EXHIBIT 10(e)
EXECUTION COPY
CREDIT AGREEMENT
dated as of
June 30, 1987
among
Santa Fe Energy Operating Partners, L.P.
The Lenders Listed Herein
and
Morgan Guaranty Trust Company of New York,
as Agent
TABLE OF CONTENTS*
PAGE
SECTION 1.01 Definitions................................ 1
1.02 Accounting Terms and Determinations........ 18
ARTICLE II
THE CREDITS
SECTION 2.01 Commitments to Lend........................ 19
2.02 Method of Borrowing........................ 20
2.03 Notes...................................... 21
2.04 Maturity of Loans.......................... 22
2.05 Interest Rates............................. 23
2.06 Mandatory Termination or Reduction
of Tranche A Commitments................ 26
2.07 Prepayments................................ 28
2.08 General Provisions as to Payments.......... 32
2.09 Funding Losses............................. 32
2.10 Computation of Interest and Fees........... 33
2.11 Regulation D Compensation.................. 33
2.12 Increase of Aggregate Loans................ 33
ARTICLE III
CONDITIONS TO BORROWINGS
SECTION 3.01 First Borrowing............................ 36
3.02 Subsequent Borrowings...................... 37
* The Table of Contents is not a part of this Agreement.
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PAGE
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01 Existence and Power....................... 38
4.02 Partnership and Governmental
Authorization; Contravention............ 38
4.03 Binding Effect............................ 38
4.04 Full Disclosure;
Financial Information................... 38
4.05 Litigation................................ 39
4.06 Compliance with ERISA..................... 39
4.07 Taxes..................................... 40
4.08 Title to Assets........................... 40
4.09 Not an Investment Company................. 41
ARTICLE V
COVENANTS
SECTION 5.01 Information............................... 41
5.02 Payment of Obligations.................... 44
5.03 Maintenance of Property; Insurance........ 44
5.04 Conduct of Business and
Maintenance of Existence;
Change of Name Fiscal Year.............. 44
5.05 Compliance with Laws...................... 45
5.06 Inspection of Property,
Books and Records....................... 45
5.07 Debt...................................... 45
5.08 Coverage Ratios; Security................. 46
5.09 Restricted Payments....................... 48
5.10 Negative Pledge........................... 48
5.11 Provision of Security Upon Triggering
Event................................... 49
5.12 Merger; Sale or Abandonment of
Assets; Release of Collateral............ 50
5.13 Use of Proceeds........................... 51
ARTICLE VI
DEFAULTS
SECTION 6.01 Events of Default......................... 52
6.02 Notice of Default......................... 55
6.03 Tranche B Loans Due Upon Failure
to Reborrow Tranche A Loans............. 55
6.04 Additional Amount Payable With
Respect to Tranche B Loans............... 55
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PAGE
ARTICLE VII
THE AGENT
SECTION 7.01 Appointment and Authorization............. 56
7.02 Agent and Affiliates...................... 56
7.03 Action by Agent........................... 56
7.04 Consultation with Experts................. 56
7.05 Liability of Agent........................ 56
7.06 Indemnification........................... 57
7.07 Credit Decision........................... 57
7.08 Fees...................................... 57
ARTICLE VIII
CHANGE IN CIRCUMSTANCES AFFECTING
TRANCHE A LENDERS
SECTION 8.01 Basis for Determining Interest
Rate Inadequate or Unfair............... 58
8.02 Illegality................................ 58
8.03 Increased Cost and Reduced Return......... 59
8.04 Prime Loans Substituted for Affected
Fixed Rate Loans........................ 61
8.05 Substitution of Lender.................... 62
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Notices................................... 62
9.02 No Waivers................................ 63
9.03 Expenses; Documentary Taxes............... 63
9.04 Sharing of Set-Offs....................... 63
9.05 Amendments and Waivers.................... 64
9.06 Successors and Assigns.................... 64
9.07 Collateral................................ 65
9.08 Representation of Lenders................. 66
9.09 Confidentiality........................... 66
9.10 New York Law.............................. 66
9.11 Counterparts; Effectiveness............... 66
9.12 Non-Recourse to Partners.................. 66
Exhibit A - Form of Domestic Note
Exhibit B - Form of Euro-Dollar Note
Exhibit C - Form of Tranche B Note
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Exhibit D - Form of Opinion of Counsel for
the Borrower and its Affiliates
Exhibit E - Form of Opinion of Special Counsel
for the Lenders and the Agent
Exhibit F - Form of SFNR Undertaking
Exhibit G - Form of Mortgage
Exhibit X - Terms of Subordination
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CREDIT AGREEMENT
AGREEMENT dated as of June 30, 1987 among SANTA FE ENERGY
OPERATING PARTNERS, L.P., the LENDERS listed on the signature pages
hereof and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. The following terms, as used
herein, have the following meanings:
"Adjusted CD Rate" has the meaning set forth in Section
2.05(b).
"Affiliate" means (except as provided in the definition of
"Triggering Event") the Managing General Partner, the Special General
Partner, or any Person directly or indirectly controlling, controlled
by or under common control with the Borrower or the Managing General
Partner or the Special General Partner. As used in this definition of
"Affiliate", the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through ownership of
voting securities, by contract or otherwise.
"Agent" means Morgan Guaranty Trust Company of New York in
its capacity as agent for the Lenders hereunder, and its successors in
such capacity.
"Annual Coverage Ratio" means, as of any date of
determination, the lowest of the ratios obtained by, for the remaining
portion of the fiscal year in which such date occurs and for each
fiscal year thereafter to and including fiscal 1997, dividing (i) the
sum of, for all Petroleum Properties owned by the Borrower on such
date, Cash Flow Available for Debt Service (calculated on the basis of
the Most Recent Engineering Report) for such period, by (ii) Debt
Service for such period (calculated on the basis set forth in the most
recent Coverage Report delivered to the Lenders pursuant to
Section 5.01(i), taking into account any incurrence or prepayment of
Debt since the date of such Coverage Report).
"Approved Assumptions" means (i) until February 20, 1988,
such assumptions regarding interest rates as have been heretofore
provided to the Borrower by the Agent, and (ii) thereafter,
assumptions as to prices, costs, interest rates and other matters
relevant to any Engineering Report or to the calculation of Coverage
Ratios, which assumptions shall be determined by the Agent, after
consultation with the Managing General Partner, on a semi-annual basis
starting in 1988 and set forth in a notice sent to the Lenders on or
before January 20 and July 20 of each such year and, if the PROVISO
hereto does not apply, in a notice to the Borrower from the Agent on
or prior to the next succeeding February 20 or August 20, as the case
may be; PROVIDED that if such assumptions are, within 10 days of any
such notice to the Lenders, disapproved by the Required Lenders (as
indicated in a notice to the Agent within such 10-day period) and
alternative assumptions are determined by the Required Lenders and set
forth in a notice delivered to the Agent on or prior to the next
succeeding February 15 or August 15, as the case may be (such
alternative assumptions to be determined by the Required Lenders in
good faith in accordance with their customary oil and gas lending
practices), such alternative assumptions shall be the Approved
Assumptions, and notice thereof shall be sent to the Borrower by the
Agent on or prior to the next succeeding February 20 or August 20, as
the case may be. Approved Assumptions set forth in a notice to the
Borrower shall govern until new Approved Assumptions are set forth in
a notice to the Borrower, and shall be used, without limitation, in
preparation of the next Engineering Report or supplement thereto
required to be delivered pursuant to Section 5.01(i).
"Assessment Rate" has the meaning set forth in Section
2.05(b).
"Borrower" means Santa Fe Energy Operating Partners, L.P., a
Delaware limited partnership.
"Borrowing" means the first borrowing hereunder consisting
of Loans made to the Borrower at the same time by the Lenders pursuant
to Article II and each subsequent borrowing hereunder consisting of
Tranche A Loans made to the Borrower at the same time by the Tranche A
Lenders pursuant to Article II. A Borrowing is, with respect to the
Tranche A Loans, a "Domestic Borrowing" if such Tranche A Loans are
Domestic Loans or a "Euro-Dollar Borrowing" if such Tranche A Loans
are Euro-Dollar Loans. A Domestic Borrowing is a "CD
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Borrowing" if such Domestic Loans are CD Loans or a "Prime Borrowing"
if such Domestic Loans are Prime Loans.
"Cash Flow Available for Debt Service" means, for any fiscal
year (or portion thereof), (a) Pre-G&A Cash Flow for such period, LESS
(b) an amount (or, with respect to any portion of a fiscal year, a
proportional amount corresponding to such portion of such fiscal year)
of general and administrative expenses equal to, for any fiscal year,
the higher of (i) for each fiscal year ending on or before December
31, 1997, $7,000,000 and for each fiscal year thereafter, $5,000,000,
and (ii) the amount equal to (x) Pre-G&A Cash Flow for such fiscal
year TIMES (y) the quotient derived by dividing (1) the sum of the
prior fiscal year's actual production-related general and
administrative expenses plus one-half of the prior fiscal year's
actual exploration-related general and administrative expenses, by (2)
Pre-G&A Cash Flow for the prior fiscal year.
"CD Base Rate" has the meaning set forth in Section 2.05(b).
"CD Loan" means a Tranche A Loan to be made as a CD Loan
pursuant to the applicable Notice of Borrowing.
"CD Reference Banks" means Bank of Montreal and Morgan
Guaranty Trust Company of New York and each such other bank as may be
appointed pursuant to Section 9.06(d).
"Code" means the Internal Revenue Code of 1986, as amended,
or any successor statute.
"Collateral Threshold" has the meaning set forth in Section
5.08(d).
"Commitment" means, with respect to each Lender, the amount
set forth opposite the name of such Lender on the signature pages
hereof, as such amount may, in the case of Tranche A Lenders, be
reduced from time to time pursuant to Section 2.06.
"Controlled Groups means all members of a controlled group
of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrower,
are treated as a single employer under Section 414(b) or 414(c) of the
Code.
"Coverage Ratio" means either the Life-of-Reserves Coverage
Ratio or the Annual Coverage Ratio.
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"Coverage Report" means a report prepared by the Borrower
and satisfactory in form and scope to the Required Lenders setting
forth the Coverage Ratios as of the date of such report and the
calculations necessary to determine such Coverage Ratios.
"Debt" of any Person means at any date, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all
obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments, (iii) all obligations of such Person to pay
the deferred purchase price of property or services, except trade
accounts payable arising in the ordinary course of business, (iv) all
obligations of such Person as lessee under capital leases, (v) all
obligations of such Person in respect of production payments, proceeds
production payments and similar financing arrangements, (vi) all Debt
of others secured by a Lien on any asset of such Person, whether or
not such Debt is assumed by such Person, and (vii) all Debt of others
Guaranteed by such Person.
"Debt Service" means, for any period, the total of principal
payments in respect of Debt of the Borrower (other than Subordinated
Debt of the Borrower owed to Affiliates) and the total of interest
payments (using, with respect to interest to accrue, the interest
rates set forth in the most recent Approved Assumptions for Debt not
bearing interest at a fixed rate) in respect of Debt of the Borrower,
in each case scheduled to be paid during such period; PROVIDED that
the principal amount of any loan which by its terms matures on a date
within such period but which may reasonably be expected to be
reborrowed in a Rollover on such date shall not be deemed, for
purposes of this definition, to be scheduled to be paid on such date.
"Default" means any condition or event which constitutes an
Event of Default or which with the giving of notice or lapse of time
or both would, unless cured or waived, become an Event of Default.
"Domestic Business Day" means any day except a Saturday,
Sunday or other day on which commercial banks in New York City are
authorized by law to close.
"Domestic Lending Office" means, as to each Tranche A
Lender, its office located at its address set forth on the signature
pages hereof (or identified on the signature pages hereof as its
Domestic Lending Office) or such other office as
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such Tranche A Lender may hereafter designate as its Domestic Lending
Office by notice to the Borrower and the Agent; PROVIDED that any
Tranche A Lender may from time to time by notice to the Borrower and
the Agent designate separate Domestic Lending Offices for its Prime
Loans, on the one hand, and its CD Loans, on the other hand, in which
case all references herein to the Domestic Lending Office of such
Tranche A Lender shall be deemed to refer to either or both of such
offices, as the context may require.
"Domestic Loans" means CD Loans or Prime Loans or both.
"Domestic Notes" means promissory notes of the Borrower,
substantially in the form of Exhibit A hereto, evidencing the
obligation of the Borrower to repay the Domestic Loans.
"Domestic Reserve Percentage" has the meaning set forth in
Section 2.05(b).
"Energy Partners" means Santa Fe Energy Partners,
L.P., a Delaware limited partnership.
"Engineering Report" means a report prepared and certified
by an Independent Petroleum Engineer which sets forth, with respect to
all oil and gas properties of the Borrower, the Recognized Proved
Reserves and the gross and net volume of Hydrocarbons projected to be
produced from such Recognized Proved Reserves, by fiscal years, for
the remaining economic life of such Recognized Proved Reserves. Each
Engineering Report shall also contain a list of Petroleum Properties,
shall set forth, for each fiscal year, Pre-G&A Cash Flow and shall
indicate Pre-G&A Cash Flow for each fiscal year for the various
Petroleum Properties. Each such report shall identify which Petroleum
Properties are "developed" and which are not "developed" (as defined
in the definition of "Recognized Proved Reserves") and shall set forth
the Relative Values thereof, on an aggregate basis. Each such report
shall be prepared in accordance with established criteria generally
accepted in the oil and gas industry and standards customarily used by
independent petroleum engineers well regarded in the industry in
making reserve determinations or appraisals, and shall be based on
Approved Assumptions and such other assumptions, estimates and
projections as are fully disclosed in such Engineering Report.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
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"ERISA Obligor" means (i) for so long as the Controlled
Group includes Santa Fe Southern Pacific and Santa Fe Natural
Resources, Santa Fe Southern Pacific and each of its Material
Subsidiaries, and (ii) at all other times, each member of the
Controlled Group.
"Euro-Dollar Business Day" means any Domestic Business Day
on which commercial banks are open for international business
(including dealings in dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Tranche A
Lender, its office, branch or affiliate located at its address set
forth on the signature pages hereof (or identified on the signature
pages hereof) as its Euro-Dollar Lending Office) or such other office,
branch or affiliate of such Tranche A Lender as it may hereafter
designate as its Euro-Dollar Lending Office by notice to the Borrower
and the Agent.
"Euro-Dollar Loan" means a Tranche A Loan to be made as a
Euro-Dollar Loan pursuant to the applicable Notice of Borrowing.
"Euro-Dollar Notes" means promissory notes of the Borrower,
substantially in the form of Exhibit B hereto, evidencing the
obligation of the Borrower to repay the Euro-Dollar Loans.
"Euro-Dollar Reference Banks" means the principal offices of
Bank of Montreal and Morgan Guaranty Trust Company of New York and
each such other bank as may be appointed pursuant to Section 9.06(d).
"Eurodollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or
any successor) for determining the maximum reserve requirement for a
member bank of the Federal Reserve System in New York City with
deposits exceeding five billion dollars in respect of "Eurocurrency
liabilities" (or in respect of any other category of liabilities which
includes deposits by reference to which the interest rate on
Euro-Dollar Loans is determined or any category of extensions of
credit or other assets which includes loans by a non-United States
office of any Tranche A Lender to United States residents).
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"Event of Default" has the meaning set forth in Section 6.01.
"Excluded Plan" means each employee pension benefit plan.
other than a "Plan" as defined in clause (i) of the definition of
"Plan", which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Code which is
either (i) maintained by a member of the Controlled Group for
employees of a member of the Controlled Group or (ii) maintained
pursuant to a collective bargaining agreement or any other arrangement
to which more than one employer makes contributions and to which a
member of the Controlled Group is then making or accruing an
obligation to make contributions or has within the preceding five plan
years made contributions.
"Fixed CD Rate" has the meaning set forth in Section
2.05(b).
"Fixed Rate Borrowing" means a CD Borrowing or a Euro-Dollar
Borrowing.
"Fixed Rate Loans" means CD Loans or Euro-Dollar Loans or
both.
"General Partners" means the Managing General Partner and
the Special General Partner of the Borrower or, if so specified, of
Energy Partners.
"Guarantee" by any Person means any obligation, contingent
or otherwise, of such Person directly or indirectly guaranteeing any
Debt of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or
otherwise, of such Person (i) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Debt (whether arising by
virtue of partnership arrangements, by agreement to keep-well, to
purchase assets, goods, securities or services, to take-or-pay, or to
maintain financial statement conditions or otherwise) or (ii) entered
into for the purpose of assuring in any other manner the holder of
such Debt 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.
"Hydrocarbons" means oil, gas and other liquid and gaseous
hydrocarbons.
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"Independent Petroleum Engineer" means Riggs & Associates
Inc., or another independent petroleum engineering consulting firm
selected by the Borrower and acceptable to the Required Lenders.
"Interest Period" means: (1) with respect to each Euro-
Dollar Borrowing, the period commencing on the date of a Borrowing and
ending one, two, three or six months thereafter, as the Borrower may
elect in the applicable Notice of Borrowing; PROVIDED that:
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be
extended to the next succeeding Euro-Dollar
Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case such
Interest Period shall end on the next preceding Euro-
Dollar business Day;
(b) any Interest Period which begins on the last Euro-
Dollar Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in
the calendar month at the end of such Interest Period)
shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month; and
(c) if any Interest Period includes a date on which a
payment of principal of the Tranche A Loans is required
to be made under Section 2.06 but does not end on such
date, then (i) the principal amount of each Euro-Dollar
Loan required to be repaid on such date shall have an
Interest Period ending on such date and (ii) the
remainder (if any) of each such Euro-Dollar Loan shall
have an Interest Period determined as set forth above.
(2) with respect to each CD Borrowing, the period commencing on the
date of such Borrowing and ending 30, 60, 90 or 180 days thereafter,
as the Borrower may elect in the applicable Notice of Borrowing;
PROVIDED that:
(a) any Interest Period (other than an Interest Period
determined pursuant to clause (b)(i) below) which would
otherwise end on a day which is not a Euro-Dollar
Business Day shall be extended to the next succeeding
Euro-Dollar Business Day; and
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(b) if any Interest Period includes a date on which a
payment of principal of the Tranche A Loans is required
to be made under Section 2.06 but does not end on
such date, then (i) the principal amount (if any) of
each CD Loan required to be repaid on such date shall
have an Interest Period ending on such date and (ii)
the remainder (if any) of each such CD Loan shall have
an Interest Period determined as set forth above.
(3) with respect to each Prime Borrowing, the period commencing on the
date of such Borrowing and ending 30 days thereafter; PROVIDED that:
(a) any Interest Period (other than an Interest Period
determined pursuant to clause (b)(i) below) which would
otherwise end on a day which is not a Euro-Dollar
Business Day shall be extended to the next succeeding
Euro-Dollar Business Day; and
(b) if any Interest Period includes a date on which a
payment of principal of the Tranche A Loans is required
to be made under Section 2.06 but does not end on such
date, then (i) the principal amount (if any) of each
Prime Loan required to be repaid on such date shall
have an Interest Period ending on such date and (ii)
the remainder (if any) of each such Prime Loan shall
have an Interest Period determined as set forth above.
"Lender" means each lender listed on the signature pages
hereof as having a Commitment, and its successors and assigns.
"Lending Office" means, as to any Tranche A Lender, its
Domestic Lending Office or its Euro-Dollar Lending Office, as the
context may require.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in
respect of such asset (including without limitation any production
payment, advance payment or similar arrangement with respect to
minerals in place), whether or not filed, recorded or otherwise
perfected under applicable law. For the purposes of this Agreement,
the Borrower 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.
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"Life-of-Reserves Coverage Ratio" means, as of any date of
determination, the ratio obtained by dividing (i) the sum of, for all
Petroleum Properties owned by the Borrower on such date, Cash Flow
Available for Debt Service (calculated on the basis of the Most Recent
Engineering Report) for the period of twenty years commencing on such
date, by (ii) Debt Service for such period (calculated on the basis
set forth in the most recent Coverage Report delivered to the Lenders
pursuant to Section 5.01(i), taking into account any incurrence or
prepayment of Debt since the date of such Coverage Report).
"Loan" means a loan made by a Lender to the Borrowerhereunder.
"London Interbank Offered Rate" has the meaning set forth in
Section 2.05(c).
"Managing General Partner" means the managing general
partner of the Borrower or, if so specified, of Energy Partners.
"Material Subsidiary" means any Subsidiary of Santa Fe
Southern Pacific (other than Bankers Leasing and Financial
Corporation, a Delaware corporation, and its subsidiaries and
Constellation Reinsurance Company) the consolidated assets of which,
as shown by its most recent year-end consolidated balance sheet, are
in excess of $75,000,000.
"Mortgage" means a mortgage or deed of trust, substantially
in the form of Exhibit G hereto or in such other form as has been
approved by the Required Lenders, if and as required to be executed
and recorded by the Borrower pursuant to Section 5.08 or 5.11.
"Most Recent Engineering Report" means as of any date of
determination, until the first Engineering Report is delivered
pursuant to Section 5.01(i), the Engineering Report dated December 31,
1986, as supplemented by a report heretofore delivered to the Lenders
under a cover letter dated June 12, 1987 prepared by the Managing
General Partner to take account of the Petro-Lewis Acquisition, and,
thereafter, the most recent Engineering Report delivered pursuant to
Section 5.01(i), in each case as subsequently updated pursuant to
Section 5.01(i) or supplemented pursuant to Section 5.08 on or prior
to such date of determination; PROVIDED that if the Borrower at any
time acquires any additional Recognized Proved Reserves, it may cause
a further supplement, prepared by an
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Independent Petroleum Engineer, to the most recent Engineering Report
delivered pursuant to Section 5.01(i) to be delivered to the Lenders,
whereupon the "Most Recent Engineering Report" shall incorporate such
supplement.
"Note" means a Domestic Note or a Euro-Dollar Note or a
Tranche B Note, and "Notes" means the Domestic Notes or the Euro-
Dollar Notes or the Tranche B Notes or all of them.
"Notice of Borrowing" has the meaning set forth in Section
2.02.
"Notice of Prepayment" and "Notice of Prospective
Prepayment" have the meanings set forth in Section 2.07(c).
"Partnership Agreements" means the Agreement of Limited
Partnership of Energy Partners dated as of January 14, 1986 among
Santa Fe Pacific Exploration, as Managing General Partner, Santa Fe
Energy, as Special General Partner, and Santa Fe Energy, as the
organizational limited partner, and the Agreement of Limited
Partnership of the Borrower dated as of January 14, 1986 among Santa
Fe Pacific Exploration, as Managing General Partner, Santa Fe Energy,
as Special General Partner and Energy Partners, as the Limited
Partner, as such agreements may be amended from time to time in
accordance with the provisions hereof.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Permitted Liens" means, with respect to any assets, Liens
thereon consisting of:
(i) lessor's royalties, overriding royalties, and division
orders and sales contracts covering Hydrocarbons,
reversionary interests and similar burdens, if the net
cumulative effect of such burdens does not operate to
reduce the net revenue interest of the Borrower in any
Petroleum Property to less than such net revenue
interest set forth in the Most Recent Engineering
Report;
(ii) any operator's liens or similar Liens arising in the
ordinary course of the Borrower's oil and gas
operations and securing obligations of the Borrower
that are not past due;
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(iii) inchoate liens arising by operation of statutory law
and liens for taxes or assessments not yet due or not
yet delinquent, or, if delinquent, that are being
contested in good faith in the normal course of
business;
(iv) easements, rights of way, servitudes, permits, surface
leases and other rights in respect of surface
operations, pipelines, grazing, logging, canals,
ditches, reservoirs or the like; conditions, covenants
or other restrictions; and easements for streets,
alleys, highways, pipelines, telephone lines, power
lines, railways and other easements and rights-of-way,
on, over or in respect of such Petroleum Properties;
(v) rights reserved to or vested in any municipality or
governmental, tribal, statutory or public authority to
control or regulate any of the Petroleum Properties in
any manner, and all applicable laws, rules, and orders
of governmental or tribal authority; and
(vi) all other Liens arising in the ordinary course of the
Borrower's business or incidental to the ownership of
its properties;
PROVIDED that such Liens (x) do not secure Debt, (y) do not in the
aggregate materially detract from the value of the properties of the
Borrower or materially impair the use thereof in the operation of the
business of the Borrower and (z) in the aggregate are not
disadvantageous in any material respect to the Lenders.
"Person" means an individual, a corporation, a partnership,
an association, a trust or any other entity or organization, including
a government or political subdivision or an agency or instrumentality
thereof.
"Petroleum Properties" means, at any time, all Recognized
Proved Reserves which are (i) owned by the Borrower at such time free
and clear of any Lien (other than Liens permitted by Section 5.10) and
(ii) covered in the Most Recent Engineering Report.
"Petro-Lewis Acquisition" means the acquisition of Petroleum
Properties by the Borrower from Petro-Lewis Corporation and its
affiliates in April 1987.
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"Plan" means (i) for so long as the Controlled Group
includes Santa Fe Southern Pacific and Santa Fe Natural Resources, an
employee pension benefit plan which is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Code
and is maintained by Santa Fe Southern Pacific or any of its Material
Subsidiaries for salaried employees of Santa Fe Southern Pacific or
any of its Material Subsidiaries, and (ii) at any other time, an
employee pension benefit plan which is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Code
and is either (X) maintained by a member of the Controlled Group for
employees of a member of the Controlled Group or (y) maintained
pursuant to a collective bargaining agreement or any other arrangement
under which more than one employer makes contributions and to which a
member of the Controlled Group is then making or accruing an
obligation to make contributions or has within the preceding five plan
years made contributions.
"Pre-G&A Cash Flow" means, for any fiscal year (or portion
thereof), (a) an amount (or, with respect to any portion of a fiscal
year, a proportional amount corresponding to such portion of such
fiscal year) of projected gross revenues from the sale of Hydrocarbons
produced from Recognized Proved Reserves to be received, subject to no
entitlement of any other Person but including appropriate adjustments
for over- and under-produced status, by the Borrower during such
fiscal year as set forth in the Most Recent Engineering Report, LESS
(b) an amount (or, with respect to any portion of a fiscal year, a
proportional amount corresponding to such portion of such fiscal year)
of projected royalties and wind-fall profit, production, ad valorem,
severance, income and all other taxes, operating and capital
expenditures required to be incurred during such fiscal year in order
to generate such gross revenues (but not including general and
administrative expenses or principal and interest payable with respect
to Debt) as set forth in the Most Recent Engineering Report.
"Prepayment" has the meaning set forth in Section 2.07(c).
"Prime Loan" means a Tranche A Loan to be made as a Prime
Loan pursuant to the applicable Notice of Borrowing or Article VIII.
"Prime Rate" means the rate of interest publicly announced
by Morgan Guaranty Trust Company of New York in New York City from
time to time as its Prime Rate.
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"Pro Rata Share" has the meaning set forth in Section
5.08(d).
"Prospective Prepayment" has the meaning set forth in
Section 2.07(c).
"Recognized Proved Reserves" means reserves of Hydrocarbons
which are estimated to be recoverable with reasonable certainty and
are consistent with the "Definitions for Oil and Gas Reserves" as
published by the Society of Petroleum Engineers of AIME, PROVIDED that
(i) the estimates are made by an Independent Petroleum Engineer, (ii)
the estimates are made on the basis of (a) the Approved Assumptions
and (b) actual production or an actual flow test, (iii) the reserves
are located onshore or offshore the United States or Canada and shall
otherwise be acceptable to the Required Lenders, and (iv) no more than
10% (in Relative Value) of Recognized Proved Reserves included at any
time in the Most Recent Engineering Report shall consist of proved
reserves which are not developed. Reserves in reservoirs penetrated
by wells but currently not being produced are classified as
"developed" only if (X) the Independent Petroleum Engineer has
determined that such reserves can be recovered through the existing
wells requiring no more than simple workover operation and (y) an
actual flow test of the formation in an offset well or a conclusive
flow test of the same well shall have been conducted and, using the
Approved Assumptions, shall support the economic producibility of such
reserves.
"Reduction Date" means each March 31, June 30, September 30
and December 31, from and including March 31, 1990 to and including
December 31, 1997.
"Reference Banks" means the CD Reference Banks or the Euro-
Dollar Reference Banks, as the context may require, and "Reference
Bank" means any one of such Reference Banks.
"Refunding Borrowing" means a Borrowing which, after
application of the proceeds thereof, results in no net increase in the
outstanding principal amount of Loans made by any Lender.
"Regulation G" means Regulation G of the Board of Governors
of the Federal Reserve System, as in effect from time to time.
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"Regulation U" means Regulation U of the Board of Governors
of the Federal Reserve System, as in effect from time to time.
"Relative Value" of any selected Petroleum Properties (or
Recognized Proved Reserves) in relation to a group of Petroleum
Properties (or Recognized Proved Reserves) means as of any date of
determination the number, stated as a percentage, obtained by dividing
(i) the net present value (using the discount rate used in valuing
reserves for purposes of Energy Partners' most recent annual report on
Form 10-K filed with the Securities and Exchange Commission under the
Securities Exchange Act of 1934) of Pre-G&A Cash Flow attributable to
such selected Petroleum Properties (or Recognized Proved Reserves) by
(ii) the net present value (using the same discount rate) of Pre-G&A
Cash Flow attributable to such group of Petroleum Properties (or
Recognized Proved Reserves), in each case based on the Most Recent
Engineering Report for the period of twenty fiscal years commencing
with the fiscal year in which the date of determination occurs.
"Required Lenders" means at any time prior to the first
Borrowing, Lenders having at least 66 2/3% of the aggregate amount of
the Commitments and thereafter, Lenders holding Notes evidencing at
least 66 2/3% of the aggregate unpaid principal amount of the Loans.
"Restricted Payment" means (i) any distribution on account
of any partnership interest in the Borrower (whether in the form of
cash, securities or other property and whether on account of income,
capital or otherwise), (ii) any payment by the Borrower on account of
the purchase, redemption, retirement or acquisition of any partnership
interest (or any right to acquire any partnership interest) in the
Borrower or (iii) any payment which represents an Investment in any
Affiliate; PROVIDED that any payments by the Borrower, in accordance
with its normal practice as of the date of this Agreement, of windfall
profit taxes on behalf of Persons holding partnership interests in the
Borrower or Energy Partners shall not be considered Restricted
Payments; and PROVIDED FURTHER that balances that may be outstanding
and payable by Energy Partners or by either of the General Partners to
the Borrower arising in the course of the Borrower's normal cash
management operations which provide for settlement on a monthly basis
shall not constitute Restricted Payments. For purposes hereof
"Investment" means any investment in any Person, whether by means of
share purchase, capital contribution, loan or otherwise.
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"Rollover" means (i) any Refunding Borrowing and (ii) any
similar reborrowing from a lender of a loan which is prepaid, or by
its terms is due, to such lender on the date of such reborrowing if
the instrument or agreement governing such Debt specifically
contemplates the periodic prepayment or repayment and simultaneous
reborrowing of such loan.
"Santa Fe Energy" means Santa Fe Energy Company, a Texas
corporation.
"Santa Fe Pacific Exploration" means Santa Fe Pacific
Exploration Company, a Delaware corporation.
"Santa Fe Natural Resources" means Santa Fe Natural
Resources, Inc., a Delaware corporation, and its successors.
"Santa Fe Southern Pacific" means Santa Fe Southern Pacific
Corporation, a Delaware corporation, and its successors.
"SFNR Undertaking" means a letter of Santa Fe Natural
Resources to the Lenders substantially in the form of Exhibit F
hereto.
"Special General Partner" means the special general partner
of the Borrower or, if so specified, of Energy Partners.
"Subordinated Debt" means Debt of the Borrower no principal
of which is payable on a mandatory or optional basis so long as any of
the Loans remain outstanding and which is evidenced by an instrument
containing subordination provisions substantially in the form of
Exhibit H hereto.
"Subsidiary" of any Person means any corporation or other
entity of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions are at the time directly or
indirectly owned by such Person; PROVIDED that "Subsidiary", with
respect to the Borrower, shall not refer to any joint venture to which
the Borrower is a party entered into in the ordinary course of the
Borrower's investment in oil and gas interests, properties or
prospects, even if such joint venture constitutes a partnership for
tax purposes.
"Tranche A" means, (i) with respect to a Lender, a Lender
whose Commitment is indicated on the signature pages hereof to be a
Tranche A Commitment, (ii) with respect to a
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Commitment, means the Commitment of a Tranche A Lender, and (iii) with
respect to a Loan, a Loan made by a Tranche A Lender.
"Tranche B" means, (i) with respect to a Lender, a Lender
whose Commitment is indicated on the signature pages hereof to be a
Tranche B Commitment, (ii) with respect to a Commitment, means the
Commitment of a Tranche B Lender, (iii) with respect to a Loan, a Loan
made by a Tranche B Lender and (iv) with respect to a Note, a
promissory note of the Borrower, substantially in the form of Exhibit
C hereto, evidencing the obligation of the Borrower to repay a Tranche B Loan.
"Triggering Event" means the first to occur of:
(i) that point in time when Santa Fe Energy and its
Affiliates first beneficially own, directly or
indirectly, less than an aggregate of 50% of all
limited partnership units of Energy Partners (the
"Units") then outstanding, excluding any outstanding
Units which Energy Partners may have issued (other than
to Santa Fe Energy or any of its Affiliates) to acquire
oil and gas properties, oil or gas exploration,
development, production, treatment, processing,
transportation or marketing assets, or corporations,
partnerships or other business entities engaged
predominantly in the oil and gas business; or
(ii) the execution and delivery by Santa Fe Energy or an
Affiliate of Santa Fe Energy of a definitive agreement
to sell, or a determination by Santa Fe Energy or an
Affiliate of Santa Fe Energy to distribute, Units
which, if sold or distributed, would result in, or the
occurrence of any other event that within 90 days after
the occurrence thereof would result in, Santa Fe Energy
and its Affiliates beneficially owning, directly or
indirectly, less than an aggregate of 50% of all
units then outstanding, excluding any outstanding
Units which Energy Partners may have issued (other
than to Santa Fe Energy or any of its Affiliates) to
acquire oil and gas properties, oil or gas
exploration, development, production, treatment,
processing, transportation or marketing assets, or
corporations, partnerships or other business engaged
predominantly in the oil and gas business; or
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(iii) the distribution by Santa Fe Energy or an Affiliate of
Santa Fe Energy of securities convertible into, or
rights or warrants to acquire Units which, if fully
converted or exercised, would reduce the interest of
Santa Fe Energy and its Affiliates to less than an
aggregate of 50% of all Units then outstanding,
excluding any outstanding units which Energy Partners
may have issued (other than to Santa Fe Energy or any
of its Affiliates) to acquire oil and gas properties,
oil or gas exploration, development, production,
treatment, processing, transportation or marketing
assets, or corporations, partnerships or other business
entities engaged predominantly in the oil and gas
business; PROVIDED that if such securities, rights or
warrants are redeemable by Santa Fe Energy or an
Affiliate of Santa Fe Energy immediately following
their distribution, a "Triggering Event" shall not be
deemed to have occurred unless and until such
securities, rights or warrants are no longer so
redeemable.
For purposes of this definition, "Affiliate" of Santa Fe Energy means
any person, entity or group (x) owning 10% or more of the securities
of Santa Fe Energy entitled to vote for the election of directors, or
(y) controlling, controlled by or under common control with Santa Fe
Energy.
"Unfunded Vested Liabilities" means, with respect to any
Plan at any time, the amount (if any) by which (i) the present value
of all vested nonforfeitable benefits under such Plan exceeds (ii) the
fair market value of all Plan assets allocable to such benefits, all
determined as of the then most recent valuation date for such Plan,
but only to the extent that such excess represents a potential
liability of a member of the Controlled Group to the PBGC or the Plan
under Title IV of ERISA.
"Wholly-Owned Subsidiary" of any Person means any Subsidiary
of such Person all of the shares of capital stock or other ownership
interests of which (except directors' qualifying shares) are at the
time directly or indirectly owned by such Person.
SECTION 1.02. ACCOUNTING TERMS AND DETERMINATIONS. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made,
and all financial statements required to be delivered hereunder shall
be prepared in accordance with generally accepted accounting
principles as in effect from
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time to time, applied on a basis consistent (except for changes
concurred in by the independent public accountants for Energy
Partners) with the most recent audited financial statements of Energy
Partners delivered to the Lenders.
ARTICLE II
CREDITS
SECTION 2.01. COMMITMENTS TO LEND.
(a) THE FIRST BORROWING. Each Lender severally agrees to
lend to the Borrower at one time on or prior to August 31, 1987, on
the terms and conditions set forth in this Agreement, an amount equal
to such Lender's Commitment. Such Loan by each Lender shall be made
as part of the first Borrowing hereunder, which shall be made from the
several Lenders ratably in proportion to their respective Commitments.
(b) SUBSEQUENT BORROWINGS. Each Tranche A Lender severally
agrees on the terms and conditions set forth in this Agreement, to
make one or more new Tranche A Loans to the Borrower upon any
repayment of outstanding Tranche A Loans pursuant to Section 2.04;
PROVIDED that the principal amount of such Lender's new Loans shall
not exceed the principal amount of its outstanding Loans being repaid;
and PROVIDED FURTHER that the principal amount of such Lender's
outstanding Loans shall at no time exceed its Commitment. The
Borrower agrees that it shall, unless it has theretofore given a
Notice of Prepayment in accordance with Section 2.07(c), give a Notice
of Borrowing providing for a Borrowing of Tranche A Loans to occur on
the last day of each Interest Period so that, after giving effect
thereto, the aggregate amount of Tranche A Loans outstanding on such
day equals the aggregate Tranche A Commitments on such day, after
giving effect to any reduction of Tranche A Commitments on such day
pursuant to Section 2.06(c). Each Borrowing under this subsection (b)
shall be in an amount equal to $5,000,000 or any larger multiple of
$1,000,000 (or if less, the aggregate amount of the Tranche A
Commitments) and shall be made from the several Tranche A Lenders
ratably in proportion to their respective Tranche A Commitments.
There shall not at any time be more than four Tranche A Loans
outstanding from each Tranche A Lender, in addition to any Loan made
by such Lender under Section 2.12. Amounts required to be repaid
pursuant to Section 2.06(d) shall not be reborrowed, and amounts
repaid pursuant to Section 8.02 shall be reborrowed only as provided
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therein; the making by any Lender of a Loan pursuant to Section 2.12
and the making by any such Lender of subsequent Tranche A Loans
pursuant to its new or increased Commitment shall not be deemed a
reborrowing of amounts repaid hereunder.
SECTION 2.02. METHOD OF BORROWING. (a) The Borrower shall
give the Agent notice (a "Notice of Borrowing") at least three
Euro-Dollar Business Days before the first Borrowing and, thereafter,
not later than 10:00 A.M. (New York City time) on the date of each
Prime Borrowing, at least two Domestic Business Days before each CD
Borrowing and at least three Euro-Dollar Business Days before each
Euro-Dollar Borrowing, specifying:
(i) the date of such Borrowing, which shall be a
Euro-Dollar Business Day in the case of the first
Borrowing, and, thereafter, shall be a Domestic
Business Day in the case of a Domestic Borrowing or a
Euro-Dollar Business Day in the case of a Euro-Dollar
Borrowing,
(ii) the aggregate amount of such Borrowing,
(iii) whether the Tranche A Loans included in such
Borrowing are to be CD Loans, Prime Loans or Euro-
Dollar Loans, and
(iv) in the case of a Fixed Rate Borrowing, the duration
of the Interest Period applicable thereto, subject to
the provisions of the definition of Interest Period.
(b) Upon receipt of a Notice of Borrowing, the Agent shall
promptly notify each Tranche A Lender (and, in the case of the first
Borrowing only, each Tranche B Lender) of the contents thereof and of
such Lender's ratable share of such Borrowing and such Notice of
Borrowing shall not thereafter be revocable by the Borrower.
(c) Not later than 11:00 A.M. (New York City time) on the
date of each Borrowing, each Tranche A Lender (and, in the case of the
first Borrowing only, each Tranche B Lender) shall (except as provided
in subsection (d) of this Section) make available its ratable share of
such Borrowing, in Federal or other funds immediately available in New
York City, to the Agent at its address specified in or pursuant to
Section 9.01. Unless the Agent determines that any applicable
condition specified in Article III has not been satisfied, the Agent
will make the funds so received from the Lenders available to the
Borrower at the Agent's aforesaid address.
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(d) If any Tranche A Lender makes one or more new Loans
hereunder on a day on which the Borrower is to repay all or any part
of any outstanding Loans from such Tranche A Lender, such Tranche A
Lender shall apply the proceeds of its new Loans to make such
repayment and only an amount equal to the difference (if any) between
the amount being borrowed and the amount being repaid shall be made
available by such Bank to the Agent as provided in subsection (c) of
this Section, or remitted by the Borrower to the Agent as provided in
Section 2.08, as the case may be.
SECTION 2.03. NOTES. (a) The Domestic Loans of each
Tranche A Lender shall be evidenced by a single Domestic Note payable
to the order of such Lender for the account of its Domestic Lending
Office in an amount equal to the aggregate unpaid principal amount of
such Lender's Domestic Loans.
(b) The Euro-Dollar Loans of each Tranche A Lender shall be
evidenced by a single Euro-Dollar Note payable to the order of such
Lender for the account of its Euro-Dollar Lending Office in an amount
equal to the aggregate unpaid principal amount of such Lender's
Euro-Dollar Loans.
(c) Each Tranche A Lender may, by notice to the Borrower
and the Agent (to be given not later than two Domestic Business Days
prior to the first Borrowing) request that its Prime Loans and CD
Loans be evidenced by separate Domestic Notes payable to the order of
such Lender for the account of its Domestic Lending Office in an
amount equal to the aggregate unpaid principal amount of such Lender's
Prime Loans and CD Loans, respectively. Each such Note shall be in
substantially the form of Exhibit A hereto with appropriate
modifications to reflect the fact that it evidences solely. Prime
Loans or CD Loans, as the case may be. Each reference in this
Agreement to the "Notes" or "Domestic Note" of such Lender shall be
deemed to refer to and include either or both of such Notes, as the
context may require.
(d) The Loan of each Tranche B Lender shall be evidenced by
a single Tranche B Note payable to such Tranche B Lender in an amount
equal to the aggregate unpaid principal amount of such Lender's Loan.
(e) Upon receipt of each Lender's Notes pursuant to Section
3.01(d) or 2.12, the Agent shall mail such Notes to such Lender. Each
Tranche A Lender shall record, and prior to any transfer of its Notes
shall endorse on the schedules
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forming a part thereof appropriate notations to evidence, the date,
amount and maturity of each Loan made by it and the date and amount of
each payment of principal made by the Borrower with respect thereto;
PROVIDED that the failure of any Tranche A Lender to make any such
recordation or endorsement shall not affect the obligations of the
Borrower hereunder or under the Notes. Each Tranche A Lender is
hereby irrevocably authorized by the Borrower so to endorse its Notes
and to attach to and make a part of any Note a continuation of any
such schedule as and when required.
SECTION 2.04. MATURITY OF LOANS. (a) Each Tranche A Loan
included in any Borrowing shall mature, and the principal amount
thereof shall be due and payable, on the last day of the Interest
Period applicable to such Tranche A Loan.
(b) The principal amount of each Tranche B Loan shall be
due in installments on the Reduction Dates to and including December
31, 1997 in the following amounts: (i) on each Reduction Date from
and including March 31, 1990 to and including December 31, 1991, an
amount equal to 4.44% of the original amount of such Tranche B Loan
shall be due, (ii) on each Reduction Date from and including March 31,
1992 to and including December 31, 1992, an amount equal to 3.89% of
the original amount of such Tranche B Loan shall be due, (iii) on each
Reduction Date from and including March 31, 1993 to and including
December 31, 1993, an amount equal to 3.33% of the original amount of
such Tranche B Loan shall be due, (iv) on each Reduction Date from and
including March 31, 1994 to and including September 30, 1997, an
amount equal to 2.22% of the original amount of such Tranche B Loan
shall be due and (v) on December 31, 1997, an amount equal to 2.3% of
the original amount of such Tranche B Loan shall be due; PROVIDED that
(x) the principal amount of any Tranche B Loan made pursuant to
Section 2.12 shall be due in installments on the remaining Reduction
Dates and the amount of such installments with respect to such Loan
shall be the same, as a percentage of the then outstanding amount of
such Loan, as the amount of the installments due on such Reduction
Dates with respect to the original Tranche B Loans, as a percentage of
the then outstanding amount of such original Loans, (y) in the case of
any prepayment of a Tranche B Loan pursuant to Section 2.07(c)(ii)(x)
or (c)(iii)(x), the remaining installments payable with respect to
such Tranche B Loan shall be reduced as the Borrower shall direct by
notice in writing to the Agent (which notice shall be irrevocable once
given) on or prior to the date of such prepayment and (z) the amounts
of the remaining installments may be adjusted from time to time as
contemplated by Section 5.08(a).
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SECTION 2.05. INTEREST RATES. (a) Each Prime Loan shall, subject to
the provisions of subsection (h) below, bear interest on the
outstanding principal amount thereof, for each day from the date such
Loan is made until it becomes due, at a rate per annum equal to the
Prime Rate for such day. Any overdue principal of and, to the extent
permitted by law, overdue interest on any Prime Loan shall, subject to
the provisions of subsection (h) below, bear interest, payable on
demand, for each day until paid at a rate per annum equal to the sum
of 1% plus the Prime Rate for such day.
(b) Each CD Loan shall, subject to the provisions of
subsection (h) below, bear interest on the outstanding principal
amount thereof, for the Interest Period applicable thereto, at a rate
per annum equal to the applicable Fixed CD Rate; PROVIDED that if any
CD Loan or any portion thereof shall, as a result of clause (2)(b)(i)
of the definition of Interest Period, have an Interest Period of less
than 30 days, such portion shall bear interest during such Interest
Period at the rate applicable to Prime Loans during such period. Such
interest shall be payable for each Interest Period on the last day
thereof and, if such Interest Period is longer than 90 days, at
intervals of 90 days after the first day thereof. Any overdue
principal of and, to the extent permitted by law, overdue interest on
any CD Loan shall, subject to the provisions of subsection (h) below,
bear interest, payable on demand, for each day until paid at a rate
per annum equal to the sum of 1% plus the higher of (i) the Fixed CD
Rate applicable to such Loan and (ii) the Prime Rate for such day.
The "Fixed CD Rate" applicable to any CD Loan for any
Interest Period means a rate per annum equal to the sum of 5/8 of 1%
plus the applicable Adjusted CD Rate.
The "Adjusted CD Rate" applicable to any Interest Period
means a rate per annum determined pursuant to the following formula:
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{ CDBR } *
ACDR = { ---------- } + AR
{ 1.00 - DRP }
ACDR = Adjusted CD Rate
CDBR = CD Base Rate 1931
DRP = Domestic Reserve Percentage
AR = Assessment Rate
______________
* The amount in brackets being rounded upwards, if
necessary, to the next higher of 1/100 of 1%.
The "CD Base Rate" applicable to any Interest Period is the
rate of interest determined by the Agent to be the arithmetic average
(rounded upward, if necessary, to the next higher 1/100 of 1%) of the
prevailing rates per annum bid at 10:00 A.M. (New York City time) (or
as soon thereafter as practicable) on the first day of such Interest
Period by two or more New York certificate of deposit dealers of
recognized standing for the purchase at face value from each CD
Reference Bank of its certificates of deposit in an amount comparable
to the unpaid principal amount of the CD Loan of such CD Reference
Bank to which such Interest Period applies and having a maturity
comparable to such Interest Period.
"Domestic Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or
any successor) for determining the maximum reserve requirement
(including without limitation any basic, supplemental or emergency
reserves) for a member bank of the Federal Reserve System in New York
City with deposits exceeding five billion dollars in respect of new
non-personal time deposits in dollars in New York City having a
maturity comparable to the related Interest Period and in an amount of
$100,000 or more. The Fixed CD Rate shall be adjusted automatically
on and as of the effective date of any change in the Domestic Reserve
Percentage.
"Assessment Rate" means for any Interest Period the net
annual assessment rate (rounded upwards, if necessary, to the next
higher 1/100 of 1%) actually incurred by Morgan Guaranty Trust Company
of New York to the Federal Deposit Insurance Corporation (or any
successor) for such Corporation's (or such successor's) insuring time
deposits at offices of Morgan Guaranty Trust Company of New York in
the United States during the most recent period for which such
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rate has been determined prior to the commencement of such Interest
Period.
(c) Each Euro-Dollar Loan shall, subject to the provisions
of subsection (h) below, bear interest on the outstanding principal
amount thereof, for the Interest Period applicable thereto, at a rate
per annum equal to the sum of 1/2 of 1% plus the applicable London
Interbank Offered Rate. Such interest shall be payable for each
Interest Period on the last day thereof and, if such Interest Period
is longer than three months, at intervals of three months after the
first day thereof.
The "London Interbank Offered Rate" applicable to any
Interest Period means the average (rounded upward, if necessary, to
the next higher 1/16 of 1%) of the respective rates per annum at which
deposits in dollars are offered to each of the Euro-Dollar Reference
Banks in the London inter-bank market at approximately 11:00 A.M.
(London time) two Euro-Dollar Business Days before the first day of
such Interest Period in an amount approximately equal to the principal
amount of the Euro-Dollar Loan of such Euro-Dollar Reference Bank to
which such Interest Period is to apply (or, if applicable, the
principal amount of the Loan to be made pursuant to Section 2.12) and
for a period of time comparable to such Interest Period.
(d) Any overdue principal of and, to the extent permitted
by law, overdue interest on any Euro-Dollar Loan shall, subject to the
provisions of subsection (h) below, bear interest, payable on demand,
for each day from and including the date payment thereof was due to
but excluding the date of actual payment, at a rate per annum equal to
the sum of 1 1/2% plus the average (rounded upward, if necessary, to
the next higher 1/16 of 1%) of the respective rates per annum at which
one day (or, if such amount due remains unpaid more than three Euro-
Dollar Business Days, then for such other period of time not longer
than six months as the Agent may elect) deposits in dollars in an
amount approximately equal to such overdue payment due to each of the
Euro-Dollar Reference Banks are offered to such Euro-Dollar Reference
Bank in the London interbank market for the applicable period
determined as provided above (or, if the circumstances described in
clause (a) or (b) of Section 8.01 shall exist, at a rate per annum
equal to the sum of 1% plus the rate applicable to Prime Loans for
such day).
(e) Each Tranche B Loan shall, subject to the provisions of
subsection (h) below, bear interest on the
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outstanding principal amount thereof, for each day from the date such
Loan is made until it becomes due, at 9.63% per annum, except that any
Tranche B Loan made pursuant to Section 2.12 shall bear interest on
the outstanding principal amount thereof at the rate set forth on the
addendum hereto and in the Note relating to such Loan. Any overdue
principal of, premium (if any) under Section 2.07 or 6.04, and, to the
extent permitted by law, overdue interest on any Tranche B Loan shall,
subject to the provisions of subsection (h) below, bear interest,
payable on demand, for each day until paid at a rate per annum equal
to the sum of 1% plus the rate specified in the previous sentence.
Such interest shall be payable in arrears on each March 31, June 30,
September 30 and December 31, commencing September 30, 1987.
(f) The Agent shall determine each interest rate applicable
to the Tranche A Loans hereunder. The Agent shall give prompt notice
to the Borrower and the Tranche A Lenders by telex or telecopy of each
rate of interest so determined, and its determination thereof shall be
conclusive in the absence of manifest error.
(g) Each Reference Bank agrees to use its best efforts to
furnish quotations to the Agent as contemplated hereby. If any
Reference Bank does not furnish a timely quotation, the Agent shall
determine the relevant interest rate on the basis of the quotation or
quotations furnished by the remaining Reference Bank or Banks or, if
none of such quotations is available on a timely basis, the provisions
of Section 8.01 shall apply.
(h) Notwithstanding the foregoing provisions, the
APPLICABLE RATE OF INTEREST per annum on each Loan outstanding shall
be, for each day, if the aggregate ownership by Santa Fe Southern
Pacific AND its WHOLLY-OWNED Subsidiaries of limited partnership
interests in Energy Partners, as a percentage of the total outstanding
limited partnership interests in Energy Partners, on such day is (i)
less than 50% but greater than or equal to 25%, increased by 1/8 of 1%
per annum, (ii) less than 25% but greater than or equal to 10%,
increased by 1/4 of 1% per annum, or (iii) LESS THAN 10%, INCREASED BY
1/2 OF 1% PER ANNUM.
SECTION 2.06. MANDATORY TERMINATION OR REDUCTION OF TRANCHE
A COMMITMENTS. (a) The Tranche A Commitments shall terminate on
December 31, 1997, and any Tranche A Loans then outstanding (together
with accrued interest thereon) shall be due and payable on such date.
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(b) On any date after the date of the first Borrowing on
which the Commitment of any Tranche A Lender shall be greater than the
principal amount of the Loan of such Tranche A Lender outstanding on
such date (after giving effect to any repayment, prepayment and
borrowing on such date), the Commitment of such Lender shall be
automatically reduced to an amount equal to such outstanding principal
amount.
(c) The aggregate Tranche A Commitments shall be further
reduced (and the Commitment of each Tranche A Lender shall be
correspondingly reduced on a pro rata basis), on each Reduction Date
in each year as follows:
REDUCTION ON EACH
YEAR REDUCTION DATE
1990 $1,377,777.78
1991 $1,377,777.78
1992 $1,205,555.56
1993 $1,033,333.33
1994 $ 688,888.89
1995 $ 688,888.89
1996 $ 688,888.89
1997 $ 688,888.88
PROVIDED that (i) any reduction of the Commitments pursuant to
subsection (b) shall reduce the amount of subsequent mandatory
reductions of Commitments pursuant to this subsection (c) as directed
by the Borrower in a notice (which shall be irrevocable once given) to
the Agent on or prior to the date of such reduction of the Commitments
pursuant to subsection (b); (ii) if any Tranche A Loan is made
pursuant to Section 2.12, the amount of each of the remaining
reductions of Commitments pursuant to this subsection (c) shall be
ratably increased in proportion to the increase in the aggregate
Tranche A Commitments hereunder; and (iii) the schedule of mandatory
reductions of Commitments pursuant to this subsection (c) may be
adjusted from time to time as contemplated by Section 5.08(a)
(d) On each Reduction Date, the Borrower shall repay such
principal amount (together with accrued interest thereon) of each
Tranche A Lender's outstanding Loan, if any, as may be necessary so
that after such repayment, the unpaid principal amount of such
Lender's Loan does not exceed the amount of such Lender's Commitment
as then reduced.
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SECTION 2.07. PREPAYMENTS. (a) The Borrower may, subject
to the provisions of subsection (c) below, prepay any Prime Borrowing
in whole at any time, or from time to time in part.
(b) Except as provided in Section 8.02 the Borrower may not
prepay all or any portion of the principal amount of any Fixed Rate
Loan prior to the maturity thereof.
(c) (i) If (x) the Borrower determines to reduce the
aggregate principal amount of Loans outstanding hereunder and such
reduction is not called for by the provisions of Section 2.04(b) and
Section 2.06(c) and (d) (any such reduction herein referred to as a
"Prepayment"), or (y) the Borrower determines to increase, on a
prospective basis pursuant to Section 5.08(a), the amount of scheduled
reductions on a Reduction Date of the aggregate principal amount of
Loans outstanding hereunder called for by the provisions of Section
2.04(b) and Section 2.06(c) and (d) (any such increase in such
scheduled reduction for such Reduction Date herein referred to as a
"Prospective Prepayment"), then, it shall give the Agent notice (a
"Notice of Prepayment" or "Notice of Prospective Prepayment") of such
determination not less than 15 days prior to the date on which it
wishes to (i) make such Prepayment or (ii) adjust the amounts of the
installments to be due under Section 2.04(b) and the amounts of the
reductions in Commitments under Section 2.06(c) to give effect to such
Prospective Prepayment. Such date shall, in the case of a Prepayment,
be a Domestic Business Day, and, if the Tranche A Loans then
outstanding are Fixed Rate Loans, the last day of the then current
Interest Period (other than an Interest Period provided for in clause
(l)(c)(i) or (2)(b)(i) of the definition of "Interest Period"). Each
Prepayment shall be of an amount equal to (x) $5,000,000 or a larger
multiple of $1,000,000, (y) such amount as will effect the restoration
of the Coverage Ratios to their required levels under Section 5.08, or
(z) the aggregate principal amount of Loans outstanding. Each
Prospective Prepayment under this Section shall be in such amount as
will, when taken together with other related adjustments being made to
the scheduled reductions of Loans outstanding hereunder, restore the
Annual Coverage Ratio to its required level under Section 5.08(a).
Each Notice of Prepayment and Notice of Prospective Prepayment shall
specify how the amount of such Prepayment or Prospective Prepayment is
to be allocated, on an aggregate basis for both Tranche A and Tranche
B Loans, to the remaining scheduled reductions in the Loans under
Section 2.04(b) and Section 2.06(c) and (d).
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(ii) Unless the aggregate amount of all prior Prepayments
and Prospective Prepayments as to which notice has been given under
this Section exceeds $20,000,000, each Tranche B Lender shall, not
less than 7 days after the date of a Notice of Prepayment or Notice of
Prospective Prepayment, as relevant, advise the Agent whether it
wishes to be included in the portion of such Prepayment or Prospective
Prepayment which, together with all such prior Prepayments and
Prospective Prepayments, does not exceed $20,000,000. Based on such
notices given to the Agent, which the Agent shall forward to the
Borrower, the Borrower shall:
(x) in the case of a Prepayment, prepay on the date
specified in the Notice of Prepayment the Tranche B Loans of the
Tranche B Lenders, if any, participating in such Prepayment and
prepay the Prime Loans on such date or give a Notice of Borrowing
with respect to a reborrowing of the Tranche A Loans due on such
date such that the portion of such Prepayment which, together
with all such prior Prepayments and Prospective Prepayments, does
not exceed $20,000,000 shall, after giving effect to any
repayment, prepayment and reborrowing of Loans on such day,
assuming the conditions precedent set forth in Section 3.02 are
met on such day, have been applied pro rata (based on the then
outstanding amounts of the Loans) to the Loans of the Tranche B
Lenders, if any, participating in such Prepayment and the Tranche
A Lenders; or
(y) in the case of a Prospective Prepayment, the Agent
shall make such changes in the amounts of the scheduled
installments due on the Tranche B Loans under Section 2.04(b) and
the reductions of the Commitments under Section 2.06(c) scheduled
to occur on the relevant Reduction Date, such that, after giving
effect to any repayment, prepayment and reborrowing of Loans on
such day, assuming the conditions precedent set forth in Section
3.02 are met on such day, the portion of such Prospective
Prepayment which, together with all such prior Prepayments and
Prospective Prepayments, does not exceed $20,000,000, shall have
been applied pro rata (based on the then outstanding amounts of
the Loans) to the Loans of the Tranche B Lenders, if any,
participating in such Prospective Prepayment and the Tranche A
Lenders.
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(iii) In the case of any Prepayment or Prospective
Prepayment, or a portion thereof, which, together with all prior
Prepayments and Prospective Prepayments as to which notice has been
given under this Section, exceeds $20,000,000, the Borrower shall:
(x) in the case of a Prepayment, prepay on the date
specified in the Notice of Prepayment the Tranche B Loans of the
Tranche B Lenders and prepay the Prime Loans on such date or give
a Notice of Borrowing with respect to a reborrowing of the
Tranche A Loans due on such date such that the portion of such
Prepayment which, together with all such prior Prepayments and
Prospective Prepayments, exceeds $20,000,000 shall, after giving
effect to any repayment, prepayment and reborrowing of Loans on
such day, assuming the conditions precedent set forth in Section
3.02 are met on such day, have been applied pro rata (based on
the then outstanding amounts of the Loans) to all of the Loans of
the Lenders; or
(y) in the case of a Prospective Prepayment, the Agent shall
make such changes in the amounts of the scheduled installments
due on the Tranche B Loans under Section 2.04(b) and the
reductions of the Commitments under Section 2.06(c) scheduled to
occur on the relevant Reduction Date, such that, after giving
effect to any repayment, prepayment and reborrowing of Loans on
such day, assuming the conditions precedent set forth in Section
3.02 are met on such day, the portion of such Prospective
Prepayment which, together with all such prior Prepayments and
Prospective Prepayments, exceeds $20,000,000, shall have been
applied pro rata (based on the then outstanding amounts of the
Loans) to all of the Loans of the Lenders.
(d) Upon receipt of a Notice of Prepayment or Notice of
Prospective Prepayment pursuant to this Section, the Agent shall
promptly notify each Lender of the contents thereof, and such notice
shall not thereafter be revocable by the Borrower. The Agent shall
promptly advise each Lender of the portion of any Prepayment or
Prospective Prepayment which is applicable to its Loan determined in
accordance with subsection (c) above and shall also advise such Lender
of the corresponding adjustments in the remaining scheduled reductions
of such Loan under Section 2.04(b) or Section 2.06(c) and (d) as
relevant. With respect to any prepayment of a
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Tranche B Loan made as part of a Prepayment or as to the portion of
any installment of a Tranche B Loan which is attributable to a
Prospective Prepayment, the amount of each scheduled installment of
such Loan which would have been required to be paid on a subsequent
Reduction Date but for such Prepayment or Prospective Prepayment shall
be for purposes of this Section 2.07 referred to as an "Eliminated
Payment"; PROVIDED that the "Eliminated Payments" associated with any
prepayment of a Tranche B Loan shall also include the reductions (if
any) in Eliminated Payments occurring under subsection (e)(iii) below
as a consequence of such prepayment.
(e) (i) Any prepayment of Prime Loans or Tranche B Loans
under subsection (c)(ii)(x) or subsection (c)(iii)(x) above shall be
effected by payment by the Borrower to the Agent for the accounts of
the relevant Lenders of the principal amount to be prepaid together
with accrued interest thereon to the date of prepayment and, in the
case of the portion of any Tranche B Loans prepaid pursuant to
subsection (c)(iii)(x) above, an amount equal to the excess, if any,
of (x) the net present value, at the time of such prepayment, of all
future scheduled payments of principal and interest with respect to
the corresponding Eliminated Payments, calculated as if such
prepayment were not being made and using a discount rate equal to the
yield, which shall be imputed by linear interpolation from the yields
(as most recently published in Federal Reserve Statistical Release
H.15 (519) or any successor publication thereto) of those United
States Treasury notes which have maturities as close as practicable to
the remaining weighted average life of such Eliminated Payments; OVER
(y) the amount of such prepayment.
(ii) If any portion of an installment of any Tranche B Loan
due on a Reduction Date pursuant to Section 2.04(b) is payable due to
a Prospective Prepayment (or portion thereof) described in subsection
(c)(iii)(y) above, the Borrower shall also pay to the Agent for the
account of the relevant Tranche B Lender an amount equal to the
excess, if any, of (x) the net present value, at the time of such
payment, of all future scheduled payments of principal and interest
with respect to the corresponding Eliminated Payments, calculated as
if such Prospective Prepayment (or portion thereof) had not occurred
and using a discount rate equal to the yield, which shall be imputed
by linear interpolation from the yields (as most recently published in
Federal Reserve Statistical Release H.15 (519) or any successor
publication thereto) of those United States Treasury notes which have
maturities as close as practicable to the remaining weighted average
life of such
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Eliminated Payments; OVER (y) such portion of such installment.
(iii) For purposes hereof, any reduction of a scheduled
installment of a Tranche B Loan under Section 2.04 attributable to a
prepayment of such Tranche B Loan under subsection (c)(iii)(x) shall
be applied at the time of such prepayment first to reduce the portion,
if any, of such installment which is then attributable to Prospective
Prepayments described in subsection (c)(iii)(y) above and shall also
reduce (on a pro rata basis, if there is more than one such Eliminated
Payment) the corresponding Eliminated Payments associated with such
portion of such installment.
SECTION 2.08. GENERAL PROVISIONS AS TO PAYMENTS. The
Borrower shall make each payment of principal of, and interest on, the
Loans hereunder not later than 11:00 A.M. (New York City time) on the
date when due, in Federal or other funds immediately available in New
York City, to the Agent at its address referred to in Section 9.01.
The Agent will wire transfer to each Lender, in accordance with the
most recent wire transfer instructions previously delivered by such
Lender to the Agent, the amount of each such payment received by the
Agent for the account of such Lender. If such payment is received by
the Agent at or before 11:00 A.M. (New York City time) on any date,
such wire transfer shall be made by the Agent on such date. If such
payment is received after 11:00 A.M. (New York City time), such wire
transfer shall be made by the Agent on the next succeeding Domestic
Business Day. Whenever any payment of principal of, or interest on,
the Domestic Loans or the Tranche B Loans shall be due on a day which
is not a Domestic Business Day, the date for payment thereof shall be
extended to the next succeeding Domestic Business Day. Whenever any
payment of principal of, or interest on, the Euro-Dollar Loans shall
be due on a day which is not a Euro-Dollar Business Day, the date for
payment thereof shall be extended to the next succeeding Euro-Dollar
Business Day unless such Euro-Dollar Business Day falls in another
calendar month, in which case the date for payment thereof shall be
the next preceding Euro-Dollar Business Day. If the date for any
payment of principal is extended by operation of law or otherwise,
interest thereon shall be payable for such extended time.
SECTION 2.09. FUNDING LOSSES. If the Borrower makes any
payment of principal with respect to any Fixed Rate Loan (pursuant to
Article VI or VIII or otherwise) on any day other than the last day of
the Interest Period applicable thereto, or the end of an applicable
period fixed pursuant to
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Section 2.05(d), or if the Borrower fails to borrow any Fixed Rate
Loans after notice has been given to any Lender in accordance with
Section 2.02(b) or fails to borrow Loans to be advanced under Section
2.12, the Borrower shall reimburse each Lender on demand for any
resulting loss or expense incurred by it (or by any existing or
prospective participant in the related Loan), including (without
limitation) any loss incurred in liquidating or employing deposits
from third parties, but excluding loss of margin for the period after
any such payment or failure to borrow, PROVIDED that such Lender shall
have delivered to the Borrower a certificate as to the amount of such
loss or expense, which certificate shall be conclusive in the absence
of manifest error.
SECTION 2.10. COMPUTATION OF INTEREST AND FEES. Interest on
Domestic Loans based on the Prime Rate shall be computed on the basis
of a year of 365 days (or 366 days in a leap year) and paid for the
actual number of days elapsed (including the first day but excluding
the last day). Interest on Domestic Loans based on the Adjusted CD
Rate and interest on Euro-Dollar Loans shall be computed on the basis
of a year of 360 days and paid for the actual number of days elapsed,
calculated as to each Interest Period or period fixed pursuant to
Section 2.05(d) from and including the first day thereof to but
excluding the last day thereof. Interest on Tranche B Loans shall be
computed on the basis of a year of 360 days, consisting of 12 months
of 30 days each.
SECTION 2.11. REGULATION D COMPENSATION. Each Tranche A
Lender may require the Borrower to pay, contemporaneously with each
payment of interest on the Tranche A Loans, additional interest on the
Euro-Dollar Loans of such Tranche A Lender at a rate per annum equal
to the excess of (i)(A) the applicable London Interbank Offered Rate
divided by (B) one MINUS the Euro-Dollar Reserve Percentage over (ii)
the rate specified in clause (i)(A). Any Tranche A Lender wishing to
require payment of such additional interest (x) shall so notify the
Borrower and the Agent, in which case such additional interest on the
Euro-Dollar Loans of such Tranche A Lender shall be payable to such
Tranche A Lender at the place indicated in such notice with respect to
each Interest Period commencing at least five Domestic Business Days
after the giving of such notice and (y) shall notify the Borrower at
least five Domestic Business Days prior to each date on which interest
is payable on the Tranche A Loans of the amount then due it under this
Section.
SECTION 2.12. INCREASE OF AGGREGATE LOANS. (a) The
aggregate Commitments and Loans hereunder may from time to
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time after the first Borrowing be increased by the addition of a new
Lender and its commitment to this facility or by increasing the
Commitment of any existing Lender under this facility, in the manner
described in this Section.
(b) At any time that the Borrower desires to increase the
aggregate Commitments and Loans hereunder, it shall give notice
thereof to the Agent, and shall specify whether it wishes such
Commitments and Loans to be Tranche A Commitments and Loans or
Tranche B Commitments and Loans or some combination thereof. In the
case of any proposed increase in Tranche B Commitments and Loans
hereunder, the Borrower shall, in such notice, state the interest rate
per annum at which such Loans shall be made. The Agent shall promptly
advise the Lenders of any such notice it receives from the Borrower.
With respect to any proposed increase in Tranche A Commitments and
Loans hereunder, each existing Tranche A Lender shall, within ten
Domestic Business Days, advise the Agent as to whether it is willing
to provide its share of such increase pro rata in proportion to the
existing Commitments of the Tranche A Lenders. With respect to any
proposed increase in Tranche B Commitments and Loans hereunder, each
existing Tranche B Lender shall, within ten Domestic Business Days,
advise the Agent as to whether it is willing to provide its share of
such increase pro rata in proportion to the existing Commitments of
the Tranche B Lenders. If any existing Tranche A or Tranche B Lenders
hereunder are not willing to provide the full amounts of their shares
of any such increase in the Commitments and Loans hereunder, the
resulting shortfall shall be allocated among the remaining Tranche A
or Tranche B Lenders, as relevant, as determined by the Borrower and
the Agent, or the Borrower may designate one or more new Lenders,
satisfactory to the Agent, to provide one or more new Commitments and
Loans hereunder in the amount of such shortfall, and, in the case of
Tranche B Loans, at the rate of interest per annum specified in the
notice of the Borrower to the Agent described above.
(e) The increase in existing Commitments or the addition of
Commitments of new Lenders hereunder shall be effected by execution of
an addendum to this Agreement as provided in Section 9.05.
Simultaneously with the execution of such an addendum, the Borrower
shall execute and deliver to the Agent a Euro-Dollar Note and a
Domestic Note for each Lender that is a new Tranche A Lender, or a
Tranche B Note for each Lender that is a Tranche B Lender making a new
Loan under this Section, in each case dated the date of such addendum,
and shall, in any case, execute and deliver such documents as the
Agent may reasonably request relating to the authorization
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for and validity of such addendum and, if relevant, such new Note or
Notes. If the Borrower shall have provided security under Section
5.08 or 5.11, the documents relating to such security shall be amended
as necessary or advisable to take account of the increased Commitments
and Loans hereunder.
(d) The Lender executing such addendum shall, not later
than 11:00 A.M. (New York City time) on the date specified in such
addendum, advance a Loan to the Borrower in an amount equal to, in the
case of a new Lender, its Commitment, or, in the case of an existing
Lender, the increase in its Commitment by making such amount
available, in Federal or other funds immediately available in New York
City, to the Agent at its address specified in or pursuant to Section
9.01. If such Loan is a Tranche A Loan, it shall be of the same type
(Prime, CD or Euro-Dollar) as the then-outstanding Tranche A Loans and
the Interest Period for such Tranche A Loan shall commence on such
date and end on the last day of the then current Interest Period for
the then-outstanding Tranche A Loans. Such Tranche A Loan shall
mature, and the principal amount thereof be due and payable, on the
last day of the Interest Period applicable thereto. If such Loan is a
Tranche B Loan, the principal thereof shall be payable and interest
thereon shall accrue and be payable as provided in Sections 2.04(b)
and 2.05(e).
(e) The borrowing of any Loan by the Borrower under this
Section shall constitute a representation and warranty by the Borrower
to all of the Lenders that:
(i) immediately after such borrowing, no Default shall have
occurred and be continuing; and
(ii) the fact that the representations and warranties of the
Borrower contained in this Agreement (except the representation
and warranty set forth in Section 4.04(d) as to any material
adverse change which has theretofore been disclosed in writing by
the Borrower to the Lenders) are true on and as of the date of
such borrowing.
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ARTICLE III
CONDITIONS TO BORROWINGS
SECTION 3.01. FIRST BORROWING. The obligation of each
Lender to make a Loan on the occasion of the first Borrowing is
subject to the satisfaction of the following conditions:
(a) receipt by the Agent of notice of such Borrowing as
required by Section 2.02;
(b) the fact that, immediately after such Borrowing, no
Default shall have occurred and be continuing;
(c) the fact that the representations and warranties of the
Borrower contained in this Agreement shall be true on and as of
the date of such Borrowing;
(d) receipt by the Agent for the account of each Lender of
a duly executed Note or Notes, each dated on or before the date
of such Borrowing, complying with the provisions of Section 2.03;
(e) receipt by the Agent of opinions of counsel acceptable
to it or policies of title insurance acceptable to it covering
not less than 85% (in Relative Value) of the Petroleum Properties
acquired by the Borrower pursuant to the Petro-Lewis Acquisition;
(f) receipt by the Agent of the duly executed SFNR
Undertaking dated the date of the first Borrowing;
(g) receipt by the Agent of an opinion of Jeffrey R.
Moreland, associate general counsel of Santa Fe Southern Pacific
and counsel for the Borrower and its affiliates in connection
herewith, substantially in the form of Exhibit D hereto and
covering such additional matters relating to the transactions
contemplated hereby as the Required Lenders may reasonably
request;
(h) receipt by the Agent of an opinion of Davis Polk &
Wardwell, special counsel for the
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Lenders and the Agent, substantially in the form of Exhibit E
hereto and covering such additional matters relating to the
transactions contemplated hereby as the Required Lenders may
reasonably request;
(i) receipt by the Agent of a certificate signed by the
president or chief financial officer of the Managing General
Partner of the Borrower, to the effect set forth in clauses (b)
and (c) above and certifying as to the correctness of the
Coverage Report delivered in connection with the first Borrowing
pursuant to Section 5.01(i); and
(j) receipt by the Agent of all documents it may reasonably
request relating to the existence of the Borrower and the
Managing General Partner, the authority for and the validity of
this Agreement, the Notes, the Mortgages and the SFNR Undertaking
and any other matters relevant hereto, all in form and substance
satisfactory to the Agent.
The certificate and opinions referred to in clauses (g), (h) and (i)
above shall be dated the date of the first Borrowing.
SECTION 3.02. SUBSEQUENT BORROWINGS. The obligation of
each Tranche A Lender to make a Loan on the occasion of each Borrowing
subsequent to the first Borrowing is subject to the satisfaction of
the following conditions:
(a) receipt by the Agent of notice of such Borrowing as
required by Section 2.02;
(b) the fact that, immediately after such Borrowing, no
Default shall have occurred and be continuing; and
(c) the fact that the representations and warranties of the
Borrower contained in this Agreement (except the representation
and warranty set forth in Section 4.04(d) as to any material
adverse change which has theretofore been disclosed in writing by
the Borrower to the Lenders) shall be true on and as of the date
of such Borrowing.
Each Borrowing hereunder shall be deemed to be a representation and
warranty by the Borrower on the date of such Borrowing as to the facts
specified in clauses (b) and (c) of this Section.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. EXISTENCE AND POWER. The Borrower is a limited
partnership duly organized, validly existing and in good standing
under the laws of the State of Delaware, including the Delaware
Revised Uniform Limited Partnership Act, and in each other
jurisdiction where the ownership of its properties or the conduct of
its business requires it so to be, and has authority under said laws
and its Partnership Agreement and all powers and all material
governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted.
SECTION 4.02. PARTNERSHIP AND GOVERNMENTAL AUTHORIZATION;
CONTRAVENTION. The execution, delivery and performance by the
Borrower of this Agreement, the Notes and the Mortgages are within the
Borrower's legal powers, have been duly authorized by all necessary
legal action, require no action by or in respect of, or filing with,
any governmental body, agency or official (except for the recordation
of the Mortgages and the filing of the related financing statements)
and do not contravene, or constitute a default under, any provision of
applicable law or regulation or of either Partnership Agreement or of
any other agreement, judgment, injunction, order, decree or other
instrument binding upon the Borrower or Energy Partners or result in
the creation or imposition of any Lien on any asset of the Borrower or
Energy Partners (except as contemplated by Sections 5.08 and 5.11).
SECTION 4.03. BINDING EFFECT. This Agreement constitutes a
valid and binding agreement of the Borrower; the Notes, when executed
and delivered in accordance with this Agreement, will constitute valid
and binding obligations of the Borrower; and the Mortgages, when
executed in accordance with this Agreement, will constitute valid and
binding agreements of the Borrower.
SECTION 4.04. FULL DISCLOSURE; FINANCIAL INFORMATION. (a) The
information and other documents furnished by or on behalf of the
Borrower or any of its Affiliates to the Lenders in connection with
the transactions contemplated hereby do not and will not, as of the
date thereof, contain
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any untrue statement of material fact or omit to state a material
fact necessary in order to make the statements contained therein not
misleading.
(b) The balance sheet of Energy Partners as of December 31, 1986
and the related statements of income, changes in financial position
and changes in partners' capital for the fiscal year then ended,
reported on by Price Waterhouse and set forth in the 1986 annual
report on Form 10-K for Energy Partners, as filed with the Securities
and Exchange Commission, a copy of which has been delivered to each of
the Lenders, fairly present, in conformity with generally accepted
accounting principles, the financial position of Energy Partners as of
such date and its results of operations and changes in financial
position for such fiscal year.
(c) The unaudited balance sheet of Energy Partners as of March
31, 1987 and the related unaudited statements of income, changes in
financial position and changes in partners' capital for the three
months then ended, set forth in the quarterly report of Energy
Partners for the fiscal quarter ended March 31, 1987 as filed with the
Securities and Exchange Commission on Form 10-Q, a copy of which has
been delivered to each of the Lenders, fairly present, in conformity
with generally accepted accounting principles applied on a basis
consistent with the financial statements referred to in paragraph (b)
of this Section, the financial position of Energy Partners as of such
date and its results of operations and changes in financial position
for such three month period (subject to normal year-end adjustments).
(d) Since December 31, 1986 there has been no material adverse
change in the business, properties, financial position, results of
operations or current operating environment of Energy Partners or of
the Borrower.
SECTION 4.05. LITIGATION. There is no action, suit or
proceeding pending against, or to the knowledge of the Borrower
threatened against or affecting, the Borrower or any of its Affiliates
before any court or arbitrator or any governmental body, agency or
official in which there is a reasonable possibility of an adverse
decision which could materially adversely affect the Borrower's
ability to perform its obligations under this Agreement or which in
any manner draws into question the validity of this Agreement, the
Notes or the Mortgages.
SECTION 4.06. COMPLIANCE WITH ERISA. (a) Each ERISA
Obligor has fulfilled in all material respects its
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obligations under the minimum funding standards of ERISA and the Code
with respect to each Plan and is in compliance in all material
respects with the presently applicable provisions of ERISA and the
Code, and with respect to each Plan there is not outstanding any
material liability currently payable (other than premium payments
outstanding for 60 days or less) to the PBGC or a Plan under Title IV
of ERISA.
(b) As of the date of this Agreement, the sum, for all Excluded
Plans, of (i) the present value of all benefits accrued under each
Excluded Plan determined on a termination basis using the assumptions
established by the PBGC as in effect on such date minus (ii) the
assets of such Excluded Plan (excluding for these purposes any accrued
but unpaid contributions) does not exceed $22,000,000.
SECTION 4.07. TAXES.
(a) From and including the date of this Agreement to and
including the date of the first Borrowing, the Borrower represents
that neither the Borrower nor Energy Partners is an association
taxable as a corporation within the meaning of the Code, and neither
the income of the Borrower nor the income of Energy Partners is
subject to Federal income tax at the partnership level under the Code.
(b) The Borrower and Energy Partners have filed all United
States Federal income tax information returns and all other material
tax returns which are required to be filed by them and have paid all
taxes due pursuant to such returns or pursuant to any assessment
received by either of them (other than such taxes as are being
contested in good faith in appropriate proceedings). The charges,
accruals and reserves on the books of the Borrower and on the books of
Energy Partners in respect of taxes or other governmental charges are,
in the opinion of the Borrower, adequate.
SECTION 4.08. TITLE TO ASSETS. The Borrower has, to the best of
its knowledge, valid and defensible title to the Petroleum Properties,
subject to no Liens other than Liens permitted under Section 5.10, and
the Borrower's net revenue interests in the various Petroleum
Properties are as shown in the Most Recent Engineering Report. Except
for instances which do not in the aggregate materially detract from
the value of such leases or materially impair the use thereof in the
operation of its business, the Borrower enjoys peaceful, lawful and
undisturbed possession under all leases included in the Petroleum
Properties and such leases are valid, subsisting, in full force and
effect, and are not subject to any
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terms which are not usual and customary in similar transactions
negotiated on an arms-length basis.
SECTION 4.09. NOT AN INVESTMENT COMPANY. The Borrower is not an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Lender has any
Commitment hereunder or any amount payable under any Note remains
unpaid:
SECTION 5.01. INFORMATION. The Borrower will deliver to each of
the Lenders:
(a) as soon as available and in any event within 120 days after
the end of each fiscal year of Energy Partners, a balance sheet of
Energy Partners as of the end of such fiscal year and the related
statements of income, changes in financial position and changes in
partners' capital for such fiscal year, setting forth in each case in
comparative form the figures for the previous fiscal year, all
reported on in a manner acceptable to the Securities and Exchange
Commission by Price Waterhouse or other independent public accountants
of nationally recognized standing;
(b) as soon as available and in any event within 60 days after
the end of each of the first three quarters of each fiscal year of the
Borrower, a balance sheet of Energy Partners as of the end of such
quarter and the related statements of income, changes in financial
position and changes in partners' capital for such quarter and for the
portion of the fiscal year of Energy Partners ended at the end of such
quarter, setting forth in each case in comparative form the figures
for the corresponding quarter and the corresponding portion of the
previous fiscal year of Energy Partners, all certified (subject to
normal year-end adjustments) as to fairness of presentation, generally
accepted accounting principles and consistency by the chief
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financial officer or chief accounting officer of the Managing General
Partner;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of
the chief financial officer or chief accounting officer of the
Managing General Partner (i) setting forth (x) the Coverage Ratios as
of the date of such financial statements, and (y) if the
Life-of-Reserves Coverage Ratio does not exceed 2.05, in reasonable
detail the calculations required to establish the Coverage Ratios and
(ii) stating whether any Default exists on the date of such
certificate and, if any Default then exists, setting forth the details
thereof and the action which the Managing General Partner and the
Borrower are taking or propose to take with respect thereto;
(d) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements
whether anything has come to their attention to cause them to believe
that any Default existed on the date of such statements;
(e) forthwith upon the occurrence of any Default, a certificate
of the chief financial officer or chief accounting officer of the
Managing General Partner setting forth the details thereof and the
action which the Managing General Partner and the Borrower are taking
or propose to take with respect thereto;
(f) promptly upon the mailing thereof to the limited partners of
Energy Partners generally, copies of all financial statements, reports
(other than reports on Form K-1 under the Code and related schedules
thereto) and proxy statements so mailed other than those provided or
to be provided under subsection (a) or (b) above;
(g) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration
statements on Form S-8 or its equivalent) and reports on Forms 10-K,
10-Q and 8-K (or their equivalents) which the Energy Partners shall
have filed with the Securities
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and Exchange Commission other than those provided or to be provided
under Subsection (a) or (b) above;
(h) if and when any ERISA Obligor (i) gives or is required to
give notice to the PBGC of any "reportable event" (as defined in
Section 4043 of ERISA) with respect to any Plan which might constitute
grounds for a termination of such Plan under Title IV of ERISA, or
knows that the plan administrator of any Plan has given or is required
to give notice of any such reportable event, a copy of the notice of
such reportable event given or required to be given to the PBGC; (ii)
receives notice of complete or partial withdrawal liability under
Title IV of ERISA, a copy of such notice; or (iii) receives notice
from the PBGC under Title IV of ERISA of an intent to terminate or
appoint a trustee to administer any Plan, a copy of such notice;
(i)(x) on or prior to April 1 of each year, an Engineering
Report as of January 1 of such year; (y) unless the Required Lenders
waive such requirement (consent to any request for such waiver not to
be unreasonably denied), on or prior to September 15 of each year, an
update of such Engineering Report as of July 1 of such year, prepared
by the Borrower or an Independent Petroleum Engineer, which shall
reflect (1) the acquisition of Recognized Proved Reserves covered in
supplements, prepared by an Independent Petroleum Engineer, delivered
to the Lenders since delivery of such Engineering Report, (2) six
months' reduction in Recognized Proved Reserves (equal to one-half of
such year's production as shown in the Engineering Report as of
January 1 of such year), (3) any significant adverse developments in
production or reserves since January 1 of such year, (4) changes in
Approved Assumptions and (5) any disposition of Recognized Proved
Reserves; but shall not otherwise, unless prepared by an Independent
Petroleum Engineer, reflect any acquisition of Recognized Proved
Reserves or any reassessment of the matters covered in such
Engineering Report; and (z) on the date of, and giving effect to, the
first Borrowing, and on or prior to May 1 and October 15 of each year,
a Coverage Report as of the date of such Coverage Report;
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(j) forthwith upon the occurrence of any Triggering Event or of
an event described in clause II of Section 5.11(a), or any change in
the ownership of Energy Partners which results in a change in the
applicable interest rates hereunder, a certificate of the Managing
General Partner setting forth the details thereof; and
(k) from time to time such additional information regarding the
financial position or business of the Borrower or Energy Partners or
the General Partners of the Borrower as the Agent, at the request of
any Lender, may reasonably request.
SECTION 5.02. PAYMENT OF OBLIGATIONS. The Borrower will pay and
discharge at or before maturity, all its material obligations and
liabilities, including, without limitation, tax liabilities, except
where the same may be contested in good faith by appropriate
proceedings, and will maintain, in accordance with generally accepted
accounting principles, appropriate reserves for the accrual of any of
the same.
SECTION 5.03. MAINTENANCE OF PROPERTY; INSURANCE. (a) The
Borrower will keep all property useful and necessary in its business
in good working order and condition.
(b) The Borrower will maintain or cause to be maintained for its
benefit, with financially sound and reputable insurance companies,
property, casualty and liability insurance with respect to all its
properties and operations whether owned or leased in at least such
amounts and against at least such risks as is customary for Persons
engaged in the same or a similar business in similar locations. The
Borrower will furnish to the Agent from time to time, if so requested,
full information as to the insurance carried.
SECTION 5.04. CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE:
CHANGE OF NAME; FISCAL YEAR. The Borrower will preserve, renew and
keep in full force and effect its existence and its rights, privileges
and franchises necessary or desirable in the normal conduct of
business. Without limiting the generality of the foregoing, it shall
be the case that Energy Partners will have no assets, operations or
business activities except for its ownership of 99% of the partnership
interests in the Borrower (and except for such ownership of assets,
operations and business activities as are incidental thereto) and will
continue to operate, and to own its oil and gas properties, through
the Borrower and that the Borrower
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shall continue to be engaged primarily in the exploration for, and
acquisition, production and marketing of, Hydrocarbons on behalf of
Energy Partners. The Borrower will cause any Petroleum Properties
operated by it or by an Affiliate, and will use its best efforts to
cause any Petroleum Properties operated by any other Person, to be
operated prudently in accordance with good oil field practice. The
Borrower will cause Hydrocarbons produced from the Petroleum
Properties to be marketed in a commercially reasonable manner at
commercially reasonable prices. The Borrower will have no
Subsidiaries (i) except with the prior written consent of the Required
Lenders, such consent not to be unreasonably withheld provided that
the provisions of this Agreement are amended to take account thereof
as deemed appropriate by the Required Lenders and (ii) except for
Subsidiaries which may exist on a transitory basis not to exceed 90
days in the course of an acquisition by the Borrower of oil and gas
properties by way of a purchase of stock or partnership interests.
The Borrower shall not change its name without 30 days' prior written
notice to the Agent, and the Agent shall promptly notify each Lender
thereof. The fiscal year of the Borrower and Energy Partners shall at
all times be the calendar year.
SECTION 5.05. COMPLIANCE WITH LAWS. The Borrower will comply in
all material respects with all applicable laws, ordinances, rules,
regulations, and requirements of governmental authorities except where
the necessity of compliance therewith is contested in good faith by
appropriate proceedings.
SECTION 5.06. INSPECTION OF PROPERTY, BOOKS AND RECORDS. The
Borrower will keep proper books of record and account of all dealings
and transactions in relation to its business and activities; and will
permit representatives of any Lender to visit and inspect any of its
properties, to examine and make abstracts from any of its books and
records and to discuss its affairs, finances and accounts with its
officers and independent public accountants, all at such reasonable
times and as often as may reasonably be desired, it being understood
that the foregoing shall be at the expense of such Lender and, in the
case of visits and inspections of oil and gas properties, at such
Lender's risk.
SECTION 5.07. DEBT. The Borrower shall not incur any Debt on or
after the date of this Agreement unless, immediately after such
incurrence of Debt, (i) no Default shall have occurred and be
continuing and (ii) the Life-of Reserves Coverage Ratio is equal to or
greater than 1.75 and the Annual Coverage Ratio is equal to or greater
than 1.20.
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Furthermore, the Borrower shall not incur any Debt after a Triggering
Event, or an event described in clause (II) or (III) of Section
5.11(a), has occurred until it has complied with Section 5.11(a) or
such compliance is, pursuant to a waiver granted under Section 5.11(b)
or pursuant to the provisions of Section 5.11(c), no longer required.
For purposes of this Section, a Rollover shall not be deemed an
incurrence of Debt.
SECTION 5.08. COVERAGE RATIOS; SECURITY (a) If the
Life-of-Reserves Coverage Ratio set forth in any certificate delivered
pursuant to Section 5.01(c) or Coverage Report delivered pursuant to
Section 5.01(i)(z) is less than 1.75, or if the Annual Coverage Ratio
set forth in such certificate or Coverage Report is less than 1.20,
then, within 60 days of the date of such report, the Borrower shall
(i) reduce Debt, (ii) in accordance with Section 2.07(c), adjust the
amounts of installments of Tranche B Loans under Section 2.04(b) and
the amounts of mandatory reductions of Commitments under Section
2.06(c) so that amounts scheduled to be paid under such Sections are
reduced for later Reduction Dates and increased (by an equal amount in
aggregate) for earlier Reduction Dates or (iii) acquire additional
Recognized Proved Reserves (acceptable to the Required Lenders and
included in a supplement, prepared by an Independent Petroleum
Engineer and delivered to the Lenders within such 60-day period, to
the Most Recent Engineering Report) such that, based on a new Coverage
Report delivered to the Lenders within such 60-day period, the
Life-of-Reserves Coverage Ratio is equal to or greater than 1.75 and
the Annual Coverage Ratio is equal to or greater than 1.20; PROVIDED
that, if a Triggering Event, or an event described in clause (II) or
(III) of Section 5.11(a), has occurred, the Life-of-Reserves Coverage
Ratio shall not on any day be less than 1.90 unless the Borrower has
complied with Section 5.11(a) or such compliance is, pursuant to a
waiver granted under Section 5.11(b) or pursuant to the provisions of
Section 5.11(c), no longer required.
(b) If, on any day, the Life-of-Reserves Coverage Ratio is less
than the Collateral Threshold on such day, the Borrower shall, not
later than 60 days thereafter, either (i) have delivered to the Agent
evidence satisfactory to the Agent (which shall include opinions of
counsel) that Mortgages have been executed and recorded as necessary
to perfect for the benefit of the Lenders liens having first priority
(except for Permitted Liens), securing payment of principal of and
interest on the Notes and all other amounts payable by the Borrower
under this Agreement and covering the lesser of (x) the Lenders' Pro
Rata Share of 80% (in Relative Value) of
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the Petroleum Properties not subject to Liens described in Section
5.10(a) and (y) such Petroleum Properties (l) the Cash Flow Available
for Debt Service from which for the period of twenty fiscal years
commencing with the fiscal year in which the date of determination
occurs equals or exceeds (2) 190% of the sum of the aggregate
outstanding principal amount of the Loans and interest scheduled to
accrue on the Loans (using the interest rates for the Loans as set
forth in the most recent Approved Assumptions) or (ii) reduce Debt or
acquire additional Recognized Proved Reserves (acceptable to the
Required Lenders and included in a supplement, prepared by an
Independent Petroleum Engineer and delivered to the Lenders within
such 60-day period, to the then Most Recent Engineering Report) such
that, based on a new Coverage Report delivered to the Lenders within
such 60-day period, the Life-of-Reserves Coverage Ratio is equal to or
greater than the Collateral Threshold; PROVIDED that if the
Life-of-Reserves Coverage Ratio, after giving effect to any incurrence
of Debt, Restricted Payment or sale or other disposition of assets
(including any exchange of Petroleum Properties for other oil and gas
properties) by the Borrower, would be less than the Collateral
Threshold, the Borrower shall, as a precondition to such incurrence of
Debt, Restricted Payment or sale (or exchange) or other disposition of
assets, comply with clause (b)(i) above.
(c) If the Borrower provides security pursuant to clause (b)(i)
above, it shall at all times thereafter maintain a perfected first
priority (except as aforesaid) lien for the benefit of the Lenders
covering the lesser of (l) the Lenders' Pro Rata Share (as calculated
from time to time) of 80% (in Relative Value) of the Petroleum
Properties not subject to Liens described in Section 5.10(a) and (2)
such Petroleum Properties (x) the Cash Flow Available for Debt Service
from which for the period of twenty fiscal years commencing with the
fiscal year in which the date of determination occurs equals or
exceeds (y) 190% of the sum of the aggregate outstanding principal
amount of the Loans and interest scheduled to accrue on the Loans
(using the interest rates for the Loans as set forth in the most
recent Approved Assumptions).
(d) The "Pro Rata Share" of any holder of any Debt of the
Borrower (other than Debt of the Borrower Guaranteed by another
Person, Subordinated Debt, Debt secured by any Lien on any asset of
the Borrower pursuant to Section 5.10(a) or (e), or Debt incurred in
violation of this Agreement) at any time is the then outstanding
principal amount of such Debt as a percentage of the then outstanding
total principal amount of the Borrower's Debt other than (w) Debt of
the Borrower
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Guaranteed by another Person, (x) Subordinated Debt, (y) Debt secured
by a Lien on any asset of the Borrower pursuant to Section 5.10(a) or
(e) and (z) Debt incurred in violation of this Agreement; and the
"Collateral Threshold" is, if Santa Fe Southern Pacific and its
Wholly-Owned Subsidiaries' aggregate ownership of limited partnership
units of Energy Partners is, as a percentage of total outstanding
limited partnership units of Energy Partners, (i) greater than or
equal to 50%, 1.90, (ii) less than 50% but greater than or equal to
25%, 2.15, or (iii) less than 25%, 2.65.
SECTION 5.09. RESTRICTED PAYMENTS. The Borrower will not
declare or make any Restricted Payments if (a) after giving effect to
such Restricted Payment, a Default shall have occurred and be
continuing, or (b) Santa Fe Southern Pacific and its Wholly-Owned
Subsidiaries own in aggregate, less than 50% of the outstanding
limited partnership units of Energy Partners and the Life-of-Reserves
Ratio is, after giving effect to such Restricted Payment, less than
2.05. Furthermore, the Borrower shall not, after a Triggering Event,
or an event described in clause (II) or (III) of Section 5.11(a), has
occurred, make any Restricted Payment until it has complied with
Section 5.11(a) or such compliance is, pursuant to a waiver granted
under Section 5.11(b) or pursuant to Section 5.11(c), no longer
required.
SECTION 5.10. NEGATIVE PLEDGE. The Borrower will not create,
assume or suffer to exist any Lien on any asset now owned or hereafter
acquired by it, except:
(a) any Lien existing on any oil and gas interest, property
or prospect acquired by the Borrower which Lien was in existence
prior to such acquisition and was not created in contemplation of
such acquisition; PROVIDED that no more than one-third (in
Relative Value) of the Petroleum Properties shall at any time be
subject to such Liens;
(b) Permitted Liens;
(c) (i) Liens securing the Loans and any other obligations
of the Borrower under this Agreement and (ii) so long as such
Liens described in clause (i) exist, Liens on Petroleum
Properties securing other Debt of the Borrower (other than Debt
of the Borrower Guaranteed by another Person, Subordinated Debt,
Debt secured by any Lien on any asset of the Borrower pursuant to
Section 5.10(a) or (e), or Debt incurred in violation of this
Agreement); PROVIDED
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that the Relative Value of such Petroleum Properties, in relation
to all Petroleum Properties subject to Liens described in this
clause (c), does not exceed the Pro Rata Share of the holders of
such other Debt;
(d) any Lien arising pursuant to any order of attachment,
distraint or similar legal process arising in connection with
court proceedings so long as the execution or other enforcement
thereof is effectively stayed and the claims secured thereby are
being contested in good faith by appropriate proceedings; and
(e) Liens on assets which do not (directly or indirectly)
constitute oil and gas interests, properties or prospects,
PROVIDED that aggregate principal amount of Debt secured thereby
does not at any time exceed $10,000,000.
SECTION 5.11. PROVISION OF SECURITY UPON TRIGGERING EVENT.
(a) Subject to the provisions of subsection (c) below, if (I) a
Triggering Event shall have occurred or (II) there shall be any change
in the identity of the Managing General Partner or of the Special
General Partner of either of the Borrower or Energy Partners or (III)
an event described in the definition of "Triggering Event" (for these
purposes replacing "Santa Fe Energy" whenever it occurs with "Santa Fe
Natural Resources") shall have occurred, the Borrower shall, not later
than 60 days after such event, (if it has not theretofore provided
security pursuant to Section 5.08(a) or is not at such time
maintaining such security in accordance with Section 5.08(c)) have
delivered to the Agent evidence satisfactory to the Agent (which shall
include opinions of counsel) that Mortgages have been executed and
recorded as necessary to perfect for the benefit of the Lenders liens
having first priority (except for Permitted Liens), securing payment
of principal of and interest on the Notes and all other amounts
payable by the Borrower under this Agreement and covering the lesser
of (l) the Lenders' Pro Rata Share of 80% (in Relative Value) of the
Petroleum Properties not subject to Liens described in Section 5.lO(a)
and (2) such Petroleum Properties (x) the Cash Flow Available for Debt
Service from which for the period of twenty fiscal years commencing
with the fiscal year in which the date of determination occurs equals
or exceeds (y) 190% of the aggregate outstanding principal amount of
the Loans.
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(b) The Borrower shall, if required to provide security pursuant
to subsection (a) above, at all times there after (unless the Required
Lenders waive such requirement, the consent of the Lenders to a
request for such waiver not to be unreasonably withheld in light of,
among other things, the considerations identified in clause (ii) of
subsection (c) below) maintain a perfected first priority (except as
aforesaid) lien for the benefit of the Lenders covering the lesser of
(1) the Lenders' Pro Rata Share (as calculated from time to time) of
80% (in Relative Value) of the Petroleum Properties not subject to
Liens described in Section 5.10(a) and (2) such Petroleum Properties
(x) the Cash Flow Available for Debt Service from which for the period
of twenty fiscal years commencing with the fiscal year in which the
date of determination occurs equals or exceeds (y) 190% of the
aggregate outstanding principal amount of the Loans.
(c) The Borrower need not comply with the provisions of
subsection (a) above, if, within the 60-day period referred to
therein, (i) in the case of a Triggering Event occurring while Santa
Fe Pacific Exploration is the Managing General Partner, a new board of
directors of Santa Fe Pacific Exploration is elected which is
comprised entirely of persons who are not employees, officers,
directors or affiliates of Santa Fe Natural Resources or of any
affiliate of Santa Fe Natural Resources (other than Santa Fe Pacific
Exploration) and (ii) in any case, the Required Lenders have not
determined, taking into account the composition of the board of
directors of the Managing General Partner, that such event may result
in a change of management policy that may adversely affect the
interests of the Lenders. Each Lender agrees to respond to the Agent
with respect to any request for a determination under clause (ii)
above within five Domestic Business Days of such Lender's receipt of
such request.
SECTION 5.12. MERGER; SALE OR ABANDONMENT OF ASSETS: RELEASE OF
COLLATERAL. (a) The Borrower will not merge or consolidate with any
other Person unless the surviving Person is the Borrower or is a
Person directly or indirectly controlling, controlled by or under
common control with Santa Fe Southern Pacific (the word "control"
having for purposes hereof the meaning assigned thereto in the
definition of Affiliate) and unless, after giving effect thereto, no
Default shall have occurred and be continuing. The Borrower will not
sell, assign, lease or otherwise transfer or abandon any Petroleum
Properties or any proceeds thereof or rights with respect thereto
without the prior written consent of the Required Lenders except that
(i) the Borrower may sell Hydrocarbons after severance in the ordinary
course of its
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business; (ii) the Borrower may sell, in any period of twelve months,
Petroleum Properties having an aggregate fair market value not in
excess of $25,000,000, PROVIDED that (A) the aggregate fair market
value of all Petroleum Properties sold pursuant to this clause (ii)
during the term of this Agreement shall not exceed $50,000,000 and (B)
no sale of Petroleum Properties may be made under this clause (ii) if,
after giving effect to such sale and the use of proceeds thereof,
(1) a Default would exist, or (2) the Life-of-Reserves Coverage Ratio
would be less than 1.75 or the Annual Coverage Ratio would be less
than 1.20; (iii) the Borrower may exchange any Petroleum Properties
for any other oil and gas properties having an equivalent fair market
value provided such exchange is otherwise permitted by this Agreement
and PROVIDED that, after giving effect thereto, (x) no Default would
exist, and (y) the Life-of-Reserves Coverage Ratio would equal or
exceed 1.75 and the Annual Coverage Ratio would equal or exceed 1.20;
(iv) the Borrower may sell, lease or otherwise transfer (through
farm-out or otherwise) any oil and gas property (or any indirect
investment in oil and gas property) if such property contains no
Recognized Proved Reserves; and (v) the Borrower may abandon any oil
and gas property which the Managing General Partner has determined in
good faith (and, if such property consists of one or more line items
in the Most Recent Engineering Report, so certified to the Agent) is
incapable of producing Hydrocarbons at a level sufficient to produce
gross revenues in excess of the sum of associated royalties, operating
costs and windfall profits, production, ad valorem, severance and
income taxes.
(b) If, at any time, the Borrower is required at such time
pursuant to Sections 5.08(c) and/or 5.11(b) to maintain security
theretofore provided under Sections 5.08(b) and/or 5.11(a), the Agent
shall, nevertheless, upon the request of the Borrower, release any
Mortgage as to any Petroleum Properties, if after giving effect to
such release, (x) no Default shall have occurred and be continuing,
(y) the Life-of-Reserves Coverage Ratio equals or exceeds 1.75 and the
Annual Coverage Ratio equals or exceeds 1.20, and (z) the Borrower
continues to be in compliance with Sections 5.08(c) and/or 5.11(b), as
relevant.
SECTION 5.13. USE OF PROCEEDS. The proceeds of the Loans made
under this Agreement will be used by the Borrower to refinance
short-term debt and for general corporate purposes. None of such
proceeds will be used, directly or indirectly, for the purpose,
whether immediate, incidental or ultimate, of purchasing or carrying
any "margin stock" within the meaning of Regulation G or Regulation U.
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ARTICLE VI
DEFAULTS
SECTION 6.01. EVENTS OF DEFAULT. If one or more of the
following events ("Events of Default") shall have occurred and be
continuing:
(a) the Borrower shall fail to pay when due any principal
of any Loan or shall fail to pay within 10 Domestic Business Days
of the due date thereof any interest on any Loan, any fees or any
other amount payable hereunder;
(b) the Borrower shall fail to observe or perform any
covenant contained in Sections 5.07 through 5.13 inclusive (other
than Section 5.08(c) or Section 5.11(b));
(c) the Borrower shall fail to observe or perform any
covenant or agreement contained in this Agreement (other than
those covered by clause (a) or (b) above) or in any Mortgage for
30 days after written notice thereof has been given to the
Borrower by the Agent at the request of any Lender;
(d) any representation, warranty, certification or
statement made by the Borrower or the Managing General Partner in
this Agreement or in any certificate, financial statement or
other document delivered pursuant to this Agreement shall prove
to have been incorrect in any material respect when made (or
deemed made);
(e) the Borrower shall fail to make any payment in respect
of any Debt (other than the Notes) when due or within any
applicable grace period if the aggregate principal amount of such
Debt exceeds $5,000,000;
(f) any event or condition shall occur which results in the
acceleration of the maturity of any Debt of the Borrower (other
than the Notes) or enables (or, with the giving of notice or
lapse of time or both, would enable) the holder of such Debt or
any Person acting on such holder's behalf to
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accelerate the maturity thereof if the aggregate principal amount of
such Debt exceeds $5,000,000;
(g) the Borrower shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part
of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it, or
shall make a general assignment for the benefit of creditors, or
shall fail generally to pay its debts as they become due, or
shall take any corporate action to authorize any of the
foregoing;
(h) an involuntary case or other proceeding shall be
commenced against the Borrower seeking liquidation,
reorganization or other relief with respect to it or its debt
under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it
or any substantial part of its property, and such involuntary
case or other proceeding shall remain undismissed and unstated
for a period of 60 days; or an order for relief shall be entered
against the Borrower under the federal bankruptcy laws as now or
hereafter in effect;
(i) any ERISA Obligor shall fail to pay when due an amount
or amounts aggregating in excess of $5,000,000 which it shall
have become liable to pay to the PBGC or to a Plan under Title IV
of ERISA; or notice of intent to terminate a Plan or Plans having
aggregate Unfunded Vested Liabilities in excess of $10,000,000
(collectively, a "Material Plan") shall be filed under Title IV
of ERISA by any ERISA Obligor, any plan administrator or any
combination of the foregoing; or the PBGC shall institute
proceedings under Title IV of ERISA to terminate or to cause a
trustee to be appointed to administer any Material Plan or a
proceeding shall be instituted by a fiduciary of any Material
Plan against any ERISA Obligor to enforce Section 515 of ERISA
and such proceeding shall not have been dismissed within 30
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days thereafter; or a condition shall exist by reason of which
the PBGC would be entitled to obtain a decree adjudicating that
any Material Plan must be terminated;
(j) judgments or orders for the payment of money in excess
of $10,000,000 in the aggregate shall be rendered against the
Borrower and such judgments or orders shall continue unsatisfied
and unstayed for a period of 30 days;
(k) Energy Partners shall fail to directly own at least 99%
of the partnership interests in the Borrower or shall cease to be
the sole limited partner of the Borrower; or the Borrower or
Energy Partners shall be dissolved; or either Partnership
Agreement shall be amended in any material respect without the
prior written consent of the Required Lenders or shall be
breached in any material respect; or any other agreement to which
the Borrower or Energy Partners is a party is breached and such
breach may reasonably be expected to have a material adverse
effect on the ability of the Borrower to perform its obligations
under this Agreement; or
(1) (i) any lien granted pursuant to Section 5.08 or 5.11
shall thereafter be determined to be invalid or unenforceable, or
not to constitute a first priority lien (subject only to
Permitted Liens) on the properties purported to be covered
thereby, and such event or condition shall continue, not cured or
waived, for seven days; provided that any such event or condition
affecting any lien shall not be an Event of Default if the
Borrower is in compliance with Section 5.08(c) and Section
5.11(b) without giving effect to such lien; or (ii) the Borrower
contests in writing the validity, enforceability or priority of
any lien granted and required to be maintained pursuant to
Section 5.08 or Section 5.11;
then, and in every such event, the Agent shall, if requested by the
Required Lenders, by notice to the Borrower terminate the Tranche A
Commitments and they shall thereupon terminate, and by notice to the
Borrower declare the Notes (together with accrued interest thereon) to
be, and the Notes shall thereupon become, immediately due and payable
without presentment, demand, protest or other notice of any kind, all
of which are
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hereby waived by the Borrower; PROVIDED that in the case of any of the
Events or Default specified in clause (g) or (h) above, without any
notice to the Borrower or any other act by the Agent or the Lenders,
the Commitments shall thereupon terminate and the Notes (together with
accrued interest thereon) shall become immediately due and payable
without presentment, demand, protest or other notice of any kind, all
of which are hereby waived by the Borrower.
SECTION 6.02. NOTICE OF DEFAULT. The Agent shall give notice to
the Borrower under Section 6.01(c) promptly upon being requested to do
so by any Lender and shall thereupon notify all the Lenders thereof.
SECTION 6.03. TRANCHE B LOANS DUE UPON FAILURE TO REBORROW
TRANCHE A LOANS. If, on the last day of any Interest Period, the
Borrower fails to borrow Tranche A Loans in accordance with the Notice
of Borrowing required to be given with respect to a Borrowing on such
day (due to a failure by the Borrower to deliver a Notice of
Borrowing, a failure to meet conditions precedent or otherwise), the
Tranche B Loans shall be due and payable on such day, without
presentment, demand, protest or notice of any kind, all of which are
hereby waived by the Borrower.
SECTION 6.04. ADDITIONAL AMOUNT PAYABLE WITH RESPECT TO TRANCHE
B LOANS. Together with any payment of any Tranche B Loan pursuant to
Section 6.01 or 6.03 above, the Borrower shall pay to the relevant
Tranche B Lender an amount equal to the excess, if any, of (x) all
future scheduled payments of principal and interest with respect to
the corresponding Eliminated Payments, calculated as if such payment
were not being made and using a discount rate equal to the yield,
which shall be imputed by linear interpolation from the yields (as
most recently published in Federal Reserve Statistical Release H.15
(519) or any successor publication thereto) of those United States
Treasury notes which have maturities as close as practicable to the
remaining weighted average life of such Eliminated Payments; over (y)
the amount of such payment. With respect to any such payment pursuant
to Section 6.01 or 6.03 above of a Tranche B Loan, the corresponding
"Eliminated Payments" shall mean all scheduled installments of such
Loan which would have been required to be paid on subsequent Reduction
Dates but for such payment pursuant to Section 6.01 or 6.03 above;
PROVIDED that the "Eliminated Payments" associated with any such
payments shall also include the Eliminated Payments (as defined in
Section 2.07(d) associated with any portion of any such scheduled
installment which is then
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attributable to Prospective Prepayments described in Section
2.07(c)(iii)(y).
ARTICLE VII
THE AGENT
SECTION 7.01. APPOINTMENT AND AUTHORIZATION. Each Lender
irrevocably appoints and authorizes the Agent to take such action as
agent on its behalf and to exercise such powers under this Agreement
and the Notes and the Mortgages as are delegated to the Agent by the
terms hereof or thereof, together with all such powers as are
reasonably incidental thereto. Each Lender, in particular, authorizes
the Agent to act as mortgagee or beneficiary and security agent under
each Mortgage for the benefit of the Lenders, subject to the
provisions of this Article VII.
SECTION 7.02. AGENT AND AFFILIATES. Morgan Guaranty Trust
Company of New York shall have the same rights and powers under this
Agreement as any other Lender and may exercise or refrain from
exercising the same as though it were not the Agent, and Morgan
Guaranty Trust Company of New York and its affiliates may accept
deposits from, lend money to, and generally engage in any kind of
business with the Borrower or any Affiliate of the Borrower as if it
were not the Agent hereunder.
SECTION 7.03. ACTION BY AGENT. The obligations of the Agent
hereunder are only those expressly set forth herein. Without limiting
the generality of the foregoing, the Agent shall not be required to
take any action with respect to any Default, except as expressly
provided in Article VI.
SECTION 7.04. CONSULTATION WITH EXPERTS. The Agent may consult
with legal counsel (who may, with the consent of the Required Lenders,
be counsel for the Borrower), independent public accountants and other
experts selected by it and shall not be liable for any action taken or
omitted to be taken by it in good faith in accordance with the advice
of such counsel, accountants or experts.
SECTION 7.05. LIABILITY OF AGENT. Neither the Agent nor any of
its directors, officers, agents, or employees shall be liable for any
action taken or not taken by it in connection herewith or under any
Mortgage (i) with the consent or at the request of the Required
Lenders or (ii) in the
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absence of its own gross negligence or willful misconduct. Neither the
Agent nor any of its directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into or verify
(i) any statement, warranty or representation made in connection with
this Agreement or any Mortgage or any borrowing hereunder; (ii) the
performance or observance of any of the covenants or agreements of the
Borrower; (iii) the satisfaction of any condition specified in Article
III or Section 2.12, except receipt of items required to be delivered
to the Agent; or (iv) the validity, effectiveness or genuineness of
this Agreement, the Notes, any Mortgage or any other instrument or
writing furnished in connection herewith or therewith. The Agent shall
not incur any liability by acting in reliance upon any notice,
consent, certificate, statement, or other writing (which may be a bank
wire, telex or similar writing) believed by it to be genuine or to be
signed by the proper party or parties.
SECTION 7.06. INDEMNIFICATION. Each Lender shall, ratably in
accordance with its outstanding Loans, indemnify the Agent (to the
extent not reimbursed by the Borrower) against any cost, expense
(including counsel fees and disbursements), claim, demand, action,
loss or liability (except such as result from the Agent's gross
negligence or willful misconduct) that the Agent may suffer or incur
in connection with this Agreement or any action taken or omitted by
the Agent hereunder.
SECTION 7.07. CREDIT DECISION. Each Lender acknowledges that it
has, independently and without reliance upon the Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into
this Agreement. Each Lender also acknowledges that it will,
independently and without reliance upon the Agent or any other sender,
and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in
taking or not taking any action under this Agreement.
SECTION 7.08. FEES. The Borrower shall pay to the Agent the
arrangement and commitment fee set forth in the letter from the Agent
to the Borrower dated June 8, 1987, and shall pay to the Agent on the
date of the first Borrowing and on each anniversary thereof, so long
as any Loan remains outstanding, an agency and engineering fee of
$30,000. -57-
ARTICLE VIII
CHANGE IN CIRCUMSTANCES AFFECTING TRANCHE A LENDERS
SECTION 8.01. BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR
UNFAIR. If on or prior to the first day of any Interest Period:
(a) the Agent is advised by the Reference Banks that
deposits in dollars (in the applicable amounts) are not being
offered to the Reference Banks in the relevant market for such
Interest Period, or
(b) Tranche A Lenders having 66 2/3% or more of the
aggregate amount of the Tranche A Commitments advise the Agent
that the Adjusted CD Rate or the London Interbank Offered Rate,
as the case may be, as determined by the Agent will not
adequately and fairly reflect the cost to such Tranche A Lenders
of funding their Fixed Rate Loans for such Interest Period,
the Agent shall forthwith give notice thereof to the Borrower and the
Tranche A Lenders, whereupon until the Agent notifies the Borrower
that the circumstances giving rise to such suspension no longer exist,
the obligations of the Tranche A Lenders to make CD Loans or
Euro-Dollar Loans, as the case may be, shall be suspended. Unless the
Borrower notifies the Agent at least two Domestic Business Days before
the date of any Fixed Rate Borrowing for which a Notice of Borrowing
has previously been given that it elects not to borrow on such date,
such Borrowing shall instead be made as a Prime Borrowing.
SECTION 8.02. ILLEGALITY. If, after the date of this Agreement,
the adoption of any applicable law, rule or regulation, or any change
therein, or any change in the interpretation or administration thereof
by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or
compliance by any Tranche A Lender (or its Euro-Dollar Lending Office)
with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency shall make it
unlawful or impossible for any Tranche A Lender (or its Euro-Dollar
Lending Office) to make, maintain or fund its Euro-Dollar Loans and
such Tranche A Lender shall so notify the Agent, the Agent shall
forthwith give notice thereof to
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the other Tranche A Lenders and the Borrower, whereupon until such
Tranche A Lender notifies the Borrower and the Agent that the
circumstances giving rise to such suspension no longer exist, the
obligation of such Tranche A Lender to make Euro-Dollar Loans shall be
suspended. Before giving any notice to the Agent pursuant to this
Section, such Tranche A Lender shall designate a different Euro-Dollar
Lending Office if such designation will avoid the need for giving such
notice and will not, in the judgment of such Tranche A Lender, be
otherwise materially disadvantageous to such Tranche A Lender. If such
Tranche A Lender shall determine that it may not lawfully continue to
maintain and fund any of its outstanding Euro-Dollar Loans to maturity
and shall so specify in such notice, the Borrower shall immediately
prepay in full the then outstanding principal amount of each such
Euro-Dollar Loan, together with accrued interest thereon. Concurrently
with prepaying each such Euro-Dollar Loan, the Borrower shall borrow a
Prime Loan in an equal principal amount from such Tranche A Lender (on
which interest and principal shall be payable contemporaneously with
the related Euro-Dollar Loans of the other Tranche A Lenders), and
such Tranche A Lender shall make such a Prime Loan.
SECTION 8.03. INCREASED COST AND REDUCED RETURN. (a) If after
the date hereof, the adoption of any applicable law, rule or
regulation, or any change therein, or any change in the interpretation
or administration thereof by any governmental authority, central bank
or comparable agency charged with the interpretation or administration
thereof, or compliance by any Tranche A Lender (or its Lending Office)
with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency:
(i) shall subject any Tranche A Lender (or its Lending
Office) to any tax, duty or other charge with respect to its
Fixed Rate Loans, its Notes or its obligation to make Fixed Rate
Loans, or shall change the basis of taxation of payments to any
Tranche A Lender (or its Lending Office) of the principal of or
interest on its Fixed Rate Loans or any other amounts due under
this Agreement in respect of its Fixed Rate Loans or its
obligation to make Fixed Rate Loans (except for changes with
respect to tax on net income or any tax computed by reference to
net income of such Tranche A Lender or its applicable Lending
Office imposed by the jurisdiction in which such Tranche A
Lender's principal executive office or applicable Lending Office
is located); or
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(ii) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement (including, without
limitation, any such requirement imposed by the Board of
Governors of the Federal Reserve System, but excluding (A) with
respect to any CD Loan any such requirement included in an
applicable Domestic Reserve Percentage and (B) with respect to
any Euro-Dollar Loan any such requirement for which such Tranche
A Lender is entitled to compensation during the relevant Interest
Period pursuant to Section 2.11) against assets of, deposits with
or for the account of, or credit extended by, any Tranche A
Lender (or its Lending Office) or shall impose on any Tranche A
Lender (or its Lending Office) or on the United States market for
certificates of deposit or the London interbank market any other
condition affecting its Fixed Rate Loans, its Notes or its
obligation to make Fixed Rate Loans;
and the result of any of the foregoing is to increase the cost to such
Tranche A Lender (or its Lending Office) of making or maintaining any
Fixed Rate Loan, or to reduce the amount of any sum received or
receivable by such Tranche A Lender (or its Lending Office) under this
Agreement or under its Notes with respect thereto, by an amount deemed
by such Tranche A Lender to be material, such Tranche A Lender shall
promptly after its determination of such occurrence give notice
thereof to the Agent (which shall promptly give notice to the
Borrower), and the Borrower shall pay to such Tranche A Lender from
time to time, within 30 days of demand, such amount as such Tranche A
Lender certifies to be the amount that will compensate it for such
increased costs, provided that the Borrower's obligation to pay such
Tranche A Lender shall be limited to the increased costs that are
attributable to the period of time commencing with the date 30 days
prior to the date on which such Tranche A Lender's notice is received
by the Borrower.
(b) If after the date hereof, any Tranche A Lender shall
have determined that the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or
any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance
by any Tranche A Lender (or its Lending Office) with any request
or directive regarding capital adequacy (whether or not having
the force of law)
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of any such authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on such
Tranche A Lender's capital as a consequence of its obligations
hereunder to a level below that which such Tranche A Lender could
have achieved but for such adoption, change or compliance (taking
into consideration such Tranche A Lender's policies with respect
to capital adequacy) by an amount deemed by such Tranche A Lender
to be material, such Tranche A Lender shall promptly after its
determination of such occurrence give notice thereof to the Agent
(which will promptly give notice to the Borrower), and the
Borrower shall pay to such Tranche A Lender from time to time,
within 30 days of demand, such amount as such Tranche A Lender
certifies to be the amount that will compensate it for such
reduction provided that the Borrower's obligation to pay such
Tranche A Lender shall be limited to the reduction that is
attributable to the period of time commencing with the date 30
days prior to the date on which such Tranche A Lender's notice is
received by the Borrower.
(c) Each Tranche A Lender will promptly notify the Borrower
and the Agent of any event of which it has knowledge, occurring
after the date hereof, which will entitle such Tranche A Lender
to compensation pursuant to this Section and will designate a
different Lending Office if such designation will avoid the need
for, or reduce the amount of, such compensation and will not, in
the judgment of such Tranche A Lender, be otherwise materially
disadvantageous to such Tranche A Lender. A certificate of any
Tranche A Lender claiming compensation under this Section and
setting forth the additional amount or amounts to be paid to it
hereunder shall be conclusive in the absence of manifest error.
In determining such amount, such Tranche A Lender may use any
reasonable averaging and attribution methods.
SECTION 8.04. PRIME LOANS SUBSTITUTED FOR AFFECTED FIXED RATE
LOANS. If (i) the obligation of any Tranche A Lender to make
Euro-Dollar Loans has been suspended pursuant to Section 8.02 or (ii)
any Tranche A Lender has demanded compensation under Section 8.03(a)
and the Borrower shall, by at least five Euro-Dollar Business Days'
prior notice to such Tranche A Lender through the Agent, have elected
that the provisions of this Section shall apply to such Tranche A
Lender, then, unless and until such Tranche A Lender notifies the
Borrower that the circumstances giving rise to such suspension or
demand for compensation no longer apply:
(a) all Loans which would otherwise be made by such Tranche
A Lender as CD Loans or Euro-Dollar
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Loans, as the case may be, shall be made instead as Prime Loans
(on which interest and principal shall be payable
contemporaneously with the related Fixed Rate Loans of the other
Tranche A Lenders), and
(b) after each of its CD Loans or Euro-Dollar Loans, as the
case may be, has been repaid, all payments of principal which
would otherwise be applied to repay such Fixed Rate Loans shall
be applied to repay its Prime Loans instead.
SECTION 8.05. SUBSTITUTION OF LENDER. If (i) the obligation of
any Tranche A Lender to make Euro-Dollar Loans has been suspended
pursuant to Section 8.02 or (ii) any Tranche A Lender has demanded
compensation under Section 8.03, the Borrower shall have the right,
with the assistance of the Agent, to seek a mutually satisfactory (to
the Borrower and the Agent) substitute lender or lenders (which may be
one or more of the Lenders) to purchase the Notes and assume the
Tranche A Commitment of such Tranche A Lender.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. NOTICES. All notices, requests and other
communications to any party hereunder shall be in writing (including
bank wire, telex, telecopy or similar writing) and shall be given to
such party at its address or telex or telecopy number set forth on the
signature pages hereof or such other address or telex or telecopy
number as such party may hereafter specify for the purpose by notice
to the Agent and the Borrower. Each such notice, request or other
communication shall be effective (i) if given by telex or telecopy,
when such telex or telecopy is transmitted to the telex or telecopy
number specified in this Section and, in the case of a telex, the
appropriate answerback is received, (ii) if given by mail, 72 hours
after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (iii) if given by any other
means, when delivered at the address specified in this Section;
PROVIDED that notices to the Agent under Article II and requests to
the Lenders under Section 5.11(c)(ii) shall not be effective until
received.
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SECTION 9.02. NO WAIVERS. No failure or delay by the Agent or
any Lender in exercising any right, power or privilege hereunder or
under any Note or any Mortgage shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative
and not exclusive of any rights or remedies provided by law.
SECTION 9.03. EXPENSES; DOCUMENTARY TAXES. The Borrower shall
pay (i) all reasonable out-of-pocket expenses of the Agent, including
reasonable fees and disbursements of special counsel for the Lenders
and the Agent, in connection with the preparation of this Agreement,
any waiver or consent hereunder or any amendment hereof or any Default
or alleged Default hereunder, (ii) all out-of-pocket expenses of the
Agent, including fees and disbursements of counsel for the Lenders and
the Agent, in connection with the preparation, execution, recordation,
or administration of any Mortgage and (iii) if an Event of Default
occurs, all out-of-pocket expenses incurred by the Agent or any
Lender, including fees and disbursements of counsel, in connection
with such Event of Default and collection and other enforcement
proceedings resulting therefrom. The Borrower shall indemnify each
Lender against any transfer taxes, recording taxes, documentary taxes,
assessments or charges made by any governmental authority by reason of
the execution and delivery of this Agreement or the Notes or of the
execution and recordation of any Mortgage.
SECTION 9.04. SHARING OF SET-OFFS. Each Lender agrees that if
it shall, by exercising any right of set-off or counterclaim or
otherwise, receive payment of a proportion of the aggregate amount of
principal and interest due with respect to any Note held by it which
is greater than the proportion received by any other Lender in respect
of the aggregate amount of principal and interest due with respect to
any Note held by such other Lender, the Lender receiving such
proportionately greater payment shall purchase such participations in
the Notes held by the other Lenders, and such other adjustments shall
be made, as may be required so that all such payments of principal and
interest with respect to the Notes held by the Lenders shall be shared
by the Lenders pro rata; PROVIDED that nothing in this Section shall
impair the right of any Lender to exercise any right of set-off or
counterclaim it may have and to apply the amount subject to such
exercise to the payment of indebtedness of the Borrower other than its
indebtedness under the Notes. The Borrower
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agrees, to the fullest extent it may effectively do so under
applicable law, that any holder of a participation in a Note, whether
or not acquired pursuant to the foregoing arrangements, may exercise
rights of set-off or counterclaim and other rights with respect to
such participation as fully as if such holder of a participation were
a direct creditor of the Borrower in the amount of such participation.
SECTION 9.05. AMENDMENTS AND WAIVERS. Any provision of this
Agreement or the Notes or the Mortgage may be amended or waived if,
but only if, such amendment or waiver is in writing and is signed by
the Borrower and the Required Lenders (and, if the rights or duties of
the Agent are affected thereby, by the Agent); PROVIDED that no such
amendment or waiver shall, unless signed by all the Lenders, (i)
increase the Commitment of any Lender or subject any Lender to any
additional obligation, except as contemplated by Section 2.12 and the
further PROVISO below, (ii) reduce the principal of or rate of
interest on any Loan or any fees hereunder, (iii) effect any amendment
in the provisions of Section 2.07, 6.03, 6.04 or 9.04, (iv) effect any
amendment in Section 5.08 or 5.11 or permit the release of any
Mortgage except pursuant to a waiver granted under Section 5.11(b) or
pursuant to the provisions of Section 5.12(b), (v) postpone the date
fixed for any payment of principal of or interest on any Loan or any
fees hereunder or (vi) change the percentage of the Commitments or of
the aggregate unpaid principal amount of the Notes which shall be
required for the Lenders or any of them to take any action under this
Section or any other provision of this Agreement; PROVIDED FURTHER
that the signature pages hereof may be amended to include a new Lender
and to set forth its Commitment or to increase the Commitment of an
existing Lender (as contemplated by Section 2.12) and to reflect the
resulting increase in the aggregate Commitments by execution of an
addendum hereto by the Borrower, the Agent and such Lender, and all
references herein, or in any other document, to this Agreement shall
thereafter be deemed to refer to this Agreement as amended by such
addendum. The Agent shall promptly give notice to the Borrower and all
Lenders of any amendment or waiver of this Agreement or the Notes or
any Mortgage.
SECTION 9.06. SUCCESSORS AND ASSIGNS. (a) The provisions of
this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except
that (i) the Borrower may not assign or otherwise transfer any of its
rights under this Agreement and (ii) no Tranche A Lender may, without
the prior written consent of the Borrower, assign any Tranche A Loan
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hereunder; PROVIDED that nothing herein shall be deemed to prohibit
the granting by any Tranche A Lender of participation in any Tranche A
Loan hereunder or the sale, assignment, pledge or other transfer by
any Tranche A Lender of its Notes and its rights thereunder to any
Federal Reserve Bank.
(b) The Agent and the Borrower may, for all purposes of this
Agreement, treat any Lender as the holder of any Note drawn to it or
its order (and owner of the Loans evidenced thereby) until written
notice of assignment, participation or other transfer shall have been
received by them and reflected on the Borrower's books; PROVIDED that
no Tranche A Lender or participant shall give any such written notice
with respect to any participation referred to in the PROVISO contained
in subsection (a) prior to the occurrence of an Event of Default. The
Borrower shall promptly record on its books all notices it receives
under this subsection (b). In the case of any transfer of a Tranche B
Note, the Borrower shall execute and deliver a new Tranche B Note
payable to the transferee upon surrender of the old Tranche B Note
duly endorsed or accompanied by a written instrument of transfer duly
executed by the registered holder of the old Tranche B Note. Such new
Tranche B Note shall be dated and bear interest from the date to which
interest has been paid on the surrendered Tranche B Note or from the
date of the surrendered Note if no interest has been paid thereon.
(c) No assignee, participant or other transferee of any Tranche
A Lender's rights shall be entitled to receive any greater payment
under Section 8.03 than such Lender would have been entitled to
receive with respect to the rights transferred, except in the case of
an assignment made with the Borrower's prior written consent or by
reason of the provisions of Section 8.02 or 8.03 requiring such Lender
to designate a different Lending Office under certain circumstances or
at a time when the circumstances giving rise to such greater payment
did not exist.
(d) If any Reference Bank assigns its Notes to an unaffiliated
institution, the Agent shall, in consultation with the Borrower and
with the consent of the Tranche A Lenders, appoint another bank to act
as a Reference Bank hereunder.
SECTION 9.07. COLLATERAL. Each of the Lenders represents to the
Agent and each of the other Lenders that it in good faith is not
relying upon any "margin stock" (as defined in Regulation G and
Regulation U) as collateral in the
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extension or maintenance of the credit provided for in this Agreement.
SECTION 9.08. REPRESENTATIONS OF LENDERS. Each Tranche A Lender
represents that it is making its Loan in the ordinary course of its
commercial banking business and not with a view toward distribution
thereof, and each Tranche B Lender represents that it is acquiring its
Tranche B Note for investment for its own account and not with a view
toward distribution thereof, subject, nevertheless, to any requirement
of law that the disposition of its property shall at all times be
within its control.
SECTION 9.09. CONFIDENTIALITY. Any information which any of the
Lenders receives from the Borrower which is designated proprietary or
confidential at the time of receipt thereof by such Lender shall not
be disclosed by such Lender to any other Person, if such information
is not otherwise in the public domain, other than (i) to its
independent accountants and legal counsel, (ii) pursuant to statutory
and regulatory requirements, (iii) pursuant to any mandatory court
order, or (iv) to any other Lender or, subject to an agreement
containing provisions substantially the same as those of this Section,
to any participant in or assignee of, or prospective participant in or
assignee of, any Loan.
SECTION 9.10. NEW YORK LAW. This Agreement and each Note shall
be construed in accordance with and governed by the law of the State
of New York.
SECTION 9.11. COUNTERPARTS; EFFECTIVENESS. This Agreement may
be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto
were upon the same instrument. This Agreement shall become effective
when the Agent shall have received counterparts hereof signed by all
of the parties hereto.
SECTION 9.12. NON-RECOURSE TO PARTNERS. No recourse shall be had
for the payment of the principal of or interest on any Loan, or for
any claim based thereon, or otherwise in respect thereof, or with
respect to any other obligation hereunder, against any past, present
or future partner of the Borrower or any partner thereof (including,
without limitation, Santa Fe Pacific Exploration and Santa Fe Energy),
and in no event shall any such Person be held liable, personally or
otherwise with respect to the indebtedness evidenced by the Notes or
for any obligations under this Agreement, whether by virtue of any
statute or rule of law, or
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by the enforcement of any assessment or penalty or otherwise, all such
liability being expressly waived and released by the Agent and each
Lender.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officers as of the
day and year first above written.
SANTA FE ENERGY OPERATING
PARTNERS, L.P.
By: SANTA FE PACIFIC EXPLORATION
COMPANY, as Managing
General Partner
By:
Title:
1616 South Voss Road,
Suite 1000
Houston, Texas 77057
Telecopy number: (713) 975-4871
COMMITMENTS
$13,000,000 MORGAN GUARANTY TRUST COMPANY
(Tranche A) OF NEW YORK
By:
Title:
DOMESTIC LENDING OFFICE
Morgan Guaranty Trust Company
of New York
23 Wall Street
New York, New York 10015
Telex number: 420230
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COMMITMENTS
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, CHANNEL ISLAND
BRANCH
By:
Title:
LENDING OFFICE
Morgan Guaranty Trust Company
of New York, Channel Islands
Branch
c/o MORGAN CHRISTIANA CORP.
Servicing Unit
902 Market Street
Wilmington, Delaware 19801
Telex number: 835383
$10,000,000 EQUITABLE VARIABLE LIFE INSURANCE
(Tranche B) COMPANY
By:
Title:
c/o Equitable Capital Management
Corporation
1285 Avenue of the Americas
New York, New York 10019
Attention: Corporate Finance
Department
Telex number: (212) 554-1032
$11,000,000 THE NORTHWESTERN MUTUAL LIFE
(Tranche B) INSURANCE COMPANY
By:
Title:
720 East Wisconsin Avenue
Milwaukee, WI 53202
Telecopy number: (414) 226-7001
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COMMITMENTS
$9,000,000 BANK OF MONTREAL
(Tranche A)
By:
Title:
115 South La Salle Street
Chicago, IL 60603
Telex number: 190289 TRT
Telecopy number: (312) 750-4368
$9,000,000 TEXAS COMMERCE BANK,
(Tranche A) NATIONAL ASSOCIATION
By:
Title:
Texas Commerce Plaza
712 Main Street
Houston, TX 77002
Telex number: 775418 TEXCOMBK
$7,000,000 AMERICAN GENERAL LIFE INSURANCE
(Tranche B) COMPANY OF NEW YORK
By:
Title:
2929 Allen Parkway
A37-01
Houston, TX 77019
Attention: Private Placement
Department
Telecopy number: (713) 831-1979
$6,500,000 MUTUAL BENEFIT LIFE INSURANCE
(Tranche B) COMPANY
By:
Title:
520 Broad Street
Newark, NJ 07101
Telecopy number: (201) 482-5865
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COMMITMENTS
$6,500,000 NEW ENGLAND MUTUAL LIFE
(Tranche B) INSURANCE COMPANY
By:
Title:
501 Boylston Street
Boston, MA 04126
Telecopy number: (617) 578-4827
$6,500,000 PRINCIPAL MUTUAL LIFE INSURANCE
(Tranche B) COMPANY
By:
Title:
By:
Title:
711 High Street
Des Moines, Iowa 50309
Attention: Investment Department-
Securities
Telecopy number: (515) 247-5930
$6,500,000 UNUM LIFE INSURANCE COMPANY
(Tranche B) OF AMERICA
By:
Title:
2211 Congress Street
Portland, ME 04122
Attention: Bond Investment
Division
Telecopy number: (207) 780-6937
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COMMITMENTS
$5,000,000 THE EQUITABLE LIFE ASSURANCE
(Tranche B) SOCIETY OF THE UNITED STATES
By:
Title:
c/o Equitable Management
Corporation
1285 Avenue of the Americas
New York, New York 10019
Attention: Corporate Finance
Department
Telecopy number: (212) 554-1032
Total Commitments
$90,000,000
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By:
Title:
23 Wall Street
New York, New York 10015
Attention: Kevin McCann
Telex number; 420230
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