising, and no course of dealing with respect to, any right, power
or privilege under any Loan Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege thereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The remedies provided in the Loan Documents are
cumulative and not exclusive of any remedies provided by law or in equity.
13.2 Notices. All notices and other communications provided for herein
(including, without limitation, any modifications of, or waivers or consents
under, this Agreement) shall be given or made by telex, telegraph, telecopy
(confirmed by mail), cable, mail or other writing and telexed, telecopied,
telegraphed, cabled, mailed or delivered to the intended recipient at the
"Address for Notices" specified below its name on the signature pages hereof;
or, as to any party, at such other address as shall be designated by such party
in a notice to the Company, Administrative Agent given in accordance with this
Section 13.2. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly received when transmitted by
telex or telecopier during regular business hours, delivered to the telegraph or
cable office or personally delivered or, in the case of a mailed notice, three
(3) days after deposit in the United States mails, postage prepaid, certified
mail with return receipt requested (or upon actual receipt, if earlier), in each
case given or addressed as aforesaid.
13.3 Indemnification. The Company shall indemnify the Agents, the
Banks, and each Affiliate thereof and their respective directors, officers,
employees and agents from, and hold each of them harmless against, any and all
losses, liabilities, claims or damages to which any of them may become subject
(REGARDLESS OF WHETHER CAUSED IN WHOLE OR IN PART BY THE SIMPLE (BUT NOT GROSS)
NEGLIGENCE OF THE PERSON INDEMNIFIED), insofar as such losses, liabilities,
claims or damages arise out of or result from any (i)actual or proposed use by
the Company of the proceeds of any extension of credit by any Bank hereunder,
(ii)breach by the Company of this Agreement or any other Loan Document,
(iii)violation by the Company or any of its Subsidiaries of any Legal
Requirement, including but not limited to those relating to Hazardous
Substances, (iv)Liens or security interests previously or hereafter granted on
any real or personal property, to the extent resulting from any Hazardous
Substance located in, on or under any such property, (v) ownership by the Banks
or the Agents of any real or personal property following foreclosure, to the
extent such losses, liabilities, claims or damages arise out of or result from
any Hazardous Substance located in, on or under such property, including,
without limitation, losses, liabilities, claims or damages which are imposed
upon Persons under laws relating to or regulating Hazardous Substances solely by
virtue of ownership, (vi)Bank's or Agent's being deemed an operator of any such
real or personal property by a court or other regulatory or administrative
agency or tribunal in circumstances in which neither any of the Agents nor any
of the Banks is generally operating or generally exercising control over such
property, to the extent such losses, liabilities, claims or damages arise out of
or result from any Hazardous Substance located
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in, on or under such property, (vii)investigation, litigation or other
proceeding (including any threatened investigation or proceeding) relating to
any of the foregoing, and the Company shall reimburse each Agent, each Bank, and
each Affiliate thereof and their respective directors, officers, employees and
agents, upon demand, for any expenses (including legal fees) incurred in
connection with any such investigation or proceeding or (viii) taxes (excluding
income taxes and franchise taxes) payable or ruled payable by any Governmental
Authority in respect of any Loan Document, together with interest and penalties,
if any; provided, however, that the Company shall not have any obligations
pursuant to this Section13.3 with respect to any losses, liabilities, claims,
damages or expenses (a) arising from or relating solely to events, conditions or
circumstances which, as to clauses (iv), (v) or (vi) above, first came into
existence or which first occurred after the date on which the Company or any of
its Subsidiaries conveyed to an unrelated third party all of the Company's or
the applicable Subsidiary's rights, titles and interests to the applicable real
or personal property (whether by deed, deed-in-lieu, foreclosure or otherwise)
other than a conveyance made in violation of any Loan Document, (b) incurred by
the Person seeking indemnification by reason of the gross negligence or willful
misconduct of such Person, or (c)asserted by one or more indemnified parties or
stockholders thereof against one or more indemnified parties. If the Company
ever disputes a good faith claim for indemnification under this Section13.3 on
the basis of the proviso set forth in the preceding sentence, the full amount of
indemnification provided for shall nonetheless be paid, subject to later
adjustment or reimbursement at such time (if any) as a court of competent
jurisdiction enters a final judgment as to the applicability of any such
exceptions or an agreement is reached with respect thereto.
13.4 Amendments, Etc. No amendment or waiver of any provision of this
Agreement or any other Loan Document, nor any consent to any departure by the
Company therefrom, shall in any event be effective unless the same shall be
agreed or consented to by the Majority Banks and the Company, and each such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, that no amendment, waiver or consent
shall, unless in writing and signed by each Bank affected thereby, do any of the
following: (a) increase the Commitment of such Bank (it being understood that
the waiver of any reduction in the Commitments or any mandatory repayment other
than (x) the repayment of all Loans on the Stated Maturity Date and (y) the
mandatory reductions of the Commitments provided for in Section2.3(a) and (z)
the mandatory prepayments required by the terms of Section3.2(b), shall not be
deemed to be an increase in any Commitment) or subject the Banks to any
additional obligation; (b) reduce the principal of, or interest on, any Loan or
fee hereunder; (c)postpone any scheduled date fixed for any payment or mandatory
prepayment of principal of, or interest on, any Loan, fee or other sum to be
paid hereunder; (d) change the percentage of any of the Commitments or of the
aggregate unpaid principal amount of any of the Loans, or the number of Banks,
which shall be required for the Banks or any of them to take any action under
this Agreement; (e)change any provision contained in Sections 9.7 or 13.3 hereof
or this Section 13.4 or Section6.7 hereof, or (f)release all or substantially
all of any security for the obligations of the Company under this Agreement or
all or substantially all of the personal liability of any obligor created under
any of the Loan Documents. Anything in this Section 13.4 to the contrary, no
amendment, waiver or consent shall be made with respect to Section 12 without
the consent of Administrative Agent.
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13.5 Successors and Assigns.
(a) This Agreement shall be binding upon and inure to the benefit of
the Company, the Agents and the Banks and their respective successors and
assigns. The Company may not assign or transfer any of its rights or obligations
hereunder without the prior written consent of all of the Banks. Each Bank may
sell participations to any Person in all or part of any Loan, or all or part of
its Commitments, in which event, without limiting the foregoing, the provisions
of Section6 shall inure to the benefit of each purchaser of a participation and
the pro rata treatment of payments, as described in Section 5.2, shall be
determined as if such Bank had not sold such participation. In the event any
Bank shall sell any participation, such Bank shall retain the sole right and
responsibility to enforce the obligations of the Company relating to the Loans,
including, without limitation, the right to approve any amendment, modification
or waiver of any provision of this Agreement other than amendments,
modifications or waivers with respect to (i) any fees payable hereunder to the
Banks and (ii) the amount of principal or the rate of interest payable on, or
the dates fixed for the scheduled repayment of principal of, the Loans.
(b) Each Bank may assign to one or more Banks or any other Person all
or a portion of its interests, rights and obligations under this Agreement,
provided, however, that (i) other than in the case of an assignment to another
Bank that is, at the time of such assignment, a party hereto or an Affiliate of
such Bank, the Company must give its prior written consent, which consent will
not be unreasonably withheld, (ii) the aggregate amount of the Commitment and/or
Loans of the assigning Bank subject to each such assignment (determined as of
the date the Assignment and Acceptance (as defined below) with respect to such
assignment is delivered to Administrative Agent) shall in no event be less than
$10,000,000 (or $5,000,000 in the case of an assignment to an Affiliate of a
Bank or between Banks) unless either (A) if Bank's Commitment is less than
$10,000,000 or $5,000,000, as applicable, such amount is equal to all of such
Bank's Commitment under this Agreement or (B) each of the Company and the
Administrative Agent otherwise consent, (iii) notwithstanding any other term or
provision of this Agreement, unless the Company shall have otherwise consented
in writing (such consent not to be unreasonably withheld), each such assignment
shall be pro rata with respect to the Loans and the Commitment of the assignor,
and (iv)the parties to each such assignment shall execute and deliver to
Administrative Agent, for its acceptance and recording in the Register (as
defined below), an Assignment and Acceptance in the form of ExhibitE hereto
(each an "Assignment and Acceptance") with blanks appropriately completed,
together with any note or notes subject to such assignment and a processing and
recordation fee of $2,500 paid by the assignee (for which the Company shall have
no liability). Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in each Assignment and Acceptance, which
effective date shall be at least five Business Days after the execution thereof,
(A) the assignee thereunder shall be a party hereto and, to the extent provided
in such Assignment and Acceptance, have the rights and obligations of a Bank
hereunder and (B) the Bank thereunder shall, to the extent provided in such
Assignment and Acceptance, be released from its obligations under this
Agreement. Notwithstanding anything contained in this Agreement to the contrary,
any Bank may at any time assign all or any portion of its rights under this
Agreement
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and the notes issued to it as collateral to a Federal Reserve Bank; provided,
that no such assignment shall release the assigning Bank from any of its
obligations hereunder.
(c) By executing and delivering an Assignment and Acceptance, the Bank
assignor thereunder and the assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than the representation
and warranty that it is the legal and beneficial owner of the interest being
assigned thereby free and clear of any adverse claim, such Bank assignor makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any of the other Loan Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
any of the other Loan Documents or any other instrument or document furnished
pursuant thereto; (ii) such Bank assignor makes no representation or warranty
and assumes no responsibility with respect to the financial condition of the
Company or the performance or observance by the Company of any of its
obligations under this Agreement or any of the other Loan Documents or any other
instrument or document furnished pursuant hereto; (iii) such assignee confirms
that it has received a copy of this Agreement, together with copies of the
financial statements referred to in Section 8.6 and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon any Agent, such Bank assignor or any
other Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement and the other Loan Documents; (v) such
assignee appoints and authorizes each Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement and the other Loan
Documents as are delegated to such Agent by the terms hereof, together with such
powers as are reasonably incidental thereto; and (vi) such assignee agrees that
it will perform in accordance with their terms all obligations that by the terms
of this Agreement and the other Loan Documents are required to be performed by
it as a Bank.
(d) Administrative Agent shall maintain at its office a copy of each
Assignment and Acceptance delivered to it and a register for the recordation of
the names and addresses of the Banks and the Commitments of, and principal
amount of the Loans owing to, each Bank from time to time (the "Register"). The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Company, the Agents and the Banks may treat each person the name of
which is recorded in the Register as a Bank hereunder for all purposes of this
Agreement and the other Loan Documents. The Register shall be available for
inspection by the Company or any Bank at any reasonable time and from time to
time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Bank and the assignee thereunder together with any note or notes
subject to such assignment, the written consent to such assignment executed by
the Company and the fee payable in respect thereto, Administrative Agent shall,
if such Assignment and Acceptance has been completed with blanks appropriately
filled, (i)accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to the
Company. If applicable,
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within five (5) Business Days after receipt of notice, the Company, at its own
expense, shall execute and deliver to Administrative Agent in exchange for the
surrendered notes new notes to the order of such assignee in an amount equal to
the Commitments and/or Loans assumed by it pursuant to such Assignment and
Acceptance and, if the assigning Bank has retained Commitments and/or Loans
hereunder, new notes to the order of the assigning Bank in an amount equal to
the Commitment and/or Loans retained by it hereunder. Such new notes shall be in
an aggregate principal amount equal to the aggregate principal amount of such
surrendered notes, shall be dated the effective date of such Assignment and
Acceptance and shall otherwise be in substantially the form of the respective
note. Thereafter, such surrendered notes, if any, shall be marked renewed and
substituted and the originals delivered to the Company (with copies, certified
by the Company as true, correct and complete, to be retained by Administrative
Agent).
(f) Any Bank may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 13.5, disclose to
the assignee or participant or proposed assignee or participant, any information
relating to the Company furnished to such Bank by or on behalf of the Company;
provided, however, that, prior to any such disclosure, the Company shall have
consented thereto, which consent shall not be unreasonably withheld, and each
such assignee or participant, or proposed assignee or participant, shall execute
an agreement whereby such assignee or participant shall agree to preserve the
confidentiality of any Confidential Information (defined in Section13.14) on
terms substantially the same as those provided in Section13.14.
(g) The Company will have the right to consent to any material
intercreditor arrangements in connection with an assignment by any Bank of any
interest, right or obligation under this Agreement which is not pro rata with
respect to the Loans and the Commitment of the assignor and the Company may deny
its consent to any such arrangements which, in the reasonable judgement of the
Company, would adversely affect the Company in a material respect.
(h) The provisions of this Section shall not apply to the assignment
and pledge of a Bank's rights hereunder or under any note to any Federal Reserve
Bank for collateral purposes pursuant to Regulation A of the Board of Governors
of the Federal Reserve System and any Operating Circular issued by such Federal
Reserve Bank; provided that such assignment and pledge shall not relieve such
Bank of any of its obligations hereunder.
13.6 Limitation of Interest. The Company, the Agents and the Banks
intend to strictly comply with all applicable laws, including applicable usury
laws. Accordingly, the provisions of this Section13.6 shall govern and control
over every other provision of this Agreement or any other Loan Document which
conflicts or is inconsistent with this Section, even if such provision declares
that it controls. As used in this Section, the term "interest" includes the
aggregate of all charges, fees, benefits or other compensation which constitute
interest under applicable law, provided that, to the maximum extent permitted by
applicable law, (a) any non-principal payment shall be characterized as an
expense or as compensation for something other than the use, forbearance or
detention of money and not as interest, and (b) all interest at any time
contracted for, reserved,
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charged or received shall be amortized, prorated, allocated and spread, in equal
parts during the full term of the Obligations. In no event shall the Company or
any other Person be obligated to pay, or any Bank have any right or privilege to
reserve, receive or retain, (a) any interest in excess of the maximum amount of
nonusurious interest permitted under the laws of the State of Texas or the
applicable laws (if any) of the United States or of any other applicable state,
or (b) total interest in excess of the amount which such Bank could lawfully
have contracted for, reserved, received, retained or charged had the interest
been calculated for the full term of the Obligations at the Highest Lawful Rate.
On each day, if any, that the interest rate (the "Stated Rate") called for under
this Agreement or any other Loan Document exceeds the Highest Lawful Rate, the
rate at which interest shall accrue shall automatically be fixed by operation of
this sentence at the Highest Lawful Rate for that day, and shall remain fixed at
the Highest Lawful Rate for each day thereafter until the total amount of
interest accrued equals the total amount of interest which would have accrued if
there were no such ceiling rate as is imposed by this sentence. Thereafter,
interest shall accrue at the Stated Rate unless and until the Stated Rate again
exceeds the Highest Lawful Rate when the provisions of the immediately preceding
sentence shall again automatically operate to limit the interest accrual rate.
The daily interest rates to be used in calculating interest at the Highest
Lawful Rate shall be determined by dividing the applicable Highest Lawful Rate
per annum by the number of days in the calendar year for which such calculation
is being made. None of the terms and provisions contained in this Agreement or
in any other Loan Document which directly or indirectly relate to interest shall
ever be construed without reference to this Section 13.6, or be construed to
create a contract to pay for the use, forbearance or detention of money at an
interest rate in excess of the Highest Lawful Rate. If the term of any
Obligation is shortened by reason of acceleration of maturity as a result of any
Default or by any other cause, or by reason of any required or permitted
prepayment, and if for that (or any other) reason any Bank at any time,
including but not limited to, the stated maturity, is owed or receives (and/or
has received) interest in excess of interest calculated at the Highest Lawful
Rate, then and in any such event all of any such excess interest shall be
canceled automatically as of the date of such acceleration, prepayment or other
event which produces the excess, and, if such excess interest has been paid to
such Bank, it shall be credited pro tanto against the then-outstanding principal
balance of the Company's obligations to such Bank, effective as of the date or
dates when the event occurs which causes it to be excess interest, until such
excess is exhausted or all of such principal has been fully paid and satisfied,
whichever occurs first, and any remaining balance of such excess shall be
promptly refunded to its payor. Chapter 346 of the Texas Finance Code (which
regulates certain revolving credit accounts (formerly Tex. Rev.
Civ. Stat. Ann. Art. 5069, Ch. 15)) shall not apply to this Agreement.
13.7 Survival. The obligations of the Company under Sections 6, 9.7 and
13.3 hereof and the obligations of the Banks under Section 13.6 hereof shall
survive the repayment of the Loans and the termination of the Commitments.
13.8 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.
72
13.9 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
agreement and any of the parties hereto may execute this Agreement by signing
any such counterpart.
13.10 GOVERNING LAW; FORUM SELECTION; CONSENT TO JURISDICTION. THIS
AGREEMENT AND (EXCEPT AS THEREIN PROVIDED) THE OTHER LOAN DOCUMENTS ARE
PERFORMABLE IN HARRIS COUNTY, TEXAS, WHICH SHALL BE A PROPER PLACE OF VENUE FOR
SUIT ON OR IN RESPECT THEREOF. THE COMPANY IRREVOCABLY AGREES THAT ANY LEGAL
PROCEEDING IN RESPECT OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS SHALL BE
BROUGHT IN THE DISTRICT COURTS OF HARRIS COUNTY, TEXAS OR THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS, HOUSTON DIVISION
(COLLECTIVELY, THE "SPECIFIED COURTS"). THE COMPANY HEREBY IRREVOCABLY SUBMITS
TO THE NONEXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS OF THE STATE OF
TEXAS. THE COMPANY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF
ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT
BROUGHT IN ANY SPECIFIED COURT, AND HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIMS
THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. THE COMPANY FURTHER (1) AGREES TO DESIGNATE
AND MAINTAIN AN AGENT FOR SERVICE OF PROCESS IN THE CITY OF HOUSTON, TEXAS, IN
CONNECTION WITH ANY SUCH SUIT, ACTION OR PROCEEDING AND TO DELIVER TO
ADMINISTRATIVE AGENT EVIDENCE THEREOF AND (2) IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH SUIT,
ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, POSTAGE PREPAID, TO THE COMPANY AT ITS ADDRESS AS PROVIDED IN
THIS AGREEMENT OR AS OTHERWISE PROVIDED BY TEXAS LAW. NOTHING HEREIN SHALL
AFFECT THE RIGHT OF ANY AGENT OR ANY BANK TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE COMPANY IN ANY JURISDICTION OR TO SERVE PROCESS IN
ANY MANNER PERMITTED BY APPLICABLE LAW. THE COMPANY AGREES THAT A FINAL JUDGMENT
IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN
OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY
LAW. THIS AGREEMENT AND (EXCEPT AS THEREIN PROVIDED) THE OTHER LOAN DOCUMENTS
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE APPLICABLE LAWS (OTHER
THAN THE CONFLICT OF LAWS RULES) OF THE STATE OF TEXAS AND THE UNITED STATES OF
AMERICA FROM TIME TO TIME IN EFFECT.
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13.11 WAIVER OF JURY TRIAL; PUNITIVE DAMAGES. THE COMPANY, EACH AGENT
AND EACH BANK HEREBY (I) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT
PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT OF, UNDER OR IN
CONNECTION WITH THE LOAN DOCUMENTS OR ANY TRANSACTION CONTEMPLATED THEREBY OR
ASSOCIATED THEREWITH, BEFORE OR AFTER MATURITY; (II) IRREVOCABLY WAIVES, TO THE
MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER
IN ANY SUCH LITIGATION ANY EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES; (III)
CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OR 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)ACKNOWLEDGES 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.
13.12 Severability. Whenever possible, each provision of the Loan
Documents shall be interpreted in such manner as to be effective and valid under
applicable law. If any provision of any Loan Document shall be invalid, illegal
or unenforceable in any respect under any applicable law, the validity, legality
and enforceability of the remaining provisions of such Loan Document shall not
be affected or impaired thereby.
13.13 Chapter 15 Not Applicable. Chapter 15, Subtitle 3, Title 79,
Revised Civil Statutes of Texas, 1925, as amended, shall not apply to this
Agreement or to any Loan, nor shall this Agreement or any Loan be governed by or
be subject to the provisions of such Chapter 15 in any manner whatsoever.
13.14 Confidential Information. Each Agent and each Bank
separately agrees that:
(a) As used herein, the term "Confidential Information" means written
information about the Company or the transactions contemplated herein furnished
by the Company to the Agents and/or the Banks which is specifically designated
as confidential by the Company; Confidential Information, however, shall not
include information which (i) was publicly known or available, or otherwise
available on a non-confidential basis to any Bank, at the time of disclosure
from a source other than the Company, (ii) subsequently becomes publicly known
through no act or omission by such Bank, (iii) otherwise becomes available on a
non-confidential basis to any Bank other than through disclosure by the Company
or (iv) has been in the possession of any Bank for a period of more than two
years from the date on which such information originally was furnished to such
Bank by the Company, unless the Company shall have requested the Agents and the
Banks in writing, at least 30 days prior to the end of such two-year period, to
maintain the confidentiality of such
74
information for another two (2) year period (or for successive two (2) year
periods); provided that the Company shall not unreasonably withhold its consent
to a request made after the initial two (2) year period to eliminate information
from "Confidential Information".
(b) Each Agent and each Bank agrees that it will take normal and
reasonable precautions to maintain the confidentiality of any Confidential
Information furnished to such Person; provided, however, that such Person may
disclose Confidential Information (i) upon the Company's consent; (ii) to its
auditors; (iii) when required by any Legal Requirement; (iv) as may be required
or appropriate in any report, statement or testimony submitted to any
Governmental Authority having or claiming to have jurisdiction over it; (v) to
such Person's and its Subsidiaries' or Affiliates' officers, directors,
employees, agents, representatives and professional consultants in connection
with this Agreement or administration of the Loans; (vi) as may be required or
appropriate, should such Bank elect to assign or grant participations in any of
the Obligations in connection with (1) the enforcement of the Obligations to any
such Person under any of the Loan Documents or related agreements, or (2) any
potential transfer pursuant to this Agreement of any Obligation owned by any
Bank (provided any potential transferee has been approved by the Company if
required by this Agreement, which approval shall not be unreasonably withheld,
and has agreed in writing to be bound by substantially the same provisions
regarding Confidential Information contained in this Section); (vii) as may be
required or appropriate in response to any summons or subpoena or in connection
with any litigation or administrative proceeding; (viii) to any other Bank; (ix)
to the extent reasonably required in connection with the exercise of any remedy
hereunder or under the other Loan Documents; or (x) to correct any false or
misleading information which may become public concerning such Person's
relationship to the Company.
13.15 Tax Forms. With respect to each Bank which is organized under the
laws of a jurisdiction outside the United States, on the day of the initial
borrowing hereunder and from time to time thereafter if requested by the Company
or Administrative Agent, such Bank shall provide Administrative Agent and the
Company with the forms prescribed by the Internal Revenue Service of the United
States certifying as to such Bank's status for purposes of determining exemption
from United States withholding taxes with respect to all payments to be made to
such Bank hereunder or other documents satisfactory to the Company and
Administrative Agent indicating that all payments to be made to such Bank
hereunder are subject to such tax at a rate reduced by an applicable tax treaty.
Unless the Company and Administrative Agent shall have received such forms or
such documents indicating that payments hereunder are not subject to United
States withholding tax or are subject to such tax at a rate reduced by an
applicable tax treaty, the Company or Administrative Agent shall withhold taxes
from such payments at the applicable statutory rate in the case of payments to
or for any Bank organized under the laws of a jurisdiction outside the United
States.
13.16 Entire Agreement. THIS WRITTEN AGREEMENT AND THE OTHER 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.
75
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[SIGNATURES BEGIN ON FOLLOWING PAGE]
76
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
OCEAN ENERGY, INC., a Texas corporation
By:
Name: Stephen A. Thorington
Title: Senior Vice President - Finance,
Treasury & Corporate Development
Address for Notices:
1001 Fannin, Suite 1700
Houston, Texas 77002
Attention: Stephen A. Thorington
Phone: (713) 951-1319
Fax: (713) 951-4846
[SIGNATURE PAGE TO 364-DAY CREDIT AGREEMENT]
S - 1
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, as a Bank and as
Administrative Agent
By:
Name:
Title:
Address for Notices:
1 Chase Manhattan Plaza, 8th Floor
New York, New York 10081
Attention: Ms. Debbie Rockower
Phone: (212) 552-7446
Fax: (212) 552-5700
with a copy to:
Chase Bank of Texas, National Association
712 Main Street
Houston, Texas 77002
Attention: Manager, Energy Division
[SIGNATURE PAGE TO 364-DAY CREDIT AGREEMENT]
S - 2
THE CHASE MANHATTAN BANK, as
Auction Administrative Agent
By:
Name:
Title:
Address for Notices:
1 Chase Manhattan Plaza, 8th Floor
New York, New York 10081
Attention: Ms. Debbie Rockower
Phone: (212) 552-7446
Fax: (212) 552-5700
[SIGNATURE PAGE TO 364-DAY CREDIT AGREEMENT]
S - 3
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a Bank
and as Syndication Agent
By:
Name:
Title:
Address for Notices:
Attention:
Phone:
Fax:
with further notice to:
Phone:
Fax:
[SIGNATURE PAGE TO 364-DAY CREDIT AGREEMENT]
S - 4
BANK ONE, TEXAS, N.A., as a Bank and as
Documentation Agent
By:
Name: Christine M. Macan
Title: Vice President
Address for Notices:
910 Travis, TX2-4330
Houston, Texas 77002
Attention: Jo Linda Papadakis
Phone: (713) 751-6235
Fax: (713) 751-7894
with further notice to:
910 Travis, TX2-4330
Houston, Texas 77002
Attention: Christine M. Macan
Phone: (713) 751-3484
Fax: (713) 751-3544
[SIGNATURE PAGE TO 364-DAY CREDIT AGREEMENT]
S - 5
SOCIETE GENERALE, SOUTHWEST
AGENCY, as a Bank and as a Managing
Agent
By:
Name: Richard Erbert
Title: Vice President
Lending Office for all Loans:
2001 Ross Avenue, Suite 4800
Dallas, Texas 75201
Address for Notices:
2001 Ross Avenue, Suite 4800
Dallas, Texas 75201
Attention: Loan Administration
Phone: (214) 754-0171
Fax: (214) 979-2792
with further notice to:
Societe Generale
1111 Bagby, Suite 2020
Houston, Texas 77002
Attention: Richard Erbert
Phone: (713) 650-0824
Fax: (713) 759-6318
[SIGNATURE PAGE TO 364-DAY CREDIT AGREEMENT]
S - 6
BANK OF MONTREAL, as a Bank and as a
Managing Agent
By:
Name: Melissa Bauman
Title: Director
Address for Notices:
115 S. LaSalle, 11th Floor
Chicago, Illinois 60603
Attention: Craig Reynolds
Phone: (312) 750-6047
Fax: (312) 750-6061
with further notice to:
Melissa Bauman
700 Louisiana, Suite 4400
Houston, Texas 77002
Phone: (713) 546-9723
Fax: (713) 223-4007
[SIGNATURE PAGE TO 364-DAY CREDIT AGREEMENT]
S - 7
BANKBOSTON, N.A., as a Bank and as Co-
Agent
By:
Name: Terrence Ronan
Title: Director
Address for Notices:
100 Federal Street
Boston, MA 02110
Attention: Terrence Ronan
Phone: (617) 434-5472
Fax: (617) 434-3652
with further notice to:
100 Federal Street
Boston, MA 02110
Attention: Fidel Vasquez
Loan Officer
Phone: (617) 434-1906
Fax: (617) 434-3652
[SIGNATURE PAGE TO 364-DAY CREDIT AGREEMENT]
S - 8
ABN AMRO BANK N.A., HOUSTON
AGENCY, as a Bank and as Co-Agent
By:
Name:
Title:
By:
Name:
Title:
Address for Notices:
3 Riverway, Suite 1700
Houston, Texas 77056
Attention: Jamie A. Conn
Phone: (713) 964-3356
Fax: (713) 961-1699
with further notice to:
208 South LaSalle Street, Suite 1500
Chicago, IL 60604-1003
Attention: Karen MacAllister
Phone: (312) 992-5123
Fax: (312) 992-5111
[SIGNATURE PAGE TO 364-DAY CREDIT AGREEMENT]
S - 9
CREDIT SUISSE FIRST BOSTON, as a
Bank and as Co-Agent
By:
Name: Douglas E. Maher
Title: Vice President
Address for Notices:
11 Madison Avenue, 20th Floor
New York, New York 10010-3629
Attention: Douglas E. Maher
Phone: (212) 325-3641
Fax: (212) 325-8615
with further notice to:
600 Travis Street, 30th Floor
Houston, Texas 77002
Attention: R. Scott Brown
Phone: (713) 220-6774
Fax: (713) 237-0325
[SIGNATURE PAGE TO 364-DAY CREDIT AGREEMENT]
S - 10
WELLS FARGO BANK (TEXAS),
NATIONAL ASSOCIATION, as a Bank
By:
Name: J. Alan Alexander
Title: Vice President
Address for Notices:
Wells Fargo Bank, N.A.
201 Third Street, 8th Floor
San Francisco, CA 94103
Attention: Oscar Enriquez
Phone: (415) 477-5425
Fax: (415) 979-0675
with further notice to:
Wells Fargo Bank (Texas), N.A.
Energy Dept.
1000 Louisiana, 3rd Floor
Houston, Texas 77002
Attention: J. Alan Alexander
Phone: (713) 319-1368
Fax: (713) 739-1087
[SIGNATURE PAGE TO 364-DAY CREDIT AGREEMENT]
S - 11
CREDIT LYONNAIS, NEW YORK
BRANCH, as a Bank
By:
Name: Phillipe Soustra
Title: Senior Vice President
Address for Notices:
Credit Lyonnais
1000 Louisiana, Suite 5360
Houston, Texas 77002
Attention: Jeff Baker
Phone: (713) 753-8711
Fax: (713) 751-0307
[SIGNATURE PAGE TO 364-DAY CREDIT AGREEMENT]
S - 12
THE BANK OF NOVA SCOTIA, as a Bank
and as Co-Agent
By:
Name:
Title:
Address for Notices:
600 Peachtree Street N.E., Suite 2700
Atlanta, GA 30308
Attention: Phyllis Walker
Phone: (404) 877-1552
Fax: (404) 888-8998
with further notice to:
1100 Louisiana, Suite 3000
Houston, Texas 77002
Attention: Mark Ammerman
Phone: (713) 759-3442
Fax: (713) 759-2425
[SIGNATURE PAGE TO 364-DAY CREDIT AGREEMENT]
S - 13
SOUTHWEST BANK OF TEXAS, N.A., as
a Bank
By:
Name: A. Stephen Kennedy
Title: Vice President/Manager Energy
Lending
Address for Notices:
4400 Post Oak Parkway
Houston, Texas 77027
Attention: Ann Greer
Phone: (713) 235-8881 ext 1792
Fax: (713) 439-5954
with further notice to:
4400 Post Oak Parkway
Houston, Texas 77027
Attention: A. Stephen Kennedy
Phone: (713) 235-8881 ext 1707
Fax: (713) 439-5925
[SIGNATURE PAGE TO 364-DAY CREDIT AGREEMENT]
S - 14
THE BANK OF TOKYO-MITSUBISHI,
LTD., as a Bank
By:
Name:
Title:
Address for Notices:
1100 Louisiana Street, Suite 2800
Houston, Texas 77002-5216
Attention: J. M. McIntyre
Phone: (713) 655-3845
Fax: (713) 655-3855
[SIGNATURE PAGE TO 364-DAY CREDIT AGREEMENT]
S - 15
THE BANK OF NEW YORK, as a Bank and
as Co-Agent
By:
Name: John N. Watt
Title: Vice President
Address for Notices:
One Wall Street, 19th Floor
New York, New York 10286
Attention: Terry Foran
Phone: (212) 635-7921
Fax: (212) 635-7923
with further notice to:
One Wall Street, 19th Floor
New York, New York 10286
Attention: Peter Keller
Phone: (212) 635-7861
Fax: (212) 635-7923
[SIGNATURE PAGE TO 364-DAY CREDIT AGREEMENT]
S - 16
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as a Bank and
as Co-Agent
By:
Name: Kevin McCann
Title: Vice President
Address for Notices:
60 Wall Street, 5th Floor
New York, New York 10260
Attention: John Kowalczuk
Phone: (212) 648-0381
Fax: (212) 648-5416
with further notice to:
60 Wall Street, 5th Floor
New York, New York 10260
Attention: Philip McNeal
Phone: (212) 648-0309
Fax: (212) 648-5416
[SIGNATURE PAGE TO 364-DAY CREDIT AGREEMENT]
S - 17
THE FUJI BANK LIMITED, NEW YORK
BRANCH, as a Bank
By:
Name:
Title:
Address for Notices:
2 World Trade Center, 79th Floor
New York, New York 10048
Attention: Ricky Simmons
Phone: (212) 898-2066
Fax: (212) 321-9407
[SIGNATURE PAGE TO 364-DAY CREDIT AGREEMENT]
S - 18
THE SANWA BANK, LIMITED, as a Bank
By:
Name:
Title:
Address for Notices:
1200 Smith Street, Suite 2670
Houston, Texas 77002
Attention: Clyde Redford
Phone: (713) 652-3190
Fax: (713) 654-1462
[SIGNATURE PAGE TO 364-DAY CREDIT AGREEMENT]
S - 19
GUARANTY AGREEMENT
(364-Day Credit Agreement)
THIS GUARANTY AGREEMENT dated as of March 30, 1999 is by OCEAN ENERGY,
INC., a corporation duly organized and validly existing under the laws of the
state of Louisiana (the "Guarantor"), in favor of each of the financial
institutions that is now or hereafter a party to the Credit Agreement (as
defined below) as a "Bank" (individually, a "Bank" and, collectively, the
"Banks"); CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, as administrative agent for
the Banks (in such capacity, the "Administrative Agent"), BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION, as syndication agent for the Banks (in
such capacity, the "Syndication Agent"), BANK ONE, TEXAS, N.A., as documentation
agent for the Banks (in such capacity, the "Documentation Agent"), SOCIETE
GENERALE, SOUTHWEST AGENCY and BANK OF MONTREAL, as managing agents for the
Banks (in such capacity, the "Managing Agents"), and THE CHASE MANHATTAN BANK,
as auction administrative agent for the Banks (in such capacity, the "Auction
Administrative Agent").
Recitals
A. Ocean Energy, Inc., a Texas corporation (the "Company"), the
Administrative Agent, the Syndication Agent, the Documentation Agent, the
Managing Agents and the Auction Administrative Agent (collectively the "Agents")
and the Banks have executed that certain 364-Day Credit Agreement of even date
herewith (such credit agreement, as amended, the "Credit Agreement").
B. One of the terms and conditions stated in the Credit Agreement for
the making of the Loans and extensions of credit described in the Credit
Agreement is the execution and delivery to the Agents and the Banks of this
Guaranty Agreement.
D. NOW, THEREFORE, (i) in order to comply with the terms and conditions
of the Credit Agreement, (ii) to induce the Banks to enter into the Credit
Agreement, and (iii) for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Guarantor hereby agrees as
follows:
Article I
Definitions and Accounting Matters
Section 1.1 Terms Defined in Recitals. As used in this Guaranty
Agreement, the terms defined in the Recitals shall have the meanings indicated
in the Recitals.
Section 1.2 Certain Definitions. As used in this Guaranty Agreement,
including the Recitals, the following terms shall have the following meanings,
unless the context otherwise requires:
"Guarantor Claims" shall have the meaning indicated in Section 4.1.
1
"Guaranty Agreement" shall mean this Guaranty Agreement, as the same
may from time to time be amended, amended and restated, supplemented or
otherwise modified.
"Loan Document" shall mean "Loan Document" as defined in the Credit
Agreement.
"Material Adverse Effect" shall mean a material adverse effect on the
business, condition (financial or otherwise), operations or properties
(including proven oil and gas reserves) of the Guarantor and its Subsidiaries,
taken as a whole, or on the ability of the Guarantor to perform its material
obligations under the Loan Documents to which it is a party taken as a whole.
"Obligations" shall mean (a) the payment and performance of all present
and future "Obligations" (as defined in the Credit Agreement) and any other
obligations and liabilities of the Company to the Agents and the Banks under the
Credit Agreement, including but not limited to, the full and punctual payment of
the Loans and any and all promissory notes given in connection with the Credit
Agreement, or in modification, renewal, extension or rearrangement thereof in
whole or in part; (b) all obligations of the Guarantor under this Guaranty
Agreement; and (c) all interest (whether pre- or post- petition), charges,
expenses, reasonable attorneys' or other fees and any other sums payable to the
Agents and the Banks in connection with the execution, administration or
enforcement of any of their rights and remedies hereunder or any other Loan
Document.
Section 1.3 Credit Agreement Definitions. Unless otherwise defined
herein, all terms beginning with a capital letter which are defined in the
Credit Agreement shall have the same meanings herein as therein.
Article II
Guaranty
Section 2.1 Obligations Guaranteed. The Guarantor hereby
irrevocably and unconditionally guarantees the prompt payment at maturity of the
Obligations.
Section 2.2 Nature of Guaranty. This guaranty is an absolute,
irrevocable, completed and continuing guaranty of payment and not a guaranty of
collection, and no notice of the Obligations or any extension of credit already
or hereafter contracted by or extended to the Company need be given to the
Guarantor. This guaranty may not be revoked by the Guarantor and shall continue
to be effective with respect to debt under the Obligations arising or created
after any attempted revocation by the Guarantor and shall remain in full force
and effect until the Obligations are paid in full and the Commitments are
terminated, notwithstanding that from time to time prior thereto no Obligations
may be outstanding. The Company, the Agents and the Banks may modify, alter,
rearrange, extend for any period and/or renew from time to time, the Obligations
and the Agents and the Banks may waive any Defaults or Events of Default without
notice to the Guarantor and in such event the Guarantor will remain fully bound
hereunder on the Obligations. Subject to the terms of the Credit Agreement, this
Guaranty Agreement may be enforced by the Agents and/or the Banks and any
subsequent holder of the Obligations and shall not be discharged by the
assignment or negotiation of all or part of the Obligations. The Guarantor
hereby expressly waives
2
presentment, demand, notice of non-payment, protest and notice of protest and
dishonor, notice of Event of Default, notice of intent to accelerate the
maturity and notice of acceleration of the maturity and any other notice in
connection with the Obligations, and also notice of acceptance of this Guaranty
Agreement, acceptance on the part of the Agents and the Banks being conclusively
presumed by their request for this Guaranty Agreement and delivery of the same
to the Administrative Agent.
Section 2.3 Banks' Rights. Subject to the terms of the Credit
Agreement, the Guarantor authorizes the Banks (or the Administrative Agent on
behalf of the Banks), without notice or demand and without affecting the
Guarantor's obligation hereunder, to take and hold agreed-upon security for the
payment of the Obligations, and exchange, enforce, waive and release any such
security; and to apply such security and direct the order or manner of sale
thereof as the Agents and the Banks in their discretion may determine; and to
obtain a guaranty of the Obligations from any one or more Persons and at any
time or times to enforce, waive, rearrange, modify, limit or release any of such
other Persons from their obligations under such guaranties.
Section 2.4 Guarantor's Waivers. The Guarantor waives any right to
require the Agents and the Banks to (a) proceed against the Company or any other
Person liable on the Obligations, (b) enforce their rights against any other
guarantor of the Obligations, (c) proceed or enforce their rights against or
exhaust any security given to secure the Obligations, (d) have the Company
joined with the Guarantor in any suit arising out of this Guaranty Agreement
and/or the Obligations, or (e) pursue any other remedy whatsoever. Neither the
Agents nor the Banks shall be required to mitigate damages or take any action to
reduce, collect or enforce the Obligations. The Guarantor waives any defense
arising by reason of any disability, lack of corporate authority or power, or
other defense of the Company or any other guarantor of the Obligations, and
shall remain liable hereon regardless of whether the Company or any other
guarantor be found not liable thereon for any reason.
Section 2.5 Maturity of Obligations; Payment. The Guarantor agrees that
if the maturity of the Obligations is accelerated by bankruptcy or otherwise,
such maturity shall also be deemed accelerated for the purpose of this Guaranty
Agreement without demand or notice to the Guarantor. The Guarantor will,
forthwith upon notice from the Administrative Agent of the Company's failure to
pay the Obligations at maturity, pay to the Administrative Agent for the benefit
of the Agents and the Banks at the Administrative Agent's Principal Office, the
amount due and unpaid by the Company and guaranteed hereby. The failure of the
Administrative Agent to give this notice shall not in any way release the
Guarantor hereunder.
Section 2.6 Banks' Expenses. If the Guarantor fails to pay the
Obligations after notice from the Administrative Agent of the Company's failure
to pay any Obligations at maturity (whether by acceleration or otherwise), and
if the Agents or the Banks obtain the services of an attorney for collection of
amounts owing by the Guarantor hereunder, or obtain advice of counsel in respect
of any of their rights under this Guaranty Agreement, or if suit is filed to
enforce this Guaranty Agreement, or if proceedings are had in any bankruptcy,
receivership or other judicial proceedings for the establishment or collection
of any amount owing by the Guarantor hereunder, or if any
3
amount owing by the Guarantor hereunder is collected through such proceedings,
the Guarantor agrees to pay to the Administrative Agent at its Principal Office
the reasonable attorneys' fees of the Agents and the Banks.
Section 2.7 Obligation. It is expressly agreed that the obligation of
the Guarantor for the payment of the Obligations guaranteed hereby shall be
primary and not secondary.
Section 2.8 Events and Circumstances Not Reducing or Discharging the
Guarantor's Obligations. The Guarantor hereby consents and agrees, to each of
the following to the fullest extent permitted by law, that its obligations under
this Guaranty Agreement shall not be released, diminished, impaired, reduced or
adversely affected by any of the following, and waives any rights (including
without limitation rights to notice) which it might otherwise have as a result
of or in connection with any of the following:
(a) Modifications, etc. Any renewal, extension, modification, or
increase in the amount of the Commitments as in effect on the date hereof,
decrease, alteration or rearrangement of all or any part of the Obligations, any
Loan Document or any instrument executed in connection therewith, or any
contract or understanding between the Company, any Agent and/or the Banks, or
any other Person, pertaining to the Obligations;
(b) Adjustment, etc. Any adjustment, indulgence, forbearance or
compromise that might be granted or given by the Agents or the Banks to the
Company, the Guarantor or any Person liable on the Obligations;
(c) Condition of the Company or the Guarantor. The insolvency,
bankruptcy, arrangement, reorganization, adjustment, composition, liquidation,
disability, dissolution or lack of power of the Company or the Guarantor or any
other Person at any time liable for the payment of all or part of the
Obligations; or any sale, lease or transfer of any or all of the assets of the
Company or the Guarantor, or any changes in the shareholders of the Company or
the Guarantor;
(d) Invalidity of Obligations. The invalidity, illegality or
unenforceability of all or any part of the Obligations or any Loan Document for
any reason whatsoever, including without limitation the fact that the
Obligations, or any part thereof, exceed the amount permitted by law, the act of
creating the Obligations or any part thereof is ultra vires, the officers or
representatives executing any Loan Document or otherwise creating the
Obligations acted in excess of their authority, the Obligations violate
applicable usury laws, the Company has valid defenses, claims or offsets
(whether at law, in equity or by agreement) which render the Obligations wholly
or partially uncollectible from the Company, the creation, performance or
repayment of the Obligations (or the execution, delivery and performance of any
Loan Document) is illegal, uncollectible, legally impossible or unenforceable,
or the Credit Agreement or other Loan Documents have been forged or otherwise
are irregular or not genuine or authentic;
(e) Release of Obligors. Any full or partial release of the
obligation of the Company on the Obligations or any part thereof, of any
co-guarantors, or any other Person now or hereafter liable,
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whether directly or indirectly, jointly, severally, or jointly and severally, to
pay, perform, guarantee or assure the payment of the Obligations or any part
thereof, it being recognized, acknowledged and agreed by the Guarantor that the
Guarantor may be required to pay the Obligations in full without assistance or
support of any other Person, and the Guarantor has not been induced to enter
into this Guaranty Agreement on the basis of a contemplation, belief,
understanding or agreement that other parties other than the Company will be
liable to perform the Obligations, or that the Agents and the Banks will look to
other parties to perform the Obligations;
(f) Security. The taking or accepting of any security, collateral
or guaranty, or other assurance of payment, for all or any part of the
Obligations;
(g) Release of Collateral, etc. Any release, surrender, exchange,
subordination, deterioration, waste, loss or impairment (including without
limitation negligent, willful, unreasonable or unjustifiable impairment) of any
collateral, property or security, at any time existing in connection with, or
assuring or securing payment of, all or any part of the Obligations;
(h) Care and Diligence. The failure of any Agent or any Bank or any
other Person to exercise diligence or reasonable care in the preservation,
protection, enforcement, sale or other handling or treatment of all or any part
of such collateral, property or security;
(i) Status of Liens. The fact that any collateral, security or Lien
contemplated or intended to be given, created or granted as security for the
repayment of the Obligations shall not be properly perfected or created, or
shall prove to be unenforceable or subordinate to any other Lien, it being
recognized and agreed by the Guarantor that the Guarantor is not entering into
this Guaranty Agreement in reliance on, or in contemplation of the benefits of,
the validity, enforceability, collectability or value of any of the collateral
for the Obligations;
(j) Payments Rescinded. Any payment by the Company to any Agent or Bank
is held to constitute a preference under the bankruptcy laws, or for any reason
an Agent or Bank is required to refund such payment or pay such amount to the
Company or someone else; or
(k) Other Actions Taken or Omitted. Any other action taken or omitted
to be taken with respect to the Credit Agreement or the other Loan Documents,
the Obligations, or the security and collateral therefor, whether or not such
action or omission prejudices the Guarantor or increases the likelihood that the
Guarantor will be required to pay the Obligations pursuant to the terms hereof;
it being the unambiguous and unequivocal intention of the Guarantor that the
Guarantor shall be obligated to pay the Obligations when due, notwithstanding
any occurrence, circumstance, event, action, or omission whatsoever, whether
contemplated or uncontemplated, and whether or not otherwise or particularly
described herein, except for the full and final payment and satisfaction of the
Obligations.
Section 2.9 Limitations on Obligation of the Guarantor Hereunder. The
parties hereto (i) intend that the obligation of the Guarantor hereunder be
limited to the maximum amount that would not result in the obligation created
hereby being avoidable under Section 548 of the Federal
5
Bankruptcy Code (11 U.S.C. Section 548; hereinafter "Section 548") or other
applicable state fraudulent conveyance or transfer law and (ii) agree that this
Guaranty Agreement shall be so construed. Accordingly, the obligation of the
Guarantor hereunder is limited to an amount that is the greater of (x) the
"reasonably equivalent value" or "fair consideration" received by the Guarantor
in exchange for the obligation incurred hereunder, within the meaning of Section
548, as amended, or any applicable state fraudulent conveyance or transfer law,
as amended; or (y) the lesser of (1) the maximum amount that will not render the
Guarantor insolvent or (2) the maximum amount that will not leave the Guarantor
with any Property deemed an unreasonably small capital. Clauses (1) and (2) are
and shall be determined pursuant to Section 548, as amended, or other applicable
state fraudulent conveyance or transfer law, as amended.
Section 2.10 Subrogation. The Guarantor shall not exercise any rights
which it may acquire by way of subrogation, reimbursement, exoneration,
indemnification or participation, by any payment made under this Guaranty
Agreement, under any other Loan Document or otherwise until the Obligations have
been paid in full and the Commitments are terminated. Except as described in
this Section, the Guarantor further waives any benefit of any right to
participate in any security now or hereafter held by the Agents and/or the
Banks.
Article III
Representations, Warranties and Covenants
Section 3.1 Representations and Warranties. In order to induce the
Agents and the Banks to accept this Guaranty Agreement, the Guarantor represents
and warrants to the Agents and Banks (which representations and warranties will
survive the creation of the Obligations and any extension of credit thereunder)
that:
(a) Benefit to the Guarantor. The Guarantor is a wholly-owned
Subsidiary of the Company and the Guarantor's guaranty pursuant to this Guaranty
Agreement reasonably may be expected to benefit, directly or indirectly, the
Guarantor; and the Guarantor has determined that this Guaranty Agreement is
necessary and convenient to the conduct, promotion and attainment of the
business of the Guarantor and the Company.
(b) Corporate Existence. The Guarantor: (i) is duly organized and
validly existing 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 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.
(c) No Breach. The execution and delivery by the Guarantor of this
Guaranty Agreement and the other Loan Documents to which it is a party, the
consummation of the transactions herein or therein contemplated, and the
compliance with the terms and provisions hereof will not (i) conflict with or
result in a breach of, or require any consent under (A) the charter or by-laws
of the Guarantor, or (B) any applicable law or regulation, or any order, writ,
injunction or decree of any
6
court or other Governmental Authority, or any material agreement or instrument
to which the Guarantor is a party or by which it is bound or to which it is
subject in each case in such manner as could reasonably be expected to have a
Material Adverse Effect; or (ii) constitute a default under any such agreement
or instrument, or result in the creation or imposition of any Lien upon any of
the revenues or property of the Guarantor in each case in such manner as could
reasonably be expected to have a Material Adverse Effect.
(d) Corporate Action. The Guarantor has all necessary corporate power
and authority to execute, deliver and perform its obligations under this
Guaranty Agreement and the Loan Documents to which it is a party; and the
execution, delivery and performance by the Guarantor of this Guaranty Agreement
and the other Loan Documents to which such Person is a party have been duly
authorized by all necessary corporate action on its part. This Guaranty
Agreement and the Loan Documents to which the Guarantor is a party constitute
the legal, valid and binding obligation of the Guarantor, enforceable against
the Guarantor in accordance with their terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws
affecting creditors' rights and general principals of equity.
(e) Approvals. Other than consents heretofore obtained or described in
the Credit Agreement, 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 Guarantor of this Guaranty Agreement
or the Loan Documents to which it is a party or for the validity or
enforceability thereof. It is understood that continued performance by the
Guarantor of this Guaranty Agreement and the other Loan Documents to which it is
a party will require various filings, such as filings related to environmental
matters, ERISA matters, Taxes and intellectual property, filings required to
maintain corporate and similar standing and existence, filings pursuant to the
Uniform Commercial Code and other security filings and recordings and filings
required by the SEC, routine filings in the ordinary course of business, and
filings required in connection with the exercise by the Banks and the Agents of
remedies in connection with the Loan Documents.
(f) Solvency. The Guarantor (i) is not insolvent and will not be
rendered insolvent as a result of this Guaranty Agreement, (ii) is not engaged
in a business or a transaction, or about to engage in a business or a
transaction, for which any property or assets remaining with the Guarantor are
unreasonably small capital, and (iii) does not intend to incur, or believe it
will incur, debts that will be beyond its ability to pay as such debts mature.
(g) No Representation by Agents or Banks. Neither any Agent, any Bank
nor any other Person has made any representation, warranty or statement to the
Guarantor in order to induce the Guarantor to execute this Guaranty Agreement.
Section 3.2 Covenants. The Guarantor acknowledges that it is has read
the Credit Agreement and hereby covenants and agrees to comply with covenants
and agreements set forth therein which restrict Restricted Subsidiaries of the
Company in so far as such covenants and agreements apply to it.
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Article IV
Subordination of Indebtedness
Section 4.1 Subordination of all Guarantor Claims. As used herein, the
term "Guarantor Claims" shall mean all debts and obligations of the Company to
the Guarantor, whether such debts and obligations now exist or are hereafter
incurred or arise, or whether the obligation be direct, contingent, primary,
secondary, several, joint and several, or otherwise, and irrespective of whether
such debts or obligations be evidenced by note, contract, open account, or
otherwise, and irrespective of the Person or Persons in whose favor such debts
or obligations may, at their inception, have been, or may hereafter be created,
or the manner in which they have been or may hereafter be acquired by the
Guarantor. Except for payments permitted by the Credit Agreement, until the
Obligations shall be paid and satisfied in full, the Commitments are terminated
and the Guarantor shall have performed all of its obligations hereunder and the
Loan Documents to which it is a party, the Guarantor shall not receive or
collect, directly or indirectly, from the Company any amount upon the Guarantor
Claims.
Section 4.2 Claims in Bankruptcy. In the event of receivership,
bankruptcy, reorganization, arrangement, debtor's relief, or other insolvency
proceedings involving the Company, the Administrative Agent on behalf of the
Agents and the Banks shall have the right to prove their claim in any
proceeding, so as to establish their rights hereunder and receive directly from
the receiver, trustee or other court custodian, dividends and payments which
would otherwise be payable upon Guarantor Claims. The Guarantor hereby assigns
such dividends and payments to the Administrative Agent for the benefit of the
Agents and the Banks. Should any Agent or Bank receive, for application upon the
Obligations, any such dividend or payment which is otherwise payable to the
Guarantor, and which, as between the Company and the Guarantor, shall constitute
a credit upon the Guarantor Claims, then upon payment in full of the Obligations
and the termination of the Commitments, the Guarantor shall become subrogated to
the rights of the Agents and the Banks to the extent that such payments to the
Agents and the Banks on the Guarantor Claims have contributed toward the
liquidation of the Obligations, and such subrogation shall be with respect to
that proportion of the Obligations which would have been unpaid if the Agents
and the Banks had not received dividends or payments upon the Guarantor Claims.
Section 4.3 Payments Held in Trust. In the event that notwithstanding
Sections 4.1 and 4.2, the Guarantor should receive any funds, payments, claims
or distributions which is prohibited by such Sections, the Guarantor agrees (a)
to hold in trust for the Agents and the Banks an amount equal to the amount of
all funds, payments, claims or distributions so received, and (b) that it shall
have absolutely no dominion over the amount of such funds, payments, claims or
distributions except to pay them promptly to the Administrative Agent, for the
benefit of the Agents and the Banks; and the Guarantor covenants promptly to pay
the same to the Administrative Agent.
Section 4.4 Liens Subordinate. The Guarantor agrees that, until the
Obligations are paid in full and the Commitments terminated, any Liens upon the
Company's assets securing payment of the Guarantor Claims shall be and remain
inferior and subordinate to any Liens upon the Company's assets securing payment
of the Obligations, regardless of whether such encumbrances
8
in favor of the Guarantor, any Agent or Bank presently exist or are hereafter
created or attach. Without the prior written consent of the Administrative
Agent, the Guarantor, during the period in which any of the Obligations are
outstanding or the Commitments are in effect, shall not (a) exercise or enforce
any creditor's right it may have against the Company, or (b) foreclose,
repossess, sequester or otherwise take steps or institute any action or
proceeding (judicial or otherwise, including without limitation the commencement
of or joinder in any liquidation, bankruptcy, rearrangement, debtor's relief or
insolvency proceeding) to enforce any Lien, mortgages, deeds of trust, security
interest, collateral rights, judgments or other encumbrances on assets of the
Company held by the Guarantor.
Section 4.5 Notation of Records. All promissory notes and, upon the
request of the Administrative Agent, all accounts receivable ledgers or other
evidence of the Guarantor Claims accepted by or held by the Guarantor shall
contain a specific written notice thereon that the indebtedness evidenced
thereby is subordinated under the terms of this Guaranty Agreement.
Article V
Miscellaneous
Section 5.1 Successors and Assigns. This Guaranty Agreement is and
shall be in every particular available to the successors and assigns of the
Agents and the Banks and is and shall always be fully binding upon the legal
representatives, successors and assigns of the Guarantor, notwithstanding that
some or all of the monies, the repayment of which this Guaranty Agreement
applies, may be actually advanced after any bankruptcy, receivership,
reorganization or other event affecting either the Company or the Guarantor.
Section 5.2 Notices. Any notice or demand to the Guarantor under or in
connection with this Guaranty Agreement may be given and shall conclusively be
deemed and considered to have been given and received in the manner provided for
in Section 13.2 of the Credit Agreement and to the address of the Guarantor set
forth on the signature page to this Guaranty Agreement.
Section 5.3 Authority of Administrative Agent. The Guarantor
acknowledges that the rights and responsibilities of the Administrative Agent
under this Guaranty Agreement with respect to any action taken by the
Administrative Agent or the exercise or non-exercise by the Administrative Agent
of any option, right, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Guaranty Agreement shall, as between
the Agents and the Banks, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Administrative Agent and the Guarantor, the Administrative Agent
shall be conclusively presumed to be acting as agent for the Banks with full and
valid authority so to act or refrain from acting; and the Guarantor shall not be
under any obligation, or entitlement, to make any inquiry respecting such
authority.
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Section 5.4 CONSTRUCTION.
(a) THIS GUARANTY AGREEMENT (INCLUDING, BUT NOT LIMITED TO, THE
VALIDITY AND ENFORCEABILITY HEREOF) SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY
AGREEMENT OR THE OTHER LOAN DOCUMENTS TO WHICH THE GUARANTOR IS A PARTY MAY 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
GUARANTY AGREEMENT, THE GUARANTOR 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 GUARANTOR 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 NONEXCLUSIVE AND
DOES NOT PRECLUDE THE ADMINISTRATIVE AGENT OR ANY BANK FROM OBTAINING
JURISDICTION OVER THE GUARANTOR IN ANY COURT OTHERWISE HAVING JURISDICTION.
(c) THE GUARANTOR IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY
OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT, AS THE
CASE MAY BE, AT ITS SAID ADDRESS, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER
SUCH MAILING.
(d) NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY AGENT OR ANY BANK OR
ANY HOLDER OF A NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE GUARANTOR IN ANY
OTHER JURISDICTION.
(e) THE GUARANTOR AND, BY ITS ACCEPTANCE HEREOF, EACH AGENT AND EACH
BANK 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 GUARANTY AGREEMENT OR ANY LOAN DOCUMENT TO WHICH IT IS A PARTY 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
10
DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (III) CERTIFY
THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OR 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 GUARANTY AGREEMENT, THE
LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION
5.4.
Section 5.5 Survival of Obligations. To the extent that any payments on
the Obligations 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 Obligations so
satisfied shall be revived and continue as if such payment or proceeds had not
been received and the Agents' and the Banks' Liens, rights, powers and remedies
under this Guaranty Agreement and each Loan Document shall continue in full
force and effect. In such event, each Loan Document shall be automatically
reinstated and the Guarantor shall take such action as may be reasonably
requested by the Administrative Agent and the Banks to effect such
reinstatement.
Section 5.6 Status as Specified or Designated Senior Indebtedness.
The Guarantor hereby acknowledges and confirms that:
(a) this Guaranty Agreement and the obligations of the Guarantor
hereunder are "Guarantor Senior Indebtedness" and "Specified Guarantor Senior
Indebtedness" under and for purposes of the 95 Indenture; and
(b) this Guaranty Agreement and the obligations of the Guarantor
hereunder are "Guarantor Senior Indebtedness" and "Designated Guarantor Senior
Indebtedness" under and for purposes of the 96 Indenture, the 97 Indenture and
the 98 Senior Subordinated Indenture;
and that as such, the Agents and the Banks are entitled to the rights and
privileges afforded holders of Guarantor Senior Indebtedness, Specified
Guarantor Senior Indebtedness or Designated Guarantor Senior Indebtedness, as
applicable, under each of such Indentures.
Section 5.7 Interest. It is in the interest of the Guarantor and the
Agents and the Banks to conform strictly to all applicable usury laws.
Accordingly, reference is made to Section 13.6 of the Credit Agreement which is
incorporated herein by reference for all purposes.
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WITNESS THE EXECUTION HEREOF, effective as of the date first written
above.
OCEAN ENERGY, INC., a Louisiana corporation
By:
Name: James C. Flores,
Title: President
Address: c/o Ocean Energy, Inc.
1001 Fannin, Suite 1700
Houston, Texas 77002
Contact: Stephen A. Thorington
Telephone: (713) 951-1319
Telecopy: (713) 951-4846
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