EXHIBIT 4(a)(iii)
POGO PRODUCING COMPANY
_______________________
Second Amendment
Dated as of December 31, 1993
to
Credit Agreement
Dated as of September 23, 1992
THIS SECOND AMENDMENT TO CREDIT AGREEMENT, dated as of December
31, 1993 (the "Amendment"), between Pogo Producing Company, a Delaware
Corporation (the "Borrower"), the various financial institutions which
are or may become parties to the Credit Agreement, as amended hereby
(collectively, the "Lenders"), Bank of Montreal, acting through its
Chicago, Illinois branch, (the "Bank"), as agent (the "Agent") for the
Lenders and Banque Paribas, acting through its Houston Agency, as co-
agent (the "Co-Agent"), for the Lenders,
W I T N E S S E T H
WHEREAS the Borrower, the Lenders, the Agent and the Co-Agent are
parties to a certain Credit Agreement dated as of September 23, 1992,
as amended by the First Amendment to Credit Agreement dated as of
September 30, 1992, (the "Credit Agreement"); and
WHEREAS the Borrower desires to amend certain provisions of the
Credit Agreement;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. DEFINITIONS.
1.1 AMENDMENT. The following definitions as set forth in the
Credit Agreement are amended in their entirety as set forth below and
such definitions, as so amended, are hereby incorporated by reference
into the Credit Agreement, as amended by this Amendment:
"APPLICABLE MARGIN" means, at any time that the Borrower's
Implied Senior Debt Rating is equal to any rating set forth
below, the percentages per annum set forth opposite such Implied
Senior Debt Rating for CD Rate Loans and LIBO Rate Loans;
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provided, that if the Borrower's Implied Senior Debt Rating shall
change at any time, the Applicable Margin set forth below shall
become effective on the immediately next Quarterly Payment Date:
MINIMUM IMPLIED SENIOR DEBT RATING FROM STANDARD & POORS
(or an equivalent rating from Moodys or another
approved rating agency)
CD RATE LOANS LIBO RATE LOANS
BB- or lower . . . . . . . . . 1 7/8% 1 3/4%
BB (including BB+) . . . . . . 1 3/4% 1 5/8%
BBB- or higher . . . . . . 1 5/8% 1 1/2%
"BORROWING BASE" means, at any time, that amount, determined in
accordance with SECTION 2.6 and calculated using information in
the then most recent Reserve Report or Alternate Reserve Report,
which equals the lesser of (i) the sum total of (a) the
Discounted Present Value of the Future Net Income for each
category of Proved Reserves multiplied by (b) the relevant
Applicable Percentage for each category of Proved Reserves, and
(ii) the product of 10/7 times sixty-five percent (65%) of the
Discounted Present Value of Future Net Income attributable to the
Proved Developed Producing Reserves. During the period from
December 31, 1993, to the date of the next determination of the
Borrowing Base pursuant to the provisions of SECTION 7.2, the
amount of the Borrowing Base shall be One Hundred Million Dollars
($100,000,000) PROVIDED THAT, if pursuant to a Reserve Report
dated January 1st of any year the ratio of (x) Borrowing Base to
(y) Commitment Amount plus the amount of Senior Debt (other than
the Loans) that is outstanding on such date which is permitted
pursuant to SECTION 8.2(a)(ii) is at least 1.5 to 1.0, then the
Borrowing Base shall not be redetermined pursuant to the
Alternate Reserve Report dated as of the following July 1st.
"BORROWING BASE PROPERTIES" means those oil and gas properties of
the Borrower or, to the extent provided below, of a Majority-
owned Subsidiary of the Borrower (including the Borrower's or
such Majority-owned Subsidiary's pro rata share of Qualified
Partnership Properties pro rated on the basis of the lesser of
(i) Borrower's or such Majority-owned Subsidiary's share of
income from the partnership and (ii) the Borrower's or such
Majority-owned Subsidiary's share of partnership properties or
proceeds thereof upon a liquidation of the partnership) included
in the most recent Reserve Report or Alternate Reserve Report;
PROVIDED, HOWEVER, that Borrowing Base Properties shall not include:
(i) properties located outside the United States
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(ii) properties owned by the Borrower's Subsidiaries (other than
Qualified Partnership Properties to the extent of the Borrower's
or its Subsidiary's pro rata share thereof) except as permitted
by the provisions of the sentence immediately following, (iii)
properties which secure Non-Recourse Indebtedness and (iv)
properties subject to Liens other than those permitted under
CLAUSES (d), (e), (f), (g) and (i) of SECTION 8.3; PROVIDED THAT,
unless the Discounted Present Value of such properties, (i.e., i-iv),
in the aggregate, is no more than $5,000,000, no properties
of the Borrower or any Majority-owned Subsidiary of Borrower
(including the Borrower's or such Majority-owned Subsidiary's pro
rata share of Qualified Partnership Properties) included in the
most recently delivered Reserve Report or Alternate Reserve
Report, as the case may be, may be deleted from a subsequent
Reserve Report or Alternate Reserve Report, including the
imposition of a Lien thereon or the securing of Non-Recourse
Indebtedness thereby, without the consent of the Required
Lenders, which consent shall not be unreasonably withheld and
shall not require the payment of a fee or other compensation by
the Borrower. Notwithstanding the immediately preceding
sentence, the Borrower or a Subsidiary of the Borrower may
transfer Borrowing Base Properties to one or more Majority-owned
Subsidiaries of the Borrower PROVIDED THAT (i) such transfer is
permitted pursuant to SECTION 8.8(b) and (ii) the Subsidiary to
which such properties are transferred by the Borrower or any
Majority-owned Subsidiary of the Borrower shall have executed and
delivered to the Agent a Subsidiary Guaranty. Nothing herein
shall prevent a Subsidiary from transferring Borrowing Base
Properties to the Borrower at any time. Eugene Island Block 330
shall be included as a Borrowing Base Property in the Reserve
Report dated as of January 1, 1994.
"CHANGE IN CONTROL" means the acquisition by any Person, or two
or more Persons acting in concert, of beneficial ownership
(within the meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934) of fifty
percent (50%) or more of the outstanding shares of voting stock
of the Borrower.
"IMPLIED SENIOR DEBT RATING" means that "implied senior debt
rating", if any, from time to time assigned to the Borrower by
any of Standard & Poors, Moody's or another nationally recognized
debt rating agency, PROVIDED THAT such other agency is acceptable
to the Agent and Co-Agent.
"LIEN" means any security interest, mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or
lien (statutory or other) of any kind or nature whatsoever with
respect to any property, real or personal.
"LOAN DOCUMENT" means this Agreement, the Notes, the Security
Documents and any Subsidiary Guaranty.
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"NON-RECOURSE INDEBTEDNESS" shall mean any Indebtedness of the
Borrower and its Subsidiaries with respect to which the holder
thereof agrees that (i) the Borrower and its Subsidiaries are not
personally liable and (ii) such holder may require payment only
to the extent specifically identified properties of the Borrower
and its Subsidiaries are available to provide therefor, such
matters to be set forth in an agreement or other instrument in
form and substance reasonably satisfactory to the Required
Lenders.
"REVOLVING LOAN COMMITMENT AMOUNT" means, on any date,
$100,000,000, as such amount may be changed from time to time
pursuant to SECTION 2.2.
"SECURITY DOCUMENTS" means, collectively, the Mortgage, Deed of
Trust, Assignment, Security Agreement and Financing Statement
from the Borrower or a Subsidiary as the case may be,
substantially in the form attached hereto as EXHIBIT H and the
Act of Collateral Mortgage (Louisiana) and Collateral Mortgage
Note, each substantially in the form shown in EXHIBIT I attached
hereto and the Security Agreement and Financing Statement
(Louisiana), substantially in the form attached hereto in EXHIBIT J,
PROVIDED that, any Security Document executed by a Subsidiary
of the Borrower shall name such Subsidiary of the Borrower as the
Mortgagor and/or Debtor, as the case may be, and shall, in the
case of the Mortgage, Deed of Trust, Assignment, Security
Agreement and Financing Statement and the Security Agreement and
Financing Statement (Louisiana), include the obligations of such
Subsidiary pursuant to its Subsidiary Guaranty in "Secured
Indebtedness" as defined therein.
"STATED MATURITY DATE" means
(a) with respect to Revolving Loans, June 29, 1996; and
(b) with respect to the Term Loans, June 30, 1998.
"SUBORDINATED INDEBTEDNESS" means (i) the eight percent (8%)
Convertible Subordinated Debentures due December 31, 2005 issued
by the Borrower pursuant to the Indenture dated as of October 15,
1980, between the Borrower and First Interstate Bank of Texas,
Trustee, (ii) the ten and one quarter percent (10.25%)
Convertible Subordinated Notes due April 1, 1999 issued by the
Borrower pursuant to the Note Agreements dated as of April 1,
1984 between the Borrower and each of the Northwestern Mutual
Life Insurance Company, American General Life Insurance Company,
Massachusetts Mutual Life Insurance Company and Mass Mutual
Corporate Investors, Inc., (iii) the ten and one quarter percent
(10.25%) Convertible Subordinated Notes due April 1, 1999 issued
by the Borrower pursuant to the Note Agreements dated as of May 1,
1984 between the Borrower and each of American Gas and Oil
Investors and AmGO II, and (iv) new Indebtedness incurred, all or
a portion of the proceeds of which are used to repay in whole or
in part any issue of Subordinated Indebtedness of the Borrower,
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PROVIDED THAT:
(a) such new Indebtedness has covenants regarding the
matters set forth in SECTION 8.4 not materially more
restrictive to the Borrower than the covenants
contained in SECTION 8.4 of this Agreement;
(b) such new Indebtedness has subordination terms not
materially less favorable to the holders of the Notes
than the Subordinated Indebtedness to be repaid;
(c) any principal payments for such new Indebtedness
scheduled to be paid are no greater than those under
the existing schedule of principal payments prior to
such date of the Subordinated Indebtedness being
repaid; and
(d) the maturity dates thereof are no earlier than those of
the Subordinated Indebtedness being refinanced.
"TERM LOAN COMMITMENT AMOUNT" means the least of (i) the
aggregate Revolving Loans outstanding to all Lenders as of the
Revolving Loan Commitment Termination Date, (ii) the Commitment
Amount in effect with respect to Revolving Loans as of the
Resolving Loan Commitment Termination Date, or (iii) the
Borrowing Base in effect on the Revolving Loan Commitment
Termination Date minus all Senior Debt other than the Revolving
Loans outstanding on such date.
1.2 PARTIAL AMENDMENT. The definition of "INDEBTEDNESS" as set
forth in the Credit Agreement is partially amended as set forth below
and such definition, as so amended, is hereby incorporated by
reference into the Credit Agreement as amended by this Amendment:
(a) inserting an "and" at the end of clause (f),
(b) deleting the "; and" at the end of clause (g) and
replacing it with a "."; and
(c) deleting clause (h) in its entirety.
1.3 DELETION. The definition of "EUGENE ISLAND BLOCK 330
PRODUCTION PAYMENT" is no longer used in the Credit Agreement and is
therefore deleted in its entirety.
1.4 ADDITION. The following definitions shall be added to the
Credit Agreement:
(a) immediately after the definition of "Loan Document",
the following
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"MAJORITY-OWNED SUBSIDIARY" means, with respect to any
Person, any partnership or joint venture in which such
Person is a general partner and any corporation of which
more than 90% of the outstanding capital stock having
ordinary voting power to elect a majority of the board of
directors of such corporation (irrespective of whether at
the time capital stock of any other class or classes of such
corporation shall or might have voting power upon the
occurrence of any contingency) is at the time directly or
indirectly owned by such Person, by such Person and one or
more other Subsidiaries of such Person, or by one or more
other Subsidiaries of such Person.
(b) immediately after the definition of "Subsidiary", the
following
"SUBSIDIARY GUARANTY" means any Guaranty executed and
delivered by a Subsidiary of the Borrower pursuant to
Section 7.10, substantially in the form of EXHIBIT K, as the
same may from time to time be amended, supplemented,
restated or otherwise modified.
1.5 USE OF DEFINED TERMS. Unless otherwise defined herein or
the context otherwise requires, or except as the definition may be
amended by this Amendment, terms used in this Amendment, including its
preamble and recitals, shall have the meanings provided in the Credit
Agreement, as hereby amended.
2. AMENDMENTS TO CREDIT AGREEMENT.
2.1 AMENDMENT OF SECTION 2.1.3(a) OF THE CREDIT AGREEMENT.
Section 2.1.3(a) of the Credit Agreement is hereby amended and
replaced in its entirety by the following:
(a) in the case of Revolving Loans, the aggregate
outstanding principal amount of all Revolving Loans
outstanding would exceed the lesser of (i) the
Revolving Loan Commitment Amount and (ii) the Borrowing
Base then in effect minus all other Senior Debt
outstanding;
2.2 PARTIAL AMENDMENT OF SECTION 3.1.2 OF THE CREDIT AGREEMENT.
Section 3.1.2 of the Credit Agreement is hereby amended and partially
replaced by the following:
(a) The first paragraph of Section 3.1.2 of the Credit
Agreement is hereby amended and replaced in its
entirety as follows:
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Section 3.1.2 MANDATORY PREPAYMENTS ON REVOLVING
LOANS. If at any time prior to the Revolving Loan
Commitment Termination Date, the aggregate principal
amount of all Senior Debt outstanding shall exceed the
Borrowing Base then in effect, the Borrower shall, at
the Borrower's option, either (i) forthwith repay the
Revolving Loans in an aggregate amount equal to such
excess or (ii) prepay the Revolving Loans, in no more
than five substantially equal monthly installments, in
an amount such that upon the conclusion of such
mandatory prepayments, the aggregate principal amount
of all outstanding Senior Debt will not exceed the
Borrowing Base. The first such payment pursuant to
CLAUSE (ii) above shall be due within 30 days after the
date on which it is first determined that the principal
amount of all Senior Debt exceeds such Borrowing Base,
and the remaining payments shall be due on the
numerically corresponding day of each of the subsequent
months. If a subsequent month does not contain a
numerically corresponding day, the Borrower shall make
such payment on the last Business Day of such month, or
if the numerically corresponding day is not a Business
Day, such payment will be due on the preceding Business
Day.
(b) The second and third paragraphs of Section 3.1.2 of the
Credit Agreement are hereby partially amended and
replaced by substituting the phrase "Senior Debt" for
the Phrase "Revolving Loans" wherever it appears in
such paragraphs.
2.3 PARTIAL AMENDMENT OF SECTION 3.1.3 OF THE CREDIT AGREEMENT.
Section 3.1.3 of the Credit Agreement is hereby partially amended and
replaced by replacing the first paragraph thereof in its entirety with
the following:
Section 3.1.3 MANDATORY PREPAYMENT ON TERM LOANS. If at
any time after the making of the Term Loans, the ratio of
(a) the lesser of (i) the Discounted Present Value of Future
Net Income attributable to Proved Reserves or (ii) 10/7
times the Discounted Present Value of Future Net Income
attributable to the Proved Developed Producing Reserves (in
either case based on the data in the Reserve Report or
Alternate Reserve Report, as the case may be, used to
determine the Borrowing Base then in effect), to (b) the
outstanding principal amount of the Senior Debt shall at any
time be less that 1.5 to 1.0, the Borrower shall, at the
Borrower's option, either (i) forthwith repay Term Loans in
an aggregate amount equal to such deficiency, or (ii) prepay
the Term Loans, in no more than five substantially equal
monthly installments, in an amount such that, upon the
conclusion of such mandatory prepayments, such ratio would
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be at least 1.5 to 1.0. The first such payment pursuant to
CLAUSE(ii) above shall be due within 30 days after the date
on which it is first determined that such ratio is less than
1.5 to 1.0, and the remaining payments shall be due on the
numerically corresponding day of each of the subsequent
months.
2.4 AMENDMENT OF SECTION 4.11 OF CREDIT AGREEMENT. Section 4.11
of the Credit Agreement is hereby amended and replaced in its entirety
by the following:
SECTION 4.11. USE OF PROCEEDS. The Borrower shall apply
the proceeds of each Borrowing in accordance with the THIRD
RECITAL; without limiting the foregoing, and except as
permitted by SECTION 8.5(d), no proceeds of any Loan will be
used to acquire any equity security of a class which is
registered pursuant to Section 12 of the Securities Exchange
Act of 1934 if such acquisition would result in the
Borrower's owning more than five percent (5%) of the
issuer's outstanding voting stock and no proceeds of any
Loan will be used to acquire such stock if such acquisition
would result in any violation of F.R.S. Board Regulation U
by the Borrower or any Lender.
2.5 AMENDMENT OF SECTION 5.2.1(D) OF THE CREDIT AGREEMENT.
Section 5.2.1(d) of the Credit Agreement is hereby amended and
replaced in its entirety with the following:
(d) the Commitment Amount plus all Senior Debt outstanding
other than the Loans does not exceed the Borrowing Base
and the Borrower is in compliance with the Current
Ratio and Fixed Charge Coverage Ratio as required by
SECTIONS 8.4(c) and 8.4(d), respectively, and,
immediately after giving effect to the proposed
Borrowing, Senior Debt shall not exceed the Borrowing
Base then in effect and the Indebtedness of the
Borrower shall not exceed the amount permitted under
CLAUSE(a), and Specified Debt shall not exceed the
amount permitted under CLAUSE (b), of SECTION 8.4.
2.6 AMENDMENT OF SECTION 6.8 OF CREDIT AGREEMENT. Section 6.8
of the Credit Agreement is hereby amended and replaced in its entirety
by the following:
SECTION 6.8. SUBSIDIARIES. The Borrower has no
Subsidiaries, except those Subsidiaries
(a) which are identified in ITEM 6.8 (a) ("Existing
Subsidiaries") of the Disclosure Schedule; or
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(b) which are permitted to have been acquired or
formed in accordance with SECTION 8.5 or 8.7.
As of September 23, 1992, the Borrower is the record or
beneficial owner of the issued and outstanding shares of capital
stock of each such corporate Subsidiary which is identified in
ITEM 6.8(a) of the Disclosure Schedule. Such shares are free and
clear of any Liens, including, without limitation, claims arising
out of any preemptive rights granted in connection with the
issuance of any such shares. All such shares are duly issued,
fully paid and nonassessable and there are no outstanding
options, warrants or other rights entitling the holder thereof to
purchase any shares of capital stock of any such Subsidiary. The
Borrower's partnership interest in any Subsidiary organized as a
partnership is free and clear of any Liens.
2.7 AMENDMENT OF SECTION 6.12 OF CREDIT AGREEMENT. Section 6.12
of the Credit Agreement is hereby partially amended and replaced as
follows:
(a) SECTION 6.12 (b) is hereby amended and replaced in its
entirety as follows:
"(b) to the best knowledge of the Borrower, there
have been no past, and there are no pending or
threatened
(i) claims, complaints, or notices received
by the Borrower or any of its Subsidiaries with
respect to any alleged violation of any
Environmental Law, or
(ii) claims, complaints, notices or
inquiries to, or requests for information received
by, the Borrower or any of its Subsidiaries
regarding potential liability under any
Environmental Law relating to operations or the
condition of any facilities or property (including
underlying groundwater) owned, leased or operated
by the Borrower or any of its Subsidiaries
that, singly or in the aggregate, have or may reasonably
be expected to have, a material adverse effect on the financial
condition, operations, assets, business, properties or prospects
of the Borrower and its Subsidiaries taken as a whole;"
(b) SECTION 6.12(d) of the Credit Agreement is hereby
amended and replaced as follows:
"(d) to the best knowledge of Borrower, the
Borrower and its Subsidiaries have been issued and are
in material compliance with all permits, certificates,
approvals, licenses and other authorizations relating
to environmental matters that are necessary for their
businesses;".
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2.8 AMENDMENT OF SECTION 6.14 OF CREDIT AGREEMENT. Section 6.14
of the Credit Agreement is hereby amended and replaced in its entirety
by the following:
SECTION 6.14. RANK OF INDEBTEDNESS. The obligations of the
Borrower to pay the principal of and interest on the Loans made
hereunder and the Notes and all other amounts payable by the
Borrower hereunder constitute direct and general obligations of
the Borrower and rank in right of payment prior to or PARI PASSU
with all unsecured indebtedness and liabilities for borrowed
money, or other obligations arising out of the extension of
credit, of the Borrower. As of December 31, 1993, the Borrower
does not have outstanding any such liability or obligation which
is subordinated to any other such indebtedness, liability or
obligation but which is not subordinated to all indebtedness of
the Borrower for money borrowed hereunder and under the Notes.
There is no Senior Debt outstanding as of December 31, 1993 other
than obligations pursuant to this Agreement, the Notes, and the
other Loan Documents.
2.9 AMENDMENT OF SECTION 6.17 OF CREDIT AGREEMENT. Section 6.17
of the Credit Agreement is hereby amended and replaced in its entirety
by the following:
SECTION 6.17. NO CONTRACTUAL VIOLATION. Borrower has no
contract or agreement to which it or any of its Subsidiaries is a
party or by which it or its properties are bound (excluding any
agreements or contracts governing Indebtedness that do not exceed
$1,000,000 at any one time outstanding in the aggregate which
have been incurred to vendors to finance acquisition of assets as
to the assets financed with such Indebtedness) prohibiting or
having the effect of prohibiting the creation or assumption of
any Lien upon any of its assets, properties or revenues whether
now owned or hereafter acquired, or restricting the ability of
the Borrower to amend or otherwise modify this Agreement or any
other Loan Document, except as provided in this Agreement and the
other Loan Documents.
2.10 PARTIAL AMENDMENT OF SECTION 7.2 OF THE CREDIT AGREEMENT.
Section 7.2 of the Credit Agreement is hereby partially amended and
replaced by (a) deleting the word "and" at the end of paragraph (k)
thereof, (b) deleting the period at the end of paragraph (l) thereof
and replacing it with a semi-colon and adding the word "and" thereto,
and (c) adding the following paragraph (m) to such Section:
(m) as soon as reasonably possible and in any event within
ten (10) Business Days if the principal of the Senior Debt
outstanding (including the Loans) shall exceed the Borrowing Base
then in effect, notice of such excess.
2.11 AMENDMENT OF SECTION 7.3 OF CREDIT AGREEMENT. Section 7.3
of the Credit Agreement is hereby amended and replaced in its entirety
by the following:
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SECTION 7.3. COMPLIANCE WITH LAWS, ETC. The Borrower will,
and will cause each of its Subsidiaries to, comply in all
material respects with all applicable laws, rules, regulations
and orders, such compliance to include (without limitation):
(a) the maintenance and preservation of its corporate
or partnership existence and qualification as a foreign
corporation or partnership except as contemplated by SECTION
8.7 or except where the failure to do so would not have a
material adverse effect on the business and operations of
the Borrowers and its Subsidiaries taken as a whole.
(b) the payment, before the same become delinquent, of
all taxes, assessments and governmental charges imposed upon
it or upon its property except to the extent being
diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance
with GAAP shall have been set aside on its books or except
where the failure to do so would not have a material adverse
effect on the business or operations of the Borrower and its
Subsidiaries taken as a whole.
2.12 AMENDMENT OF SECTION 7.6 OF CREDIT AGREEMENT. Section 7.6
of the Credit Agreement is hereby amended by inserting the word
"material" immediately prior to the word "business" in the third line
of the first sentence of such section 7.6.
2.13 AMENDMENT OF SECTION 7.7 OF CREDIT AGREEMENT. Section
7.7 (b) of the Credit Agreement is hereby amended by inserting the
word "material" immediately prior to the word "violations" at the
beginning of the third line of such section 7.7(b).
2.14 AMENDMENT OF SECTION 7.8 OF CREDIT AGREEMENT. Section
7.8 of the Credit Agreement is hereby partially amended and replaced
as follows:
(a) SECTION 7.8(c) is hereby amended by adding the word
"or" to the end of the section;
(b) SECTION 7.8(d) is hereby amended by deleting the "; or"
at the end of the section and adding a ".";
(c) SECTION 7.8(e) is hereby deleted in its entirety;
(d) SECTION 7.8(f) is hereby redesignated as Section 7.8(e)
and references thereto in the Credit Agreement, including the
reference to "CLAUSE (f)" in the carryover paragraph at the top
of page 61, are hereby amended to refer to Section 7.8(e) and
Section 7.8(f) is further amended by:
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(i) adding after the word "deliver" in the first line
thereof the phrase ", and cause each Subsidiary to
which Borrowing Base Properties have been
transferred pursuant to SECTION 8.8(b) to execute
and deliver,"
(ii) adding after the phrase "Collateral Agent" in the
first line thereof the phrase "the Security
Documents,"
(iii) adding after the word "Borrower" in the tenth line
thereof the phrase "or such Subsidiary,"
(iv) adding after the word "Borrower's" in the eleventh
line thereof the phrase "or such Subsidiary's";
and
(v) adding after the term "(the "Collateral")" in the
fifteenth line thereof the phrase "as set forth";
(e) Section 7.8(g) is hereby amended and replaced in its
entirety as follows:
"(f) deliver to the Agent, within 15 days from the
date of occurrence described in CLAUSES (a), (b), (c) or (d)
above, a plan setting forth in reasonable detail the manner
in which required payments, if any, on the Loans will be
made."; and
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(f) The last full paragraph of Section 7.8 is hereby
amended by deleting the first sentence thereof in its entirety
and by deleting the word "also" in the remaining sentence thereof.
2.15 AMENDMENT OF SECTION 8.2 OF CREDIT AGREEMENT. Section 8.2
of the Credit Agreement is hereby amended and replaced in its entirety
by the following:
SECTION 8.2. INDEBTEDNESS. The Borrower hereby agrees that
it shall not, and shall not permit any of its Subsidiaries to:
(a) create, incur, assume or suffer to exist or
otherwise become or be liable in respect of any Senior Debt,
other than, without duplication, the following:
(i) Senior Debt in respect of the Loans and other
Obligations; and
(ii) other Senior Debt not to exceed $10,000,000
in the aggregate at any time outstanding; or
(b) create, incur, assume or suffer to exist or
otherwise become or be liable in respect of any Non-Recourse
Indebtedness secured by a Lien on Borrowing Base Properties.
2.16 AMENDMENT OF SECTION 8.3 OF CREDIT AGREEMENT. Section 8.3
of the Credit Agreement is hereby partially amended as follows:
(a) Section 8.3(a) is hereby amended and replaced in its
entirety by the following:
"(a) Liens securing payment of the Obligations of
Borrower, or obligations of a Subsidiary pursuant to any
Subsidiary Guaranty, granted pursuant to any Security
Document executed by the Borrower pursuant to SECTION 7.8;"
(b) Section 8.3(i) is hereby amended by inserting the word
"and" at the end of such section;
(c) Section 8.3(j) is hereby deleted in its entirety; and
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(d) Section 8.3(k) is hereby amended and replaced in its
entirety by the following:
"(j) Liens which do not encumber Borrowing Base
Properties and which secure or relate to Non-Recourse
Indebtedness."
2.17 AMENDMENT OF SECTION 8.8 OF CREDIT AGREEMENT. Section 8.8
of the Credit Agreement is hereby amended and replaced in its entirety
by the following:
SECTION 8.8. ASSET DISPOSITIONS. In either of the first
two or last two Fiscal Quarters of any Fiscal Year:
(a) the aggregate value of assets (including cash
accounts, accounts receivable, production payments, and
capital stock of or partnership interests in Subsidiaries,
but excluding oil, gas, and other liquid or gaseous
hydrocarbons sold in the ordinary course of business) sold,
transferred, leased, contributed, or otherwise conveyed by
the Borrower and its Subsidiaries other than to the Borrower
or its Subsidiaries, or to which the Borrower and its
Subsidiaries may grant options, warrants, or other rights,
shall not exceed, in the aggregate, $5,000,000.
Notwithstanding the foregoing, the Borrower and its
Subsidiaries may grant, sell, or convey production payments
as permitted by this Agreement in connection with Non-
Recourse Indebtedness. For purposes of this SECTION 8.8(a),
the value of any asset is the greater of its book value or
fair market value at the time of any disposition; and
(b) the Discounted Present Value of Borrowing Base
Properties sold, transferred, leased, contributed or
otherwise conveyed by the Borrower to any Subsidiary shall
not exceed, in the aggregate, ten percent (10%) of the
Borrowing Base determined pursuant to the most recent
Reserve Report or Alternate Reserve Report without first
obtaining the consent of the Required Lenders, which consent
shall not be unreasonably withheld and shall not require the
payment of a fee or other compensation by the Borrower.
2.18 AMENDMENT OF SECTION 8.9 OF CREDIT AGREEMENT. Section 8.9
of the Credit Agreement is hereby amended and replaced in its entirety
by the following:
15
SECTION 8.9. MODIFICATION OF CERTAIN AGREEMENTS. The
Borrower will not consent to any amendment, supplement or other
modification of any of the terms or provisions contained in, or
applicable to any document or instrument evidencing or governing
any existing Subordinated Indebtedness, other than any amendment,
supplement or other modification which (a) does not accelerate
the date of or increase the amount of any repayment or redemption
required pursuant to such agreements, prior to June 30, 1998, (b)
does not contain covenants regarding the matters set forth in
SECTION 8.4 materially more restrictive than the covenants
contained in SECTION 8.4 of this Agreement, (c) does not increase
the rate of interest payable or fees and other compensation,
except to the extent such fees and other compensation are usual
and customary for transactions of such type, and (d) does not
contain or result in subordination terms materially less
favorable to holders of the Notes than the original terms. After
giving effect to any amendment, supplement, or modification which
conforms to CLAUSES (a), (b), (c), and (d) of this SECTION 8.9,
the Indebtedness of the Borrower shall not exceed the limits
permitted pursuant to CLAUSE (a) of SECTION 8.4.
2.19 DELETION OF SECTION 8.11 OF CREDIT AGREEMENT. The text of
Section 8.11 of the Credit Agreement is deleted in its entirety and is
hereby replaced by the phrase "{Intentionally Omitted}".
2.20 AMENDMENT OF SECTION 8.12 OF CREDIT AGREEMENT. Section
8.12 of the Credit Agreement is hereby amended and replaced in its
entirety by the following:
SECTION 8.12. NEGATIVE PLEDGES, ETC. The Borrower will
not, and will not permit any of its Subsidiaries to, enter into
any agreement (excluding this Agreement, any other Loan Document,
any agreement related to Indebtedness permitted under SECTION
8.2(a)(ii) and any agreement governing Indebtedness not to exceed
$1,000,000 at any one time outstanding in the aggregate which is
incurred to vendors to finance acquisitions of assets as to the
assets financed with proceeds of such Indebtedness) prohibiting
or having the effect of prohibiting the creation or assumption of
any Lien upon any of its properties, revenues or assets, whether
now owned or hereafter acquired, or restricting the ability of
the Borrower to amend or otherwise modify this Agreement or any
other Loan Document; PROVIDED, HOWEVER, that any agreement
related to Indebtedness permitted under SECTION 8.2(a)(ii), which
is excluded from the provisions of this SECTION 8.12, shall not
prohibit the Lenders from exercising their rights pursuant to
SECTION 7.8 hereof.
2.21 AMENDMENT OF SECTION 9.1.3 OF CREDIT AGREEMENT. Section
9.1.3 of the Credit Agreement is hereby amended and replaced in its
entirety by the following:
16
SECTION 9.1.3 NON-PERFORMANCE OF CERTAIN COVENANTS AND
OBLIGATIONS. The Borrower shall default in the due performance
and observance of any of its obligations under ARTICLE VIII
(excluding SECTION 8.4) and, with respect to SECTION 8.3, 8.5 or
8.6, such default shall continue unremedied for a period of five
(5) Business Days after notice thereof shall have been given to
the Borrower by the Agent or any Lender.
2.22 AMENDMENT OF SECTIONS 9.1.5 AND 9.1.6 OF CREDIT AGREEMENT.
The amount of "$1,000,000" set forth in the first sentence of each of
Sections 9.1.5 and 9.1.6, respectively, is hereby deleted and replaced
by "$5,000,000" in each section.
2.23 ADDITION. ARTICLE VII is hereby amended by the addition of
a new Section 7.10 as follows:
SECTION 7.10 SUBSIDIARY GUARANTIES. Prior to, or
contemporaneous with, the transfer by Borrower of a Borrowing
Base Property to a Subsidiary of Borrower, Borrower shall cause
such Subsidiary to execute and deliver to the Lenders a
Subsidiary Guaranty if such Subsidiary has not previously
executed a similar Guaranty for the benefit of the Lenders.
2.24 AMENDMENT OF PERCENTAGES. The Percentage shown opposite
the signature of each Lender is hereby amended and replaced with the
Percentage indicated opposite the name of such Lender shown below:
Bank of Montreal 31%
Banque Paribas 25%
The First National Bank of Boston 22%
NBD Bank, N.A. 22%
2.25 PARTIAL AMENDMENT OF EXHIBIT B. Exhibit B of the Credit
Agreement is hereby partially amended as follows:
(a) The word "and" is deleted from the last line of clause (a)
of the third paragraph thereof;
(b) the period after the last line of clause (b) of the third
paragraph thereof is replaced with a semicolon and the word
"and" added; and
(c) an additional clause (c) which reads as follows is added to
the third paragraph thereof:
17
(c) Senior Debt, both before and after giving effect to the
borrowing requested hereby, is not in excess of the
Borrowing Base.
2.26 PARTIAL AMENDMENT OF EXHIBIT H. Exhibit "H" ("Mortgage,
Deed of Trust, Assignment, Security Agreement and Financing
Statement") of the Credit Agreement is hereby partially
amended as follows:
(a) The Preface of Exhibit H of the Credit Agreement is hereby
partially amended by deleting from the fourteenth line of
such Preface the phrase "and other holders of Senior Debt."
(b) Section 1.1(a) of Exhibit H of the Credit Agreement is
hereby partially amended by (i) deleting from the first line
of such Section the phrase "Senior Debt" and replacing such
phrase with the word "Loans" and (ii) deleting from the
thirteenth and fourteenth lines of such Section the phrase
"and {describe other indebtedness and identify 'Other Notes'} ."
(c) Section 1.1(b) of Exhibit H of the Credit Agreement is
hereby partially amended by deleting from the second and
third lines of such Section the phrase "or Other Notes."
(d) Section 2.1 of Exhibit H of the Credit Agreement is hereby
partially amended by deleting from the last line of such
Section the phrase "and the Other Notes."
(e) Section 2.3 of Exhibit H of the Credit Agreement is hereby
partially amended by deleting from the tenth line of such
Section the phrase "any of the Other Notes,".
(f) Section 3.2 of Exhibit H of the Credit Agreement is hereby
partially amended by replacing the first indented
subparagraph of such Section in its entirety with the
following:
FIRST: To the payment and satisfaction of all costs
and expenses incurred in connection with the collection of
such proceeds, and to the payment of all items of the
Secured Indebtedness not evidenced by any Note.
(g) Section 6.5 of Exhibit H of the Credit Agreement is hereby
partially amended by deleting from the fourteenth line of
such Section the phrase "and the Other Notes."
(h) Section 6.7 of Exhibit H of the Credit Agreement is hereby
partially amended by deleting from the second, sixth and
seventh lines of such Section the phrase "or the Other Notes."
(i) Section 6.8 of Exhibit H of the Credit Agreement is hereby
partially amended by deleting from the second and fourth
lines of such Section the phrase "or the Other Notes."
18
2.27 PARTIAL AMENDMENT OF EXHIBIT J. Exhibit J ("Security
Agreement and Financing Statement (Louisiana)") of the Credit
Agreement is hereby partially amended and replaced as follows:
(a) The Preface of Exhibit J of the Credit Agreement is hereby
partially amended by deleting from the twelfth line of such
Preface the phrase "and other holders of Senior Debt."
(b) Section 1.1(a) of Exhibit J of the Credit Agreement is
hereby partially amended by (i) deleting from the first line
of such Section the phrase "Senior Debt" and replacing such
phrase with the word "Loans" and (ii) deleting from the
thirteenth and fourteenth lines of such Section the phrase
"and {describe other indebtedness and identify 'Other
Notes'}."
(c) Section 1.1(b) of Exhibit J of the Credit Agreement is
hereby partially amended by deleting from the second and
third lines of such Section the phrase "or Other Notes."
(d) Section 2.1 of Exhibit J of the Credit Agreement is hereby
partially amended by deleting from the last line of such
Section the phrase "and the Other Notes."
(e) Section 2.3 of Exhibit J of the Credit Agreement is hereby
partially amended by deleting from the tenth line of such
Section the phrase "any of the Other Notes,".
(f) Section 3.2 of Exhibit J of the Credit Agreement is hereby
partially amended by replacing the first indented
subparagraph of such Section in its entirety with the following:
FIRST: To the payment and satisfaction of all costs
and expenses incurred in connection with the collection of
such proceeds, and to the payment of all items of the
Secured Indebtedness not evidenced by any Note.
(g) Section 5.3 of Exhibit J of the Credit Agreement is hereby
partially amended by deleting from the eight line of such
Section the phrase "the Other Notes."
(h) Section 6.4 of Exhibit J of the Credit Agreement is hereby
partially amended by deleting from the fifteenth and
sixteenth lines of such Section the phrase "and the Other
Notes."
(i) Section 6.5 of Exhibit J of the Credit Agreement is hereby
partially amended by deleting from the second, sixth and
seventh lines of such Section the phrase "or the Other Notes."
(j) Section 6.6 of Exhibit J of the Credit Agreement is hereby
partially amended by deleting from the second and fourth
lines of such Section the phrase "or the Other Notes."
19
2.28 ADDITION OF EXHIBIT K. EXHIBIT A to this Amendment is
hereby added to the Credit Agreement as Exhibit K thereto.
3. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lenders and the Agent to enter into this
Amendment, the Borrower hereby reaffirms, as of the date hereof, its
representations and warranties contained in Article VI of the Credit
Agreement (except to the extent any such representation and warranty
relates solely to an earlier date) and additionally represents and
warrants as follows:
3.1 ORGANIZATION. The Borrower and each of its corporate
Subsidiaries is a corporation validly organized and existing and in
good standing under the laws of the state, or country, of its
incorporation, and is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction where the
nature of its business requires such qualification, except where
failure to qualify would not have a material adverse effect on the
business or financial condition of the Borrower and its Subsidiaries
taken as a whole or the Borrower's ability to perform the Loan
Documents, as such may be amended hereby, or this Amendment. Each of
the Borrower's Subsidiaries which is organized as a partnership is
validly organized and existing and in good standing under the laws of
the state of its formation, and is duly qualified to do business and
is in good standing as a foreign partnership where the nature of its
business requires such qualification, except where failure to qualify
would not have a material adverse effect on the business or financial
condition of the Borrower, or the Borrower and its Subsidiaries taken
as a whole or the Borrower's ability to perform under the Loan
Documents, as such may be amended hereby, or this Amendment. The
Borrower and each of its Subsidiaries has full power and authority and
holds all requisite governmental licenses, permits and other approvals
to enter into and perform its Obligations under the Credit Agreement,
as amended hereby, each other Loan Document and this Amendment and to
own and hold under lease its property and to conduct its business
substantially as currently conducted by it.
3.2 DUE AUTHORIZATION, NON-CONTRAVENTION. The execution,
delivery and performance by the Borrower of this Amendment, the New
Notes (as defined hereafter) and the consummation of the transactions
contemplated hereby and by the Loan Documents as so amended, are
within the Borrower's corporate powers, have been duly authorized by
all necessary corporate action, and do not
(a) contravene the Borrower's Organic Documents;
20
(b) contravene any contractual restriction, law or
governmental regulation or court decree or order binding on or
affecting the Borrower or any Subsidiary; or
(c) result in, or require the creation or imposition of,
any Lien on any properties of the Borrower or its Subsidiaries
except as Liens will be imposed, created, or required upon
execution and delivery of the Security Documents pursuant to
SECTION 7.8 of the Credit Agreement.
3.3 GOVERNMENTAL APPROVAL. No authorization or approval or
other action by, and no notice to or filing with, any governmental
authority or regulatory body is required for the due execution,
delivery or performance by the Borrower of this Amendment or the Notes.
3.4 VALIDITY, ETC. This Amendment and the Loan Documents as
amended hereby constitute the legal, valid and binding obligations of
the Borrower, enforceable in accordance with their respective terms
except as such enforceability is subject to the effect of (i) any
applicable bankruptcy, insolvency, reorganization or similar law
relating to or affecting creditors' rights generally and (ii) general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law), including concepts of
materiality, reasonableness, good faith and fair dealing.
4. CONDITIONS TO EFFECTIVENESS.
The effectiveness of this Amendment is conditioned upon receipt
by the Agent of all the following documents, each in form and
substance satisfactory to the Agent:
(a) a certificate of the Secretary or Assistant Secretary
of the Borrower, certifying as to (i) resolutions of the Board of
Directors of the Borrower approving the execution, delivery and
performance of this Amendment and the New Notes (as herein
defined); (ii) the By-laws of the Borrower; (iii) the incumbency
and signatures of the officers authorized to execute this
Amendment and the New Notes on behalf of the Borrower;
(b) an opinion of Gerald A. Morton, Associate General
Counsel of the Borrower;
(c) new Notes in a form satisfactory to the Agent (the "New
Notes") for delivery to the Lenders, such New Notes to be in
exchange for and not in payment of the Notes now held by the
Lenders and in the amount of such Lender's Commitment, as amended
hereby.
21
5. EFFECT OF AMENDMENT.
This Amendment shall be deemed to be an amendment to the Credit
Agreement, and the Credit Agreement, as amended hereby, is hereby
ratified, approved and confirmed in each and every respect. All
references to the Credit Agreement in any other document, instrument,
agreement or writing shall hereafter be deemed to refer to the Credit
Agreement as amended hereby. All references in the Credit Agreement
or any other Documents to the Notes shall be deemed to refer to the
New Notes. All references in the Credit Agreement to Exhibit B shall
be deemed to refer to Exhibit B as amended hereby. All references in
the Credit Agreement or any other document to the Mortgage, Deed of
Trust, Assignments, Security Agreement and Financing Statement shall
be deemed to refer to such document as amended hereby and each
reference in the Credit Agreement to Exhibit H shall be to Exhibit H
as amended hereby. All references in the Credit Agreement or any other
document to the Security Agreement and Financing Statement (Louisiana)
shall be deemed to refer to such document as amended hereby and each
reference in the Credit Agreement to Exhibit J shall refer to Exhibit
J as amended hereby.
6. GOVERNING LAW, SEVERABILITY, ETC.
THIS AMENDMENT SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF ILLINOIS. Whenever possible each
provision of this Amendment shall be interpreted in such manner as to
be effective and valid under applicable laws, but if any provision of
this Amendment shall be prohibited by or invalid under applicable law,
such provision shall be ineffective to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or
the remaining provisions of this Amendment.
THIS WRITTEN AMENDMENT AND THE CREDIT AGREEMENT AS AMENDED BY
THIS AMENDMENT REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY
NOT BE CONTRADICTED BY PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.
7. MISCELLANEOUS.
7.1 SUCCESSORS AND ASSIGNS. This Amendment shall be binding
upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns.
7.2 COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
22
7.3 EFFECTIVENESS. This Amendment shall become effective when
counterparts hereof executed on behalf of the Borrower and each Lender
(or notice thereof satisfactory to the Agent) shall have been received
by the Agent, all conditions set forth in Section 4 hereof have been
fulfilled and notice thereof shall have been given by the Agent to the
Borrower and each Lender.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be executed by their respective officers thereunto duly authorized
as of the day and year first written above.
POGO PRODUCING COMPANY
By: /s/ D. STEPHEN SLACK
Name: D. Stephen Slack,
Title: Senior Vice President, Finance
BANK OF MONTREAL,
acting through its U.S. branches
and agencies, including initially its
Chicago Illinois branch, as Agent
By: /s/ MARK M. GREEN
Name: Mark M. Green
Title: Director
BANQUE PARIBAS
acting through its Houston Agency, as
Co-Agent
By: /s/ BARTON D. SCHOUEST
Name: Barton D. Schouest
Title: Group Vice President
By: /s/ PATRICK J. MILON
Name: Patrick J. Milon
Title: SVP-Deputy General Manager
BANK OF MONTREAL
By: /s/ MARK M. GREEN
Name: Mark M. Green
Title: Director
BANQUE PARIBAS
By: /s/ BARTON D. SCHOUEST
Name: Barton D. Schouest
Title: Group Vice President
23
By: /s/ PATRICK J. MILON
Name: Patrick J. Milon
Title: SVP-Deputy General Manager
NBD BANK, N.A.
By: /s/ DOUGLAS R. LIFTMAN
Name: Douglas R. Liftman
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ GEORGE W. PASSELA
Name: George W. Passela
Title: Managing Director
24
EXHIBIT A TO THE SECOND AMENDMENT EXHIBIT K
GUARANTY
THIS GUARANTY (this "GUARANTY"), dated as of _____ __, 19__, made
by {NAME OF SUBSIDIARY}, a __________ (the "GUARANTOR"), in favor of
each of the Lender Parties (as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement, dated as of
September 23, 1992, and amended as of September 30, 1992 and
December ___, 1993 (as so amended and together with all further
amendments and other modifications, if any, from time to time
thereafter made thereto, the "CREDIT AGREEMENT"), among Pogo Producing
Company, a Delaware corporation (the "BORROWER"), the various
commercial lending institutions (individually a "LENDER" and
collectively the "LENDERS") as are, or may from time to time become,
parties thereto and Bank of Montreal, acting through its Chicago,
Illinois branch, as agent (together with any successor(s) thereto in
such capacity, the "AGENT") for the Lenders and Banque Paribas, acting
through its Houston Agency, as co-agent (the "CO-AGENT") for the
Lenders, the Lenders have extended Commitments to make Loans to the
Borrower; and
WHEREAS, the Guarantor has duly authorized the execution,
delivery and performance of this Guaranty; and
WHEREAS, it is in the best interests of the Guarantor to execute
this Guaranty inasmuch as the Guarantor will derive substantial direct
and indirect benefits from Loans made from time to time to the
Borrower by the Lenders pursuant to the Credit Agreement;
NOW THEREFORE, for good and valuable consideration the receipt of
which is hereby acknowledged, and in order to induce the Lenders to
make Loans (including the initial Loans) to the Borrower pursuant to
the Credit Agreement, the Guarantor agrees, for the benefit of each
Lender Party, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. CERTAIN TERMS. The following terms (whether
or not underscored) when used in this Guaranty, including its preamble
and recitals, shall have the following meanings (such definitions to
be equally applicable to the singular and plural forms thereof):
25
"AGENT" is defined in the FIRST RECITAL.
"BORROWER" is defined in the FIRST RECITAL.
"CO-AGENT" is defined in the FIRST RECITAL.
"CREDIT AGREEMENT" is defined in the FIRST RECITAL.
"GUARANTOR" is defined in the PREAMBLE.
"GUARANTY" is defined in the PREAMBLE.
"LENDER" is defined in the FIRST RECITAL.
"LENDER PARTY" means, as the context may require, any Lender, the
Agent, the Co-Agent or the Collateral Agent and each of the respective
successors, transferees and assigns of any of the foregoing.
"LENDERS" is defined in the FIRST RECITAL.
"OBLIGATIONS" means all obligations (monetary or otherwise) of
the Borrower arising with respect to the Credit Agreement, the Notes,
or any other Loan Document.
"OBLIGOR" means the Borrower or any other Person (other than the
Agent, Co-Agent or any Lender) obligated under any Loan Document.
SECTION 1.2. CREDIT AGREEMENT DEFINITIONS. Unless otherwise
defined herein or the context otherwise requires, terms used in this
Guaranty, including its preamble and recitals, have the meanings
provided in the Credit Agreement.
ARTICLE II
GUARANTY PROVISIONS
SECTION 2.1. GUARANTY. The Guarantor hereby absolutely,
unconditionally and irrevocably
(a) guarantees the full and punctual payment when due,
whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise, of all Obligations of the
Borrower now or hereafter existing under the Credit Agreement,
the Notes and each other Loan Document to which the Borrower is
or may become a party, whether for principal, interest, fees,
expenses or otherwise (including all such amounts which would
become due but for the operation of the automatic stay under
Section 362(a) of the United States Bankruptcy Code, 11 U.S.C.
Section 362(a), and the operation of Sections 502(b) and 506(b)
of the United States Bankruptcy Code, 11 U.S.C. Section 502(b)
and Section 506(b)), and
26
(b) indemnifies and holds harmless each Lender Party and
each holder of a Note for any and all costs and expenses
(including reasonable attorney's fees and expenses) incurred by
such Lender Party or such holder, as the case may be, in
enforcing any rights under this Guaranty;
PROVIDED, HOWEVER, that the Guarantor shall be liable under this
Guaranty for the maximum amount of such liability that can be hereby
incurred without rendering this Guaranty, as it relates to the
Guarantor, voidable under applicable law relating to fraudulent
conveyance or fraudulent transfer, and not for any greater amount.
This Guaranty constitutes a guaranty of payment when due and not of
collection, and the Guarantor specifically agrees that it shall not be
necessary or required that any Lender Party or any holder of any Note
exercise any right, assert any claim or demand or enforce any remedy
whatsoever against the Borrower or any other Obligor (or any other
Person) before or as a condition to the obligations of the Guarantor
hereunder.
SECTION 2.2. ACCELERATION OF GUARANTY. The Guarantor agrees
that, in the event of the dissolution or insolvency of the Guarantor,
or the inability or failure of the Guarantor to pay debts as they
become due, or an assignment by the Guarantor for the benefit of
creditors, or the commencement of any case or proceeding in respect of
the Guarantor under any bankruptcy, insolvency or similar laws, and if
such event shall occur at a time when any of the Obligations of the
Borrower may not then be due and payable, the Guarantor will pay to
the Lenders forthwith the full amount which would be payable hereunder
by the Guarantor if all such Obligations were then due and payable.
SECTION 2.3. GUARANTY ABSOLUTE, ETC. This Guaranty shall in
all respects be a continuing, absolute, unconditional and irrevocable
guaranty of payment, and shall remain in full force and effect until
all Obligations of the Borrower have been paid in full, all
obligations of the Guarantor hereunder shall have been paid in full
and all Commitments shall have terminated. The Guarantor guarantees
that the Obligations of the Borrower will be paid strictly in
accordance with the terms of the Credit Agreement and each other Loan
Document under which they arise, regardless of any law, regulation or
order now or hereafter in effect in any jurisdiction affecting any of
such terms or the rights of any Lender Party or any holder of any Note
with respect thereto. The liability of the Guarantor under this
Guaranty shall be absolute, unconditional and irrevocable irrespective
of:
(a) any lack of validity, legality or enforceability of the
Credit Agreement, any Note or any other Loan Document;
(b) the failure of any Lender Party or any holder of
any Note
27
(i) to assert any claim or demand or to enforce any
right or remedy against the Borrower, any other Obligor or
any other Person (including any other guarantor) under the
provisions of the Credit Agreement, any Note, any other Loan
Document or otherwise, or
(ii) to exercise any right or remedy against any
other guarantor of, or collateral securing, any Obligations
of the Borrower or any other Obligor;
(c) any change in the time, manner or place of payment of,
or in any other term of, all or any of the Obligations of the
Borrower or any other Obligor, or any other extension, compromise
or renewal of any Obligation of the Borrower or any other
Obligor;
(d) any reduction, limitation, impairment or termination of
any Obligations of the Borrower or any other Obligor for any
reason, including any claim of waiver, release, surrender,
alteration or compromise, and shall not be subject to (and the
Guarantor hereby waives any right to or claim of) any defense or
setoff, counterclaim, recoupment or termination whatsoever by
reason of the invalidity, illegality, nongenuineness,
irregularity, compromise, unenforceability of, or any other event
or occurrence affecting, any Obligations of the Borrower, any
other Obligor or otherwise;
(e) any amendment to, rescission, waiver, or other
modification of, or any consent to departure from, any of the
terms of the Credit Agreement, any Note or any other Loan
Document;
(f) any addition, exchange, release, surrender or
non-perfection of any collateral, or any amendment to or waiver or
release or addition of, or consent to departure from, any other
guaranty, held by any Lender Party or any holder of any Note
securing any of the Obligations of the Borrower or any other
Obligor; or
(g) any other circumstance which might otherwise constitute
a defense available to, or a legal or equitable discharge of, the
Borrower, any other Obligor, any surety or any guarantor.
SECTION 2.4. REINSTATEMENT, ETC. The Guarantor agrees that
this Guaranty shall continue to be effective or be reinstated, as the
case may be, if at any time any payment (in whole or in part) of any
of the Obligations is rescinded or must otherwise be restored by any
Lender Party or any holder of any Note, upon the insolvency,
bankruptcy or reorganization of the Borrower, any other Obligor or
otherwise, all as though such payment had not been made.
28
SECTION 2.5. WAIVER, ETC. The Guarantor hereby waives
promptness, diligence, notice of acceptance and any other notice with
respect to any of the Obligations of the Borrower or any other Obligor
and this Guaranty and any requirement that the Agent, any other Lender
Party or any holder of any Note protect, secure, perfect or insure any
security interest or Lien, or any property subject thereto, or exhaust
any right or take any action against the Borrower, any other Obligor
or any other Person (including any other guarantor) or entity or any
collateral securing the Obligations of the Borrower or any other
Obligor, as the case may be.
SECTION 2.6. WAIVER OF SUBROGATION. The Guarantor hereby
irrevocably waives any claim or other rights which it may now or
hereafter acquire against the Borrower or any other Obligor that arise
from the existence, payment, performance or enforcement of the
Guarantor's obligations under this Guaranty or any other Loan
Document, including any right of subrogation, reimbursement,
exoneration, or indemnification, any right to participate in any claim
or remedy of the Lender Parties against the Borrower or any other
Obligor or any collateral which the Agent or other Lender Party now
has or hereafter acquires, whether or not such claim, remedy or right
arises in equity, or under contract, statute or common law, including
the right to take or receive from the Borrower or any other Obligor,
directly or indirectly, in cash or other property or by set-off or in
any manner, payment or security on account of such claim or other
rights. If any amount shall be paid to the Guarantor in violation of
the preceding sentence and the Obligations shall not have been paid in
cash in full and the Commitments have not been terminated, such amount
shall be deemed to have been paid to the Guarantor for the benefit of,
and held in trust for, the Lender Parties, and shall forthwith be paid
to the Lender Parties to be credited and applied upon the Obligations,
whether matured or unmatured. The Guarantor acknowledges that it will
receive direct and indirect benefits from the financing arrangements
contemplated by the Credit Agreement and that the waiver set forth in
this Section is knowingly made in contemplation of such benefits.
SECTION 2.7. SUCCESSORS, TRANSFEREES AND ASSIGNS; TRANSFERS
OF NOTES, ETC. This Guaranty shall:
(a) be binding upon the Guarantor, and its successors,
transferees and assigns; and
(b) inure to the benefit of and be enforceable by the Agent
and each other Lender Party.
Without limiting the generality of the foregoing CLAUSE (b), any
Lender may assign or otherwise transfer (in whole or in part) any Note
or Loan held by it to any other Person or entity, and such other
Person or entity shall thereupon become vested with all rights
benefits, duties and obligations in respect thereof granted to such
Lender under any Loan Document (including this Guaranty) or otherwise,
subject, however, to any contrary provisions in such assignment or
transfer, and to the provisions of Article X and Sections 11.11, 11.12
and 11.14 of the Credit Agreement.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. REPRESENTATIONS AND WARRANTIES. The Guarantor
hereby represents and warrants unto each Lender Party as set forth in
this Article.
SECTION 3.1.1. ORGANIZATION, ETC. {The Guarantor is a
corporation duly organized, validly existing and in good standing
under the laws of the State of its incorporation, and is duly
qualified to do business and is in good standing as a foreign
corporation in each jurisdiction where the nature of its business
requires such qualification, except where failure to qualify would not
have a material adverse effect on the business or financial condition
of the Guarantor or on its ability to perform its Obligations pursuant
to this Guaranty and each other Loan Document to which it is a party.}
{The Guarantor is a partnership duly organized, validly existing and
in good standing under the laws of the State of its formation, and is
duly qualified to do business and is in good standing as a foreign
partnership where the nature of its business requires such
qualification, except where failure to qualify would not have a
material adverse effect on the business or financial condition of the
Guarantor or the Guarantor's ability to perform its Obligations under
this Guaranty and any other Loan Documents to which it is a party.}
The Guarantor has full power and authority and holds all requisite
governmental licenses, permits and other approvals to enter into and
perform its Obligations under this Guaranty and each other Loan
Document to which it is a party and to own and hold under lease its
property and to conduct its business substantially as currently
conducted by it.
SECTION 3.1.2. DUE AUTHORIZATION, NON-CONTRAVENTION, ETC. The
execution, delivery and performance by the Guarantor of this Guaranty
and each other Loan Document, including the Security Documents
executed or to be executed by it, are within the Guarantor's
{corporate} {partnership} powers, have been duly authorized by all
necessary {corporate} {partnership} action, and do not
(a) contravene the Guarantor's {Organic Documents}
{partnership agreement};
(b) contravene any contractual restriction, law or
governmental regulation or court decree or order binding on or
affecting the Guarantor; or
(c) result in, or require the creation or imposition of,
any Lien on any properties of the Guarantor, except as Liens will
be imposed, created, or required upon execution and delivery of
the Security Documents pursuant to Section 7.8 of the Credit
Agreement.
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SECTION 3.1.3. GOVERNMENT APPROVAL, REGULATION, ETC. No
authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required
for the due execution, delivery or performance by the Guarantor of
this Guaranty or any other Loan Document to which it is or will be a
party. The Guarantor is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, or a
"holding company", or a "subsidiary company" of a "holding company",
or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
SECTION 3.1.4. VALIDITY, ETC. This Guaranty constitutes, and
the Security Documents and each other Loan Document executed by the
Guarantor will, on the due execution and delivery thereof, constitute,
the legal, valid and binding obligations of the Guarantor, enforceable
in accordance with their respective terms except as such
enforceability is subject to the effect of (i) any applicable
bankruptcy, insolvency, reorganization or similar law relating to or
affecting creditors' rights generally and (ii) general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law), including concepts of materiality,
reasonableness, good faith and fair dealing.
ARTICLE IV
COVENANTS, ETC.
SECTION 4.1. AFFIRMATIVE COVENANTS. The Guarantor covenants
and agrees that, so long as any portion of the Obligations shall
remain unpaid or any Lender shall have any outstanding Commitment, the
Guarantor will, unless the Required Lenders shall otherwise consent in
writing, perform the obligations set forth in this Section.
SECTION 4.1.1. The Guarantor hereby agrees that upon the
occurrence of any event or condition described in clauses (a) through
(d) of Section 7.8 of the Credit Agreement, it will execute and
deliver to the Collateral Agent such Security Documents as may be
required or the Agent may request and cause each such Security
Document to be filed, registered and recorded, as the law may require
or the Agent may request, in each jurisdiction where so required or
requested, and deliver to the Collateral Agent an acknowledgment copy,
or other evidence satisfactory to it, of each such filing,
registration and recordation, in order to mortgage, assign, grant a
security interest in and pledge to the Collateral Agent, acting on
behalf of the Lenders, the entire right, title and interest of the
Guarantor (and, with respect to any Qualified Partnership Properties,
the Guarantor's PRO RATA share of the right, title and interest of any
partnership) in and to the Borrowing Base Properties and related
property interests, both real and personal, and the proceeds thereof
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(the "COLLATERAL") as set forth in such request, and to perfect and
evidence the first priority of all such Security Documents (subject to
liens and encumbrances permitted by the terms of such instruments).
Except as noted below, Section 7.8 of the Credit Agreement, all
related definitions and all ancillary provisions are hereby
incorporated by reference herein as if set out in full herein,
PROVIDED that (a) all references in clause (e) to "the Borrower," "the
Borrower or any of its Subsidiaries" and "the Borrower or its
Subsidiary" shall be deemed to be a reference to "the Guarantor", "the
Guarantor or any of its Subsidiaries" or "the Guarantor or its
Subsidiaries," as the case may be, and (b) any provision of such
Section 7.8 requiring that the Borrower will cause its Subsidiary or
Subsidiaries to take any action or will not permit its Subsidiary or
Subsidiaries to take any action will be deemed to require that the
Guarantor take, or refrain from taking (as the case may be), such
action.
SECTION 4.2. NEGATIVE COVENANTS. The Guarantor covenants and
agrees that, so long as any portion of the Obligations shall remain
unpaid or any Lender shall have any outstanding Commitment, the
Guarantor will not, without the prior written consent of the Required
Lenders, do anything prohibited in this Section.
SECTION 4.2.1. The Guarantor shall not transfer any Borrowing
Base Properties of the Guarantor in any manner except to the Borrower
or to another Subsidiary of the Borrower which has executed a
Subsidiary Guaranty in form and substance satisfactory to the Agent.
ARTICLE V
MISCELLANEOUS PROVISIONS
SECTION 5.1. LOAN DOCUMENT. This Guaranty is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise
expressly indicated herein) be construed, administered and applied in
accordance with the terms and provisions thereof.
SECTION 5.2. BINDING ON SUCCESSORS, TRANSFEREES AND ASSIGNS;
ASSIGNMENT. In addition to, and not in limitation of, SECTION 2.7,
this Guaranty shall be binding upon the Guarantor and its successors,
transferees and assigns and shall inure to the benefit of and be
enforceable by each Lender Party and each holder of a Note and their
respective successors, transferees and assigns (to the full extent
provided pursuant to SECTION 2.7); PROVIDED, HOWEVER, the Guarantor
may not assign any of its obligations hereunder without the consent of
the Required Lenders.
SECTION 5.3. AMENDMENTS, ETC. No amendment to or waiver of
any provision of this Guaranty, nor consent to any departure by the
Guarantor herefrom, shall in any event be effective unless the same
shall be in writing and signed by the Agent, and then such waiver or
consent shall be effective only in the specific instance and for the
specific purpose for which given.
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SECTION 5.4. ADDRESSES FOR NOTICES TO THE GUARANTOR. All
notices and other communications hereunder to the Guarantor shall be
in writing or by telex, or by facsimile delivered or transmitted to
it, addressed to it at the address, telex or facsimile number set
forth below its signature hereto or at such other address, telex or
facsimile number as shall be designated by the Guarantor in a written
notice to the Agent at the address, telex or facsimile number
specified in the Credit Agreement complying as to delivery with the
terms of this Section. Any notice, if mailed and properly addressed
with postage prepaid, shall be deemed given when received; any notice,
if transmitted by telex or facsimile, shall be deemed given when
transmitted (answerback confirmed in the case of telexes).
SECTION 5.5. NO WAIVER; REMEDIES. In addition to, and not in
limitation of, SECTION 2.3 and SECTION 2.5, no failure on the part of
any Lender Party or any holder of a Note to exercise,
and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
SECTION 5.6. SECTION CAPTIONS. Section captions used in this
Guaranty are for convenience of reference only, and shall not affect
the construction of this Guaranty.
SECTION 5.7. SETOFF. In addition to, and not in limitation
of, any rights of any Lender Party or any holder of a Note under
applicable law, each Lender Party and each such holder shall, upon the
occurrence of any Default described in any of CLAUSES (a) through (d)
of Section 9.1.9. of the Credit Agreement or any Event of Default,
have the right to appropriate and apply to the payment of the
obligations of the Guarantor owing to it hereunder, whether or not
then due, and the Guarantor hereby grants to each Lender Party and
each such holder a continuing security interest in, any and all
balances, credits, deposits, accounts or moneys of the Guarantor then
or thereafter maintained with such Lender Party or such holder and any
and all property of every kind or description of or in the name of the
Guarantor now or hereafter, for any reason or purpose whatsoever, in
the possession or control of, or in transit to, such Lender Party,
such holder or any agent or bailee for such Lender Party or such
holder; PROVIDED, HOWEVER, that any such appropriation and application
shall be subject to the provisions of Section 4.9 of the Credit
Agreement.
SECTION 5.8. SEVERABILITY. Wherever possible each provision
of this Guaranty shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this
Guaranty shall be prohibited by or invalid under such law, such
provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or
the remaining provisions of this Guaranty.
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SECTION 5.9. GOVERNING LAW, ENTIRE AGREEMENT, ETC. THIS
GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF ILLINOIS. THIS GUARANTY AND THE OTHER
LOAN DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES
HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY
PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
THIS GUARANTY AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
duly executed and delivered by its officer thereunto duly authorized
as of the date first above written.
{NAME OF SUBSIDIARY}
By:
Title:
Address:
Attention:
Telecopy:
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