EXHIBIT 10(v)
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
dated as of March 16, 1994
among
SANTA FE ENERGY RESOURCES, INC.,
the Banks signatory hereto,
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
as Co-Agent and Administrative Agent
and
NATIONSBANK OF TEXAS, N.A.
as Co-Agent
TABLE OF CONTENTS
Section 1. Definitions and Accounting Matters . . . . . . . . . 1
1.1. Certain Defined Terms . . . . . . . . . . . . . . . . . 1
1.2. Accounting Terms and Determinations . . . . . . . . . . 40
1.3. Classes and Types of Loans . . . . . . . . . . . . . . 41
Section 2. Commitments . . . . . . . . . . . . . . . . . . . . . 42
2.1. Loans . . . . . . . . . . . . . . . . . . . . . . . . . 42
2.2. Terminations, Reductions and Changes of Commitments and
Facility A Maximum Amounts . . . . . . . . . . . . . . 44
2.3. Fees . . . . . . . . . . . . . . . . . . . . . . . . . 46
2.4. Affiliates; Lending Offices . . . . . . . . . . . . . . 47
2.5. Several Obligations . . . . . . . . . . . . . . . . . . 47
2.6. Notes . . . . . . . . . . . . . . . . . . . . . . . . . 48
2.7. Optional Reserve Report . . . . . . . . . . . . . . . . 48
2.8. Release of Mortgages . . . . . . . . . . . . . . . . . 48
2.9. Use of Proceeds . . . . . . . . . . . . . . . . . . . . 49
2.10.Original Credit Documents Not Terminated . . . . . . . 49
2.11.Sale of Certain Properties . . . . . . . . . . . . . . 49
Section 3. Borrowings, Prepayments and Selection of
Interest Rates . . . . . . . . . . . . . . . . . 50
3.1. Borrowings . . . . . . . . . . . . . . . . . . . . . . 50
3.2. Prepayments . . . . . . . . . . . . . . . . . . . . . . 50
3.3. Selection of Interest Rates . . . . . . . . . . . . . . 52
Section 4. Payments of Principal and Interest . . . . . . . . . 53
4.1. Repayment of Loans . . . . . . . . . . . . . . . . . . 53
4.2. Interest . . . . . . . . . . . . . . . . . . . . . . . 53
Section 5. Payments; Pro Rata Treatment; Computations, Etc. . . 54
5.1. Payments . . . . . . . . . . . . . . . . . . . . . . . 54
5.2. Pro Rata Treatment . . . . . . . . . . . . . . . . . . 55
5.3. Computations . . . . . . . . . . . . . . . . . . . . . 55
5.4. Minimum and Maximum Amounts . . . . . . . . . . . . . . 55
5.5. Certain Actions, Notices, Etc . . . . . . . . . . . . . 55
5.6. Non-Receipt of Funds by the Agent . . . . . . . . . . . 57
5.7. Sharing of Payments, Etc. . . . . . . . . . . . . . . . . 57
Section 6. Yield Protection and Illegality . . . . . . . . . . . 58
6.1. Additional Costs. . . . . . . . . . . . . . . . . . . . 58
6.2. Limitation on Types of Loans . . . . . . . . . . . . . 60
6.3. Illegality . . . . . . . . . . . . . . . . . . . . . . 61
6.4. Substitute Alternate Base Rate Loans . . . . . . . . . 62
6.5. Compensation . . . . . . . . . . . . . . . . . . . . . 62
6.6. Capital Adequacy . . . . . . . . . . . . . . . . . . . 63
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Section 7. Conditions Precedent . . . . . . . . . . . . . . . . 64
7.1. Closing Conditions . . . . . . . . . . . . . . . . . . 64
7.2. All Loans . . . . . . . . . . . . . . . . . . . . . . . 66
Section 8. Representations and Warranties . . . . . . . . . . . 67
8.1. Corporate Existence . . . . . . . . . . . . . . . . . . 67
8.2. Information . . . . . . . . . . . . . . . . . . . . . . 68
8.3. Litigation; Compliance . . . . . . . . . . . . . . . . 68
8.4. No Breach . . . . . . . . . . . . . . . . . . . . . . . 69
8.5. Corporate Action . . . . . . . . . . . . . . . . . . . 69
8.6. Approvals . . . . . . . . . . . . . . . . . . . . . . . 69
8.7. Regulations G, U and X . . . . . . . . . . . . . . . . 70
8.8. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . 70
8.9. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 70
8.10.Subsidiaries . . . . . . . . . . . . . . . . . . . . . 70
8.11.Investment Company Act . . . . . . . . . . . . . . . . 70
8.12.Public Utility Holding Company Act . . . . . . . . . . 70
8.13.Environmental Matters . . . . . . . . . . . . . . . . . 71
8.14.Title . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 9. Covenants . . . . . . . . . . . . . . . . . . . . . . 72
9.1. Financial Statements and Certificates . . . . . . . . . 72
9.2. Inspection of Property . . . . . . . . . . . . . . . . 76
9.3. Compliance with Environmental Laws . . . . . . . . . . 77
9.4. Payment of Taxes . . . . . . . . . . . . . . . . . . . 77
9.5. Maintenance of Insurance . . . . . . . . . . . . . . . 77
9.6. Restricted Payments and Restricted Investments . . . . 78
9.7. Lien, Debt and Other Restrictions. . . . . . . . . . . 79
9.8. Issuance of Stock by Restricted Subsidiaries . . . . . 91
9.9. Coverage Ratios . . . . . . . . . . . . . . . . . . . . 91
9.10.Prepayment of Junior Securities . . . . . . . . . . . . 91
Section 10. Defaults. . . . . . . . . . . . . . . . . . . . . . . 91
10.1.Events of Default. . . . . . . . . . . . . . . . . . . 91
Section 11. The Agent . . . . . . . . . . . . . . . . . . . . . . 96
11.1.Appointment, Powers and Immunities . . . . . . . . . . 96
11.2.Reliance by Agent . . . . . . . . . . . . . . . . . . . 96
11.3.Defaults . . . . . . . . . . . . . . . . . . . . . . . 97
11.4.Rights as a Bank . . . . . . . . . . . . . . . . . . . 97
11.5.INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . 98
11.6.Non-Reliance on the Agent and Other Banks . . . . . . . 98
11.7.Failure to Act . . . . . . . . . . . . . . . . . . . . 98
11.8.Resignation or Removal of the Agent . . . . . . . . . . 99
Section 12. Miscellaneous . . . . . . . . . . . . . . . . . . . 99
12.1.Waiver . . . . . . . . . . . . . . . . . . . . . . . . 99
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12.2.Notices . . . . . . . . . . . . . . . . . . . . . . . . 99
12.3.Expenses, Etc. . . . . . . . . . . . . . . . . . . . . 100
12.4.INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . 100
12.5.Amendments, Etc. . . . . . . . . . . . . . . . . . . . 101
12.6.Successors and Assigns . . . . . . . . . . . . . . . . 102
12.7.Survival; Term; Reinstatement . . . . . . . . . . . . . 105
12.8.Limitation of Interest . . . . . . . . . . . . . . . . 106
12.9.Captions . . . . . . . . . . . . . . . . . . . . . . . 107
12.10.Counterparts . . . . . . . . . . . . . . . . . . . . . 107
12.11.GOVERNING LAW . . . . . . . . . . . . . . . . . . . . 107
12.12.Severability . . . . . . . . . . . . . . . . . . . . . 107
12.13.Chapter 15 Not Applicable . . . . . . . . . . . . . . 108
Exhibit A - Form of Facility A Note
Exhibit B - Form of Facility B Note
Exhibit C - Request for Extension of Credit
Exhibit D - Assignment Agreement
Exhibit E - Facility A Maximum Amount
Exhibit F - Preliminary Available Amount
Schedule I - Restricted and Unrestricted Subsidiaries
Schedule II - Liens and Funded Debt
Schedule III - Initial Approved Assumptions and Price Protection
Agreements
Schedule IV - Coverage Report
Schedule V - Subordination Provisions
Schedule VI - Opinion of Andrews & Kurth, L.L.P.
Schedule VII - Opinion of David L. Hicks
Schedule VIII- Mortgages
Schedule IX - Jurisdictions for Which Certificates Are to Be
Provided
Schedule X - Designated Debt
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AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
This Amended and Restated Revolving Credit Agreement (as amended,
modified, supplemented and restated from time to time, this
"AGREEMENT") dated as of March 16, 1994, is by and among SANTA FE
ENERGY RESOURCES, INC. (the "COMPANY"), a Delaware corporation; each
of the lenders which is or which may from time to time become a
signatory hereto (individually a "BANK" and collectively the "BANKS");
TEXAS COMMERCE BANK NATIONAL ASSOCIATION ("TCB"), a national banking
association, as Administrative Agent for the Banks (in such capacity,
together with its successors in such capacity, the "AGENT"); and TCB
and NATIONSBANK OF TEXAS, N.A. ("NATIONSBANK"), a national banking
association, as Co-Agents (in such capacity, the "CO-AGENTS").
INTRODUCTION.
The Company, the Banks, the Agent and the Co-Agents entered into
that certain Revolving and Term Credit Agreement dated as of May 20,
1992. They now wish to amend and restate that agreement as it has
been amended prior to the date hereof.
AGREEMENTS.
The parties agree as follows:
Section 1. DEFINITIONS AND ACCOUNTING MATTERS.
1.1. CERTAIN DEFINED TERMS. As used herein, the following terms
shall have the following meanings:
"ACHIEVEMENT DATE" shall mean the first date on which both (a)
the aggregate minimum Qualifying Amount of Junior Securities to be
used in determining the applicable table on EXHIBIT E for the Facility
A Maximum Amount and the applicable table on EXHIBIT F for the
Preliminary Available Amount has been issued and the gross proceeds
thereof received by the Company and (b) all Designated Debt for the
aggregate Qualifying Amount of Junior Securities actually issued, as
shown on SCHEDULE X, shall have been repaid or Defeased. In
determining any Achievement Date, the Qualifying Amounts of Junior
Securities issued on such date, on the Qualifying Date and on each
additional date, if any, on which Junior Securities have been issued
shall be aggregated. For example, if there is only one issuance of
Junior Securities and such issuance is in a Qualifying Amount of
$75,000,000, the Facility A Maximum Amount will thereafter be
determined according to Table Four of EXHIBIT E, the Preliminary
Available Amount will thereafter be determined according to Table Four
of EXHIBIT F, and the Qualifying Date and the Achievement Date will be
the same. For example, if there are two issuances of Junior
Securities, one in the amount of $75,000,000 and a later one in the
amount of $50,000,000, the Qualifying Date will be the date of the
first issuance, which will also be the Achievement Date for the
$75,000,000 level in both EXHIBIT E and EXHIBIT F, and the Facility A
Maximum Amount will be determined according to Table Four of EXHIBIT E
and the Preliminary Available Amount will be determined according to
Table Four of EXHIBIT F until the date of the second issuance; the
date of the second issuance will be the Achievement Date for the
$125,000,000 level in both EXHIBIT E and EXHIBIT F, and the Facility A
Maximum Amount will thereafter be determined according to Table Two of
EXHIBIT E and the Preliminary Available Amount will thereafter be
determined according to Table Two of EXHIBIT F. An Achievement Date
must occur, if at all, prior to July 1, 1994.
"ADDITIONAL COSTS" shall have the meaning ascribed to such term
in SECTION 6.1.
"ADOBE" shall mean Adobe Resources Corporation, formerly a
Delaware corporation.
"ADOBE PROPERTIES" shall mean oil, gas and mineral properties and
other assets owned by Adobe at the time of the Merger.
"AFFILIATE" shall mean, as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or
is controlled by, such Person; and with respect to an individual,
"AFFILIATE" shall also mean any individual related to such individual
by blood or marriage. As used in this definition, "CONTROLS",
"CONTROLLED BY" and "UNDER COMMON CONTROL WITH" shall mean possession,
directly or indirectly, of power to direct or cause the direction of
management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise).
"AGGREGATE COMMITMENT" shall mean the total of all Commitments of
all Banks.
"ALTERNATE ANNUAL DEBT SERVICE COVERAGE RATIO" shall mean, as of
any date of determination and for the Calculation Period in which such
date occurs and for each Calculation Period thereafter to and
including the Calculation Period including December 31, 1998, the
lowest of the ratios obtained by dividing (a) Combined CFADS
(calculated on the basis of the Most Recent Engineering Report) for
such Calculation Period by (b) the sum of (1) the Alternate Debt
Service of the Company and the Restricted Subsidiaries for such
Calculation Period PLUS (2), at all times and
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to the extent the Special Subsidiary Qualifying Conditions are met,
the Special Subsidiary Percentage times the Alternate Debt Service of
the Special Subsidiary for such Calculation Period (in each case
calculated on the basis set forth in the most recent Coverage Report
delivered pursuant to SECTION 9.1 and taking into account any
incurrence or prepayment of Covered Debt by the Company or any of the
Restricted Subsidiaries or the Special Subsidiary since the date of
such Coverage Report).
"ALTERNATE BASE RATE" shall mean, for any date, a rate per annum
(rounded upwards, if necessary, to the next higher 1/100%) equal to
the greater of (a) the Prime Rate in effect on such day or (b) the Fed
Funds Rate in effect for such day plus 1/2%. Any change in the
Alternate Base Rate due to a change in the Fed Funds Rate shall be
effective on the effective date of such change in the Fed Funds Rate.
If for any reason the Agent shall have determined (which determination
shall be conclusive absent manifest error) that it is unable to
ascertain the Fed Funds Rate for any reason, including the inability
or failure of the Agent to obtain sufficient bids or publications in
accordance with the terms hereof, the Alternate Base Rate shall be the
Prime Rate until the circumstances giving rise to such inability no
longer exist.
"ALTERNATE BASE RATE LOANS" shall mean Loans which bear interest
at a rate based upon the Alternate Base Rate.
"ALTERNATE DEBT SERVICE" shall mean, for any Calculation Period
and with respect to any Person, the total of principal payments in
respect of Covered Debt of such Person 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 such
Covered Debt not bearing interest at a fixed rate; if some or all of
such Covered Debt bears interest at one or more fixed rates as of the
date of determination of Alternate Debt Service but such Covered Debt
will not bear interest at such fixed rate or rates to the end of such
Calculation Period, then interest payments in respect of Alternate
Debt Service with respect to such Covered Debt shall be calculated on
the basis of such fixed rate or rates for such time as the same shall
be applicable to such Covered Debt, and then at the interest rates set
forth in the most recent Approved Assumptions) in respect of Covered
Debt of such Person, in each case paid and scheduled to be paid during
such Calculation Period; PROVIDED that the principal amount of any
Covered Debt of such Person which by its terms matures on a date
within such Calculation 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;
and PROVIDED FURTHER that for purposes of this definition it shall be
assumed that (a) surety bonds for environmental purposes
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and letters of credit issued for the account of a Person will be fully
drawn upon their respective expiry dates, (b) the reimbursement
obligations of a Person with respect to all surety bonds for
environmental purposes and letters of credit issued for its account
shall be satisfied immediately and considered as a "principal payment"
for purposes of this definition.
"AMENDMENT TO DEED OF TRUST" shall mean that certain First
Amendment to Deed of Trust, Mortgage, Assignment of Production and
Security Agreement of even date herewith, in Proper Form, amending the
Deed of Trust to reflect the changes effected by this Agreement.
"AMENDMENT TO LEASEHOLD DEED OF TRUST" shall mean that certain
First Amendment to Leasehold Deed of Trust and Security Agreement of
even date herewith, in Proper Form, amending certain of the Mortgages
to reflect the changes effected by this Agreement.
"AMENDMENT TO LOUISIANA SECURITY AGREEMENT" shall mean that
certain First Amendment to Security Agreement, Assignment of
Production and Financing Statement of even date herewith, in Proper
Form, amending certain of the Mortgages to reflect the changes
effected by this Agreement.
"AMENDMENT TO SECURITY AGREEMENT -- CONTRACT RIGHTS" shall mean
that certain First Amendment to Security Agreement -- Accounts,
Inventory, Equipment and Contract Rights of even date herewith, in
Proper Form, amending certain of the Mortgages to reflect the changes
effected by this Agreement.
"AMENDMENT TO SECURITY AGREEMENT -- STOCK" shall mean that
certain First Amendment to Security Agreement -- Pledge of even date
herewith, in Proper Form, amending the Stock Pledge Agreement to
reflect the changes effected by this Agreement.
"ANNUAL DEBT SERVICE COVERAGE RATIO" shall mean, as of any date
of determination and for the Calculation Period in which such date
occurs and for each Calculation Period thereafter to and including the
Calculation Period including December 31, 1998, the lowest of the
ratios obtained by dividing (a) Combined CFADS (calculated on the
basis of the Most Recent Engineering Report) for such Calculation
Period by (b) the sum of (1) the Debt Service of the Company and the
Restricted Subsidiaries for such Calculation Period PLUS (2), at all
times and to the extent the Special Subsidiary Qualifying Conditions
are met, the Special Subsidiary Percentage times the Debt Service of
the Special Subsidiary for such Calculation Period (in each case
calculated on the basis set forth in the most recent Coverage Report
delivered pursuant to SECTION 9.1 and taking into account any
incurrence or prepayment of
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Covered Debt by the Company or the Restricted Subsidiaries or the
Special Subsidiary since the date of such Coverage Report).
"APPLICABLE ENVIRONMENTAL LAWS" shall mean all applicable
environmental or pollution-control Legal Requirements governing,
without limitation, wastewater effluent, solid and hazardous waste or
substances and air emissions, together with any other applicable
requirements for conducting, on a timely basis, reporting,
record-keeping, periodic tests and monitoring for contamination of
ground water, surface water, air and land and for biological toxicity
of the aforesaid, including, without limitation, the Resource
Conservation and Recovery Act of 1976, the Comprehensive Environmental
Response Compensation and Liability Act of 1980 (as amended by the
Superfund Amendments and Reauthorization Act), the Toxic Substances
Control Act, the Safe Drinking Water Act, the Hazardous Materials
Transportation Act, the Clean Air Act, the Clean Water Act, the Oil
Pollution Act, the Texas Water Code, the Texas Health and Safety Code,
the Texas Natural Resources Code, the Louisiana Environmental Quality
Act, the Louisiana Air Control Law, the Louisiana Water Control Law,
the Louisiana Solid Waste Management and Resource Recovery Law, the
Louisiana Hazardous Waste Control Law, the Louisiana Oil Spill
Prevention and Response Act, the Louisiana Resource Recovery and
Development Act, the Louisiana Waste Reduction Law, the Louisiana
Hazardous Material Information Development, Preparedness, and Response
Act, the Louisiana State and Local Coastal Resources Management Act of
1978, the Louisiana Coastal Wetlands Conservation and Restoration Act,
the Louisiana Abandoned Oilfield Waste Site Law, and the Louisiana
Mineral Code, in each case as amended from time to time.
"APPLICABLE LENDING OFFICE" shall mean, for each Bank and for
each Type of Loan, the lending office of such Bank (or of an Affiliate
of such Bank) designated for such Type of Loan below its name on the
signature pages hereof or such other office of such Bank (or of an
Affiliate of such Bank) as such Bank may from time to time specify to
the Agent and the Company as the office by which its Loans of such
Type are to be made and/or issued and maintained.
"APPLICABLE MARGIN" shall mean, on any day:
(a) With respect to any Alternate Base Rate Loan, the per annum
percentage set forth at the appropriate intersection in the table
shown below; where the vertical axis is the SLOR Coverage Ratio on
such day (assuming the Available Amount is fully drawn and that the
aggregate unpaid principal balance of the Facility A Notes is equal to
the Facility A Maximum Amount FOR DETERMINATIONS RELATED TO THE
INDEPENDENT ENGINEERING REPORT and on the basis of the actual
aggregate amount of outstanding Facility A Loans, Facility B Loans and
Letter of Credit Liabilities FOR ALL OTHER
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DETERMINATIONS) and the horizontal axis is the Annual Debt Service
Coverage Ratio on such day (assuming the Available Amount is fully
drawn and that the aggregate unpaid principal balance of the
Facility A Notes is equal to the Facility A Maximum Amount for
determinations related to the Independent Engineering Report and on
the basis of the actual aggregate amount of outstanding Facility A
Loans, Facility B Loans and Letter of Credit Liabilities for all other
determinations):
ALTERNATE BASE RATE LOANS
SLOR Annual Debt Service
COVERAGE RATIO COVERAGE RATIO
Equal to or
greater than Equal to or
Less than 1.20 but less greater than
1.20 than 1.25 1.25
Less than 1.85 1.00% 1.00% 1.00%
Equal to or greater
than 1.85 but less
than 1.95 .75% .50% .50%
Equal to or greater
than 1.95 but less
than 2.00 .75% .25% .25%
Equal to or greater
than 2.00 .75% .25% 0%
The initial Applicable Margin for Alternate Base Rate Loans shall be
.75% per annum. The Applicable Margin shall be determined upon the
delivery of each Independent Engineering Report. Thereafter, the
Applicable Margin shall be determined according to the preceding table
at the time of each delivery of a Coverage Report and each Request for
Extension of Credit, but, except as provided in SUBSECTIONS (c) and
(d) below, shall never be less than the Applicable Margin determined
upon the delivery of such Independent Engineering Report until the
next determination of the SLOR Coverage Ratio and Annual Debt Service
Coverage Ratio in accordance with this definition at the time of the
delivery of the next Independent Engineering Report, whereupon the
minimum Applicable Margin shall be reset.
(b) The Applicable Margin for any Eurodollar Loan on any day
shall be 1.00% more than the Applicable Margin for Alternate Base
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Rate Loans in effect on such day. The initial Applicable Margin for
Eurodollar Loans shall be 1.75% per annum.
(c) On the Qualifying Date, the Applicable Margin for Alternate
Base Rate Loans and for Eurodollar Loans shall be automatically
reduced to .50% per annum and 1.50% per annum, respectively.
(d) At any time on or after the Qualifying Date but prior to
July 1, 1994 the Company may choose not more often than once to
recalculate the SLOR Coverage Ratio and the Annual Debt Service
Coverage Ratio by giving written notice to the Co-Agents. Such
recalculation shall be made using new Approved Assumptions approved in
connection with such recalculation by Banks with aggregate Commitment
Percentages of 75% or more and using the Independent Engineering
Report most recently furnished in accordance with this Agreement.
Upon any such recalculation, the Company shall notify the Co-Agents of
the recalculated ratios, whereupon the Agent shall redetermine the
Applicable Margin for Alternate Base Rate Loans and for Eurodollar
Loans according to the table set forth in SUBSECTION (a) above. The
Applicable Margin as so redetermined shall become effective on the
date of such redetermination and shall remain in effect until the next
determination of Applicable Margin in accordance with this Agreement.
"APPLICABLE PERIODS" shall mean the Applicable Periods identified
on EXHIBIT E and EXHIBIT F.
"APPROVED ASSUMPTIONS" shall mean:
(a) until the first delivery of an Independent Engineering
Report hereunder, those assumptions set forth on SCHEDULE III;
(b) thereafter, for each Independent Engineering Report
hereunder, assumptions as to product prices, interest rates,
escalation rates, discount rates and future levels of production
curtailment, which assumptions shall be determined by the Co-Agents
after consultation with the Company and set forth (x) in the case of
each Required Reserve Report, in a notice sent to the Banks on or
before January 21 of each such year and in a notice from the Agent to
the Company on or prior to the next succeeding February 1 or (y) in
the case of each Optional Reserve Report, in a notice
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sent to the Banks within 30 days of the delivery of the notice to the
Co-Agents required by SECTIONS 2.7 and 2.8 and in a notice from the
Agent to the Company on or prior to a date 10 days after the date of
such notice to the Banks, and
(c) for purposes of SUBSECTION (d) of the definition of
"Applicable Margin" and the second sentence of SECTION 2.8,
assumptions determined by the Co-Agents after consultation with the
Company and set forth in a notice sent to the Banks within 30 days of
the Company's notice to the Co-Agents and in a notice from the Agent
to the Company on or prior to a date 10 days after the date of such
notice to the Banks;
PROVIDED that, in the case of CLAUSES (b) and (c) preceding such
assumptions are, within ten days after any such notice is sent to the
Banks, approved (as indicated in one or more notices received by the
Agent within such ten-day period) by Banks with aggregate Commitment
Percentages of 75% or more. If the assumptions proposed by the
Co-Agents are not approved, the Banks will work to determine and
approve alternative assumptions in good faith in accordance with their
customary oil and gas lending practices. Approved Assumptions set
forth in a notice to the Company shall govern until new Approved
Assumptions are set forth in a notice to the Company as provided
herein, and shall be used, without limitation, in preparation of the
next Independent Engineering Report required to be delivered pursuant
to SECTION 9.1 or permitted to be delivered pursuant to SECTIONS 2.7
or 2.8.
"ASSIGNMENT AGREEMENT" shall mean an Assumption and Assignment
Agreement substantially in the form of EXHIBIT D.
"ATTRIBUTABLE DEBT" shall mean the lesser of (a) the fair market
value of the assets sold pursuant to any Sale and Leaseback
Transaction (which determination shall be based upon a written opinion
(the cost of which shall be borne exclusively by the Company) as to
valuation from an independent valuation expert selected by the
Company) or (b) the present value (discounted according to GAAP at the
interest rate implicit in the lease) of the obligations of the lessee
for rental payments during the term of any lease constituting a part
of such Sale and Leaseback Transaction.
"AVAILABLE AMOUNT" shall mean, subject always to the limitation
set forth in SECTION 2.8, the Preliminary Available Amount from time
to time in effect, as the same may be adjusted upward and downward in
accordance with SECTION 2.1(b)(2) or permanently decreased in
accordance with SECTION 2.2.
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"AVAILABLE COMMITMENT" shall mean the Aggregate Commitment minus
the Unavailable Commitment.
"BOARD" shall mean the Board of Governors of the Federal Reserve
System of the United States.
"BUSINESS DAY" shall mean any day other than a day on which
commercial banks are authorized or required to close in Houston, Texas
or New York, New York, and where such term is used in the definition
of "QUARTERLY DATE" or, if such day relates to a borrowing of, a
payment or prepayment of principal of or interest on, or an Interest
Period for, a Eurodollar Loan or a notice by the Company with respect
to any such borrowing, payment, prepayment or Interest Period, which
is also a day on which dealings in dollar deposits are carried out in
the relevant Eurodollar interbank market.
"CALCULATION PERIOD" shall mean the year ending on the last day
of a March; with respect to calculations for a Calculation Period
determined with reference to amounts for two calendar years, it shall
be assumed (unless such amounts are due on scheduled dates, in which
case such calculations shall be made with reference to such dates)
that each such calendar year amount is spread evenly over the
appropriate calendar year, with the result that each such amount for a
Calculation Period beginning on an April 1 shall be composed of (a)
9/12 of the calendar year amount for the calendar year containing such
April 1 plus (b) 3/12 of the calendar year amount for the next
calendar year.
"CAPITAL GAINS" shall mean gains (net of expenses and income
taxes applicable thereto) in excess of losses resulting from the sale,
conversion or other disposition of capital assets (I.E., assets other
than current assets).
"CAPITALIZED LEASE OBLIGATION" shall mean any rental obligation
which, under GAAP, is or will be required to be capitalized on the
books of the Company or any Restricted Subsidiary, taken at the amount
thereof accounted for as indebtedness (net of interest expense) in
accordance with such principles.
"CFADS" shall mean, for any Calculation Period and with respect
to any Person, (a) Net Oil and Gas Income (PROVIDED that in
calculating Combined CFADS, no more than 25% of Net Oil and Gas Income
may be attributable to proved nonproducing and proved undeveloped
Recognized Proved Reserves) LESS (b) Projected G & A Expense LESS (c)
Projected Income Tax Expense PLUS (d) anticipated net income (or minus
anticipated net losses) from the Price Protection Agreements
(determined on the basis of the Approved Assumptions), (e) PLUS any
anticipated gain, and MINUS any
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anticipated loss, on Interest Rate Protection Agreements (determined
on the basis of the Approved Assumptions), PLUS (f) other income from
operations as reasonably projected under the Approved Assumptions, not
to exceed 5% of Combined CFADS, and PLUS (g) proceeds of sales of
assets permitted by the Credit Documents, to the extent (but only to
the extent) such proceeds are applied as prepayments pursuant to
SECTION 3.2(b), in each case for such Calculation Period and such
Person.
"CHANGE OF CONTROL" shall mean any change so that any Person (or
any Persons acting together which would constitute a Group), together
with any Affiliates or Related Persons thereof, shall at any time
either (a) Beneficially Own more than 50% of the aggregate voting
power of all classes of Voting Stock of the Company or (b) succeed in
having sufficient of its or their nominees elected to the Board of
Directors of the Company such that such nominees, when added to any
existing director remaining on the Board of Directors of the Company
after such election who is an Affiliate or Related Person of such
Person or Group, shall constitute a majority of the Board of Directors
of the Company. As used herein (a) "BENEFICIALLY OWN" shall mean
beneficially own as defined in Rule 13d-3 of the Securities Exchange
Act of 1934, as amended (the "EXCHANGE ACT"), or any successor
provision thereto; (b) "GROUP" shall mean a "group" for purposes of
Section 13(d) of the Exchange Act; (c) "RELATED PERSON" of any Person
shall mean any other Person owning (1) 5% or more of the outstanding
common stock of such Person or (2) 5% or more of the Voting Stock of
such Person, and (d) "VOTING STOCK" of any Person shall mean capital
stock of such Person which ordinarily has voting power for the
election of directors (or persons performing similar functions) of
such Person, whether at all times or only so long as no senior class
of securities has such voting power by reason of any contingency.
"CHAPTER ONE" shall mean Chapter One of the Texas Credit Code, as
in effect on the date the document using such term was executed.
"CLASS" shall have the meaning ascribed to such term in
SECTION 1.3.
"CODE" shall mean the Internal Revenue Code of 1986, as amended,
or any successor statute, together with all publicly available written
regulations, rulings and interpretations thereof or thereunder by the
Internal Revenue Service.
"COLLATERAL" shall mean all property at any time subject to the
Security Documents.
"COMBINED CFADS" shall mean, for any Calculation Period, the sum
of (a) CFADS of the Company and the Restricted Subsidiaries
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PLUS, at all times and to the extent all Special Subsidiary Qualifying
Conditions are met, (b) the product of (1) the Special Subsidiary
Percentage times (2) the CFADS of the Special Subsidiary, in each case
for such Calculation Period.
"COMBINED COVERED DEBT" shall mean, as of any date, the sum of
(a) the Covered Debt of the Company and the Restricted Subsidiaries
PLUS, at all times and to the extent all Special Subsidiary Qualifying
Conditions are met as of such date, (b) the product of (1) the Special
Subsidiary Percentage times (2) the Covered Debt of the Special
Subsidiary, all as of such date.
"COMBINED GROUP" shall mean the Company, the Restricted
Subsidiaries and the Special Subsidiary.
"COMBINED RESERVE VALUE" shall mean, as of any date, the sum of
(a) the Reserve Value of the Company and the Restricted Subsidiaries
PLUS, at all times and to the extent all Special Subsidiary Qualifying
Conditions are met as of such date, (b) the product of (1) the Special
Subsidiary Percentage times (2) the Reserve Value of the Special
Subsidiary, all as of such date. In calculating the Combined Reserve
Value, no more than 25% of such Combined Reserve Value may be
attributable to the combination of proved nonproducing and proved
undeveloped Recognized Proved Reserves.
"COMMITMENT FEE" shall mean the commitment fees payable by the
Company to the Agent for the account of the Banks in their Commitment
Percentages as provided in SECTION 2.3.
"COMMITMENT PERCENTAGE" shall mean, as to any Bank, the per-
centage equivalent of a fraction, the numerator of which is the
aggregate of such Bank's Commitments, subject to reduction and the
identification of new Banks pursuant to SECTION 12.6, and the
denominator of which is the Aggregate Commitment.
"COMMITMENTS" shall mean, as to any Bank, the aggregate of such
Bank's Facility A Commitment, if any, and Facility B Commitment, if
any.
"CONSOLIDATED NET EARNINGS" shall mean consolidated gross
revenues (including Capital Gains) of the Company and the Restricted
Subsidiaries less all operating and non-operating expenses of the
Company and the Restricted Subsidiaries including all charges of a
proper character (including current and deferred taxes on income,
provision for taxes on unremitted foreign earnings which are included
in gross revenues, and current additions to reserves), but not
including in gross revenues any dividends, distributions or other
payments received by the Company or any of its Restricted
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Subsidiaries in connection with the Hadson Stock, unless received in
the form of cash, or any dividends, distributions or other payments
received by the Company or any of its Restricted Subsidiaries from the
Special Subsidiary or gains resulting from write-up of assets, any
equity of the Company or any Restricted Subsidiary in the unremitted
earnings of any Person which is not a Restricted Subsidiary, any
earnings of any Person acquired by the Company or any Restricted
Subsidiary through purchase, merger or consolidation or otherwise for
any year prior to the year of acquisition, or any deferred credit
representing the excess of equity in any Restricted Subsidiary at the
date of acquisition over the cost of the investment in such Restricted
Subsidiary; all determined in accordance with GAAP.
"CONSOLIDATED NET EARNINGS AVAILABLE FOR FIXED CHARGES" shall
mean for any period the sum of (a) Consolidated Net Earnings for such
period (PROVIDED that the maximum amount of Capital Gains included
therein shall be $3,000,000 through December 31, 1990 and such maximum
amount shall increase by $150,000 on the first day of each year
thereafter); without duplication, (b) cash distributions received
during such period by the Company and the Restricted Subsidiaries on
their Investment in the Special Subsidiary to the extent not
reinvested in the Special Subsidiary; to the extent deducted from
gross revenues in determining Consolidated Net Earnings, (c) all
provisions for any federal, state or other income taxes made by the
Company and the Restricted Subsidiaries during such period; (d) Fixed
Charges of the Company and the Restricted Subsidiaries during such
period; (e) depreciation, depletion and amortization charges of the
Company and the Restricted Subsidiaries for such period, and (f) all
other non-cash charges of the Company and the Restricted Subsidiaries
for such period, all determined in accordance with GAAP.
"CONSOLIDATED NET TANGIBLE ASSETS" shall mean the aggregate net
tangible assets of the Company and the Restricted Subsidiaries,
determined as follows:
(a) The MLP Investment (at such times as SFEP is treated as the
Special Subsidiary) plus the aggregate gross book value of all the
assets of the Company and the Restricted Subsidiaries, both real and
personal, shall be computed, EXCLUDING, however, the following items:
(1) all franchises, licenses, permits, patents, patent
applications, copyrights, trademarks, trade names, goodwill,
experimental or organizational expense, unamortized debt discount and
expense, and all other assets which under GAAP are deemed intangible;
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(2) any reacquired shares or reacquired Debt of the Company
or the Restricted Subsidiaries;
(3) any write-up of assets made after December 31, 1989;
(4) 50% of the value of all assets of the Company and the
Restricted Subsidiaries acquired after April 1, 1990 which are located
outside the United States of America and Canada and not freely
returnable to the United States of America or Canada, including any
notes or accounts receivable from any debtor having any substantial
part of its business, operations or properties located outside the
United States of America and Canada, except notes or accounts
receivable from such a debtor which arose in the ordinary course of
business of the Company or any Restricted Subsidiary, as the case may
be, to which such notes or accounts receivable are payable and which
otherwise constitute current assets, but only to the extent of an
amount of dollars readily realizable from such notes or accounts
receivable by liquidation either directly or through a currency freely
convertible into dollars; and
(5) all Restricted Investments of the Company and the
Restricted Subsidiaries (other than Restricted Investments in the
capital stock of Hadson).
(b) From the gross book value of the tangible assets of the
Company and the Restricted Subsidiaries, determined as provided in the
preceding CLAUSE (a), there shall be deducted the following items:
(1) all reserves for depreciation, depletion, obsolescence
and amortization of the assets of the Company and the Restricted
Subsidiaries (other than assets excluded as provided in the preceding
CLAUSE (a)), all proper reserves (other than reserves for deferred
taxes and general contingency reserves and other reserves representing
mere appropriations of surplus) which in accordance with GAAP should
be set aside in connection with the business conducted by them;
(2) all Current Debt of the Company and the Restricted
Subsidiaries; and
(3) all other liabilities of the Company and the Restricted
Subsidiaries, including the reduction in equity attributable to
minority interests but excluding deferred taxes, Funded Debt of the
Company and the Restricted Subsidiaries, capital shares, surplus and
general contingency reserves and other reserves representing mere
appropriations of surplus.
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(c) In the determination of Consolidated Net Tangible Assets, no
amount shall be included therein on account of any excess cost of
acquisition of shares of any Restricted Subsidiary over the net book
value of the assets of such Restricted Subsidiary attributable to such
shares at the date of such acquisition or on account of any excess of
the net book value of the assets of any Restricted Subsidiary
attributable to any shares of such Restricted Subsidiary at the date
of acquisition of such shares over the cost of acquisition of such
shares.
"COVERAGE REPORT" shall mean a report substantially in the form
of SCHEDULE IV setting forth the calculation of the TLOR Coverage
Ratio, the SLOR Coverage Ratio, the Annual Debt Service Coverage Ratio
and the Alternate Annual Debt Service Coverage Ratio.
"COVERED DEBT" shall mean, for any Person, without duplication,
(a) all obligations for borrowed money (including obligations for
borrowed money consisting of or arising in connection with Junior
Securities); (b) all obligations evidenced by bonds, debentures, notes
or other similar instruments; (c) all obligations to pay the deferred
purchase price of property or services, except trade accounts payable
arising in the ordinary course of business; (d) all Capitalized Lease
Obligations; (e) all obligations in respect of production payments,
proceeds production payments and similar financing arrangements; (f)
all reimbursement obligations and all letter of credit advances with
respect to letters of credit issued for the account of such Person,
including the Letter of Credit Liabilities; (g) surety bonds for
environmental purposes; (h) all obligations of the types described in
CLAUSES (a) through (g) of this definition (collectively, "ORDINARY
DEBT") of another Person secured by a Lien on any property of the
Person as to which Covered Debt is being determined, regardless of
whether such Ordinary Debt is assumed by such Person, and (i) all
Ordinary Debt of another Person guaranteed (but excluding the
obligations of the Company and the Restricted Subsidiaries arising
solely by virtue of their serving as general partner of SFEP) by such
Person; PROVIDED that Covered Debt shall not include Ordinary Debt or
any obligation of the types described in CLAUSES (h) or (i) of this
definition which is (1) non-recourse (either directly or contingently)
as to all members of the Combined Group and (2) secured only by assets
which are not Recognized Proved Reserves.
"CREDIT DOCUMENTS" shall mean this Agreement, the Notes, the
Letter of Credit Agreement, all Security Documents, the Notice of
Entire Agreement, and all instruments, certificates and agreements now
or hereafter executed or delivered to the Agent or any Bank pursuant
to any of the foregoing.
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"CURRENT DEBT" shall mean any obligation for borrowed money (and
any notes payable and drafts accepted representing obligations for
borrowed money) payable on demand or within a period of one year from
the date of the creation thereof and any Guaranty with respect to
Current Debt (of the kind otherwise described in this definition) of
another Person; PROVIDED that any obligation shall be treated as
Funded Debt, regardless of this term, if such obligation is renewable
pursuant to the terms thereof or of a revolving credit or similar
agreement effective for more than one year after the date of the
creation of such obligation, or may be payable out of the proceeds of
a similar obligation pursuant to the terms of such obligation or of
any such agreement.
"DEBT" shall mean Funded Debt and/or Current Debt, as the case
may be.
"DEBT SERVICE" shall mean, for any Calculation Period, the total
of principal payments in respect of Covered Debt of the Person as to
which Debt Service is to be determined 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 such
Covered Debt not bearing interest at a fixed rate; if some or all of
such Covered Debt bears interest at one or more fixed rates as of the
date of determination of Debt Service but such Covered Debt will not
bear interest at such fixed rate or rates to the end of such
Calculation Period, then interest payments in respect of Debt Service
with respect to such Covered Debt shall be calculated on the basis of
such fixed rate or rates for such time as the same shall be applicable
to such Covered Debt, and then at the interest rates set forth in the
most recent Approved Assumptions) in respect of Covered Debt of such
Person, in each case paid and scheduled to be paid during such
Calculation Period; PROVIDED that the principal amount of any Covered
Debt of such Person which by its terms matures on a date within such
Calculation 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;
and PROVIDED FURTHER that for purposes of this definition it shall be
assumed (to the extent relevant with respect to such Person) that (a)
Letters of Credit will be fully drawn upon their respective expiry
dates; (b) other letters of credit issued for the account of such
Person will not be drawn; (c) surety bonds for environmental purposes
issued on behalf of such Person will not be drawn, and (d) the
reimbursement obligations of the Company under the Letter of Credit
Agreement shall be satisfied immediately and considered as a
"principal payment" for purposes of this definition.
"DEED OF TRUST" shall mean the Deed of Trust, Mortgage,
Assignment of Production and Security Agreement dated as of May 20,
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1992 from the Company to Gary K. Wright, Trustee for the benefit of
the Agent, and the Agent on behalf of the Banks, as amended and
modified from time to time, including pursuant to the Amendment to
Deed of Trust.
"DEFAULT" shall mean an Event of Default or an event which with
notice or lapse of time or both would, unless cured or waived, become
an Event of Default.
"DEFEASED" shall mean, with respect to any amount of Designated
Debt, that the Company (a) shall have given to the holders of such
Designated Debt irrevocable notice of the repayment of such Designated
Debt, (b) shall have deposited with the trustee or an independent
escrow or paying agent as trust funds the entire amount sufficient to
pay at the date fixed for such repayment all of such Designated Debt,
including principal, premium if any, and interest due or to become due
to such date of repayment, such amount to be invested only in readily
marketable direct full faith and credit obligations of the United
States of America having maturities of not more than one year from
date of issue, and (c) shall have paid or caused to be paid all other
sums payable by the Company in connection with such Designated Debt.
"DESIGNATED DEBT" shall mean the indebtedness of the Company
described on SCHEDULE X. SCHEDULE X sets forth, for each range of
Qualifying Amounts of Junior Securities, the maturities of Covered
Debt which must be repaid in order for the Facility A Maximum Amount
and the Preliminary Available Amount to reach the levels set forth in
EXHIBITS E and F.
"EBITD" shall mean for any period Consolidated Net Earnings for
such period, plus the aggregate amounts deducted in determining
Consolidated Net Earnings in respect of (a) all provisions for any
federal, state or other income taxes made by the Company and the
Restricted Subsidiaries during such period; (b) Fixed Charges of the
Company and the Restricted Subsidiaries during such period; (c)
depreciation, depletion and amortization charges of the Company and
the Restricted Subsidiaries for such period, and (d) all other
non-cash charges of the Company and the Restricted Subsidiaries for
such period, all determined in accordance with GAAP.
"ELIGIBLE ASSIGNEE" shall mean (a) a commercial bank having total
assets in excess of $1,000,000,000 or (b) a finance company, insurance
company, other financial institution or fund, acceptable to the Agent
and the Company, which is regularly engaged in making, purchasing or
investing in loans and having total assets in excess of
$1,000,000,000.
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"ENGINEERING SHORTFALL" shall mean the amount, if any, by which
the sum of (a) the aggregate outstanding principal balance of the
Facility B Notes PLUS (b) the aggregate Letter of Credit Liabilities
shall exceed the Available Amount at the time of any delivery of (and
as determined in accordance with) an Independent Engineering Report
and its related Coverage Report. The effects of an Engineering
Shortfall are described, among other places herein, in
SECTIONS 2.1(a)(4), 2.1(b)(4), 2.2(a)(3), 2.8, 7.2(a), 7.2(e), 9.9,
and 10.1(d) AND (e). An Engineering Shortfall shall continue until
cured by presentation of a new Coverage Report demonstrating that the
sum of (a) and (b) is equal to or less than the Available Amount then
in effect.
"ENVIRONMENTAL CLAIM" shall mean any claim, demand, action, cause
of action, suit, judgment, governmental or private investigation
relating to remediation or compliance with Applicable Environmental
Laws, proceeding or lien, whether threatened, sought, brought or
imposed, that seeks to recover costs, damages, punitive damages,
expenses, fines, criminal liability, judgments, response costs,
investigative and monitoring costs, abatement costs, attorney's fees,
expert's fees or consultant's fees, or seeks to impose liability
regarding the Company or any of its Subsidiaries, or any of their
sites or properties for violations of Applicable Environmental Laws or
for pollution, contamination, investigation, preservation, protection,
remediation or clean up of the air, surface water, ground water, soil
or wetlands, or otherwise in relation to the use, storage, generation,
release, handling or disposal of materials and substances that are
regulated by or subject to Applicable Environmental Laws.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and all rules, regulations and
interpretations by the Internal Revenue Service or the Department of
Labor thereunder.
"ERISA AFFILIATE" shall mean any trade or business (whether or
not incorporated) which on and after December 5, 1990 is under common
control with the Company within the meaning of the regulations under
Section 414 of the Code.
"EURODOLLAR BASE RATE" shall mean, with respect to any Interest
Period for any Eurodollar Loan, the lesser of (a) the rate per annum
(rounded upwards, if necessary, to the nearest 1/100%) determined by
the Agent based upon rates quoted at approximately 11:00 a.m. (local
time in the relevant Eurodollar interbank market) (or as soon
thereafter as practicable) on the day two Business Days prior to the
first day of such Interest Period for the offering BY TCB TO leading
dealers in such Eurodollar interbank market of dollar deposits for
delivery on the first day of such Interest
-17-
Period, in immediately available funds and having a term comparable to
such Interest Period and in an amount comparable to the principal
amount of the respective Eurodollar Loan to which such Interest Period
relates or (b) the Highest Lawful Rate. Each determination of the
Eurodollar Base Rate shall be conclusive and binding, absent manifest
error, and may be computed using any reasonable averaging and
attribution method.
"EURODOLLAR LOANS" shall mean Loans the interest on which is
determined on the basis of rates referred to in the definition of
"EURODOLLAR BASE RATE".
"EURODOLLAR RATE" shall mean, for any Interest Period for any
Eurodollar Loan, a rate per annum (rounded upwards, if necessary, to
the nearest 1/100%) determined by the Agent to be equal to the product
of (a) the Eurodollar Base Rate for such Loan for such Interest Period
times (b) Statutory Reserves.
"EVENT OF DEFAULT" shall have the meaning assigned to such term
in SECTION 10.
"EXISTING PRIORITY DEBT" at any time shall mean, to the extent
that it is otherwise Priority Debt, an amount equal to the sum of (a)
the Merger Debt at such time, (b) the outstanding principal amount of
Debt under the Springing Lien Agreement at such time, and (c) the
outstanding principal amount of Debt under those certain Credit
Agreements of Petrolera Santa Fe S.A., dated as of June 25, 1991 and
April 28, 1992, at such time.
"FACILITY A COMMITMENT" shall mean, as to any Bank, the
obligation, if any, of such Bank to make Facility A Loans to the
Company in an initial principal amount up to but not exceeding such
Bank's Commitment Percentage of the Facility A Maximum Amount from
time to time in effect, which shall never exceed the amount set forth
opposite such Bank's name on the signature pages hereof under the
caption "Facility A Commitment" (as the same may be reduced from time
to time pursuant to SECTION 2.2), and such Bank's obligation, if any,
to make Facility A Readvances to the Company in an aggregate principal
amount at any one time outstanding up to but not exceeding an amount
equal to such Bank's Commitment Percentage times the Facility A Unused
Commitment then in effect (as the same may be reduced from time to
time pursuant to SECTION 2.2).
"FACILITY A LOAN" shall mean a Loan (including a Facility A
Readvance) made pursuant to SECTION 2.1(a).
"FACILITY A MATURITY DATE" shall mean the earlier of (a) the date
the principal amount then outstanding of and the accrued interest on
the Facility A Loans and all fees and all other amounts
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payable hereunder and under the Facility A Notes become due and
payable pursuant to SECTION 10.1 or (b) December 31, 1998.
"FACILITY A MAXIMUM AMOUNT" shall mean, on any day occurring
during the respective Applicable Periods set forth in EXHIBIT E, the
amount set forth for such Applicable Period in the applicable table in
EXHIBIT E (as the same may be reduced from time to time pursuant to
SECTION 2.2). The applicable table shall be determined according to
the aggregate Qualifying Amount of Junior Securities issued by the
Company as of the most recent Achievement Date, but to qualify for a
particular table (other than Table Five), the Company must have repaid
or Defeased, on or before such Achievement Date, all Designated Debt
for such aggregate Qualifying Amount set forth on SCHEDULE X.
"FACILITY A NOTES" shall mean the promissory notes of the Company
evidencing the Facility A Loans, in the form of EXHIBIT A.
"FACILITY A OPTIONAL PREPAYMENT" shall mean any prepayment of the
Facility A Notes made pursuant to SECTION 3.2(a).
"FACILITY A READVANCE" shall mean a readvance made pursuant to
SECTION 2.1(a)(2) of any Facility A Optional Prepayment.
"FACILITY A TERMINATION DATE" shall mean the earlier of (a) the
Facility A Maturity Date and (b) the date the Facility A Commitments
are terminated pursuant to SECTION 2.2.
"FACILITY A UNUSED COMMITMENT" shall mean, on any date, the
difference of (a) the Facility A Maximum Amount MINUS (b) the
aggregate outstanding principal balance of the Facility A Notes, all
determined on such date.
"FACILITY B COMMITMENT" shall mean, as to any Bank, the
obligation, if any, of such Bank to make Facility B Loans to the
Company in an aggregate principal amount at any one time outstanding
up to but not exceeding such Bank's Commitment Percentage times the
difference between (a) the Available Amount then in effect and (b) the
aggregate Letter of Credit Liabilities, which amount shall never
exceed the amount set forth opposite such Bank's name on the signature
pages hereof under the caption "Facility B Commitment" (as the same
may be reduced from time to time pursuant to SECTION 2.2).
"FACILITY B LOAN" shall mean a Loan made pursuant to
SECTION 2.1(b).
"FACILITY B MATURITY DATE" shall mean the earlier of (a) the date
the principal amount then outstanding of and accrued interest
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on the Facility B Loans and all fees and all other amounts payable
hereunder and under the Facility B Notes become due and payable
pursuant to SECTION 10.1 or (b) December 31, 1996.
"FACILITY B NOTES" shall mean the promissory notes of the Company
evidencing the Facility B Loans, in the form of EXHIBIT B.
"FACILITY B TERMINATION DATE" shall mean the earlier of (a) the
Facility B Maturity Date and (b) the date the Facility B Commitments
are terminated pursuant to SECTION 2.2.
"FACILITY B UNUSED COMMITMENT" shall mean, on any date, the
difference of (a) the Available Amount minus (b) the sum of (1) the
aggregate outstanding principal balance of the Facility B Notes plus
(2) the Letter of Credit Liabilities, all determined on such date.
"FDIC" shall mean the Federal Deposit Insurance Corporation or
any entity succeeding to any or all of its functions.
"FED FUNDS RATE" shall mean, for any period, a fluctuating
interest rate per annum equal for each day during such period to the
weighted average of the rates on overnight federal funds transactions
with members of the Federal Reserve System arranged by federal funds
brokers, as published on the succeeding Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for the day
of such transactions received by the Agent from three federal funds
brokers of recognized standing selected by it.
"FINANCING STATEMENTS" shall mean all such Uniform Commercial
Code financing statements as the Agent or any Bank shall reasonably
require, in Proper Form, duly executed by the Company or others to
give notice of and to perfect or continue perfection of the Agent's
security interest in all Collateral.
"FIXED CHARGES" shall mean (without duplication) for any period
the sum of interest expense in respect of all Debt of the Person for
which the determination is made (calculated, in the case of Debt which
bears interest at a floating rate, at the rate in effect at the time
of calculation), including imputed interest expense in respect of
Capitalized Lease Obligations.
"FUNDED DEBT" shall mean and include, without duplication, any
obligation (including the current maturities thereof)
(a) payable more than one year from the date of creation thereof
(1) for borrowed money; (2) evidenced by bonds, debentures,
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notes or reimbursement obligations in respect of letters of credit or
other similar instruments (other than letters of credit and surety
bonds relating to trade obligations incurred in the ordinary course of
business and includable, under GAAP, in current liabilities on a
balance sheet or in the notes relating thereto); (3) for the payment
of the deferred purchase price of property or services, except trade
accounts payable arising in the ordinary course of business; (4)
constituting Capitalized Lease Obligations; (5) in respect of
production payments, proceeds production payments or similar financing
arrangements; (6) which is, under GAAP, shown on a balance sheet
(after giving effect, in the case of the balance sheet of the Company
or a Restricted Subsidiary, to the eliminating entries, if any, for
the Unrestricted Subsidiaries as a group and the Special Subsidiary)
as long-term debt (excluding provisions for deferred income taxes,
unfunded pension obligations, unfunded liabilities for other
post-employment benefits and other reserves or provisions to the
extent that such reserves or provisions do not constitute an
obligation), or (7) for any item described in any of the foregoing
CLAUSES (1) through (6) which is secured by any Lien on property owned
by the Company or any Restricted Subsidiary, whether or not the
obligations secured thereby shall have been assumed by the Company or
such Restricted Subsidiary; or
(b) payable more than one year from the date of creation
thereof, which under GAAP is shown on the balance sheet as a long-term
liability (EXCLUDING provisions for deferred income taxes, unfunded
pension obligations, unfunded liabilities for other post-employment
benefits and other reserves or provisions to the extent that such
reserves or provisions do not constitute an obligation); or
(c) constituting a Guaranty with respect to Funded Debt (of the
kind otherwise described in CLAUSES (a) and (b) of this definition) of
another Person, including any obligation by the Company or a
Restricted Subsidiary for Funded Debt of SFEP or any other Person,
regardless of the percentage of equity interest owned therein by the
Company or a Restricted Subsidiary, by virtue of its capacity as a
general partner of SFEP or such other Person.
"GAAP" shall mean, as to a particular Person, such accounting
practice as, in the opinion of the independent accountants of
recognized national standing regularly retained by such Person and
acceptable to the Agent, conforms at the time to generally accepted
accounting principles, consistently applied. Generally accepted
accounting principles means those principles and practices which are
(a) recognized as such by the Financial Accounting Standards Board;
(b) applied for all periods after the date hereof in a manner
consistent with the manner in which such principles and practices were
applied to the financial statements of the relevant
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Person dated December 31, 1989 and for the period then ended, and (c)
consistently applied for all periods after the date hereof so as to
reflect properly the financial condition and results of operations of
such Person.
"GAS PLANT" shall mean the gas treatment and processing plant
known as the "Sale Ranch Plant" formerly owned by the Company and
located in Martin County, Texas, and all related facilities.
"GOVERNMENTAL AUTHORITY" shall mean any sovereign governmental
authority, the United States of America, any State of the United
States and any political subdivision of any of the foregoing, and any
agency, instrumentality, department, commission, board, bureau,
central bank, authority, court or other tribunal, in each case whether
executive, legislative, judicial, regulatory or administrative, having
jurisdiction over the Company, any of the Company's Subsidiaries, any
of their respective property, the Agent, the Co-Agent or any Bank.
"GUARANTY" shall mean and include, without limitation, any
obligation of the Company or a Restricted Subsidiary
(a) constituting a guaranty, endorsement (other than an
endorsement of a negotiable instrument for collection in the ordinary
course of business) or other contingent liability (whether direct or
indirect) in connection with the obligations, stock or dividends of
any Person (other than the Company or a Restricted Subsidiary);
(b) payable under any contract (other than the Tax
Indemnification Agreement and any other tax indemnification or sharing
agreement) providing for the making of loans, advances or capital
contributions to any Person (other than the Company or a Restricted
Subsidiary), or for the purchase of any property from any Person, in
each case in order primarily to enable such Person to maintain working
capital, net worth or any other balance sheet condition or to pay
debts, dividends or expenses;
(c) payable under any contract for the purchase of materials,
supplies or other property or services (other than any natural gas
transportation contract or any electrical, water supply, steam
purchase or other utility supply contract) if such contract (or any
related document) requires that payment for such materials, supplies
or other property or services shall be made regardless of whether or
not delivery of such materials, supplies or other property or services
is ever made or tendered; PROVIDED that the exceptions contained in
this CLAUSE (c) shall not apply to any contract for the purchase or
transportation of natural gas where payment is required regardless of
whether the delivery of such
-22-
natural gas is ever made or tendered, unless at the time such contract
is entered into the aggregate of payments under such contract and all
such existing contracts would not exceed $20,000,000 in any calendar
year based on existing rates and automatic escalations in such rates
under such contracts;
(d) payable under any contract to rent or lease (as lessee) any
real or personal property (other than any oil and gas leases) if such
contract (or any related document) provides that the obligation to
make payments thereunder is absolute and unconditional under
conditions not customarily found in commercial leases then in general
use or requires that the lessee purchase or otherwise acquire
securities or obligations of the lessor; or
(e) payable under any other contract which, in economic effect,
is substantially equivalent to a guarantee for any payment or
performance of an obligation of a Person other than the Company or a
Restricted Subsidiary.
"HADSON" shall mean Hadson Corporation, a Delaware corporation,
and any successor corporation thereto.
"HADSON STOCK" shall mean, to the extent held continuously by the
Company or any of its Restricted Subsidiaries after the merger of SFER
Pipeline, Inc. into the Company, (a) any of the 2,080,000 shares of
the Senior Cumulative Preferred Stock, Series A, par value $.01 per
share, of Hadson and the 10,395,665 shares of the common stock, par
value $.01 per share, of Hadson, acquired by the Company or any of its
Subsidiaries on or before January 31, 1994, (b) any stock acquired by
virtue of one or more stock splits or recapitalizations involving such
common stock or Senior Cumulative Preferred Stock and not involving
any additional economic consideration on the part of the Company or
any of its Subsidiaries, and (c) any dividend paid on such common
stock or Senior Cumulative Preferred Stock solely in the capital stock
of Hadson.
"HIGHEST LAWFUL RATE" shall mean, on any day, the maximum
nonusurious rate of interest permitted for that day by whichever of
applicable federal or Texas law permits the higher interest rate,
stated as a rate per annum. On each day, if any, that Chapter One
establishes the Highest Lawful Rate, the Highest Lawful Rate shall be
the "indicated rate ceiling" (as defined in Chapter One) for that day.
"HYDROCARBONS" shall mean crude oil, condensate, natural gas,
natural gas liquids and associated substances.
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"INDEPENDENT ENGINEERING REPORT" shall mean a report prepared by
an Independent Petroleum Engineer which sets forth the gross and net
volume of Hydrocarbons projected to be produced from the Petroleum
Properties, by calendar years, for the remaining economic life of the
Petroleum Properties. The Petroleum Properties of the Special
Subsidiary shall be segregated from the Petroleum Properties of the
other members of the Combined Group, and the Adobe Properties shall be
separately identified. Each Independent Engineering Report shall also
contain a list of Petroleum Properties of the members of the Combined
Group and indicate the Net Oil and Gas Income for each calendar year
attributable thereto, all in reasonable detail. Each such report
shall identify which of the Petroleum Properties covered thereby are
"proved developed producing", "proved developed non-producing" and
"proved undeveloped" (as defined in the "Definitions for Oil and Gas
Reserves" as published by the Society of Petroleum Engineers). 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 Independent Engineering
Report.
"INDEPENDENT PETROLEUM ENGINEER" shall mean Ryder Scott Company
Petroleum Engineers or another independent petroleum engineer retained
by the Company acceptable to the Required Banks.
"INTEREST PAYMENT DATE" shall mean with respect to any Eurodollar
Loan or Alternate Base Rate Loan, the last day of each Interest Period
applicable thereto; PROVIDED that in the case of a Eurodollar Loan
with an Interest Period of six months, the Interest Payment Dates
shall be the days that would have been the Interest Payment Dates for
such Loan had two successive Interest Periods of three months been
applicable to such Loan.
"INTEREST PERIOD" shall mean:
(a) with respect to any Eurodollar Loan, the period commencing
on (1) the date such Loan is designated as or converted into or
continued as a Eurodollar Loan or (2) in the case of a Rollover to a
successive Interest Period, the last day of the immediately preceding
Interest Period and ending on the numerically corresponding day in the
first, second, third or sixth calendar month thereafter, as the
Company may select as provided in SECTION 3.3, except that each such
Interest Period which commences on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar
month shall end on the last Business Day of the appropriate subsequent
calendar month; and
-24-
(b) with respect to any Alternate Base Rate Loan, the period
commencing on the date such Loan is made as, or converted into, an
Alternate Base Rate Loan and on each Quarterly Date thereafter and
ending on each next succeeding Quarterly Date;
PROVIDED that (x) if any Interest Period would end on a day which
shall not be a Business Day, such Interest Period shall be extended to
the next succeeding Business Day unless, with respect to Eurodollar
Loans only, such next succeeding Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the
next preceding Business Day; (y) no Interest Period may be selected
for any Loan that ends later than the Termination Date for Loans of
that Class or that causes the aggregate amount of Loans subject to
Interest Periods extending beyond the next scheduled reduction in
Facility A Maximum Amount or Preliminary Available Amount to exceed
the Facility A Maximum Amount or Preliminary Available Amount, as the
case may be, scheduled to be in effect after such reduction; and (z)
no Interest Period may be selected that ends later than December 31,
1998. Interest shall accrue from and including the first day of an
Interest Period to but excluding the last day of such Interest Period.
"INTEREST RATE PROTECTION AGREEMENTS" shall mean an interest rate
swap agreement, interest rate cap agreement or other similar
arrangement which satisfies all of the following requirements: (a) a
member of the Combined Group is a party to such agreement; (b) the
Company has given evidence (satisfactory to the Agent) of such
agreement to the Agent; (c) the terms and parties to such agreement,
taking into account all similar agreements to which members of the
Combined Group are parties, are satisfactory to the Required Banks;
and (d) such agreement is in full force and effect and has not been
unwound.
"INVESTMENT" shall mean any purchase or other acquisition of the
stock, obligations or securities of, or any interest in, or any
capital contribution, loan or advance to, or any Guaranty in respect
of the obligations of (but excluding the obligations of the Company
and the Restricted Subsidiaries arising solely by virtue of their
serving as general partner of SFEP) any Person, but in any event shall
include as an investment in any Person the amount of all Debt owed by
such Person, and all accounts receivable from such Person which are
not current assets or did not arise from sales to such Person in the
ordinary course of business. As used herein, any capital contribution
of assets by the Company or any Restricted Subsidiary shall be valued
at the book value of such assets as reflected in the consolidated
financial statements of the Company and the Restricted Subsidiaries as
at the end of the quarter ending immediately prior to such
contribution.
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"JUNIOR SECURITIES" shall mean (a) equity (including preferred
stock but excluding any equity which the holder thereof may have any
right to put back to the Company for cash and excluding any equity
mandatorily redeemable for cash) of the Company or (b) indebtedness of
the Company which in the sole discretion of the Required Banks
satisfies all of the following requirements: (1) such indebtedness
shall be subordinated by writing in Proper Form in right of payment to
all existing and future indebtedness of the Company under the Credit
Documents, as renewed, extended, amended, modified, supplemented and
increased from time to time; (2) such indebtedness shall be unsecured;
(3) no principal of such indebtedness shall be scheduled to be due
before January 31, 1999; (4) such indebtedness shall not be governed
by any covenant or event of default more restrictive than those set
forth in the Credit Documents; (5) the provisions applicable to such
indebtedness with respect to a change in the control of the Company
and the sale of assets by any member of the Combined Group shall be
not more restrictive than those set forth in the Credit Documents; (6)
such indebtedness shall be subject to Blockage for periods aggregating
up to 180 days within any 365 day period; (7) the holders of such
indebtedness shall be required to give the Agent at least five days'
prior written notice of any intended acceleration of such indebtedness
(which the Agent shall transmit to each Bank promptly upon receipt);
and (8) the holders of such indebtedness shall not have the right to
declare a default with respect to, or to accelerate, any of such
indebtedness in the event of a default on other indebtedness of any
member of the Combined Group except (i) at the scheduled maturity of
such other indebtedness or (ii) in the event that principal of such
other indebtedness in excess of $25,000,000 shall be duly accelerated.
For purposes of this definition, "BLOCKAGE" shall mean, upon the
occurrence of a default and so long as it is continuing, the
prohibition of the payment (including principal of, interest or
premium on or sinking fund requirements) of any indebtedness or
obligations of the Company consisting of or arising in connection with
any Junior Securities. For purposes of this definition, "PAYMENT" and
its correlatives shall include any deposit of property to defease any
Junior Securities.
"LEGAL REQUIREMENT" shall mean any applicable law, statute,
ordinance, decree, requirement, order, judgment, rule, regulation (or
official interpretation by any Governmental Authority of any of the
foregoing) of, and the terms of any license or permit issued by, any
Governmental Authority, in each case as now or hereafter in effect.
"LETTER OF CREDIT" shall have the meaning ascribed to such term
in the Letter of Credit Agreement.
-26-
"LETTER OF CREDIT AGREEMENT" shall mean that certain Letter of
Credit Agreement of even date herewith, among the Company, the Agent,
the Co-Agents, and the Banks.
"LETTER OF CREDIT COMMITMENT" shall have the meaning ascribed to
it in the Letter of Credit Agreement.
"LETTER OF CREDIT LIABILITIES" shall have the meaning ascribed to
such term in the Letter of Credit Agreement.
"LIEN" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to
give any of the foregoing), any conditional sale or other title
retention agreement, any lease in the nature thereof, and the filing
of, or agreement to give, any financing statement under the Uniform
Commercial Code of any jurisdiction or any other type of preferential
arrangement.
"LOANS" shall mean the loans provided for by SECTION 2.1,
including Rollovers of Loans.
"MATERIAL ADVERSE CHANGE" shall mean an occurrence of whatever
nature (including any adverse determination in any litigation,
arbitration or governmental investigation or proceeding), which after
taking into account actual insurance coverage and effective
indemnification with respect to such occurrence, (a) has a material
adverse effect on the financial condition, business, operations or
properties of the Company and its Subsidiaries taken as a whole and
(b) impairs in any material respect either (1) the ability of the
Company to perform any of its obligations under the Credit Documents
or (2) the ability of the Banks to enforce any of such obligations or
any of their remedies under the Credit Documents.
"MERGER" shall mean the merger of Adobe into the Company which
occurred May 19, 1992.
"MERGER DEBT", for purposes of the definition of "Existing
Priority Debt" used in SECTION 9.7(b)(3) and 9.7(b)(4) of this
Agreement, shall mean at any time, with respect to the Debt of the
Company incurred as of May 20, 1992, in connection with the Merger, as
such Debt may have been or hereafter may be renewed, extended or
otherwise modified, the maximum principal amount of such Debt that can
be outstanding at such time, but only to the extent that such amount
is equal to or less than (a) $90,000,000, at any time during the
period from and including December 31, 1993, to and including December
30, 1994, (b) $72,000,000, at any time during the period from and
including December 31, 1994, to and including December 30, 1995, (c)
$54,000,000, at any time during the period from and including December
31, 1995, to and including December 30, 1996,
-27-
(d) $36,000,000, at any time during the period from and including
December 31, 1996, to and including December 30, 1997, (e)
$18,000,000, at any time during the period from and including December
31, 1997, to and including December 30, 1998, and (f) $0.00 at any
time thereafter.
"MLP INVESTMENT" shall mean, at any time, the lesser of (a) the
book value of the Investment of the Company and the Restricted
Subsidiaries in the Special Subsidiary, as determined from the most
recent consolidated balance sheet of the Company or (b) the product of
(1) the average closing price of the publicly traded limited partner
interests of the Special Subsidiary for the 30 days immediately
preceding the date upon which such determination is made multiplied by
(2) the total limited partner interests in the Special Subsidiary
owned by the Company and the Restricted Subsidiaries on the date such
determination was made.
"MORTGAGED PROPERTIES" shall mean all property, whether now
existing or hereafter acquired, which is or is to become subject to
the Liens of a Mortgage.
"MORTGAGES" shall mean, collectively, the Deed of Trust and the
mortgages, deeds of trust, assignments, security agreements,
collateral mortgages, collateral mortgage notes, pledge agreements and
other devices described or referenced on SCHEDULE VIII, executed by
the Company in favor of the Agent.
"MOST RECENT ENGINEERING REPORT" shall mean, as of any date of
determination, (a) until the first Independent Engineering Report is
delivered pursuant to SECTION 9.1 or SECTION 2.7, the Independent
Engineering Report of Ryder Scott Company Petroleum Engineers dated
February 3, 1994; (b) thereafter, the most recent Independent
Engineering Report delivered pursuant to either SECTION 9.1 or
SECTION 2.7 on or prior to such date of determination.
"NET OIL AND GAS INCOME" shall mean, for any calendar year (or
portion thereof) and for any Person, (a) an amount (or, with respect
to any portion of a calendar year, PRO RATA in accordance with the
number of days in such portion of such calendar year) of projected
gross revenues (based on the prices set forth in the Approved
Assumptions) from the sale of Hydrocarbons produced from the
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 such Person during such calendar year as
set forth in the Most Recent Engineering Report LESS (b) an amount
(or, with respect to any portion of a calendar year, PRO RATA in
accordance with the number of days in such portion of such calendar
year) of projected
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royalties and windfall profit, production, ad valorem, severance and
all other similar taxes and operating and capital expenditures
required to be incurred during such calendar 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.
"NOTES" shall mean the Facility A Notes and the Facility B Notes.
"NOTICE OF ENTIRE AGREEMENT" shall mean that certain Notice of
Entire Agreement, DTPA Waiver and Release of Claims of even date
herewith between the Company and the Agent.
"OBLIGATIONS" shall mean, as at any date of determination
thereof, the sum of (a) the aggregate principal amount of Loans out-
standing hereunder PLUS (b) the aggregate amount of the Reimbursement
Obligations.
"OFFICER'S CERTIFICATE" shall mean a certificate signed in the
name of the Company by its President, one of its Vice Presidents or
its Treasurer.
"OPTIONAL RESERVE REPORT" shall mean the Independent Engineering
Report permitted by SECTION 2.7.
"ORGANIZATIONAL DOCUMENTS" shall mean, with respect to a
corporation, the certificate of incorporation, articles of
incorporation and bylaws of such corporation; with respect to a
partnership or a limited partnership, the partnership agreement
establishing such partnership; with respect to a joint venture, the
joint venture agreement establishing such joint venture; and with
respect to a trust, the instrument establishing such trust; in each
case including any and all modifications thereof as of the date of the
Credit Document referring to such Organizational Document.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"PERMITTED ENCUMBRANCES" shall have the meaning ascribed to such
term in the Deed of Trust.
"PERSON" shall mean and include an individual or legal entity in
the form of a partnership, a limited liability company, a joint
venture, a corporation, a trust, an unincorporated organization or a
government or any department or agency thereof. The term "Person"
shall not, however, mean and include an arrangement that is not a
separate legal entity such as the legal arrangement
-29-
between two or more parties owning interests in the same property or
unit.
"PETROLEUM PROPERTIES" shall mean, at any time and with respect
to any Person, all Recognized Proved Reserves which are (a) owned by
such Person at such time free and clear of any Lien (other than
Permitted Encumbrances and Liens permitted by SECTION 9.7) and
(b) covered in the Most Recent Engineering Report.
"PLAN" shall mean an employee benefit plan which is covered by
ERISA which is either (a) maintained by the Company or any ERISA
Affiliate for employees of the Company or such ERISA Affiliate or (b)
a multiemployer plan as defined in Section 4001(a)(3) of ERISA to
which (i) the Company, (ii) any ERISA Affiliate or (iii) any trade or
business which was previously under common control with the Company
within the meaning of Section 414 of the Code (but only with respect
to such period of common control with the Company), has an obligation
to make contributions (or with respect to (iii) above, had an
obligation to make contributions during any portion of time that the
limitations period under Section 4301(f) of ERISA with respect to such
obligation has not expired).
"POST-DEFAULT RATE" shall mean, in respect of any principal of
any Loan or any other amount payable by the Company under any Credit
Document which is not paid when due (whether at stated maturity, by
acceleration, or otherwise), a rate per annum on each day during the
period commencing on the due date until such amount is paid in full
equal to the lesser of (a) the Alternate Base Rate as in effect for
that day PLUS the Applicable Margin for Alternate Base Rate Loans in
effect for that day plus 2% or (b) the Highest Lawful Rate for that
day.
"PRELIMINARY AVAILABLE AMOUNT" shall mean, on any day occurring
during the respective Applicable Periods set forth on EXHIBIT F, the
amount set forth for such Applicable Period in the applicable table in
EXHIBIT F (as the same may be reduced from time to time pursuant to
SECTION 2.2). The applicable table shall be determined according to
the aggregate Qualifying Amount of Junior Securities issued by the
Company as of the most recent Achievement Date, but to qualify for a
particular table (other than Table Five), the Company must have repaid
or Defeased, on or before such Achievement Date, all Designated Debt
for such aggregate Qualifying Amount set forth on SCHEDULE X.
"PRICE PROTECTION AGREEMENT" shall mean a product price
protection agreement which satisfies all of the following
requirements: (a) a member of the Combined Group is a party to such
agreement; (b) the Company has given evidence (satisfactory to the
Agent) of such agreement to the Agent; (c) the terms and
-30-
parties to such agreement, taking into account all similar agreements
to which members of the Combined Group are parties, are satisfactory
to the Required Banks; and (d) such agreement is in full force and
effect and has not been unwound. The agreements described on
SCHEDULE III are Price Protection Agreements for purposes of this
Agreement as of the date hereof.
"PRIME RATE" shall mean, as of a particular date, the prime rate
most recently announced by TCB and thereafter entered in the minutes
of TCB's Loan and Discount Committee, automatically fluctuating upward
and downward with and at the time specified in each such announcement
without special notice to the Company or any other Person, which prime
rate may not necessarily represent the lowest or best rate actually
charged to a customer.
"PRINCIPAL OFFICE" shall mean the principal banking building of
the Agent, presently located at 712 Main Street, Houston, Harris
County, Texas 77002.
"PRIORITY DEBT" at any time shall mean an amount equal to the sum
of (without duplication) the amount of all Special Debt outstanding at
such time and the amount of all Debt of the Company and its Restricted
Subsidiaries outstanding at such time that is secured by one or more
Liens permitted under CLAUSE (4), (5), (6), (7), (8), (9), (10), (11),
(12) or (13) of SECTION 9.7(a).
"PROJECTED G & A EXPENSE" shall mean, for any Person, the
appropriate projected annual levels of general and administrative
expense and district overhead to be used in the calculation of CFADS
of such Person, as mutually agreed among the Agent, the Co-Agents and
the Company as soon as practical after the delivery of the Most Recent
Engineering Report.
"PROJECTED INCOME TAX EXPENSE" shall mean, for any Person, the
appropriate projected annual levels of income tax expense to be used
in the calculation of CFADS of such Person, as determined by the Agent
after consultation with the Company and based on such Person's current
tax position projected into the future and the Most Recent Engineering
Report; the Agent will give written notice of the Projected Income Tax
Expense of each such Person to the Company as soon as practical after
the delivery of the Most Recent Engineering Report.
"PROPER FORM" shall mean in form and substance satisfactory to
the Agent.
"PROVED RESERVES" shall mean reserves of Hydrocarbons in place
which are estimated to be recoverable with reasonable certainty and
-31-
are consistent with the "Definitions for Oil and Gas Reserves" as
published by the Society of Petroleum Engineers.
"QUALIFYING AMOUNT" shall mean that amount of Junior Securities
which results in gross cash proceeds to the Company of not less than
the amounts specified herein.
"QUALIFYING DATE" shall mean the first date prior to July 1,
1994, on which the Agent shall have received evidence satisfactory to
it in its sole discretion that both (a) Junior Securities in a
Qualifying Amount of at least $75,000,000 shall have been issued (such
issuance may be in one or more transactions on one or more dates) and
cash proceeds thereof shall have been received by the Company and (b)
all Designated Debt for the aggregate Qualifying Amount of Junior
Securities actually issued, as shown on SCHEDULE X, shall have been
repaid or Defeased. The Qualifying Date must occur, if at all, before
July 1, 1994.
"QUARTERLY DATES" shall mean the last day of each March, June,
September and December; PROVIDED that if any such date is not a
Business Day, the relevant Quarterly Date shall be the next succeeding
Business Day.
"RECOGNIZED PROVED RESERVES" shall mean Proved Reserves if (a)
the designation of such Proved Reserves was by an Independent
Petroleum Engineer; (b) a member of the Combined Group owns such
Proved Reserves; (c) the estimates with respect to such Proved
Reserves were made on the basis of the most recent Approved
Assumptions, and (d) either (1) such Proved Reserves are located
onshore or offshore the United States or Canada or (2) the Required
Banks have consented to the inclusion of such Proved Reserves in the
Recognized Proved Reserves.
"REGULATION D" shall mean Regulation D of the Board as the same
may be amended or supplemented from time to time and any successor or
other regulation relating to reserve requirements.
"REGULATORY CHANGE" shall mean, with respect to any Bank, any
change on or after the date of this Agreement in any Legal Requirement
(including Regulation D) or the adoption or making on or after such
date of any official interpretation, directive or request applying to
a class of banks including such Bank under any Legal Requirement
(whether or not having the force of law) by any Governmental Authority
charged with the interpretation or administration thereof.
"REIMBURSEMENT OBLIGATIONS" shall have the meaning ascribed to
that term in the Letter of Credit Agreement.
-32-
"REQUEST FOR EXTENSION OF CREDIT" shall mean a request for
extension of credit duly executed by the chief executive officer,
chief financial officer or treasurer of the Company, or such other
officer of the Company as its chief financial officer shall from time
to time designate in a writing delivered to the Agent, appropriately
completed and substantially in the form of EXHIBIT C.
"REQUIRED BANKS" shall mean Banks having equal to or greater than
66-2/3% of the Aggregate Commitment.
"REQUIRED RATIOS" shall mean (a) an Annual Debt Service Coverage
Ratio of at least 1.15 to 1.00; (b) an Alternate Annual Debt Service
Coverage Ratio of at least 1.00 to 1.00; (c) a TLOR Coverage Ratio of
at least 1.50 to 1.00, and (d) an SLOR Coverage Ratio of at least 1.75
to 1.00.
"REQUIRED RESERVE REPORT" shall mean each Independent Engineering
Report required to be provided pursuant to SECTION 9.1(g).
"RESERVE VALUE" shall mean, as of any date and with respect to a
Person, the net present value (discounted at the discount rate set
forth in the most recent Approved Assumptions) of projected Net Oil
and Gas Income (calculated on the basis of the Most Recent Engineering
Report) attributable to the Petroleum Properties of such Person for
the period commencing on such date and ending at the end of the
economic life of such Petroleum Properties.
"RESTRICTED INVESTMENT" shall mean any Investment other than:
(a) Investments in the Company or a Restricted Subsidiary or in
an entity which immediately after or concurrently with such Investment
will be a Restricted Subsidiary;
(b) Investments in the Special Subsidiary;
(c) readily marketable direct full faith and credit obligations
of the United States of America or any agency thereof or obligations
unconditionally guaranteed by the full faith and credit of the United
States of America or any agency thereof, due within three years of the
making of the Investment;
(d) readily marketable direct obligations of any State of the
United States of America or any political subdivision of any such
State having a credit rating of at least "Aa" by Moody's Investors
Service, Inc. ("MOODY'S") or "AA" by Standard & Poor's Corporation
("S&P"), in each case due within three years from the making of the
Investment;
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(e) domestic and eurodollar certificates of deposit maturing
within one year from the making of the Investment issued by, deposits
in, eurodollar deposits through, and banker's acceptances of,
commercial banks incorporated under the laws of the United States or
any State thereof, Canada, Japan or any Western European country, and
having combined capital, surplus and undivided profits of at least
$100,000,000;
(f) readily marketable commercial paper of any commercial bank
or corporation doing business and incorporated under the laws of the
United States of America or any State thereof having a credit rating
of at least "A-1" from S&P or at least "P-1" by Moody's, in each case
due within 270 days after the making of the Investment;
(g) money market investment programs which primarily invest in
the types of Investments described in CLAUSES (c) through (f) above
and which are classified as a current asset in accordance with GAAP
and which are administered by broker-dealers acceptable to the Agent;
(h) repurchase agreements with major dealers or banks, pursuant
to which physical delivery of the respective securities is required,
except for obligations of the U.S. Treasury to be delivered through
the Federal Reserve book entry system;
(i) travel and other like advances to officers and employees of
the Company or a Restricted Subsidiary in the ordinary course of
business;
(j) Investments in the Hadson Stock; or
(k) Investments not described in CLAUSES (a) through (j) of this
definition in an aggregate principal amount not to exceed $10,000,000.
"RESTRICTED SUBSIDIARY" shall mean each Subsidiary of the Company
designated as a Restricted Subsidiary on SCHEDULE I, together with any
Subsidiary hereafter created or acquired and, at the time of creation
or acquisition, not designated by the Board of Directors of the
Company as an Unrestricted Subsidiary. Any Subsidiary of the Company
designated as an Unrestricted Subsidiary for purposes of this
Agreement may thereafter be designated a Restricted Subsidiary upon 30
days' prior written notice to the Banks if, at the time of such
designation and after giving effect thereto and to the concurrent
retirement of any Debt, (a) no Default shall have occurred and be
continuing; (b) such Subsidiary is organized under the laws of the
United States or any state thereof; (c) 80% or more of each class of
voting stock outstanding
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of such Subsidiary is owned by the Company or a wholly owned
Restricted Subsidiary, and (d) such Subsidiary could incur at least
$1.00 of additional Funded Debt without violation of
SECTION 9.7(b)(4).
"ROLLOVER" shall mean any 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, PROVIDED that such reborrowing
results in no net increase in the aggregate outstanding principal
balance of such loan; without limiting the generality of the
foregoing, "Rollover" shall include specifically the repayment of a
Loan at the end of the Interest Period applicable thereto and the
simultaneous reborrowing by the Company of a new Loan in the same
principal amount.
"SALE" shall mean any sale, transfer, exchange, or other
disposition for value.
"SALE AND LEASEBACK TRANSACTION" shall mean any arrangement in
which the Company or a Restricted Subsidiary shall sell its buildings,
equipment or surface real properties, which was acquired or occupied
by the Company or a Restricted Subsidiary for more than 180 days, and
within 180 days from the date of such sale, enter into a lease as
lessee of such buildings, equipment or surface real properties having
a term (including terms of renewal or extension at the option of the
lessor or the lessee, whether or not such option has been exercised)
expiring three or more years after the commencement of the initial
term.
"SECURED DEBT" shall mean all Funded Debt that is secured by a
Lien permitted by SECTION 9.7(a)(13) on any property or assets of the
Company or any Restricted Subsidiary.
"SECURITY AGREEMENT" shall mean the Security Agreement dated
May 20, 1992 between the Company and the Agent on behalf of the Banks
covering all of the interest of the Company in all accounts, general
intangibles, equipment, fixtures, inventory, contract rights,
partnerships, joint ventures and other forms of property, of whatever
kind and character, at any time comprising, relating to, or evidencing
or effectuating ownership of, the Gas Plant, as amended and modified
from time to time.
"SECURITY DOCUMENTS" shall mean, collectively, the Deed of Trust,
the Mortgages, the Amendment to Deed of Trust, the Amendment to
Louisiana Security Agreement, the Amendment to Leasehold Deed of
Trust, the Amendment to Security Agreement-Contract Rights, the
Amendment to Security Agreement -- Stock, the Security Agreement,
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the Stock Pledge Agreement, all applicable Financing Statements and
any and all other agreements, deeds of trust, mortgages, chattel
mortgages, security agreements, pledges, guaranties, assignments of
production or proceeds of production, assignments of income,
assignments of contract rights, assignments of partnership interest,
assignments of royalty interests, assignments of performance,
completion or surety bonds, standby agreements, subordination
agreements, undertakings, stock powers and other instruments and
Financing Statements now or hereafter executed and delivered by any
Person (other than solely by a Bank and/or any other creditor
participating in the Facility A Loans or any collateral or security
therefor) in connection with, or as security for the payment or
performance of, the Facility A Notes; and, from and after the
execution and delivery thereof, shall include any supplemental such
document.
"SENIOR INDEBTEDNESS" shall mean, without duplication, that part
of Covered Debt consisting of (a) all indebtedness and obligations
evidenced by, arising under or incurred in connection with the Credit
Documents and all renewals, extensions, rearrangements, refundings,
and modifications of any thereof; (b) all other indebtedness and
obligations of the Company, the Restricted Subsidiaries or the Special
Subsidiary, which is PARI PASSU with or senior to the indebtedness and
obligations described in CLAUSE (a) above, (c) Capitalized Lease
Obligations, and (d) all indebtedness and obligations of the Company,
the Restricted Subsidiaries or the Special Subsidiary which is at the
time of any determination of Senior Indebtedness secured by any Lien.
"SERIAL NOTE AGREEMENT" shall mean that certain Note Agreement
dated as of March 31, 1990, evidencing the issuance of Series A, B, C,
D, E, F and G Notes by the Company in the aggregate amount of
$365,000,000, as amended from time to time.
"SFEP" shall mean, collectively, Santa Fe Energy Partners, L.P.
and Santa Fe Energy Operating Partners, L.P., each a Delaware limited
partnership.
"SFP GROUP" shall mean Santa Fe Pacific Corporation and its
affiliated group of corporations which together constitute an
affiliated group of corporations within the meaning of Section 1504(a)
of the Code.
"SLOR COVERAGE RATIO" shall mean, as of any date of
determination, the ratio of (a) the Combined Reserve Value to (b) all
Senior Indebtedness included in Combined Covered Debt, in each case as
of such date.
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"SPECIAL DEBT" shall mean the sum of (a) Attributable Debt; (b)
Secured Debt, and (c) Funded Debt of the Restricted Subsidiaries.
"SPECIAL SUBSIDIARY" shall mean SFEP until (a) the Company
designates SFEP a Restricted Subsidiary pursuant to the terms of the
Serial Note Agreement or (b) the Company designates or continues to
designate SFEP as an Unrestricted Subsidiary subsequent to the
acquisition by the Company and the Restricted Subsidiaries of all of
the outstanding limited partnership interests in SFEP.
"SPECIAL SUBSIDIARY PERCENTAGE" shall mean, as of any date, the
percentage ownership interest of the Company and the Restricted
Subsidiaries in the Special Subsidiary on such date.
"SPECIAL SUBSIDIARY QUALIFYING CONDITIONS" shall mean all of the
following conditions: (a) the Company or a Restricted Subsidiary owns
more than 50% of the outstanding indicia of equity rights issued by
Santa Fe Energy Partners, L.P. and serves as the sole managing general
partner of Santa Fe Energy Partners, L.P.; (b) Santa Fe Energy
Partners, L.P. owns more than 50% of the outstanding indicia of equity
rights issued by Santa Fe Energy Operating Partners, L.P.; (c) the
Company or a Restricted Subsidiary serves as the sole managing general
partner of Santa Fe Energy Operating Partners, L.P., and (d) both
Santa Fe Energy Partners, L.P. and Santa Fe Energy Operating Partners,
L.P. are permitted (by applicable law and applicable contract) to make
distributions to their partners.
"SPIN-OFF" shall mean (a) the distribution, by dividend to the
stockholders of Santa Fe Pacific Corporation of the shares of capital
stock of the Company owned by Santa Fe Pacific Corporation, which
distribution was commenced on December 4, 1990, and (b) the
distribution by SFP Properties, Inc. to Santa Fe Pacific Corporation
of the capital stock of the Company that was made on December 27,
1989.
"SPRINGING LIEN" shall mean the Liens on real property of SFEP
that come into existence at any time SFEP is a Restricted Subsidiary
pursuant to section 5.08(b) or 5.11 of the Credit Agreement (the
"SPRINGING LIEN AGREEMENT") dated as of June 30, 1987 among Santa Fe
Energy Operating Partners, L.P., the lenders listed on the signature
pages thereof and Morgan Guaranty Trust Company of New York, as the
Agent, as the same may be amended, PROVIDED that (a) the Debt under
the Springing Lien Agreement is not increased, extended or renewed and
(b) the Springing Lien Agreement is not amended in any way which would
increase the likelihood or potential circumstances under which such
Liens may arise; if either clause of
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the foregoing proviso is violated, then such Liens shall not be
"Springing Liens" for purposes of this Agreement.
"STATUTORY RESERVES" shall mean a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator
of which is the number one minus the weighted average of the reserve
percentages (including any marginal, special, emergency, or
supplemental reserves), expressed as a decimal, actually required to
be maintained by any Bank by the Board or any other Governmental
Authority to which any of the Banks is subject as required by
Regulation D during the applicable Interest Period for "eurocurrency
liabilities" (as such term is used in Regulation D) and any other
reserves actually required to be maintained by any Bank by reason of
any Regulatory Change against (1) any category of liabilities which
includes deposits by reference to which the Eurodollar Rate is to be
determined as provided in the definition of "Eurodollar Base Rate" or
(2) any category of extensions of credit or other assets which include
Eurodollar Loans. Such reserve percentages shall include, without
limitation, those imposed under Regulation D. Statutory Reserves
shall be adjusted automatically on and as of the effective date of any
change in any reserve percentage. Each determination of the Statutory
Reserves by the Agent shall be conclusive and binding, absent manifest
error, and may be made using any reasonable averaging and attribution
method.
"STOCK PLEDGE AGREEMENT" shall mean the Security Agreement --
Pledge dated May 20, 1992, from the Company to the Agent, covering all
of the issued and outstanding capital stock of Trend, as amended and
modified from time to time, including pursuant to the Amendment to
Security Agreement -- Stock.
"SUBSIDIARY" shall mean, with respect to any Person (the
"PARENT"), any corporation or entity, a majority of the shares of
voting stock (or in the case of an entity which is not a corporation,
of the equity interests that provide the power to manage or direct the
management of such entity) of which is at the time any determination
is being made, owned, directly or indirectly, by the parent.
"TAX ALLOCATION AGREEMENTS" shall mean those nine certain
agreements among the SFP Group, dated as of January 1, 1990 unless
otherwise specified in this definition and styled as follows: (a)
Agreement for the Allocation of the Combined Utah Franchise Tax
Liability; (b) Agreement for the Allocation of the Combined Oregon
Excise Tax Liability; (c) Agreement for the Allocation of the
Consolidated New Mexico Income Tax Liability; (d) Agreement for the
Allocation of the Combined Kansas Income Tax Liability; (e) Agreement
for the Allocation of the Combined Illinois Income Tax
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Liability; (f) Agreement for the Allocation of the Combined California
Franchise Tax Liability; (g) Agreement for the Allocation of the
Combined Arizona Income Tax Liability; (h) Agreement Concerning Taxes,
and (i) Agreement for the Allocation of the Consolidated Federal
Income Tax Liability Among the Members of the Santa Fe Southern
Pacific Corporation Affiliated Group, dated as of January 1, 1987.
"TAX INDEMNIFICATION AGREEMENT" shall mean any agreement pursuant
to which the Company agrees to indemnify Santa Fe Pacific Corporation
or any member of the SFP Group from and against any and all federal,
state or local taxes, interest, penalties or additions to tax imposed
upon or incurred by the SFP Group or any member thereof as a result of
the Spin-Off to the extent specified in any such agreement.
"TERMINATION DATE" shall mean the Facility A Termination Date or
the Facility B Termination Date, as the case may be, and "TERMINATION
DATES" means both such dates.
"TEXAS CREDIT CODE" shall mean Title 79, Revised Civil Statutes
of Texas, 1925, as amended.
"TLOR COVERAGE RATIO" shall mean, as of any date of
determination, the ratio of (a) the Combined Reserve Value to (b) the
Combined Covered Debt, in each case as of such date.
"TREND" shall mean Santa Fe Energy Resources (Delaware) Inc. a
wholly-owned Subsidiary of the Company.
"TYPE" shall have the meaning assigned to such term in
SECTION 1.3.
"UNAVAILABLE COMMITMENT" shall mean (a) prior to the first
Achievement Date, $50,000,000; (b) as of and following any Achievement
Date, the difference of (1) $85,000,000 and (2) the Preliminary
Available Amount determined for such Achievement Date according to the
applicable table in EXHIBIT F; and (c) if no Achievement Date has
occurred by July 1, 1994, zero.
"UNFUNDED LIABILITIES" shall mean, with respect to any Plan, at
any time, the amount (if any) by which (a) the present value of all
benefits under such Plan exceeds (b) the fair market value of all Plan
assets allocable to such benefits, all determined as of the then most
recent valuation date for such Plan (in accordance with GAAP), but
only to the extent that such excess represents a potential liability
of the Company or any ERISA Affiliate to the PBGC or a Plan under
Title IV of ERISA.
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"UNIMPAIRED CONSOLIDATED NET EARNINGS" shall mean, for any
period, the amount of Consolidated Net Earnings for such period except
that with respect to the oil and gas properties impairments taken by
the Company and its Restricted Subsidiaries in the fourth quarter of
1993 in the amount of up to $100 million as reflected in the Company's
consolidated financial statements for the year ended December 31,
1993:
(a) for any calculation of "Unimpaired Consolidated Net
Earnings" for any fiscal period of the Company and its Restricted
Subsidiaries ending on or after December 31, 1993, the net
earnings of the Company and its Restricted Subsidiaries shall not
be reduced by the amount of such oil and gas properties
impairments; and
(b) for any such calculation for any fiscal period of the
Company and its Restricted Subsidiaries ending on or after
December 31, 1993, the depreciation, depletion and amortization
expenses of the Company and its Restricted Subsidiaries shall be
calculated on a pro forma basis as if such oil and gas properties
impairments had never occurred.
"UNRESTRICTED SUBSIDIARY" shall mean each Subsidiary of the
Company designated as an Unrestricted Subsidiary on SCHEDULE I,
together with any Subsidiary of the Company which is hereafter
designated by the Board of Directors of the Company as an Unrestricted
Subsidiary. Unless designated as a Restricted Subsidiary after the
date hereof, SFEP shall be treated hereunder as an Unrestricted
Subsidiary except as SFEP is otherwise treated hereunder as a Special
Subsidiary. Any Subsidiary may be designated an Unrestricted
Subsidiary upon 30 days' prior written notice to the Banks if, at the
time of such designation and after giving effect thereto and to the
concurrent retirement of any Debt, (a) no Default shall have occurred
and be continuing; (b) such Subsidiary does not own, directly or
indirectly, any Funded Debt or capital stock of the Company or a
Restricted Subsidiary, and (c) the Company could incur at least $1.00
of additional Funded Debt without violation of SECTION 9.7(b)(3).
1.2. ACCOUNTING TERMS AND DETERMINATIONS. Except where
specifically otherwise provided:
(a) The symbol "$" and the word "dollars" shall mean lawful
money of the United States of America.
(b) For purposes of SECTIONS 9.6 and 9.7 and the definitions
used solely therein, any accounting term not otherwise defined shall
have the meaning ascribed to it under GAAP. For all other purposes
any accounting term not otherwise defined shall have the
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meaning ascribed to it under generally accepted accounting principles.
(c) Unless otherwise expressly provided, any accounting concept
and all financial covenants shall be determined on a consolidated
basis, and financial measurements shall be computed without
duplication.
(d) Wherever the term "including" or any of its correlatives
appears in the Credit Documents, it shall be read as if it were
written "including (by way of example and without limiting the
generality of the subject or concept referred to)".
(e) Wherever the word "herein" or "hereof" is used in any Credit
Document, it is a reference to that entire Credit Document and not
just to the subdivision of it in which the word is used.
(f) References in any Credit Document to Section numbers are
references to the Sections of such Credit Document.
(g) References in any Credit Document to Exhibits, Schedules,
Annexes and Appendices are to the Exhibits, Schedules, Annexes and
Appendices to such Credit Document, and they shall be deemed
incorporated into such Credit Document by reference.
(h) Any term defined in the Credit Documents which refers to a
particular agreement, instrument or document shall also mean, refer to
and include all modifications, amendments, supplements, restatements,
renewals, extensions and substitutions of the same; PROVIDED that
nothing in this subsection shall be construed to authorize any such
modification, amendment, supplement, restatement, renewal, extension
or substitution except as may be permitted by other provisions of the
Credit Documents.
(i) All times of day used in the Credit Documents mean local
time in Houston, Texas.
(j) Defined terms may be used in the singular or plural, as the
context requires.
1.3. CLASSES AND TYPES OF LOANS. Loans hereunder are
distinguished by "Class" and by "Type". The "Class" of a Loan (or of
a Commitment to make such a Loan) refers to the determination whether
such Loan is a Facility A Loan or a Facility B Loan, each of which
constitutes a Class. The "Type" of a Loan refers to the determination
whether such Loan is a Eurodollar Loan or an Alternate Base Rate Loan.
A Loan may be identified by both Class and Type (E.G., a "Eurodollar
Facility B Loan" indicates that such Loan is both a Eurodollar Loan
and a Facility B Loan).
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Section 2. COMMITMENTS.
2.1. LOANS. Each Bank severally agrees, subject to the terms and
conditions of this Agreement, to make Loans as follows:
(a) FACILITY A LOANS.
(1) On the date hereof, each Bank shall make to the Company
(and the Company shall borrow from each Bank) a Loan under this
SECTION 2.1(a) in an amount not to exceed such Bank's Facility A
Commitment then in effect. The aggregate of the Facility A Commitments
on the date hereof is $90,000,000.
(2) From time to time after the date hereof and prior to
the Facility A Termination Date, each Bank shall readvance Facility A
Optional Prepayments under this SECTION 2.1(a) to the Company in an
aggregate principal amount at any one time outstanding up to but not
exceeding such Bank's Commitment Percentage of the Facility A Unused
Commitment then in effect. Each Facility A Readvance shall be in an
amount that is an integral multiple of $1,000,000. Subject to the
conditions herein, any such Facility A Optional Prepayment made prior
to the Facility A Termination Date may be reborrowed pursuant to the
terms of this Agreement; PROVIDED, that any and all Facility A Loans
shall be due and payable in full at the Facility A Maturity Date.
(3) Notwithstanding anything in this Agreement to the
contrary, (A) no Bank shall be required to make any Facility A
Readvance if by virtue thereof the aggregate of the Facility A
Readvances of such Bank at any one time outstanding would exceed such
Bank's Commitment Percentage of the Facility A Unused Commitment then
in effect, and (B) if a Bank fails to make a Facility A Readvance as
and when required hereunder and the Company subsequently makes a
repayment on the Facility A Notes, such repayment shall be split among
the non-defaulting Banks ratably in accordance with their respective
Commitment Percentages until each Bank has its Commitment Percentage
of all of the outstanding Facility A Loans, and the balance of such
repayment shall be divided among all of the Banks in accordance with
their respective Commitment Percentages.
(4) Notwithstanding anything in this Agreement to the
contrary, no Bank shall be required to make a Facility A Readvance
(but each Bank shall permit Rollovers) during the existence of an
Engineering Shortfall.
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(b) FACILITY B LOANS.
(1) Subject to the conditions herein (including CLAUSE (6)
of this section), from time to time on or after the date hereof and
prior to the Facility B Termination Date, each Bank shall make Loans
under this SECTION 2.1(b) to the Company in an aggregate principal
amount at any one time outstanding up to but not exceeding such Bank's
Facility B Commitment; PROVIDED HOWEVER, that the foregoing
notwithstanding, prior to the Qualifying Date or, if no Qualifying
Date occurs, July 1, 1994, the aggregate Facility B Loans shall never
exceed the aggregate of the Facility B Commitments of all Banks minus
the Unavailable Commitment. Subject to the conditions herein
(including CLAUSE (6) of this section), any such Facility B Loan
repaid prior to the Facility B Termination Date may be reborrowed
pursuant to the terms of this Agreement; PROVIDED, that any and all
such Facility B Loans shall be due and payable in full on the
Facility B Maturity Date.
(2) Concurrently with the delivery of each Independent
Engineering Report and related Coverage Report required or permitted
hereby, there shall be determined, based on the Most Recent
Engineering Report and Approved Assumptions, the total maximum amount
of Facility B Loans and Letters of Credit to be available to the
Company hereunder and under the Letter of Credit Agreement without
violation of any Required Ratio. Upon each such delivery, the Company
may by notice to the Co-Agents designate as the Available Amount any
amount (not to exceed the Preliminary Available Amount as of the most
recent Achievement Date (or, if no Achievement Date occurs, the
Preliminary Available Amount then in effect) according to the
applicable table in EXHIBIT F) equal to or less than such total
maximum amount. The Available Amount so designated shall remain in
effect as the Available Amount until the next determination under this
SECTION 2.1(b)(2). If no amount lesser than (a) or (b) in this
sentence is designated in accordance with this SECTION 2.1(b)(2), the
Available Amount shall be the lesser of (a) the Preliminary Available
Amount then in effect according to the applicable table in EXHIBIT F
or (b) such total maximum amount.
(3) Notwithstanding anything in this Agreement to the
contrary, (A) no Bank shall be required to make Facility B Loans at
any one time outstanding in excess of such Bank's Commitment
Percentage of the lesser of (x) the aggregate of the Facility B
Commitments of all Banks then in effect (minus, prior to the
Qualifying Date or, if no Qualifying Date occurs, July 1, 1994, the
Unavailable Commitment) and (y) the difference between (i) the
Available Amount and (ii) the aggregate Letter of Credit Liabilities,
and (B) if a Bank fails to make a Facility B Loan as and when required
hereunder and the Company subsequently makes a
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repayment on the Facility B Notes, such repayment shall be split among
the non-defaulting Banks ratably in accordance with their respective
Commitment Percentages until each Bank has its Commitment Percentage
of all of the outstanding Facility B Loans, and the balance of such
repayment shall be divided among all of the Banks in accordance with
their respective Commitment Percentages.
(4) Notwithstanding anything in this Agreement to the
contrary, no Bank shall be required to make Facility B Loans (but each
Bank shall permit Rollovers) during the existence of an Engineering
Shortfall.
(5) Upon each delivery of the financial statements required
by SECTION 9.1(b) and the Independent Engineering Report required by
SECTION 9.1(g), the Company may request the Banks to extend the
Facility B Termination Date then in effect by a period not to exceed
one year (but in no event later than December 31, 1998). Such request
shall be made by giving its written request to the Agent specifying
the date to which the Facility B Termination Date is to be extended.
The Agent, the Co-Agents and the Banks shall consider any such request
in a timely fashion and in good faith and in light of all relevant
facts and circumstances at the time of such request, but the granting
of any such extension shall be at all times within the sole and
absolute discretion of the Agent, the Co-Agents and the Banks. The
granting of any such extension would require the unanimous consent of
the Agent, the Co-Agents and the Banks and may be conditional on such
terms and conditions as the Agent, the Co-Agents and the Banks may in
their discretion propose. Failure to obtain such an extension shall
not IPSO FACTO either constitute or excuse a Default or an Event of
Default.
(6) Notwithstanding anything contained in this Section,
except in the case of a Rollover or a Facility B Loan to satisfy a
Reimbursement Obligation pursuant to SECTION 4.1, the Company may not
obtain Facility B Loans at any time unless the Facility A Unused
Commitment is equal to zero at such time.
2.2. TERMINATIONS, REDUCTIONS AND CHANGES OF COMMITMENTS AND
FACILITY A MAXIMUM AMOUNTS.
(a) MANDATORY. (1) On the Facility A Termination Date, all
Facility A Commitments shall be terminated in their entirety. On the
Facility B Termination Date, all Facility B Commitments shall be
terminated in their entirety.
(2) In the event that the Company is required to make a
prepayment of the Facility A Loans pursuant to SECTION 3.2(b)(2)(A) or
3.2(b)(2)(B), the Facility A Maximum Amount for the Applicable
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Period then in effect shall be reduced by the amount of such
prepayment and an amount equal to such prepayment shall be deducted
from the Facility A Maximum Amounts for each subsequent Applicable
Period PRO RATA according to their respective amounts in effect
immediately prior to such reduction; PROVIDED, that if such PRO RATA
deduction does not result in compliance by the Company with all
Required Ratios, such amount shall be reallocated among such
subsequent Applicable Periods (and, if necessary, to the aggregate
Facility B Commitments) as the Company shall direct to the extent
necessary to bring the Company into compliance with all Required
Ratios.
(3) The Company shall from time to time reduce the
aggregate Facility B Commitments for present and future Applicable
Periods (and, if necessary, the Facility A Maximum Amount) to the
extent necessary to bring the Company into compliance with all
Required Ratios. Any such reduction or termination of Commitments
shall be made against the Facility B Commitments; PROVIDED, that if
the Company can comply with all Required Ratios only by reducing the
Facility A Maximum Amount, the Company may reduce or terminate the
Facility A Maximum Amount, but only to the extent necessary to achieve
such compliance. Any such reduction shall be accomplished within 10
Business Days after demand therefor by the Agent; PROVIDED, that in
the case of any noncompliance with Required Ratios resulting solely
from an Engineering Shortfall, the Company shall remedy such
noncompliance, but no Event of Default shall occur until the
expiration of the cure period provided in SECTION 10.1(e).
(4) In addition, in the event the Company is required to
make a prepayment of Facility A Loans pursuant to SECTION 3.2(b)(3),
an amount equal to such prepayment shall be deducted from the Facility
A Maximum Amounts for present and future Applicable Periods (and, if
necessary, to the aggregate Facility B Commitments) in such manner as
the Company may direct to the extent necessary to bring the Company
into compliance with all Required Ratios.
(5) Except where reductions in the Facility A Maximum
Amounts for the Applicable Periods are made PRO RATA pursuant to
SECTION 2.2(a)(2), if at any time the Facility A Maximum Amount is
reduced for any future Applicable Period pursuant to
SECTION 2.2(a)(2), 2.2(a)(3) or 2.2(a)(4) to bring the Company in
compliance with all Required Ratios, the Facility A Maximum Amount for
the Applicable Period in effect at such time and each Applicable
Period subsequent thereto and prior to such future Applicable Period
shall be reduced by a like amount.
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(b) THE COMPANY'S OPTION.
(1) The Company shall have the right to terminate or reduce
the unused portion of the Facility B Commitments at any time or from
time to time; PROVIDED that (A) the Company shall give notice of each
such termination or reduction to the Agent as provided in SECTION 5.5;
(B) each such partial reduction shall be in an integral multiple of
$5,000,000, and (C) the Company may not cause the Available Amount to
be less than the aggregate principal amount of the Facility B Loans
then outstanding plus the Letter of Credit Liabilities then
outstanding. No voluntary reduction in the Available Amount prior to
any scheduled reduction in the Available Amount shall affect the
Available Amount after such scheduled reduction date unless such
voluntarily reduced Available Amount is less than the amount scheduled
to be the Available Amount after such scheduled reduction date, in
which case the Available Amount after such scheduled reduction date
shall be no greater than such voluntarily reduced Available Amount.
Reference is made to SECTION 2.8 for restrictions on the Company's
right to increase the Available Amount under certain circumstances.
(2) The Company shall have the right to (A) terminate or
reduce the Facility A Unused Commitment at any time or from time to
time or (B) reduce the Facility A Maximum Amount for any particular
Applicable Period at any time or from time to time; PROVIDED that (i)
the Company shall give notice of each such termination or reduction to
the Agent as provided in SECTION 5.5, (ii) each such partial reduction
shall be in an integral multiple of $5,000,000, (iii) the Company may
not cause the Facility A Maximum Amount to be less than the aggregate
principal amount of the Facility A Loans then outstanding; and (iv)
the Company shall not terminate or reduce the Facility A Unused
Commitment unless at the same time the aggregate Facility B
Commitments are terminated or reduced by the same amount. Reductions
in the Facility A Maximum Amount may be applied to any Applicable
Period at the option of the Company PROVIDED that after such
application the Company is in compliance with all Required Ratios.
(c) NO REINSTATEMENT. NO reduction in or termination of the
Commitments pursuant to SECTION 2.2 and no reduction in any Facility A
Maximum Amount may be reinstated without the written approval of the
Agent and all Banks.
2.3. FEES. (a) In consideration of the Commitments, the Company
shall pay to the Agent for the account of each Bank in accordance with
its Commitment Percentage commitment fees (the "COMMITMENT FEES") for
the period from the date of the effectiveness of this Agreement to and
including the date the last of the Commitments are terminated at a
rate per annum equal to the
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sum of (a) 1/2% of the unused portion of the Available Commitment and
(b) 1/4% of the Unavailable Commitment. The Commitment Fees shall be
computed for each day and shall be based on the unused portion of the
Available Commitment and the Unavailable Commitment for such day.
Accrued Commitment Fees shall be payable in arrears on the date of the
initial Loans or Facility A Readvances, within three days after demand
therefor on or about the Quarterly Dates, and within three days after
demand therefor on or about the relevant Termination Date.
(b) In consideration of the Commitments and of the agreement of
the Banks to enter into this Agreement, the Company shall pay to the
Agent for the account of each Bank in accordance with its Commitment
Percentage a facility fee in an amount equal to .125% of such Bank's
Commitment Percentage of the Unavailable Commitment. Such facility
fee shall be due on the Qualifying Date and will never be due if the
Qualifying Date does not occur.
(c) All past due fees payable pursuant to this section shall bear
interest at the Post-Default Rate. Upon receipt, the Agent shall
disburse such fees to the Banks in accordance with their Commitment
Percentages.
2.4. AFFILIATES; LENDING OFFICES.
(a) Any Bank may, if it so elects, fulfill its Commitment as to
any Eurodollar Loan by causing a branch, foreign or otherwise, or
Affiliate of such Bank to make such Loan and may transfer and carry
such Loan at, to or for the account of any branch office or Affiliate
of such Bank; PROVIDED that in such event, for the purposes of this
Agreement, such Loan shall be deemed to have been made by such Bank
and the obligation of the Company to repay such Loan shall
nevertheless be to such Bank and shall be deemed to be held by such
Bank, to the extent of such Loan, for the account of such branch or
Affiliate.
(b) Notwithstanding any provision of this Agreement to the
contrary, each Bank shall be entitled to fund and maintain its funding
of all or any part of its Loans hereunder in any manner it sees fit,
it being understood, however, that for the purposes of this Agreement
all determinations hereunder shall be made as if such Bank had
actually funded and maintained each Eurodollar Loan during each
Interest Period through the purchase of deposits having a maturity
corresponding to such Interest Period and bearing an interest rate
equal to the applicable Eurodollar Base Rate for such Interest Period.
2.5. SEVERAL OBLIGATIONS. The failure of any Bank to make any
Loan to be made by it on the date specified therefor shall not
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relieve any other Bank of its obligation to make its Loan on such
date, but neither the Agent nor any Bank shall be responsible for the
failure of any other Bank to make a Loan to be made by such other
Bank.
2.6. NOTES. The Loans made by each Bank shall be evidenced by a
single Facility A Note or Facility B Note, as the case may be, of the
Company (each, together with all renewals, extensions, modifications
and replacements thereof and substitutions therefor, a "NOTE") dated
the date hereof, payable to the order of such Bank in a principal
amount equal to the Commitment of such Class of such Bank as
originally in effect and otherwise duly completed. Each Bank is
hereby authorized by the Company to endorse on the schedule (or a
continuation thereof) attached to each Note of such Bank, to the
extent applicable, the date, amount and Type of and the Interest
Period for each Loan made by such Bank to the Company hereunder, and
the amount of each payment or prepayment of principal of such Loan
received by such Bank; PROVIDED that any failure by such Bank to make
any such endorsement shall not affect the obligations of the Company
under such Note, in respect of such Loan, or hereunder.
2.7. OPTIONAL RESERVE REPORT. The Company may from time to time
at its option, exercisable by giving written notice to the Co-Agents
not more often than once in any Calculation Period, provide to the
Co-Agents an Independent Engineering Report. Upon the receipt of such
notice, the Co-Agents shall consult with the Company to determine new
Approved Assumptions, which shall be furnished to the Banks by a
notice as provided in the definition of "Approved Assumptions" and
shall be subject to the approval by Banks with aggregate Commitment
Percentages of 75% or more as provided therein. The Optional Reserve
Report shall be based on the new Approved Assumptions and shall be
accompanied by a Coverage Report as of the date such Optional Reserve
Report is furnished. The Annual Debt Service Coverage Ratio, the
Alternate Annual Debt Service Coverage Ratio, the TLOR Coverage Ratio
and the SLOR Coverage Ratio (and the Applicable Margin) shall each be
redetermined in accordance with this Agreement on the basis of each
such Optional Reserve Report and Coverage Report, and the Available
Amount recalculated as provided in SECTION 2.1(b)(2).
2.8. RELEASE OF MORTGAGES. The Company shall be entitled to a
release of the Mortgaged Properties from the liens, assignments and
security interests of the Deed of Trust and the other Mortgages,
PROVIDED that (a) immediately before and immediately after giving
effect to such release, no Default shall have occurred and be
continuing; and (b) the Annual Debt Service Coverage Ratio and the
SLOR Coverage Ratio (each calculated assuming the Available Amount is
fully drawn and that the aggregate unpaid principal
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balance of the Facility A Notes is equal to the Facility A Maximum
Amount) immediately before and immediately after giving effect to any
such release shall be at least 1.25 to 1.00 and 2.00 to 1.00,
respectively. At any time on or after the Qualifying Date, but prior
to July 1, 1994, the Company may choose not more often than once by
giving written notice to the Co-Agents to recalculate the Annual Debt
Service Coverage Ratio and the SLOR Coverage Ratio to determine if the
Company qualifies for release of the Mortgaged Properties pursuant to
this section; such recalculation shall be based on new Approved
Assumptions to be determined in connection with such recalculation by
Banks with Commitment Percentages of 75% or more and using the
Independent Engineering Report most recently furnished in accordance
with this Agreement. Notwithstanding any other provision of this
Agreement to the contrary, should both (x) the Company at any time
designate as the Available Amount an amount less than the maximum
amount then offered to it as the Available Amount and (y) as a result
the Company shall obtain the release of any Mortgaged Properties, the
Available Amount may never thereafter exceed the amount so designated
by the Company.
2.9. USE OF PROCEEDS. The proceeds of the Loans shall be used by
the Company for working capital and for general corporate purposes and
may not be utilized (a) to pay dividends other than usual dividends in
the ordinary course of business or (b) for the buyout or acquisition
of any business unless the board of directors of such Person or any
other similar body has first approved such buyout or acquisition.
2.10. ORIGINAL CREDIT DOCUMENTS NOT TERMINATED. The
execution and delivery of this Agreement and the other Credit
Documents in connection with this Agreement, including the Notes, does
not and shall not constitute payment, prepayment or novation of any
indebtedness outstanding under the Revolving and Term Credit Agreement
dated as of May 20, 1992, by and among the parties hereto, as amended,
or the notes outstanding thereunder on the date hereof (the "ORIGINAL
NOTES"). The Original Notes have been marked "renewed" rather than
"paid". All Liens securing the Original Notes as amended and modified
from time to time by the Credit Documents executed and delivered
concurrently with this Agreement are hereby ratified, confirmed,
extended, renewed and brought forward as security for the Notes and
all other Obligations of the Company described therein as being
secured thereby.
2.11. SALE OF CERTAIN PROPERTIES. Notwithstanding the
provisions of SECTIONS 2.2, 2.8 and 3.2, the sale of the properties by
the Company pursuant to the agreement dated December 2, 1993 by and
among the Company, Santa Fe Energy Operating Partners, L.P. and Bridge
Oil U.S.A. and with respect to the Manila Village properties,
Plaquemines Parish, Louisiana, pursuant to the
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agreement dated October 26, 1993, by and among the Company, Santa Fe
Energy Operating Partners, L.P., Santa Fe Oil Company and Vintage
Petroleum, Inc. shall be made with a release from the Liens of the
Security Documents, without any required prepayment and without
reducing either any Facility A Maximum Amount or any Preliminary
Available Amount.
Section 3. BORROWINGS, PREPAYMENTS AND SELECTION OF INTEREST
RATES.
3.1. BORROWINGS. The Company shall give the Agent notice of each
borrowing to be made hereunder as provided in SECTION 5.5. Each
borrowing shall be in an amount of $1,000,000 or any integral multiple
thereof. Not later than 1:00 p.m. on the date specified for each such
borrowing hereunder, each Bank shall make available the amount of the
Loan, if any, to be made by it on such date to the Agent, at its
Principal Office, in immediately available funds, for the account of
the Company. The amount so received by the Agent shall, subject to
the terms and conditions of this Agreement, be made available to the
Company by depositing the same, in immediately available funds, in an
account designated by the Company and maintained with the Agent at its
Principal Office.
3.2. PREPAYMENTS.
(a) OPTIONAL PREPAYMENTS. Except as provided in SECTIONS 3,
4.2(c), 5 and 6, the Company shall have the right to prepay, on any
Business Day, in whole or in part, without the payment of any penalty
or fee, Loans at any time or from time to time; PROVIDED that the
Company shall give the Agent notice of each such prepayment as
provided in SECTION 5.5. Eurodollar Loans may be prepaid on the last
day of an Interest Period applicable thereto. Eurodollar Loans may
not be otherwise prepaid unless prepayment is accompanied by payment
of all compensation required by SECTION 6.5. All optional prepayments
shall be applied to Facility B Loans and Reimbursement Obligations
until all such Facility B Loans and Reimbursement Obligations have
been repaid, then to Facility A Loans.
(b) MANDATORY PREPAYMENTS. (1) The Company shall from time to
time on demand by the Agent prepay the Facility B Loans in such
amounts as shall be necessary (A) so that at all times the aggregate
outstanding principal amount of the Facility B Loans and Letter of
Credit Liabilities shall not be in excess of the Available Amount or
(B) to comply with SECTION 9.9. Any such payment shall be allocated
between Facility B Loans and Letter of Credit Liabilities and, if to
Letter of Credit Liabilities, first to Reimbursement Obligations and
then to other obligations as the Company may elect.
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In addition, the Company shall from time to time on demand by the
Agent prepay the Facility A Loans in such amounts as shall be
necessary (A) so that at all times the aggregate outstanding principal
amount of the Facility A Loans (including Facility A Readvances) shall
not be in excess of the Facility A Maximum Amount or (B) to comply
with SECTION 9.9.
(2) (A) Upon any sale for cash or cash equivalent
consideration of any Proved Reserves included in the Adobe Properties
in excess of $1,000,000 in any one transaction or $5,000,000 for all
transactions, the Company shall prepay on the Business Day following
the date of such sale for application to the unpaid principal balance
of the Facility A Notes an amount equal to the greater of (i) 100% of
the total proceeds of such sale or (ii) 58% of the present worth
assigned to the property sold in the Most Recent Engineering Report.
(B) Except as otherwise permitted by the Mortgages,
Mortgaged Properties cannot be sold for consideration other than cash
without the approval of all Banks. Upon any sale of any Proved
Reserves included in the Adobe Properties (other than Mortgaged
Properties) for consideration other than cash which causes the
aggregate net present value (at the discount rate included in the
Approved Assumptions on the date of each such sale) of all Adobe
Properties sold for consideration other than cash (determined in
accordance with the applicable Most Recent Engineering Report) in any
one Calculation Period to exceed $5,000,000, the Company shall prepay
on the Business Day following the date of such sale for application to
the unpaid principal balance of the Facility A Notes an amount equal
to 100% of the net present value (at the discount rate included in the
Approved Assumptions in effect on the date of such sale) of the Adobe
Properties so sold (determined in accordance with the Most Recent
Engineering Report).
(C) All amounts prepaid pursuant to
SECTION 3.2(b)(2)(A) or (B) shall be applied to the unpaid principal
balance of the Facility A Notes. The Company may in its discretion
defer making the prepayment required by SECTION 3.2(b)(2) (A) or (B)
until the earlier of (i) the time the aggregate amount of such
prepayments so deferred equals or exceeds $1,000,000 or (ii) one month
after the date the first such prepayment would otherwise be due.
(3) Concurrently with any sale of any Proved Reserves
(whether or not included in the Adobe Properties) which would cause
the aggregate amount of such sales since the effective date of the
last calculation of compliance with the Required Ratios to exceed
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$20,000,000 in the aggregate, each of the Annual Debt Service Coverage
Ratio and the Alternate Annual Debt Service Coverage Ratio shall be
redetermined for the Calculation Period in which such sales occur and
for each Calculation Period thereafter to and including December 31,
1998 and the SLOR Coverage Ratio and the TLOR Coverage Ratio shall be
redetermined, in each case to the effective date of the sale on the
basis of the most recent Approved Assumptions and the Most Recent
Engineering Report and the most recent Coverage Report delivered to
the Agent pursuant to SECTION 9.1. In making such redeterminations,
(a) the Proved Reserves (whether or not included in the Adobe
Properties) described in the Most Recent Engineering Report which are
no longer owned by members of the Combined Group (the "SOLD
PROPERTIES") shall be identified; (b) there shall be determined the
gross and net volumes of Hydrocarbons projected in the Most Recent
Engineering Report to be produced from the Petroleum Properties
(including the Sold Properties) minus the gross and net volumes of
Hydrocarbons projected in the Most Recent Engineering Report to be
produced from the Sold Properties; (c) there shall be determined by
calendar years the Net Oil and Gas Income shown in the Most Recent
Engineering Report as attributable to the Petroleum Properties
(including the Sold Properties) of members of the Combined Group minus
the Net Oil and Gas Income shown in the Most Recent Engineering Report
as attributable to the Sold Properties; and (d) the discount rate and
other factors set forth in the most recent Approved Assumptions shall
be used. In addition to any prepayments required by SECTION
3.2(b)(2)(A) and (B), if the Company upon any such redetermination
shall not be in compliance with all Required Ratios, the Company shall
prepay on the Business Day following the date of such sale an amount
of the proceeds of all sales of any Adobe Properties not previously
prepaid for application to the unpaid principal balance of the
Facility A Notes. The Company may in its discretion defer making the
prepayments required by the preceding sentence until the earlier of
(a) the time the aggregate amount of such prepayments so deferred
equals or exceeds $1,000,000 or (b) one month after the date the first
such prepayment would otherwise be due.
(4) The Company shall maintain records of all sales of
Proved Reserves, shall clearly designate each such sale as a sale of
an Adobe Property or other property, and shall otherwise maintain
books and records which enable it to comply, and to demonstrate to the
Agent on request compliance, with the obligations of the Company in
this SECTION 3.2(b).
3.3. SELECTION OF INTEREST RATES. Subject to SECTIONS 5, 6 and
12.8, the Company shall have the right, by giving written notice to
the Agent as provided in SECTION 5.5, either to convert any Loan (in
whole or in part) into a Loan of another Type or to
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continue such Loan (in whole or in part) as a Loan of the same Type.
Any such notice of conversion of a Loan into, or continuation of a
Loan as, a Eurodollar Loan shall specify the new Interest Period. In
the event the Company fails to so give such notice prior to the end of
any Interest Period for any Eurodollar Loan, such Loan shall become an
Alternate Base Rate Loan on the last day of such Interest Period. No
more than 10 Eurodollar Interest Periods shall be in effect at any
time. Except as otherwise provided herein, each designation of an
interest rate with respect to the Facility A Notes or Facility B Notes
shall apply to all Facility A Notes and Facility B Notes ratably in
accordance with their respective outstanding principal balances. If
any Bank assigns an interest in any of its Notes when any Eurodollar
Loan is outstanding with respect thereto, the assignee shall have its
ratable interest in such Eurodollar Loan.
Section 4. PAYMENTS OF PRINCIPAL AND INTEREST.
4.1. REPAYMENT OF LOANS. (a) The Company will pay to the Agent
for the account of each Bank the principal of each Loan made by such
Bank on the dates provided in the respective Notes and herein and the
amount of each Reimbursement Obligation forthwith upon its incurrence.
The amount of any Reimbursement Obligation may, if the applicable
conditions precedent specified in SECTION 7 (other than any Default
resulting solely from the nonpayment of such Reimbursement Obligation)
have been satisfied, be paid with the proceeds of Loans.
(b) Subject to SECTIONS 3.2 and 10.1, the Company shall pay the
outstanding principal amount of all Facility A Loans on the Facility A
Maturity Date and the outstanding principal amount of all Facility B
Loans on the Facility B Maturity Date.
4.2. INTEREST. (a) Subject to SECTION 12.8, the Company will pay
to the Agent for the account of each Bank interest on the unpaid
principal amount of each Loan made by such Bank for the period
commencing on the date of such Loan to but excluding the date such
Loan shall be paid in full, at the lesser of (1) the following rates
per annum:
(A) if such Loan is an Alternate Base Rate Loan, the Alternate
Base Rate PLUS the Applicable Margin for Alternate Base Rate Loans; or
(B) if such Loan is a Eurodollar Loan, the applicable Eurodollar
Rate PLUS the Applicable Margin for Eurodollar Loans; or
(2) the Highest Lawful Rate.
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(b) Notwithstanding any of the foregoing but subject to
SECTION 12.8, the Company will pay to the Agent for the account of
each Bank interest at the applicable Post-Default Rate on any
principal of any Loan made by such Bank and on any other amount
payable by the Company hereunder to or for the account of such Bank
(but, if such amount is interest, only to the extent legally
enforceable), which shall not be paid in full when due (whether at
stated maturity, by acceleration or otherwise), for the period
commencing on the due date thereof through and including the date the
same is paid in full.
(c) Accrued interest shall be due and payable on the applicable
Interest Payment Dates, except that (1) accrued interest payable at
the Post-Default Rate shall be due and payable from time to time on
demand of the Agent or the Required Banks (through the Agent), (2)
accrued interest on any amount converted from one Type of Loan to
another Type of Loan shall be paid on the amount so converted at the
time of such conversion, and (3) accrued interest on any Eurodollar
Loan paid or prepaid shall be due at the time of such payment or
prepayment.
Section 5. PAYMENTS; PRO RATA TREATMENT; COMPUTATIONS, ETC.
5.1. PAYMENTS. (a) Except to the extent otherwise provided
herein, all payments of principal of or interest on the Loans and
other amounts to be made by the Company hereunder and under the Notes
and the Security Documents shall be made in dollars, in immediately
available funds, to the Agent at its Principal Office (or in the case
of a successor Agent, at the principal office of such successor Agent
in the United States), not later than 11:00 a.m. on the date on which
such payment shall become due (each such payment made after such time
on such due date to be deemed to have been made on the next succeeding
Business Day).
(b) The Company shall, at the time of making each payment
hereunder or under any Note or any Security Document, specify to the
Agent the Loans or other amounts payable by the Company hereunder or
thereunder to which such payment is to be applied (and in the event
that it fails so to specify, such payment shall be applied as the
Agent may designate to the Loans or other amounts then due and
payable); PROVIDED that if no Loans are then due and payable or an
Event of Default has occurred and is continuing, the Agent may apply
such payment to the Obligations in such order as it may elect in its
sole discretion, but subject to the other terms and conditions of this
Agreement, including SECTION 5.2). Each payment received by the Agent
hereunder or under any Note or any Security Document for the account
of a Bank shall be paid promptly to such Bank, in immediately
available funds for the account of such Bank's Applicable Lending
Office.
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(c) If the due date of any payment hereunder or under any Note
or Security Document falls on a day which is not a Business Day, the
due date for such payment (subject to the definition of Interest
Period) shall be extended to the next succeeding Business Day and
interest shall be payable for any principal so extended for the period
of such extension.
5.2. PRO RATA TREATMENT. Except to the extent otherwise provided
herein, (a) each borrowing from the Banks hereunder, each payment of
Commitment Fees and other fees and each termination or reduction of
the Commitments of the Banks under SECTION 2.3 shall be made PRO RATA
according to the Banks' respective Commitments, and (b) each payment
by the Company of principal of or interest on Loans of a particular
Type shall be made to the Agent for the account of the Banks PRO RATA
in accordance with the respective unpaid principal amounts of such
Loans held by the Banks (subject to SECTION 6.4).
5.3. COMPUTATIONS. Interest based on the Alternate Base Rate (to
the extent determined by reference to the Prime Rate), and fees
hereunder, will be computed on the basis of 365 (or 366) days and
actual days elapsed (including the first day but excluding the last
day) occurring in the period for which payable. All other interest
shall be computed on the basis of a year of 360 days and actual days
elapsed (including the first day but excluding the last day) occurring
in the period for which payable, unless the effect of so computing
shall be to cause the rate of interest to exceed the Highest Lawful
Rate (in which event interest shall be calculated on the basis of the
actual number of days elapsed in a year composed of 365 or 366 days,
as the case may be).
5.4. MINIMUM AND MAXIMUM AMOUNTS. Except for prepayments made
pursuant to SECTION 3.2(b), each borrowing and repayment of principal
of Loans, each optional prepayment and each conversion of Type shall
be in an aggregate principal amount equal to $1,000,000, or an
integral multiple thereof (borrowings or prepayments of Loans of
different Types or, in the case of Eurodollar Loans, having different
Interest Periods at the same time hereunder, to be deemed separate
borrowings and prepayments for purposes of the foregoing, one for each
Type or Interest Period), and each termination or reduction of
Commitments shall be in an aggregate principal amount equal to
$5,000,000 or an integral multiple thereof. Upon any mandatory
prepayment that would reduce Eurodollar Loans having the same Interest
Period to less than $1,000,000, such Loans shall automatically be
converted into Alternate Base Rate Loans.
5.5. CERTAIN ACTIONS, NOTICES, ETC. Notices to the Agent of any
termination or reduction of Commitments, prepayments of Loans and of
the duration of Interest Periods and Requests for Extension
-55-
of Credit shall be irrevocable and shall be effective only if received
by the Agent not later than 11:00 a.m. on the number of Business Days
prior to the date of the relevant termination, reduction, borrowing
and/or prepayment specified below:
Number of Business
Days Prior
Notice
Termination or reduction
of Commitments 10
Borrowing or prepayment
of or conversion into
Alternate Base Rate Loans same day
Borrowing or prepayment
of or conversion into or
continuance of Eurodollar
Loans 3
Prepayments required
pursuant to SECTION 3.2 1
Each such notice of termination or reduction shall specify the amount
of the Commitment to be terminated or reduced. Each such notice of
prepayment or Request for Extension of Credit shall specify the
amount, Class and Type of the Loans to be borrowed or prepaid (subject
to SECTIONS 3.2(a) and 5.4), the date of borrowing or prepayment
(which shall be a Business Day) and, in the case of Eurodollar Loans,
the duration of the Interest Period therefor (subject to the
definition of Interest Period). Any such notice of conversion of a
Loan into a Loan of another Type shall identify such Loan (or portion
thereof) being converted and specify the Type of Loan into which such
Loan is being converted (subject to SECTION 5.4) and the date for
conversion (which shall be a Business Day) and, unless such Loan is
being converted into an Alternate Base Rate Loan, the duration
(subject to the definition of Interest Period) of the Interest Period
therefor which is to commence as of the last day of the then current
Interest Period therefor (or the date of conversion, if such Loan is
being converted from an Alternate Base Rate Loan). Each such notice
of continuation of a Loan (or portion thereof) as the same Type of
Loan shall identify such Loan (or portion thereof) being continued
(subject to SECTION 5.4) and the duration (subject to the definition
of Interest Period) of the Interest Period therefor which is to
commence as of the last day of the then current Interest Period
therefor. The Agent shall promptly notify the Banks of the contents
of each such notice or Request for Extension of Credit.
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Notice of any prepayment having been given, the principal amount
specified in such notice, together with interest thereon to the date
of prepayment, shall be due and payable on such prepayment date.
5.6. NON-RECEIPT OF FUNDS BY THE AGENT. Unless the Agent shall
have been notified by a Bank prior to noon on the date on which such
Bank is to make payment to the Agent of the proceeds of a Loan to be
made by it hereunder or by the Company prior to the date on which the
Company is to make a payment to the Agent for the account of one or
more of the Banks, as the case may be (such Bank or the Company being
herein called the "PAYOR" and such payment being herein called the
"REQUIRED PAYMENT"), which notice shall be effective upon receipt,
that the Payor does not intend to make the Required Payment to the
Agent, the Agent may assume that the Required Payment has been made
and may, in reliance upon such assumption (but shall not be required
to), make the amount thereof available to the intended recipient on
the date that such Required Payment is to be made. If the Payor is
the Company and the Company has not in fact made the Required Payment
to the Agent on or before such date, the recipient of such payment
shall, on demand, pay to the Agent the amount made available by the
Agent, together with interest thereon from the date such amount was so
made available by the Agent until the date the Agent recovers such
amount at a rate per annum equal to the Fed Funds Rate for the first
three days after demand and thereafter at the Fed Funds Rate plus 2%.
If the Payor is a Bank and such Bank has not in fact made the Required
Payment to the Agent on or before such date, then such Bank shall pay
to the Agent the amount made available by the Agent on behalf of such
Bank, together with interest thereon from the date such amount was so
made available by the Agent until the Agent recovers such amount at a
rate per annum equal to the Fed Funds Rate for the first three days
and thereafter at the Fed Funds Rate plus 2%.
5.7. SHARING OF PAYMENTS, ETC. If a Bank or any participant of a
Bank shall obtain payment of any obligation to it under this
Agreement, through the exercise of any right of set-off, banker's
lien, counterclaim or similar right, or otherwise, then such Bank or
participant shall promptly purchase from the other Banks participa-
tions in the Loans made or other obligations held by the other Banks
in such amounts, and make such other adjustments from time to time as
shall be equitable to the end that all the Banks and participants
shall share the benefit of such payment (net of any expenses which may
be incurred by such Bank or its participant in obtaining or preserving
such benefit) PRO RATA in accordance with the unpaid principal and
interest then due to each of them. To such end all the Banks and
their participants shall make appropriate adjustments among themselves
(by the resale of participations sold or otherwise) if such payment is
rescinded or
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must otherwise be restored. The Company agrees, to the fullest extent
it may effectively do so under applicable law, that any Person so
purchasing a participation in the Loans made or other obligations held
by other Banks may exercise all rights of set-off, bankers' lien,
counterclaim or similar rights with respect to such participation as
fully as if such Bank were a direct holder of Loans or other
obligations in the amount of such participation. Nothing contained
herein shall require any Bank to exercise any such right or shall
affect the right of any Bank to exercise, and retain the benefits of
exercising, any such right with respect to any other indebtedness or
obligation of the Company.
Section 6. YIELD PROTECTION AND ILLEGALITY.
6.1. ADDITIONAL COSTS.
(a) Subject to SECTION 12.8, the Company shall pay to the Agent,
on demand for the account of such Bank, from time to time such amounts
as any Bank may reasonably determine to be necessary to compensate it
for any costs incurred by such Bank which such Bank reasonably
determines are attributable to its making or maintaining of any
Eurodollar Loan hereunder or its obligation to make or maintain any
such Loan hereunder, or any reduction in any amount receivable by such
Bank hereunder in respect of any of such Loans or such obligation
(such increases in costs and reductions in amounts receivable being
herein called "ADDITIONAL COSTS"), in each case resulting from any
Regulatory Change which:
(1) subjects such Bank (or makes it apparent that such Bank
is subject) to any tax (including any United States interest equali-
zation tax), levy, impost, duty, charge or fee (collectively,
"TAXES"), or any deduction or withholding for any Taxes on or from the
payment due under any Eurodollar Loan or other amounts due hereunder,
other than income and franchise taxes of the jurisdiction (or any
subdivision thereof) in which such Bank has an office or its
Applicable Lending Office; or
(2) changes the basis of taxation of any amounts payable to
such Bank under this Agreement or its Notes in respect of any of such
Loans, other than changes which affect taxes measured by or imposed on
the overall net income or franchise taxes of such Bank or of its
Applicable Lending Office for any of such Loans by the jurisdiction
(or any subdivision thereof) in which such Bank has an office or such
Applicable Lending Office; or
(3) imposes or modifies or increases or deems applicable
any reserve, special deposit or similar requirement (including any
such requirement imposed by the Board) relating to any extensions of
credit or other assets of, or any deposits with or other
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liabilities of, such Bank or loans made by such Bank, or against any
other funds, obligations or other property owned or held by such Bank; or
(4) imposes any other condition affecting this Agreement
(or any of such extensions of credit or liabilities).
Each Bank will notify the Company through the Agent of any event
occurring after the date of this Agreement which will entitle such
Bank to compensation pursuant to this section as promptly as
practicable after it obtains knowledge thereof and determines to
request such compensation, and (if so requested by the Company through
the Agent) will designate a different available Applicable Lending
Office for the Eurodollar Loans of such Bank or take such other action
as the Company may reasonably request if such designation or action is
consistent with the internal policy of such Bank and legal and
regulatory restrictions, can be undertaken at no additional cost, will
avoid the need for, or reduce the amount of, such compensation and
will not, in the sole opinion of such Bank, be disadvantageous to such
Bank (PROVIDED that such Bank shall have no obligation so to designate
an Applicable Lending Office located in the United States of America).
Each Bank will furnish the Company with a statement setting forth the
basis and amount of each request by such Bank for compensation under
this section, with each such statement to cover amounts accruing under
this section with respect to a period beginning not earlier than 120
days from the date thereof and using any reasonable averaging and
attribution methods.
(b) Without limiting the effect of the foregoing provisions of
this section, in the event that, by reason of any Regulatory Change,
any Bank either (1) incurs Additional Costs based on or measured by
the excess above a specified level of the amount of a category of
deposits or other liabilities of such Bank which includes deposits by
reference to which the interest rate on Eurodollar Loans is determined
as provided in this Agreement or a category of extensions of credit or
other assets of such Bank which includes Eurodollar Loans or (2)
becomes subject to restrictions on the amount of such a category of
liabilities or assets which it may hold, then, if such Bank so elects
by notice to the Company (with a copy to the Agent), the obligation of
such Bank to make Eurodollar Loans hereunder shall be suspended until
the date such Regulatory Change ceases to be in effect (in which case
the provisions of SECTION 6.4 shall be applicable).
(c) Determinations and allocations by any Bank for purposes of
this section of the effect of any Regulatory Change on its costs of
maintaining its obligations to make Loans or of making or maintaining
Loans or on amounts receivable by it in respect of
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Loans, and of the additional amounts required to compensate such Bank
in respect of any Additional Costs, shall be conclusive, absent
manifest error, and may be prepared using any reasonable averaging and
attribution methods.
(d) In the event any Bank shall seek compensation pursuant to
this SECTION 6.1, the Company may give notice to such Bank (with
copies to the Agent) that it wishes to seek one or more Eligible
Assignees (which may be one or more of the Banks) to purchase and
assume the Commitments, Loans, Notes and Letter of Credit Liabilities
of such Bank. Each Bank requesting compensation pursuant to this
SECTION 6.1 agrees to sell its Commitments, Loans, Notes, Letter of
Credit Liabilities and interests in this Agreement and in the Letter
of Credit Agreement pursuant to SECTION 12.6 (without recourse,
representation or warranty except as provided in SECTION 12.6) to any
such Eligible Assignee for an amount equal to the sum of the
outstanding unpaid principal of and accrued interest on such Loans,
Notes and Letter of Credit Liabilities plus all other fees and amounts
(including any compensation claimed by such Bank under this
SECTION 6.1) owing to such Bank hereunder and under the Letter of
Credit Agreement calculated, in each case, to the date such
Commitments, Loans, Notes, Letter of Credit Liabilities and interests
are purchased, whereupon such Bank shall have no further Commitment or
other obligation to the Company hereunder or under any Note or under
the Letter of Credit Agreement.
6.2. LIMITATION ON TYPES OF LOANS. Anything herein to the
contrary notwithstanding, if, with respect to any Eurodollar Loans:
(a) the Agent determines (which determination shall be
conclusive absent manifest error) that quotations of interest rates
for the relevant deposits referred to in the definition of "Eurodollar
Base Rate" in SECTION 1.1 are not being provided in the relevant
amounts or for the relevant maturities for purposes of determining the
rate of interest for such Loans for Interest Periods therefor as
provided in this Agreement; or
(b) the Required Banks determine (which determination shall be
conclusive absent manifest error) and notify the Agent that the
relevant rates of interest referred to in the definition of "Eurodol-
lar Base Rate" in SECTION 1.1 upon the basis of which the rates of
interest for such Loans are to be determined do not accurately reflect
the cost to such Banks of making or maintaining such Loans for any
proposed Interest Periods therefor; or
(c) the Agent determines (which determination shall be
conclusive absent manifest error) that by reason of circumstances
affecting the Eurodollar interbank market generally, deposits in
dollars in the relevant Eurodollar interbank market are not being
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offered for the applicable Interest Period and in an amount equal to
the amount of the Eurodollar Loan requested by the Company;
then the Agent shall promptly notify the Company and each Bank
thereof, and, so long as such condition remains in effect, the Banks
shall be under no obligation to make Eurodollar Loans (but shall
maintain until the end of the Interest Period then in effect the
Eurodollar Loans then outstanding).
6.3. ILLEGALITY. Notwithstanding any other provision of this
Agreement to the contrary, if by reason of (x) the adoption of any
applicable Legal Requirement or any change in any applicable Legal
Requirement or in the interpretation or administration thereof by any
Governmental Authority or compliance by any Bank with any request or
directive (whether or not having the force of law) of any central bank
or other Governmental Authority or (y) circumstances affecting the
relevant Eurodollar interbank market or the position of a Bank
therein, it shall at any time be unlawful or impracticable in the sole
discretion of a Bank for such Bank or its Applicable Lending Office to
(a) honor its obligation to permit the establishment of Eurodollar
Loans hereunder or (b) maintain Eurodollar Loans hereunder, then such
Bank through the Agent shall promptly notify the Company thereof and
the obligation of such Bank to establish or maintain Eurodollar Loans
hereunder shall be suspended until such time as such Bank may again
establish and maintain Eurodollar Loans, in which case the provisions
of SECTION 6.4 shall be applicable. Before giving such notice
pursuant to this section, such Bank will designate a different
available Applicable Lending Office for the Eurodollar Loans of such
Bank or take such other action as the Company may reasonably request
if such designation or action is consistent with the internal policy
of such Bank and legal and regulatory restrictions, can be undertaken
at no additional cost, will avoid the need to suspend such Bank's
obligation to make Eurodollar Loans hereunder and will not, in the
sole opinion of such Bank, be disadvantageous to such Bank (PROVIDED
that such Bank shall have no obligation so to designate an Applicable
Lending Office located in the United States of America). In the event
any Bank shall seek to invoke the benefits of this section, the
Company may give notice to such Bank (with copies to the Agent) that
it wishes to seek one or more Eligible Assignees (which may be one or
more of the Banks) to purchase and assume the Commitments, Loans,
Notes and Letter of Credit Liabilities of such Bank. Each Bank
requesting to invoke the benefits of this SECTION 6.3 agrees to sell
its Commitments, Loans, Notes, Letter of Credit Liabilities and
interests in this Agreement and in the Letter of Credit Agreement
pursuant to SECTION 12.6 (without recourse, representation or warranty
except as provided in SECTION 12.6) to any such Eligible Assignee for
an amount equal to the sum of the outstanding unpaid principal of and
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accrued interest on such Loans, Notes and Letter of Credit Liabilities
plus all other fees and amounts owing to such Bank hereunder and under
the Letter of Credit Agreement calculated, in each case, to the date
such Commitments, Loans, Notes, Letter of Credit Liabilities and
interests are purchased, whereupon such Bank shall have no further
Commitment or other obligation to the Company hereunder or under any
Note or under the Letter of Credit Agreement.
6.4. SUBSTITUTE ALTERNATE BASE RATE LOANS. If the obligation of
any Bank to make or maintain Eurodollar Loans shall be suspended
pursuant to SECTION 6.1, 6.2 or 6.3, all Loans which would otherwise
be made by such Bank as Eurodollar Loans shall be made instead as
Alternate Base Rate Loans (and, if an event referred to in
SECTION 6.1(b) or 6.3 has occurred and such Bank so requests by notice
to the Company with a copy to the Agent, each Eurodollar Loan of such
Bank then outstanding shall be automatically converted into an
Alternate Base Rate Loan on the date specified by such Bank in such
notice) and, to the extent that such Loans are so made as (or
converted into) Alternate Base Rate Loans, all payments of principal
which would otherwise be applied to such Loans shall be applied
instead to such Alternate Base Rate Loans.
6.5. COMPENSATION. Subject to SECTION 12.8, the Company shall
pay to the Agent for the account of each Bank, within two Business
Days after demand therefor by such Bank through the Agent, such amount
or amounts as shall be sufficient (in the reasonable opinion of such
Bank) to compensate it for any loss, cost or expense incurred by it as
a result of:
(a) any payment, prepayment or conversion of a Eurodollar Loan
made by such Bank on a date other than the last day of an Interest
Period for such Loan; or
(b) any failure by the Company to borrow a Eurodollar Loan to be
made by such Bank on the date for such borrowing specified in the
relevant notice of borrowing under SECTION 5.5 or to convert an
Alternate Base Rate Loan into a Eurodollar Loan on such date after
giving notice of such conversion or to continue a Eurodollar Loan
after giving notice of such continuance; or
(c) any cessation of the Eurodollar Rate to apply to any Loan or
any part thereof;
such compensation to include, without limitation, an amount equal to
the excess, if any, as reasonably determined by each Bank, of (1) its
cost of obtaining the funds for the Loan being paid, prepaid or
converted or not borrowed, converted or continued (assumed to be the
applicable Eurodollar Base Rate) for the period
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from the date of such payment, prepayment or conversion or failure to
borrow convert or continue to the last day of the Interest Period for
such Loan (or, in the case of a failure to borrow, convert or continue
the Interest Period for the Loan which would have commenced on the
date of such failure to borrow convert or continue) over (2) the
amount of interest (as reasonably determined by such Bank) that would
be realized by such Bank in reemploying the funds so paid, prepaid or
converted or not borrowed, converted or continued for such period or
Interest Period, as the case may be. Each determination of the amount
of such compensation by a Bank shall be conclusive and binding, absent
manifest error, and may be computed using any reasonable averaging and
attribution method.
6.6. CAPITAL ADEQUACY. If any Bank shall have determined that
the adoption after the date hereof or effectiveness after the date
hereof (regardless of whether previously announced) of any applicable
Legal Requirement or treaty regarding capital adequacy, or any change
after the date hereof in any existing or future Legal Requirement or
treaty regarding capital adequacy, or any change in the interpretation
or administration thereof after the date hereof by any Governmental
Authority or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its Applicable
Lending Office) with any request or directive after the date hereof
regarding capital adequacy (whether or not having the force of law) of
any such Governmental Authority or comparable agency has or would have
the effect of reducing the rate of return on the capital of such Bank
(or any holding company of which such Bank is a part) as a consequence
of its obligations hereunder and under or in respect of the Notes held
by it to a level below that which such Bank or holding company could
have achieved but for such adoption, change or compliance by an amount
deemed by such Bank to be material, then from time to time, upon
demand by such Bank (with a copy to the Agent), the Company (subject
to SECTION 12.8) shall pay to such Bank such additional amount or
amounts as will compensate such Bank or holding company for such
reduction. The certificate of any Bank setting forth such amount or
amounts as shall be necessary to compensate it and the basis therefor
shall cover amounts accruing under this section with respect to a
period beginning not earlier than 120 days from the date thereof and
shall be conclusive and binding, absent manifest error. The Company
shall pay the amount shown as due on any such certificate upon
delivery of such certificate. In preparing such certificate, a Bank
may employ such assumptions and allocations of costs and expenses as
it shall in good faith deem reasonable and may use any reasonable
averaging and attribution method. In the event any Bank shall seek
compensation pursuant to this section, the Company may give notice to
such Bank (with copies to the Agent) that it wishes to seek one or
more Eligible Assignees (which may be
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one or more of the Banks) to purchase and assume the Commitments,
Loans, Notes and Letter of Credit Liabilities of such Bank. Each Bank
requesting compensation pursuant to this section agrees to sell its
Commitments, Loans, Notes, Letter of Credit Liabilities and interests
in this Agreement and in the Letter of Credit Agreement pursuant to
SECTION 12.6 (without recourse, representation or warranty except as
provided in SECTION 12.6) to any such Eligible Assignee for an amount
equal to the sum of the outstanding unpaid principal of and accrued
interest on such Loans, Notes and Letter of Credit Liabilities plus
all other fees and amounts (including any compensation claimed by such
Bank under this section owing to such Bank hereunder and under the
Letter of Credit Agreement calculated, in each case, to the date such
Commitments, Loans, Notes, Letter of Credit Liabilities and interests
are purchased, whereupon such Bank shall have no further Commitment or
other obligation to the Company hereunder or under any Note or the
Letter of Credit Agreement.
Section 7. CONDITIONS PRECEDENT.
7.1. CLOSING CONDITIONS. The effectiveness of this Agreement is
subject to the following conditions precedent, each of which shall
have been fulfilled or waived to the satisfaction of the Agent:
(a) CORPORATE ACTION AND STATUS. The Agent shall have received
copies of the Organizational Documents of the Company certified by the
Secretary of the Company, and resolutions of the Board of Directors of
the Company, certified by the Secretary of the Company, for all corpo-
rate action taken by the Company authorizing the execution, delivery
and performance of the Credit Documents and all other documents
related to this Agreement, together with such certificates as may be
appropriate to demonstrate the qualification and good standing of and
payment of taxes by each member of the Combined Group in each
jurisdiction set forth on SCHEDULE IX.
(b) INCUMBENCY. The Company shall have delivered to the Agent a
certificate in respect of the name and signature of each officer who
(1) is authorized to sign on its behalf the applicable Credit
Documents related to any Loan and (2) will, until replaced by another
officer or officers duly authorized for that purpose, act as its
representative for the purposes of signing documents and giving
notices and other communications in connection with any Loan. The
Agent and each Bank may conclusively rely on such certificates until
they receive notice in writing from the Company to the contrary.
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(c) NOTES. The Agent shall have received the appropriate Notes
of the Company for each Bank, duly completed and executed.
(d) SECURITY MATTERS. The Security Documents, including the
Amendment to Security Agreement -- Contract Rights, the Amendment to
Security Agreement -- Stock and the Amendment to Louisiana Security
Agreement, shall have been duly executed and delivered by the
respective parties thereto, and such other action (including the
endorsement and/or pledge of the property covered thereby, notice to
and any necessary consent by the obligor on or issuer of pledged
instruments or assigned contracts) as may be necessary or as the Agent
shall have requested (other than any filing and recording required in
connection with the amendment of the Security Documents) to perfect
the security interests created pursuant thereto shall have been taken.
The Agent shall have received evidence satisfactory to it that the
Liens created by the Security Documents will constitute first priority
Liens, except for Permitted Encumbrances. The Agent shall have
received such opinions of local counsel in the States of Alabama,
Louisiana and Oklahoma as the Agent may reasonably request.
(e) CREDIT DOCUMENTS. The Company shall have duly executed and
delivered the other Credit Documents to which it is a party and each
such Credit Document shall be in Proper Form. Each such Credit
Document shall be in substantially the form furnished to the Banks
prior to their execution of this Agreement, together with such changes
therein as the Agent and the Banks may approve.
(f) SECURITY DOCUMENTS. The Mortgages and the Amendment to Deed
of Trust and the Amendment to Leasehold Deed of Trust shall have been
duly executed and delivered by the Company and the Agent in recordable
form (in such number of copies as the Agent shall have requested), and
to the extent permitted by applicable law the Company shall have paid
to the Agent in immediately available funds all expenses (including
mortgage recording and other similar taxes) and premiums reasonably
expected to be incurred by it in connection with recording the
Mortgages and all related documents in the appropriate offices (with
the Agent to repay to the Company any such sums not expended for that
purpose).
(g) FEES AND EXPENSES. The Company shall have paid to the Agent
for the account of each Bank (1) an extension fee equal to .25% of
each Bank's Commitment Percentage of the Available Commitment and (2)
a facility fee equal to .125% of each Bank's Commitment Percentage of
the Unavailable Commitment, and shall have paid to the Agent all fees
then due in the amounts previously agreed upon in writing among the
Company and the Agent.
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(h) OPINION OF COUNSEL TO THE COMPANY. The Agent shall have
received the opinions of Andrews & Kurth L.L.P. and of David L. Hicks,
counsel to the Company, substantially in the forms of SCHEDULES VI and
VII, respectively.
(i) COUNTERPARTS. The Agent shall have received counterparts of
each of the Credit Documents duly executed and delivered by or on
behalf of each of the parties thereto (or, in the case of any Bank as
to which the Agent shall not have received such a counterpart, the
Agent shall have received evidence satisfactory to it of the execution
and delivery by such Bank of a counterpart hereof).
(j) CONSENTS. The Agent shall have received evidence
satisfactory to it that all consents of each Governmental Authority
and of each other Person, if any, required in connection with (1) the
Loans, (2) the execution, delivery and performance of the Credit
Documents, and (3) the transfer effected by the Security Documents of
the Company's rights in and to those agreements in which a security
interest or lien is granted or which are assigned under the Security
Documents have been received and remain in full force and effect.
(k) LETTER OF CREDIT AGREEMENT. The Letter of Credit Agreement
shall have been executed and delivered by all parties thereto and
shall be in full force and effect.
(l) OTHER DOCUMENTS. The Agent shall have received such other
documents consistent with the terms of this Agreement and relating to
the transactions contemplated hereby as the Agent may reasonably
request.
All provisions and payments required by this SECTION 7.1 are
subject to the provisions of SECTION 12.8.
7.2. ALL LOANS. The obligation of each Bank to make any Loan
(including its initial Loan) to be made by it hereunder is subject to
the additional conditions precedent that, as of the date of such Loan,
and after giving effect thereto:
(a) no Default shall have occurred and be continuing (PROVIDED,
that a Default resulting solely from an Engineering Shortfall shall
not bar a Rollover), and no "Default", as that term is defined in the
Letter of Credit Agreement, shall have occurred and be continuing
under the Letter of Credit Agreement;
(b) if the Loan is not a Rollover, there has been no Material
Adverse Change since December 31, 1993;
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(c) if the Loan is not a Rollover, all representations and
warranties made in each Credit Document shall be true and correct in
all material respects on and as of the date of the making of such
Loan, with the same force and effect as if made on and as of such
date; if the Loan is a Rollover, all representations and warranties
made in each Credit Document (other than and except for the
representations and warranties set forth in SECTION 8.2(a)(2), 8.2(b),
8.3, 8.8 and 8.13) shall be true and correct in all material respects
on and as of the date of the making of such Loan, with the same force
and effect as if made on and as of such date;
(d) except for Loans on the date hereof, the Company shall have
delivered to the Agent a Request for Extension of Credit within the
time specified in SECTION 5.5;
(e) if such Loan is not a Rollover and after giving effect to
such Loan and the Loans of the other Banks to be made
contemporaneously therewith, the Company shall be in compliance with
all Required Ratios and no Engineering Shortfall shall exist; and
(f) the making of such Loan shall not be prohibited by, or
subject any Bank to any penalty under, any Legal Requirement
applicable to any Bank.
Each Request for Extension of Credit by the Company hereunder
shall include a representation and warranty by the Company to the
effect set forth in SUBSECTIONS (a) through (e) (if applicable) of
this SECTION 7.2 (both as of the date of such notice and, unless the
Company otherwise notifies the Agent prior to the date of such
borrowing, as of the date of such borrowing). Except in the case of
Loans on the date hereof, such representation and warranty shall be
accompanied by a certificate of the President or chief financial
officer of the Company setting forth in reasonable detail the
calculations of the Company in making such representation and
warranty.
Section 8. REPRESENTATIONS AND WARRANTIES. To induce the Banks
to enter into this Agreement and to make the Loans, the Company
represents and warrants (such representations and warranties to
survive any investigation and the making of the Loans) to the Banks
and the Agent as follows:
8.1. CORPORATE EXISTENCE. Each member of the Combined Group (a)
is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization; (b) has all requisite
power, and has all licenses, permits, authorizations, consents and
approvals necessary, to own its property and carry on its business as
now being conducted, and (c) is qualified to do
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business, and is in good standing, in (1) all jurisdictions in which
any of the Recognized Proved Reserves which it owns are located and
(2) any other jurisdiction in which the nature of the business
conducted by it makes such qualification necessary or advisable,
unless (for purposes only of this CLAUSE (2)) the failure to be so
qualified or in good standing would not individually or in the
aggregate have a material adverse effect on the business, financial
condition or results of operations of the Combined Group taken as a
whole.
8.2. INFORMATION.
(a) (1) The most recent consolidated balance sheet of the
Company and its Subsidiaries and the related consolidated statements
of operations, changes in financial position and cash flows for the
period then ended, together with the respective notes thereto,
delivered to each of the Banks prior to the execution of this
Agreement (which financial statements are dated December 31, 1993), or
in accordance with the provisions of SECTION 9.1(a) or (b), as the
case may be (the latest of such financial statements and the notes
thereto being referred to herein as the "MOST RECENT FINANCIAL
STATEMENTS"), fairly present in all material respects the consolidated
financial position of the Company and its Subsidiaries as of such date
and their consolidated results of operations for the period then ended
in conformity with generally accepted accounting principles.
(2) The Company and its Subsidiaries did not on the date of
the Most Recent Financial Statements, and do not on the date as of
which this representation is made in accordance with the terms of this
Agreement, have any material contingent liabilities, material
liabilities for taxes, unusual and material forward or long-term
commitments or material unrealized or anticipated losses from any
commitments, except (A) as referred to or reflected or provided for in
the Most Recent Financial Statements; (B) as otherwise hereafter
disclosed to the Banks in writing in accordance with the terms of this
Agreement, or (C) in connection with the obligations of the Company
under this Agreement and the Letter of Credit Agreement.
(b) Since December 31, 1993, there has been no Material Adverse
Change.
8.3. LITIGATION; COMPLIANCE. Except as disclosed in writing to
the Banks prior to the date hereof, or as hereafter disclosed to the
Banks in accordance with the provisions of SECTION 9.1(E), there are
no legal or arbitral proceedings or any proceedings by or before any
Governmental Authority now pending, or, to the knowledge of the
Company, threatened, against or affecting the Company or any
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of its Subsidiaries which, if adversely determined, would cause a
Material Adverse Change. The Company and its Subsidiaries comply in
all material respects with all applicable material (based on the
Company and its Subsidiaries taken as a whole) Legal Requirements
(other than the Applicable Environmental Laws, representations
regarding which are subject to SECTION 8.13). Neither the Company nor
any of its Subsidiaries is in default in any material respect under or
violation of any material (based on the Company and its Subsidiaries
taken as a whole) judgment, order or decree of any Governmental
Authority.
8.4. NO BREACH. None of the execution and delivery of the Credit
Documents, the consummation of the transactions therein contemplated
or compliance with the terms and provisions thereof will conflict with
or result in a breach of, or require any consent that has not been
obtained under, the Serial Note Agreement, the Organizational
Documents of the Company or any of its Subsidiaries or any material
Legal Requirement (including any securities law, rule or regulation)
applicable to the Company or any of its Subsidiaries or (except for
the Liens required or permitted by this Agreement and the Security
Documents) result in the creation or imposition of any Lien upon any
of the revenues or property of the Company or any of its Subsidiaries.
Such execution, delivery, consummation and compliance do not and will
not conflict with or result in a breach of any material agreement or
instrument to which the Company is a party or by which the Company is
bound or to which it is subject, or constitute a default under any
such agreement or instrument.
8.5. CORPORATE ACTION. The Company has all necessary corporate
power and authority to execute, deliver and perform its obligations
under the Credit Documents. The execution, delivery and performance
of the Credit Documents by the Company have been duly authorized by
all necessary corporate action. The Credit Documents have been duly
and validly executed and delivered by the Company and constitute the
legal, valid and binding obligations of the Company, enforceable in
accordance with their respective terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws relating
to the enforcement of creditors' rights generally and by general
equitable principles.
8.6. APPROVALS. All authorizations, approvals and consents of,
and all filings and registrations with, all Governmental Authorities
and each other Person necessary for the execution, delivery or
performance of any Credit Document or for the validity or
enforceability thereof, except for the filings and recordings of the
Liens created pursuant to the Security Documents, have been obtained
by the Company and are in full force and effect.
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8.7. REGULATIONS G, U AND X. Neither the Company nor any of its
Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation
G, U or X of the Board) and no part of the proceeds of any extension
of credit hereunder will be used to acquire or carry, directly or
indirectly, any such margin stock.
8.8. ERISA. The Company and each ERISA Affiliate have fulfilled
their contribution obligations under each Plan subject to Title IV of
ERISA and have fulfilled their obligations under the minimum funding
standards of ERISA and the Code with respect to each Plan subject to
Title IV of ERISA, and in all other regards with respect to each Plan
are in material compliance with the applicable provisions of ERISA,
the Code, and all other applicable laws, regulations and rules, to the
extent that noncompliance with such provisions would result in a
Material Adverse Change. The Company has no knowledge of any event
with respect to each Plan which could result in a Material Adverse
Change.
8.9. TAXES. Each of the Company and its Subsidiaries has filed
all United States federal income tax returns and all other material
tax returns which are required to be filed by it and has paid all
taxes due pursuant to such returns or pursuant to any assessment
received by it, except to the extent the same may be contested in good
faith by appropriate proceedings diligently conducted for which
adequate reserves have been established in accordance with generally
accepted accounting principles. The charges, accruals and reserves on
the books of the Company and its Subsidiaries in respect of taxes and
other governmental charges, as made on a periodic basis, are adequate.
8.10. SUBSIDIARIES. SCHEDULE I is a complete and correct list, as
of the date of this Agreement, of all Subsidiaries of the Company.
All shares or other indicia of equity interest of the Restricted
Subsidiaries and the Special Subsidiary directly or indirectly owned
by the Company are free and clear of Liens, and all such shares are
validly issued, fully paid and non-assessable.
8.11. INVESTMENT COMPANY ACT. No member of the Combined Group is
an investment company within the meaning of the Investment Company Act
of 1940, as amended, or directly or indirectly controlled by or acting
on behalf of any Person which is an investment company, within the
meaning of said Act.
8.12. PUBLIC UTILITY HOLDING COMPANY ACT. No member of the
Combined Group is a "public utility company", or, to the knowledge of
the Company, an "affiliate" or a "subsidiary company" of a "public
utility company", or a "holding company", or an "affiliate"
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or a "subsidiary company" of a "holding company" or of a "subsidiary
company" of a "holding company," as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended.
8.13. ENVIRONMENTAL MATTERS. Except as disclosed in writing to
the Agent prior to the date hereof, the Company and its Subsidiaries,
and the plants and sites of each, have complied with all Applicable
Environmental Laws, except, in any such case, where such failure to so
comply would not result in a Material Adverse Change. Without
limiting the generality of the preceding sentence, neither the Company
nor any of its Subsidiaries has received notice of or has actual
knowledge of any actual or claimed or asserted failure so to comply
with Applicable Environmental Laws or of any other Environmental Claim
which alone or together with all other such failures or Environmental
Claims is material and would result in a Material Adverse Change.
Except as disclosed in writing to the Agent prior to the date hereof,
neither the Company nor any of its Subsidiaries nor their plants or
other sites manage, generate or dispose of, or during their respective
period of use, ownership, occupancy or operation by the Company or its
Subsidiaries have managed, generated, released or disposed of, any
hazardous wastes, hazardous substances, hazardous materials, toxic
substances or toxic pollutants, as those terms are used or defined in
the Applicable Environmental Laws, in material violation of or in a
manner which would result in liability under the Applicable
Environmental Laws or any other applicable Legal Requirement, or in a
manner which would result in an Environmental Claim except where such
noncompliance or liability or Environmental Claim would not result in
a Material Adverse Change. The representation and warranty contained
in this section is based in its entirety upon (a) current
interpretations and enforcement policies that have been publicly
disseminated and are used by Governmental Authorities charged with the
enforcement of the Applicable Environmental Laws or which apply to the
Company or any of its Subsidiaries with respect to any property or
sites in a particular jurisdiction and (b) current levels of publicly
disseminated scientific knowledge concerning the detection of, and the
health and environmental risks associated with the discharge of,
substances and pollutants regulated pursuant to the Applicable
Environmental Laws.
8.14. TITLE. (a) The Company has good and defensible title
to the oil, gas and mineral properties included in the Adobe
Properties in the Most Recent Engineering Report furnished to the
Banks.
(b) Such properties and facilities are free and clear of all
Liens, except Permitted Encumbrances and other Liens permitted hereby.
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(c) The Company has full right, power and authority to execute,
deliver and perform the Security Documents with respect to all such
properties and to convey, assign and mortgage the same, without the
necessity of any consent, approval or other action of any kind of or
by any other Person, failure to obtain which could cause a Material
Adverse Change, and such execution, delivery and performance will not
result in the breach of or constitute a default under any agreement,
instrument, judgment, license, order or permit to which the Company is
a party or by which the Company or any of its property may be bound,
which together with all other such breaches and defaults could cause a
Material Adverse Change.
(d) All oil, gas and mineral leases and leasehold estates, gas
purchase and sales contracts, and other agreements comprising or
relating to any of such properties are valid and subsisting and in
full force and effect, except for those leases, estates, contracts,
easements, rights-of-way and agreements which are in the aggregate not
material to oil, gas and mineral properties included in the Adobe
Properties in the Most Recent Engineering Report furnished to the
Banks, taken as a whole.
(e) All rights, permits, easements, servitudes and
rights-of-way, failure to have or maintain which would materially
interfere with the development, maintenance and operation of such
properties so as to cause a Material Adverse Change, have been
obtained by the Company and are in full force and effect.
(f) Each of the Security Documents creates or will create, when
executed and delivered, a valid Lien upon the Property therein
described.
Section 9. COVENANTS. The Company agrees with the Banks and the
Agent that until the termination of this Agreement:
9.1. FINANCIAL STATEMENTS AND CERTIFICATES. The Company will
deliver in duplicate:
(a) to each Bank, as soon as practicable and in any event within
45 days after the end of each quarterly period (other than the last
quarterly period) in each fiscal year, consolidated and consolidating
statements of operations, stockholders' equity and cash flows of the
Company and its Subsidiaries for the period from the beginning of the
current fiscal year to the end of such quarterly period, and a
consolidated and consolidating balance sheet of the Company and its
Subsidiaries as of the end of such quarterly period, setting forth (1)
as to each account affected thereby, all eliminating entries for the
Unrestricted Subsidiaries as a group and for the Special Subsidiary,
respectively, and (2) the resulting consolidated and consolidating
figures for the
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Company and the Restricted Subsidiaries, and setting forth in each
case in comparative form figures for the corresponding period in the
preceding fiscal year, all in reasonable detail and unaudited but
certified by an authorized financial officer of the Company as fairly
presenting the financial position and results of operations of the
Company and its Subsidiaries as of the date thereof and the period
then ended, subject to changes resulting from year-end adjustments;
(b) to each Bank, as soon as practicable and in any event within
90 days after the end of each fiscal year, consolidated and
consolidating statements of operations, stockholders' equity and cash
flows of the Company and its Subsidiaries for such year, and a
consolidated and consolidating balance sheet of the Company and its
Subsidiaries as of the end of such fiscal year, setting forth (1) as
to each account affected thereby, all eliminating entries for the
Unrestricted Subsidiaries as a group and for the Special Subsidiary,
respectively, and (2) the resulting consolidating figures for the
Company and the Restricted Subsidiaries, and setting forth in each
case in comparative form corresponding consolidating figures from the
preceding annual audit, all in reasonable detail and which shall be
reported on by Price Waterhouse & Co. or other independent public
accountants of recognized national standing selected by the Company
whose report shall (A) contain an opinion that shall be unqualified as
to the scope or limitations imposed by the Company and shall not be
subject to any other material qualification and (B) state that such
financial statements present fairly, in all material respects, the
financial position of the Company and its Subsidiaries at the dates
indicated and their cash flows and the results of their operations and
the changes in their financial position for the periods indicated in
conformity with generally accepted accounting principles, and shall be
accompanied by a report of such independent public accountants stating
that (W) such audit was made for the purpose of forming an opinion on
the consolidated financial statements taken as a whole; (X) the
consolidating information set forth therein is presented for purposes
of additional analysis rather than to present the financial position,
results of operations and cash flows of the individual companies; (Y)
such consolidating information has been subjected to the auditing
procedures applied in the audit of the basic financial statements, and
(Z) in such independent public accountants' opinion, such
consolidating information is fairly stated in all material respects in
relation to the consolidated financial statements taken as a whole,
with such changes thereto as such accountants reasonably determine to
be appropriate under the circumstances;
(c) to each Bank, promptly upon transmission thereof, copies of
all financial statements, proxy statements, notices and reports
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as it shall send to its public stockholders and copies of all
registration statements (without exhibits, and other than registration
statements and reports relating to employee benefit or compensation
plans) and all reports which it files with the Securities and Exchange
Commission (or any governmental body or agency succeeding to the
functions of the Securities and Exchange Commission);
(d) to each Bank, promptly upon receipt thereof, a copy of each
other report submitted to the Company or any of its Subsidiaries by
independent accountants in connection with any annual, interim or
special audit made by them of the books of the Company or any such
Subsidiary;
(e) to each Bank, as soon as practicable and in any event within
15 days after any executive officer of the Company obtains knowledge
(1) of any Default or any condition or event which, in the opinion of
management of the Company, would have a Material Adverse Change (to
the extent affecting the Company and its Subsidiaries in a materially
different manner or extent than the oil and gas industry generally);
(2) that any Person has given any notice to the Company or any of its
Subsidiaries or taken any other action with respect to a claimed
default or event or condition of the type referred to in
SECTION 10.1(b) or (m); (3) of the institution of any litigation
involving claims against the Company or any of its Subsidiaries equal
to or greater than $5,000,000 with respect to any single cause of
action or of any adverse determination in any court proceeding in any
litigation involving a potential liability to the Company or any of
its Subsidiaries equal to or greater than $5,000,000 with respect to
any single cause of action which makes the likelihood of an adverse
determination in such litigation against the Company or such Sub-
sidiary substantially more probable, or (4) of any regulatory
proceeding which, if determined adversely to the Company, would have a
Material Adverse Change (to the extent affecting the Company and its
Subsidiaries in a materially different manner or extent than the oil
and gas industry generally), an Officer's Certificate specifying the
nature and period of existence of any such Default, condition or
event, or specifying the notice given or action taken by such Person
and the nature of any such claimed Default, event or condition, or
specifying the details of such proceeding, litigation or dispute and,
in each case, what action the Company or any of its Subsidiaries has
taken, is taking or proposes to take with respect thereto;
(f) to each Bank, (1) promptly after the filing or receiving
thereof, copies of all annual reports and such other material reports
and notices which the Company or any ERISA Affiliate files under ERISA
with the Internal Revenue Service, the PBGC or the U.S.
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Department of Labor with respect to a Plan that is subject to Title IV
of ERISA; (2) promptly upon acquiring knowledge of any "reportable
event" (as defined in Section 4043 of ERISA) or of any "prohibited
transaction," as such term is defined in the Code or ERISA, in
connection with any Plan which may result in a Material Adverse
Change, a statement executed by the president or chief financial
officer of the Company or the applicable ERISA Affiliate, setting
forth the details thereof and the action which the Company or the
ERISA Affiliate proposes to take with respect thereto and, when known,
any action taken by the PBGC, the Internal Revenue Service or the U.S.
Department of Labor with respect thereto; (3) promptly after the
filing or receiving thereof by the Company or any ERISA Affiliate, any
notice of the institution of any proceedings or other actions which
may result in the termination of any Plan or notice of complete or
partial withdrawal liability under Title IV of ERISA, and (4) each
request for waiver of the funding standards or extension of the
amortization periods required by Sections 303 and 304 of ERISA or
Section 412 of the Code promptly after the request is submitted by the
Company or any ERISA Affiliate, to the Secretary of the Treasury, the
U.S. Department of Labor or the Internal Revenue Service, as the case
may be;
(g) to each Bank, as soon as available but in no event later
than February 28 of each year, an Independent Engineering Report
reflecting data as of December 31 of the prior year; and
(h) to each Bank, with reasonable promptness, such other
information respecting the business, financial condition or results of
operations of the Company or any of its Subsidiaries as such Bank may
reasonably request.
Additionally, the Company will deliver to each Bank:
(x) Together with each delivery of financial statements required
by SUBSECTION (a) above, each Required Reserve Report and each
Optional Reserve Report, an Officer's Certificate and a Coverage
Report demonstrating (with computations in reasonable detail)
compliance by the Company and the Restricted Subsidiaries with the
provisions of SECTIONS 9.6, 9.7(b)(3), (4) and (6), 9.7(c)(2) and
(3), 9.7(d), 9.7(e), 9.7(f), 9.7(g) and 9.9 (and in the case of each
Coverage Report accompanying a Required Reserve Report or an Optional
Reserve Report, calculating the SLOR Coverage Ratio and the Annual
Debt Service Coverage Ratio for purposes of and as provided in SECTION 2.7
or SECTION 2.8 and, in the case of each Coverage Report furnished
pursuant to CLAUSE (d) of the definition of "Applicable Margin", such
CLAUSE (d)), demonstrating that no Default exists under
SECTION 10.1(i) and stating that there then exists no Default, or, if
any Default exists, specifying the
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nature and period of existence thereof and what action the Company
proposes to take with respect thereto.
(y) Together with each delivery of financial statements required
by SUBSECTION (b) above, a certificate of such accountants stating
that, in conducting the audit of the Company's consolidated financial
statements in accordance with generally accepted auditing standards
they have obtained no knowledge of any Default arising under
SECTION 10.1(a), (b) or (i) or any Default arising under
SECTION 10.1(d) that occurs as result of the breach or violation by
the Company or the Restricted Subsidiaries of SECTIONS 9.6, 9.7(b),
(c), (d), (e), (f), (g), (h), (i) or 9.8, or, if they have obtained
knowledge of any such Default, specifying the nature and period of
existence thereof. Such accountants, however, shall not be liable to
the Agent or any Bank by reason of their failure to obtain knowledge
of any such Default which would not be disclosed in the course of an
audit conducted in accordance with generally accepted auditing
standards. The Company also covenants that forthwith upon the chief
executive officer, principal financial officer or principal accounting
officer of the Company obtaining knowledge of a Default, it will
deliver to each Bank an Officer's Certificate specifying the nature
and period of existence thereof and what action the Company proposes
to take with respect thereto.
(z) Together with each delivery of financial statements required
by SUBSECTIONS (a) or (b) above, the Company will deliver to each Bank
a pro forma statement of operations of the Company and its Restricted
Subsidiaries for the same fiscal period as such financial statements
that assumes that the impairments of oil and gas properties taken by
the Company and its Restricted Subsidiaries in the fourth quarter of
1993 in the amount of up to $100 million as reflected in the Company's
consolidated financial statements for the year ended December 31,
1993, shall not have occurred and a calculation in reasonable detail
showing the determination of Consolidated Net Earnings and Unimpaired
Consolidated Net Earnings for such fiscal period.
9.2. INSPECTION OF PROPERTY. The Company covenants that it will
permit any Person designated in writing by any Bank, at such Bank's
expense and risk, to visit and inspect any of the properties of the
Company and its Subsidiaries; and also to examine the corporate books
and financial records of the Company and its Subsidiaries and to make
copies thereof or extracts therefrom and to discuss the affairs,
finances and accounts of such Persons with the executive officers of
the Company, the petroleum reserve engineers employed by the Company
and its Subsidiaries and the Company's independent public accountants,
all at such reasonable times, with a representative of the Company
present and as often as
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such Bank may reasonably request, and will assist such Person or
Persons in all such activities.
9.3. COMPLIANCE WITH ENVIRONMENTAL LAWS. The Company will, and
will cause each of its Subsidiaries and each of its Affiliates that
are controlled by the Company or its Subsidiaries to, comply in a
timely fashion with, or operate pursuant to valid waivers of the
provisions of, all Applicable Environmental Laws, except where
non-compliance would neither (a) result in a Material Adverse Change
nor (b) subject the Agent or any Bank to any liability for such
non-compliance (PROVIDED that the Company shall not be in default of
this SUBSECTION (b) if the Company indemnifies each of the Agent,
Banks or any of them subjected to such liability and provides
collateral to secure such indemnification, all to the extent required
by the Person subjected to such liability in its sole and unfettered
discretion). THE COMPANY AGREES TO INDEMNIFY AND HOLD THE AGENT AND
EACH BANK, AND THEIR RESPECTIVE OFFICERS, AGENTS AND EMPLOYEES
HARMLESS FROM ANY LOSS, LIABILITY, CLAIM OR EXPENSE WHICH ANY SUCH
PERSON MAY INCUR OR SUFFER AS A RESULT OF A BREACH BY THE COMPANY OR
ITS SUBSIDIARIES OR AFFILIATES, AS THE CASE MAY BE, OF THIS COVENANT.
The Company shall not be deemed to have breached or violated this
section if the Company or its Subsidiary or Affiliate, as the case may
be, is challenging in good faith by appropriate proceedings diligently
pursued the application or enforcement of any such Applicable
Environmental Laws for which adequate reserves have been established
in accordance with generally accepted accounting principles.
9.4. PAYMENT OF TAXES. The Company will, and will cause each of
its Subsidiaries to, pay, or have paid on its behalf, before the same
become delinquent all taxes, assessments and governmental charges
imposed upon it or upon its property, except to the extent contested
in good faith by appropriate proceedings diligently conducted for
which adequate reserves have been established in accordance with
generally accepted accounting principles.
9.5. MAINTENANCE OF INSURANCE. The Company covenants that it and
each of its Subsidiaries will carry and maintain insurance (subject to
self-insurance in the maximum amount of $10,000,000, customary
deductibles and retentions) in at least such amounts and against such
liabilities and hazards and by such methods as customarily maintained
by other companies operating similar businesses and, together with
each delivery of financial statements required by SECTION 9.1(b) will
deliver to the Agent for each Bank an Officer's Certificate specifying
the details of such insurance in effect. Upon the request of the
Agent or any Bank, the Company shall promptly deliver to the Agent one
or more current certificates of the insurer or insurers providing the
insurance required by this SECTION 9.5 to the effect that such
insurance may
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not be canceled, reduced or affected in any manner without 30 days'
prior written notice to the Agent.
9.6. RESTRICTED PAYMENTS AND RESTRICTED INVESTMENTS. The Company
will not and will not permit any Restricted Subsidiary to (a) make any
Restricted Investment; (b) pay or declare any dividend on any class of
its stock or make any other distribution on account of any class of
its stock, or redeem, purchase or otherwise acquire, directly or
indirectly, any shares of its stock, or (c) make any additional
Investment in the Special Subsidiary (all of the foregoing described
in SUBSECTIONS (b) and (c) above being herein called "RESTRICTED
PAYMENTS") (1) except out of Consolidated Net Earnings Available for
Restricted Payments and Restricted Investments; PROVIDED that the
Company or any wholly owned Restricted Subsidiary may, without
violation of this clause, in a single transaction or a series of
publicly announced related transactions to be completed within six
months, make an Investment in the Special Subsidiary which results in
the ownership by the Company and the wholly owned Restricted
Subsidiaries of 100% of the outstanding general and limited partner
interests in the Special Subsidiary; PROVIDED FURTHER that the amount
of such Investment shall be included in any subsequent computations of
Restricted Payments and of Consolidated Net Earnings Available for
Restricted Payments and Restricted Investments under this Section
unless immediately after giving effect to such Investment in the
Special Subsidiary, the Special Subsidiary is designated as a
Restricted Subsidiary; (2) unless, after giving effect to any such
Restricted Investment or Restricted Payment, as the case may be, (A)
no Default shall have occurred and be continuing and (B) the Company
could incur at least $1.00 of additional Funded Debt without violation
of SECTION 9.7(b)(3), and (3) unless, in the case of Investments in
the Special Subsidiary, such Investment shall otherwise be permitted
by SECTION 9.7(g).
"CONSOLIDATED NET EARNINGS AVAILABLE FOR RESTRICTED PAYMENTS AND
RESTRICTED INVESTMENTS" shall mean an amount equal to
(a) the sum of (1) $45,000,000; (2) 100% (or minus 100% in case
of a deficit) of Unimpaired Consolidated Net Earnings for the period
(taken as one accounting period) commencing on April 1, 1990 (the
"COMMENCEMENT DATE") and terminating at the end of the last fiscal
quarter preceding the date of any proposed Restricted Investment or
Restricted Payment, as the case may be; (3) the net cash proceeds
received by the Company or any Restricted Subsidiary from the sale of
any shares of its stock on or after the Commencement Date, except (A)
any such proceeds used as a basis for a prepayment in respect of the
then-outstanding notes issued under the Serial Note Agreement pursuant
to Paragraphs 4A, 4B or 4C thereof and (B) any proceeds from the sale
of stock to the Company
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or any of its Subsidiaries on or after the Commencement Date; (4) the
net cash proceeds received by the Company or any Restricted Subsidiary
from the sale, on or after the Commencement Date, of any convertible
debt security which has been converted into stock of the Company or a
Restricted Subsidiary, except (A) any such proceeds used as a basis
for a prepayment in respect of the then-outstanding notes issued under
the Serial Note Agreement pursuant to Paragraphs 4A, 4B or 4C thereof
and (B) any proceeds from the sale of such convertible debt security
to the Company or any of its Subsidiaries; (5) any cash distributions
from the Special Subsidiary received by the Company or any Restricted
Subsidiary on or after the Commencement Date, and (6) any return of
capital from Unrestricted Subsidiaries or Restricted Investments
received by the Company or any Restricted Subsidiary on or after the
Commencement Date, less
(b) the sum of all Restricted Investments and all Restricted
Payments made on or after the Commencement Date.
There shall not be included in Restricted Payments or in any
computation of Consolidated Net Earnings Available for Restricted
Payments and Restricted Investments (w) dividends paid or declared in
respect of stock held by any Person, or distributions made to any
Person, in stock of the Company or any Restricted Subsidiary; (x)
exchanges of stock of one or more classes of the Company or any
Restricted Subsidiary for common stock of the Company or such
Restricted Subsidiary, as the case may be, or for stock of the Company
or such Restricted Subsidiary, as the case may be, of the same class,
except to the extent that cash or other value is involved in such
exchange; (y) dividends paid or declared in respect of stock held by,
or distributions made to, or redemptions, purchases or other
acquisitions of stock made from, the Company or a wholly owned
Restricted Subsidiary, or (z) any advances to the Special Subsidiary
not in excess of $20,000,000 in the aggregate at any one time
outstanding that are repaid in full within 60 days pursuant to
customary cash management services provided to the Special Subsidiary.
The term "stock" as used in this Section shall include warrants,
options to purchase stock and redeemable rights.
9.7. LIEN, DEBT AND OTHER RESTRICTIONS. The Company will not and
will not permit any Restricted Subsidiary to:
(a) LIENS. Create, assume or suffer to exist any Lien upon any
of its properties or assets, whether now owned or hereafter acquired
except
(1) Liens for taxes or assessments or other governmental
charges or levies not yet due or which are being actively contested in
good faith by appropriate proceedings;
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(2) Liens (including mechanics' and materialmen's liens,
landlord liens, easements, rights-of-way or the like) incidental to
the conduct of its business or the ownership of its property and
assets which are not incurred in connection with the borrowing of
money or the obtaining of advances or credit (other than advances or
credit on open account, includable in current liabilities, for goods
and services in the ordinary course of business and on terms and
conditions which are customary in the oil, gas and mineral exploration
and development business) or the guaranteeing of the obligations of
another Person, and which do not in the aggregate materially detract
from the value of its property or assets or materially impair the use
thereof in the operation of its business;
(3) Liens for lessor's royalties, overriding royalties, net
profits interests, carried interests, reversionary interests and other
similar burdens, production sales contracts, division orders,
contracts for the sale, purchase, exchange, or processing of
hydrocarbons, unitization and pooling designations, declarations,
orders and agreements, operating agreements, agreements of
development, area of mutual interest agreements, gas balancing or
deferred production agreements, processing agreements, plant
agreements, pipeline gathering and transportation agreements,
injection, repressuring and recycling agreements, salt water or other
disposal agreements, seismic or geophysical permits or agreements, and
other agreements which are customary in the oil, gas and mineral
exploration and development business or in the business of processing
gas and gas condensate production for the extraction of products
therefrom, if the net cumulative effect of such burdens does not
operate to reduce the net revenue interest of any oil and gas
properties to less than (A) the "Net Revenue Interest" set forth in
the Most Recent Engineering Report for those oil and gas properties
included in the Most Recent Engineering Report or (B) the net revenue
interest so acquired for those oil and gas properties acquired after
the date of the Most Recent Engineering Report; PROVIDED that such
Liens are not incurred in connection with the borrowing of money or
the obtaining of advances or credit (other than advances or credit on
open account, includable in current liabilities, for goods and
services in the ordinary course of business and on terms and
conditions which are customary in the oil, gas and mineral exploration
and development business) or the guaranteeing of the obligations of
another Person;
(4) Liens described in SCHEDULE II securing Debt of the
Company or a Restricted Subsidiary set forth in SCHEDULE II;
(5) the Springing Lien, Liens existing on any real property
of any Person at the time such Person becomes a Restricted Subsidiary,
or any Liens existing prior to the time of acquisition upon any real
property acquired by the Company or any Restricted
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Subsidiary through purchase, merger or consolidation or otherwise,
whether or not the obligation secured by such Lien is assumed by the
Company or such Restricted Subsidiary; PROVIDED that except as
otherwise permitted by SECTION 9.7(a), any such Springing Lien or Lien
(A) shall not encumber any other property of the Company or any
Restricted Subsidiary and (B) shall not have been created in
anticipation of such Person becoming a Restricted Subsidiary or in
anticipation of the acquisition by the Company or any Restricted
Subsidiary of the real property secured thereby;
(6) Liens placed on property at the time of acquisition,
construction, development or improvement thereof, or created in
respect of such property within six months after the time of
acquisition thereof or the commencement of construction, development
or improvement thereof, as the case may be, to secure all or a portion
of (or to secure Debt incurred to pay all or a portion of) the
purchase price of such acquisition, or the cost of such construction,
development or improvement, as the case may be; PROVIDED that (A) such
property is not and shall not thereby become encumbered in an amount
in excess of the lesser of the cost or fair market value thereof; (B)
except as otherwise permitted in SECTION 9.7(a), any such Lien shall
not encumber any other property of the Company or a Restricted
Subsidiary, and (C) any such Lien shall not encumber property of the
Company or a Restricted Subsidiary for the purpose of securing an
obligation of the Company or a Restricted Subsidiary or securing a
Guaranty by the Company or any Restricted Subsidiary in connection
with the sale, exchange, transfer or other disposition by the Company
or a Restricted Subsidiary of net profits interests; PROVIDED that the
Company or a Restricted Subsidiary may assign all or part of the
proceeds of production of property in which a net profits interest has
been granted to secure its obligation to make net profits interests
payments therefrom; and PROVIDED FURTHER that any such Lien shall not
encumber any other property of the Company or any Restricted Subsid-
iary.
(7) Liens on the capital stock of a Restricted Subsidiary
acquired after April 11, 1990 by the Company or a Restricted
Subsidiary and created or assumed contemporaneously with such
acquisition, to secure Debt assumed or incurred to finance all or a
part of the purchase price of such acquisition;
(8) Liens on the capital stock of an Unrestricted Subsid-
iary other than the Special Subsidiary;
(9) from and after the time that the Company and the wholly
owned Restricted Subsidiaries shall have become the owners of all of
the outstanding general and limited partner interests in the Special
Subsidiary, (A) Liens on all or any portion of the
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limited partner interests in SFEP, at such times as SFEP shall be an
Unrestricted Subsidiary or (B) at such times as SFEP shall be a
Restricted Subsidiary, Liens securing Debt incurred to finance all or
a part of the purchase price of limited partner interests in the
Special Subsidiary acquired by the Company and the wholly owned
Restricted Subsidiaries from Persons other than the Special Subsidiary
in a single transaction or a series of publicly announced related
transactions that were completed within six months and that result in
the ownership by the Company and the wholly owned Restricted
Subsidiaries of 100% of the general and limited partner interests
therein; PROVIDED that the Liens described in this CLAUSE (B) shall
extend only to the limited partner interests so acquired;
(10) Liens on property of the Company or a Restricted
Subsidiary to secure Debt assumed or incurred in the form of
Capitalized Lease Obligations or industrial revenue bonds, pollution
control bonds or similar tax-exempt financings; PROVIDED that any such
Lien shall not encumber any property of the Company or a Restricted
Subsidiary other than the property the acquisition or construction of
which is financed or refinanced, in whole or in part, with proceeds
from such Debt;
(11) Liens created pursuant to the Security Documents;
(12) any Lien renewing or extending any Lien permitted by
CLAUSES (4), (5), (6), (7), (8), (9), (10) or (11) above; PROVIDED
that the principal amount of the Debt secured thereby is not increased
and such Lien is not extended to other property; and
(13) other Liens on any property of the Company or a
Restricted Subsidiary securing any Funded Debt of the Company or a
Restricted Subsidiary permitted by SECTION 9.7(b)(3)(C) or (4)(C).
(b) DEBT. Create, incur, assume or suffer to exist any Debt,
except
(1) Funded Debt of the Company hereunder or represented by
the notes issued pursuant to the Serial Note Agreement;
(2) Funded Debt of the Company or any Restricted Subsidiary
set forth in SCHEDULE II, which may not be renewed, extended, refunded
or permitted to remain outstanding after the stated maturities thereof
except by the Person primarily liable thereon and unless, after giving
effect to such renewal, extension or refunding, neither the principal
amount thereof nor the aggregate Funded Debt of the Company and the
Restricted Subsidiaries is increased thereby;
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(3) Funded Debt of the Company if at the time it is
created, incurred or assumed and after giving effect thereto, to the
receipt of the proceeds thereof, and to the concurrent retirement of
any Debt, (A) the aggregate amount of all Funded Debt of the Company
and the Restricted Subsidiaries shall not exceed 65% of Consolidated
Net Tangible Assets; (B) Consolidated Net Earnings Available for Fixed
Charges for the four fiscal quarters of the Company (taken as a single
period) most recently ended shall equal at least 225% of Fixed Charges
for the four fiscal quarters of the Company (taken as a single period)
commencing with and including the fiscal quarter during which such
Funded Debt is created, incurred or assumed, and (C) (1) for any such
creation, incurrence or assumption occurring prior to December 31,
1998, Priority Debt (other than Existing Priority Debt) shall not
exceed the lesser of (y)(I) 40% of Consolidated Net Tangible Assets
minus (II) Existing Priority Debt and (z) 33% of Consolidated Net
Tangible Assets, and (2) for any such creation, incurrence or
assumption occurring on or after December 31, 1998, Priority Debt
shall not exceed 33% of Consolidated Net Tangible Assets, and (3) if
such Funded Debt is Secured Debt, Special Debt shall not exceed 10% of
Consolidated Net Tangible Assets;
(4) Funded Debt of a Restricted Subsidiary if at the time
it is created, incurred or assumed and after giving effect thereto, to
the receipt of the proceeds thereof, and to the concurrent retirement
of any Debt, (A) the aggregate amount of all Funded Debt of the
Company and the Restricted Subsidiaries shall not exceed 65% of
Consolidated Net Tangible Assets; (B) Consolidated Net Earnings
Available for Fixed Charges for the four fiscal quarters of the
Company (taken as a single period) most recently ended shall equal at
least 225% of Fixed Charges for the four fiscal quarters of the
Company (taken as a single period) commencing with and including the
fiscal quarter during which such Funded Debt is created, incurred or
assumed, and (C) (1) for any such creation, incurrence or assumption
occurring prior to December 31, 1998, Priority Debt (other than
Existing Priority Debt) shall not exceed the lesser of (y)(I) 40% of
Consolidated Net Tangible Assets minus (II) Existing Priority Debt and
(z) 33% of Consolidated Net Tangible Assets, and (2) for any such
creation, incurrence or assumption occurring on or after December 31,
1998, Priority Debt shall not exceed 33% of Consolidated Net Tangible
Assets, and (3) Special Debt shall not exceed 10% of Consolidated Net
Tangible Assets;
(5) Debt of the Company owing to a wholly owned Restricted
Subsidiary which is subordinated to the Obligations upon terms set
forth on SCHEDULE V, and Debt of a Restricted Subsidiary owing to the
Company or any other wholly owned Restricted Subsidiary; and
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(6) Current Debt of the Company not secured by any Lien on
any property owned by the Company or the Restricted Subsidiaries;
PROVIDED that for a period of at least 45 consecutive days in each
period of 18 consecutive months commencing April 1, 1990, the amount
of Current Debt (other than Current Debt existing pursuant to
customary cash management services provided to the Special Subsidiary
which is repaid in full within 60 days) permitted by this clause shall
at no time exceed the maximum amount of Funded Debt that the Company
could then incur under SECTION 9.7(b)(3) without violation thereof.
For purposes of this SECTION 9.7(b), any Debt (i) which is
extended, renewed or refunded shall be deemed to have been incurred
when extended, renewed or refunded (except as provided pursuant to
CLAUSE (2) above); (ii) of a Person when it becomes, or is merged
into, or is consolidated with a Restricted Subsidiary or the Company
shall be deemed to have been incurred at that time; (iii) which is
permitted by CLAUSE (5) above and which is owing to a wholly owned
Restricted Subsidiary when it ceases to be a wholly owned Restricted
Subsidiary shall be deemed to have been incurred at that time; (iv) of
a Restricted Subsidiary which is owing to the Company or any other
Restricted Subsidiary shall be deemed to have been incurred at the
time the Company or such other Restricted Subsidiary disposes of such
Debt to any Person other than the Company or a wholly owned Restricted
Subsidiary; (v) which is Funded Debt of the Company or a Restricted
Subsidiary consisting of a reimbursement obligation in respect of a
letter of credit or similar instrument shall be deemed to be incurred
when such letter of credit or similar instrument is issued, or (vi)
which is Funded Debt of the type described in CLAUSE (b) of the
definition of Funded Debt, or any Guaranty of such Funded Debt, shall
not be deemed to have been created, incurred or assumed, as the case
may be, at the time it becomes Funded Debt, but shall be included in
all subsequent calculations of Funded Debt for all purposes of this
Agreement.
(c) SALE OF LESS THAN SUBSTANTIALLY ALL ASSETS. Sell, exchange,
transfer or otherwise dispose of part, but less than all or
substantially all, of their respective assets, unless
(1) such sale, exchange, transfer or other disposition is
made in the ordinary course of business (including abandonments,
farm-ins, farm-outs, leases and subleases of developed or undeveloped
properties owned or held by the Company or any Restricted Subsidiary
that are made or entered into in the ordinary course of business, but
EXCLUDING, however, any sale of net profits interests in developed oil
and gas properties); or
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(2) after giving effect to such sale, exchange, transfer or
other disposition, (A) the aggregate net book value of (i) all assets
of the Company and the Restricted Subsidiaries (including the sale of
net profits interests in developed oil and gas properties) sold, ex-
changed, transferred or otherwise disposed of (on a consolidated
basis) (but excluding assets sold, exchanged, transferred or otherwise
disposed of in the ordinary course of business pursuant to
SECTION 9.7(c)(1)) during the period of 12 consecutive months
immediately preceding such sale, exchange, transfer or other
disposition and (ii) the assets of all Restricted Subsidiaries, the
stock of which have been sold or otherwise disposed of pursuant to
SECTION 9.7(d)(2)(A) during such 12-month period shall not exceed 10%
of Consolidated Net Tangible Assets of the Company and the Restricted
Subsidiaries as of the end of the fiscal quarter immediately preceding
or coinciding with such sale, exchange, transfer or other disposition,
and (B) the assets described in the foregoing CLAUSE (A) shall not
have contributed more than 10% of EBITD of the Company and the
Restricted Subsidiaries for the four most recently completed fiscal
quarters taken as a single accounting period; or
(3) after giving effect to such sale, exchange, transfer or
other disposition, (A) the aggregate net book value of (i) all assets
of the Company and the Restricted Subsidiaries (including the sale of
net profits interests in developed oil and gas properties) sold, ex-
changed, transferred or otherwise disposed of (on a consolidated
basis) (but excluding assets sold, exchanged, transferred or otherwise
disposed of pursuant to SECTION 9.7(c)(1) and (2)) during the period
of 12 consecutive months immediately preceding such sale, exchange,
transfer or other disposition and (ii) the assets of all Restricted
Subsidiaries, the stock of which has been sold or otherwise disposed
of pursuant to SECTION 9.7(d)(2)(B) during such 12-month period, shall
not exceed 10% of Consolidated Net Tangible Assets of the Company and
the Restricted Subsidiaries as of the end of the fiscal quarter
immediately preceding or coinciding with such sale, exchange, transfer
or other disposition; (B) the assets described in the foregoing CLAUSE
(A) shall not have contributed more than 10% of EBITD for the four
most recently completed fiscal quarters taken as a single accounting
period, and (C) within six months after such sale, exchange, transfer
or other disposition, the net proceeds thereof are applied toward, or
the exchange results in, (1) the acquisition by the Company or a
Restricted Subsidiary of (i) assets which have an aggregate fair
market value at least equal to the net proceeds received by the
Company and its Restricted Subsidiaries from such sale, exchange,
transfer or other disposition; (ii) if the assets so sold, exchanged,
transferred or otherwise disposed of were located in the United States
of America or Canada, the assets acquired are located in the United
States of America or Canada, and
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(iii) the assets so acquired are of a type usual and customary in the
oil and gas business; PROVIDED that no Liens shall at any time exist
on the assets so acquired which secure any Debt except as permitted by
SECTION 9.7(a)(13) or (2) the prepayment of an aggregate principal
amount of all Obligations plus accrued interest and premium, if any,
thereon in accordance with this Agreement and the Letter of Credit
Agreement, or the payment of an aggregate principal amount of other
Funded Debt (other than Funded Debt subordinate in right of payment to
the Obligations) plus accrued interest and premium, if any, in either
case in an amount at least equal to the aggregate net proceeds that
the Company or a Restricted Subsidiary receives from the sale,
exchange, transfer or other disposition of such assets.
(d) SALE OF STOCK OF RESTRICTED SUBSIDIARIES. Sell or otherwise
dispose of, or part with control of, any shares of stock of any
Restricted Subsidiary, except (1) to the Company or another wholly
owned Restricted Subsidiary and (2) that all shares of stock of any
Restricted Subsidiary at the time owned by the Company and all
Restricted Subsidiaries may be sold as an entirety for a cash
consideration which represents the fair market value (as determined in
good faith by the Board of Directors of the Company) at the time of
sale of the shares of stock so sold; PROVIDED that for purposes of
this exception:
(A) (i) the net book value of the assets of such Restricted
Subsidiary together with (x) the net book value of the assets of any
other Restricted Subsidiary the stock of which was sold during the
preceding 12-month period and (y) the net book value of the assets of
the Company and all Restricted Subsidiaries sold, exchanged,
transferred or otherwise disposed of pursuant to SECTION 9.7(c)(2)
during the preceding 12-month period, does not represent more than 10%
of Consolidated Net Tangible Assets as of the end of the fiscal
quarter immediately preceding or coinciding with such sale, exchange,
transfer or other disposition and (ii) the earnings of such Restricted
Subsidiary together with (x) the earnings of any other Restricted
Subsidiary the stock of which was sold or otherwise disposed of
pursuant to the exception described in this CLAUSE (A) during the
preceding 12-month period and (y) the earnings attributable to the
assets sold, exchanged, transferred or otherwise disposed of pursuant
to SECTION 9.7(c)(2) during such 12-month period, do not represent
more than 10% of EBITD for the four most recently completed fiscal
quarters taken as a single accounting period; and PROVIDED FURTHER
that, at the time of such sale, such Restricted Subsidiary shall not
own, directly or indirectly, any shares of stock of the Company or any
other Restricted Subsidiary unless all of the shares of stock of such
other Restricted Subsidiary owned, directly or indirectly, by the
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Company and all Restricted Subsidiaries are simultaneously being sold
as permitted by the exception described in this CLAUSE (A); or
(B) (i) the net book value of the assets of such Restricted
Subsidiary together with (x) the net book value of the assets of any
other Restricted Subsidiary the stock of which was sold during the
preceding 12-month period and (y) the net book value of the assets of
the Company and any Restricted Subsidiary sold, exchanged, transferred
or otherwise disposed of pursuant to SECTION 9.7(c)(3) during the
preceding 12-month period, does not represent more than 10% of the
Consolidated Net Tangible Assets as of the end of the fiscal quarter
immediately preceding or coinciding with such sale, exchange, transfer
or other disposition; (ii) the earnings of such Restricted Subsidiary
together with (x) the earnings of any other Restricted Subsidiary the
stock of which was sold or otherwise disposed of pursuant to the
exception described in this CLAUSE (B) during the preceding 12-month
period and (y) the earnings attributable to the assets sold,
exchanged, transferred or otherwise disposed of pursuant to
SECTION 9.7(c)(3) during such 12-month period, do not represent more
than 10% of EBITD for the four most recently completed fiscal quarters
taken as a single accounting period, and (iii) within six months after
such sale or other disposition, the proceeds thereof are applied
toward (i) the acquisition by the Company or a Restricted Subsidiary
of (1) assets which have an aggregate fair market value at least equal
to the net proceeds received by the Company and the Restricted
Subsidiaries from such sale or other disposition and (2) the assets so
acquired are of a type usual and customary in the oil and gas
business; PROVIDED that no Liens shall at any time exist on the assets
so acquired which secure any Debt except as permitted by
SECTION 9.7(a)(13), or (ii) the prepayment of an aggregate principal
amount of all Obligations in accordance with this Agreement and the
Letter of Credit Agreement, or the payment of an aggregate principal
amount of other Funded Debt (other than Funded Debt subordinate in
right of payment to the Obligations) plus accrued interest and
premium, if any, in either case in an amount at least equal to the
aggregate net proceeds that the Company or a Restricted Subsidiary
receives from the sale or other disposition; and PROVIDED FURTHER
that, at the time of such sale or other disposition, such Restricted
Subsidiary shall not own, directly or indirectly, (y) any shares of
stock of the Company or any other Restricted Subsidiary unless all of
the shares of stock of such other Restricted Subsidiary owned,
directly or indirectly, by the Company and all Restricted Subsidiaries
are simultaneously being sold as permitted by the exception described
in this CLAUSE (B).
(e) MERGER AND SALE OF ALL OR SUBSTANTIALLY ALL ASSETS. Merge
or consolidate with or into any other Person or convey, exchange,
transfer or otherwise dispose of all or a substantial
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part of its assets (I.E., assets which could not otherwise be disposed
of pursuant to SECTION 9.7(c)(2) or (3)) to any Person except that
(1) any wholly owned Restricted Subsidiary may merge with
the Company (PROVIDED that the Company shall be the continuing or
surviving corporation) or with any one or more other wholly owned
Restricted Subsidiaries;
(2) any Restricted Subsidiary may sell, exchange, transfer
or otherwise dispose of any of its assets to the Company or to a
wholly owned Restricted Subsidiary;
(3) any Restricted Subsidiary may sell, exchange, transfer
or otherwise dispose of all or substantially all of its assets subject
to the conditions and provisions specified in SECTIONS 9.7(c)(2) and
(3);
(4) any Restricted Subsidiary may merge into or consolidate
with any Person which does not thereupon become a Restricted
Subsidiary, subject to the conditions and provisions specified in
SECTION 9.7(d) with respect to a sale or other disposition of the
stock of such Restricted Subsidiary;
(5) any Restricted Subsidiary may permit any Person to be
merged into such Restricted Subsidiary or may consolidate with or
merge into a Person which thereupon becomes a Restricted Subsidiary;
PROVIDED that immediately after any such merger or consolidation, no
Default shall have occurred and be continuing;
(6) the Company may permit any Person to be merged into the
Company (such that the Company shall be the continuing or surviving
corporation); and
(7) the Company may permit any corporation to consolidate
with the Company and the Company may merge into or otherwise dispose
of its assets as an entirety or substantially as an entirety to any
solvent corporation organized under the laws of the United States of
America or any state thereof and having at least 80% of its
consolidated assets located in the United States of America and Canada
which expressly assumes in writing the due and punctual performance of
the obligations of the Company under the Credit Documents, to the same
extent as if such successor or transferee corporation had originally
executed the Credit Documents in the place of the Company (it being
agreed that such assumption shall, upon the request of any Bank and at
the expense of such successor or transferee corporation, be evidenced
by the exchange of such Note for another Note executed by such
successor or transferee corporation, with such changes in phraseology
and form
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as may be appropriate but in substance of like terms as the Note
surrendered for such exchange and of like unpaid principal amount, and
that each Note executed pursuant to this Agreement after such assump-
tion shall be executed by and in the name of such successor or
transferee corporation);
PROVIDED that for purposes of SECTIONS 9.7(e)(6) and (7) immediately
after such merger, consolidation, sale or other disposition, and after
giving effect thereto, (x) such successor or transferee Person could
incur at least $1.00 of additional Funded Debt without violation of
SECTION 9.7(b)(3) and (y) no Default shall have occurred and be
continuing. As soon as practicable, and in any event at least 75 days
prior to the proposed consummation date of any merger, consolidation,
sale or other disposition described in SECTION 9.7(e)(7), the Company
shall give written notice thereof to each Bank describing in
reasonable detail the proposed transaction, the date on which it is
proposed to be consummated and the identity, jurisdiction of
organization, and geographic composition of assets of the proposed
successor or transferee corporation. No disposition by the Company of
its assets as an entirety or substantially as an entirety under
SECTION 9.7(e)(7) shall release the Company as the maker of the Notes
from its liability as obligor thereon.
(f) SALE AND LEASEBACK. Enter into any Sale and Leaseback
Transaction unless:
(1) immediately after giving effect thereto and to the
application of any sales proceeds received in connection therewith,
Special Debt shall not exceed 10% of the Consolidated Net Tangible
Assets; or
(2) the net sales proceeds received by the Company or a
Restricted Subsidiary in respect of the assets sold pursuant to such
Sale and Leaseback Transaction are greater than or equal to the fair
market value of the assets sold (which determination shall be based
upon a written opinion (the cost of which shall be borne exclusively
by the Company) as to valuation from an independent valuation expert
selected by the Company) and such proceeds are concurrently applied to
(A) the purchase, acquisition, development or construction of assets
having a value at least equal to such net proceeds, and to be used in
the Company's or such Restricted Subsidiary's business; PROVIDED that
no Liens shall at any time exist on such assets which secure any Debt
except as permitted by SECTION 9.7(a)(13); (B) the prepayment in
accordance with this Agreement of any aggregate principal amount of
all the Obligations (plus accrued interest and premium, if any) at
least equal to the amount of such net proceeds; or (C) the payment of
other Funded Debt (other than Funded Debt subordinate in right of
payment to the
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Obligations) in an aggregate principal amount at least equal to the
amount of such net sales proceeds; or
(3) the Sale and Leaseback Transaction involves the sale of
assets by the Company to a wholly owned Restricted Subsidiary or by a
Restricted Subsidiary to the Company or to another wholly owned
Restricted Subsidiary; PROVIDED that if the Company is the seller
under any such Sale and Leaseback Transaction, its lease obligations
thereunder shall be subordinated to the Funded Debt represented by the
Notes upon terms set forth on SCHEDULE V.
(g) INVESTMENTS IN THE SPECIAL SUBSIDIARY. Directly or
indirectly make an Investment in the Special Subsidiary after
March 31, 1990, unless (1) the aggregate amount of all other
Investments in the Special Subsidiary made, directly or indirectly, by
the Company and the Restricted Subsidiaries after March 31, 1990 shall
not exceed the aggregate amount of cash distributions received by the
Company and the Restricted Subsidiaries from the Special Subsidiary
after March 31, 1990 or (2) in the opinion of the Board of Directors
of the Company, the Investment would not impair the ability of the
Company to make when due any payment (including any prepayment
required by SECTION 3.2(b)) of principal of or interest on the Notes.
(h) TRANSACTIONS WITH AFFILIATES. Directly or indirectly
purchase, acquire or lease any property from, or sell, transfer or
lease any property to, or otherwise deal with, in the ordinary course
of business or otherwise, (1) any Affiliate (except any employee
compensation benefit plan or any Restricted Subsidiary) or (2) any
Person (other than a Restricted Subsidiary) in which an Affiliate or
the Company (directly or indirectly) owns, beneficially or of record,
5% or more of the outstanding voting stock or similar equity interest,
except that (A) any Affiliate may be a director, officer or employee
of the Company or any Restricted Subsidiary and may be paid reasonable
compensation in connection therewith and (B) subject to applicable
fiduciary standards with respect to the Special Subsidiary, acts and
transactions that would otherwise be prohibited by this Subsection may
be performed or engaged in if upon terms not less favorable to the
Company or any Restricted Subsidiary than if no relationship described
in CLAUSES (1) and (2) above existed.
(i) TAX CONSOLIDATION. Except for the Tax Allocation
Agreements, the Company will not, and will not permit any of its
Subsidiaries to, file or consent to the filing of any consolidated
income tax return with any Person unless such other Person shall have
agreed in writing with the Company that the Company's or such
Subsidiary's liability with respect to taxes as a result of the filing
of any such consolidated income tax return with such Person
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shall not be materially greater, nor the receipt of any tax benefits
materially less, than they would have been had the Company and its
Subsidiaries continued to file a consolidated income tax return with
the Company as the parent corporation.
9.8. ISSUANCE OF STOCK BY RESTRICTED SUBSIDIARIES. The Company
covenants that it will not permit any Restricted Subsidiary (either
directly or indirectly, by the issuance of rights or options for, or
securities convertible into, such shares) to issue, sell or otherwise
dispose of any shares of any authorized but unissued or treasury class
of such Restricted Subsidiary's stock (other than directors'
qualifying shares) except to the Company or another Restricted
Subsidiary.
9.9. COVERAGE RATIOS. As of the end of each fiscal quarter of
the Company, and each delivery of a Required Reserve Report or
Optional Reserve Report, the Company shall be in compliance with all
Required Ratios (except for any noncompliance resulting solely from an
Engineering Shortfall, and then only prior to the cure thereof
permitted by SECTION 10.1(e)).
9.10. PREPAYMENT OF JUNIOR SECURITIES. Without the prior
written consent of the Required Banks, the Company shall not prepay
(or deposit any property to defease) any indebtedness consisting of
Junior Securities before the payment in full of all indebtedness under
the Credit Documents.
Section 10. DEFAULTS.
10.1. EVENTS OF DEFAULT. If one or more of the following
events (herein called "EVENTS OF DEFAULT") shall occur and be
continuing:
(a) the Company shall fail to pay any principal of any Loan or
any fee or other principal amount payable hereunder or under any other
Credit Document when due, or shall fail to pay any interest on any
amount hereunder or under any other Credit Document for more than
three days after the date due; or
(b) any member of the Combined Group shall default in any
payment of principal of or interest on any other obligation for money
borrowed (or any Capitalized Lease Obligation, any obligation under a
conditional sale or other title retention agreement, any obligation
issued or assumed as full or partial payment for property whether or
not secured by a purchase money mortgage or any obligation under notes
payable or drafted accepted representing extensions of credit) beyond
any period of grace provided with respect thereto, or any member of
the Combined Group shall fail to perform or observe any other
agreement, term or condition contained
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in any agreement under which any such obligation is created (or if any
other event thereunder or under any such agreement shall occur and be
continuing) and the effect of such failure or other event is to cause,
or to permit the holder or holders of such obligation (or a trustee on
behalf of such holder or holders) to cause, such obligation to become
due prior to any stated maturity, or any member of the Combined Group
shall fail to pay any Guaranty relating to Debt for borrowed money in
accordance with its terms, PROVIDED that the aggregate amount of all
obligations as to which such a payment default shall occur and be
continuing or such a failure or other event causing or permitting
acceleration shall occur and be continuing shall exceed $10,000,000;
or
(c) any representation or warranty by the Company or any of its
officers in any Credit Document or in any writing furnished to the
Agent or the Banks in connection herewith shall prove to have been
false or misleading in any material respect as of the date as of which
it was made; or
(d) the Company shall default in the performance of any of its
obligations under SECTIONS 9.6 through 9.8 or under SECTION 9.9 (other
than a Default resulting solely from an Engineering Shortfall) or
under SECTION 9.10; or
(e) the Company shall deliver any Independent Engineering Report
and related Coverage Report to the Banks in accordance with
SECTION 9.1 or SECTION 2.7 reflecting noncompliance with any Required
Ratio and such noncompliance shall result solely from an Engineering
Shortfall and shall not be cured (such cure to be evidenced by a new
Coverage Report demonstrating compliance with all Required Ratios) on
or before the date 180 days after the Company delivers such
Independent Engineering Report and related Coverage Report; or
(f) the Company shall default in the performance of any of its
obligations in any Credit Document other than those specified
elsewhere in this SECTION 10.1 and such default shall not be remedied
within 30 days after any executive officer of the Company obtains
actual knowledge thereof; or
(g) any member of the Combined Group shall (1) make an
assignment for the benefit of creditors; (2) generally fail to pay its
debts as such debts become due, or (3) admit in writing its inability
to generally pay its debts as such debts become due; or
(h) a Governmental Authority shall enter any decree or order for
relief in respect of any member of the Combined Group under any
bankruptcy, reorganization, compromise, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar law,
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whether now or hereafter in effect (herein called the "BANKRUPTCY
Law"), of any jurisdiction; or
(i) any member of the Combined Group shall petition or apply to
any Governmental Authority for, or consent to, the appointment of, or
taking possession by, a trustee, receiver, custodian, liquidator or
similar official of such member of the Combined Group, or of any
substantial part of the assets of such member of the Combined Group,
or shall commence a voluntary case under the Bankruptcy Law of the
United States or any proceedings (other than proceedings for the
voluntary liquidation and dissolution of a Restricted Subsidiary)
relating to any member of the Combined Group under the Bankruptcy Law
of any other jurisdiction; or
(j) any such petition or application referred to in
SECTION 10.1(i) shall be filed, or any such proceedings referred to in
SECTION 10.1(i) shall be commenced, against any member of the Combined
Group and such member of the Combined Group by any act shall indicate
its approval thereof, consent thereto or acquiescence therein, or an
order, judgment or decree shall be entered appointing any such
trustee, receiver, custodian, liquidator or similar official, or
approving the petition in any such proceedings, and such order,
judgment or decree shall remain unstayed and in effect for more than
60 consecutive days; or
(k) any order, judgment or decree shall be entered in any
proceedings against any member of the Combined Group decreeing the
dissolution of any member of the Combined Group and such order,
judgment or decree shall remain unstayed and in effect for more than
the appeal time provided by law; or
(l) any order, judgment or decree shall be entered in any
proceedings against any member of the Combined Group decreeing a
split-up of such member of the Combined Group which requires (1) the
divestiture of assets which exceed, or the divestiture of partnership
interest in the Special Subsidiary or of the stock of a Restricted
Subsidiary whose assets exceed, 10% of Consolidated Net Tangible
Assets as of the end of the fiscal quarter immediately preceding or
coinciding with such divestiture or (2) the divestiture of assets or
stock of a Restricted Subsidiary or assets of or partnership interest
in the Special Subsidiary, which shall have contributed more than 10%
of EBITD for the four most recently completed fiscal quarters, and
such order, judgment or decree shall remain unstayed and in effect for
more than 60 consecutive days; or
(m) any judgment or order, or series of judgments or orders, for
the payment of money in an amount in excess of $5,000,000 shall be
rendered against any member of the Combined Group and the same shall
not be discharged (or provision shall not be made for such
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discharge), or a stay of execution thereof shall not be procured,
within the appeal time provided by law from the date of entry thereof,
or such member of the Combined Group shall not, within said appeal
time, or such longer period during which execution of the same shall
have been stayed, appeal therefrom and cause the execution thereof to
be stayed during such appeal; or
(n) so long as any of the Mortgages is in effect, the making of
any levy, seizure or attachment on or of any substantial portion of
the Collateral which is not stayed or lifted within the appeal time
provided by applicable law; or the loss, theft, substantial damage, or
destruction of any such Collateral which is not replaced if the amount
of such loss, theft, damage or destruction not covered by insurance
together with the dollar value of all other previous such loss, theft,
damage, or destruction during the term of this Agreement and not
covered by insurance exceeds $10,000,000; or
(o) so long as the Stock Pledge Agreement is in effect, the
making of any levy, seizure or attachment on or of, or the seizure,
nationalization, expropriation or forfeiture of, any properties of
Trend or any of its Subsidiaries which net of insurance results in a
diminution of value equaling or exceeding the greater of (i) any
substantial portion of the properties of Trend and its Subsidiaries
taken as a whole, or (ii) a loan value (based on the Most Recent
Engineering Report) which equals or exceeds $5,000,000 as of the most
recent determination thereof; or
(p) the Company or any ERISA Affiliate 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 with respect to any Plan; or notice of
intent to terminate a Plan or Plans (other than a multiemployer plan
under Section 4001(a)(3) of ERISA) having aggregate Unfunded
Liabilities in excess of $5,000,000 shall be filed under Title IV of
ERISA by the Company or any ERISA Affiliate, 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 Plan or Plans (other than a
multiemployer plan under Section 4001(a)(3) of ERISA) having aggregate
Unfunded Liabilities in
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excess of $5,000,000 or a proceeding shall be instituted by a
fiduciary of any such Plan or Plans against the Company or any ERISA
Affiliate to enforce Section 515 or 4219(c)(5) of ERISA; or the
Company or any ERISA Affiliate shall incur a complete or partial
withdrawal liability under Title IV of ERISA in an annual amount in
excess of $2,000,000 (and in the aggregate $5,000,000) in connection
with any Plan; or a condition shall exist by reason of which the PBGC
would be entitled to obtain a decree adjudicating that any Plan or
Plans having aggregate Unfunded Liabilities in excess of $5,000,000
must be terminated; or there shall occur any event or condition that
might reasonably constitute grounds for the termination of any Plan or
Plans having aggregate Unfunded Liabilities in excess of $5,000,000 or
with respect to such Plan or Plans either the imposition of any
liability in excess of $5,000,000 (other than contributions in the
ordinary course) or any Lien provided under Section 4068 of ERISA
securing an amount in excess of $5,000,000 on any property of the
Company or any ERISA Affiliate; PROVIDED, however, any amounts owing
by Santa Fe Pacific Corporation pursuant to the ERISA Indemnification
Agreement between Santa Fe Pacific Corporation and the Company shall
first be offset against the dollar threshold amounts set forth above
before any such condition or event constitutes an event of default
under this paragraph; or
(q) one or more demands for payment is made upon the Company by
Santa Fe Pacific Corporation or any other Person pursuant to the Tax
Indemnification Agreement and such demands would exceed $5,000,000 in
the aggregate; or
(r) any Change of Control shall occur; or
(s) any Event of Default shall occur and be continuing under the
Letter of Credit Agreement,
THEREUPON: (I) the Agent may (and, if directed by the Required Banks,
shall) do any or all of the following: (a) declare the Commitments
terminated (whereupon the Commitments shall be terminated); and (b)
declare the principal amount then outstanding of and the accrued
interest on the Loans and all fees and all other amounts payable
hereunder and under the Notes to be forthwith due and payable, where-
upon such amounts shall be and become immediately due and payable,
without notice (including notice of acceleration and notice of intent
to accelerate), presentment, demand, protest or other formalities of
any kind, all of which are hereby expressly WAIVED by the Company;
PROVIDED that in the case of the occurrence of an Event of Default
with respect to the Company referred to in SECTION 10.1(g) through
(l), the Commitments shall be automatically terminated and the prin-
cipal amount then outstanding of and the accrued interest on the Loans
and fees and all other amounts payable hereunder and under the Notes
shall be and become automatically and immediately due and payable,
without notice (including notice of intent to accelerate and notice of
acceleration) and without presentment, demand, protest or other for-
malities of any kind, all of which are hereby expressly WAIVED by the
Company; (II) each Bank may exercise its rights of offset against each
account and all other property of the Company in the possession of
such Bank, which right is hereby granted by the Company to the Banks;
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and (III) the Agent and each Bank may exercise any and all other
rights pursuant to the Credit Documents, at law and in equity.
Section 11. THE AGENT.
11.1. APPOINTMENT, POWERS AND IMMUNITIES. Each Bank hereby
irrevocably appoints and authorizes the Agent to act as its Agent
under the Credit Documents with such powers as are specifically
delegated to the Agent by the terms thereof, together with such other
powers as are reasonably incidental thereto, including the execution
and delivery of the First Amendment to Deed of Trust. The Agent
(which term as used in this section shall include reference to its
Affiliates and its own and its Affiliates' officers, directors,
employees and agents) shall (a) have no duties or responsibilities
except those expressly set forth in the Credit Documents, and shall
not by reason of any Credit Document be a trustee or fiduciary for any
Bank; (b) not be responsible to any Bank for any recitals, statements,
representations or warranties contained in any Credit Document, or in
any certificate or other document referred to or provided for in, or
received by any of them under, any Credit Document, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of
any Credit Document or any other document referred to or provided for
therein or any property covered thereby or for any failure by the
Company or any other Person to perform any of its obligations
thereunder; (c) not be required to initiate or conduct any litigation
or collection proceedings hereunder or under any Credit Document
except to the extent requested by the Required Banks (and SECTION 11.7
shall apply), and (d) not be responsible for any action taken or
omitted to be taken by it under any Credit Document or any other
document or instrument referred to or provided for therein or in
connection therewith, including pursuant to its own negligence, except
for its own gross negligence or willful misconduct. The Agent may
employ agents and attorneys-in-fact and shall not be responsible for
the negligence or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. In any foreclosure proceeding
concerning any collateral for the Notes or other obligations of the
Company hereunder, each holder of a Note or other obligations of the
Company hereunder if bidding for its own account or for its own
account and the accounts of other Banks is prohibited from including
in the amount of its bid an amount to be applied as a credit against
its Notes or the Notes of the other Banks; instead, such holder must
bid in cash only.
11.2. RELIANCE BY AGENT. The Agent shall be entitled to rely
upon any certification, notice or other communication (including any
thereof by telephone, telex, telegram or cable) believed by it to be
genuine and correct and to have been signed or sent by or on behalf of
the proper Person or Persons, and upon
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advice and statements of legal counsel (which may be counsel for the
Company), independent accountants and other experts selected by the
Agent. As to any matters not expressly provided for by any Credit
Document, the Agent shall in all cases be fully protected in acting,
or in refraining from acting, hereunder and thereunder in accordance
with instructions of the Required Banks, and any action taken or
failure to act pursuant thereto shall be binding on all of the Banks.
Pursuant to instructions of all Banks or the Required Banks, as
appropriate, the Agent shall have the authority to execute releases of
the Security Documents on behalf of the Banks without the joinder of
any Bank.
11.3. DEFAULTS. The Agent shall not be deemed to have know-
ledge of the occurrence of a Default (other than the non-payment of
principal of or interest on Loans) unless it has received notice from
a Bank or the Company specifying such Default and stating that such
notice is a "Notice of Default". In the event that the Agent receives
such a notice of the occurrence of a Default, the Agent shall give
prompt notice thereof to the Banks (and shall give each Bank prompt
notice of each such non-payment). The Agent shall (subject to
SECTIONS 11.7 and 12.5) take such action with respect to such Default
as shall be directed by all Banks or the Required Banks, as
appropriate, and within its rights under the Credit Documents and at
law or in equity; PROVIDED that, unless and until the Agent shall have
received such directions, the Agent may (but shall not be obligated
to) take such action, or refrain from taking such action, permitted
hereby with respect to such Default as it shall deem advisable in the
best interests of the Banks and within its rights under the Credit
Documents, at law or in equity.
11.4. RIGHTS AS A BANK. With respect to their Commitments
and Loans, TCB and NationsBank in their capacities as Banks hereunder
shall have the same rights and powers hereunder as any other Bank and
may exercise the same as though they were not acting as the Agent or
the Co-Agents, and the term "Bank" or "Banks" shall, unless the
context otherwise indicates, include the Agent and the Co-Agents in
their individual capacity. The Agent and the Co-Agents may (without
having to account therefor to any Bank) accept deposits from, lend
money to and generally engage in any kind of banking, trust, letter of
credit, agency or other business with the Company (and any of its
Affiliates) as if they were not acting as the Agent and the Co-Agents,
and the Agent and the Co-Agents may accept fees and other considera-
tion from the Company and its Affiliates (in addition to the fees
heretofore agreed to between the Company and the Agent or the
Co-Agents) for services in connection with this Agreement or otherwise
without having to account for the same to the Banks.
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11.5. INDEMNIFICATION. THE BANKS AGREE TO INDEMNIFY THE
AGENT (TO THE EXTENT NOT REIMBURSED UNDER SECTION 12.3 OR 12.4, BUT
WITHOUT LIMITING THE OBLIGATIONS OF THE COMPANY UNDER SAID
SECTIONS 12.3 AND 12.4), RATABLY IN ACCORDANCE WITH THEIR RESPECTIVE
COMMITMENTS, FOR ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES,
DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR
DISBURSEMENTS OF ANY KIND AND NATURE WHATSOEVER (INCLUDING THE
CONSEQUENCES OF THE NEGLIGENCE OF THE AGENT) WHICH MAY BE IMPOSED ON,
INCURRED BY OR ASSERTED AGAINST THE AGENT IN ANY WAY RELATING TO OR
ARISING OUT OF ANY CREDIT DOCUMENT (AS DEFINED HEREIN) OR ANY OTHER
DOCUMENTS CONTEMPLATED BY OR REFERRED TO THEREIN OR THE TRANSACTIONS
CONTEMPLATED THEREBY (INCLUDING THE COSTS AND EXPENSES WHICH THE
COMPANY IS OBLIGATED TO PAY UNDER SECTIONS 12.3 AND 12.4 BUT
EXCLUDING, UNLESS A DEFAULT HAS OCCURRED AND IS CONTINUING, NORMAL
ADMINISTRATIVE COSTS AND EXPENSES INCIDENT TO THE PERFORMANCE OF ITS
AGENCY DUTIES HEREUNDER) OR THE ENFORCEMENT OF ANY OF THE TERMS HEREOF
OR THEREOF OR OF ANY SUCH OTHER DOCUMENTS, INCLUDING THE NEGLIGENCE OF
THE AGENT; PROVIDED THAT NO BANK SHALL BE LIABLE FOR ANY OF THE
FOREGOING TO THE EXTENT THEY ARISE FROM THE GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OF THE PARTY TO BE INDEMNIFIED. The obligations of
the Banks under this SECTION 11.5 shall survive the termination of
this Agreement.
11.6. NON-RELIANCE ON THE AGENT AND OTHER BANKS. Each Bank
agrees that it has received current financial information with respect
to the Company and that it has, independently and without reliance on
the Agent, the Co-Agents or any other Bank and based on such documents
and information as it has deemed appropriate, made its own credit
analysis of the Company and decision to enter into this Agreement and
that it will, independently and without reliance upon the Agent, the
Co-Agents or any other Bank, and based on such documents and
information as it shall deem appropriate at the time, continue to make
its own analysis and decisions in taking or not taking action under
the Credit Documents. The Agent and the Co-Agents shall not be
required to keep themselves informed as to the performance or
observance by the Company of any Credit Document or any other document
referred to or provided for therein or to inspect the property or
books of the Company or any other Person. Except for notices, reports
and other documents and information expressly required to be furnished
to the Banks by the Agent and the Co-Agents under the Credit
Documents, the Agent and the Co-Agents shall not have any duty or
responsibility to provide any Bank with any credit or other
information concerning the affairs, financial condition or business of
the Company (or any of its Affiliates) which may come into the
possession of the Agent or either Co-Agent.
11.7. FAILURE TO ACT. Except for action expressly required
of the Agent under the Credit Documents, the Agent shall
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in all cases be fully justified in failing or refusing to act
hereunder and thereunder unless it shall receive further assurances to
its satisfaction by the Banks of their indemnification obligations
under SECTION 11.5 against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such
action.
11.8. RESIGNATION OR REMOVAL OF THE AGENT. Subject to the
appointment and acceptance of a successor Agent as provided below, the
Agent may resign at any time by giving notice thereof to the Banks and
the Company, and the Agent may be removed at any time with or without
cause by the Required Banks. Upon any such resignation or removal,
the Required Banks shall have the right to appoint a successor Agent.
If no successor Agent shall have been so appointed by the Required
Banks and shall have accepted such appointment within 30 days after
the retiring Agent's giving of notice of resignation or the Required
Banks' removal of the retiring Agent, then the retiring Agent may, on
behalf of the Banks, appoint a successor Agent. Any successor Agent
shall be a bank which has an office in the United States and a
combined capital and surplus of at least $250,000,000 and with its
deposits insured by the FDIC. Upon the acceptance of any appointment
as the Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder.
Such successor Agent shall promptly specify its Principal Office
referred to in SECTIONS 3.1 and 5.1 by notice to the Company. After
any retiring Agent's resignation or removal hereunder as the Agent,
the provisions of this SECTION 11 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it
while it was acting as the Agent.
Section 12. MISCELLANEOUS.
12.1. WAIVER. No waiver of any Default shall be a waiver of
any other Default. No failure on the part of the Agent or any Bank to
exercise and no delay in exercising, and no course of dealing with
respect to, any right, power or privilege under any Credit Document
shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege thereunder preclude any
other or further exercise thereof or the exercise of any other right,
power or privilege. The remedies provided in the Credit Documents are
cumulative and not exclusive of any remedies provided by law or in
equity.
12.2. NOTICES. All notices and other communications provided for
herein (including any modifications of, or waivers or consents under,
this Agreement) shall be given or made by telex, telegraph,
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telecopy (confirmed by mail), cable or other writing and telexed,
telecopied, telegraphed, cabled, mailed or delivered to the intended
recipient at the "Address for Notices" specified below its name on the
signature pages hereof; or, as to any party, at such other address as
shall be designated by such party in a notice to the Company and the
Agent given in accordance with this section. Except as otherwise
provided in this Agreement, all such communications shall be deemed to
have been duly given when transmitted by telex or telecopier,
delivered to the telegraph or cable office or personally delivered or,
in the case of a mailed notice, upon receipt, in each case given or
addressed as aforesaid.
12.3. EXPENSES, ETC. Whether or not any Loan is ever made,
the Company shall pay or reimburse on demand each of the Banks, the
Agent and the Co-Agents for paying: (a) the reasonable fees and
expenses of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P., special
counsel to the Agent, and of local counsel to the Agent in the States
of Louisiana, Oklahoma and Alabama in connection with (1) the
preparation, execution and delivery of the Credit Documents (including
the exhibits and schedules hereto), the making of the Loans hereunder
and (2) any modification, supplement or waiver of any of the terms of
any Credit Document; (b) all reasonable out-of-pocket costs and expen-
ses of the Banks, the Agent and the Co-Agents (including costs of
preparing an Independent Engineering Report and reasonable counsels'
fees) in connection with any Event of Default under or the enforcement
of any Credit Document; (c) all transfer, stamp, documentary or other
similar taxes, assessments or charges levied by any governmental or
revenue authority in respect of any Credit Document or any other
document referred to therein; (d) all costs, expenses, taxes,
assessments and other charges incurred in connection with any filing,
registration, recording or perfection of any security interest
contemplated by this Agreement, any Security Document or any document
referred to herein or therein; and (e) reasonable expenses of due
diligence and syndication, and mutually agreed advertising and
marketing costs.
12.4. INDEMNIFICATION. THE COMPANY SHALL INDEMNIFY THE
AGENT, THE CO-AGENTS, THE BANKS, AND EACH AFFILIATE THEREOF AND THEIR
RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, AGENTS AND COUNSEL FROM,
AND HOLD EACH OF THEM HARMLESS AGAINST, ANY AND ALL LOSSES,
LIABILITIES, COSTS, EXPENSES, CLAIMS OR DAMAGES TO WHICH ANY OF THEM
MAY BECOME SUBJECT, REGARDLESS OF AND INCLUDING LOSSES, LIABILITIES,
COSTS, EXPENSES, CLAIMS AND DAMAGES ARISING FROM THE NEGLIGENCE OF THE
AGENT OR THE CO-AGENTS OR THE BANKS OR ANY OTHER INDEMNITEE, INSOFAR
AS SUCH LOSSES, LIABILITIES, COSTS, EXPENSES, CLAIMS OR DAMAGES ARISE
OUT OF OR RESULT FROM ANY (A) ACTUAL OR PROPOSED USE BY THE COMPANY OF
THE PROCEEDS OF ANY EXTENSION OF CREDIT BY ANY BANK HEREUNDER;
(B) BREACH BY THE COMPANY OF ANY CREDIT DOCUMENT (AS DEFINED HEREIN);
(C) VIOLATION BY THE COMPANY
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OR ANY OF ITS SUBSIDIARIES OF ANY LEGAL REQUIREMENT INCLUDING, WITHOUT
LIMITATION, APPLICABLE ENVIRONMENTAL LAWS; (D) ANY BANK'S OR THE
AGENT'S OR ANY CO-AGENT'S BEING DEEMED AN OWNER OR OPERATOR OF ANY
ASSETS OF THE COMPANY OR ITS SUBSIDIARIES BY A COURT OR OTHER
REGULATORY OR ADMINISTRATIVE AGENCY OR TRIBUNAL IN CIRCUMSTANCES IN
WHICH NEITHER THE AGENT, EITHER CO-AGENT NOR ANY OF THE BANKS IS
GENERALLY OPERATING OR GENERALLY EXERCISING CONTROL OVER SUCH ASSETS,
TO THE EXTENT SUCH LOSSES, LIABILITIES, CLAIMS OR DAMAGES ARISE OUT OF
OR RESULT FROM ANY LEGAL REQUIREMENT INCLUDING, WITHOUT LIMITATION,
APPLICABLE ENVIRONMENTAL LAWS PERTAINING TO THE CONDITION OF SUCH
ASSETS, (E) ENVIRONMENTAL CLAIMS OR (F) ANY INVESTIGATION, LITIGATION
OR OTHER PROCEEDING (INCLUDING ANY THREATENED INVESTIGATION OR
PROCEEDING) RELATING TO ANY OF THE FOREGOING, and the Company shall
reimburse the Agent, each Co-Agent, each Bank, and each Affiliate
thereof and their respective directors, officers, employees, agents
and counsel, upon demand, for any expenses (including legal fees)
incurred in connection with any such investigation or proceeding; but
excluding any such losses, liabilities, claims, damages, costs or
expenses incurred by a Person or any Affiliate thereof or their
respective directors, officers, employees, agents or counsel by reason
of the gross negligence or willful misconduct of such Person,
Affiliate, director, officer, employee, agent or counsel. The
obligation of the Company to provide indemnification under this
section for fees and expenses of counsel shall be limited to the fees
and expenses of one counsel in each jurisdiction representing all of
the Persons entitled to such indemnification, except to the extent
that, in the reasonable judgment of any such indemnified Person, the
existence of actual or potential conflicts of interest make
representation of all of such indemnified Persons by the same counsel
inappropriate; in such a case, the Person exercising such judgment
shall be indemnified for the reasonable fees and expenses of its
separate counsel to the extent provided in this Section without giving
effect to the first clause of this sentence. Nothing in this
SECTION 12.4 is intended to limit the obligations of the Company under
any other provision of this Agreement.
12.5. AMENDMENTS, ETC. No amendment or waiver of any
provision of any Credit Document, nor any consent to any departure by
the Company therefrom, shall in any event be effective unless the same
shall be agreed or consented to by the Required Banks and the Company,
and each such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given;
PROVIDED that no amendment, waiver or consent shall, unless in writing
and signed by each Bank affected thereby, (a) increase any Commitment
of any of the Banks or subject the Banks to any additional obliga-
tions; (b) reduce the principal of, or interest on, any Loan, fee or
other sum to be paid under any Credit Document; (c) postpone any
scheduled date fixed for any payment of
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principal of, or interest on, any Loan, fee or other sum to be paid
under any Credit Document; (d) change the percentage of any of the
Commitments, or of the aggregate unpaid principal amount of any of the
Loans, or the number of Banks which shall be required for the Banks or
any of them to take any action under this Agreement; (e) change any
provision contained in SECTIONS 2.5, 5.2, 5.7, 6, 12.3 or 12.4 or this
SECTION 12.5, or in the definition of "Required Ratios", or (f) except
as provided in the Credit Documents, release any material part of the
security for the obligations of the Company under any Credit Document.
Except as permitted by the Mortgages, Mortgaged Properties cannot be
sold for consideration other than cash without the approval of all
Banks. Anything in this SECTION 12.5 to the contrary, no amendment,
waiver or consent shall be made with respect to SECTION 11 without the
consent of the Agent and the Co-Agents.
12.6. SUCCESSORS AND ASSIGNS. (a) This Agreement shall be
binding upon and inure to the benefit of the Company, the Agent, the
Co-Agents and the Banks and their respective successors and assigns.
The Company may not assign or transfer any of its rights or
obligations hereunder without the prior written consent of all of the
Banks.
(b) Each Bank may sell participations to any Person in all or
part of any Loan, or all or part of its Notes or Commitments, in which
event, without limiting the foregoing, the provisions of SECTION 6
shall inure to the benefit of each purchaser of a participation and
the PRO RATA treatment of payments, as described in SECTION 5.2, shall
be determined as if such Bank had not sold such participation. In the
event any Bank shall sell any participation, (1) the Company, the
Agent, the Co-Agents and the other Banks shall continue to deal solely
and directly with such selling Bank in connection with such selling
Bank's rights and obligations under the Credit Documents (including
the Notes held by such selling Bank); (2) such Bank shall retain the
sole right and responsibility to enforce the obligations of the
Company relating to the Loans, including the right to approve any
amendment, modification or waiver of any provision of this Agreement
other than amendments, modifications or waivers with respect to (A)
any fees payable hereunder to the Banks, (B) the amount of principal
or the rate of interest payable on, or the dates fixed for the
scheduled repayment of principal of, the Loans and other sums to be
paid to the Banks hereunder, and (C) the release or termination of all
or substantially all of the security for the Loans, and (3) the
Company agrees, to the fullest extent it may effectively do so under
applicable law, that any participant of a Bank may exercise all rights
of set-off, bankers' lien, counterclaim or similar rights with respect
to such participation as fully as if such
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participant were a direct holder of Loans if such Bank has previously
given notice of such participation to the Company.
(c) Each Bank may assign to one or more Banks or Eligible
Assignees all or a portion of its interests, rights and obligations
under this Agreement (including all or a portion of its Commitments
and the same portion of the related Loans at the time owing to it and
the related Note held by it); PROVIDED (1) other than in the case of
an assignment to a Person at least 50% owned by the assignor Bank, or
by a common parent of both, or to another Bank, the Agent and the
Company must give their respective prior written consent, which
consent will not be unreasonably withheld; (2) the aggregate amount of
the Commitments and/or Loans of the assigning Bank subject to each
such assignment (determined as of the date the Assignment Agreement
with respect to such assignment is delivered to the Agent) shall in no
event be less $10,000,000 (or $1,000,000 in the case of an assignment
between Banks) (except for certain exceptions approved by the Company
and the Agent or where all of a Bank's Commitments and Loans are being
assigned) and shall be in an amount that is an integral multiple of
$1,000,000 (except for certain exceptions approved by the Company and
the Agent or where all of a Bank's Commitments and Loans are being
assigned); (3) the assigning Bank shall contemporaneously assign to
such assignee Bank or Eligible Assignee an equal percentage of the
assigning Bank's Letter of Credit Commitment and all of the assigning
Bank's other rights and obligations under the Letter of Credit
Agreement; and (4) the parties to each such assignment shall execute
and deliver to the Agent, for its acceptance and recording in its
records, an Assignment Agreement with blanks appropriately completed,
together with the Notes subject to such assignment and a processing
and recordation fee of $2,000 (for which the Company shall have no
liability except in the case of assignments required by the Company
pursuant to SECTION 6.1, 6.3 or 6.6, in which case such fee shall be
paid by the Company). Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each
Assignment Agreement, (A) the assignee thereunder shall be a party
hereto and, to the extent provided in such Assignment Agreement, have
the rights and obligations of a Bank hereunder, and (B) the Bank
making such assignment shall, to the extent provided in such
assignment, be released from its obligations under this Agreement
(and, in the case of an Assignment Agreement covering all or the
remaining portion of an assigning Bank's rights and obligations under
this Agreement, such Bank shall cease to be a party hereto).
(d) By executing and delivering an Assignment Agreement, the
Bank assignor thereunder and the assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (1)
other than the representation and warranty that it is the legal and
beneficial owner of the interest being assigned thereby, such
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assignor Bank makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with any Credit Document or
the execution, legality, validity, enforceability, genuineness,
sufficiency or value of any Credit Document; (2) such assignor Bank
makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Company or the performance
or observance by the Company of any of its obligations under any
Credit Document; (3) such assignee confirms that it has received a
copy of this Agreement, together with copies of the financial
statements of the Company previously delivered in accordance herewith
and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into such
Assignment Agreement; (4) such assignee will, independently and
without reliance upon the Agent, such assignor Bank or any other Bank
and based on such documents and information as it shall deem appropri-
ate at the time, continue to make its own credit decisions in taking
or not taking action under the Credit Documents; (5) such assignee
appoints and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers under the Credit Documents as are
delegated to the Agent by the terms hereof, together with such powers
as are reasonably incidental thereto, and (6) such assignee agrees
that it will perform in accordance with their terms all obligations
that by the terms of the Credit Documents are required to be performed
by it as a Bank.
(e) The Agent shall maintain at its office a copy of each
Assignment Agreement delivered to it and a record of the names and
addresses of the Banks and the Commitments of, and principal amount of
the Loans owing to, each Bank from time to time. The entries in such
record shall be conclusive, in the absence of manifest error, and the
Company, the Agent and the Banks may treat each Person the name of
which is recorded therein as a Bank hereunder for all purposes of the
Credit Documents. Such records shall be available for inspection by
the Company or any Bank at any reasonable time and from time to time
upon reasonable prior notice.
(f) Upon its receipt of an Assignment Agreement executed by an
assigning Bank and the assignee thereunder together with the Note
subject to such assignment, the written consent to such assignment and
the fee payable in respect thereto, the Agent shall, if such
Assignment Agreement has been completed with blanks appropriately
filled, (1) accept such Assignment Agreement; (2) record the
information contained therein in its records, and (3) give prompt
notice thereof to the Company. Contemporaneously with the receipt by
the Agent of an Assignment Agreement, the Company, at its own expense,
shall execute and deliver to the Agent in exchange for each
surrendered Note a new Note payable to the order
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of such assignee in an amount equal to the Commitments and/or Loans
assumed by it pursuant to such Assignment Agreement and, if the
assignor Bank has retained Commitments and/or Loans hereunder, new
Notes payable to the order of the assignor Bank in an amount equal to
the Commitments and/or Loans retained by it. Such new Notes shall be
in an aggregate principal amount equal to the principal amount of each
surrendered Note, shall be dated the effective date of such Assignment
Agreement and shall otherwise be in substantially the form of the
surrendered Notes. Thereafter, each surrendered Note shall be marked
cancelled and returned to the Company.
(g) Any Bank may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this
Section, disclose to the assignee or participant or proposed assignee
or participant any information relating to the Company furnished to
such Bank by or on behalf of the Company.
(h) Any assignment by a Bank pursuant to this SECTION 12.6 shall
not result in any single Bank holding in excess of 25% of the
Aggregate Commitment at any one time.
(i) Notwithstanding any other provision of this SECTION 12.6,
TCB and its Affiliates may not assign their rights hereunder unless,
after giving effect to such assignment, TCB and its Affiliates would
have an aggregate Commitment Percentage of at least 10%.
(j) Notwithstanding anything herein to the contrary, each Bank
may pledge and assign all or any portion of its rights and interests
under the Credit Documents to any Federal Reserve Bank.
12.7. SURVIVAL; TERM; REINSTATEMENT. In addition to the
other provisions of this Agreement expressly stated to survive the
termination of this Agreement, the obligations of the Company under
SECTIONS 6, 12.3 and 12.4 and the last sentence of this SECTION 12.7
and the obligations of the Banks under SECTION 12.8 shall survive the
termination of this Agreement. The term of this Agreement shall be
until (a) the full and final payment of all Notes, (b) the termination
of all Commitments and (c) the payment of all amounts due under the
Credit Documents. The Company agrees that if at any time all or any
part of any payment previously applied by any Bank to any Loan or
other sum hereunder is or must be returned by or recovered from such
Bank for any reason (including the order of any bankruptcy court), the
Credit Documents shall automatically be reinstated to the same effect
as if the prior application had not been made, and the Company hereby
agrees to indemnify such Bank against, and to save and hold such Bank
harmless from, any required return by or recovery from such Bank of
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any such payment because of its being deemed preferential under
applicable Legal Requirements, or for any other reason.
12.8. LIMITATION OF INTEREST. The parties to this Agreement
intend to strictly comply with all applicable laws, including
applicable usury laws. Accordingly, the provisions of this
SECTION 12.8 shall govern and control over every other provision of
any Credit Document which conflicts or is inconsistent with this
Section, even if such provision declares that it controls. As used in
this Section, the term "interest" includes the aggregate of all
charges, fees, benefits or other compensation which constitute
interest under applicable law; PROVIDED that, to the maximum extent
permitted by applicable law, (a) any non-principal payment shall be
characterized as an expense or as compensation for something other
than the use, forbearance or detention of money, and not as interest
and (b) all interest at any time contracted for, taken, reserved,
retained, charged or received shall be amortized, prorated, allocated
and spread, in equal parts during the full term of the Loans and the
Commitments. In no event shall the Company or any other Person be
obligated to pay, or the Agent or any Bank have any right or privilege
to reserve, receive or retain, (x) any interest in excess of the
maximum amount of nonusurious interest permitted under the laws of the
State of Texas or the applicable laws (if any) of the United States or
of any other state or (y) total interest in excess of the amount which
the Agent or such Bank could lawfully have contracted for, taken,
reserved, received, retained or charged had the interest been
calculated for the full term of the Loans at the Highest Lawful Rate.
On each day, if any, that the interest rate (the "STATED RATE") called
for under any Credit Document exceeds the Highest Lawful Rate, the
rate at which interest shall accrue shall automatically be fixed by
operation of this sentence at the Highest Lawful Rate for that day,
and shall remain fixed at the Highest Lawful Rate for each day
thereafter until the total amount of interest accrued equals the total
amount of interest which would have accrued if there were no such
ceiling rate as is imposed by this sentence. Thereafter, interest
shall accrue at the Stated Rate unless and until the Stated Rate again
exceeds the Highest Lawful Rate when the provisions of the immediately
preceding sentence shall again automatically operate to limit the
interest accrual rate. The daily interest rates to be used in
calculating interest at the Highest Lawful Rate shall be determined by
dividing the applicable Highest Lawful Rate per annum by the number of
days in the calendar year for which such calculation is being made.
None of the terms and provisions contained in any Credit Document
which directly or indirectly relate to interest shall ever be
construed without reference to this Section, or be construed to create
a contract to pay for the use, forbearance or detention of money at an
interest rate in excess of the Highest Lawful Rate. If
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the term of any of the Notes is shortened by reason of acceleration of
maturity as a result of any Default or by any other cause, or by
reason of any required or permitted prepayment, and if for that (or
any other) reason the Agent or any Bank at any time, including the
stated maturity, is owed or receives (and/or has received) interest in
excess of interest calculated at the Highest Lawful Rate, then and in
any such event all of any such excess interest shall be cancelled
automatically as of the date of such acceleration, prepayment or other
event which produces the excess, and, if such excess interest has been
paid to the Agent or such Bank, it shall be credited PRO TANTO against
the then-outstanding principal balance of the Company's obligations to
the Agent or such Bank, effective as of the date or dates when the
event occurs which causes it to be excess interest, until such excess
is exhausted or all of such principal has been fully paid and
satisfied, whichever occurs first, and any remaining balance of such
excess shall be promptly refunded to its payor.
12.9. CAPTIONS. Captions and section headings appearing
herein are included solely for convenience of reference and are not
intended to affect the interpretation of any provision of this
Agreement.
12.10. COUNTERPARTS. Each Credit Document may be executed in
any number of counterparts, all of which taken together shall consti-
tute one and the same agreement and any of the parties hereto may
execute such Credit Document by signing any such counterpart.
12.11. GOVERNING LAW. EXCEPT TO THE EXTENT OTHERWISE
SPECIFIED THEREIN, EACH CREDIT DOCUMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF TEXAS AND THE
UNITED STATES OF AMERICA. THE COMPANY HEREBY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF TEXAS AND OF ANY TEXAS STATE COURT SITTING IN
HARRIS COUNTY, TEXAS FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT
OF OR RELATING TO THE CREDIT DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED THEREBY. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH
A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
12.12. SEVERABILITY. Whenever possible, each provision of the
Credit Documents shall be interpreted in such manner as to be
effective and valid under applicable law. If any provision of any
Credit Document shall be invalid, illegal or unenforceable in any
respect under any applicable law, the validity, legality and
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enforceability of the remaining provisions of such Credit Document
shall not be affected or impaired thereby.
12.13. CHAPTER 15 NOT APPLICABLE. Chapter 15 of the Texas
Credit Code shall not apply to any Credit Document or to any
Commitment or Loan, nor shall any Credit Document be governed by or be
subject to the provisions of such Chapter 15 in any manner whatsoever.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered effective as of the day and year
first above written.
SANTA FE ENERGY RESOURCES, INC.,
a Delaware corporation
By:M. J. ROSINSKI
M. J. Rosinski
Vice President and Chief
Financial Officer
Address for Notices:
Santa Fe Energy Resources, Inc.
1616 South Voss, Suite 1000
Houston, Texas 77057
Telecopy: (713) 268-5341
Attention: Vice President and
Chief Financial Officer
Telex: 794-567
(Answerback: SFEPROD HOU)
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, individually,
as Administrative Agent and as
Co-Agent
By:JAMES R. MCBRIDE
James R. McBride
Senior Vice President
Address for Notices:
Domestic and Eurodollar Texas Commerce Bank National
Lending Offices: Association
712 Main Street
Texas Commerce Bank National Houston, Texas 77002
Association Attention: Manager, Energy Group
ABA #113000609 Telecopy: (713) 236-4117
For Credit To: Acct. #10967 Telex: 166-053
(Answerback:TCB HOU)
Attention: Investment
Operations/Norma Benzon with copies to:
Reference: Santa Fe Energy
Resources, Inc. Texas Commerce Bank National
Association
Facility A P. O. Box 2558
COMMITMENT: $11,828,571.41 Houston, Texas 77252
Attention: Manager, Capital
Facility B Markets Division
COMMITMENT: $11,171,428.59
and
Texas Commerce Bank National
Association
P. O. Box 2558
Houston, Texas 77252
Attention: Manager, Loan
Agreements Division
NATIONSBANK OF TEXAS, N.A.,
individually and as Co-Agent
By:H. GENE SHIELS
Name:H. Gene Shiels
Title:Vice President
Domestic and Eurodollar Address for Notices:
Lending Offices:
NationsBank of Texas, N.A. NationsBank of Texas, N.A.
ABA #111000025 700 Louisiana
For Credit to: Acct. # P.O. Box 2518
0180019828 Houston, Texas 77252-2518
Attention: Loan Funds Attention: H. Gene Shiels
Transfer Telecopy: (713) 247-6432
Reference: Santa Fe Energy
Resources, Inc.
Facility A
COMMITMENT: $11,314,285.71
Facility B
COMMITMENT: $10,685,714.29
THE BANK OF NEW YORK
By:DANIEL T. GATES
Name:Daniel T. Gates
Title:Vice President
Domestic Lending Office: Address for Notices:
The Bank of New York
ABA #021000018 The Bank of New York
For Credit To: Commercial One Wall Street, 19th Floor
Loan Servicing Department New York, New York 10286
GLA #111-556 Attention: Daniel Gates
Reference: Santa Fe Energy Telecopy: (212) 635-7923
Resources, Inc. Telex: 232-060
(Answerback:BONY UR)
Eurodollar Lending Office: with a copy to:
The Bank of New York Ms. Ann Marie Schron
ABA #021000018 The Bank of New York
For Credit To: Eurodollar/ One Wall Street, 19th Floor
Cayman Funding Area New York, New York 10286
LIBOR Account No.: Telecopy: (212) 635-7923
803-3140-992 Telex: 232-060
(Answerback:BONY UR)
Reference: Santa Fe Energy
Resources, Inc.
Facility A
COMMITMENT: $9,257,142.86
Facility B
COMMITMENT: $8,742,857.14
THE BANK OF NOVA SCOTIA
By:A. S. NORSWORTHY
Name:A. S. Norsworthy
Title:Assistant Agent
Domestic and Eurodollar Address for Notices:
Lending Offices:
Bank of Nova Scotia, New The Bank of Nova Scotia
York Agency 600 Peachtree Street, Suite 2700
ABA #026002532 Atlanta, Georgia 30308
For Credit To: Atlanta Attention: Claude Ashby
Agency Telecopy: (404) 888-8998
Reference: Santa Fe Energy Telex: 00542319
Resources, Inc. (Answerback: SCOTIABANK ATL)
Facility A
COMMITMENT: $9,257,142.86
with a copy to:
Facility B
COMMITMENT: $8,742,857.14 The Bank of Nova Scotia
1100 Louisiana, Suite 3000
Houston, Texas 77002
Attention: Mark Ammerman
Telecopy: (713) 752-2425
BANK OF MONTREAL
By:MARK GREEN
Name:Mark Green
Title:Director
Domestic and Eurodollar Address for Notices:
Lending Offices:
Harris Bank Bank of Montreal
ABA #071000288 700 Louisiana, Suite 4400
For Credit To: Bank of Houston, Texas 77002
Montreal, Chicago Branch Attention: Dennis Spencer
Attention: E. Rios Telecopy: (713) 223-4007
Reference: Santa Fe Energy Telex: 77-5640
Resources, Inc. (Answerback: BKMONTREAL HOU)
Facility A
COMMITMENT: $10,285,714.29
Facility B
COMMITMENT: $9,714,285.71
CIBC, INC.
By:J. D. WESTLAND
Name:J. D. Westland
Title:Vice President
Domestic and Eurodollar Address for Notices:
Lending Offices:
Morgan Guaranty Trust CIBC, Inc.
Company of New York Two Paces West, 2727 Paces Ferry Road
ABA #021-000-238 Suite 1200
For Credit To: CIBC, Atlanta, Georgia 30339
Atlanta Acct. #630-00-480 Attention: Vice President
Telephone No: (404) 319-4999
Telecopier No.: (404) 319-4950
Attention: Loan Operations Telex: 54-2413
Reference: Santa Fe Energy answer back: CANBANK ATL
Resources, Inc.
Facility A
COMMITMENT: $9,257,142.86
with a copy to:
Facility B
COMMITMENT: $8,742,857.14 Canadian Imperial Bank of
Commerce
2 Houston Center, Suite 1200
Houston, Texas 77010
Attention: Brian R. Swinford
Telecopy: (713) 658-9922
BANQUE PARIBAS HOUSTON AGENCY
By:BRIAN MALONE
Name:Brian Malone
Title:Vice President
By:PATRICK J. MILOR
Name:Patrick J. Milor
Title:SVP-Deputy General Manager
Domestic and Eurodollar Address for Notices:
Lending Offices:
Bankers Trust Co. Banque Paribas Houston Agency
ABA #02-100-1033 1200 Smith Street, Suite 3100
Houston, Texas 77002
For Credit To: Banque Attention: Barton D. Schouest
Paribas New York Telecopy: (713) 659-3832
#04202195
Final Credit 2144-001545
Banque Paribas Houston Agency
Reference: Santa Fe Energy
Resources, Inc.
Facility A
COMMITMENT: $9,257,142.86
Facility B
COMMITMENT: $8,742,857.14
THE FIRST NATIONAL BANK OF BOSTON
By:FRANK T. SMITH
Name:Frank T. Smith
Title:Director
Domestic and Eurodollar Address for Notices:
Lending Offices:
Bank of Boston The First National Bank of Boston
ABA #011000390 100 Federal Street
Boston, Massachusetts 02110
For Credit To: Attention: George W. Passela
not applicable Telecopy: (617) 434-3652
Reference: Santa Fe Energy
Resources, Inc.
Facility A
COMMITMENT: $9,257,142.86
Facility B
COMMITMENT: $8,742,857.14
ABN AMRO Bank N.V., HOUSTON AGENCY
By:W. BRYAN CHAPMAN
Name:W. Bryan Chapman
Title:Vice President
By:CHARLES W. RANDALL
Name:Charles W. Randall
Title:Group Vice President
Domestic and Eurodollar Address for Notices:
Lending Offices:
ABN AMRO New York ABN AMRO Bank N.V., Houston Agency
ABA #026009580 Three Riverway, Suite 1600
Houston, Texas 77056
For Credit To: ABN AMRO Attention: Mr. Bryan Chapman
Houston Agency Telecopy: (713) 629-7533
Acct. #651001071541
Reference: Santa Fe Energy
Resources, Inc.
Facility A
COMMITMENT: $10,285,714.29
Facility B
COMMITMENT: $9,714,285.71
EXHIBITS:
A - Form of Facility A Note
B - Form of Facility B Note
C - Request for Extension of Credit
D - Assignment Agreement
E - Facility A Maximum Amount
F - Preliminary Available Amount
SCHEDULES:
I - Restricted and Unrestricted Subsidiaries
II - Liens and Funded Debt
III - Initial Approved Assumptions and Price Protection
Agreements
IV - Coverage Report
V - Subordination Provisions
VI - Opinion of Andrews & Kurth, L.L.P.
VII - Opinion of David L. Hicks
VIII- Mortgages
IX - Jurisdictions for Which Certificates Are to Be Provided
X - Designated Debt