1
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CREDIT AGREEMENT
among
PENN VIRGINIA CORPORATION
AND
TEXAS COMMERCE BANK NATIONAL ASSOCIATION, AS AGENT
AND
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
FIRST NATIONAL BANK OF CHICAGO
AS BANKS
Dated as of August 2, 1996
CLOSING DOCUMENTS
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Table of Contents
3
CLOSING BINDER INDEX
PENN VIRGINIA CORPORATION
CREDIT AGREEMENT
DATED AS OF AUGUST 2, 1996
DOCUMENT TAB NO.
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Credit Agreement dated as of August 2, 1996 [Conformed Copy] . . . . . . . . . . . . . . 1
Promissory Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Texas Commerce Bank National Association . . . . . . . . . . . . . . . . . . . . 2(a)
First Union National Bank of North Carolina . . . . . . . . . . . . . . . . . . 2(b)
First National Bank of Chicago . . . . . . . . . . . . . . . . . . . . . . . . . 2(c)
Subsidiary Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Officer's Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Regulation U - Purpose Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Borrowing Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Intercreditor Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Termination of Credit Agreement and Guaranties . . . . . . . . . . . . . . . . . . . . . 9
Termination of Line of Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 10
Secretary's Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Penn Virginia Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . 11(a)
Penn Virginia Oil & Gas Corporation . . . . . . . . . . . . . . . . . . . . . . 11(b)
Penn Virginia Coal Company . . . . . . . . . . . . . . . . . . . . . . . . . . . 11(c)
Penn Virginia Resources Corporation . . . . . . . . . . . . . . . . . . . . . . 11(d)
Penn Virginia Equities Corporation . . . . . . . . . . . . . . . . . . . . . . . 11(e)
DOCUMENT TAB NO.
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Certificates of Existence and Good Standing . . . . . . . . . . . . . . . . . . . . . . . 12
Penn Virginia Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . 12(a)
Penn Virginia Oil & Gas Corporation . . . . . . . . . . . . . . . . . . . . . . 12(b)
Penn Virginia Coal Company . . . . . . . . . . . . . . . . . . . . . . . . . . . 12(c)
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CREDIT AGREEMENT
Among
PENN VIRGINIA CORPORATION
AS BORROWER
PENN VIRGINIA OIL & GAS CORPORATION
PENN VIRGINIA COAL COMPANY
PENN VIRGINIA RESOURCES CORPORATION
PENN VIRGINIA EQUITIES CORPORATION
AS SUBSIDIARY GUARANTORS
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
THE FIRST NATIONAL BANK OF CHICAGO
AS BANKS
And
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AS AGENT
DATED AS OF AUGUST 2, 1996
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5
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS . . . . . . . . . . . 1
SECTION 1.1. Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . 1
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SECTION 1.2. Accounting Terms. . . . . . . . . . . . . . . . . . . . . . . . . 22
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SECTION 1.3. Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . . 23
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ARTICLE II
REVOLVING CREDIT LOANS. . . . . . . . . . . . . 24
SECTION 2.1. Revolving Credit Loans . . . . . . . . . . . . . . . . . . . . . . 24
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SECTION 2.2. Borrowing Procedure for Revolving Credits . . . . . . . . . . . . 24
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SECTION 2.3. Issuing the Letters of Credit. . . . . . . . . . . . . . . . . . . 25
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SECTION 2.4. Conversions or Continuation of Borrowings . . . . . . . . . . . . 28
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SECTION 2.5. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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SECTION 2.6. Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
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SECTION 2.7. Interest on Revolving Credit Loans and Payment Dates . . . . . . . 31
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SECTION 2.8. Interest on Overdue Amounts . . . . . . . . . . . . . . . . . . . 32
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SECTION 2.9. Voluntary Termination and Reduction of the Total
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Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
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SECTION 2.10. Voluntary Prepayment of Revolving Credit Loans . . . . . . . . . . 32
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SECTION 2.11. Mandatory Payments on Revolving Credit Loans . . . . . . . . . . . 33
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SECTION 2.12. Alternate Rate of Interest . . . . . . . . . . . . . . . . . . . . 34
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SECTION 2.13. Change in Circumstances . . . . . . . . . . . . . . . . . . . . . 34
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SECTION 2.14. Change in Legality . . . . . . . . . . . . . . . . . . . . . . . . 36
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SECTION 2.15. Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . 36
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SECTION 2.16. Method of Payments Pro Rata Treatment . . . . . . . . . . . . . . 37
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SECTION 2.17. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
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SECTION 2.18. Sharing of Payments and Setoffs . . . . . . . . . . . . . . . . . 40
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SECTION 2.19. Limitation on Reimbursement; Mitigation . . . . . . . . . . . . . 40
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SECTION 2.20. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . 41
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SECTION 2.21. Mandatory Termination of Total Commitment; Extension
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of Maturity Date . . . . . . . . . . . . . . . . . . . . . . . . 41
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SECTION 2.22. Replacement of Banks . . . . . . . . . . . . . . . . . . . . . . . 41
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ARTICLE III
BORROWING BASE . . . . . . . . . . . . . . 42
SECTION 3.1. Borrowing Base Asset Reports . . . . . . . . . . . . . . . . . . . 42
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SECTION 3.2. Determination of Total Borrowing Base. . . . . . . . . . . . . . . 42
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SECTION 3.3. The Designated Borrowing Base. . . . . . . . . . . . . . . . . . . 44
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SECTION 3.4. Special Determination of Total Borrowing Base. . . . . . . . . . . 44
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SECTION 3.5. Initial Total Borrowing Base; Initial Available Borrowing
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Base. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
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ARTICLE IV
CONDITIONS PRECEDENT . . . . . . . . . . . . . 45
SECTION 4.1. Conditions Precedent to the Revolving Credit Loans . . . . . . . . 45
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SECTION 4.2. Additional Conditions Precedent . . . . . . . . . . . . . . . . . 47
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SECTION 4.3. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
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ARTICLE V
REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . 48
SECTION 5.1. Organization; Corporate Powers . . . . . . . . . . . . . . . . . . 48
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SECTION 5.2. Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
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SECTION 5.3. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . 49
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SECTION 5.4. No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
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SECTION 5.5. Gas Balancing Agreements and Advance Payment
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Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
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SECTION 5.6. Borrowing Base Assets . . . . . . . . . . . . . . . . . . . . . . 50
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SECTION 5.7. Ownership of Properties Generally . . . . . . . . . . . . . . . . 51
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SECTION 5.8. No Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
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SECTION 5.9. Financial Position; No Material Adverse Change . . . . . . . . . . 51
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SECTION 5.10. Litigation; Adverse Effects . . . . . . . . . . . . . . . . . . . 52
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SECTION 5.11. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
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SECTION 5.12. Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 52
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SECTION 5.13. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . 52
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SECTION 5.14. Governmental Regulation . . . . . . . . . . . . . . . . . . . . . 54
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SECTION 5.15. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
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SECTION 5.16. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
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SECTION 5.17. Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
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SECTION 5.18. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
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SECTION 5.19. Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . 55
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SECTION 5.20. Licenses, Permits, Etc . . . . . . . . . . . . . . . . . . . . . . 55
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SECTION 5.21. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
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ARTICLE VI
AFFIRMATIVE COVENANTS . . . . . . . . . . . . . 55
SECTION 6.1. Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
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SECTION 6.2. Business of the Borrower . . . . . . . . . . . . . . . . . . . . . 59
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SECTION 6.3. Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . 59
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SECTION 6.4. Right of Inspection . . . . . . . . . . . . . . . . . . . . . . . 59
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SECTION 6.5. Maintenance of Insurance . . . . . . . . . . . . . . . . . . . . . 59
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SECTION 6.6. Payment of Taxes and Claims . . . . . . . . . . . . . . . . . . . 59
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SECTION 6.7. Compliance with Laws and Documents . . . . . . . . . . . . . . . . 59
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SECTION 6.8. Operation of Properties and Equipment . . . . . . . . . . . . . . 60
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SECTION 6.9. Environmental Law Compliance and Indemnity . . . . . . . . . . . . 60
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SECTION 6.10. ERISA Reporting Requirements . . . . . . . . . . . . . . . . . . . 61
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SECTION 6.11. Subsidiary Guaranty . . . . . . . . . . . . . . . . . . . . . . . 62
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SECTION 6.12. Permits, Licenses. . . . . . . . . . . . . . . . . . . . . . . . . 62
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SECTION 6.13. Additional Documents . . . . . . . . . . . . . . . . . . . . . . . 62
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SECTION 6.14. Title Assurances . . . . . . . . . . . . . . . . . . . . . . . . . 62
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ARTICLE VII
NEGATIVE COVENANTS. . . . . . . . . . . . . . 63
SECTION 7.1. Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
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SECTION 7.2. Restrictions on Distributions . . . . . . . . . . . . . . . . . . 64
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SECTION 7.3. Negative Pledge . . . . . . . . . . . . . . . . . . . . . . . . . 64
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SECTION 7.4. Consolidation, Mergers and Acquisitions; Fundamental
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Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
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SECTION 7.5. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
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SECTION 7.6. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . 66
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SECTION 7.7. Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
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SECTION 7.8. Sales of Assets . . . . . . . . . . . . . . . . . . . . . . . . . 66
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SECTION 7.9. ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . . 67
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SECTION 7.10. Sales and Leasebacks . . . . . . . . . . . . . . . . . . . . . . . 67
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SECTION 7.11. Margin Regulation . . . . . . . . . . . . . . . . . . . . . . . . 68
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SECTION 7.12. Amendment to Organizational Documents . . . . . . . . . . . . . . 68
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SECTION 7.13. Fiscal Year; Fiscal Quarter . . . . . . . . . . . . . . . . . . . 68
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SECTION 7.14. Hedge Transactions . . . . . . . . . . . . . . . . . . . . . . . . 68
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SECTION 7.15. Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . 68
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ARTICLE VIII
EVENTS OF DEFAULT . . . . . . . . . . . . . . 69
SECTION 8.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . 69
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SECTION 8.2. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
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SECTION 8.3. Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . . . 72
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SECTION 8.4. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
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ARTICLE IX
THE AGENT. . . . . . . . . . . . . . . . 73
SECTION 9.1. Authorization and Action . . . . . . . . . . . . . . . . . . . . . 73
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SECTION 9.2. Agent's Reliance; Exculpatory Provisions, Etc . . . . . . . . . . 73
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SECTION 9.3. The Agent in its Individual Capacity and Affiliates . . . . . . . 74
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SECTION 9.4. Bank Credit Decision . . . . . . . . . . . . . . . . . . . . . . . 75
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SECTION 9.5. Indemnification and Reimbursement . . . . . . . . . . . . . . . . 75
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SECTION 9.6. Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . 76
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SECTION 9.7. Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . 76
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SECTION 9.8. Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . 76
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ARTICLE X
MISCELLANEOUS . . . . . . . . . . . . . . . 76
SECTION 10.1. Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . 76
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SECTION 10.2. Notices, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . 78
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SECTION 10.3. No Waiver; Remedies Cumulative . . . . . . . . . . . . . . . . . 79
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SECTION 10.4. Costs, Expenses and Taxes . . . . . . . . . . . . . . . . . . . . 79
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SECTION 10.5. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 80
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SECTION 10.6. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
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SECTION 10.7. Survival of Representations and Warranties . . . . . . . . . . . 81
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SECTION 10.8. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . 81
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SECTION 10.9. Successors and Assigns; Participation; Eligible
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Assignees . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
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SECTION 10.10. Separability . . . . . . . . . . . . . . . . . . . . . . . . . . 84
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SECTION 10.11. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . 84
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SECTION 10.12. Marshalling; Recapture . . . . . . . . . . . . . . . . . . . . . 85
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SECTION 10.13. Representation by the Banks . . . . . . . . . . . . . . . . . . . 85
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SECTION 10.14. No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . 86
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SECTION 10.15. Execution in Counterparts . . . . . . . . . . . . . . . . . . . . 86
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SECTION 10.16. Jurisdiction; Consent to Service of Process . . . . . . . . . . . 86
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SECTION 10.17. Credit Agreement Governs Conflicts . . . . . . . . . . . . . . . 86
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SECTION 10.18. FINAL AGREEMENT OF THE PARTIES . . . . . . . . . . . . . . . . . 87
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SCHEDULES
Schedule 1.1 - Name and Address of the Banks and Commitment Amounts
Schedule 5.6 - Description of Coal Assets and Coal Leases
Schedule 5.10 - Description of Existing Litigation
Schedule 5.11 - Summary of Existing Benefit Plans
Schedule 5.13 - Environmental Matters
Schedule 5.16 - Subsidiaries
Schedule 5.19 - Description of Material Contracts
Schedule 7.1 - Description of Existing Debt as of the Effective Date
Schedule 7.5 - Description of Existing Investments
Schedule 7.6 - Description of Transactions with Affiliates
EXHIBITS
Exhibit A - Form of Borrowing Request
Exhibit B - Form of Commitment Transfer Supplement
Exhibit C - Form of Letter of Credit Application
Exhibit D - Form of Note
Exhibit E - Form of Notice of Conversion or Continuation
Exhibit F - Form of Subsidiary Guaranty
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9
CREDIT AGREEMENT
CREDIT AGREEMENT dated as of August 2, 1996, among PENN VIRGINIA
CORPORATION, a Virginia corporation (the "Borrower"), the Banks (as
hereinafter defined), and TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a national
banking association ("TCB") acting in its capacity as agent for the Banks (in
such capacity, the "Agent").
PRELIMINARY STATEMENTS
WHEREAS, the Borrower and its Subsidiaries (as herein defined) have
requested that the Banks make available to the Borrower, on the terms and
subject to the conditions stated herein, a revolving credit facility, the
proceeds of which will be used (i) to refinance existing indebtedness of the
Borrower and its Subsidiaries, (ii) to provide working capital to the Borrower
and its Subsidiaries, (iii) to finance capital expenditures and acquisitions of
the Borrower and its Subsidiaries and (iv) to provide letters of credit for the
account of the Borrower and its Subsidiaries;
WHEREAS, the Borrower owns, either directly or indirectly, one hundred
percent (100%) of the issued and outstanding capital stock of each of Penn
Virginia Resources Corporation, a Virginia corporation ("Resources"), Penn
Virginia Equities Corporation, a Delaware corporation ("Equities"), Penn
Virginia Oil & Gas Corporation, a Virginia corporation ("PVOG") and Penn
Virginia Coal Company, a Virginia corporation ("PVCC"); and
WHEREAS, the Banks are willing, upon and subject to the terms and
conditions stated herein, to make such revolving credit facility available to
the Borrower and its Subsidiaries.
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. Certain Defined Terms. As used in this Credit Agreement,
the following terms shall have the following meanings:
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Loan" shall mean any Revolving Credit Loan bearing interest at a
rate determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"Accommodation Obligation," as applied to the Borrower or any of its
Subsidiaries, shall mean any Contractual Obligation, contingent or otherwise,
of the Borrower or such Subsidiary of the Borrower with respect to any
Indebtedness or other obligation or liability of another, including, without
limitation, any such Indebtedness, obligation or liability directly or
indirectly guarantied, endorsed (other than endorsements of negotiable
instruments for collection or deposit in the ordinary course of business),
co-made or discounted or sold with recourse by the Borrower or such Subsidiary
of the Borrower, or in respect of which the Borrower or such Subsidiary of the
Borrower is otherwise directly or indirectly liable, including Contractual
Obligations (contingent or otherwise) arising through any agreement to
purchase, repurchase, or otherwise acquire such Indebtedness, obligation or
liability or any security
10
therefor, or to provide funds for the payment or discharge thereof (whether in
the form of loans, advances, stock purchases, capital contributions or
otherwise), or to maintain solvency, assets, level of income, or other
financial condition, or any "keep well," "take-or-pay," "throughput" or other
similar arrangement or to make payment other than for value received.
"Advance Payment Contract" shall mean any contract whereby the Borrower
or any of its Subsidiaries either (a) receives or becomes entitled to receive
(either directly or indirectly) any payment (an "Advance Payment") to be
applied toward payment of the purchase price of Hydrocarbons produced or to be
produced from Oil and Gas Interests owned by the Borrower or any of its
Subsidiaries and which Advance Payment is paid or to be paid in advance of
actual delivery of such production to or for the account of the purchaser
regardless of such production, or (b) grants an option or right of refusal to
the purchaser to take delivery of such production in lieu of payment, and, in
either of the foregoing instances, the Advance Payment is, or is to be, applied
as payment in full for such production when sold and delivered or is, or is to
be, applied as payment for a portion only of the purchase price thereof or of a
percentage or share of such production; provided that inclusion of the standard
provisions in any gas sales or purchase contract or any similar contract shall
not, in and of itself, constitute such contract as an Advance Payment Contract
for the purposes hereof.
"Affiliate" shall mean, when used with respect to any Person, each
other Person that directly or indirectly controls or is controlled by or is
under common control with such Person. As used in this definition, "control"
means the 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) and shall
include, without limitation, any Person who beneficially owns more than fifty
percent (50%) of the equity of the other Person and, as to any general or
limited partnership, any general partner thereof.
"Agent" shall have the meaning assigned to that term in the
introduction to this Credit Agreement and shall include any successor agent
appointed in accordance with Section 9.6 of this Credit Agreement.
"Alternate Base Rate" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/100 of 1%) equal to the greatest
of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective
Rate in effect on such day plus 1/2 of 1%. For purposes hereof: "Prime Rate"
shall mean, as of a particular date, the prime rate of interest per annum most
recently announced by the Agent, automatically fluctuating upward or downward
with and at the time specified in each such announcement without notice to the
Borrower or any other Person; each change in the Prime Rate shall be effective
on the date such change is announced; which Prime Rate may not necessarily
represent the Agent's lowest or best rate actually charged to a customer;
"Federal Funds Effective Rate" shall mean, for any day, 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 by the Federal
Reserve Bank of New York for such day on the next succeeding Business Day 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.
If for any reason the Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Federal
Funds Effective Rate for any reason, including, without limitation, the
inability or failure of the Agent to obtain sufficient quotations in accordance
with the terms hereof, the Alternate Base Rate shall be determined without
regard to clause (b) of the first sentence of this definition, as appropriate,
until the circumstances giving rise to such inability no longer exist. Any
change in the Alternate Base Rate due to a change in the Prime Rate or the
Federal Funds Effective Rate
-2-
11
shall be effective on the effective date of such change in the Prime Rate or
the Federal Funds Effective Rate, respectively.
"Applicable Eurodollar Margin" shall mean, with respect to each
Eurodollar Borrowing:
(a) on each day on which the Utilized Percentage of Borrowing Base is
less than twenty-five percent (25%), five-eighths of one percent (0.625%) per
annum;
(b) on each day on which the Utilized Percentage of Borrowing Base is
equal to or greater than twenty-five percent (25%) but less than fifty percent
(50%), three-fourths of one percent (0.75%) per annum;
(c) on each day of which the Utilized Percentage of Borrowing Base is
equal to or greater than fifty percent (50%) but less than seventy-five percent
(75%), one percent (1.00%) per annum;
(d) on each day of which the Utilized Percentage of Borrowing Base is
equal to or greater than seventy-five percent (75%), one and one-fourth of one
percent (1.25%) per annum.
"Approved Petroleum Engineer" shall mean Williamson Petroleum
Consultants, Inc. or such other reputable firm(s) of independent petroleum
engineers as shall be approved by the Majority Banks.
"Available Borrowing Base" shall mean the Total Borrowing Base minus
the Existing Debt.
"Available Commitment" shall mean at any time, an amount equal to the
Available Borrowing Base in effect at that time, or, if the Borrower has
notified the Agent of its Designated Borrowing Base pursuant to the provisions
of Section 3.3, the Designated Borrowing Base in effect at that time.
"Bank" shall mean each of the financial institutions whose name appears
on the signature pages to this Credit Agreement and the Persons which from time
to time become a party hereto in accordance with Section 10.9.
"Bankruptcy Code" shall mean the Bankruptcy Reform Act of 1978 as
codified under 11 U.S.C. Section 101, et seq.
"Benefit Plan" shall mean any employee benefit plan subject to Title IV
of ERISA maintained by the Borrower or any ERISA Affiliate with respect to
which the Borrower or such ERISA Affiliate has a fixed or contingent liability.
"Board" shall mean the Board of Governors of the Federal Reserve System
of the United States.
"Borrower" shall mean Penn Virginia Corporation, a Virginia
corporation.
"Borrowing" shall mean a borrowing comprised of simultaneous Revolving
Credit Loans of the same Type made to the Borrower on the same date by the
Banks, (or resulting from conversions or continuations on a given date pursuant
to Section 2.4), and, in the case of Eurodollar Loans, having the same
Eurodollar Interest Period, distributed ratably among the Banks in the manner
described in Article II. A Borrowing is an "ABR Borrowing" if the Revolving
Credit Loans comprising such Borrowing are ABR Loans, and a "Eurodollar
Borrowing" if the Revolving Credit Loans comprising such Borrowing
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12
are Eurodollar Loans.
"Borrowing Base Assets" shall mean, collectively, the (i) Oil and Gas
Interests, (ii) Coal Interests, (iii) dividends with respect to the Norfolk
Common Stock and (iv) any other property owned by the Borrower or Subsidiary
Guarantor (x) which the Borrower has requested that the Banks consider in their
determination of the Total Borrowing Base and (y) which the Banks, in their
sole discretion, have considered for purposes of determining the Total
Borrowing Base (as evidenced by a notice to such effect delivered by the Agent
to the Borrower).
"Borrowing Base Deficiency" shall mean, as of any date, the amount, if
any, by which the Utilized Credit on such date exceeds the Available Commitment
in effect on such date.
"Borrowing Base Asset Reports" shall mean the reports required to be
delivered to the Banks pursuant to Section 3.1 which shall include the Reserve
Report, the Coal Reserve Report and a report setting forth the aggregate amount
of all outstanding Consolidated Debt.
"Borrowing Base Notice" shall mean a written notice sent to the
Borrower by the Agent pursuant to Section 3.2 notifying the Borrower of the
Total Borrowing Base and the Available Borrowing Base.
"Borrowing Base Period" shall mean (a) initially, the period from the
Effective Date through December 1, 1996; and (b) thereafter, each six month
period beginning on June 1 or December 1 of each year.
"Borrowing Date" shall mean, with respect to each Borrowing, the
Business Day upon which the proceeds of such Borrowing are made available to
the Borrower by the Banks.
"Borrowing Request" shall mean, with respect to each Borrowing, a
request made pursuant to Section 2.2 which request shall be in the form of
Exhibit A.
"Business Day" shall mean any day (other than a day which is a
Saturday, Sunday or legal holiday in the State of Texas on which banks are open
for business in Houston, Texas and; provided, however, that, when used in
connection with a Eurodollar Loan or Eurodollar Borrowing, the term "Business
Day" shall also exclude any day on which banks are not open for dealings in
dollar deposits in the interbank eurodollar market.
"Capital Lease" shall mean, when used with respect to any Person, any
lease in respect of which the obligations of such Person constitute Capitalized
Lease Obligations.
"Capitalized Lease Obligations" shall mean, when used with respect to
any Person, without duplication, all obligations of such Person to pay rent or
other amounts under any lease of (or other arrangement conveying the right to
use) real or personal property, or a combination thereof, which obligations
shall have been or should be, in accordance with GAAP, capitalized on the books
of such Person.
"Cash Equivalents" shall mean, when used in connection with the
Borrower or any Subsidiary of the Borrower, such Borrower's or such
Subsidiary's Investments in:
(a) Government Securities due within one year from the date of
acquisition thereof;
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13
(b) Readily marketable direct obligations of any State of the
United States or any political subdivision of any such State given on
the date of such investment a credit rating of at least A2 by Moody's
Investors Service, Inc. or A by S&P, in each case due within one year
from the date of acquisition thereof;
(c) Certificates of deposit issued by, money market deposit
accounts with, eurodollar deposits through, bankers' acceptances of,
and repurchase and reverse repurchase agreements covering Government
Securities executed by a Bank or any other bank doing business in and
incorporated under the laws of the United States or any state thereof
whose deposits are insured through the FDIC, or any successor thereto,
and having (either itself or its holding company) on the date of such
Investment combined capital, surplus and undivided profits of at least
$400,000,000, or any offshore branch of such bank, in each case
maturing within one year from the date of acquisition thereof;
(d) Certificates of deposit issued by, money market deposit
accounts with, eurodollar deposits through, bankers' acceptances of,
and repurchase and reverse repurchase agreements covering Government
Securities executed by First American Bank, N.A. having an aggregate
market value at any one time not in excess of $3,000,000, in each case
maturing within one year from the date of acquisition thereof;
(e) Commercial paper of a Bank or such Bank's holding company or
of any other bank or bank holding company given on the date of such
Investment a credit rating of at least P-1 by Moody's Investors
Service, Inc. and A-1 by S&P, or of corporations doing business in and
incorporated under the laws of the United States or any state thereof
given on the date of such Investment a credit rating of at least P-1 by
Moody's Investors Service, Inc. and A-1 by S&P, in each case, maturing
within one year from the date of acquisition thereof; and
(f) "Money-market mutual funds" investing at least 95% of the
mutual fund assets in instruments of the types described in
subparagraphs (a) through (e) above.
"Closing Date" shall mean August 2, 1996.
"Coal Interests" shall mean any and all rights, estates, titles and
interests in the Coal Leases, all royalty interests, net profits interests,
carried interests and any and all other interests in coal, whether any of the
same be real or personal, now owned or hereafter acquired by the Borrower or
its Subsidiaries, directly or indirectly, and all properties, rights and
interests covered thereby, whether arising by contract, by order, or by
operation of laws, which now or hereafter include all or any part of the
foregoing.
"Coal Leases" shall mean those coal mining leases described on Schedule
5.6 hereto.
"Coal Reserve Report" shall mean a report in form and substance
satisfactory to each Bank, which Coal Reserve Report shall be dated as of the
next preceding December 31, and shall (i) review the material coal reserves
attributable to the Coal Leases of the Borrower and its Subsidiaries (and
showing any material additions to or deletions from the Coal Interests covered
by the previous Coal Reserve Report and made by the Borrower and its
Subsidiaries since the date of the previous Coal Reserve Report), (ii) set
forth the quality of the coal reserves attributable to the Coal Interests
covered in said Coal Reserve Report, (iii) contain a reasonably detailed five
(5) year forecast of the rate of production and net income with respect to the
coal reserves covered by said Coal Reserve Report as of the date of
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such Coal Reserve Report, (iv) set forth the current material terms of all Coal
Leases with respect to the Coal Interests described in said Coal Reserve
Report, (v) contain a status report on all material permits relevant to the
Coal Interests described in said Coal Reserve Report, and (vi) set forth the
capital expenditure plans of PVCC. Each Coal Reserve Report shall be prepared
by personnel of the Borrower and its Subsidiaries, which Coal Reserve Report
shall provide the current status of the information set forth in the
immediately preceding Coal Reserve Report.
"Code" shall mean Internal Revenue Code of 1986, as amended from time
to time, and the regulations promulgated thereunder.
"Commitment" shall mean, when used with reference to any Bank at the
time any determination thereof is to be made, the commitment of such Bank to
extend credit to the Borrower by means of Revolving Credit Loans, which subject
to Sections 2.9 and 8.2, shall be an amount equal to the amount set forth
opposite the name of such Bank under the heading "Amount of Commitment" on
Schedule 1.1 to this Credit Agreement.
"Commitment Fee Rate" shall have the meaning specified in Section
2.5(a) hereof.
"Commitment Percentage" shall mean, with respect to each Bank, the
percentage determined by dividing its Commitment by the Total Commitment.
"Commitment Transfer Supplement" shall mean a Commitment Transfer
Supplement entered into by a Bank and an Eligible Assignee, and accepted by the
Agent, substantially in the form of Exhibit B attached hereto.
"Communications" shall have the meaning specified in Section 10.2.
"Consolidated" shall refer to the consolidation of any Person, in
accordance with GAAP, with its properly Consolidated Affiliates. Reference to
a Person's Consolidated financial statements, financial position, financial
condition, liabilities, etc. refer to the consolidated financial statements,
financial position, financial condition, liabilities, etc. of such Person and
its properly Consolidated Affiliates.
"Consolidated Assets" shall mean, when used with respect to the
Borrower and its Subsidiaries, all items which should be classified as assets
on the Consolidated financial statements of the Borrower delivered to the Agent
pursuant to Section 6.1, all as determined in conformity with GAAP.
"Consolidated Capitalization" shall mean, when used with respect to the
Borrower and its Subsidiaries, an amount equal to the sum of (i) Consolidated
Equity plus (ii) Consolidated Funded Debt.
"Consolidated Cash Flow" shall mean, with respect to the Borrower and
its Subsidiaries for a particular period, without duplication, the sum of (i)
Consolidated Net Income of such Person during such fiscal period plus (ii) the
Borrower's Consolidated depreciation, depletion, amortization and other
non-cash items reducing Consolidated Net Income during such period, all
determined in accordance with GAAP.
"Consolidated Debt Service" shall mean, with respect to the Borrower
and its Subsidiaries for a particular period, the sum of (i) the Consolidated
Interest Expense, including all fees paid with respect to letters of credit, of
the Borrower and its Subsidiaries paid during such period by the Borrower and
its
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15
Subsidiaries plus (ii) the total scheduled principal payments on Consolidated
Funded Debt owing by the Borrower and its Subsidiaries on a Consolidated basis,
paid during such period, all as determined in accordance with GAAP.
"Consolidated EBITDA" shall mean, for a particular period, an amount
equal to (a) all amounts which, in accordance with generally accepted
accounting principles consistently applied, would be included as Consolidated
income from continuing operations of the Borrower and its Subsidiaries on a
Consolidated basis before income taxes and extraordinary items, if any, for
such period, plus (b) the aggregate amount which, in accordance with generally
accepted accounting principles consistently applied, was deducted in
determining the Consolidated operating income from continuing operations under
clause (a) in respect of depreciation, depletion, amortization and other
non-cash items reducing said Consolidated operating income of the Borrower and
its Subsidiaries determined on a Consolidated basis for such period.
"Consolidated Equity" shall mean, with respect to the Borrower and its
Subsidiaries, at anytime, the Consolidated Assets of the Borrower less the
Consolidated Liabilities of the Borrower.
"Consolidated Funded Debt" shall mean, without duplication and with
respect to the Borrower and its Subsidiaries, at anytime, Debt in any of the
following categories:
(a) Debt of such Person for borrowed money or for the deferred
purchase price of property or services;
(b) Debt of such Person which is evidenced by a note, bond, debenture
or similar instrument, but excluding bonds or deposits posted in
favor of the United States of America or any state securing
reclamation obligations, obligations to plug abandoned wells or
seal abandoned mines or obligations to clean up and restore the
land on which such wells or mines are located;
(c) all obligations of such Person under Capitalized Lease
Obligations;
(d) all obligations of such Person in respect of letters of credit and
acceptances issued or created for the account of such Person,
except letters of credit in favor of the United States of America
or any state securing reclamation obligations, obligations to plug
abandoned wells or seal abandoned mines or obligations to clean up
and restore the land on which such wells or mines are located;
(e) all liabilities secured by any Lien on any property owned by such
Person even though such Person has not assumed or otherwise become
liable for the payment thereof;
(f) all obligations to pay production payments and to make capital
contributions under joint venture or other similar agreements; and
(g) all Accommodation Obligations of such Person with respect to
Consolidated Funded Debt described in subclauses (a) through (f)
above.
"Consolidated Interest Expense" shall mean, with respect to the
Borrower and its Subsidiaries, for any fiscal period, the aggregate of all
costs, fees and expenses paid by the Borrower and its
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16
Subsidiaries in such fiscal period for Consolidated Funded Debt, which are
classified as interest expense on the Consolidated financial statements of the
Borrower and its Subsidiaries, all as determined in conformity with GAAP.
"Consolidated Liabilities" shall mean, when used with respect to the
Borrower and its Subsidiaries, all items which should be classified as
liabilities on the Consolidated financial statements of the Borrower delivered
to the Agent pursuant to Section 6.1, all as determined in conformity with
GAAP.
"Consolidated Net Income" shall mean, for any period, the net earnings
(or loss) after taxes of the Borrower and its Subsidiaries on a Consolidated
basis for such period determined in conformity with GAAP.
"Consolidated Tangible Net Worth" shall mean, with respect to the
Borrower and its Subsidiaries, at any time, the Consolidated Equity of the
Borrower, at such time, less the Consolidated Intangible Assets of the Borrower
at such time. For purposes of this definition, "Intangible Assets" shall mean
the amount (to the extent reflected in determining Consolidated Equity) of all
unamortized debt discount and expense, unamortized deferred charges, goodwill,
patents, trademarks, service marks, trade names, copyrights and organization
expenses.
"Contractual Obligation" as applied to any Person, shall mean any
provision of any stock or other securities issued by that Person or any
indenture, mortgage, deed of trust, contract, undertaking, document, instrument
or other agreement or instrument to which that Person is a party or by which it
or any of its properties is bound, or to which it or any of its properties is
subject (including, without limitation, any restrictive covenant affecting such
Person or any of its properties).
"Credit Agreement" shall mean this Credit Agreement dated as of August
2, 1996, among the Borrower, the Agent and the each of the Banks, as said
agreement may be amended, modified, supplemented, and/or extended from time to
time.
"Debt" shall mean, as to any Person, all indebtedness, liabilities and
obligations of such Person, whether matured or unmatured, liquidated or
unliquidated, primary or secondary, direct or indirect, absolute, fixed or
contingent, and whether or not required to be considered pursuant to GAAP. Debt
includes, without limiting the foregoing, (a) indebtedness of such Person for
borrowed money or for the deferred purchase price of property or services or
which is evidenced by a note, bond, debenture or similar instrument, (including
Environmental Liabilities or liabilities to the PBGC), (b) all obligations of
such Person under Capitalized Lease Obligations, (c) all obligations of such
Person in respect of letters of credit and acceptances issued or created for
the account of such Person, (d) all liabilities secured by any Lien on any
property owned by such Person even though such Person has not assumed or
otherwise become liable for the payment thereof, (e) all Accommodation
Obligations of such Person, (f) all obligations to pay production payments and
to make capital contributions under joint venture or other similar agreements,
(g) all net payments or amounts owing by such Person in respect of Hedge
Transactions, interest rate protection agreements, foreign currency exchange
agreements, commodity swap agreements or other interest, exchange rate or
commodity hedging arrangements, and (h) liabilities in respect of Unfunded
Vested Liabilities. The Debt of a Person shall include the Debt of any
partnership or joint venture in which such Person is a general or venture
partner. The Debt of a Person shall not include (i) trade payables and expense
accruals incurred or assumed in the ordinary course of such Person's business,
provided such payables have not remained unpaid for a period of ninety (90)
days after
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17
the same became due unless such Person is diligently contesting same in good
faith or (ii) bonds, letters of credit or deposits posted in favor of the
United States of America or any state securing reclamation obligations,
obligations to plug abandoned wells or seal abandoned mines or obligations to
clean up and restore the land on which such wells or mines are located.
"Debtor Relief Laws" shall mean the Bankruptcy Code and all other
applicable dissolution, liquidation, conservatorship, bankruptcy, moratorium,
readjustment of debt, compromise, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief laws from time to time in effect
affecting the rights of creditors generally.
"Default" shall mean any Event of Default and the occurrence of any
event or condition which would with the giving of any requisite Default Notice
and/or the passage of time or both constitute an Event of Default.
"Default Rate" shall mean the interest rate described in Section 2.8.
"Designated Borrowing Base" shall have the meaning assigned to that
term in Section 3.3.
"Determination Date" shall mean (a) each December 1 and June 1, and (b)
with respect to any Special Determination, the first day of the first month
which is not less than twenty (20) Domestic Business Days following the date of
a request for a Special Determination.
"Distribution" shall mean any dividend payable in cash or property with
respect to any shares of capital stock of the Borrower or any Subsidiary of the
Borrower (other than dividends payable in shares of the same class of common,
preferred or other capital stock as the shares upon which the dividend is being
paid), any other distribution made with respect to any shares of capital stock
of the Borrower or any Subsidiary of the Borrower, or any purchase, redemption
or retirement of, or other payment with respect to, or sinking or other
analogous fund for the purchase, redemption, defeasance, retirement or other
acquisition of, any shares of capital stock of the Borrower or and Subsidiary
of the Borrower.
"Dollars" and the symbol "$" shall mean the lawful currency of the
United States.
"Effective Date" shall mean the date on which all of the conditions
precedent to the making of the Revolving Credit Loans set forth in Section 4.1
are first satisfied or waived by the Banks and the initial Revolving Credit
Loans are made.
"Eligible Assignee" shall mean any of (i) a Bank or any Affiliate of a
Bank; (ii) a commercial bank organized under the laws of the United States, or
any state thereof having total assets in excess of $1,000,000,000; (iii) a
commercial bank organized under the laws of any other country which is a member
of the OECD, or a political subdivision of any such country having total assets
in excess of $1,000,000,000, provided that such bank is acting through its main
office or a branch or agency located in the country in which it is organized or
another country which is also a member of the OECD having total assets in
excess of $1,000,000,000; (iv) the central bank of any country which is a
member of the OECD or (v) a finance company, insurance company or other
financial institution or fund having total assets in excess of $1,000,000,000,
provided that a holder, either directly or indirectly, of capital stock or of
any right to acquire capital stock of the Borrower or any Affiliate of the
Borrower shall not be an Eligible Assignee.
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"Environmental Laws": any applicable federal, state, or local statute,
law, rule, regulation, ordinance, code, permit, consent, approval, license,
written policy or rule of common law now or hereafter in effect and in each
case as amended, and any judicial or administrative interpretation thereof,
including any judicial or administrative order, injunction, consent decree or
judgment, or other authorization or requirement whenever promulgated, issued or
modified, including the requirement to register underground storage tanks, well
plugging and abandonment requirements, and oil and gas waste disposal
requirements relating to:
(i) emissions, discharges, spills, migration, movement,
releases or threatened releases of pollutants, contaminants, Hazardous
Materials, or hazardous or toxic materials or wastes into or onto soil,
land, ambient air, surface water, ground water, watercourses, publicly
owned treatment works, drains, sewer systems, wetlands or septic
systems;
(ii) the use, treatment, storage, disposal, handling,
manufacturing, transportation, or shipment of Hazardous Materials or
hazardous and/or toxic wastes, material, products or by-products
containing Hazardous Materials (or of equipment or apparatus containing
Hazardous Materials); or
(iii) otherwise relating to pollution or the protection of human
health or the environment, including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, 42 U.S.C. Sections 9601 et seq., as amended, the Resource
Conservation and Recovery Act, 42 U.S.C. Sections 6901 et seq., as
amended, the Hazardous Materials Transportation Act, 49 U.S.C. Sections
1801 et seq., as amended, the Clean Water Act, 33 U.S.C. Sections 1251
et seq., as amended, the Toxic Substances Control Act, 15 U.S.C.
Sections 2601 et seq., as amended,; the Clean Air Act, 42 U.S.C.
Sections 7401 et seq., as amended, the federal Water Pollution Control
Act, 33 U.S.C. Section 1251 et seq., as amended, the Safe Drinking
Water Act, 42 U.S.C. Sections 300f et seq., as amended, the Atomic
Energy Act, 42 U.S.C. Sections 2011 et seq., as amended, the Natural
Gas Pipeline Safety Act of 1968, 49 U.S.C. Section 1671 et seq., as
amended, the Federal Insecticide, Fungicide and Rodenticide Act, 7
U.S.C. Sections 136 et seq., as amended, and the Occupational Safety
and Health Act, 29 U.S.C. Sections 651 et seq., as amended, and all
comparable statutes of the States of Kentucky, Pennsylvania, Tennessee,
Virginia and West Virginia, and all comparable local governmental
regulations in such states, and other environmental, conservation or
protection laws in effect in any jurisdiction where any real Property
of the Borrower or any Subsidiary of the Borrower is located.
"Environmental Liabilities": with respect to any Person, any and all
liabilities, responsibilities, losses, sums paid in settlement of claims,
obligations, charges, actions (formal or informal), claims (including, without
limitation, claims for personal injury or for real or personal property
damage), liens, administrative proceedings, damages (including, without
limitation, loss or damage resulting from the occurrence of an Event of
Default), punitive damages, consequential damages, treble damages, penalties,
fines, monetary sanctions, interest, court costs, response and remediation
costs, stabilization costs, encapsulation costs, treatment, storage, or
disposal costs, groundwater monitoring or environmental sampling costs, other
causes of action and any other costs and expenses (including, without
limitation, reasonable attorneys', experts', and consultants' fees, costs of
investigation and feasibility studies and disbursements in connection with any
investigative, administrative or judicial proceeding), whether direct or
indirect, known or unknown, absolute or contingent, past, present or future
arising under, pursuant to or in connection with any Environmental Law, or any
other binding obligation of such Person requiring abatement of pollution or
protection of human health and the environment.
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"Environmental Lien": a Lien in favor of any Governmental Authority
for (i) any liability under Environmental Laws or (ii) damages arising from, or
costs incurred by such Governmental Authority in response to, a Release or
threatened Release of a Hazardous Substance into the environment.
"Equities" shall mean Penn Virginia Equities Corporation, a Delaware
corporation and a wholly owned Subsidiary of the Borrower.
"ERISA" shall mean the United States Employee Retirement Income
Security Act of 1974, as amended from time to time, together with all rules and
regulations promulgated with respect thereto.
"ERISA Affiliate" shall mean any (i) corporation which is a member of
the same controlled group of corporations (within the meaning of Section 414(b)
of the Code) as the Borrower, (ii) partnership or other trade or business
(whether or not incorporated) under common control (within the meaning of
Section 414(c) of the Code) with the Borrower, (iii) member of the same
affiliated service group (within the meaning of Section 414(m) of the Code) as
the Borrower or (iv) other Person required to be aggregated with the Borrower
or an ERISA Affiliate thereof, as defined above, pursuant to Section 414(o) of
the Code.
"Eurocurrency Liabilities" shall have the meaning assigned to that term
in Regulation D.
"Eurodollar Borrowing" shall mean a Borrowing comprised of Eurodollar
Loans.
"Eurodollar Interest Period" shall mean, with respect to each
Eurodollar Borrowing, a period of one, two, three or six months, as specified
in the Borrowing Request submitted pursuant to Section 2.2 with respect
thereto, beginning on and including the date specified in such Borrowing
Request (which must be a Business Day) and ending on the date which corresponds
numerically to such beginning date one, two, three or six months thereafter (or
if such month has no numerically corresponding date, on the last Business Day
of such month); provided that each Eurodollar Interest Period which would
otherwise end on a day which is not a Business Day shall end on the next
succeeding Business Day unless such next succeeding Business Day is the first
Business Day of a calendar month, in which case such Eurodollar Interest Period
shall end on the Business Day next preceding such numerically corresponding
day. No Eurodollar Interest Period may be elected which would end after the
Maturity Date.
"Eurodollar Loan" shall mean any Revolving Credit Loan bearing interest
at a rate determined by reference to the Eurodollar Rate in accordance with the
provisions of Article II.
"Eurodollar Rate" shall mean, with respect to each Eurodollar Loan
comprising part of a Eurodollar Borrowing and with respect to the related
Eurodollar Interest Period, the rate of interest per annum (rounded upward to
the nearest 1/16 of one percent) determined pursuant to the following formula:
Eurodollar (Unadjusted)
------------------------------------
Eurodollar Rate = 1.00 - Eurodollar Reserve Percentage
"Eurodollar Reserve Percentage" of any Bank with respect to any
Eurodollar Interest Period for any Eurodollar Loan of such Bank shall mean, the
reserve percentage (expressed as a decimal) equal to the maximum aggregate
reserve requirements (including all basic, emergency, supplemental, marginal
and other reserves and taking into account any transitional adjustments or
other scheduled changes in reserve requirements) specified under regulations
issued from time to time by the Board of Governors
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of the Federal Reserve System and then applicable to assets or liabilities
consisting of and including Eurocurrency Liabilities having a term
approximately equal or comparable to such Eurodollar Interest Period.
"Eurodollar (Unadjusted)" shall mean, with respect to each day during
each Eurodollar Interest Period pertaining to each Eurodollar Loan comprising a
Eurodollar Borrowing, the rate per annum equal to the rate at which TCB is
offered Dollar deposits at or about 11:00 A.M., Houston, Texas time, two
Business Days prior to the beginning of such Eurodollar Interest Period in the
interbank eurodollar market where the eurodollar and foreign currency and
exchange operations in respect of its Eurodollar Loans are then being conducted
for delivery on the first day of such Eurodollar Interest Period for the number
of days comprised therein and in an amount comparable to the amount of the
Eurodollar Borrowing to be outstanding during such Eurodollar Interest Period.
"Event of Default" shall have the meaning specified in Section 8.1.
"Existing Debt" shall mean, at the time of determination, the
aggregate principal then outstanding on Consolidated Funded Debt described in
Schedule 7.1(a) or permitted pursuant to the terms of Subclauses (h) and/or (i)
of Section 7.1.
"Existing First Union Agreement" shall mean that certain Loan and
Agency Agreement dated as of February 3, 1995, among the Borrower, First Union
National Bank, formerly known as First Fidelity Bank, N.A., Corestates Bank,
N.A. and First Union National Bank of Virginia (the "Existing Lenders") and
First Union National Bank as agent for the benefit of the Existing Lenders.
"Existing Litigation" shall mean all actions, suits, proceedings,
governmental investigations or arbitrations disclosed in Schedule 5.10 hereto.
"Existing Plans" shall have the meaning specified in Section 7.9.
"FDIC" shall mean the Federal Deposit Insurance Corporation (or any
successor).
"Federal Funds Effective Rate" shall have the meaning specified in the
definition of the term "Alternate Base Rate".
"Fiscal Quarter" shall mean a three-month period ending on the last day
of December, March, June or September of any year.
"Fiscal Year" shall mean a twelve-month period ending on December 31 of
any year.
"GAAP" shall mean generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, which are consistent with those applied in the
preparation of the financial statements of the Borrower referred to in Section
5.9(a).
"Gas Balancing Agreement" shall mean any agreement or arrangement
whereby any Person having an interest in any Hydrocarbons to be produced from
the Oil and Gas Interests of the Borrower
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and its Subsidiaries has a right to take more than its proportionate share of
production therefrom.
"Government Securities" shall mean readily marketable direct full faith
and credit obligations of the United States or obligations unconditionally
guaranteed by the full faith and credit of the United States (or by any agency
thereof to the extent such obligations are backed by the full faith and credit
of the United States).
"Governmental Approval" shall mean any authorization, consent,
approval, license, lease, ruling, permit, certification, exemption, filing for,
or registration by or with any Governmental Authority required by the Borrower
or any Subsidiary of the Borrower in connection with (i) the execution,
delivery and performance of the Loan Documents by any of such Persons and the
borrowing of any funds under this Credit Agreement, (ii) the validity or
enforceability of the Loan Documents and the exercise by the Agent or any Bank
of its rights and remedies thereunder, and/or (iii) the acquisition,
maintenance, ownership and operation of the Borrowing Base Assets.
"Governmental Authority" shall mean any nation or government, any
federal, state, province, city, town, municipality, county, local or other
political subdivision thereof or thereto and any department, commission, board,
bureau, instrumentality, agency or other entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Hazardous Substances" shall mean (1) hazardous materials, hazardous
wastes, and hazardous substances including, but not limited to, those
substances, materials and wastes listed in the United States Department of
Transportation Hazardous Materials Table, 49 C.F.R.. Section 172.101, as
amended, or listed by the federal Environmental Protection Agency as hazardous
substances under or pursuant to 40 C.F.R. Part 302, as amended, or substances,
materials, contaminants or wastes which are or become regulated under any
Environmental Law, including without limitation, those substances, materials,
contaminants or wastes as defined in the following statutes and their
implementing regulations: the Hazardous Materials Transportation Act, 49
U.S.C. Section 1801 et seq., as amended, the Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901 et seq., as amended, the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601
et seq., as amended; the Toxic Substances Control Act, 15 U.S.C. Section 2601
et seq., as amended; the Clean Air Act, 42 U.S.C. Section 7401 et seq., as
amended, the federal Water Pollution Control Act, 33 U.S.C. Section 1251 et
seq., as amended, the Occupational Safety and Health Act, 2 U.S.C. Section 651
et seq., as amended, the Safe Drinking Water Act, 42 U.S.C. Section 300f et
seq., as amended and the Natural Gas Pipeline Safety Act of 1968, 49 U.S.C.
Section 1671 et seq., as amended; (2) all substances, materials, contaminants
or wastes listed in all comparable statutes of the States of Kentucky,
Pennsylvania, Tennessee, Virginia and West Virginia and in comparable local
Requirements of Law in such states; (3) acid gas, sour water streams or sour
water vapor streams containing hydrogen sulfide or other forms of sulphur,
sodium hydrosulfide and ammonia; (4) Hydrocarbons; (5) natural gas, synthetic
gas, and any mixtures thereof; (6) asbestos and/or any material which contains
1% or more, by weight, of any hydrated mineral silicate, including but not
limited to chrysotile, amosite, crocidolite, tremolite, anthophylite and/or
actinolite, whether friable or non-friable; (7) PCB's, or PCB containing
materials or fluids; (8) radon; (9) naturally occurring radioactive material,
radioactive substances or waste; (10) salt water and other oil and gas wastes
and (11) any other hazardous or noxious substance, material, pollutant,
emission, or solid, liquid or gaseous waste.
"Hedge Transaction" shall mean a transaction pursuant to which the
Borrower or any of its Subsidiaries fix the price to be received by them for
future production of Hydrocarbons, including price swap agreements under which
the Borrower or its Subsidiaries agree to pay a price for a specified amount of
Hydrocarbons determined by reference to a recognized market on a specified
future date and the contracting party agrees to pay the Borrower or its
Subsidiaries a fixed price for the same or similar
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amount of Hydrocarbons.
"Highest Lawful Rate" shall mean, as of a particular date and as to any
Bank, the maximum nonusurious interest rate that may under applicable law then
be contracted for, charged or received by such Bank in connection with its
Revolving Credit Loans.
"Hostile Acquisition" shall mean any transaction in which the Borrower
or its Subsidiaries, directly or indirectly, purchases or offers to purchase or
acquire, in any transaction or series of transactions, an aggregate of 5% or
more of the equity securities or controlling interest of any Person, for any
type of consideration, without the prior written consent of such Person or such
Person's Board of Directors or controlling body.
"Hydrocarbons" shall mean oil, gas, casinghead gas, condensate,
distillate, liquid hydrocarbons, gaseous hydrocarbons and all products
separated, settled and dehydrated therefrom and all products refined therefrom,
including, without limitation, kerosene, liquified petroleum gas, refined
lubricating oils, diesel fuel, drip gasoline, natural gasoline, helium, sulphur
and all other minerals.
"Immaterial Oil and Gas Interests" shall have the meaning assigned to
that term in Section 5.6 hereof.
"Initial Borrowing Base Asset Reports" shall mean (i) the Reserve
Report covering the Oil and Gas Interests of the Borrower and its Subsidiaries
prepared as of December 31, 1995, by the Approved Petroleum Engineer, and (ii)
the Coal Reserve Report covering the Coal Interests of the Borrower and its
Subsidiaries prepared as of December 31, 1995, by the personnel of the Borrower
and its Subsidiaries, complete and correct copies of which have been furnished
by the Borrower to the Banks.
"Initial Financial Statements" shall mean (i) the audited annual
Consolidated financial statements of the Borrower and its Consolidated
Subsidiaries dated as of December 31, 1995 and (ii) the quarterly Consolidated
financial statement of the Borrower and its Subsidiaries dated as of March 31,
1996, copies of which Initial Financial Statements have heretofore been
delivered by the Borrower to the Banks.
"Interest Payment Date" shall mean any date interest is due pursuant to
the provisions of Section 2.7(b) hereof.
"Investment" shall mean, as applied to the Borrower or a Subsidiary of
the Borrower, any direct or indirect purchase or other acquisition by the
Borrower or such Subsidiary of stock, partnership interest or other equity
interest, or of a beneficial interest therein, of any other Person, and any
direct or indirect loan, advance (other than deposits with financial
institutions available for withdrawal on demand, prepaid expenses, advances to
employees and similar items made or incurred in the ordinary course of
business), or capital contribution by the Borrower or such Subsidiary to any
other Person, including all Debt and accounts owed by that other Person which
are not current assets or did not arise from sales of goods or services to the
Borrower or such Subsidiary in the ordinary course of business. The amount of
any Investment shall be determined in conformity with GAAP.
"IRS" shall mean the Internal Revenue Service or any successor agency.
"Issuing Bank" shall mean TCB.
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"Lending Office" shall mean, with respect to each Bank, the branch or
branches (or Affiliate or Affiliates) from which such Bank's Eurodollar Loans
or ABR Loans, as the case may be, are made or maintained and for the account of
which payments of principal of, and interest on, such Bank's Eurodollar Loans
or ABR Loans are made.
"Letter of Credit" shall mean a Standby Letter of Credit requested to
be issued under the Letter of Credit Commitment.
"Letter of Credit Application" shall mean the application to the
Issuing Bank by the Borrower for the issuance of a Standby Letter of Credit in
substantially the form of Exhibit C hereto.
"Letter of Credit Commitment" shall mean with respect to each Bank, the
lesser of (a) such Bank's Commitment Percentage of $5,000,000 and (b) such
Bank's Commitment.
"Letter of Credit Exposure" of any Bank shall mean such Bank's
aggregate participation in the unfunded portion of Letters of Credit
outstanding at any time.
"Lien" shall mean, with respect to any asset, (a) any mortgage, deed of
trust, production payment, deposit, lien, charge, pledge, security interest,
claim or encumbrance of any kind (whether voluntary or involuntary, affirmative
or negative, and whether imposed or created by operation of law or otherwise)
upon such asset, (b) the interest of a vendor or a lessor under any conditional
sale agreement, capital lease or other title retention agreement relating to
such asset and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities but excluding
(i) any right of offset which arises without agreement in the ordinary course
of business and (ii) any option, call or similar right of the issuer or a third
party with respect to the securities issued by Westmoreland Coal Company and
Westmoreland Resources, Inc. beneficially owned by the Borrower or its
Subsidiaries.
"Loan Documents" shall mean this Credit Agreement, each of the Notes,
the Subsidiary Guaranty, the Letters of Credit, the Letter of Credit
Applications and reimbursement agreements executed in connection therewith,
each Compliance Certificate, each Notice of Conversion or Continuance, each
Borrowing Request, all Reserve Reports, all Borrowing Base Asset Reports, all
legal opinions and when executed and delivered by the parties thereto, all
other agreements, certificates, instruments and documents executed in
connection with the Credit Agreement, as the same may be amended, modified,
supplemented or extended from time to time.
"Loan(s)" shall mean all Revolving Credit Loans.
"Majority Banks" shall mean those Banks holding more than 66-2/3% of
the Utilized Credit, or, if no Utilized Credit is outstanding, at least 66-2/3%
of the Total Commitment.
"Margin Stock" shall have the meaning given to such term under
Regulation U.
"Material Adverse Effect" shall mean (a) a material adverse effect on
the business, assets, operations or condition (financial or otherwise) of the
Borrower and its Subsidiaries taken as a whole, (b) material impairment of the
ability of the Borrower or any of its Subsidiaries to perform timely any of its
respective Obligations under any Loan Document to which it is or will be a
party, or (c) material impairment of the rights of or benefits available to the
Banks under any Loan Document.
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"Material Contract" shall mean any contract, agreement or instrument to
which the Borrower or any of its Subsidiaries is a party (i) which calls for
payments to or from the Borrower or any Subsidiary of the Borrower of an amount
in excess of $1,000,000 during any twelve month period or (ii) pursuant to
which the Borrower or any Subsidiary of the Borrower acquires any right to an
interest in real or personal property or a right to obtain services if the
Borrower or such Subsidiary's inability to obtain any such right could
reasonably be expected to result in a Material Adverse Effect.
"Maturity Date" shall mean August 2, 2000, or the earlier date of
termination in whole of the Commitments or as extended pursuant to the
provisions contained in Section 2.21 hereof.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is
making or accruing an obligation to make contributions, or has within any of
the preceding five (5) plan years made or accrued an obligation to make
contributions.
"Norfolk Common Stock" shall mean the common stock of the Norfolk
Southern Corporation, par value of $1.00.
"Notes" shall mean the promissory notes of the Borrower dated the
Effective Date payable to the order of each Bank, substantially in the form of
Exhibit D.
"Notice of Conversion or Continuation" shall mean a Notice of
Conversion or Continuation in the form of Exhibit E signed by a Responsible
Officer of the Borrower.
"Obligations" shall mean all obligations, liabilities and indebtedness
of every nature of the Borrower and its Subsidiaries from time to time owing to
any Bank under any Loan Document to which the Borrower or such Subsidiary is a
party, including, without limitation, (a) the due and punctual payment of (x)
the principal of and interest on the Revolving Credit Loans, Letters of Credit
and reimbursement obligations under Letter of Credit Applications, when and as
due, whether at maturity, by acceleration, upon one or more dates set for
prepayment or otherwise, including, to the extent permitted by applicable law,
interest that accrues after the commencement of any proceeding by or against
the Borrower or any of its Subsidiaries under the Bankruptcy Code and all other
applicable Debtor Relief Laws and (y) all other monetary obligations of the
Borrower and its Subsidiaries to any Bank under this Credit Agreement and each
of the other Loan Documents to which the Borrower or such Subsidiary is a
party, including any and all fees, costs, expenses and indemnities and (b) the
due and punctual performance of all other obligations of the Borrower and its
Subsidiaries under this Credit Agreement and each other Loan Document to which
the Borrower or such Subsidiary is a party. "Obligation" means any part of the
Obligations.
"Oil and Gas Interests" shall mean any and all rights, estates, titles
and interests in any oil and gas wells, oil, gas, sulphur and other mineral
leaseholds and fee interests, all overriding royalty interests, mineral
interests, royalty interests, net profits interests, oil payments, production
payments, carried interests and any and all other interests in Hydrocarbons,
whether any of the same be real or personal, now owned or hereafter acquired by
the Borrower or its Subsidiaries, directly or indirectly together with rights,
titles and interests created by or arising under the terms of any unitization,
communitization, and pooling agreements or arrangements, and all properties,
rights and interests covered thereby, whether arising by contract, by order, or
by operation of laws, which now or hereafter include all or any part of the
foregoing.
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"Opinion of the Borrower's Counsel" shall mean the favorable written
legal opinion of Dechert Price & Rhoads, legal counsel to the Borrower and its
Subsidiaries, dated as of the Closing Date, and in form and substance
satisfactory to the Agent.
"Participants" shall have the meaning assigned to that term in Section
10.9 hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to all or any of its functions under ERISA.
"Permitted Liens" shall mean with respect to the Borrower or any
Subsidiary of the Borrower:
(a) Liens (if any) securing the Notes in favor of the Banks;
(b) Inchoate Liens incident to construction or maintenance of real
property or with respect to the conduct of the Borrower's business with respect
to the Coal Interests and the Oil and Gas Interests, or Liens incident to
construction or maintenance of real property, now or hereafter filed of record
for which adequate reserves with respect thereto are maintained on its books in
accordance with GAAP and which are being diligently contested in good faith by
appropriate proceedings and have not proceeded to judgment, provided that, by
reason of nonpayment of the obligations secured by such Liens, no such real
property is subject to a material risk of loss or forfeiture prior to judgment;
(c) Liens for taxes and assessments on real property which are not yet
past due, or Liens for taxes and assessments on real property for which
adequate reserves with respect thereto are maintained on its books in
accordance with GAAP and which taxes and assessments are being diligently
contested in good faith by appropriate proceedings and have not proceeded to
judgment, provided that, by reason of nonpayment of the obligations secured by
such Liens, no such real property is subject to a material risk of loss or
forfeiture prior to judgment;
(d) Imperfections and irregularities in title to any property which in
the aggregate do not materially impair the marketability or use of such
property for the purposes for which it is or may reasonably be expected to be
held;
(e) Easements, exceptions, reservations, or other agreements for the
purpose of pipelines, conduits, cables, wire communication lines, power lines
and substations, streets, trails, walkways, drainage, irrigation, water, and
sewerage purposes, dikes, canals, ditches, the removal of oil, gas, coal, or
other minerals, and other like purposes affecting real property which in the
aggregate do not materially burden or impair the marketability or use of such
real property for the purposes for which it is or may reasonably be expected to
be held;
(f) Non-consensual Liens imposed by Law, including carrier's,
mechanics', landlord's, warehousemen's or other similar Liens, other than those
described in clauses (b) or (c) above, arising in the ordinary course of
business with respect to obligations which are not delinquent or are being
diligently contested in good faith by appropriate proceedings, provided that,
if delinquent, adequate reserves with respect thereto are maintained on its
books in accordance with GAAP and, by reason of nonpayment, no property is
subject to a material risk of loss or forfeiture prior to judgment;
(g) Liens consisting of pledges or deposits made in the ordinary
course of business in compliance with workers' compensation, unemployment
insurance and other social security laws or regulations;
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(h) Liens consisting of deposits of property to secure the performance
of bids, trade contracts (other than for Debt), leases (other than Capitalized
Lease Obligations), statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature incurred in the ordinary course of
business;
(i) Lease burdens payable to third parties which are either (i)
deducted in the calculation of discounted present value of the Oil and Gas
Interests covered in the Reserve Reports including, without limitation, any
royalty, overriding royalty, net profit interests, production payment, carried
interest or reversionary working interest which has been disclosed to the Agent
in writing, or (ii) which burden properties which are not included in the
Reserve Reports or the Coal Reserve Reports;
(j) Liens arising under operating, pooling or unitization agreements
of a scope and nature customary in the oil and gas industry;
(k) Liens arising under, in connection with or related to farm-out,
farm-in, joint operating or area of mutual interest agreements or other similar
or customary arrangements, agreements or interests, incurred in the ordinary
course of business and to the extent such Liens are limited in recourse to (x)
the properties subject to such interests or agreements, (y) the Hydrocarbons
produced from such properties and (z) the proceeds of such Hydrocarbons;
(l) Purchase money Liens upon or in any property acquired by the
Borrower or any of its Subsidiaries in the ordinary course of business to
secure the deferred portion of the purchase price of such property or any
indebtedness incurred to finance the acquisition of such property provided,
however, that (i) no such Lien shall be extended to cover property other than
the property being acquired (ii) the Debt secured thereby is permitted pursuant
to Section 7.1(h);
(m) All other non-consensual Liens arising in the ordinary course of
the Borrower's or such Subsidiaries' business or incidental to the ownership of
their properties;
provided that no Permitted Lien referred to above shall (i) secure any Debt
except for Debt permitted pursuant to subparagraphs (a), (e) or (h) of Section
7.1 hereof or (ii) in the aggregate materially detract from the marketability
of the material Borrowing Base Assets or materially impair the use thereof in
the operation of the business of the Borrower or such Subsidiary.
"Person" shall mean an individual, partnership, corporation (including
a business trust), joint stock company, trust, unincorporated association,
joint venture or other entity, or a foreign state or political subdivision
thereof or any agency of such state or subdivision.
"Prime Rate" shall have the meaning specified in the definition of the
term "Alternate Base Rate."
"Proved Developed Behind Pipe Hydrocarbon Reserves" shall mean Proved
Hydrocarbon Reserves which are recoverable from zones behind casing in existing
wells, which will require additional completion work or a future recompletion
prior to the start of production.
"Proved Developed Non-Producing Hydrocarbon Reserves" shall mean the
summation of Proved Developed Behind Pipe Hydrocarbon Reserves and Proved
Developed Shut-in Hydrocarbon Reserves.
"Proved Developed Producing Hydrocarbon Reserves" shall mean those
Proved Hydrocarbon
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Reserves which are recoverable from completion intervals currently open and
producing to market. Improved recovery reserves are considered to be producing
only after an improved recovery project has been installed and is in operation.
"Proved Developed Shut-in Hydrocarbon Reserves" shall mean Proved
Hydrocarbon Reserves that are recoverable from completion intervals open as of
the date of estimation, but which are not producing as of such date.
"Proved Hydrocarbon Reserves" shall mean those recoverable Hydrocarbons
which have been proved to a high degree of certainty by reason of existing
production, adequate testing, or in certain cases by adequate core data and
other engineering and geologic information on zones which are present in
existing wells or in known reservoirs. Reserves that can be produced
economically through the application of established improved recovery
techniques are included in the proved classification when (a) successful
testing by a pilot project or the operation of any installed program in that
reservoir or one in the immediate area with similar rock and fluid properties
provides support for the engineering analysis on which the project or program
was based, and (b) it is reasonably certain the project will proceed. Reserves
to be recovered by improved recovery techniques that have yet to be established
through repeated economically successful applications are included in the
proved category only after successful testing by a pilot project or after the
operation of an installed program in the reservoir provides support for the
engineering analysis on which the project or program was based. Improved
recovery includes all methods for supplement natural reservoir including (1)
pressure maintenance, (2) cycling and (3) secondary recovery in its original
sense. Improved recovery also includes the enhanced recovery methods of
thermal, chemical flooding, and the use of miscible and immiscible displacement
fluids.
"Proved Reserves" shall mean the meaning assigned to that term in the
definition of "Reserve Report".
"Proved Undeveloped Hydrocarbon Reserves" shall mean Proved Hydrocarbon
Reserves that are recoverable (i) by new wells on undrilled acreage, (ii) by
replacement wells on previously drilled and producing acreage or (iii) from
existing wells where a relatively large expenditure is required for
recompletion and from acreage where the application of an improved recovery
technique is planned and the costs required to place the project in operation
are relatively large. Proved Undeveloped Hydrocarbon Reserves on undrilled
acreage shall be limited to those drilling units offsetting productive units
that are reasonably certain of production when drilled. Proved Hydrocarbon
Reserves for other undrilled units are Proved Undeveloped Hydrocarbon Reserves
only where it can be demonstrated with certainty that there is continuity of
production from the existing productive formation.
"PVCC" shall mean Penn Virginia Coal Company, a Virginia corporation
and a wholly owned Subsidiary of the Borrower.
"PVOG" shall mean Penn Virginia Oil & Gas Corporation, a Virginia
corporation and a wholly owned Subsidiary of the Borrower.
"Register" shall have the meaning specified in Section 10.9(f) hereof.
"Regulation D" shall mean Regulation D of the Board (respecting reserve
requirements), as the same is from time to time in effect, and all official
rulings and interpretations thereunder or thereof.
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"Regulation G" shall mean Regulation G of the Board (respecting margin
credit extended by Persons other than banks, brokers and dealers), as the same
is from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"Regulation U" shall mean Regulation U of the Board (respecting margin
credit extended by banks), as the same is from time to time in effect, and all
official rulings and interpretations thereunder or thereof.
"Regulation X" shall mean Regulation X of the Board (respecting
borrowers who obtain margin credit), as the same is from time to time in
effect, and all official rulings and interpretations thereunder or thereof.
"Release" shall mean any release, spill, emission, leak, injection,
deposit, disposal, discharge, dispersal, leaching or migration of any Hazardous
Substance into the environment or into or out of any real property of the
Borrower or any Subsidiary of the Borrower, including the movement of Hazardous
Substances through or in the air, soil, surface water, groundwater and/or land
in violation of Environmental Laws.
"Remedial Action" shall mean actions required by a Governmental Agency
to (i) clean up, remove, treat or in any other way address Hazardous Substances
in the environment, (ii) prevent the Release or threat of Release or minimize
the further Release of Hazardous Substances so they do not migrate or endanger
or threaten to endanger public health or welfare or the environment or (iii)
perform pre-remedial studies and investigations and post-remedial monitoring
and care.
"Reportable Event" shall mean any of the events described in Section
4043 or Section 4068(f) of ERISA for which the thirty (30) day notice
requirement of 29 C.F.R. Section 2615.3 has not been waived.
"Requirements of Law" shall mean any federal, state or local law, rule
or regulation, permit or other binding determination of any Governmental
Authority applicable to the Borrower or any of its Subsidiaries or any of their
respective properties or assets.
"Reserve Report" shall mean a report in form and substance satisfactory
to each Bank, which Reserve Report shall be dated as of the next preceding
December 31 or June 30, as the case may be, and shall review at least 80% of
the Proved Reserves attributable to the Oil and Gas Interests of the Borrower
and its Subsidiaries (and showing any material additions to or deletions from
the Oil and Gas Interests covered by the previous Reserve Report made by the
Borrower and its Subsidiaries since the date of the previous Reserve Report),
shall set forth the Proved Developed Producing Hydrocarbon Reserves, Proved
Developed Behind Pipe Hydrocarbon Reserves, Proved Developed Shut-In
Hydrocarbon Reserves and Proved Undeveloped Hydrocarbon Reserves (the "Proved
Reserves") attributable to the Oil and Gas Interests and a projection of the
rate of production and net income with respect to the Proved Reserves as of the
date of such Reserve Report, all in accordance with the guidelines published by
the Securities and Exchange Commission. Each Reserve Report to be submitted
prior to March 31 in each such year shall be prepared by the Approved
Petroleum Engineer. The Majority Banks shall have the right to approve of the
composition of the Oil and Gas Interests covered in the Reserve Report to be
prepared by the Approved Petroleum Engineer. Each Reserve Report to be
submitted prior to October 1 in each year may be limited to information
prepared by personnel of the Borrower or its Subsidiaries, which Reserve Report
shall provide the current status of the information set forth in the
immediately preceding Reserve Report.
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"Responsible Officer" shall mean, as to any Person, its Chairman,
Vice-Chairman, President, Executive Vice President(s), Senior Vice President(s)
or Vice President duly authorized to act on behalf of such Person.
"Resources" shall mean Penn Virginia Resources, a Virginia corporation
and a wholly owned Subsidiary of the Borrower.
"Revolving Credit Loan(s)" shall have the meaning provided in Section
2.1(a).
"S&P" shall mean Standard & Poor's Corporation.
"Special Determination" means any determination of the Borrowing Base
pursuant to Section 3.4.
"Standby Letter of Credit" shall mean a Letter of Credit which
represents an obligation to the beneficiary on the part of the Issuing Bank (a)
to repay money borrowed by or advanced to or for the account of the Borrower or
any of its Subsidiaries or (b) to make payment on account of any indebtedness
undertaken by the Borrower or any of its Subsidiaries or (c) to make payment on
account of any default by the Borrower or any of its Subsidiaries in the
performance of an obligation.
"Subsidiary" shall mean as of any date of determination and with
respect to any Person, any corporation, partnership, joint venture or other
entity whether now existing or hereafter organized or acquired of which the
securities, partnership units or other ownership interests having ordinary
voting power, in the absence of contingencies, to elect a majority of the board
of directors or other persons performing similar functions (including that of a
general or venture partner) are at the time directly or indirectly owned by
such Person and/or one or more Subsidiaries of such Person.
"Subsidiary Guarantors" shall mean Resources, Equities, PVCC, PVOG and
any such other Person who has guaranteed some or all of the Obligations and who
has been accepted by the Banks as a Subsidiary Guarantor, including any
Subsidiary of the Borrower which now or hereafter executes and delivers an
Instrument of Joinder of the Subsidiary Guaranty in the form of Exhibit C to
the Subsidiary Guaranty pursuant to the provisions of Section 6.11.
"Subsidiary Guaranty" shall mean the guaranty of the Obligations
executed by each Subsidiary of the Borrower in favor of the Agent for the
benefit of the Banks to secure the Obligations substantially in the form of
Exhibit F, either as originally executed or as the same may from time to time
be supplemented, modified, amended, renewed, extended or supplanted.
"Swing Loans" shall have the meaning assigned to such term in Section
7.1(g).
"TCB" shall mean Texas Commerce Bank National Association, a national
banking association.
"Termination Event" shall mean (i) a Reportable Event with respect to
any Benefit Plan (other than a "reportable event" that is not subject to the
provision for 30 days notice to the PBGC); (ii) the withdrawal of the Borrower
from a Benefit Plan during a plan year in which the Borrower was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA; (iii) the imposition of an
obligation on the Borrower under Section 4041 of ERISA to provide affected
parties written notice of intent to terminate a Benefit Plan in a distress
termination described in Section 4041(c) of ERISA; (iv) the institution by the
PBGC of proceedings to terminate a Benefit Plan; (v) any other event or
condition
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which would constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Benefit Plan; or (vi)
the occurrence of an event described in Section 4068(f) of ERISA with respect
to a Benefit Plan.
"Total Borrowing Base" shall mean, at the particular time in question,
the amount determined by the Agent and the Majority Banks in accordance with
the provisions of Article III, provided, however, that in no event shall the
Total Borrowing Base exceed the Total Commitment.
"Total Commitment" shall mean $50,000,000 as the same may be reduced
from time to time pursuant to Section 2.9.
"Type," when used in respect to any Revolving Credit Loan or Borrowing,
refers to the Rate by reference to which interest on such Revolving Credit Loan
or on the Revolving Credit Loans comprising such Borrowing is determined. For
purposes hereof, "Rate" shall include the Eurodollar Rate and the Alternate
Base Rate.
"Unavailable Commitment" shall have the meaning specified in Section
2.5(d) hereof.
"Unavailable Fee Rate" shall have the meaning specified in Section
2.5(d) hereof.
"Unfunded Vested Liabilities" shall mean, with respect to any Benefit
Plan at any time, the amount (if any) by which (i) the present value of all
vested nonforfeitable benefits under such Benefit Plan exceeds (ii) the fair
market value of all Benefit Plan assets allocable to such benefits, all
determined as of the then most recent valuation date for such Benefit Plan, but
only to the extent that such excess represents a potential liability of an
ERISA Affiliate to the PBGC or such Benefit Plan under Title IV of ERISA.
"United States" and "U.S." each shall mean United States of America.
"Unused Availability" shall mean at any time, an amount equal to the
Available Commitment in effect at that time, minus the Utilized Credit.
"Utilized Credit" shall mean, at any time, without duplication, the sum
of (i) the aggregate principal amount then outstanding on Revolving Credit
Loans, (ii) the aggregate principal amount then outstanding on Swing Loans,
plus (iii) the aggregate Letter of Credit Exposure, plus (iv) the aggregate
amount of payment theretofore made by the Issuing Bank in respect to Letters of
Credit and not theretofore reimbursed by the Borrower to the Issuing Bank or
deemed a Revolving Credit Loan pursuant to Section 2.3(d).
"Utilized Percentage of Borrowing Base" shall mean on any date an
amount equal to (i) the Utilized Credit on such day minus the aggregate
principal amount then outstanding on Swing Loans divided by (ii) the Available
Borrowing Base on such day.
"Withholding Taxes" shall have the meaning provided in Section 2.17(a).
SECTION 1.2. Accounting Terms. All terms of an accounting or
financial nature shall be construed in accordance with GAAP, as in effect from
time to time; provided, however, that, for purposes of determining compliance
with any covenant set forth in Article VII, such terms shall be
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construed in accordance with GAAP as in effect on the date of this Credit
Agreement, applied on a basis consistent with the application used in the
audited financial statements referred to in Section 5.9(a).
SECTION 1.3. Interpretation.
(a) In this Credit Agreement, unless a clear contrary intention
appears:
(i) the singular number includes the plural number and vice
versa;
(ii) reference to any gender includes each other gender;
(iii) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Credit Agreement as a whole
and not to any particular Article, Section or other subdivision;
(iv) reference to any Person includes such Person's successors
and assigns but, if applicable, only if such successors and
assigns are permitted by this Credit Agreement, and reference to a
Person in a particular capacity excludes such Person in any other
capacity or individually, provided that nothing in this clause
(iv) is intended to authorize any assignment not otherwise
permitted by this Credit Agreement;
(v) reference to any agreement, document or instrument means such
agreement, document or instrument as amended, supplemented or
modified and in effect from time to time in accordance with the
terms thereof and, if applicable, the terms hereof, and reference
to any Note includes any Note issued pursuant hereto in extension
or renewal thereof and in substitution or replacement therefor;
(vi) unless the context indicates otherwise, reference to any
Article, Section, Schedule or Exhibit means such Article or
Section hereof or such Schedule or Exhibit hereto;
(vii) the words "including" (and with correlative meaning
"include") means including, without limiting the generality of any
description preceding such term;
(viii) with respect to the determination of any period of time,
the word "from" means "from and including" and the word "to" means
"to but excluding;" and
(ix) reference to any law means such as amended, modified,
codified or reenacted, in whole or in part, and in effect from
time to time.
(b) The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction of this Credit
Agreement.
(c) No provision of this Credit Agreement shall be interpreted or
construed against any Person solely because that Person or its legal
representative drafted such provision.
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ARTICLE II
REVOLVING CREDIT LOANS
SECTION 2.1. Revolving Credit Loans. (a) Subject to the terms and
conditions and relying upon the representations and warranties set forth herein
and in the other Loan Documents, each Bank agrees, severally and not jointly,
to make its Commitment Percentage of loans to the Borrower (collectively, the
"Revolving Credit Loans"), at any time and from time to time on and after the
Effective Date and up to, but excluding, the Maturity Date, provided, a Bank's
Commitment Percentage of the aggregate amount of the Utilized Credit at any one
time shall not exceed such Bank's Commitment and provided, further, that the
aggregate amount of the Utilized Credit shall at no time exceed the Available
Commitment. Except as otherwise provided in this Credit Agreement, the
Revolving Credit Loans shall mature and be due and payable in full on the
Maturity Date. Subject to the terms and provisions hereof, the Borrower may
borrow, repay and reborrow hereunder. Each Borrowing shall be made in
accordance with the procedures set forth in Section 2.2 and shall be in an
aggregate principal amount (x) in the case of an ABR Borrowing, $500,000 or a
whole multiple of $100,000 in excess thereof (or, if then Unused Availability
is less than $500,000, such lesser amount) and (y) in the case of a Eurodollar
Borrowing, $1,000,000 or a whole multiple of $500,000 in excess thereof. The
Revolving Credit Loans may from time to time be (i) Eurodollar Loans, (ii) ABR
Loans, or (iii) a combination thereof, as determined by the Borrower and
notified to the Agent in accordance with Sections 2.2 and 2.4.
(b) Subject to the terms and conditions and relying upon the
representations and warranties herein set forth, the Issuing Bank agrees to
issue Letters of Credit upon the request of the Borrower for the account of the
Borrower or any Subsidiary of the Borrower at any time and from time to time on
and after the Effective Date and up to, but excluding, the earlier of the
Maturity Date and the termination of the Letter of Credit Commitments in
accordance with the terms hereof. Each Bank (other than the Issuing Bank)
severally agrees, on the terms and conditions hereinafter set forth, to
purchase participations in the Letters of Credit issued by the Issuing Bank
pursuant to Section 2.3 in an aggregate amount not to exceed such Bank's Letter
of Credit Commitment. Notwithstanding the foregoing, the aggregate undrawn
face amount of all Letters of Credit at any time outstanding shall not exceed
the aggregate Letter of Credit Commitments of all the Banks, and no Letter of
Credit will be issued if immediately after such issuance the Utilized Credit
would exceed the Available Commitment then in effect. On each day during the
period commencing with the issuance by the Issuing Bank of any Letter of Credit
and until such Letter of Credit shall have expired or been terminated, and,
irrespective of whether such Letter of Credit has expired or terminated, if
same has been drawn upon and the amount so drawn has not been reimbursed to the
Issuing Bank, the Commitment of each Bank shall be deemed to be utilized for
all purposes hereof in an amount equal to such Bank's Commitment Percentage of
the undrawn face amount of such Letter of Credit, plus the aggregate amount of
all unreimbursed drawings.
SECTION 2.2. Borrowing Procedure for Revolving Credits.
(a) In order to effect a Borrowing(s), the Borrower shall submit a
Borrowing Request in writing or by telecopy (or telephone notice promptly
confirmed in writing or by telecopy) to the Agent, (i) in the case of a
Eurodollar Borrowing, not later than 11:00 a.m., Houston, Texas time, three (3)
Business Days before the Borrowing Date specified in the Borrowing Request for
such proposed Eurodollar Borrowing(s) and (ii) in the case of an ABR Borrowing,
not later than 12:00 noon, Houston, Texas time, on the Borrowing Date specified
in the Borrowing Request for such proposed ABR Borrowing. Such Borrowing
Request shall be irrevocable and shall in each case refer to this Credit
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Agreement and specify (w) whether the Borrowing(s) then being requested are to
be Eurodollar Borrowing(s), or ABR Borrowing(s), or a combination thereof, (x)
the Borrowing Date of such Borrowing(s) (which shall be a Business Day), (y)
the aggregate principal amount of such Borrowing(s) and (z) in the case of
Eurodollar Borrowings, the Eurodollar Interest Periods with respect thereto. If
no Eurodollar Interest Period with respect to any Eurodollar Borrowing(s) is
specified in any such Borrowing Request, then the Borrower shall be deemed to
have selected a Eurodollar Interest Period of one (1) month's duration. The
Agent shall promptly advise the Banks of any Borrowing Request given pursuant
to this Section 2.2 and of each Bank's Commitment Percentage of the requested
Borrowing(s) by telecopy (or telephone notice promptly confirmed in writing or
by telecopy).
(b) Each Bank may at its option make any Eurodollar Loan by causing
any Lending Office of such Bank to make such Eurodollar Loan; provided,
however, that any exercise of such option shall not affect the obligation of
the Borrower to repay such Eurodollar Loan in accordance with the terms of this
Credit Agreement and the applicable Notes.
(c) No later than 1:00 p.m., Houston, Texas time, on the Borrowing
Date specified in each Borrowing Request, each Bank will make available to the
Agent its Commitment Percentage of the Revolving Credits comprising the
Borrowing(s) requested to be made on such date, in Dollars and immediately
available funds. Upon fulfillment of the applicable conditions set forth in
Article IV, the Agent will make the proceeds of each Borrowing so requested
available to the Borrower by crediting the amounts so received to a general
deposit account maintained by the Borrower with Texas Commerce Bank National
Association, on the Borrowing Date or, if a Borrowing shall not occur on such
Borrowing Date because any condition precedent herein specified shall not have
been met, the Agent will return the amounts so received to the respective Banks
as soon as practicable. All Borrowings shall be made by the Banks pro rata in
accordance with such Bank's Commitment Percentage of the Revolving Credits
comprising such Borrowing. Unless the Agent shall have received notice from a
Bank prior to the date of any proposed Borrowing Date that such Bank will not
make available to the Agent such Bank's Commitment Percentage of such
Borrowing, the Agent may assume that such Bank has made its Commitment
Percentage available to the Agent on such Borrowing Date in accordance with
this paragraph (c) and the Agent, in reliance upon such assumption, may, (but
under no circumstances shall the Agent be obligated to) make available to the
Borrower on such Borrowing Date a corresponding amount. If and to the extent
that such Bank shall not have made its Commitment Percentage of such Borrowing
available to the Agent, such Bank and the Borrower severally agree to repay to
the Agent forthwith on demand such corresponding amount together with interest
thereon, for each day from the date such amount is made available to the
Borrower until the date such amount is repaid to the Agent at (i) in the case
of the Borrower, the interest rate applicable to the Revolving Credits
comprising such Borrowing and (ii) in the case of such Bank, the Federal Funds
Effective Rate. If such Bank shall repay to the Agent such corresponding
amount, such amount shall constitute such Bank's Commitment Percentage of such
Borrowing for purposes of this Credit Agreement.
(d) No Eurodollar Borrowing may be made if, after giving effect to
such Eurodollar Borrowing, there would be more than six (6) Eurodollar
Borrowings outstanding at such time.
SECTION 2.3. Issuing the Letters of Credit. (a) In order to effect
the issuance of a Letter of Credit, the Borrower shall submit a Borrowing
Request and a Letter of Credit Application in writing by telecopy to the Agent
(who shall promptly notify the Issuing Bank) not later than 12:00 noon,
Houston, Texas time, two (2) Business Days before the date of issuance of such
Letter of Credit. Each such Borrowing Request and Letter of Credit Application
shall be signed by the Borrower, specify the Business
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Day on which such Letter of Credit is to be issued, and specify the
availability for Letters of Credit under the Letter of Credit Commitment and
the Available Commitment as of the date of issuance of such Letter of Credit
and the expiry date thereof which shall not be later than the earlier of (i)
twelve (12) months from the date of issuance of such Letter of Credit and (ii)
the Maturity Date; provided, however, that the Borrower may request evergreen
Letters of Credit that automatically renew on their expiry date for an
additional one year period so long as the final expiry date thereof is on or
before the Maturity Date.
(b) Upon satisfaction of the applicable terms and conditions
set forth in Article IV, the Issuing Bank shall issue such Letter of Credit to
the specified beneficiary not later than the close of business, Houston, Texas
time, on the date so specified. The Agent shall provide the Borrower and each
Bank with a copy of each Letter of Credit so issued. Each such Letter of
Credit shall (i) provide for the payment of drafts, presented for honor
thereunder by the beneficiary in accordance with the terms thereon, at sight
when accompanied by the documents described therein and (II) BE SUBJECT TO THE
UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS (1993 REVISION),
INTERNATIONAL CHAMBER OF COMMERCE PUBLICATION NO. 500, (AND ANY SUBSEQUENT
REVISIONS THEREOF APPROVED BY A CONGRESS OF THE INTERNATIONAL CHAMBER OF
COMMERCE) (THE "UCP") AND SHALL, AS TO MATTERS NOT GOVERNED BY THE UCP, BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF TEXAS.
(c) Upon the issuance date of each Letter of Credit, the
Issuing Bank shall be deemed, without further action by any party hereto, to
have sold to each other Bank, and each other Bank shall be deemed, without
further action by any party hereto, to have purchased from the Issuing Bank, a
participation, to the extent of such Bank's Commitment Percentage, in such
Letter of Credit, the obligations thereunder and in the reimbursement
obligations of the Borrower due in respect of drawings made under such Letter
of Credit. If requested by the Issuing Bank, the other Banks will execute any
other documents reasonably requested by the Issuing Bank to evidence the
purchase of such participation.
(d) Upon the presentment of any draft for honor under any Letter
of Credit by the beneficiary thereof which the Issuing Bank determines is in
compliance with the conditions for payment thereunder, the Issuing Bank shall
promptly notify the Borrower, the Agent and each Bank of the intended date of
honor of such draft and the Borrower hereby promises and agrees, at the
Borrower's option, to either (i) pay to the Agent for the account of the
Issuing Bank, by 1:00 p.m., Houston, Texas time, on the date payment is due as
specified in such notice, the full amount of such draft in immediately
available funds or (ii) request a Revolving Credit Loan pursuant to the
provisions of Sections 2.1 and 2.2 of this Credit Agreement in the full amount
of such draft, which request shall specify that the Borrowing Date is to be the
date payment is due under the Letter of Credit as specified in the Issuing
Bank's notice. If the Borrower fails timely to make such payment because a
Revolving Credit Loan cannot be made pursuant to Section 2.1(a) and Article IV,
each Bank shall, notwithstanding any other provision of this Credit Agreement
(including the occurrence and continuance of a Default or an Event of Default),
make available to the Agent for the benefit of the Issuing Bank an amount equal
to its Commitment Percentage of the presented draft on the day the Issuing Bank
is required to honor such draft. If such amount is not in fact made available
to the Agent by such Bank on such date, such Bank shall pay to the Agent for
the account of the Issuing Bank, on demand made by the Issuing Bank, in
addition to such amount, an amount equal to the product of (i) the average
daily Federal Funds Effective Rate per annum during the period referred to in
clause (iii) of this sentence times (ii) the amount of such Bank's Commitment
Percentage of the presented draft times (iii) the number of days that elapse
from the day the Issuing Bank honors such draft to the date on which the amount
equal to such Bank's Commitment Percentage of the presented draft becomes
immediately available to the Issuing Bank divided (iv) by 360. Upon receipt by
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the Agent from the Banks of the full amount of such draft, notwithstanding any
other provision of this Credit Agreement (including the occurrence and
continuance of a Default or an Event of Default) the full amount of such draft
shall automatically and without any action by the Borrower, be deemed to have
been an ABR Borrowing as of the date of payment of such draft. Nothing in this
paragraph (d) or elsewhere in this Credit Agreement shall diminish the
Borrower's obligation under this Credit Agreement to provide the funds for the
payment of, or on demand to reimburse the Issuing Bank for payment of, any
draft presented to, and duly honored by, the Issuing Bank under any Letter of
Credit, and the automatic funding of a Revolving Credit Loan as in this
paragraph provided shall not constitute a cure or waiver of the Event of
Default for failure, timely to provide such funds as in this paragraph agreed.
(e) In order to induce the issuance of Letters of Credit by
the Issuing Bank and the purchase of participations therein by the other Banks,
the Borrower agrees with the Agent, the Issuing Bank and the other Banks that
neither the Agent nor any Bank (including the Issuing Bank) shall be
responsible or liable (except as provided in the following sentence) for, and
the Borrower's unconditional obligation to reimburse the Issuing Bank through
the Agent for amounts paid by the Issuing Bank, as provided in Section 2.3(d),
on account of drafts so honored under the Revolving Credit Letters of Credit
shall not be affected by, any circumstance, act or omission whatsoever (whether
or not known to the Agent or any Bank (including the Issuing Bank) other than a
circumstance, act or omission resulting from the gross negligence or willful
misconduct of the Agent or any Bank). The Borrower agrees that any action
taken or omitted to be taken by the Agent or any Bank (including the Issuing
Bank) under or in connection with any Letter of Credit or any related draft,
document or property shall be binding on the Borrower and shall not put the
Agent or any Bank (including the Issuing Bank) under any resulting liability to
the Borrower, unless such action or omission is the result of the gross
negligence or willful misconduct of the Agent or any such Bank. The Borrower
hereby waives presentment for payment (except the presentment required by the
terms of any Letter of Credit) and notice of dishonor, protest and notice of
protest with respect to drafts honored under the Letters of Credit. The
Issuing Bank agrees promptly to notify the Borrower whenever a draft is
presented under any Letter of Credit, but failure to so notify the Borrower
shall not in any way affect the Borrower's obligations hereunder. Subject to
Section 2.19 and 2.22, if while any Letter of Credit is outstanding, any law,
executive order or regulation is enforced, adopted or interpreted by any public
body, governmental agency or court of competent jurisdiction so as to affect
any of the Borrower's obligations or the compensation to any Bank in respect of
the Letters of Credit or the cost to such Bank of establishing and/or
maintaining the Letters of Credit (or any participation therein), such Bank
shall promptly notify the Borrower thereof in writing in accordance with
Section 2.13(c) or 2.17, as the case may be, and within ten (10) Business Days
after receipt by the Borrower of such Bank's request (through the Agent) for
reimbursement or indemnification or within thirty (30) days after receipt of a
notice in respect of Withholding Taxes under Section 2.17 hereof, accompanied
by a certificate from such Bank setting forth the basis for such reimbursement
or indemnification and the calculation thereof in accordance with Section
2.14(c) or 2.17, as the case may be, the Borrower shall reimburse or indemnify
such Bank, as the case may be, with respect thereto so that such Bank shall be
in the same position as if there had been no such enforcement, adoption or
interpretation, unless the Borrower notifies the Agent of its good faith
contest to, and dispute of, the requested amount and such Bank's basis therefor
and/or calculation thereof. The foregoing agreement of the Borrower to
reimburse or indemnify the Banks shall apply in (but shall not be limited to)
the following situations: an imposition of or change in reserve, capital
maintenance or other similar requirements or in excise or similar taxes or
monetary restraints, except a change in franchise taxes imposed on such Bank or
in tax on the net income of such Bank.
(f) In the event that any provision of a Letter of Credit
Application is inconsistent with,
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or in conflict of, any provision of this Credit Agreement, including provisions
for the rate of interest applicable to drawings thereunder or rights of setoff
or any representations, warranties, covenants or any events of default set
forth therein, the provisions of this Credit Agreement shall govern.
SECTION 2.4. Conversions or Continuation of Borrowings.
(a) Subject to the other provisions of this Credit Agreement, the
Borrower may elect from time to time to convert (i) all or any part of
Eurodollar Loans which comprise part of the same Eurodollar Borrowing to a
Borrowing comprised of ABR Loans and (ii) all or any part of ABR Loans which
comprise part of the same Borrowing to a Borrowing comprised of Eurodollar
Loans, provided, however, in each case that any such conversion of Revolving
Credit Loans comprising a Eurodollar Borrowing shall, subject to the second
following sentence, only be made on the last day of a Eurodollar Interest
Period with respect thereto. All or any part of a Borrowing may be converted
as provided herein, provided that no Borrowing may be converted into a
Eurodollar Borrowing when any Default or Event of Default has occurred and is
continuing.
(b) Any Eurodollar Borrowing may be continued as such effective upon
the expiration of the Eurodollar Interest Period with respect thereto;
provided, that no Eurodollar Borrowing may be continued as such when any
Default or Event of Default has occurred and is continuing, but shall be
automatically converted to an ABR Borrowing on the last day of then current
Eurodollar Interest Period with respect thereto.
(c) In order to elect to convert or continue a Borrowing, or any
portion thereof, under this Section 2.4, the Borrower shall deliver an
irrevocable Notice of Conversion or Continuation to the Agent not later than
1:00 p.m., Houston, Texas time, (i) at least three (3) Business Days in advance
of the proposed conversion or continuation date in the case of a conversion to,
or continuation of, a Eurodollar Borrowing and (ii) at least one (1) Business
Day in advance of the proposed conversion date in the case of a conversion to
an ABR Borrowing. Each such Notice of Conversion or Continuation shall be by
telecopy (confirmed thereafter by a delivery of the original of such Notice of
Conversion or Continuation by United States mail or a reputable courier) and
shall specify (v) the date of the requested conversion or continuation (which
shall be a Business Day), (w) the amount and the Borrowing to be converted or
continued, (y) whether a conversion or continuation is requested, and, if a
conversion, into what Type of Borrowing and (z) in the case of a conversion to,
or a continuation of, a Eurodollar Borrowing, the requested Eurodollar Interest
Period. Promptly after receipt of a Notice of Conversion or Continuation under
this Section 2.4, the Agent shall provide each Bank with a copy thereof.
(d) No Borrowing, or any portion thereof, may be converted into an
Eurodollar Borrowing if, after giving effect to such conversion, there would be
more than six (6) Eurodollar Borrowings outstanding at such time.
(e) If the Borrower shall fail to deliver a timely Notice of
Conversion or Continuation with respect to any Eurodollar Borrowing, the
Borrower shall be deemed to have elected to convert such Eurodollar Borrowing
to an ABR Borrowing on the last day of the Eurodollar Interest Period with
respect to such Eurodollar Borrowing.
(f) For purposes of this Section 2.4, Borrowings having different
Eurodollar Interest Periods, regardless of whether they commence on the same
date or are of the same Type shall be considered Borrowings of different Types.
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SECTION 2.5. Fees.
(a) In consideration of each Bank's commitment to make Revolving
Credit Loans, the Borrower will pay to Agent for the account of each Bank a
commitment fee determined on a daily basis by applying the applicable
Commitment Fee Rate to such Bank's Commitment Percentage of the difference
between (i) the Available Commitment and (ii) the aggregate outstanding
principal amount of all Revolving Credit Loans, on each day from the Effective
Date to but excluding the Maturity Date. This commitment fee shall be due and
payable in arrears on the first day of the next succeeding Fiscal Quarter, on
the date of each reduction in the Total Commitment and at Maturity (by
acceleration or otherwise). The applicable "Commitment Fee Rate" shall be based
on the Utilized Percentage of Borrowing Base in effect on each such day and
calculated pursuant to the following table:
Utilized Percentage of Borrowing Base Applicable Commitment Fee Rate
- ------------------------------------- ------------------------------
Less than twenty-five percent (25%) one-fourth of one percent (0.25%) per
annum
Equal to or greater than twenty-five percent three-tenths of one percent (0.30%) per
(25%), but less than fifty percent (50%) annum
Equal to or greater than fifty percent (50%) seven-twentieths of one percent (0.35%)
but less than seventy-five percent (75%)
Greater than or equal to seventy-five percent two-fifths of one percent (0.40%) per
(75%) annum
(b) In consideration of each Bank's commitment to participate in
Letters of Credit, the Borrower will pay to Agent for the account of each Bank
a letter of credit fee equal to the greater of (i) $500.00 and (ii) a fee
determined by applying the applicable Letter of Credit Fee Rate to the face
amount of each Letter of Credit from the date of issuance thereof to the date
on which such Letter of Credit expires. All such Letter of Credit fees shall
be payable in full in advance of the issuance of such Letter of Credit. The
Agent shall pay to each Bank its Commitment Percentage of such Letter of Credit
fee. The applicable "Letter of Credit Fee Rate" shall be based on the Utilized
Percentage of Borrowing Base in effect on each such day and calculated pursuant
to the following table:
Utilized Percentage of Borrowing Base Applicable Letter of Credit Fee Rate
- ------------------------------------- ------------------------------------
Less than twenty-five percent (25%) five-eighths of one percent (0.625%) per
annum
Equal to or greater than twenty-five percent three-fourths of one percent (0.75%) per
(25%), but less than fifty percent (50%) annum
Equal to or greater than fifty percent (50%) one percent (1.00%) per annum
but less than seventy-five percent (75%)
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Greater than or equal to seventy-five percent one and one-quarter of one percent
(75%) (1.25%) per annum
(c) the Borrower agrees to pay to the Issuing Bank as a fronting fee
for the issuance of each Letter of Credit, an amount equal to one-eighth of one
percent (.125%) per annum of the face amount of each Letter of Credit from the
date of issuance thereof to the date on which such Letter of Credit expires or
is terminated.
(d) the Borrower shall pay to Agent for the ratable account of each
Bank an unavailable commitment fee determined on a daily basis by applying the
applicable Unavailable Fee Rate to such Bank's Commitment Percentage of the
Unavailable Commitment on each day from the Effective Date to but excluding the
Maturity Date. The term "Unavailable Commitment" shall mean an amount equal to
the positive difference, if any, between the Total Commitment and the Available
Commitment then in effect. This unavailable commitment fee shall be due and
payable in arrears on the first day of the next succeeding Fiscal Quarter, on
the date of each reduction in the Total Commitment and at Maturity (by
acceleration or otherwise). The applicable "Unavailable Fee Rate" shall be
based on the Utilized Percentage of Borrowing Base in effect on each such day
and calculated pursuant to the following table:
Utilized Percentage of Borrowing Base Applicable Unavailable Fee Rate
- ------------------------------------- -------------------------------
Less than twenty-five percent (25%) one-eighth of one percent (0.125%) per
annum
Equal to or greater than twenty-five percent three-twentieths of one percent (0.150%)
(25%), but less than fifty percent (50%) per annum
Equal to or greater than fifty percent (50%) seven-fortieths of one percent (0.175%)
but less than seventy-five percent (75%)
Greater than or equal to seventy-five percent one-fifth of one percent (0.200%) per
(75%) annum
(e) the Borrower shall pay when due to the Agent and each of the
Banks such other fees as shall have been separately agreed by the Agent and the
Borrower in writing.
(f) All computations of fees hereunder shall be calculated on the
basis of a year of 360 days and the actual number of days elapsed.
SECTION 2.6. Notes.
(a) The Revolving Credit Loans made by each Bank shall be evidenced
by a single Note duly executed and delivered by the Borrower, dated the Closing
Date, with the blanks appropriately completed, payable to the order of such
Bank in a principal amount equal to such Bank's Commitment as set forth in
Schedule 1.1.
(b) Each Bank is hereby authorized by the Borrower, at its option, to
endorse on the schedule attached to its Note (or on a continuation of such
schedule attached to its
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Note and made a part thereof) or in its internal records relating to its Note
an appropriate notation evidencing the date and amount of each Revolving Credit
Loan evidenced thereby, the date and amount of each payment of principal or
interest in respect thereof and such other information provided for on such
schedule. The aggregate unpaid principal amount so recorded shall be
presumptive evidence of the principal amount owing by the Borrower to such Bank
and unpaid under its Note. The failure of any Bank to make such a notation or
any error therein shall not in any manner affect the obligation of the Borrower
to repay the Revolving Credit Loans made by such Bank in accordance with the
terms of its Note and this Credit Agreement.
SECTION 2.7. Interest on Revolving Credit Loans and Payment Dates.
(a) Subject to the provisions of Section 2.8, the Revolving Credit
Loans shall bear interest as follows:
(i) The Revolving Credit Loans comprising each Eurodollar
Borrowing shall bear interest (computed on the basis of the
actual number of days elapsed over a year of 360 days) at a rate
per annum equal to the lesser of (i) the Highest Lawful Rate and
(ii) the Eurodollar Rate for the Eurodollar Interest Period in
effect for such Borrowing plus the Applicable Eurodollar Margin
with respect to such Eurodollar Loans.
(ii) The Revolving Credit Loans comprising any ABR Borrowing
shall bear interest at a rate per annum equal to the lesser of
(i) the Highest Lawful Rate and (ii) the Alternate Base Rate (if
the Alternate Base Rate is based on the Prime Rate, computed on
the basis of the actual number of days elapsed over a year of 365
or 366 days, as the case may be; if the Alternate Base Rate is
based on the Federal Funds Effective Rate, computed on the basis
of the actual number of days elapsed over a year of 360 days).
(b) Interest on each Revolving Credit Loan shall be payable by the
Borrower (i) in respect of each Revolving Credit Loan comprising part of an ABR
Borrowing, quarterly in arrears on the last Business Day of each calendar
quarter, (ii) in respect of each Revolving Credit Loan comprising part of a
Eurodollar Borrowing, on the last day of the Eurodollar Interest Period
applicable to such Eurodollar Borrowing, and, in the case of a Eurodollar
Interest Period for Eurodollar Borrowings of six (6) months, on the date
occurring three (3) months from the first day of such Interest Period and on
the last day of such Eurodollar Interest Period, (iii) in respect of each
Revolving Credit Loan accruing interest at the Default Rate, on demand and (iv)
in respect of all Revolving Credit Loans, on any prepayment or conversion (on
the amount prepaid or converted), at maturity (whether by acceleration or
otherwise) and, after maturity, on demand.
(c) Interest in respect of the unpaid principal amount of each
Revolving Credit Loan shall accrue from (and including) the date of the making
of such Revolving Credit Loan to (but not including) the date on which such
Revolving Credit Loan shall be paid in full.
(d) The Agent shall, upon determining a Eurodollar Rate for any
Eurodollar
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Interest Period with respect to a Eurodollar Borrowing, promptly notify the
Borrower and the Banks thereof.
SECTION 2.8. Interest on Overdue Amounts. If the Borrower shall fail
to pay the principal of or interest on any Revolving Credit Loan or any other
amount when due hereunder, the Borrower shall on demand from time to time pay
interest, to the extent permitted by law, on such defaulted amount from the
date of such Event of Default up to (but not including) the date of actual
payment (after as well as before judgment) at a rate per annum (the "Default
Rate") equal to the lesser of (i) the Highest Lawful Rate and (ii) (x) in the
case of ABR Borrowings, the Alternate Base Rate plus two percent (2%) per annum
or (y) in the case of Eurodollar Borrowings, the Eurodollar Rate for the
Eurodollar Interest Period in effect for such Borrowing plus the Applicable
Eurodollar Margin with respect to such Eurodollar Loans plus two percent (2%)
per annum, in either case, computed on the basis of the actual number of days
elapsed over a year of 365 or 366 days, as the case may be.
SECTION 2.9. Voluntary Termination and Reduction of the Total
Commitment.
(a) Subject to Section 2.11. The Borrower may permanently terminate,
or from time to time in part permanently reduce, the Total Commitment upon at
least five (5) Business Days' prior irrevocable written or telecopy notice (or
telephone notice promptly confirmed in writing) to the Agent (which notice the
Agent shall promptly transmit to each of the Banks). Such notice shall specify
the date and the amount of the termination or reduction of the Total
Commitment. Each partial reduction of the Total Commitment shall be in a
minimum aggregate principal amount of $5,000,000 and in integral multiples of
$1,000,000 (or a lesser amount equal to the excess of the Total Commitment over
the sum of the Utilized Credit).
(b) Simultaneously with any termination or reduction of the Total
Commitment pursuant to this Section 2.9, the Borrower shall pay to the Agent
for the account of each Bank the commitment fees on the amount of the Available
Commitment and/or the Unavailable Commitment so terminated or reduced, accrued
through the date of such termination or reduction. After a reduction of the
Total Commitment hereunder, the commitment fees with respect of the
"Unavailable Commitment" shall thereafter be calculated on the Total Commitment
as so reduced.
SECTION 2.10. Voluntary Prepayment of Revolving Credit Loans.
(a) the Borrower shall have the right at any time and from time to time
to prepay the Revolving Credit Loans, in whole or in part, (i) in the case of
Eurodollar Loans upon at least three (3) Business Days' prior written or
telecopy notice (or telephone notice promptly confirmed in writing) to the
Agent, provided, however, that in the event the Borrower prepays Eurodollar
Borrowing in whole or in part on a day which is not the last day of the
Eurodollar Interest Period applicable thereto, the provisions of Section 2.15
shall apply or (ii) in the case of an ABR Loan, upon at least one (1) Business
Day's prior written or telecopy notice or telephone notice promptly confirmed
in writing) to the Agent; provided, however, that each such partial prepayment
shall be in a minimum principal amount of $1,000,000 and in integral multiples
of $1,000,000 (or a lesser
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amount equal to the sum of the aggregate principal amount of all Revolving
Credit Loans outstanding).
(b) Each notice of prepayment under subsection (a) above shall (i)
specify the prepayment date, the principal amount of such prepayment, which
Revolving Credit Loans are to be prepaid, and in the case of Revolving Credit
Loans comprising Eurodollar Borrowings, the specific Borrowing(s) pursuant to
which such Revolving Credit Loans were made and the Eurodollar Interest Period
applicable thereto, (ii) be irrevocable and (iii) commit the Borrower to prepay
such Revolving Credit Loan(s) by the amount stated therein on the date stated
therein. All prepayments under this Section 2.10 shall be subject to Section
.15 (as to prepayments of Eurodollar Loans), but otherwise without premium or
penalty. All prepayments under this Section 2.10 shall be accompanied by
accrued interest on the principal amount being prepaid to the date of payment.
SECTION 2.11. Mandatory Payments on Revolving Credit Loans.
(a) If at any time there shall occur a Borrowing Base Deficiency, the
Borrower shall, at its election, either (1) prepay (no later than sixty (60)
calendar days after the applicable Determination Date) the principal of the
Revolving Credit Loans on a pro rata basis in an aggregate amount equal to such
Borrowing Base Deficiency (together with accrued interest on the principal
amount of the Revolving Credit Loans so prepaid to the date of prepayment), (2)
if such condition arises, in part or in whole, by reason of a Designated
Borrowing Base being in effect, increase the Designated Borrowing Base by an
amount equal to the lesser of (i) such excess or (ii) the difference between
the Available Borrowing Base and the Designated Borrowing Base or (3) any
combination of (1) and (2) or any other solution acceptable to the Majority
Banks. The Borrower shall give prompt written notice to the Agent of each
election made by it pursuant to this Section 2.11(a). If the Borrower shall
fail to give notice to the Agent as aforesaid, the Borrower shall be deemed to
have elected to prepay the Revolving Credit Loans in accordance with clause (1)
of the first sentence of Section 2.11(a).
(b) On the date of any reduction of the Total Commitment pursuant to
Section 2.9, the Borrower shall pay or prepay Revolving Credit Loans in an
amount equal to the Borrowing Base Deficiency, if any, created by such
reduction.
(c) With respect to each payment of principal required to be made
pursuant to this Section 2.11, the Borrower may designate, by written notice to
the Agent on or before the date of such payment, the Types of Revolving Credit
Loans which are to be paid and, in the case of Eurodollar Loans, the specific
Eurodollar Borrowing(s) pursuant to which made and the Eurodollar Interest
Periods applicable thereto, provided that (i) payments of Eurodollar Loans may
only be made on the last day of an Eurodollar Interest Period applicable
thereto unless all ABR Loans have been paid in full; and (ii) if any payment of
Eurodollar Loans made pursuant to a single Eurodollar Borrowing shall reduce
the outstanding Revolving Credit Loans made pursuant to such Eurodollar
Borrowing to an amount less than $1,000,000, such Eurodollar Borrowing shall
immediately be converted into ABR Loans. In the absence of a designation by
the Borrower as described in the preceding sentence, the Agent shall apply the
amount of such payment first to the
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payment of all outstanding ABR Loans and second to the payment of the
outstanding Eurodollar Loans.
(d) The unpaid principal amount of all Revolving Credit Loans shall
be due and payable in full on the Maturity Date.
SECTION 2.12. Alternate Rate of Interest. In the event, and on each
occasion, that on the day three (3) Business Days prior to the commencement of
any Eurodollar Interest Period for a Eurodollar Borrowing, the Agent shall have
reasonably determined (which determination shall be final and binding upon the
Borrower) that (i) Dollar deposits in the principal amounts of the relevant
Eurodollar Loans comprising such Eurodollar Borrowing are not generally
available in the interbank eurodollar market, or (ii) by reason of any changes
arising after the date of this Credit Agreement affecting the interbank
eurodollar market, adequate and fair means do not exist for ascertaining such
Eurodollar Rate on the basis provided for in the definition of the Eurodollar
Rate, or (iii) by reason of any other circumstance affecting a Bank or the
interbank eurodollar market or the position of such Bank in such market, the
Eurodollar Rate will not adequately and fairly reflect the cost to any Bank of
making or maintaining its Eurodollar Loan during such Eurodollar Interest
Period and such unreflected cost is not paid by the Borrower pursuant to
Section 2.13(a)the Agent shall, as soon as practicable thereafter, give written
notice of such determination to the Borrower and the Banks. In the event of
any such determination, any request by the Borrower for a Eurodollar Borrowing
pursuant to Sections 2.2 or 2.4 shall, until the circumstances giving rise to
such notice no longer exist, be deemed to be a request for a Borrowing
comprised of ABR Loans.
SECTION 2.13. Change in Circumstances.
(a) Notwithstanding any other provision herein but subject to Section
2.19, if after the Effective Date the introduction of any applicable law or
regulation or any change in applicable law or regulation or in the
interpretation or administration thereof by any Governmental Authority charged
with the interpretation or administration thereof, or compliance by the Banks
with any applicable guideline or request from any central bank or Governmental
Authority (whether or not having the force of law) (i) shall change the basis
of taxation of payments to any Bank of the principal of or interest on any
Revolving Credit Loan made by such Bank or of any other fees or amounts payable
hereunder (other than changes in the rate of tax imposed on the overall net
income of, including penalties and interest in respect thereof, or franchise
taxes based on the net income of, such Bank or its Lending Office), (ii) shall
impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, any Bank or (iii) shall impose on any Bank or the interbank
eurodollar market any other condition affecting this Credit Agreement or any
Eurodollar Loan made by such Bank, and the result of any of the foregoing shall
be to increase the cost to such Bank of making or maintaining any Eurodollar
Loan or to reduce the amount of any sum received or receivable by such Bank
hereunder (whether of principal, interest or otherwise) in respect thereof by
an amount deemed in good faith by such Bank to be material (provided that the
foregoing shall not apply to increases resulting from general increases in
interest rates or general increases in such Bank's administrative expenses or
overhead), then the Borrower shall pay to such Bank such
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additional amount or amounts as will compensate such Bank for such additional
costs incurred or reductions suffered in accordance with paragraph (c) below.
Notwithstanding the foregoing, in no event shall any Bank be permitted to
receive any compensation hereunder constituting interest in excess of the
Highest Lawful Rate.
(b) If any Bank shall have determined that the applicability of any
law, rule, regulation or guideline adopted pursuant to or arising out of any
changes after the date hereof to the July 1988 report of the Basle Committee on
Banking Regulations and Supervisory Practices entitled "International
Convergence of Capital Measurement and Capital Standards" or the adoption or
effectiveness after the date hereof of any law, rule, regulation or guideline
regarding capital adequacy, or any change in any of the foregoing, or any
change in the interpretation or administration in any of the foregoing by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by such Bank (or its
Lending Office) or such Bank's holding company with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
Governmental Authority, central bank or comparable agency, has or would have
the effect of reducing the rate of return on such Bank's capital or on the
capital of such Bank's holding company, as a consequence of its obligations
under this Credit Agreement to a level below that which such Bank or such
Bank's holding company could have achieved but for such adoption, change or
compliance (taking into consideration such Bank's policies and the policies of
such Bank's holding company with respect to capital adequacy) by an amount
deemed in good faith by such Bank to be material, then such Bank shall promptly
notify the Borrower in writing of the occurrence of any such event, such notice
to state in reasonable detail the reasons therefor and the additional amount
required to compensate such Bank for the reduction in its rate of return and
the Borrower and such Bank or (as the case may be) the Agent shall thereafter
attempt to negotiate in good faith, within thirty (30) days of the day on which
the Borrower receives such notice, an adjustment payable hereunder that will
adequately compensate such Bank or the Agent in light of these circumstances.
If the Borrower and such Bank or the Agent are unable to agree to such
adjustment within thirty (30) days of the date on which the Borrower receives
such notice, then the Borrower shall pay, subject to Section 2.19, to such Bank
or the Agent, as the case may be, an amount that will, in such Bank's or the
Agent's reasonable determination, provide adequate compensation to such Bank or
such Bank's holding company (or the Agent or the Agent's holding company, as
the case may be) for any such reduction in accordance with paragraph (c)
below. Notwithstanding the foregoing, in no event shall any Bank be permitted
to receive any compensation hereunder constituting interest in excess of the
Highest Lawful Rate.
(c) Any Bank requesting compensation pursuant to Section 2.13(a) or (b)
hereof shall deliver to the Borrower a certificate of such Bank setting forth
such amount or amounts as shall be necessary to compensate such Bank or its
holding company as specified in paragraphs (a) or (b) above, as the case may
be, such certificates to state, in reasonable detail, the reasons therefor, and
such certificate shall be, in the absence of manifest error, prima facie
evidence that such amount(s) are due and owing. In preparing such certificate,
such Bank may employ such assumptions and allocations of costs and expenses as
it shall in good faith deem reasonable and may be determined by any reasonable
averaging and attribution method. The Borrower shall pay to such Bank
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the amount shown as due on any such certificate within thirty (30) Business
Days after the Borrower's receipt of the same. Any decision by a Bank not to
require payment of any interest, cost or other amount payable under this
Section 2.13 or to calculate any amount payable by a particular method, on one
occasion, shall in no way limit or be deemed a waiver of such Bank's right to
require full payment of any interest, cost or other amount payable hereunder,
or to calculate any amount payable by another method, on any other or
subsequent occasion.
SECTION 2.14. Change in Legality.
(a) Notwithstanding any other provision herein contained to the
contrary, if (x) any change in any law or regulation or in the interpretation
thereof by any Governmental Authority charged with the administration or
interpretation thereof shall make it unlawful for any Bank or its Lending
Office to make or maintain its Commitment Percentage of any Eurodollar
Borrowing or to give effect to its obligations as contemplated hereby with
respect to its Commitment Percentage of any Eurodollar Borrowing or (y) at any
time the Majority Banks reasonably determine the making or continuance of any
Bank's Revolving Credit Loans comprising a portion of any Eurodollar Borrowing
has become impracticable as a result of a contingency occurring after the date
hereof which adversely affects the interbank eurodollar market or the position
of such Bank in such market, as the case may be, then, and in any such event,
such Bank shall, promptly after making such determination, give written or
telecopy notice (or by telephone promptly confirmed in writing) to the Borrower
and the Agent of such determination (which notice the Agent shall promptly
transmit to each of the other Banks); provided, however, that before giving any
such notice, such Bank shall use reasonable good faith efforts to designate a
different Lending Office to make or maintain its Eurodollar Loans if such
designation will avoid the need to suspend such Bank's obligations to make or
maintain Eurodollar Loans and will not be otherwise disadvantageous to such
Bank. Thereafter each such affected Bank may (i) declare that such affected
Bank will no longer make Eurodollar Loans (subject to paragraph (b) below)
whereupon any request by the Borrower for a Eurodollar Borrowing shall, as to
such Bank only, be deemed a request for an ABR Loan; and (ii) require that all
outstanding Eurodollar Loans made by such affected Bank(s) be converted into
ABR Loans at the end of the applicable Eurodollar Interest Period or such
earlier time as may be required by applicable Requirements of Law, in each case
by giving the Agent written or telecopy notice (or by telephone promptly
confirmed in writing) thereof (which notice, in the case of subclause (ii)
above shall specify which affected Eurodollar Loans are to be converted);
provided, however, that all Banks whose Eurodollar Loans are affected by the
circumstances described above shall be treated in the same manner.
(b) In the event any Bank shall exercise its rights under (a) above,
all payments of principal which would otherwise have been applied to repay the
Eurodollar Loans that would have been made, converted or continued by such Bank
or the converted Eurodollar Loans of such Bank shall instead be applied to
repay the ABR Loans made by the Bank in lieu of, or resulting from the
conversion of, such affected Eurodollar Loans.
SECTION 2.15. Funding Losses. Without duplication of other provisions
contained herein, the Borrower shall indemnify each Bank against any loss or
reasonable
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expense which such Bank may sustain or incur as a consequence of (i) any
failure by the Borrower to fulfill on the Borrowing Date for any Borrowing
hereunder the applicable conditions set forth in Article IV, (ii) any failure
by the Borrower to borrow hereunder after a Borrowing Request pursuant to this
Article II has been given, (iii) any failure by the Borrower to convert or
continue a Borrowing hereunder after a Notice of Conversion or Continuation
pursuant to this Article II has been given, (iv) any payment, prepayment,
continuance or conversion of a Eurodollar Borrowing required or permitted by
any other provision of this Credit Agreement including, without limitation,
payments made due to the acceleration of the maturity of the Notes pursuant to
Section 8.1, or otherwise made on a date other than the last day of the
applicable Eurodollar Interest Period, (v) any default in the payment or
prepayment of the principal amount of any Eurodollar Borrowing or any part
thereof or interest accrued thereon, as and when due and payable (at the due
date thereof, by notice of prepayment or otherwise) including, but not limited
to, any loss or reasonable expense sustained or incurred or to be sustained or
incurred in liquidating or employing deposits from third parties acquired to
effect or maintain such Bank's Commitment Percentage of any Eurodollar
Borrowing or any part thereof as a Eurodollar Borrowing. Such loss or
reasonable expense shall include, without limitation, an amount equal to the
excess, if any, as reasonably determined by such Bank of (i) its cost of
obtaining the funds for its Commitment Percentage of the Eurodollar Borrowing
being paid, prepaid or converted or not borrowed (based on the Eurodollar Rate
applicable thereto) for the period from the date of such payment, prepayment,
continuance or conversion or failure to borrow to the last day of the
Eurodollar Interest Period for such Eurodollar Loan (or, in the case of a
failure to borrow, the Eurodollar Interest Period for the Eurodollar Loan which
would have commenced on the date of such failure to borrow) over (ii) the
amount of interest (as reasonably determined by such Bank) that would be
realized by such Bank in reemploying the funds so paid, prepaid, continued or
converted or not borrowed for such period or Eurodollar Interest Period, as the
case may be, provided that such Bank will use its best efforts to reemploy
funds in investments of similar quality. A certificate of such Bank signed by
an officer setting forth in reasonable detail any amount or amounts which such
Bank is entitled to receive pursuant to this Section 2.15 shall be delivered to
the Borrower. The Borrower shall pay to such Bank the amount shown as due on
any certificate within thirty (30) Business Days after its receipt of the same.
Notwithstanding the foregoing, in no event shall any Bank be permitted to
receive any compensation hereunder constituting interest in excess of the
Highest Lawful Rate. Without prejudice to the survival of any other
obligations of the Borrower hereunder, the obligations of the Borrower under
this Section 2.15 shall survive the date of termination of this Credit
Agreement and the payment in full of the Obligations.
SECTION 2.16. Method of Payments Pro Rata Treatment.
(a) the Borrower shall make each payment hereunder and under the Notes
delivered hereunder not later than 1:00 p.m., Houston, Texas time, on the day
when due in lawful money of the United States (in freely transferable Dollars)
to the Agent for the account of the Banks entitled thereto at the Agent's
address referred to in Section 10.2 in immediately available funds and any
funds received by the Agent after such time shall, for all purposes hereof
(including the following sentence), be deemed to have been paid on the next
succeeding Business Day. Except as otherwise specifically provided herein,
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the Agent shall thereafter cause to be distributed on the date of receipt
thereof to each Bank in like funds its Commitment Percentage (or, if the
Revolving Credit Loan of such Bank with respect to which such payment is being
made is not of the same Type as the Revolving Credit Loans of the other Banks
with respect to which such payment is being made, such Bank's appropriate
share) of the payments so received for the account of such Bank's Lending
Office for the Revolving Credit Loan in respect of which such payment is made.
(b) Except as otherwise provided herein, (i) each Borrowing comprised
of Revolving Credit Loans hereunder shall be obtained from the Banks, each
payment of fees shall be paid for the account of the Banks and each partial
reduction of the Total Commitment under Section 2.9 shall be applied to the
Commitments of the Banks, in each case simultaneously and pro rata in
accordance with each Bank's Commitment Percentage, (ii) each conversion of a
Borrowing comprised of Revolving Credit Loans of a particular type shall be
made pro rata among the Banks according to their respective Commitment
Percentage of such Borrowing and (iii) each payment and prepayment of principal
of or interest on any Revolving Credit Loans will be made to the Agent for the
account of each of the Banks simultaneously and pro rata in accordance with
their respective Commitment Percentage of unpaid principal amounts of such
Revolving Credit Loans made by the Banks.
(c) Whenever any payment hereunder or under the Notes (including
principal of or interest on any Revolving Credit Loan or any fees or other
amounts), shall be stated to be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day, and such extension
of time shall in such case be included in the computation of payment of
interest, fee or other amount, as the case may be; provided, however, if such
extension would cause payment of interest on or principal of a Eurodollar Loan
to be made in the next following calendar month, such payment shall be made on
the next preceding Business Day.
SECTION 2.17. Taxes.
(a) All payments of principal, interest, expenses, reimbursements,
compensation, commitment, arrangement or administration fees and any other
amount from time to time due hereunder, under the Notes or any other Loan
Document made by the Borrower shall be made free and clear of and without
deduction for any present or future tax, levy, impost or any other charge, if
any, of any nature whatsoever now or hereafter imposed by any Governmental
Authority, excluding, however, in the case of the Agent and each Bank, any such
taxes, levies, costs or charges imposed on or measured by the gross receipts,
capital or overall net income of the Agent or such Bank or such Bank's Lending
Office by any jurisdiction in which the Agent or such Bank or such Bank's
Lending Office is located (all such non-excluded taxes, levies, costs, imposts,
deductions, charges or withholdings being herein called "Withholding Taxes").
If any Withholding Taxes are required to be withheld from any amounts payable
to the Agent or any Bank hereunder or under the Notes, and if such withholding
does not result from the breach by such Bank of its agreement set forth in
subsection (b) below or would not be required if such Bank's representation and
warranty set forth in subsection (c) below were true, then, to the extent that
any such Withholding Taxes are a liability of, or credited to, the
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account of the Borrower, the Borrower shall pay to the Agent or such Bank, on
the date of each such payment, such additional amounts as may be necessary in
order that the net amounts received by the Bank after such deduction or
withholding shall equal the amounts which would have been received if such
deduction or withholding were not required; provided, however, that all amounts
payable under this Section 2.17 which constitute interest under applicable law
shall not exceed an amount which would result in the payment of interest at a
rate in excess of the Highest Lawful Rate. Whenever any Withholding Taxes are
withheld by the Borrower as aforesaid, as promptly as possible thereafter, the
Borrower shall send to the Agent for its own account or for the account of such
Bank, as the case may be, a certified copy of an original official receipt
received by the Borrower showing payment thereof. If the Borrower fails to pay
any Withholding Taxes so withheld by it when due to the appropriate taxing
authority or fails to remit to the Agent the required receipts or other
required documentary evidence, the Borrower shall indemnify the Agent and the
Banks for any incremental taxes, interest or penalties that may become payable
by the Agent or any Bank as a result of any such failure. The agreements in
this Section 2.17 shall survive the termination of this Credit Agreement and
the payment of the Notes and all other Obligations.
(b) Each Bank that is not incorporated under the laws of the United
States of America or a state thereof (including each Eligible Assignee that
becomes a party to this Credit Agreement pursuant to Section 10.9) that is
entitled to receive payments under this Credit Agreement and the Notes without
deduction or withholding of any United States federal income taxes or is
entitled to an exemption from backup withholding tax agrees that, prior to the
first date on which any payment is due to it hereunder, it will deliver to the
Borrower and the Agent, as the case may be, (i) two (2) duly completed copies
of United States IRS Forms 1001 or 4224 or successor applicable form, as the
case may be, certifying in each case that such Bank is entitled to receive
payments under this Credit Agreement and the Notes payable to it, without
deduction or withholding of any United States federal income taxes, and (ii) an
IRS Forms W-8 or W-9 or successor applicable form, as the case may be, to
establish an exemption from United States backup withholding tax. Each Bank
which delivers to the Borrower and the Agent IRS Forms and/or applicable
certification pursuant to the preceding sentence further undertakes to deliver
to the Borrower and the Agent two (2) additional duly completed copies of the
said IRS Forms or applicable certification, or successor applicable forms, or
other manner of certification, as the case may be, on or before the date that
any such form expires or becomes obsolete or after the occurrence of any event
requiring a change in the most recent form previously delivered by it to the
Borrower, and such extensions or renewals thereof as may reasonably be
requested by the Borrower, establishing that such Bank is entitled to receive
payments under this Credit Agreement without deduction or withholding of any
United States federal income taxes, unless in any such case a Requirement of
Law (including, without limitation, any change in any Requirement of Law) has
occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Bank from duly completing and delivering any such form with respect to it and
such Bank advises the Borrower that it is not capable of receiving payments
without any deduction or withholding of United States federal income tax, and
in the case of a Forms W-8 or W-9, establishing an exemption from United States
backup withholding tax.
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(c) Each Bank (including each Eligible Assignee that becomes a party to
this Credit Agreement pursuant to Section 10.9) represents and warrants to the
Borrower that each Lending Office of such Bank hereunder will be entitled to
receive payments of principal of, and interest on, the Revolving Credit Loans
made by such Bank from such Lending Office without withholding or deduction for
or on account of any United States federal income taxes.
SECTION 2.18. Sharing of Payments and Setoffs. Each Bank agrees that if
it shall, through the exercise of a right of banker's lien, setoff or
counterclaim against the Borrower (pursuant to Section 8.3 or otherwise),
including, but not limited to, a secured claim under Section 506 of Title 11 of
the United States Code or other security or interest arising from, or in lieu
of, such secured claim, received by such Bank under any applicable bankruptcy,
insolvency or other similar law or otherwise, or by similar means, obtain
payment (voluntary or involuntary) in respect of any Revolving Credit Loan or
Revolving Credit Loans (other than pursuant to Sections 2.13, 2.15 or 2.17) as
a result of which the unpaid principal portion of its Revolving Credit Loans
shall be proportionately less than the unpaid principal portion of the
Revolving Credit Loans of any other Bank, it shall simultaneously purchase from
such other Banks at face value a participation in the Revolving Credit Loans of
such other Banks, so that the aggregate unpaid principal amount of Revolving
Credit Loans and participations in Revolving Credit Loans held by each Bank
shall be in the same proportion to the aggregate unpaid principal amount of all
Revolving Credit Loans then outstanding as the principal amount of its
Revolving Credit Loans prior to such exercise of banker's lien, setoff,
counterclaim or other event was to the principal amount of all Revolving Credit
Loans outstanding prior to such exercise of banker's lien, setoff, counterclaim
or other event; provided, however, that if any such purchase or purchases or
adjustments shall be made pursuant to this Section 2.18 and the payment giving
rise thereto shall thereafter be recovered, such purchase or purchases or
adjustments shall be rescinded to the extent of such recovery and the purchase
price or prices or adjustment restored without interest. The Borrower
expressly consents to the foregoing arrangements and agrees that any Bank
holding a participation in a Note deemed to have been so purchased may exercise
any and all rights of banker's lien, setoff or counterclaim with respect to any
and all moneys owing by the Borrower to such Bank as fully as if such Bank had
made a Revolving Credit Loan directly to such the Borrower in the amount of
such participation.
SECTION 2.19. Limitation on Reimbursement; Mitigation.
(a) Notwithstanding the provisions of Section 2.13 if any Bank fails to
give notice to the Borrower of any event that would obligate the Borrower to
pay any amount owing pursuant to Section 2.13 within 180 days after such Bank
obtains knowledge of such event, and subsequently gives notice to the Borrower
of such event, the Borrower shall pay only such amounts for costs incurred for
the one hundred eighty-day period immediately prior to such notice.
(b) Any Bank claiming any additional amounts payable pursuant to
Sections 2.13 or 2.17 or any Bank subject to Sections 2.12 or 2.14 shall use
reasonable efforts (consistent with its internal policy and legal and
regulatory restrictions) to change the jurisdiction of its lending office for
the Revolving Credit Loans, if the making of such
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a change would avoid the need for, or reduce the amount of, any such additional
amounts which may thereafter accrue under Sections 2.13 or 2.17 or would avoid
the unavailability of Eurodollar Loans under Sections 2.12 or 2.14 and would
not, in any such case, in the judgment of such Bank, be otherwise
disadvantageous.
SECTION 2.20. Use of Proceeds. (a) The initial Borrowing of Revolving
Credit Loans shall be an amount at least equal to the aggregate principal
amount of Debt of the Borrower and its Subsidiaries outstanding under the
Existing First Union Agreement and shall be used to repay said Debt in full.
The proceeds of all other Revolving Credit Loans and Letters of Credit may be
used (i) to provide working capital to the Borrower and its Subsidiaries, (ii)
to finance capital expenditures and acquisitions (other than acquisitions of
Margin Stock) of the Borrower and its Subsidiaries and (iii) to provide for
letters of credit for the account of the Borrower and its Subsidiaries. The
proceeds of all Swing Loans shall be used solely for cash management purposes
of the Borrower.
(b) No portion of the proceeds of any Revolving Credit Loan made
under, or any Letter of Credit issued pursuant to, this Credit Agreement shall
be used by the Borrower to purchase or carry Margin Stock, or in any manner
that might cause the borrowing or the application of such proceeds to violate
Regulation G, Regulation U, Regulation T, or Regulation X or any other
regulation of the Board or to violate the Securities Exchange Act of 1934, in
each case as in effect on the date or dates of such borrowing and such use of
proceeds.
(c) No portion of the proceeds of any Revolving Credit Loan under
this Credit Agreement shall be used by the Borrower, directly or indirectly,
for a Hostile Acquisition.
SECTION 2.21. Mandatory Termination of Total Commitment; Extension of
Maturity Date. (a) The Total Commitment shall terminate on the Maturity Date,
and any Revolving Credit Loans then outstanding (together with accrued and
unpaid interest thereon) shall be due and payable on such date.
(b) At any time after March 1 but on or before May 1 of each calendar
year, commencing with the calendar year 1997, the Borrower may request that the
Banks extend the Maturity Date for successive periods of one year. The Banks
in their sole discretion may agree to extend or decline to extend the Maturity
Date; however, if the Banks have not responded to such request in writing by
June 1 of the year of the Borrower's request such request shall be deemed to
have been denied. In the event the Banks agree to such request, the Borrower,
the Agent and the Banks shall execute a written amendment and extension
agreement in form reasonably acceptable to the Agent and the Banks evidencing
such extension and the agreed upon terms and conditions of such extension
together with such other documents as the Agent and the Banks shall reasonably
request.
SECTION 2.22. Replacement of Banks. If any Bank (an "Affected Bank")
shall have (i) failed to fund any Revolving Credit Loan that such Bank is
obligated to fund hereunder and such failure has not been cured, (ii) requested
compensation from the Borrower under Sections 2.13 or 2.17 to recover costs or
taxes incurred by such Bank
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which are not being incurred generally by the other Banks, (iii) given notice
pursuant to Sections 2.12 or 2.14 that such Bank has suspended the Borrower's
right to elect Eurodollar Loans from such Bank for reasons not generally
applicable to the other Banks or (iv) failed to approve the recommended Total
Borrowing Base and Available Borrowing Base of the Majority Banks, then, in any
such case and in addition to any other rights or remedies available to the
Borrower, the Borrower may give written notice to such Affected Bank of the
occurrence of an event set forth in subsections (i), (ii), (iii) or (iv) of
this Section 2.22, and during the sixty (60) day period following such notice,
the Borrower may make written demand on such Affected Bank (with a copy to
Agent and each other Bank), for such Affected Bank to assign to one or more
financial institutions (a "Replacement Bank"), all of such Affected Bank's
rights and obligations under this Agreement and the other Loan Documents
(including such Affected Bank's Commitment and all Revolving Credit Loans owing
to such Affected Bank), provided, such assignment shall be consummated in
accordance with and shall be subject to the terms of Section 10.9). Pursuant
to Section 10.9, upon any such assignment, such Affected Bank shall cease to be
a party hereto, provided, however, such Affected Bank shall continue to be
entitled to the benefits of Sections 2.13, 2.15, 2.17 and 8.4 accruing with
respect to such Affected Bank prior to such assignment, as well as any fees
accrued for its account and not yet paid. If an Eligible Assignee cannot be
obtained within the sixty (60) day period following said notice to the Affected
Bank, to assume the Commitment of such Affected Bank, and provided that no
Default or Event of Default shall have occurred and be continuing, then the
Borrower may prepay immediately all Revolving Credit Loans of such Affected
Bank and terminate such Affected Bank's entire Commitment hereunder provided,
however, that in the event the Borrower makes any prepayment pursuant to this
sentence, then on the date of such prepayment, the Total Commitment of the
Banks shall be permanently reduced by the amount of such Affected Bank's
Commitments and the Commitment Percentage of each other Bank shall be
redetermined based upon the amount each such other Bank's Commitment is of the
Total Commitment as so reduced.
ARTICLE III
BORROWING BASE
SECTION 3.1. Borrowing Base Asset Reports. As soon as available and in
any event by March 31 and October 1 of each year, the Borrower shall deliver to
each of the Banks the Borrowing Base Asset Reports prepared as of the
immediately preceding December 31 and June 30 respectively.
SECTION 3.2. Determination of Total Borrowing Base. Based in part on
the Borrowing Base Asset Reports delivered pursuant to Section 3.1 the Banks
shall determine the Total Borrowing Base and the Available Borrowing Base to be
in effect on the next succeeding Determination Date, which shall in no event,
exceed the Total Commitment. Such determination shall be made in good faith by
the Banks in their sole discretion in accordance with their respective
customary practices and standards for loans of this nature, which may vary from
Bank to Bank. In connection with the determination of the Total Borrowing Base
and upon the receipt of each Borrowing Base Asset Report, the Agent shall
submit to the Banks in writing on or before May 1 or November 1, as
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the case may be, the Agent's recommendation as to the Total Borrowing Base and
the Available Borrowing Base which the Agent has determined should be available
to the Borrower pursuant to the Total Commitment as of the next succeeding June
1 or December 1, as the case may be (each such date being a "Determination
Date"). Each Bank shall submit to the Agent in writing on or before May 15 or
November 15, as the case may be, such Bank's approval or disapproval of the
Agent's recommended Total Borrowing Base and Available Borrowing Base and any
such disapproval shall state the maximum Total Borrowing Base and/or Available
Borrowing Base acceptable to such Bank. If the Agent has not received such
notice from a Bank on or before the close of business on May 15 or November 15,
as the case may be, such Bank shall be deemed to have approved the Agent's
recommended Total Borrowing Base and Available Borrowing Base. In the event the
Majority Banks approve the Agent's recommended Total Borrowing Base and
Available Borrowing Base, the Total Borrowing Base and Available Borrowing Base
approved by the Majority Banks shall become effective on the next succeeding
Determination Date and shall remain in effect until the next Determination. In
the event the Majority Banks do not approve the Agent's recommended Total
Borrowing Base and Available Borrowing Base, the Banks shall consult with each
other in order to agree on the Total Borrowing Base and the Available Borrowing
Base to be effective on such Determination Date. In the event the Majority
Banks are unable to agree on the Total Borrowing Base and/or the Available
Borrowing Base to be effective on the next succeeding Determination Date prior
to May 25 or November 25, as the case may be, the Total Borrowing Base and the
Available Borrowing Base which becomes effective on the next Determination Date
shall be the weighted average of the Total Borrowing Bases and the Available
Borrowing Bases, respectively, requested by the Banks in the notices referred
to in the fourth sentence of this Section 3.2 and shall remain in effect until
the next Determination. The Agent shall notify the Borrower of the Total
Borrowing Base and the Available Borrowing Base to become effective on each
Determination Date by providing the Borrower a Borrowing Base Notice no later
than 2:00 p.m., Houston, Texas time three days prior to such Determination
Date.
Without limiting the right of the Banks to determine in good faith the
Total Borrowing Base in their sole discretion, the Borrower acknowledges and
agrees that subject to the Banks' consistent application of their respective
standards for similar loans, the Banks (i) may make such assumptions regarding
appropriate existing and projected pricing for Hydrocarbons and coal as they
deem appropriate in their sole discretion, (ii) may make such assumptions
regarding and/or modifying projected rates and/or quantities of future
production of (y) Hydrocarbons from Oil and Gas Interests and (z) coal from
Coal Interests owned by the Borrower and the Subsidiary Guarantors as they deem
appropriate in their sole good faith discretion, (iii) may consider the
projected cash requirements of the Borrower and its Subsidiaries, including,
without limitation, obligations under Consolidated Debt, and other debt service
and lease obligations of the Borrower and its Subsidiaries, general and
administrative expenses and distributions in respect of equity, (iv) are not
required to consider any asset other than Borrowing Base Assets, (v) will give
no consideration to any asset owned by an entity other than the Borrower or a
Subsidiary Guarantor and (vi) may make such other assumptions, considerations
and exclusions as each Bank deems appropriate in the exercise of its good faith
sole discretion, it being recognized that the ultimate determination to be
reached is more predicted upon the aggregate amount of credit available
hereunder which, at the
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time of the determination, each Bank determines should be available as
reasonably expected to be repayable by the Borrower, considering all then
existing and projected other items which are expected to be payable or
repayable, without undue risk of failure to timely repay. Notwithstanding
anything contained herein to the contrary, the borrowing base value given by
the Banks to the Norfolk Common Stock (together with the borrowing base value
given by the Banks to all other Margin Stock, if any,) shall never exceed
twenty-five percent (25%) of the Total Borrowing Base.
SECTION 3.3. The Designated Borrowing Base. The Borrower may designate
a borrowing base amount for each Borrowing Base Period, which borrowing base
amount shall be equal to or less than the Available Borrowing Base set forth in
the most recent Borrowing Base Notice delivered to the Borrower (the
"Designated Borrowing Base"), provided, however, that the Designated Borrowing
Base can never be less than $35,000,000 (i.e., if the Available Borrowing Base
is less than $35,000,000, then the Borrower shall not be permitted to designate
a Designated Borrowing Base). The initial Designated Borrowing Base for the
first Borrowing Base Period is $46,000,000. The Borrower shall elect to have a
Designated Borrowing Base take effect for any Borrowing Base Period by giving
notice to the Agent within five Business Days after its receipt of a Borrowing
Base Notice for a Borrowing Base Period; provided that if the Borrower has
elected a Designated Borrowing Base for a Borrowing Base Period, the Borrower
may, at any time prior to the end of such Borrowing Base Period, by giving five
Business Days' prior written notice to the Agent, elect to increase the
Designated Borrowing Base for that Borrowing Base Period to an amount not
greater than the amount of the Available Borrowing Base originally included by
the Agent in the Borrowing Base Notice for such Borrowing Base Period; provided
further that if the Borrower so elects to increase the Designated Borrowing
Base, then all commitment fees payable pursuant to Section 2.5 below with
respect to the Borrowing Base Period in which such increase took place shall be
calculated as if the increased Designated Borrowing Base had been in effect for
the entire Borrowing Base Period.
SECTION 3.4. Special Determination of Total Borrowing Base. In
addition to the redeterminations of the Total Borrowing Base pursuant to
Section 3.2, (i) within five (5) days following receipt of notice (given
pursuant to Section 6.1(l)) of a planned asset sale, transfer or disposal of
Borrowing Base Assets other than those sales permitted under Section 7.8, or
(ii) the Borrower elects not to cure defects in title at the request of the
Majority Banks pursuant to Section 6.14, the Majority Banks may request an
additional redetermination of the Total Borrowing Base and the Available
Borrowing Base in connection with such sale or defects in title. In the event
the Majority Banks request such a Special Determination, the Agent shall
promptly deliver notice of such request to the Borrower and the Borrower shall,
within ten (10) days of such request, deliver to the Banks the Borrowing Base
Asset Reports prepared as of the last day of the calendar month preceding the
date of such request. Upon receipt of such Borrowing Base Asset Reports the
Banks shall redetermine the Total Borrowing Base and the Available Borrowing
Base in accordance with the procedure set forth in Section 3.2 which Total
Borrowing Base and Available Borrowing Base shall become effective on the
Determination Date applicable to such Special Determination and shall remain in
effect until the next Determination.
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SECTION 3.5. Initial Total Borrowing Base; Initial Available Borrowing
Base. During the period from the Effective Date to November 1, 1996, the Total
Borrowing Base shall be $50,000,000 and the Available Borrowing Base shall be
$46,000,000.
ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.1. Conditions Precedent to the Revolving Credit Loans. The
obligation of each Bank to make its initial Revolving Credit Loan or for the
Issuing Bank to issue its initial Letter of Credit is subject to the
satisfaction of the following conditions precedent:
(a) The Agent shall have received, duly authorized, executed and
delivered by each Person that is a party thereto, in form and substance
satisfactory to the Banks, each of the following:
(i) each of the following Loan Documents (together with all
exhibits thereto) dated on or as of the Effective Date:
(aa) this Credit Agreement;
(bb) each of the Notes; and
(cc) the Subsidiary Guaranty;
(ii) a certificate of the Secretary or Assistant Secretary of
the Borrower, dated the Effective Date, certifying as to (aa) the
adoption and continuing effect of resolutions of the board of
directors of the Borrower authorizing the transactions
contemplated hereby and by the other Loan Documents; (bb) the
Articles of Incorporation of the Borrower, (cc) the Bylaws of the
Borrower and all amendments thereto, and (dd) the incumbency of
all officers of the Borrower who will execute or have executed
any document or instrument required to be delivered hereunder,
containing the signature of same;
(iii) a certificate of the Secretary or Assistant Secretary of
each Subsidiary Guarantor, dated the Effective Date and
certifying as to (aa) the adoption and continuing effect of
resolutions of the board of directors of such Subsidiary
Guarantor authorizing the transactions contemplated hereby and by
the other Loan Documents; (bb) the Articles (or Certificate, as
the case may be) of Incorporation of such Subsidiary Guarantor
and all amendments thereto, (cc) the Bylaws of the such
Subsidiary Guarantor and all amendments thereto, and (dd) the
incumbency of all officers of such Subsidiary Guarantor who will
execute or have executed any document or instrument required to
be delivered hereunder, containing the signature of same;
(iv) with respect to the Borrower, a certificate of existence
and good standing from the Secretary of State of the State of
Virginia dated no more
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than 5 days prior to the Effective Date and certificates of
authorization to do business and good standing in the States of
Pennsylvania and New Jersey;
(v) with respect to Resources, a certificate of existence and
good standing from the Secretary of State of the State of
Virginia dated no more than 5 days prior to the Effective Date
and certificates of authorization to do business and good
standing in the States of Kentucky, Tennessee, and West Virginia.
(vi) with respect to PVOG, a certificate of existence and good
standing from the Secretary of State of Virginia dated no more
than 5 days prior to the Effective Date and certificates of
authorization to do business and good standing in the States of
West Virginia, Kentucky, Tennessee, Illinois and Indiana.
(vii) with respect to PVCC, a certificate of existence and good
standing from the Secretary of State of Virginia dated no more
than 5 days prior to the Effective Date and certificates of
authorization to do business and good standing in the States of
West Virginia and Kentucky;
(viii) with respect to Equities, a certificate of existence and
good standing from the Secretary of State of Delaware dated no
more than 5 days prior to the Effective Date;
(ix) the Opinion of the Borrower's Counsel;
(x) a certificate of insurance coverage evidencing that all
insurance required to be obtained and/or maintained by the
Borrower and its Subsidiaries as of the Effective Date pursuant
to any of the Loan Documents is in full force and effect;
(xi) (aa) the Initial Borrowing Base Asset Reports and (bb) such
other information regarding the Borrowing Base Assets as the
Agent or any Bank may reasonably request;
(xii) (aa) the Initial Financial Statements and (bb) such other
financial information, regarding the Borrower or any of its
Subsidiaries as the Agent or any Bank may reasonably request.
All of such financial statements and financial information shall
be satisfactory to the Banks;
(xiii) for its account and for the account of each Bank, as
applicable, all fees and expenses due and payable hereunder on or
before the Effective Date and invoiced to the Borrower in writing
prior to the Effective Date;
(xiv) a Federal Reserve Form U-1, as the case may be, with
respect to the Commitment of each Bank; and
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(xv) such other certificates, opinions, documents and
instruments relating to the transactions contemplated hereby as
may have been reasonably requested by the Agent or any Bank.
(b) (i) the representation and warranties of the Borrower contained in
Article V hereof and, in all material respects, in each of the other Loan
Documents to which the Borrower is a party shall be true and correct in all
material respects on the Effective Date both before and after giving effect to
the making of the initial Revolving Credit Loans; (ii) the representations and
warranties of each Subsidiary contained in any Loan Document to which such
Subsidiary is a party are true and correct in all material respects on the
Effective Date both before and after giving effect to the initial Revolving
Credit Loans; (iii) no Default or Event of Default shall have occurred and be
continuing on the Effective Date either before or after giving effect to the
making of the initial Revolving Credit Loans, (iv) no material litigation
(other than Existing Litigation) is pending or, to the best knowledge of the
Borrower after due inquiry, threatened against the Borrower or any Subsidiary
of the Borrower and no material adverse development has occurred in any
Existing Litigation, and (v) no events or state of affairs which could
reasonably be expected to result in a Material Adverse Effect shall have
occurred since December 31, 1995;
(c) A search, made no more than 30 days prior to the Effective Date, of
the Uniform Commercial Code filing offices in each relevant jurisdiction shall
have revealed no filings or recordings with respect to the Borrowing Base
Assets (except Permitted Liens) in favor of any Person. The Agent shall have
received a copy of the search reports received as a result of such search and
fully executed releases effectuating the termination of any and all Liens
(other than Permitted Liens) pertaining to any of the Borrowing Base Assets;
(d) Evidence satisfactory to the Agent that all indebtedness of any and
all of the Borrower and its Subsidiaries owing to the Existing Lenders pursuant
to the Existing First Union Agreement has been repaid in full and all liens and
encumbrances securing such indebtedness, if any, have been released.
(e) Such other conditions precedent which the Agent may reasonably have
requested or required.
SECTION 4.2. Additional Conditions Precedent. No Bank has any
obligation to make any Revolving Credit Loan (including its initial Revolving
Credit Loan) and the Issuing Bank has no obligation to issue any Letter of
Credit (including the initial Letter of Credit) unless the following conditions
precedent have been satisfied:
(a) The Agent shall have received, in form and substance satisfactory
to the Agent, a certificate of the Borrower and of each Subsidiary signed by a
Responsible Officer of the Borrower and of each Subsidiary, dated as of the
Borrowing Date, certifying that (aa) the representations and warranties of the
Borrower and each Subsidiary contained in Article V hereof and, in all material
respects, in each of the other Loan Documents to which the Borrower or such
Subsidiary is a party, are true and correct in all material respects (both
before and after giving effect to the making of such
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Revolving Credit Loan or the issuing of such Letter of Credit) on and as of the
Borrowing Date as if made on and as of such date (or, if stated to have been
made solely as of an earlier date, were true and correct as of such earlier
date); (bb) no event or state of affairs which could reasonably be expected to
result in a Material Adverse Effect has occurred since the fiscal year end of
the Fiscal Year for which audited financial statements conforming to the
requirements of Section 6.1(b) have been delivered to the Banks pursuant to
Section 6.1(b); (cc) no Default or Event of Default then exists either before
or after giving effect to the making of such Revolving Credit Loan or the
issuing of such Letter of Credit; and (dd) no new material litigation (other
than Existing Litigation) is pending or, to the best knowledge of the Borrower
after due inquiry, threatened against the Borrower or any Subsidiary and no
material adverse development has occurred in any Existing Litigation.
(b) the Borrower shall have complied with the provisions of Section 2.2
and/or 2.3, as applicable;
(c) The Maturity Date shall not have occurred;
(d) The sum of (i) the amount of the requested Borrowing and/or the
face amount of the requested Letter of Credit plus (ii) the Utilized Credit
shall not exceed the Available Commitment then in effect.
(e) The making of such Revolving Credit Loans or the issuance of such
Letters of Credit shall not result in the Borrower's, any of its Subsidiary's
or any Bank's being in noncompliance with or in violation of Regulation U, and
shall not be prohibited by any Requirements of Law.
SECTION 4.3. General. All of the agreements, instruments, reports,
opinions and other documents and papers referred to in this Article IV (except
for the Notes and the Letters of Credit), unless otherwise expressly specified,
shall be delivered to the Agent in sufficient counterparts for each of the
Banks. As soon as practicable after receipt of such documents the Agent shall
deliver such documents to each of the Banks.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
In order to induce the Agent and each Bank to enter into this Credit
Agreement and to make the Revolving Credit Loans, the Borrower represents and
warrants as to itself and each of its Subsidiaries, to the Agent and each Bank
that the following statements are true, correct and complete.
SECTION 5.1. Organization; Corporate Powers. Each of the Borrower and
each of its Subsidiaries (a) is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or
organization, (b) is duly qualified to do business as a foreign corporation and
is in good standing in each other jurisdiction in which such qualification and
good standing are necessary in order for it to conduct its business and own its
properties as conducted and owned (except only for
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jurisdictions in which the failure to be so qualified or in good standing would
not, individually or in the aggregate, result in (i) the loss of any privileges
in such jurisdiction which are material to the Borrower or such Subsidiary or
their respective businesses, or (ii) a material liability to the Borrower or
such Subsidiary, and (c) has all requisite power and authority to own its
property and assets and to carry on its business as now conducted and as
proposed to be conducted.
SECTION 5.2. Authority. Each of the Borrower and each of its
Subsidiaries has the corporate power and authority and legal right to execute,
deliver and perform each of the Loan Documents executed by, or to be executed
by, the Borrower or such Subsidiary and each other agreement or instrument
contemplated thereby to which it is or will be a party and, with respect to the
Borrower, to borrow hereunder. The execution, delivery and performance of each
of the Loan Documents to which the Borrower or any of its Subsidiaries is or
will be a party and the consummation of the transactions contemplated thereby,
and, with respect to the Borrower, the borrowing of funds under this Credit
Agreement, have been duly approved by the board of directors of each such
Person and no other corporate proceedings on the part of such Person are
necessary to consummate such transactions. This Credit Agreement constitutes,
and each of the other Loan Documents to which the Borrower or any of its
Subsidiaries is a party when executed and delivered by such Person, will
constitute the legal, valid and binding obligation of such Person, enforceable
against such Person in accordance with its terms, except as enforceability
thereof may be limited by bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium or other similar laws relating to creditors' rights
generally and by general principles of equity which may limit the right to
obtain equitable remedies (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
SECTION 5.3. Use of Proceeds. The Borrower's uses of the proceeds of
the Revolving Credit Loans shall be as set forth in Section 2.20.
SECTION 5.4. No Conflict. The execution, delivery and performance by
the Borrower and each Subsidiary of the Borrower of the Loan Documents to which
the Borrower or such Subsidiary of the Borrower is a party, the compliance by
the Borrower or such Subsidiary of the Borrower with the terms and provisions
thereof and the consummation of each of the transactions contemplated thereby,
do not and will not (i) require any consent or approval of the stockholders of
the Borrower or any of its Subsidiaries, or any authorization, consent or
approval by any Governmental Authority or (ii) by the lapse of time, the giving
of notice or otherwise, (a) constitute a violation of any Requirement of Law
binding on the Borrower or such Subsidiary of the Borrower or a breach of any
provision contained in the articles or certificate of incorporation or bylaws
of the Borrower or such Subsidiary of the Borrower, (b) constitute a breach of
any material provision contained in any Material Contract to which the Borrower
or such Subsidiary of the Borrower is a party or by which the Borrower or such
Subsidiary of the Borrower is bound, or (c) result in or require the creation
or imposition of any Lien whatsoever upon any of the properties or assets of
the Borrower or such Subsidiary of the Borrower (other than Permitted Liens).
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SECTION 5.5. Gas Balancing Agreements and Advance Payment Contracts.
As of the Effective Date, (a) the net gas imbalance to the Borrower and PVOG
(considered in the aggregate) under all Gas Balancing Agreements to which the
Borrower or PVOG is a party or by which any Oil and Gas Interests owned by the
Borrower or any of its Subsidiaries is bound, is not in excess of $500,000, and
(b) the aggregate amount of all Advanced Payments received by the Borrower or
PVOG under Advance Payment Contracts which have not been satisfied by delivery
of production does not exceed $500,000.
SECTION 5.6. Borrowing Base Assets. (a) The Borrower and/or PVOG have
good and defensible title to all Oil and Gas Interests described in the Initial
Borrowing Base Asset Report other than Immaterial Oil and Gas Interests, free
and clear of all Liens except Permitted Liens. With the exception of
Immaterial Oil and Gas Interests, all such Oil and Gas Interests are valid,
subsisting, and in full force and effect, and all rentals, royalties, and other
amounts due and payable in respect thereof have been duly paid. Except with
respect to Immaterial Oil and Gas Interests, but without regard to any consent
or non-consent provisions of any joint operating agreement covering any of the
Proved Reserves of the Borrower and PVOG, the Borrower's (and PVOG's) share of
(a) the costs for each of the Proved Reserves described in Initial Borrowing
Base Asset Report is not greater than the decimal fraction set forth in the
Initial Borrowing Base Asset Reports, before and after payout, as the case may
be, and described therein by the respective designations "working interests",
"WI", "gross working interest", "GWI", or similar terms, and (b) production
from, allocated to, or attributed to each such Proved Reserves is not less than
the decimal fraction set forth in the Initial Borrowing Base Asset Reports,
before and after payout, as the case may be, and described therein by the
designations net revenue interest, NRI, or similar terms. Except with respect
to Immaterial Oil and Gas Interests, each well drilled in respect of each
Proved Developed Producing Hydrocarbon Reserves described in the Initial
Borrowing Base Asset Reports (y) is capable of, and is presently, producing
Hydrocarbons in commercial quantities, and the Borrower or PVOG is currently
receiving payments for its share of production, with no material funds in
respect of any thereof being presently held in suspense, other than any such
funds being held in suspense pending delivery of appropriate division orders,
and (z) has been drilled, bottomed, completed, and operated in compliance with
all applicable Requirements of Law and no such well which is currently
producing Hydrocarbons is subject to any penalty in production by reason of
such well having produced in excess of its allowable production. For purposes
of this Section 5.6(a), "Immaterial Mineral Interests" means Oil and Gas
Interests which, in the aggregate, do not represent more than two percent (2%)
of the discounted present value of all Oil and Gas Interests as set forth in
the Initial Reserve Report.
(b) The Borrower and/or PVCC have good and defensible title to all
material coal assets described on Schedule 5.6 (the "Coal Interests"), free and
clear of all Liens except Permitted Liens. All such Coal Interests are valid,
subsisting, and in full force and effect, and all rentals, royalties, and other
amounts due and payable in respect thereof have been duly paid.
(c) As of the Effective Date, Equities has good and marketable title
to 1,102,400 shares of Norfolk Common Stock (the "Norfolk Securities"), free
and clear
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of all Liens, options, warrants, puts, calls, or other rights of the issuer or
third persons.
SECTION 5.7. Ownership of Properties Generally. With respect to all
other properties and assets of the Borrower and its Subsidiaries not covered by
Section 5.6 above, the Borrower and each of its Subsidiaries have good and
defensible fee simple or leasehold title to all material properties and assets
purported to be owned by them, including, without limitation, all assets
reflected in the balance sheets referred to in Section 5.9 (a) and all assets
which are used by the Borrower and its Subsidiaries in the operation of their
respective businesses, and none of such properties or assets is subject to any
Lien other than Permitted Liens. Neither the Borrower nor any Subsidiary of the
Borrower owns any real property or leasehold interests in any real property
located on tribal lands.
SECTION 5.8. No Defaults.
(a) Neither the Borrower nor any Subsidiary of the Borrower is a
party to any Contractual Obligation that has resulted or is reasonably likely
to result in a Material Adverse Effect.
(b) (i) No Default or Event of Default exists and (ii) neither the
Borrower nor any Subsidiary of the Borrower is in default with respect to any
Material Contract.
SECTION 5.9. Financial Position; No Material Adverse Change.
(a) The Borrower has heretofore furnished to the Agent and the Banks
its Consolidated balance sheet, and the related Consolidated statements of
income, cash flows and shareholders' equity of the Borrower and its
Subsidiaries (x) as of and for the Fiscal Year ended December 31, 1995, audited
by and accompanied by the unqualified opinion of KPMG Peat Marwick, independent
certified public accountants, and (y) as of and for the Fiscal Quarter ended
March 31, 1996, certified by a Responsible Officer of the Borrower. Such
financial statements present fairly the financial condition and results of
operations of the Borrower and its Subsidiaries as of such dates and for such
periods. Such financial statements were prepared in accordance with GAAP
applied on a consistent basis.
(b) Neither the Borrower nor any Subsidiary of the Borrower has any
material contingent liabilities, material liabilities for taxes, unusual and
material forward or long-term commitments or material unrealized or anticipated
losses from any unfavorable commitments, except as referred to or reflected or
provided for in the Consolidated balance sheets of the Borrower or as otherwise
disclosed to the Banks in writing.
(c) the Borrower has disclosed to the Banks in writing any and all
facts which, in the reasonable good faith judgment of the Borrower, could
reasonably be expected to result in a Material Adverse Effect.
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SECTION 5.10. Litigation; Adverse Effects.
(a) Except as set forth in Schedule 5.10, there are no actions,
suits, proceedings, governmental investigations or arbitrations, at law or in
equity, before or by any Governmental Authority, pending or, to the best
knowledge of the Borrower, probable of assertion against the Borrower or any
Subsidiary of the Borrower or any property of the Borrower or any Subsidiary of
the Borrower, which if adversely determined, is likely to result in a material
judgment or liability not fully covered by insurance and/or could reasonably be
expected to result in a Material Adverse Effect.
(b) None of the business, properties, or operations of the Borrower
or any Subsidiary of the Borrower are materially and adversely affected by any
fire, explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God, or of the public enemy or other
casualty (whether or not covered by insurance).
SECTION 5.11. ERISA. A summary of all currently existing Benefit Plans
are listed on Schedule 5.11 hereto. The Borrower and each of its Subsidiaries
is in compliance in all material respects with the applicable provisions of
ERISA and the regulations and published interpretations thereunder. No
Reportable Event has occurred as to which the Borrower or any Subsidiary of the
Borrower was required to file a report with the PBGC, and the present value of
all benefit liabilities and benefit assets under each Benefit Plan (based on
those assumptions used to fund such Benefit Plan) is as set forth in the
Initial Financial Statements delivered to the Banks. Neither the Borrower nor
any Subsidiary of the Borrower has any ERISA Affiliates (other than the
Borrower and its Subsidiaries) or Multiemployer Plans.
SECTION 5.12. Payment of Taxes. The Borrower has filed, and has caused
each of its Subsidiaries to file, all federal, state and local tax returns and
other reports required by Requirements of Law to have been filed by the
Borrower or such Subsidiary of the Borrower and has paid (prior to delinquency)
all taxes and other similar charges and assessments that are due and payable
including extensions, except taxes, charges and assessments which are being
diligently contested in good faith by appropriate proceedings and any Lien
arising thereunder constitutes a Permitted Lien. No Responsible Officer of the
Borrower or any Subsidiary of the Borrower has knowledge of any proposed tax
assessment against the Borrower or any Subsidiary of the Borrower that is
reasonably likely to result in a Material Adverse Effect.
SECTION 5.13. Environmental Matters. Except as disclosed on Schedule
5.13 or as could not reasonably be expected to result in material liability to
the Borrower or any Subsidiary of the Borrower:
(a) The Borrower and each of its Subsidiaries is in compliance with
all applicable Environmental Laws;
(b) Each of the Borrower and each of its Subsidiaries has obtained
all consents and permits required under all applicable Environmental Laws to
operate its business as presently conducted or as proposed to be conducted, if
and at the time required by
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applicable Environmental Laws, and all such consents and permits are in full
force and effect and the Borrower and its Subsidiaries is in compliance with
all terms and conditions of such approvals;
(c) Neither the Borrower nor any Subsidiary of the Borrower nor any
of the property or operations, either past or present, of the Borrower or any
Subsidiary of the Borrower is subject to any order from or agreement with any
Governmental Authority or private party respecting (i) failure to comply with
any Environmental Law or any Remedial Action or (ii) any Environmental
Liabilities arising from the Release or threatened Release of a Hazardous
Substance into the environment except those orders and agreements with which
the Borrower or such Subsidiary of the Borrower is in compliance with;
(d) None of the operations of the Borrower or any Subsidiary of the
Borrower is subject to any judicial or administrative proceeding alleging a
violation of, or liability under, any Environmental Law;
(e) To the best knowledge and belief of the Borrower, none of the
operations of the Borrower or any Subsidiary of the Borrower is the subject of
any investigation by any Governmental Authority evaluating whether any Remedial
Action is needed to respond to a Release or threatened Release of a Hazardous
Substance into the environment;
(f) Neither the Borrower nor any Subsidiary of the Borrower has filed
any notice under any Environmental Law indicating past or present treatment,
storage or disposal of a Hazardous Substance under 40 CFR Part 261 or any state
or local equivalent;
(g) Neither the Borrower nor any Subsidiary of the Borrower has filed
any notice under any applicable Environmental Law reporting a Release of a
Hazardous Substance (other than minor or de minimis emissions) into the
environment;
(h) There is not now, nor, to the best knowledge and belief of the
Borrower has there ever been, on or in any property of the Borrower or of any
Subsidiary of the Borrower:
(i) any generation, treatment, recycling, storage or disposal
of any Hazardous Substance under 40 CFR Part 261 or any state or
local equivalent,
(ii) any underground storage tanks or surface impoundments,
(iii) any friable asbestos-containing material, or
(iv) any polychlorinated biphenyls (PCBs) used in hydraulic
oils, electrical transformers or other equipment, except in
compliance with all applicable Environmental Laws;
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(i) Except for those commitments and agreements entered into by the
Borrower or any Subsidiary of the Borrower in the ordinary course of business
in compliance with all material requirements of applicable Environmental Laws,
there have been no written commitments or agreements involving the Borrower or
any Subsidiary of the Borrower from or with any Governmental Authority or any
private entity (including, without limitation, the owner of the property or any
portion thereof) relating to the generation, storage, treatment, presence,
Release, or threatened Release of any Hazardous Substance on or into any of the
properties of the Borrower or any Subsidiary of the Borrower or the environment
(including off-site disposal of toxic wastes or Hazardous Substances) or any
Remedial Action with respect thereto;
(j) Neither the Borrower nor any Subsidiary of the Borrower has
received any pending or unresolved written notice or claim to the effect that
it is or may be liable to any Person as a result of the Release or threatened
Release of a Hazardous Substance into the environment;
(k) Neither the Borrower nor any Subsidiary of the Borrower has any
known liability in connection with any material Release or material threatened
Release of any Hazardous Substances into the environment; and
(l) To the best knowledge and belief of the Borrower, no
Environmental Lien has attached to any properties of the Borrower or any
Subsidiary of the Borrower.
SECTION 5.14. Governmental Regulation. Neither the Borrower nor any
Subsidiary of the Borrower is subject to regulation under the Interstate
Commerce Act, the Investment Company Act of 1940, the Public Utility Holding
Company Act of 1935, the Federal Power Act or any other Requirements of Law
such that its ability to incur indebtedness is limited or its ability to
consummate the transactions contemplated by this Credit Agreement and the other
Loan Documents or any document executed in connection therewith is impaired.
SECTION 5.15. Disclosure. All information contained in any financial
statements, Reserve Reports, Coal Reserve Reports, Borrowing Base Asset
Reports, certificates, exhibits, schedules, operating statements and any other
written statements and written information (excluding estimates and forecasts)
furnished by or on behalf of the Borrower or any Subsidiary of the Borrower to
the Banks and the Agent, (taken as a whole) in connection with any transaction
contemplated hereby or by any other Loan Document on or prior to the date this
representation is made or deemed made, was, and will be, true and correct in
all material respects and does not, and will not, contain any material
misstatement of fact or omit to state a material fact necessary in order to
make the statements contained therein, in light of the circumstances under
which they were made, not misleading.
SECTION 5.16. Subsidiaries. As of the Effective Date, Schedule 5.16
contains a complete and accurate (a) list of all Subsidiaries of the Borrower,
(b) description of the issued and outstanding capital stock of each Subsidiary
of the Borrower and (c) the record owners of such capital stock. Except as set
forth on Schedule 5.16, neither of the Borrower nor any Subsidiary of the
Borrower is a partner or joint venturer in any
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partnership or joint venture or a member of any unincorporated association.
SECTION 5.17. Solvency. Neither the Borrower nor any Subsidiary of the
Borrower (i) is "insolvent" (within the meaning of Section 101(32) of the
Bankruptcy Code, Section 2 of the Uniform Fraudulent Conveyance Act or Section
2 of the Uniform Fraudulent Transfer Act) or will become insolvent as a result
of the incurrence of any obligation under any Loan Document to which it is a
party; (ii) has unreasonably small capital (after giving effect to the
transactions contemplated in any Loan Document to which it is a party) for the
conduct of its existing and contemplated business and (iii) is able to perform
its contingent obligations and other commitments as they mature in the normal
course of business.
SECTION 5.18. Business. The Borrower has not conducted and is not
conducting any business other than business relating to the exploration,
development, financing, acquisition, ownership, operation, maintenance,
storage, transporting and marketing of the Oil and Gas Interests, the Coal
Interests and timber interests, land management, and related activities as
currently conducted.
SECTION 5.19. Material Contracts. Schedule 5.19 lists all Material
Contracts to which the Borrower or any of its Subsidiaries is a party or by
which it or its properties is bound (including, without limitation, all
amendments, supplements, waivers and other agreements amending, supplementing
or otherwise modifying or clarifying such agreements) but excluding (a) the
Loan Documents, (b) leases and operating agreements related to the Borrowing
Base Assets and (c) agreements and plans relating to employee benefits. The
Borrower and each of its Subsidiaries have complied in all material respects
with all obligations required to be performed by them under all Material
Contracts, except to the extent a failure to comply could not reasonably be
expected to result in a Material Adverse Effect. The Borrower is not aware of
any default by any other party to any Material Contract. True, correct and
complete copies of all Material Contracts listed on Schedule 5.19 have been
delivered to the Agent.
SECTION 5.20. Licenses, Permits, Etc. The Borrower and each of its
Subsidiaries possess such valid franchises, certificates of convenience and
necessity, operating rights, licenses, permits, consents, authorizations,
exemptions and orders of Governmental Authorities, as are necessary to carry on
their respective businesses as now conducted and as proposed to be conducted,
except to the extent a failure to obtain any such item could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 5.21. Fiscal Year. The Borrower's Fiscal Year is January 1
through December 31.
ARTICLE VI
AFFIRMATIVE COVENANTS
So long as this Credit Agreement shall remain in effect or the
principal of or interest on any Revolving Credit Loan, or any Letter of Credit,
or any reimbursement obligation with respect to any Letter of Credit, or any
commitment or other fee, expense,
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compensation or any other amount payable under any Loan Document shall remain
unpaid or outstanding or the Banks shall have any Commitments hereunder, unless
the Majority Banks shall otherwise consent in writing, the Borrower covenants
and agrees that:
SECTION 6.1. Information. The Borrower shall deliver, or cause to be
delivered, to the Banks at the Borrower's sole expense:
(a) As soon as practicable, and in any event within fifty (50) days
after the end of each Fiscal Quarter in each Fiscal Year of the Borrower (but
within ninety-five (95) days after the end of the last Fiscal Quarter in each
Fiscal Year or one hundred five (105) days after the end of the last Fiscal
Quarter in such Fiscal Year upon the Borrower's timely filing of a Form 12b-25
with respect to the Borrower's Form 10-K for that Fiscal Year), the unaudited
Consolidated balance sheet of the Borrower and its Subsidiaries as at the end
of such quarterly period and year to date period then ended, and the related
unaudited Consolidated statements of income, cash flows and shareholders'
equity for such quarterly period and for the portion of the Fiscal Year ended
with the last day of such quarterly period, and in each case setting forth
comparative figures for the related periods in the prior Fiscal Year, all in
reasonable detail prepared in a manner satisfactory to the Agent and the Banks,
and certified by a Responsible Officer of the Borrower responsible for the
administration of the finances and accounting practices of the Borrower that
such financial statements fairly present the Consolidated financial condition
and results of operations of, respectively, the Borrower and its Subsidiaries
in accordance with GAAP for the Fiscal Quarter and year to date period then
ended, subject to changes resulting from normal year-end audit adjustments.
(b) Within ninety-five (95) days after the close of each Fiscal Year
of the Borrower (or one hundred five (105) days after the close of each such
Fiscal Year upon the Borrower's timely filing of a Form 12b-25 with respect to
the Borrower's Form 10-K for that Fiscal Year), the audited Consolidated
balance sheet of the Borrower as of the end of such Fiscal Year and the related
audited Consolidated statements of income, cash flows and shareholders' equity
of the Borrower for such Fiscal Year, setting forth the comparative figures for
the preceding Fiscal Year all audited by KPMG Peat Marwick or other independent
certified public accountants of recognized national standing reasonably
satisfactory to the Majority Banks and accompanied by (x) an unqualified
opinion of such accountants to the effect that such Consolidated financial
statements present fairly, in all material respects, the financial position and
results of operations and cash flows of the Borrower and its Subsidiaries, on a
Consolidated basis, in accordance with GAAP, and (y) a certificate of such
accountants certifying that in the course of its regular audit of the financial
statements of the Borrower, which audit was conducted in accordance with
generally accepted auditing standards, such accounting firm has obtained no
knowledge of any Default or Event of Default, or if in the opinion of such
accounting firm a Default or Event of Default has occurred and is continuing, a
statement as to the nature thereof.
(c) Together with the delivery of statements referred to in
paragraphs (a) and (b) above, a Compliance Certificate, in form and substance
satisfactory to the Agent, signed by a Responsible Officer of the Borrower
responsible for the administration of the
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finances and accounting practices of the Borrower, stating that the signer has
reviewed the terms of this Credit Agreement and the other Loan Documents and
that in the course of the performance of his duties, he would normally have
knowledge of any condition or event which would constitute an Event of Default
or Default and stating whether or not he has knowledge of any such condition or
event and, if so, specifying each such condition or event of which he has
knowledge and the nature thereof and any corrective action taken or proposed to
be taken with respect thereto. Such Compliance Certificate shall set forth the
calculations required to establish compliance with the financial covenants set
forth in Section 7.15 for the fiscal period covered by such financial
statements.
(d) Promptly and in any event within three (3) Business Days after
any Responsible Officer of the Borrower obtains knowledge thereof, notice of
(i) the institution of or threat in writing of, any material action, suit,
proceeding, governmental investigation or arbitration against or affecting the
Borrower or any Subsidiary of the Borrower not previously disclosed in writing
to the Banks or any material adverse development in any action, suit,
proceeding, governmental investigation or arbitration already disclosed to the
Banks or (ii) the occurrence of any event which constitutes a Default or Event
of Default, such notice to specify the nature and period of existence of such
Default or Event of Default, and what action the Borrower and/or such
Subsidiary has taken, are taking or propose to take with respect thereto.
(e) promptly upon the mailing thereof to the stockholders of the
Borrower generally, copies of all financial statements, reports and proxy
statements so mailed;
(f) promptly upon the filing thereof, copies of all final
registration statements, post effective amendments thereto and annual,
quarterly or special reports which the Borrower shall have filed with the
Securities and Exchange Commission; provided, that the Borrower must deliver,
or cause to be delivered, any annual reports which the Borrower shall have
filed with the Securities and Exchange Commission, within one hundred (100)
days after the end of each Fiscal Year of the Borrower (or one hundred five
(105) days after the end of such Fiscal Year upon the Borrower's timely filing
of a Form 12b-25 with respect to the Borrower's Form 10-K for that Fiscal
Year), and any quarterly reports which the Borrower shall have filed with the
Securities and Exchange Commission, within fifty (50) days after the end of
each of the first three (3) quarters of each Fiscal Year of the Borrower;
(g) promptly upon request therefor by the Agent, such title opinions
and other information in either the Borrower's possession, control or direction
regarding title to the Borrowing Base Assets as are appropriate to determine
the status of title with respect thereto;
(h) promptly upon receipt of same, any notice or other information
received by the Borrower or any Subsidiary of the Borrower indicating any
potential, actual or alleged (i) non-compliance with or violation of the
requirements of any Environmental Law which could result in liability to the
Borrower or any Subsidiary for fines, clean up or any other remediation
obligations or any other liability in excess of $1,000,000 in the aggregate;
(ii) release or threatened release of any toxic or hazardous waste, substance,
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or constituent, or other substance into the environment which release would
impose on the Borrower or any Subsidiary of the Borrower a duty to report to a
governmental authority or to pay cleanup costs or to take remedial action under
any Environmental Law which could result in liability to the Borrower or any
Subsidiary of the Borrower for fines, clean up and other remediation
obligations or any other liability in excess of $1,000,000 in the aggregate; or
(iii) the existence of any Environmental Lien arising under any Environmental
Law securing any obligation of the Borrower or any Subsidiary of the Borrower
to pay fines, clean up or other remediation costs or any other liability in
excess of $1,000,000 in the aggregate. Without limiting the foregoing, the
Borrower shall provide to Agent, promptly upon request, copies of all
environmental consultants or engineers reports received by the Borrower or any
Subsidiary of the Borrower which involves the investigation, remediation or
response action with respect to any circumstance or condition which would
require delivery of a notice or other information to the Banks pursuant to this
Section 6.1(h);
(i) In the event any notification is provided by the Borrower to any
Bank or the Agent pursuant to Section 6.1(h) hereof or the Agent or any Bank
otherwise learns of any event or condition under which any such notice would be
required, then, upon request of the Majority Banks, the Borrower shall, within
ninety (90) days of such request, cause to be furnished to each Bank a report
by an environmental consulting firm acceptable to Agent and the Majority Banks,
stating that a review of such event, condition or circumstance has been
undertaken (the scope of which shall be reasonably acceptable to Agent and the
Majority Banks) and detailing the findings, conclusions, and recommendations of
such consultant. The Borrower shall bear all expenses and costs associated with
such review and updates thereof, as well as all remediation or curative action
which (y) the Borrower and/or any Subsidiary of the Borrower is required by
contract or law to make or (ii) is recommended by any such environmental
consultant and undertaken by the Borrower;
(j) Promptly (but in all events within three (3) Domestic Business
Days) after any Responsible Officer becomes aware of the occurrence of any
Default), a certificate of a Responsible Officer setting forth the details
thereof and the action which the Borrower is taking or proposes to take with
respect thereto;
(k) Promptly (but in all events within three (3) Domestic Business
Days) after any Responsible Officer becomes aware of same), notice of any
material adverse change in the business, financial condition, operations or
prospects of the Borrower, any Subsidiary Guarantor or of the Borrower and its
Subsidiaries taken as a whole;
(l) Promptly (but in all events within three (3) Domestic Business
Days) after any Responsible Officer becomes aware of same), notice of the
intended sale, transfer, encumbrance or other disposition of any Borrowing Base
Asset other than a sale, transfer, encumbrance or other disposition permitted
pursuant to Section 7.8; and
(m) From time to time such additional information regarding the
financial position or business of the Borrower and its Subsidiaries as the
Agent, at the request of any Bank, may reasonably request.
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SECTION 6.2. Business of the Borrower. The primary business of the
Borrower and its Subsidiaries on a Consolidated basis is and will continue to
be the acquisition, exploration for, development, production, transportation,
processing and marketing of Hydrocarbons, coal and accompanying elements.
SECTION 6.3. Corporate Existence. The Borrower shall, and shall cause
each of its Subsidiaries to, maintain its (i) existence and good standing in
the jurisdiction of its organization or incorporation and (ii) qualification
and good standing in all jurisdictions in which such qualification and good
standing are necessary in order for the Borrower or such Subsidiary to conduct
its business and own its property as conducted and owned in such jurisdiction
except where the failure to be so qualified or in good standing would not,
individually or in the aggregate, result in a Material Adverse Effect.
SECTION 6.4. Right of Inspection. The Borrower will permit, and will
cause each Subsidiary of the Borrower to permit, any officer, employee or agent
of the Agent or any of the Banks to visit and inspect any of the assets of the
Borrower and its Subsidiaries, examine the Borrower's and its Subsidiaries'
books of record and accounts, take copies and extracts therefrom, and discuss
the affairs, finances and accounts of the Borrower and its Subsidiaries with
the Borrower's and its Subsidiaries' officers, accountants and auditors, all at
such reasonable times and as often as the Agent or any of the Banks may
reasonably desire, all at the expense of the Borrower.
SECTION 6.5. Maintenance of Insurance. The Borrower will maintain or
cause to be maintained, and will cause each Subsidiary of the Borrower to
maintain or cause to be maintained (and will use all reasonable good faith
efforts to cause all operators of Borrowing Base Assets to maintain or cause to
be maintained) at all times, insurance covering such risks as are customarily
carried by businesses similarly situated.
SECTION 6.6. Payment of Taxes and Claims. The Borrower will pay, and
will cause each of its Subsidiaries to pay, (a) all taxes imposed upon it or
any of its assets or with respect to any of its franchises, business, income or
profits before any material penalty or interest accrues thereon and (b) all
material claims (including, without limitation, claims for labor, services,
materials and supplies) for sums which have become due and payable and which by
law have or might become a Lien (other than a Permitted Lien) on any of its
assets; provided, however, no payment of taxes or claims shall be required if
(i) the amount, applicability or validity thereof is currently being contested
in good faith by appropriate action promptly initiated and diligently conducted
in accordance with good business practices and no material part of the property
or assets of the Borrower or any of its Subsidiaries are subject to levy or
execution, (ii) the Borrower as and to the extent required in accordance with
GAAP, shall have set aside on its books reserves (segregated to the extent
required by GAAP) deemed by it to be adequate with respect thereto, and (iii)
to the extent the amount of the contested taxes or claims are in excess of
$1,000,000 (in the aggregate), the Borrower has notified the Agent of such
circumstances, in detail satisfactory to the Agent.
SECTION 6.7. Compliance with Laws and Documents. The Borrower will
comply, and will cause each of its Subsidiaries to comply, with all
Requirements of Law, their respective certificates (or articles) of
incorporation, bylaws and similar charter
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documents and all Material Contracts to which the Borrower or any of its
Subsidiaries is a party, if a violation, alone or when combined with all other
such violations, could reasonably be expected to result in a Material Adverse
Effect.
SECTION 6.8. Operation of Properties and Equipment. (a) the Borrower
will maintain and operate, and will cause each of its Subsidiaries to maintain
and operate, their respective material properties, including without limitation
all of the Borrowing Base Assets, in a good and workmanlike manner, and, (i)
with respect to the Oil and Gas Interests, observe and comply with all of the
terms and provisions, express or implied, of all oil and gas leases relating to
such Oil and Gas Interests so long as such Oil and Gas Interests are capable of
producing Hydrocarbons and accompanying elements in paying quantities, and (ii)
with respect to the Coal Interests, observe and comply with all of the terms
and provisions, express or implied, of all Coal Leases relating to such Coal
Interests so long as such Coal Leases are capable of producing coal and
accompanying elements in commercial quantities.
(b) The Borrower will comply, and will cause each of its Subsidiaries
to comply, in all material respects with all Material Contracts.
(c) The Borrower will maintain, preserve and keep, and will cause each
of its Subsidiaries to maintain, preserve and keep, at all times, all material
equipment used with respect to their respective businesses in proper repair,
working order and condition, and make all necessary or appropriate repairs,
renewals, replacements, additions and improvements thereto so that the
efficiency of such operating equipment shall at all times be properly preserved
and maintained; provided that no item of operating equipment need be so
repaired, renewed, replaced, added to or improved, if the Borrower shall in
good faith determine that such action is not necessary or desirable for the
continued efficient and profitable operation of the business of the Borrower
and its Subsidiaries.
SECTION 6.9. Environmental Law Compliance and Indemnity. The Borrower
will comply, and will cause each of its Subsidiaries to comply, in all material
respects with all Environmental Laws binding on the Borrower or such
Subsidiary, including, without limitation, (a) all licensing, permitting,
notification and similar requirements of Environmental Laws, and (b) all
provisions of all Environmental Laws regarding storage, discharge, release,
transportation, treatment and disposal of Hazardous Substances. The Borrower
will promptly pay and discharge when due, and will cause each of its
Subsidiaries to promptly pay and discharge when due, all debts, claims,
liabilities and obligations with respect to any clean-up or remediation
measures necessary to comply with Environmental Laws binding on the Borrower or
any Subsidiary of the Borrower. The Borrower hereby agrees to indemnify,
defend and hold harmless each of the Banks, the Agent and their respective
agents, affiliates, officers, directors, and employees from and against any and
all claims, losses, demands, actions, causes of action, and liabilities
whatsoever (including without limitation reasonable attorney's fees and
expenses, and costs and expenses reasonably incurred in investigating,
preparing or defending against any litigation or claim, action, suit,
proceeding or demand of any kind or character) arising out of or resulting from
the contamination by any Hazardous Substance or environmental pollutant in
violation of, or noncompliance with, any federal, state or local Environmental
Laws, including without limitation violation of the Comprehensive
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Environmental Response, Compensation and Liability Act, as amended from time to
time, or of the Resource Conservation and Recovery Act, as amended from time to
time, except to the extent that such claim, loss, demand, action, cause of
action, or liability was caused by the gross negligence or willful misconduct
of the indemnified party requesting indemnification pursuant to this Section
6.9.
SECTION 6.10. ERISA Reporting Requirements. The Borrower shall furnish
or cause to be furnished to Agent:
(a) Promptly and in any event (i) within fifteen (15) days after the
Borrower or any ERISA Affiliate knows or has reason to know that any ERISA
Event described in clause (a) of the definition of ERISA Event or any event
described in section 4063(a) of ERISA with respect to any Benefit Plan of the
Borrower or any ERISA Affiliate has occurred, and (ii) within ten (10) days
after the Borrower or any ERISA Affiliate knows or has reason to know that any
other ERISA Event with respect to any Benefit Plan of the Borrower or any ERISA
Affiliate has occurred or a request for minimum funding waiver under section
412 of the Code with respect to any Benefit Plan of the Borrower or any ERISA
Affiliate has been made, a written notice describing such event and describing
what action is being taken or is proposed to be taken with respect thereto,
together with a copy of any notice of event that is given to the PBGC;
(b) Promptly and in any event within two (2) Business Days after
receipt thereof by the Borrower or any ERISA Affiliate from the PBGC, copies of
each notice received by the Borrower or any ERISA Affiliate of the PBGC's
intention to terminate any Plan or to have a trustee appointed to administer
any Benefit Plan;
(c) Promptly and in any event within fifteen (15) days after the
receipt by the Borrower of a request therefor by a Bank, copies of any annual
and other report (including Schedule B thereto) with respect to a Benefit Plan
filed by the Borrower or any ERISA Affiliate with the United States Department
of Labor, the IRS or the PBGC;
(d) Promptly, and in any event within ten (10) Business Days after
receipt thereof, a copy of any correspondence the Borrower or any ERISA
Affiliate receives from the Plan Sponsor (as defined by section 4001(a)(10) of
ERISA) of any Benefit Plan asserting withdrawal liability pursuant to section
4219 or 4202 of ERISA upon the Borrower or any ERISA Affiliate, and a statement
from a Responsible Officer of the Borrower or such ERISA Affiliate setting
forth details as to the events giving rise to such withdrawal liability and the
action which the Borrower or such ERISA Affiliate is taking or proposes to take
with respect thereto;
(e) Notification within three (3) Business Days after the Borrower or
any ERISA Affiliate knows or has reason to know that the Borrower or any such
ERISA Affiliate has or intends to file a notice of intent to terminate any
Benefit Plan under a distress termination within the meaning of section 4041(c)
of ERISA and a copy of such notice; and
(f) Promptly after receipt of written notice of commencement thereof,
notice of all (i) claims made by participants or beneficiaries with respect to
any Benefit Plan and
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(ii) actions, suits and proceedings before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, affecting the Borrower or any ERISA Affiliate with respect to any
Benefit Plan, except those which, in the aggregate, if adversely determined
could not result in a Material Adverse Effect.
SECTION 6.11. Subsidiary Guaranty. The Borrower will cause each of its
Subsidiaries hereafter formed or acquired to execute and deliver a joinder of
the Subsidiary Guaranty promptly following such formation or acquisition.
SECTION 6.12. Permits, Licenses. The Borrower shall, and shall cause
each Subsidiary to, maintain all material assets, consents, licenses, patents,
copyrights, trademarks, service marks, trade names, permits and other approvals
and authorizations necessary to conduct its business, including, without
limitation all consents, permits, licensees and agreements material to the
Borrowing Base Assets.
SECTION 6.13. Additional Documents. The Borrower will cure promptly,
and will cause each of its Subsidiaries to cure promptly, any defects in the
creation and issuance of each Note, and the execution and delivery of this
Credit Agreement and the other Loan Documents and, at the Borrower's expense,
the Borrower shall promptly and duly execute and deliver, and cause each
Subsidiary of the Borrower to promptly execute and deliver, to each Bank, upon
reasonable request, all such other and further documents, agreements and
instruments in compliance with or accomplishment of the covenants and
agreements of each the Borrower and each Subsidiary of the Borrower in this
Credit Agreement and the other Loan Documents as may be reasonably necessary or
appropriate in connection therewith.
SECTION 6.14. Title Assurances. The Borrower shall furnish or cause to
be furnished to the Agent such information in its possession or reasonably
available to it with respect to title to the Borrowing Base Assets as the
Majority Banks may reasonably request and shall cooperate with the Agent and
its counsel in analyzing such title. Where appropriate in the opinion of the
Majority Banks and at the request of the Majority Banks, the Borrower shall
correct material defects in such title, or, if the Borrower elects not to
correct such defects in title, the Banks shall be entitled to an immediate
redetermination of the Total Borrowing Base pursuant to Section 3.4.
ARTICLE VII
NEGATIVE COVENANTS
So long as this Credit Agreement shall remain in effect or the
principal of or interest on any Revolving Credit Loan, or any Letter of Credit,
or any reimbursement obligation with respect to any Letter of Credit, or any
commitment or other fee, expense, compensation or any other amount payable
under any Loan Document shall remain unpaid or outstanding or the Banks shall
have any Commitments hereunder, unless the Majority Banks shall otherwise
consent in writing, the Borrower covenants and agrees that:
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SECTION 7.1. Debt. The Borrower shall not, and shall not permit any of
its Subsidiaries to, create, incur, assume or otherwise become or remain liable
with respect to, any Debt, except for:
(a) Debt arising hereunder and under the other Loan Documents;
(b) Unsecured Debt outstanding on the Effective Date and described in
Schedule 7.1, in each case in a principal amount at any one time outstanding
not to exceed the amount set forth on Schedule 7.1 hereof;
(c) Endorsements of negotiable instruments for collection in the
ordinary course of business;
(d) Current liabilities (exclusive of Debt) for accounts payable and
expense accruals incurred or assumed in the ordinary course of business,
provided such accounts payable have not remained unpaid for a period of ninety
(90) days after the same became due unless currently being contested in good
faith or by appropriate proceedings;
(e) Liabilities for taxes, assessments, governmental charges or levies
not yet due and payable; and
(f) Liabilities incurred under Hedge Transactions permitted pursuant to
Section 7.14 hereof.
(g) Unsecured Debt incurred by the Borrower pursuant to a line(s) of
credit entered into by the Borrower after the Effective Date with any Bank or
any other financial institution, provided, however, that (i) the terms,
covenants and conditions of said line(s) of credit may be no more burdensome or
onerous on the Borrower and its Subsidiaries than the terms, conditions and
covenants contained in this Credit Agreement, (ii) at the time said Debt is
incurred, the aggregate principal amount of all advances, including the
proposed advance (the "Swing Loans") made to the Borrower by any Bank or any
such other financial institution pursuant to such line(s) of credit does not
exceed at any one time outstanding $5,000,000.00, (iii) after giving pro forma
effect to any proposed Swing Loan, the aggregate amount of the Utilized Credit
does not exceed the Available Commitment, and (iv) the proceeds of all Swing
Loans are used by the Borrower solely for cash management purposes. Swing
Loans shall not be considered a utilization of the Total Commitment or the
Commitment of such Bank hereunder for purposes of calculating the commitment
fee due pursuant to the provisions of Section 2.5(a), but shall be included in
the determination of the Utilized Credit;
(h) Purchase money Debt in respect of property acquired by the
Borrower and its Subsidiaries in the ordinary course of business provided,
however, that the aggregate amount of all Debt incurred by the Borrower and its
Subsidiaries pursuant to this Section 7.1(h) and Section 7.1(i) shall not
exceed $3,000,000 at any one time outstanding;
(i) Additional unsecured Debt not permitted by subclauses (a) through
(h), provided, however, that the aggregate amount of all Debt incurred by the
Borrower and its Subsidiaries pursuant to this Section 7.1(i) and Section
7.1(h) shall not exceed
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$3,000,000 at any one time outstanding; and
(j) Unfunded Vested Liabilities with respect to any Existing Plan,
provided, however, that (x) such Existing Plan at all times meets all
applicable funding requirements contained in Section 412 of the Code and (y)
Borrower is at all times in compliance with Section 7.15(b).
SECTION 7.2. Restrictions on Distributions. The Borrower will not
directly or indirectly declare or pay or incur any liability to pay, and the
Borrower will not permit any of its Subsidiaries to directly or indirectly
declare or pay, or incur any liability to pay any Distributions, except that:
(a) The Borrower may pay Distributions to its shareholders from funds
legally available for such purpose, provided, however, that if the Utilized
Percentage of the Borrowing Base exceeds seventy-five percent (75%), the
Borrower will not, directly or indirectly, declare or make, or incur any
liability to make, Distributions to its shareholders in any Fiscal Quarter in
excess of an amount equal to (x) fifty-five percent (55%) of Consolidated
EBITDA for the previous four (4) Fiscal Quarters for which financial statements
have been delivered to the Banks pursuant to Section 6.1 less (y) the aggregate
amount of quarterly Distributions made to its shareholders during such four (4)
fiscal quarter period.
(b) It shall be a condition to each Distribution permitted by the
provisions of Section 7.2(a) that at the time such Distribution is made: (i) no
payment of principal, interest, fees or other amount required hereunder or
under the Loan Documents has become due and has not been paid, (ii) no Default
or Event of Default (other than as described in clause (i) of this proviso) has
occurred, is continuing and has not been waived by the Majority Banks (or if
required under Section 10.1, all of the Banks)has occurred or would occur as a
result of the making of such Distribution, (iii) no Borrowing Base Deficiency
exists or is reasonably expected to exist as of the next Determination Date,
and (iv) after giving effect to the proposed Distribution the Borrower is in
compliance with covenants contained in Section 7.15 as of (and as if the most
recently ended Fiscal Quarter of the Borrower had ended on) the date such
Distribution is made.
Notwithstanding the foregoing, (i) any Subsidiary Guarantor may make
Distributions to the Borrower or any other Subsidiary Guarantor, (ii) any
Subsidiary of the Borrower may make Distributions to the Borrower, and (iii)
Powell River Rail Corporation, may make Distributions to the Borrower and its
other shareholders so long as the Borrower owns 80% or more of the capital
stock or equity interests of Powell River Rail Corporation. The Borrower will
not enter into or become subject to, and the Borrower will not permit any of
its Subsidiaries to enter into, or become subject to, any agreement or order of
any Governmental Authority which prohibits or restricts in any way the right of
any of the Borrower's Subsidiaries to make Distributions to the Borrower.
SECTION 7.3. Negative Pledge. The Borrower will not create, incur,
assume or suffer to exist, and the Borrower will not permit any Subsidiary of
the Borrower to create, incur, assume or suffer to exist, any Lien on any asset
of the Borrower or any of
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its Subsidiaries other than Permitted Liens. The Borrower will not enter into
or become subject to, and the Borrower will not permit any Subsidiary of the
Borrower to enter into or become subject to, any agreement (other than this
Credit Agreement) that prohibits or otherwise restricts the right of the
Borrower or any of its Subsidiaries to create, incur, assume or suffer to exist
any Lien in favor of Agent for the benefit of the Banks on any of the
Borrower's or any of its Subsidiaries' assets.
SECTION 7.4. Consolidation, Mergers and Acquisitions; Fundamental
Changes. The Borrower shall not, and shall not permit any of its Subsidiaries
to, merge or consolidate with or acquire substantially all of the outstanding
capital stock or assets of any other Person or liquidate, wind up or dissolve
(or suffer any liquidation or dissolution), or convey, lease, sell, transfer or
otherwise dispose of, in one transaction or series of transactions, all or any
substantial part of its business, property or assets, whether now or hereafter
acquired, except for transactions in the nature of a consolidation and/or
merger (i) involving the Borrower in which the Borrower is the surviving
entity, or (ii) involving a Subsidiary Guarantor in which the surviving entity
is a wholly owned Subsidiary of the Borrower and has duly executed and
delivered a joinder to the Subsidiary Guaranty pursuant to Section 6.11, or
(iii) involving any other wholly owned Subsidiary of the Borrower in which such
wholly owned Subsidiary is the surviving entity, subject in each case to the
condition that immediately after such merger or consolidation and after giving
effect and pro forma effect thereto for the immediately preceding twelve-month
period, no Event of Default or Default shall have occurred, exist or be
continuing. The Borrower shall not, and shall not permit any of its
Subsidiaries to, purchase, redeem, retire or otherwise acquire for value any of
its capital stock now or hereafter outstanding.
SECTION 7.5. Investments. The Borrower shall not, and shall not permit
any of its Subsidiaries to, make, directly or indirectly, any Investments,
except:
(a) Investments existing on the date hereof and disclosed on Schedule
7.5;
(b) Investments consisting of Cash Equivalents;
(c) Accounts receivable from customers in the ordinary course of
business;
(d) Investments by the Borrower in wholly owned Subsidiaries provided
such Subsidiaries have executed and delivered a Subsidiary Guaranty in favor of
the Agent;
(e) Margin deposits in connection with any Hedge Transaction permitted
pursuant to Section 7.14;
(f) Acquisitions permitted under Section 7.4 hereof;
(g) Investments in connection with or related to farm-out, farm-in,
joint operating, joint venture or area of mutual interest agreements, gathering
systems, pipelines or other similar or customary arrangements entered into in
the ordinary course of business;
(h) Investments by the Borrower, directly or indirectly, in
Westmoreland Coal
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Company and Westmoreland Resources, Inc., provided, however, that all
Investments made by the Borrower in Westmoreland Coal Company and Westmoreland
Resources, Inc. pursuant to this Section 7.5(h) shall not exceed $500,000 in
the aggregate; or
(i) Investments by the Borrower, directly or indirectly, in Powell
River Rail Corporation, provided, however, that all Investments made by the
Borrower in Powell River Rail Corporation pursuant to this Section 7.5(i) shall
not exceed $5,000,000 in the aggregate; or
(j) An Investment in capital stock (other than Margin Stock) issued by
a United States corporation (other than Westmoreland Coal Company, Westmoreland
Resources, Inc. and Powell River Rail Corporation) in the same line of
business(es) as the Borrower and its Subsidiaries provided such Investment is
not a Hostile Acquisition and subject in each case to the condition that
immediately after such Investment and after giving effect and pro forma effect
thereto for the next succeeding twelve-month period, no Event of Default or
Default shall have occurred, exist or be continuing.
SECTION 7.6. Transactions with Affiliates. The Borrower shall not, and
shall not permit any of its Subsidiaries to, enter into, or be a party to any
transaction with any affiliated Person, except for (i) the transactions
provided for in the Loan Documents, (ii) transactions disclosed in Schedule
7.6, or (iii) transactions entered into pursuant to the reasonable requirements
of such Person's business and upon such fair and reasonable terms as could
reasonably be obtained in a arm's length transaction with an unaffiliated
Person in accordance with prevailing industry customs and practices.
SECTION 7.7. Agreements. The Borrower shall not, and shall not permit
any of its Subsidiaries to, enter into any contract, agreement or transaction
which at the time such contract, agreement or transaction was entered into
materially and adversely affects (i) the business, property, assets,
operations, condition (financial or otherwise) of the Borrower or any
Subsidiary of the Borrower, (ii) the ability of the Borrower or any Subsidiary
of the Borrower to perform timely its obligations under this Credit Agreement
and the other Loan Documents to which it is a party or (iii) a Subsidiary's
ability to perform timely its material covenants and obligations under any
Subsidiary Guaranty to which it is a party.
SECTION 7.8. Sales of Assets. The Borrower shall not, and shall not
permit any of its Subsidiaries to, sell, assign, transfer, lease, convey or
otherwise dispose of any of its assets or properties, whether now owned or
hereafter acquired, or any income or profits therefrom, or enter into any
agreement to do so, except:
(a) sales of inventory in the ordinary course of its business;
(b) sales or dispositions of worn out or obsolete tools or equipment no
longer used or useful in the business of the Borrower or such Subsidiary of the
Borrower;
(c) sales of Oil and Gas Interests and/or Coal Interests for fair market
value on an arm's length basis in an aggregate amount for both Oil and Gas
Interests and Coal Interests for the Borrower and its Subsidiaries not to
exceed $5,000,000 during any
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Fiscal Year, provided, however, that at the time of such sale no Event of
Default has occurred and is continuing and no Borrowing Base Deficiency then
exists;
(d) sales of the Norfolk Common Stock for fair market value on an arm's
length basis in an aggregate amount not to exceed $15,000,000 during any Fiscal
Year; or
(e) sales of the common stock of Westmoreland Coal Company or
Westmoreland Resources, Inc.
SECTION 7.9. ERISA. (a) With the exception of the Benefit Plans
described on Schedule 5.11 (the "Existing Plans"), neither the Borrower nor any
Subsidiary of the Borrower shall create, adopt or become bound by any Benefit
Plan. The Borrower shall not, and shall not permit any of its Subsidiaries to,
engage in a "prohibited transaction", as defined in Section 406 of ERISA or
Section 4975 of the Code, with respect to any Existing Plan or knowingly
consent to any other "interested party" or any "disqualified person", as such
terms are defined in Section 3(14) of ERISA and Section 4975(e)(2) of the Code,
respectively, engaging in any "prohibited transaction", with respect to any
Existing Plan, or permit any Existing Plan maintained by the Borrower or such
Subsidiary of the Borrower to incur any "accumulated funding deficiency", as
defined in Section 302 of ERISA or Section 412 of the Code, unless such
incurrence shall have been waived in advance by the IRS; or terminate any
Existing Plan in a manner which could result in the imposition of a Lien on any
property of the Borrower or such Subsidiary of the Borrower pursuant to Section
4068 of ERISA; or breach any fiduciary responsibility imposed under Title I of
ERISA with respect to any Existing Plan; engage in any transaction which would
result in the incurrence of a liability under Section 4069 of ERISA; or fail to
make contributions to any Existing Plan which results in the imposition of a
Lien on any property of the Borrower or such Subsidiary of the Borrower
pursuant to Section 302(f) of ERISA or Section 412(n) of the Code, if the
occurrence of any of the foregoing events would result in liability to the
Borrower or any of its Subsidiaries of $2,000,000 or more. The Borrower shall
not, and shall not permit any of its Subsidiaries to, materially increase the
benefits provided under any Existing Plan. The Borrower shall not, and shall
not permit any of its Subsidiaries to (nor will any trade or business, whether
or not incorporated, that is a member of a group of which the Borrower or such
Subsidiary of the Borrower is a member and which is treated as a single
employer under Section 414 of the Code) sponsor, maintain or contribute to any
Multiemployer Plan(s). The Borrower shall not, and shall not permit any of its
Subsidiaries to, become a member of any other group which is treated as a
single employer under Section 414 of the Code.
SECTION 7.10. Sales and Leasebacks. The Borrower shall not, and shall
not permit any of its Subsidiaries to, become liable, directly or by way of
Accommodation Obligation, with respect to any lease or any property (whether
real or personal or mixed) whether now owned or hereafter acquired, (i) which
the Borrower or such Subsidiary of the Borrower has sold or transferred or is
to sell or transfer to any other Person or (ii) which the Borrower or such
Subsidiary of the Borrower intends to use for substantially the same purposes
as any other property which has been or is to be sold or transferred by the
Borrower or such Subsidiary of the Borrower to any other Person in connection
with such lease.
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SECTION 7.11. Margin Regulation. The Borrower shall not use or permit
any other Person to use any portion of the proceeds of any credit extended
under this Credit Agreement in any manner which might cause the extension of
credit or the application of such proceeds to violate the Securities Act of
1933 or Securities Exchange Act of 1934 (each as amended to the date hereof and
from time to time hereafter, and any successor statute) or to violate
Regulation G, Regulation U, or Regulation X, or any other regulation of the
Federal Reserve Board, in each case as in effect on the date or dates of such
extension of credit and such use of proceeds.
SECTION 7.12. Amendment to Organizational Documents. The Borrower will
not enter into or permit, and the Borrower will not permit any of its
Subsidiaries to enter into or permit, any modification or amendment of its
certificate or articles of incorporation, bylaws or other charter documents
other than amendments, modifications and waivers which are not, individually or
in the aggregate, material.
SECTION 7.13. Fiscal Year; Fiscal Quarter. The Borrower shall not, and
shall not permit any of its Subsidiaries to, change its Fiscal Year or any of
its Fiscal Quarters.
SECTION 7.14. Hedge Transactions. The Borrower will not enter into,
and the Borrower will not permit any of its Subsidiaries to enter into, any
Hedge Transactions which would cause the amount of Hydrocarbons which are the
subject of Hedge Transactions in existence at such time to exceed seventy-five
percent (75%) of the Borrower's and its Subsidiaries' anticipated production
from Proved Developed Producing Hydrocarbon Reserves during the term of such
existing Hedge Transactions and no such Hedge Transactions requires the
Borrower or any Subsidiary of the Borrower to put up money, assets, letters of
credit or other security against the event of its nonperformance prior to
actual default by the Borrower or such Subsidiary in performing its obligations
thereunder.
SECTION 7.15. Financial Covenants. From and after the Effective Date,
the Borrower on a Consolidated basis shall not:
(a) Permit its Consolidated Tangible Net Worth at any time to be less
than the sum of (i) $115,000,000 plus, if positive (i) forty percent (40%) of
Consolidated Net Income for the period from the Effective Date plus, if any,
(ii) seventy-five percent (75%) of the net proceeds from the sale of equity
securities of the Borrower and its Subsidiaries for the period from the
Effective Date, on a Consolidated basis;
(b) Permit its Consolidated Debt to exceed forty-five percent (45%)
of its Consolidated Capitalization at any time;
(c) Permit the ratio of the Borrower's Consolidated current assets
(as determined in conformity with GAAP) to the Borrower's Consolidated current
liabilities (as determined in conformity with GAAP) as of the end of any Fiscal
Quarter to be less than 1.0 to 1.0. For purposes of this subparagraph (c),
Consolidated current assets shall include the Unused Availability; or
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(d) Permit its ratio of Consolidated Cash Flow to Consolidated Debt
Service at the end of any Fiscal Quarter to be less than 2.0 to 1.0, to be
calculated at the end of each Fiscal Quarter, for the four-Fiscal Quarter
period ending with such Fiscal Quarter.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1. Events of Default. If any of the following events, acts,
occurrences or conditions (each an "Event of Default") shall occur and be
continuing:
(a) The Borrower shall fail to pay when due any payment of any
principal of the Revolving Credit Loans; or
(b) The Borrower shall fail to pay when due the payment of any accrued
interest on the Revolving Credit Loans and such failure shall continue for two
(2) Business Days; or (ii) the Borrower shall fail to pay when due the payment
of any fee, expense, compensation, reimbursement or other amount when due under
this Credit Agreement, the Notes or any other Loan Document or other agreement
or document contemplated by or delivered pursuant to or in connection with this
Credit Agreement or such Loan Document or any material document executed in
connection therewith and, in any event, such failure shall continue for five
(5) Business Days after the earlier of (y) notice thereof from the Agent or any
Bank to the Borrower and (z) discovery thereof by the Borrower; or
(c) The Borrower or any Subsidiary of the Borrower shall fail to
perform or observe any term, covenant or agreement contained in Sections
6.1(c), 6.1(d)(ii), 6.11 or Article VII of this Credit Agreement; or
(d) The Borrower or any Subsidiary of the Borrower shall fail to
perform any term, covenant or agreement contained in this Credit Agreement
other than those referenced in subsections (a), (b) or (c) of this Section 8.1
or in any other Loan Document to which it is a party and, in the case of any
such failure that is capable of being remedied, such failure shall not have
been remedied within thirty (30) days after the earlier of (i) notice thereof
from the Agent to the Borrower and (ii) discovery thereof by a Responsible
Officer of the Borrower or such Subsidiary of the Borrower; or
(e) Any Subsidiary shall fail to perform any term, covenant or
agreement contained in the Subsidiary Guaranty other than those referenced in
subsections (a), and (b) of this Section 8.1, and, in the case of any such
failure that is capable of being remedied, such failure shall not have been
remedied within thirty (30) days after the earlier of (i) notice thereof from
the Agent to such Subsidiary and (ii) discovery thereof by a Responsible
Officer of such Subsidiary; or
(f) Any Termination Event occurs which would subject the Borrower or
any Subsidiary of the Borrower, to a liability in excess of $2,000,000, or the
plan administrator of any Benefit Plan applies under Section 412(d) of the Code
for a waiver
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of the minimum funding standards of Section 412(a) of the Code which would
subject the Borrower or any Subsidiary of the Borrower, to a liability in
excess of $2,000,000; or
(g) Any representation or warranty made or incorporated by the Borrower
or any Subsidiary of the Borrower in any Loan Document to which such Person is
a party or in any certificate, agreement or instrument delivered in connection
with, any Loan Document shall prove to have been incorrect or misleading in any
material respect when made or deemed made; or
(h) The Borrower or any Subsidiary of the Borrower, shall (i) fail to
pay any Debt having a principal amount in excess of $2,000,000 (other than the
amounts referred to in subsections (a) and (b) of this Section 8.1) owing by
such Person, or any interest or premium thereon, when due (or, if permitted by
the terms of the relevant document, within any applicable grace period),
whether such Debt shall become due by scheduled maturity, by required
prepayment, by acceleration, by demand or otherwise unless effectively waived
or consented to in accordance with the documents evidencing such Debt or (ii)
fail to observe or perform any material term, covenant or condition on its
respective part to be performed under any agreement or instrument evidencing,
securing or relating to any such Debt, when required to be performed, and such
failure shall continue after the applicable grace period, if any, specified in
such agreement or instrument if the effect of any failure is to cause, or to
permit the holder or holders of such Debt or a trustee on its or their behalf
(with or without the giving of notice, the lapse of time, or both), to cause
such Debt to become due prior to its stated maturity; or
(i) Any Loan Document shall, at any time after its execution and
delivery and for any reason, cease to be in full force and effect or shall be
declared to be null and void, or the validity or enforceability thereof shall
be contested by any Person party thereto (other than the Agent or any Bank) or
any such Person party thereto (other than the Agent or any Bank) shall deny
that it has any or further liability or obligation thereunder, or the
Obligations shall be subordinated for any reason; or
(j) The Borrower or any Subsidiary of the Borrower shall be adjudicated
insolvent, or shall generally not pay, or admit in writing its inability to
pay, its debts as they mature, or make a general assignment for the benefit of
creditors, or any proceeding shall be instituted by any such Person seeking to
adjudicate it insolvent, seeking liquidation, dissolution, winding- up,
reorganization, arrangement, adjustment, protection, relief or composition of
it or its debts under any Debtor Relief Law, or seeking the entry of an order
for relief or the appointment of a receiver, trustee, or other similar official
for it or for any substantial part of its property, or any such Person shall
take any corporate action in furtherance of any of the actions set forth above
in this Section 8.1(j); or
(k) Any proceeding of the type referred to in Section 8.1(j) is filed,
or any such proceeding is commenced against the Borrower or any Subsidiary of
the Borrower, or any such Person by any act indicates its approval thereof,
consent thereto or acquiescence therein, or an order for relief is entered in
an involuntary case under the bankruptcy law of the United States, or an order,
judgment or decree is entered appointing a trustee, receiver, custodian,
liquidator or similar official or adjudicating any such Person
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insolvent, or approving the petition in any such proceedings, and such order,
judgment or decree remains in effect for sixty (60) days; or
(l) A final judgment or order for the payment of money in excess of
$2,000,000 and not covered by insurance shall be rendered against the Borrower
or any Subsidiary of the Borrower and the same shall not be discharged (or
provision shall not be made for such discharge), or a stay of execution thereof
shall not be procured, within thirty (30) days from the date of entry thereof,
or the Borrower or any Subsidiary of the Borrower shall not, within said period
of thirty (30) days or such longer period during which execution of the same
shall have been stayed, appeal therefrom and cause the execution thereof to be
stayed during such appeal; or
(m) (i) Any Environmental Liability shall have been asserted under any
applicable Environmental Law against the Borrower or any Subsidiary of the
Borrower or (ii) any Release of any Hazardous Substance shall have occurred,
and such event could form the basis of an Environmental Liability against the
Borrower or any Subsidiary of the Borrower; which in either case could
reasonably be expected to result in liability to the Borrower or any Subsidiary
of Borrower in excess of $2,000,000;
THEN, (x) upon the occurrence of any Event of Default described in Section
8.1(j) or Section 8.1(k) with respect to the Borrower or any Subsidiary of the
Borrower (i) all of the Commitments shall automatically terminate, and the
Borrower shall deposit with the Agent cash equal to the aggregate face amount
of all outstanding Letters of Credit issued hereunder and (ii) the entire
unpaid amount of all Obligations shall automatically become immediately due and
payable, without presentment for payment, demand, protest, notice of intent to
accelerate, notice of acceleration or further notice of any kind, all of which
are hereby expressly waived by the Borrower and each of its Subsidiaries and
the obligation of each Bank to make any Revolving Credit Loan hereunder shall
thereupon terminate and (y) upon the occurrence of any other Event of Default,
the Agent shall at the request, or may with the consent, of the Majority Banks,
(i) by written notice to the Borrower declare all of the Commitments to be
terminated, whereupon all of the Commitments and the obligations of each Bank
to make any Revolving Credit Loan hereunder shall forthwith terminate, and the
Borrower shall deposit with the Agent cash equal to the aggregate face amount
of all outstanding Letters of Credit issued hereunder and (ii) by written
notice to the Borrower declare the entire unpaid amount of all Obligations to
be forthwith due and payable, whereupon all Obligations shall become and be
forthwith due and payable, without presentment for payment, demand, protest,
notice of intent to accelerate, notice of acceleration or further notice of any
kind, all of which are hereby expressly waived by the Borrower and each
Subsidiary of the Borrower. The Borrower hereby grants to the Agent for the
ratable benefit of the Banks a security interest in, and Lien on, any Dollars
delivered to the Agent pursuant to this Section 8.1, as security for the
Obligations.
SECTION 8.2. Remedies. If any Default or Event of Default shall occur
and be continuing, the obligations of the Banks to make Revolving Credit Loans,
and of the Issuing Bank(s) to issue Letters of Credit, under this Credit
Agreement shall terminate immediately. If any Event of Default shall occur,
the Agent for the ratable benefit of the Banks, may (and upon the request of
the Majority Banks shall) protect and enforce the
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Banks' rights and remedies under the Loan Documents by any appropriate
proceedings, including proceedings for specific performance of any covenant or
agreement contained in any Loan Document, and the Banks may enforce the payment
of any Obligations due or enforce any other legal or equitable right. All
rights and remedies and powers conferred upon the Agent and/or the Banks under
the Loan Documents shall be deemed cumulative and not exclusive of any other
rights, remedies or powers available under the Loan Documents or at law or in
equity.
SECTION 8.3. Right of Setoff. In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence and during the continuance
of any Event of Default, each Bank is hereby authorized at any time or from
time to time, to the fullest extent permitted by law and without presentment,
demand, protest or other notice of any kind to the Borrower or to any other
Person, any such notice being hereby expressly waived, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held, and other Debt at any time owing, by such Bank (including,
without limitation, by Affiliates, branches or agencies of such Bank wherever
located) to or for the credit or the account of the Borrower against any of and
all the Obligations, including, without limitation, all interests in
Obligations purchased by such Bank pursuant to Section 2.18, and all other
claims of any nature or description arising out of or in connection with this
Credit Agreement or any other Loan Document, irrespective of whether or not
such Bank shall have made any demand under this Credit Agreement or the Notes
or other Loan Documents and although such Obligations, liabilities or claims,
or any of them, shall be contingent or unmatured. Such Bank agrees promptly to
notify the Borrower after any such setoff and application made by such Bank,
but the failure to give such notice shall not affect the validity of such
setoff and application. The rights of the Banks under this Section 8.3 are in
addition to other rights and remedies (including, without limitation, other
rights of setoff) which the Banks may have. Notwithstanding any other
provisions of this Credit Agreement, the provisions of this Section 8.3 (except
for the provisions of this sentence) will not apply to any amounts held by the
Borrower or any Subsidiary of the Borrower for the benefit of working interest
owners and/or royalty owners for the purpose of paying ad valorem taxes,
development costs and/or operating costs or for the purpose of making
distributions to the revenue interest owners of revenues from various Oil and
Gas Interests.
SECTION 8.4. Indemnity. The Borrower shall indemnify the Agent and
each Bank and each Affiliate thereof and their respective directors, officers,
employees, shareholders and agents (each an "Indemnitee") from, and hold each
of them harmless against, any and all losses, liabilities, claims, damages,
expenses, penalties, actions, judgments, suits, costs or disbursements of any
kind or nature whatsoever that are asserted against an Indemnitee by any Person
if such losses, liabilities, claims, damages, expenses, penalties, actions,
judgments, suits, costs or disbursements arise out of or result from (i) any
use by the Borrower of the proceeds of any extension of credit by the Banks
hereunder or (ii) any investigation, litigation or other proceeding (including
any threatened investigation or proceeding) relating to the foregoing or
arising out of or based upon any Loan Document or any of the transactions
contemplated by any Loan Document, and the Borrower shall reimburse such
Indemnitee, within ten (10) Business Days after receipt of a composite
statement of account for any reasonable expenses
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(including reasonable legal fees) incurred in connection with any such
investigation or proceeding; but excluding any such losses, liabilities,
claims, damages, expenses, penalties, actions, judgments, suits, costs or
disbursements which are proximately caused by such Indemnitee. Without
prejudice to the survival of any other Obligations of the Borrower hereunder
and the other Loan Documents, the Obligations of the Borrower under this
Section 8.4 shall survive the termination of this Credit Agreement, the payment
in full of the Obligations and/or assignment of the Notes.
ARTICLE IX
THE AGENT
SECTION 9.1. Authorization and Action. The general administration of
the Loan Documents and any other documents contemplated by this Credit
Agreement shall be by the Agent or its designees. Each of the Banks authorizes
the Agent to take such actions on its behalf and to exercise such powers and to
perform such duties as are expressly delegated to the Agent by the terms of
this Credit Agreement and the other Loan Documents, together with such powers
as are reasonably incidental thereto. Notwithstanding any provision to the
contrary elsewhere in this Credit Agreement, the Agent shall not have any
duties or responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities on the part of the Agent
shall be read into this Credit Agreement or otherwise exist against the Agent.
(b) The provisions of this Article IX are solely for the benefit of
the Agent and the Banks, and neither the Borrower nor any Subsidiary of the
Borrower shall have any rights as a third party beneficiary or otherwise under,
or be bound by, the provisions of this Article IX.
(c) In performing its functions and duties hereunder and under the
other Loan Documents, the Agent shall act solely as the agent of the Banks and
the Agent does not assume nor shall it be deemed to have assumed any obligation
or relationship of trust or agency with or for the Borrower, any Subsidiary of
the Borrower or any of their respective successors and assigns.
SECTION 9.2. Agent's Reliance; Exculpatory Provisions, Etc.
(a) Neither the Agent nor any of its directors, officers, agents or
employees shall be liable to any Bank for any action taken or omitted to be
taken by it or them under or in connection with this Credit Agreement or the
other Loan Documents (i) with the consent or at the request of the Majority
Banks or if required under Section 10.1, all of the Banks or (ii) in the
absence of its or their own gross negligence or willful misconduct (it being
the express intention of the parties that the Agent and its directors,
officers, agents and employees shall have no liability for actions and
omissions under this Section 9.2 resulting from their sole ordinary or
contributory negligence). Without limitation of the generality of the
foregoing, the Agent: (i) may treat the payee of each Note as the holder
thereof until the Agent receives a Commitment Transfer Supplement from such
payee in accordance with the terms of Section 10.9; (ii) may consult with legal
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counsel (including counsel to the Borrower), independent public accountants and
other experts selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants or experts; (iii) makes no warranty or representation to
any Bank and shall not be responsible to any Bank for any statements,
warranties or representations made in or in connection with this Credit
Agreement or the other Loan Documents; (iv) except as otherwise expressly
provided herein, shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Credit Agreement or the other Loan Documents or to inspect the property
(including the books and records) of the Borrower or its Subsidiaries; (v)
shall not be responsible to any Bank for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Credit Agreement or
the other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto; (vi) shall incur no liability under or in respect of this
Credit Agreement or the other Loan Documents by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telegram,
telecopier, cable or telex) reasonably believed by it to be genuine and signed
or sent by the proper party or parties, (vii) shall incur no liability to any
Bank or the Issuing Bank as a result of any act or failure to act in respect of
a Letter of Credit that would not form the basis for liability against the
Agent acting either as the Agent or the Issuing Bank with respect to such
Letter of Credit, in an action between the Agent, in either such capacity, and
either the customer arranging for such Letter of Credit, the beneficiary
thereof or the holder of the draft drawn thereunder and (viii) the provisions
of this Section 9.2 shall survive the termination of this Credit Agreement
and/or the payment or assignment of any of the Obligations. The Agent shall be
fully justified in failing or refusing to take any action under this Credit
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Majority Banks (or if required under Section 10.1, all of
the Banks) as it deems appropriate or it shall first be indemnified to its
satisfaction by the Banks against any and all liability and expense (other than
that resulting from its own gross negligence or willful misconduct) which may
be incurred by it by reason of taking or continuing to take any such action.
The Agent shall in all cases be fully protected in acting, or in refraining
from acting, under this Credit Agreement and the other Loan Documents in
accordance with a request of the Majority Banks or all of the Banks, as the
case may be, and such request and any action taken or failure to act pursuant
thereto shall be binding upon all of the Banks and all future holders of the
Notes.
(b) Neither the Agent nor any of its directors, officers, employees,
or agents shall have any responsibility to any Person on account of the failure
or delay in performance or breach by any of the Banks or the Borrower or any
Subsidiary of the Borrower or any of their respective Obligations under this
Credit Agreement, the Notes, the Loan Documents or any related agreement or
document or in connection herewith or therewith.
SECTION 9.3. The Agent in its Individual Capacity and Affiliates. With
respect to its Commitment, any of the Revolving Credit Loans made by it and/or
the Notes issued to it as a Bank, TCB shall have the same rights and powers
under this Credit Agreement or the other Loan Documents as any other Bank and
may exercise the same as though it were not the Agent. The terms "Bank" or
"Banks" shall, unless otherwise expressly indicated, include the Agent in its
individual capacity. TCB and its Affiliates
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may accept deposits from, lend money, act as trustee under indentures of, and
generally engage in any kind of business with, the Borrower, its Subsidiaries
and/or any Person who may do business with or own securities of the Borrower or
any Subsidiary of the Borrower, all as if it were not the Agent and without any
duty to account therefor to the other Banks.
SECTION 9.4. Bank Credit Decision. Each Bank acknowledges and agrees
that it has, independently and without reliance upon the Agent or any other
Bank and based on the financial statements and other information referred to in
Section 5.9 and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Credit Agreement. Each Bank also acknowledges and agrees that it will,
independently and without reliance upon the Agent or any other Bank and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Credit Agreement and the other Loan Documents.
SECTION 9.5. Indemnification and Reimbursement. The Agent shall not be
required to take any action hereunder or to prosecute or defend any suit in
respect of this Credit Agreement or the other Loan Documents unless indemnified
to the Agent's satisfaction by the Banks against loss, cost, liability and
expense. If any indemnity furnished to the Agent shall become impaired, it may
call for additional indemnity and cease to do the acts indemnified against
until such additional indemnity is given. In addition, the Banks agree to
indemnify the Agent (to the extent not reimbursed by the Borrower), ratably
according to the respective principal amounts of the Notes then held by each of
them (or if no Notes are at the time outstanding, ratably according to either
(i) the respective amounts of their Commitments, or if no Commitments are
outstanding, (ii) the respective amounts of the Commitments immediately prior
to the time the Commitments ceased to be outstanding), from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by, or asserted against the Agent in any way
relating to or arising out of this Credit Agreement or any action taken or
omitted by the Agent under this Credit Agreement or the other Loan Documents
(including, without limitation, any action taken or omitted under Article II of
this Credit Agreement); provided, that no Bank shall be liable for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent's
gross negligence or willful misconduct. EACH BANK AGREES, HOWEVER, THAT IT
EXPRESSLY INTENDS, UNDER THIS SECTION 9.5, TO INDEMNIFY THE AGENT RATABLY AS
AFORESAID FOR ALL SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,
ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES AND DISBURSEMENTS ARISING OUT OF OR
RESULTING FROM THE AGENT'S ORDINARY OR CONTRIBUTORY NEGLIGENCE. Without
limitation of the foregoing, each Bank agrees to reimburse the Agent promptly
upon demand for its ratable share of any out-of-pocket expenses (including
reasonable counsel fees) incurred by the Agent in connection with the
preparation, execution, administration, or enforcement of, or legal advice in
respect of rights or responsibilities under, this Credit Agreement and the
other Loan Documents to the extent that the Agent is not reimbursed for such
expenses by the Borrower. The provisions of this Section 9.5 shall survive the
termination of Credit Agreement and/or the payment or assignment of any of the
Obligations.
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SECTION 9.6. Successor Agent. The Agent may resign at any time by
giving written notice thereof to the Banks and the Borrower and may be removed
as Agent at any time for cause by the Majority Banks. Upon any such
resignation or removal, the Majority Banks shall have the right to appoint from
among the Banks a successor Agent (with the consent of the Borrower which shall
not be unreasonably withheld or delayed, provided that if an Event of Default
shall have occurred and be continuing the consent of the Borrower need not be
obtained). If no successor Agent shall have been so appointed by the Majority
Banks, and shall have accepted such appointment, within 30 calendar days after
the retiring Agent's giving of notice of resignation or the Majority Banks'
removal of the retiring Agent, then the retiring Agent may, on behalf of the
Banks and with the concurrence of the Borrower, appoint a successor Agent,
which shall be an Eligible Assignee. Upon the acceptance of any appointment as
Agent hereunder and under the other Loan Documents 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 under this Credit
Agreement and the other Loan Documents. After any retiring Agent's resignation
or removal as Agent hereunder and under the other Loan Documents, the
provisions of this Article IX shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Credit
Agreement and the other Loan Documents.
SECTION 9.7. Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent shall have received notice from a Bank or the
Borrower referring to this Credit Agreement, describing such Default or Event
of Default and stating that such notice is a "notice of default." If the Agent
receives such a notice, the Agent shall promptly give notice thereof to the
Banks; provided, however, if such notice is received from a Bank, the Agent
also shall give notice thereof to the Borrower. The Agent shall be entitled to
take action or refrain from taking action with respect to such Default or Event
of Default as provided in Section 9.1 and Section 9.2.
SECTION 9.8. Delegation of Duties. The Agent may execute any of its
duties under this Credit Agreement or the other Loan Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-
fact selected by it with reasonable care.
ARTICLE X
MISCELLANEOUS
SECTION 10.1. Amendments and Waivers. Neither this Credit Agreement or
any other Loan Document to which the Borrower or any Subsidiary is a party nor
any terms hereof or thereof may be amended, supplemented, waived or otherwise
modified except in accordance with the provisions of this subsection. Any
provision of this Credit Agreement or any other Loan Document may be amended,
supplemented, waived, or otherwise modified if and only if such amendment,
supplement, waiver or other modification (x) is in writing, (y) is signed by
the Majority Banks (if the Banks are a
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party thereto) or by the Agent with the consent of the Majority Banks (if the
Agent is a party thereto and the Banks are not) and (z) is signed by each other
party thereto except that in the case of a waiver, the party whose performance
is being waived need not be a signatory; provided no such amendment,
supplement, waiver or other modification shall do any of the following unless
signed by all of the Banks (if the Banks are a party thereto) and by the Agent
with the consent of all of the Banks (if the Agent is a party thereto and the
Banks are not):
(i) extend the Maturity Date, the date of payment of any
principal, interest or fees, or the date of payment of any
required principal prepayment;
(ii) reduce the amount of any principal, interest or fees, the
rate of interest paid with respect to any unpaid principal,
interest or fees, or the amount of any fee payable to the Banks
hereunder;
(iii) change the amount of any Commitment of any Bank;
(iv) amend, modify, or waive any of the conditions set forth in
Article IV (other than any condition which refers therein to the
Majority Banks);
(v) amend, modify or waive any provision which calls for the
consent of, the approval of, or direction from all of the Banks;
(vi) amend, modify or waive any provision contained in Article
III.
(vii) amend, modify or waive any provision of this Section 10.1
or the definition of Majority Banks;
(viii) release any Subsidiary Guarantor from its obligations
under the Subsidiary Guaranty; or
(ix) consent to or permit the assignment or transfer by the
Borrower or any Subsidiary of the Borrower of any of its rights
and obligations under this Credit Agreement or any other Loan
Document to which it is a party (other than as a result of a
permitted merger or consolidation pursuant to Section 7.4 which
refers therein to the Majority Banks);
and provided, further, without the prior written consent of the Agent, no such
amendment, supplement, waiver or modification shall amend, supplement, waive or
otherwise modify any provision of Article IX or any other provision of any Loan
Document if the effect thereof is to affect the rights or duties of the Agent;
and provided, further, that no amendment, waiver or consent shall, unless in
writing and signed by the Issuing Bank in addition to the Banks required above
to take such action, affect the rights and duties of the Issuing Bank with
respect to the Letters of Credit and the Letter of Credit Applications, if any,
outstanding under this Credit Agreement. Any such amendment, supplement,
modification or waiver shall apply to each of the Banks equally and shall be
binding upon the Banks, the Agent, all future holders of the Notes and
Obligations, and all parties to the Loan Document so amended, supplemented,
waived
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or otherwise modified.
SECTION 10.2. Notices, Etc. Notices, consents, requests, approvals,
demands and other communications (collectively "Communications") provided for
herein shall be in writing (including telecopy, telegraphic, telex or cable
communications) and mailed, telecopied, telegraphed, telexed, cabled or
delivered:
If to the Borrower or any of its Subsidiaries, to it at:
Penn Virginia Corporation
100 Matsonford Road, Suite 200
Radnor, Pennsylvania 19087
Telephone Number: (610) 687-8900
Telecopy Number: (610) 687-3688
Attention: Steven W. Tholen
Vice President and Chief Financial Officer
If to the Agent, to it at:
Texas Commerce Bank National Association
707 Travis, 5 TCBN-86
Houston, Texas 77002
Telephone Number: (713) 216-4332
Telecopy Number: (713) 216-4117
Attention: Lori H. Vetters
Vice President-Global Oil & Gas
If such notice to the Agent relates to fundings or payments, with
a copy to:
Texas Commerce Bank National Association
1111 Fannin, 9th Floor, MS46
Houston, Texas 77002
Telephone Number: (713) 750-2784 or
(713) 750-3907
Telecopy Number: (713) 750-3810
Attention: Gale Manning
If to any Bank, as specified on Schedule 1.1 hereto or in the
appropriate Commitment Transfer Supplement pursuant to Section
10.9.
All Communications, except as otherwise expressly provided in the Loan
Documents, must be in writing and must be mailed, telecopied or delivered, to
the appropriate party at the address set forth herein or other applicable Loan
Document or, as to any party to any Loan Document, at any other address as may
be designated by it in a written notice sent to all other parties to such Loan
Document in accordance with this Section 10.2 and (b) any notice, request,
demand, direction, or other communication given by telecopier must be confirmed
within 48 hours by letter mailed or delivered to the appropriate party at its
respective address. Except as otherwise expressly provided in any Loan
Document,
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any notice, request, demand, direction, or other communication required or
permitted by any Loan Document given in compliance with this Section 10.2 shall
be effective when received or delivered.
SECTION 10.3. No Waiver; Remedies Cumulative. No failure on the part
of the Agent or any Bank or any holder of a Note to exercise, and no delay in
exercising, any right, power or privilege hereunder or under any other Loan
Document and no course of dealing between the Borrower, its Subsidiaries, or
any of them and the Agent or any Bank or any holder of any Note shall operate
as a waiver thereof; nor shall any single or partial exercise of any such
right, power or privilege, or any abandonment or discontinuance of any steps to
enforce such right, power or privilege, preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. No notice to
or demand on the Borrower in any case shall entitle the Borrower to any other
or further notice or demand in similar or other circumstances. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
SECTION 10.4. Costs, Expenses and Taxes.
(a) The Borrower agrees to pay within ten (10) Business Days
after presentation of a composite statement of account, all reasonable costs
and expenses of the Agent in connection with: (i) the negotiation,
preparation, distribution, execution and delivery of this Credit Agreement, the
Notes and the other Loan Documents and the documents and instruments referred
to therein, (ii) the syndication, management and agenting of the Revolving
Credit Loans, (iii) the Agent's review and due diligence (including, without
limitation, the review of the material Oil and Gas Interests and Coal
Interests, and (iv) the negotiation, preparation, distribution, execution and
delivery of any amendment, supplement, modification, waiver or consent relating
to any of the Loan Documents to which the Borrower or any Subsidiary of the
Borrower is a party (including, without limitation, as to each of the
foregoing, the reasonable fees and disbursements of legal counsel).
(b) The Borrower shall pay all reasonable out-of-pocket costs
and expenses of the Agent and each Bank in connection with (i) the preservation
of their rights under, and enforcement of, the Loan Documents to which the
Borrower or any Subsidiary of the Borrower is a party and the documents and
instruments referred to therein and (ii) any workout, restructuring or
rescheduling of the Obligations or any proceeding under any Debtor Relief Law
with respect to the Borrower or any Subsidiary of the Borrower (including,
without limitation, in each case, the reasonable fees and disbursements of
counsel for the Agent and the Banks and allocated costs of internal counsel).
(c) The Borrower shall pay, and hold the Agent and each of the
Banks harmless from and against, any and all present and future stamp, excise,
and other similar taxes and fees with respect to the foregoing matters and hold
the Agent and each Bank harmless from and against any and all liabilities with
respect to or resulting from any delay or omission (other than to the extent
attributable to the Agent or such Bank) to pay such taxes.
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(d) Without prejudice to the survival of any other obligations
of the Borrower hereunder, under the other Loan Documents, the obligations of
the Borrower under this Section 10.4 shall survive the termination of this
Credit Agreement and the payment in full of the Obligations for a period of
fifteen (15) months.
SECTION 10.5. Governing Law. This Credit Agreement, the Notes and,
unless otherwise specified therein, all other Loan Documents and all other
documents executed in connection herewith or therewith, shall be deemed to be
contracts and agreements executed by the Borrower, the Agent and the Banks
under the laws of the State of Texas and of the United States and for all
purposes shall be construed in accordance with, and governed by, the laws of
said State and of the United States. Without limitation of the foregoing,
nothing in this Credit Agreement, the Notes or any other Loan Document shall be
deemed to constitute a waiver of any rights which any Bank may have under
applicable federal legislation relating to the amount of interest which such
Bank may contract for, take, receive or charge in respect of any Revolving
Credit Loans, including any right to take, receive, reserve and charge interest
at the rate allowed by the law of the state where such Bank is located. The
Agent, the Banks and the Borrower further agree that insofar as the provisions
of Article 1.04, Subtitle 1, Title 79, of the Revised Civil Statutes of Texas,
1925, as amended, are applicable to the determination of the Highest Lawful
Rate with respect to the Notes, the indicated rate ceiling computed from time
to time pursuant to Section (a) of such Article shall apply to the Notes;
provided, however, that to the extent permitted by such Article, the Agent may
from time to time by notice from the Agent to the Borrower revise the election
of such interest rate ceiling as such ceiling affects then current or future
balances of the Revolving Credit Loans outstanding under the Notes. The
provisions of Chapter 15 of Subtitle 3 of the said Title 79 do not apply to
this Credit Agreement or the Notes issued hereunder.
SECTION 10.6. Interest. Each provision in this Credit Agreement and
each other Loan Document is expressly limited so that in no event whatsoever
shall the amount paid, or otherwise agreed to be paid, to the Agent or any Bank
for the use, forbearance or detention of the money to be loaned under this
Credit Agreement or any Loan Document or otherwise (including any sums paid as
required by any covenant or obligation contained herein or in any other Loan
Document which is for the use, forbearance or detention of such money), exceed
that amount of money which would cause the effective rate of interest to exceed
the Highest Lawful Rate, and all amounts owed under this Credit Agreement and
each other Loan Document shall be held to be subject to reduction to the effect
that such amounts so paid or agreed to be paid which are for the use,
forbearance or detention of money under this Credit Agreement or such Loan
Document shall in no event exceed that amount of money which would cause the
effective rate of interest to exceed the Highest Lawful Rate. Anything in this
Credit Agreement, any Note or any other Loan Document to the contrary
notwithstanding, with respect to each Note the Borrower shall never be required
to pay unearned interest on such Note or ever be required to pay interest on
such Note at a rate in excess of the Highest Lawful Rate, and if the effective
rate of interest which would otherwise be payable with respect to such Note
would exceed the Highest Lawful Rate, or if the holder of such Note shall
receive any unearned interest or shall receive monies that are deemed to
constitute interest which would increase the effective rate of interest payable
by the Borrower with respect to such Note to a rate in excess of the Highest
Lawful Rate, then (i) the amount of interest
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which would otherwise be payable by the Borrower with respect to such Note
shall be reduced to the amount allowed under applicable law and (ii) any
unearned interest paid by the Borrower or any interest paid by the Borrower in
excess of the Highest Lawful Rate shall be in the first instance credited on
the principal of such Notes with the excess thereof, if any, refunded to the
Borrower. It is further agreed that, without limitation of the foregoing, all
calculations of the rate of interest contracted for, charged or received by any
Bank under the Notes held by it, or under this Credit Agreement or the other
Loan Documents, are made for the purpose of determining whether such rate
exceeds the Highest Lawful Rate applicable to such Bank (such Highest Lawful
Rate being the Bank's "Maximum Permissible Rate"), shall be made, to the extent
permitted by usury laws applicable to such Bank (now or hereafter enacted), by
(a) characterizing any non-principal payment as an expense, fee or premium
rather than as interest and (b) amortizing, prorating and spreading in equal
parts during the period of the full stated term of the Revolving Credit Loans
evidenced by said Notes all interest at any time contracted for, charged or
received by such Bank in connection therewith.
SECTION 10.7. Survival of Representations and Warranties. All
representations, warranties and covenants contained or incorporated herein or
made in writing by the Borrower or any Subsidiary of the Borrower in connection
herewith shall survive the execution and delivery of this Credit Agreement, the
Notes and the other Loan Documents.
SECTION 10.8. Binding Effect. This Credit Agreement shall become
effective when it shall have been executed by the Borrower, the Agent and each
of the Banks and shall be binding upon and inure to the benefit of the Borrower
and the Banks and their respective successors and assigns, whether so expressed
or not, provided, that the undertaking of the Banks to make Revolving Credit
Loans to the Borrower shall not inure to the benefit of any successor or
assignee of the Borrower.
SECTION 10.9. Successors and Assigns; Participation; Eligible
Assignees.
(a) This Credit Agreement shall be binding upon and inure to
the benefit of the Borrower, the Banks, the Agent, all future holders of the
Notes and their respective successors and assigns, except that the Borrower may
not assign or transfer any of its rights or obligations under this Credit
Agreement without the prior written consent of each Bank.
(b) Any Bank may, in the ordinary course of its commercial
banking business and in accordance with applicable law at any time sell to one
or more banks or other entities ("Participants") participating interests in any
Revolving Credit Loan owing to such Bank, any Note held by such Bank, any
Letter of Credit Exposure held by it, any Commitment of such Bank, including
such Bank's Commitment Percentage of the Letter of Credit Commitment, or any
other interest of such Bank hereunder and under the other Loan Documents. In
the event of any such sale by a Bank of participating interests to a
Participant, such Bank's obligations under this Credit Agreement to the other
parties to this Credit Agreement shall remain unchanged, such Bank shall remain
solely responsible for the performance thereof, such Bank shall remain the
holder of any such Note for all purposes under this Credit Agreement and the
other Loan Documents, and the Borrower
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and the Agent shall continue to deal solely and directly with such Bank in
connection with such Bank's rights and obligations under this Credit Agreement
and the other Loan Documents. The Borrower agrees that if amounts outstanding
under this Credit Agreement and the Notes are due or unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of an Event
of Default, each Participant shall be deemed to have the right of setoff in
respect of its participating interest in amounts owing under this Credit
Agreement and any Note to the same extent as if the amount of its participating
interest were owing directly to it as a Bank under this Credit Agreement or any
Note, provided that such Participant shall only be entitled to such right of
setoff if it shall have agreed in the agreement pursuant to which it shall have
acquired its participating interest to share with the Banks the proceeds
thereof as provided in Section 8.3. The Borrower also agrees that each
Participant shall be entitled to the benefits of Sections 2.13, 2.15, 2.17 and
10.4 with respect to its participation in the Commitments and the Utilized
Credit outstanding from time to time, provided, that no Participant shall be
entitled to receive any greater amount pursuant to such sections than the
transferor Bank would have been entitled to receive in respect of the amount of
the participation transferred by such transferor Bank to such Participant had
no such transfer occurred.
(c) Any Bank may, in the ordinary course of its commercial
banking business and in accordance with applicable law at any time sell to any
Bank or any Affiliate thereof and, so long as no Event of Default has occurred
and is continuing, with the consent of the Borrower and the Agent (which in
each case shall not be unreasonably withheld) and if an Event of Default has
occurred and is continuing, without the consent of the Borrower, to one or more
Eligible Assignees, all or any part of its rights and obligations under this
Credit Agreement, its Commitment, including, without limitation, its Commitment
Percentage of the Letter of Credit Commitment, the Revolving Credit Loans
owning to it, the Note(s) held by it, the Letter of Credit Exposure held by it
(in respect of any such Bank, the "Credit Exposure"), pursuant to a Commitment
Transfer Supplement, substantially in the form of Exhibit B,provided, however,
that (i) the parties to such Commitment Transfer Supplement shall have executed
and delivered to the Agent for its acceptance and recording in the Register, a
Commitment Transfer Supplement, together with the Note(s) subject to such
assignment, (ii) each such assignment shall be of a constant, and not a
varying, percentage of the transferor Bank's Credit Exposure, i.e., any such
assignment shall include a constant percentage of, inter alia the rights and
obligations of such transferor Bank with respect to its Commitment, including,
without limitation, its Commitment Percentage of the Letter of Credit
Commitment, the Revolving Credit Loans owning to it, the Note(s) held by it,
and the Letter of Credit Exposure held by it, (iii) the amount of each such
assignment (determined as of the date Commitment Transfer Supplement with
respect to such assignment is delivered to the Agent) shall be in a minimum
principal amount of $5,000,000 and (iv) if the transferor Bank has retained any
Commitment hereunder, such transferor Bank's remaining Commitment shall be at
least $5,000,000 after giving effect to such assignment. Upon such execution,
delivery, acceptance and recording, from and after the Transfer Effective Date
determined pursuant to such Commitment Transfer Supplement, (x) the Eligible
Assignee thereunder shall be a party hereto and, to the extent provided in such
Commitment Transfer Supplement, have the rights and obligations of a Bank
hereunder with a Commitment as set forth therein, and (y) the transferor Bank
thereunder shall, to
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the extent provided in such Commitment Transfer Supplement, be released from
its obligations under this Credit Agreement (and, in the case of a Commitment
Transfer Supplement covering all or the remaining portion of a transferor
Bank's rights and obligations under this Credit Agreement, such transferor Bank
shall cease to be a party hereto. Such Commitment Transfer Supplement shall be
deemed to amend this Credit Agreement to the extent, and only to the extent,
necessary to reflect the addition of such Eligible Assignee and the resulting
adjustment of Commitment Percentages arising from the purchase by such Eligible
Assignee of all or a portion of the rights and obligations of such transferor
Bank under this Credit Agreement and the Notes. On or prior to the Transfer
Effective Date determined pursuant to such Commitment Transfer Supplement, the
Borrower, at its expense, shall execute and deliver to the Agent in exchange
for the surrendered Note a new Note to the order of such Eligible Assignee in
an amount equal to the Commitment and Revolving Credit Loans assumed by it
pursuant to such Commitment Transfer Supplement and, if the transferor Bank has
retained a Commitment and Revolving Credit Loans hereunder, a new Note to the
order of the transferor Bank in an amount equal to the Commitment and Revolving
Credit Loans retained by it hereunder. Such new Notes shall be in the form of
the Notes replaced thereby.
(d) The Agent shall maintain at its address referred to in
Section 10.2 a copy of each Commitment Transfer Supplement delivered to it and
a register (the "Register") for the recordation of the names and addresses of
the Banks and the Commitment of, the principal amount of the Revolving Credit
Loans owing to, and the Letter of Credit Exposure of, each Bank from time to
time. The entities in the Register shall be conclusive, in the absence of
manifest error, and the Borrower, the Agent and the Banks may treat each Person
whose name is recorded in the Register as the owner of the Revolving Credit
Loan and/or the Letter of Credit Exposure recorded therein for all purposes of
this Credit Agreement. The Register shall be available for inspection by the
Borrower and the Bank at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of a Commitment Transfer Supplement
executed by a transferor Bank and an Eligible Assignee (and, in the case of an
Eligible Assignee that is not then a Bank or an affiliate thereof, by the
Borrower and the Agent) together with payment to the Agent of a registration
and processing fee of $2,500, the Agent shall (i) promptly accept such
Commitment Transfer Supplement and (ii) on the Transfer Effective Date
determined pursuant thereto, record the information contained therein in the
Register and give notice of such acceptance and recordation to the Banks and
the Borrower.
(f) The Borrower hereby authorizes each Bank to disclose to
any Participant or Eligible Assignee and any prospective Eligible Assignee any
and all financial information in such Bank's possession concerning the Borrower
and its Affiliates which has been delivered to such Bank by or on behalf of the
Borrower pursuant to this Credit Agreement or which has been delivered to such
Bank by or on behalf of the Borrower in connection with such Bank's credit
evaluation of the Borrower and its Affiliates prior to becoming a party to this
Credit Agreement, provided that, prior to any such disclosure, each such
Eligible Assignee or Participant or proposed Eligible Assignee or Participant
shall agree in writing to be bound by the confidentiality provisions contained
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in Section 10.11;
(g) If, pursuant to this section, any interest in this Credit
Agreement or any Note is transferred to any Eligible Assignee which is
organized under the laws of any jurisdiction other than the United States or
any state thereof, the transferor Bank shall cause such Eligible Assignee,
concurrently with the effectiveness of such transfer, (i) to represent to the
transferor Bank (for the benefit of the transferor Bank, the Agent and the
Borrower) that under applicable law and treaties no taxes will be required to
be withheld by the Agent, the Borrower or the transferor Bank with respect to
any payments to be made to such Eligible Assignee in respect of the Revolving
Credit Loans, (ii) to furnish to the transferor Bank (and, in the case of any
Eligible Assignee registered in the Register, the Agent and the Borrower)
either U.S. Internal Revenue Service Form 4224 or U.S. Internal Revenue Service
Form 1001 (wherein such Eligible Assignee claims entitlement to complete
exemption from U.S. federal withholding tax on all interest payments hereunder)
and (iii) to agree (for the benefit of the transferor Bank, the Agent and the
Borrower) to provide the transferor Bank (and, in the case of any Eligible
Assignee registered in the Register, the Agent and the Borrower) a new Form
4224 or Form 1001 upon the expiration or obsolescence of any previously
delivered form and comparable statements in accordance with applicable U.S.
laws and regulations and amendments duly executed and completed by such
Eligible Assignee, and to comply in all material respects from time to time
with all applicable U.S. laws and regulations with regard to such withholding
tax exemption; and
(h) Nothing herein shall prohibit any Bank from (i) pledging
or assigning any Note to any Federal Reserve Bank in accordance with applicable
law or (ii) selling or assigning its Notes and its rights under the Credit
Agreement and the other Loan Documents to any Person after the occurrence and
during the continuance of an Event of Default.
SECTION 10.10. Separability. Should any clause, sentence, paragraph or
section of this Credit Agreement or any other Loan Document be judicially
declared to be invalid, unenforceable or void, such decision will not have the
effect of invalidating or voiding the remainder of this Credit Agreement or
such other Loan Document, as the case may be, and the parties hereto agree that
the part or parts of this Credit Agreement or such Loan Document so held to be
invalid, unenforceable or void will be deemed to have been stricken here from
or therefrom and the remainder will have the same force and effectiveness as if
such part or parts had never been included herein or therein.
SECTION 10.11. Confidentiality. Each Bank and the Agent acknowledge
that any information furnished to it directly by the Borrower is and shall be
confidential unless designated otherwise by the Borrower (however, such Bank or
the Agent may disclose or furnish any or all of such information to its
employees, officers, board members, auditors, counsel and agents after
informing them of the confidential nature of such information), and each Bank
and the Agent agrees that (i) it will maintain, and direct its employees,
officers, board members, auditors, counsel and agents to maintain, the
confidentiality of such information, (ii) it will not disclose, and will direct
its employees, officers, board members, auditors, counsel and agents not to
disclose, in any event such information to any third party (except as herein
set forth) and (iii) it will not
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use, and will direct its employees, officers, board members, auditors, counsel
or agents not to use such information for any purposes other than as
contemplated by this Credit Agreement; provided, however, that such Bank or the
Agent or its employees, officers, board members, auditors, counsel or agents
may disclose any such information that is (i) in the public domain or that
becomes part of the public domain after the execution hereof, as a result of
filing or recording with any Governmental Authority or for any other reason
other than as a result of any action of a Bank or the Agent or their respective
employees, officers, board members, auditors, counsel, agents or Affiliates,
(ii) in the possession of such Bank or the Agent as a result of disclosure by a
third party, except to the extent that the Person making such disclosure is
aware that such third party is bound by a confidentiality obligation to the
Borrower, (iii) required in such Bank's or the Agent's good faith judgment to
be disclosed in order to comply with any applicable Requirement of Law, in
order to comply with legal process, or in order to comply with the request of
any Governmental Authority having authority or purported authority to regulate
the Agent or such Bank, provided, such Bank or the Agent will give notice to
the Borrower of any such requirement, (iv) permitted to be disclosed to an
Eligible Assignee or prospective Eligible Assignee pursuant to Section 10.9(i)
or (v) disclosed in connection with any suit or other proceeding brought by the
Agent or such Bank against the Borrower or any Subsidiary of the Borrower or by
the Borrower or any Subsidiary of the Borrower against the Agent or such Bank.
Each Bank and the Agent agrees that if it is required by any applicable
Requirement of Law to disclose any confidential information, such Bank or the
Agent will, as soon as practicable notify the Borrower of the applicable
Requirement of Law and the date on which a response to the same is due from it,
provided that this sentence shall not apply to any disclosure the Agent or any
Bank is required by applicable Requirements of Law to make to any Governmental
Authority having authority to regulate the Agent or such Bank.
SECTION 10.12. Marshalling; Recapture. Neither the Agent nor any Bank
shall be under any obligation to marshal any assets in favor of the Borrower or
any other Person or against or in payment of any or all of the Obligations. To
the extent any Bank receives any payment by or on behalf of the Borrower, which
payment or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to the Borrower
or its estate, trustee, receiver, custodian or any other party under any Debtor
Relief Law, state or federal law, common law or equitable cause, then to the
extent of such payment or repayment, the obligation or part thereof which has
been paid, reduced or satisfied by the amount so repaid shall be reinstated by
the amount so repaid and shall be included within the liabilities of the
Borrower to such Bank as of the date such initial payment, reduction or
satisfaction occurred.
SECTION 10.13. Representation by the Banks. Each of the Banks
represents that it is the present intention of such Bank to acquire its Notes
for its own account or for the account of its Affiliates and not with a view to
the distribution or sale thereof, subject, nevertheless to the necessity that
such Bank remain in control at all times of the disposition of property held by
it for its own account; it being understood that the foregoing representations
shall not affect the characterization of the Revolving Credit Loans as
commercial lending transactions.
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SECTION 10.14. No Third Party Beneficiaries. The agreement of each
Bank to make its Revolving Credit Loans on the terms and conditions set forth
in this Credit Agreement, is solely for the benefit of the Borrower, and no
other Person (including any obligor, contractor, subcontractor, supplier or
materialman furnishing supplies, goods or services to or for the benefit of the
Borrower) shall have any rights hereunder, as against the Agent or any Bank,
under any other Loan Document, or with respect to the Revolving Credit Loans or
the proceeds thereof.
SECTION 10.15. Execution in Counterparts. This Credit Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
SECTION 10.16. Jurisdiction; Consent to Service of Process.
(a) Each party to this Credit Agreement hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any Texas State court or Federal court of the United States of
America sitting in Harris County, Texas, in any action or proceeding arising
out of or relating to this Credit Agreement or the Loan Documents, or for
recognition or enforcement of any order or judgment, and each of the parties
hereto hereby irrevocably and unconditionally agrees that all claims in respect
of any such action or proceeding may be heard and determined in such Texas
State court, or to the extent permitted by law, in such Federal court in Harris
County, Texas. Each party to this Credit Agreement irrevocably consents to the
service of process out of any Texas State court or Federal court of the United
States of America sitting in Harris County, Texas in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to such party at its address referred to in Section 10.2.
Each Party to this Credit Agreement agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Credit Agreement shall affect any right that the Agent or any
Bank may otherwise have to bring any action or proceeding relating to this
Credit Agreement or the Loan Documents against the Borrower or any Subsidiary
of the Borrower or its respective properties in the courts of any other
jurisdiction.
(b) Each party to this Credit Agreement hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Credit
Agreement or the Loan Documents in any Texas State or Federal court sitting in
Harris County, Texas. Each Party to this Credit Agreement hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
SECTION 10.17. Credit Agreement Governs Conflicts. To the fullest
extent possible, the terms and provisions of the Loan Documents shall be read
together with the terms and provisions of this Credit Agreement so that the
terms and provisions thereof do not conflict with the terms and provisions of
this Credit Agreement; provided,
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however, notwithstanding the foregoing, in the event that any of the terms of
provisions of the Loan Documents conflict with any terms or provisions of this
Credit Agreement, the terms or provisions of this Credit Agreement shall govern
and control for all purposes, provided that the inclusion of additional terms
and provisions, supplemental rights or remedies in favor of the Agent in any
Loan Document shall not be deemed to be a conflict with this Credit Agreement.
SECTION 10.18. FINAL AGREEMENT OF THE PARTIES. THIS CREDIT AGREEMENT
(INCLUDING THE EXHIBITS HERETO), THE NOTES AND THE OTHER LOAN DOCUMENTS TO
WHICH THE BORROWER OR ANY OF ITS SUBSIDIARIES IS A PARTY CONSTITUTE A "LOAN
AGREEMENT" AS DEFINED IN SECTION 26.02(A) OF THE TEXAS BUSINESS AND COMMERCE
CODE, AND REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.
THERE ARE NO ORAL AGREEMENTS BETWEEN THE PARTIES.
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IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
BORROWER:
PENN VIRGINIA CORPORATION
By: /s/ STEVEN W. THOLEN
--------------------------
Name: Steven W. Tholen
Title: Vice President and
Chief Financial Officer
AGENT:
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION,
as Agent
By: /s/ SCOTT H. RICHARDSON
-------------------------------------
Name: Scott H. Richardson
-----------------------------------
Title: Vice President
----------------------------------
BANKS
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION,
By: /s/ SCOTT H. RICHARDSON
-------------------------------------
Name: Scott H. Richardson
-----------------------------------
Title: Vice President
----------------------------------
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By: /s/ MICHAEL J. KOLOSOWSKY
-------------------------------------
Name: Michael J. Kolosowsky
Title: Vice President
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THE FIRST NATIONAL BANK OF
CHICAGO
By: /s/ WILLIAM V. CLIFFORD
-----------------------------------
Name: William V. Clifford
Title: Vice President
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SCHEDULE 1.1
Commitments, Banks, Addresses
Amount of Commitment
Bank Name and Address Commitment Percentage
- -------------------- ---------- ----------
Texas Commerce Bank National Association $20,000,000 40.0000%
707 Travis 5-TCBN-86
Houston, Texas 77002
Attention: Lori H. Vetters/Sandra Aultman
Global Oil & Gas
Telecopy No.: (713) 216-4117
Telephone No.: (713) 216-4332
First Union National Bank of North Carolina* $15,000,000 30.0000%
c/o First Union Corporation of North Carolina
1001 Fannin Street, Suite 2255
Houston, Texas 77002
Attention: Paul N. Riddle
Telephone No.: (713) 650-3716
Telecopy No.: (713) 650-6354
The First National Bank of Chicago $15,000,000 30.0000%
One First National Plaza
10th Floor
Chicago, Illinois 60670
Attention: Bill Laird/Mike Lorenzi
Energy Unit
Telephone No.: (312) 732-5635
Telecopy No.: (312) 732-4840
=========== =========
$50,000,000 100.0000%
99
EXHIBIT A
BORROWING REQUEST
Texas Commerce Bank National Association
712 Main Street
Houston, Texas 77002
Attention:
------------------------------- [Date to be inserted]
Gentlemen:
Pursuant to that certain Credit Agreement dated as of August
___, 1996 (said Credit Agreement as from time to time amended being the "Credit
Agreement," the terms defined therein being used herein as therein defined)
among Penn Virginia Corporation, a Virginia corporation ("Borrower"), the banks
party thereto (the "Banks") and Texas Commerce Bank National Association, as
agent for the Banks (in such capacity, the "Agent"), the Borrower hereby:
1. Gives you notice, irrevocably pursuant to Section 2.2 or
Section 2.3, as applicable, of the Credit Agreement that Borrower hereby:
(A) Requests (check as applicable):
_________that a Borrowing be made under the
Credit Agreement ("Proposed Borrowing") which
request is made pursuant to Section 2.2 of
the Credit Agreement.
_________ that a Letter of Credit be issued
under the Credit Agreement ("Proposed Letter
of Credit"), which request is made pursuant
to Section 2.3 of the Credit Agreement.
2. In connection with the Proposed Borrowing or Proposed
Letter of Credit, set forth below is the information required by Section 2.2 of
the Credit Agreement with respect to such Proposed Borrowing, or required by
Section 2.3 of the Credit Agreement with respect to such Proposed Letter of
Credit, as applicable (complete the applicable portions):
(a) Information applicable to the Proposed
Borrowing:
(i) The Borrowing Date of the Proposed
Borrowing is ______________________________,
199__;
(ii) The amount of the Proposed Borrowing
is _________________________________;
(iii) The account of Borrower into which
proceeds of the Proposed Borrowing should be
deposited is ______________________________;
(iv) The Type of the Proposed Borrowing
is a (check one)
_______________ ABR Borrowing
_______________ Eurodollar Borrowing. The
Interest Period is (check one)
_______________ one (1) month,
100
_______________ two (2) months,
_______________ three (3) months, or
_______________ six (6) months.
(b) Information applicable to the Proposed Letter
of Credit:
(i) The issuance date of the
Proposed Letter of Credit is
___________________ ____, 199___.
(ii) The expiry date of the
Proposed Letter of Credit is
___________________ ____, 199___.
(iii) The face amount of the
Proposed Letter of Credit is _______________.
3. Certifies that (a) immediately after giving effect to the
Proposed Borrowing or the Proposed Letter of Credit, as applicable, the
aggregate Utilized Credit does not exceed the Available Commitment, (b) the
representations and warranties of the Borrower and each Subsidiary contained in
Article V of the Credit Agreement and, in all material respects, in each of the
other Loan Documents to which the Borrower or such Subsidiary is a party, are
true and correct in all material respects (both before and after giving effect
to the making of such Proposed Borrowing or the issuing of such Proposed Letter
of Credit) on and as of the Borrowing Date as if made on and as of such date
(or, if stated to have been made solely as of an earlier date, were true and
correct in all material respects as of such earlier date); (c) no event or
state of affairs which could reasonably be expected to result in a Material
Adverse Effect has occurred since [Date of the fiscal year end of the Fiscal
Year for which audited financial statements conforming to the requirements of
Section 6.1(b) of the Credit Agreement have been delivered to the Banks
pursuant to Section 6.1(b) of the Credit Agreement]; (d) no Default or Event of
Default has occurred and is continuing or would result from such Proposed
Borrowing or the issuance of such Proposed Letter of Credit, or both as the
case may be,; and (e) no new material litigation (other than Existing
Litigation) is pending or, to the best knowledge of the Borrower after due
inquiry, threatened against the Borrower or any Subsidiary and no material
adverse development has occurred in any Existing Litigation, and (f) with
respect to the Proposed Letter of Credit, the aggregate face amount of all
Letters of Credit then outstanding plus the aggregate amount of payments
theretofore made by the Issuing Bank(s) in respect of Letters of Credit and not
theretofore reimbursed by Borrower to the Issuing Bank(s) or deemed a Revolving
Credit Loan pursuant to Section 2.3(d) of the Credit Agreement does not exceed
the Letter of Credit Commitment then in effect.
Dated:___________________________, 199____.
Very truly yours,
PENN VIRGINIA CORPORATION
By:
-----------------------
Name:
---------------------
Title:
--------------------
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EXHIBIT B
FORM OF COMMITMENT TRANSFER SUPPLEMENT
COMMITMENT TRANSFER SUPPLEMENT
COMMITMENT TRANSFER SUPPLEMENT, dated as of the date set forth
in Item 1 of Schedule I hereto, among the Transferor Bank set forth in Item 2
of Schedule I hereto (the "Transferor Bank"), each Purchasing Bank set forth in
Item 3 of Schedule I hereto (each, a "Purchasing Bank"), and TEXAS COMMERCE
BANK NATIONAL ASSOCIATION, a national banking association ("TCB"), as agent for
the Banks under the Credit Agreement described below (in such capacity, the
"Agent").
W I T N E S S E T H :
WHEREAS, this Commitment Transfer Supplement is being executed
and delivered in accordance with Section 10.9(c) of the Credit Agreement dated
as of June 25, 1996, among Penn Virginia Corporation, a Virginia corporation
(the "Borrower"), the Transferor Bank and the other Banks parties to the Credit
Agreement, and the Agent (as from time to time amended, supplemented or
otherwise modified in accordance with the terms thereof, the "Credit
Agreement"; terms defined therein being used herein as therein defined);
WHEREAS, each Purchasing Bank (if it is not already a Bank
party to the Credit Agreement) wishes to become a Bank party to the Credit
Agreement; and
WHEREAS, the Transferor Bank is selling and assigning to each
Purchasing Bank, rights, obligations and commitments under the Credit
Agreement;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Upon receipt by the Agent of five counterparts of
this Commitment Transfer Supplement, to each of which is attached a fully
completed Schedule I and Schedule II, and each of which has been executed by
the Transferor Bank, each Purchasing Bank (and any other person required by the
Credit Agreement to execute this Commitment Transfer Supplement), the Agent
will transmit to the Borrower, the Transferor Bank and each Purchasing Bank a
Transfer Effective Notice, substantially in the form of Schedule III to this
Commitment Transfer Supplement (a "Transfer Effective Notice"). Such Transfer
Effective Notice shall set forth, inter alia, the date on which the transfer
effected by this Commitment Transfer Supplement shall become effective (the
"Transfer Effective Date"), which date shall be the fifth Business Day
following the date of such Transfer Effective Notice. From and after the
Transfer Effective Date each Purchasing Bank shall be a Bank party to the
Credit Agreement for all purposes thereof.
2. At or before 12:00 Noon, local time of the Transferor
Bank, on the Transfer Effective Date, each Purchasing Bank shall pay to the
Transferor Bank, in immediately available funds, an amount equal to the
purchase price, as agreed between the Transferor Bank and such Purchasing Bank
(the "Purchase Price"), of the portion being purchased by such Purchasing Bank
(such Purchasing Bank's "Purchased Percentage") of the outstanding Loans and
other amounts owing to the Transferor Bank under the Credit Agreement and its
Note. Effective upon receipt by the Transferor Bank of the Purchase Price from
a Purchasing Bank, the Transferor Bank hereby irrevocably sells, assigns and
transfers to such Purchasing Bank, without recourse, representation or
warranty, and each Purchasing Bank hereby irrevocably purchases, takes and
assumes from the Transferor Bank, such Purchasing Bank's Purchased
102
Percentage of the Commitments and the presently outstanding Loans and other
amounts owing to the Transferor Bank under the Credit Agreement and its Note
together with all instruments, documents and collateral security pertaining
thereto.
3. The Transferor Bank has made arrangements with each
Purchasing Bank with respect to (i) the portion, if any, to be paid, and the
date or dates for payment, by the Transferor Bank to such Purchasing Bank of
any fees heretofore received by the Transferor Bank pursuant to the Credit
Agreement prior to the Transfer Effective Date and (ii) the portion, if any, to
be paid, and the date or dates for payment, by such Purchasing Bank to the
Transferor Bank of fees or interest received by such Purchasing Bank pursuant
to the Credit Agreement from and after the Transfer Effective Date.
4. (a) All principal payments that would otherwise
be payable from and after the Transfer Effective Date to or for the account of
the Transferor Bank pursuant to the Credit Agreement and its Note shall,
instead, be payable to or for the account of the Transferor Bank and the
Purchasing Banks, as the case may be, in accordance with their respective
interests as reflected in this Commitment Transfer Supplement.
(b) All interest, fees and other amounts that would
otherwise accrue for the account of the Transferor Bank from and after the
Transfer Effective Date pursuant to the Credit Agreement and its Note shall,
instead, accrue for the account of, and be payable to, the Transferor Bank and
the Purchasing Banks, as the case may be, in accordance with their respective
interests as reflected in this Commitment Transfer Supplement. In the event
that any amount of interest, fees or other amounts accruing prior to the
Transfer Effective Date was included in the Purchase Price paid by any
Purchasing Bank, the Transferor Bank and each Purchasing Bank will make
appropriate arrangements for payment by the Transferor Bank to such Purchasing
Bank of such amount upon receipt thereof from the Borrower.
5. On or prior to the Transfer Effective Date, the
Transferor Bank will deliver to the Agent its Note. On or prior to the Transfer
Effective Date, each Borrower will deliver to the Agent a Note for each
Purchasing Bank and the Transferor Bank, in each case in principal amounts
reflecting, in accordance with the Credit Agreement, their Commitments (as
adjusted pursuant to this Commitment Transfer Supplement). Promptly after the
Transfer Effective Date, the Agent will send to each of the Transferor Bank and
the Purchasing Banks its new Note.
6. Concurrently with the execution and delivery hereof,
the Transferor Bank will provide to each Purchasing Bank (if it is not already
a Bank party to the Credit Agreement) conformed copies of all documents
delivered to such Transferor Bank on the Closing Date in satisfaction of the
conditions precedent set forth in the Credit Agreement.
7. Each of the parties to this Commitment Transfer
Supplement agrees that at any time and from time to time upon the written
request of any other party, it will execute and deliver such further documents
and do such further acts and things as such other party may reasonably request
in order to effect the purposes of this Commitment Transfer Supplement.
8. By executing and delivering this Commitment Transfer
Supplement, the Transferor Bank and each Purchasing Bank confirm to and agree
with each other and the Agent and the Banks as follows: (i) other than the
representation and warranty that it is the legal and beneficial owner of the
interest being assigned hereby free and clear of any adverse claim, the
Transferor Bank makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made
-2-
103
in or in connection with the Credit Agreement or the other Loan Documents or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Credit Agreement, any of the Notes, the other Loan Documents or
any other instrument or document furnished pursuant thereto; (ii) the
Transferor Bank makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower, any
Subsidiary of the Borrower, or the performance or observance by the Borrower or
any Subsidiary of the Borrower, or of any of their respective obligations under
the Credit Agreement, the Notes, the other Loan Documents or any other
instrument or document furnished pursuant hereto; (iii) each Purchasing Bank
confirms that it has received a copy of the Credit Agreement, together with
copies of the financial statements referred to in Section 5.9, the financial
statements delivered pursuant to Section 6.1, if any, and such other documents
and information as it has deemed appropriate to make its own credit analysis
and decision to enter into this Commitment Transfer Supplement; (iv) each
Purchasing Bank will, independently and without reliance upon the Agent, the
Transferor Bank or any other Bank and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Credit Agreement and the
other Loan Documents; (v) each Purchasing Bank appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise such powers
under the Agreement as are delegated to the Agent by the terms thereof,
together with such powers as are reasonably incidental thereto, all in
accordance with Section 9 of the Credit Agreement; and (vi) each Purchasing
Bank agrees that it wi]l perform in accordance with their terms all of the
obligations which by the terms of the Credit Agreement are required t:o be
performed by it as a Bank.
9. Each party hereto represents and warrants to and agrees
with the Agent that it is aware of and will comply with the provisions of
Subsections 10.9(f) and 10.9(g) of the Credit Agreement.
10. Schedule II hereto sets forth the revised Commitments and
Commitment Percentages of the Transferor Bank and each Purchasing Bank as well
as administrative information with respect to each Purchasing Bank.
11. This Commitment Transfer Supplement shall be governed by,
and construed in accordance with, the laws of the State of Texas.
IN WITNESS WHEREOF, the parties hereto have caused this
Commitment Transfer Supplement to be executed by their respective duly
authorized officers on Schedule I hereto as of the date set forth in Item 1 of
Schedule I hereto.
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104
SCHEDULE I TO
COMMITMENT TRANSFER SUPPLEMENT
COMPLETION OF INFORMATION AND
SIGNATURES FOR COMMITMENT
TRANSFER SUPPLEMENT
Re: Credit Agreement dated as of August ___, 1996, among
Penn Virginia Corporation, a Virginia corporation
(the "Borrower"), the banks parties to the Credit
Agreement (collectively, the "Banks"), and Texas
Commerce Bank National Association, as agent for the
benefit of the Banks (in such capacity, the "Agent")
Item 1 (Date of Commitment [Insert date of Commitment Transfer
Supplement): Transfer Supplement]
Item 2 (Transferor Bank): [Insert name of Transferor Bank]
Item 3 (Purchasing Bank[s]): [Insert name[s] of Purchasing Bank[s]]
Item 4 (Signatures of Parties to Commitment Transfer Supplement):
, as
------------------------------
Transferor Bank
By:
-------------------------------
Title:
----------------------------
, as a
------------------------------
Purchasing Bank
By:
--------------------------------
Title:
-----------------------------
, as a
------------------------------
Purchasing Bank
By:
--------------------------------
Title:
-----------------------------
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105
CONSENTED TO AND ACKNOWLEDGED:
BORROWER
PENN VIRGINIA CORPORATION
By:
--------------------------------------
Name:
Title:
TEXAS COMMERCE BANK NATIONAL ASSOCIATION, as Agent
By:
--------------------------------------
Name:
Title:
[Consents Required only when Purchasing Bank is not already a Bank or affiliate
thereof]
ACCEPTED FOR RECORDATION
IN REGISTER:
TEXAS COMMERCE BANK NATIONAL ASSOCIATION, as Agent
By:
--------------------------------------
Name:
Title:
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106
SCHEDULE II TO
COMMITMENT TRANSFER SUPPLEMENT
LIST OF LENDING OFFICES, ADDRESSES
FOR NOTICES AND COMMITMENT AMOUNTS
[Name of Transferor Bank] Revised Commitment Amounts: $
--------------------------- -----
Revised Commitment Percentage: %
------------------------------ -----
[Name of Purchasing Bank] New Commitment Amounts: $
----------------------- -----
Address for Notices:
New Commitment Percentage:
-------------------------- -----
[Address]
Attention:
Telephone:
Telecopier:
Eurodollar Lending Office:
- --------------------------
- --------------------------
- --------------------------
- --------------------------
Domestic Lending Office:
- ------------------------
- --------------------------
- --------------------------
- --------------------------
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SCHEDULE III TO
COMMITMENT TRANSFER SUPPLEMENT
[Form of Transfer Effective Notice]
To: Penn Virginia Corporation, [insert name of Transferor Bank and
each Purchasing Bank]
The undersigned, as Agent [delegate of the Agent performing
administrative functions of the Agent] under the Credit Agreement dated as of
August ___, 1996, among Penn Virginia Corporation, a Virginia corporation (the
"Borrower"), the banks parties to the Credit Agreement (collectively, the
"Banks"), and Texas Commerce Bank National Association, as agent for the
benefit of the Banks (in such capacity, the "Agent"), acknowledges receipt of
five executed counterparts of a completed Commitment Transfer Supplement, as
described in Schedule I hereto. [Note: attach copy of Schedule I from
Commitment Transfer Supplement.] Terms defined in such Commitment Transfer
Supplement are used herein as therein defined.
1. Pursuant to such Commitment Transfer Supplement, you
are advised that the Transfer Effective Date will be
[Insert fifth business day following date of Transfer
Effective Notice]
2. Pursuant to such Commitment Transfer Supplement, the
Transferor Bank is required to deliver to the Agent on or before the Transfer
Effective Date its Note.
3. Pursuant to such Commitment Transfer Supplement, the
Borrower is required to deliver to the Agent on or before the Transfer
Effective Date the following Notes, each dated [Insert Closing Date]
[Describe each new Note for Transferor Bank and Purchasing
Bank as to principal amount and payee.]
4. Pursuant to such Commitment Transfer Supplement each
Purchasing Bank is required to pay its Purchase Price to the Transferor Bank at
or before 12:00 Noon on the Transfer Effective Date in immediately available
funds.
Very truly yours,
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION, as Agent
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
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108
EXHIBIT D
FORM OF NOTE
$_______________________ Houston, Texas
August 2, 1996
FOR VALUE RECEIVED, the undersigned, PENN VIRGINIA
CORPORATION, a Virginia corporation ("Borrower"), hereby promises to pay to the
order of [NAME OF BANK] (the "Bank") on or before the Maturity Date the lesser
of (i) [AMOUNT OF SUCH BANK'S COMMITMENT] and (ii) the aggregate unpaid amount
of all Loans made by the Bank pursuant to the Credit Agreement (as hereinafter
defined) and outstanding on the Maturity Date. The unpaid principal amount of
each Loan made by the Bank pursuant to the Credit Agreement shall be due and
payable at such dates and times as are specified in the Credit Agreement.
Borrower promises to pay interest on the unpaid principal
amount of each Loan from the date of such Loan until such principal amount is
paid in full, at such interest rates, subject to Section 10.6 of the Credit
Agreement, and payable at such dates and times, as are specified in the Credit
Agreement dated as of August 2, 1996 (as the same may from time to time be
amended, modified or supplemented, the "Credit Agreement," the terms defined
therein and not otherwise defined herein being used herein as therein defined)
among Borrower, the Bank, the other Banks party thereto and Texas Commerce Bank
National Association as agent for the Banks (in such capacity, the "Agent").
Both principal and interest are payable in immediately
available funds in lawful money in the United States of America at the office
of the Agent, 707 Travis, Houston, Texas 77002, for the account of the Bank, or
at such other place as the Agent shall designate in writing to Borrower. The
Bank is hereby authorized, at its option, either (i) to endorse on the schedule
attached hereto the amount and type of each Loan made by the Bank to Borrower
and the borrowing date and maturity thereof, the rate of interest applicable
thereto and all payments made on account of principal and interest hereof, or
(ii) to record such Loans and such payments in its books and records.
Subject to the terms and conditions of the Credit Agreement,
this Note may be held by the Bank for the account of any of its applicable
Lending Office and may be transferred from one to the other from time to time
as the Bank may determine.
This Note is one of the Notes referred to in the Credit
Agreement and evidences Revolving Credit Loans. Any holder of this Note is
entitled to all of the rights, remedies, benefits and privileges provided for
in the Credit Agreement as originally executed or as it may from time to time
be supplemented, modified or amended.
The Credit Agreement, among other things, provides for the
acceleration of the maturity of this Note upon the occurrence of certain stated
events and for prepayments of Revolving Credit Loans upon the terms and
conditions therein specified.
Each provision in this Note and the Credit Agreement is
expressly limited so that in no event whatsoever shall the amount paid, or
otherwise agreed to be paid, to the Bank for the use, forbearance or detention
of the money to be advanced under and evidenced by this Note or otherwise
(including any sums paid as required by any covenant or obligation contained
herein or in the Credit Agreement which
109
is for the use, forbearance or detention of such money), exceed that amount of
money which would cause the effective rate of interest to exceed the Highest
Lawful Rate, and all amounts owed under this Note and the Credit Agreement
shall be held to be subject to reduction to the effect that such amounts so
paid or agreed to be paid which are for the use, forbearance or detention of
money under this Note or the Credit Agreement shall in no event exceed that
amount of money which would cause the effective rate of interest to exceed the
Highest Lawful Rate. Anything in this Note, the Credit Agreement, or any other
Loan Document to the contrary notwithstanding, with respect to this Note the
Borrower shall never be required to pay unearned interest on this Note or ever
be required to pay interest on this Note at a rate in excess of the Highest
Lawful Rate, and if the effective rate of interest which would otherwise be
payable with respect to this Note would exceed the Highest Lawful Rate, or if
the holder of this Note shall receive any unearned interest or shall receive
monies that are deemed to constitute interest which would increase the
effective rate of interest payable by the Borrower with respect to this Note to
a rate in excess of the Highest Lawful Rate, then (i) the amount of interest
which would otherwise be payable by the Borrower with respect to this Note
shall be reduced to the amount allowed under applicable law and (ii) any
unearned interest paid by the Borrower or any interest paid by the Borrower in
excess of the Highest Lawful Rate shall be in the first instance credited on
the principal of this Note with the excess thereof, if any, refunded to the
Borrower. It is further agreed that, without limitation of the foregoing, all
calculations of the rate of interest contracted for, charged or received by the
Bank under this Note, or under the Credit Agreement or the other Loan
Documents, are made for the purpose of determining whether such rate exceeds
the Highest Lawful Rate applicable to the Bank (such Highest Lawful Rate being
the Bank's "Maximum Permissible Rate"), shall be made, to the extent permitted
by usury laws applicable to the Bank (now or hereafter enacted), by (a)
characterizing any non_principal payment as an expense, fee or premium rather
than as interest and (b) amortizing, prorating and spreading in equal parts
during the period of the full stated term of the Revolving Credit Loans
evidenced by this Note all interest at any time contracted for, charged or
received by the Bank in connection therewith.
Except as otherwise specifically provided for in the Loan
Documents, Borrower and any and all endorsers, guarantors and sureties
severally waive grace, demand, presentment for payment, notice of dishonor or
default or intent to accelerate, notice of acceleration, protest and notice of
protest and diligence in collecting and bringing of suit against any party
hereto, and agree to all renewals, extensions or partial payments hereon and to
any release or substitution of security hereof, in whole or in part, with or
without notice, before or after maturity. Except as provided in Section 10.9
of the Credit Agreement, this Note may not be assigned to any other Person.
As set forth in Section 10.4 of the Credit Agreement, Borrower
hereby promises to pay all reasonable out-of-pocket costs and expenses of the
Bank or any Eligible Assignee who becomes a holder hereof incurred in
collecting Borrower's obligations hereunder or in enforcing or attempting to
enforce any of the holder's rights hereunder, including reasonable attorney's
fees and out-of-pocket disbursements.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE LAWS OF THE STATE OF TEXAS AND ANY APPLICABLE LAWS OF THE UNITED STATES
OF AMERICA.
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110
IN WITNESS WHEREOF, Borrower has caused this Note to be
executed and delivered by its officer thereunto duly authorized effective as of
the date first above written.
PENN VIRGINIA CORPORATION
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
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111
LOANS, MATURITIES, AND PAYMENTS
OF PRINCIPAL AND INTEREST
========================================================================================================
Rate of Amount of Amount of
Amount and Interest Principal Interest Unpaid
Borrowing Type of Maturity Applicable Paid or Paid or Principal Notation
Date Loan of Loan to Loan Prepaid Prepaid Balance Made By
========================================================================================================
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
========================================================================================================
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112
EXHIBIT E
NOTICE OF CONVERSION/CONTINUATION
Texas Commerce Bank National Association
712 Main Street
Houston, Texas 77002
Attention: [Date to be inserted]
-----------------------------
Gentlemen:
Pursuant to that certain Agreement dated as of August ___,
1996 (said Credit Agreement as from time to time amended being the "Credit
Agreement," the terms defined therein being used herein as therein defined)
among Penn Virginia Corporation, a Virginia corporation ("Borrower"), the banks
party thereto (the "Banks") and Texas Commerce Bank National Association, as
agent for the Banks (in such capacity, the "Agent"), the Borrower hereby:
1. Gives you notice, irrevocably pursuant to Section 2.4 of
the Credit Agreement that the Borrower hereby requests a conversion or
continuance of one Type of Borrowing into another Type of Borrowing under the
Credit Agreement, and in that connection sets forth below the information
relating to such conversion or continuance as required by Section 2.4 of the
Credit Agreement:
(i) The Type of Borrowing to be converted or
continued pursuant hereto is presently [an ABR
Borrowing] [a Eurodollar Borrowing] in the principal
amount of $___________________ outstanding as of the
date of the conversion or continuance, as applicable
(the "Current Borrowing").
(ii) The date of the proposed conversion or
continuance is _______________________, 199___;
(iii) The portion of the Current Borrowing to be
converted or continued is ______________ (the
"Conversion Amount");
(iv) The Conversion Amount is to be converted or
continued into the following type of Borrowing (check
one):
_______________ ABR Borrowing
_______________ Eurodollar Borrowing. The Interest
Period is (check one):
_______________ one (1) month,
_______________ two (2) months,
_______________ three (3) months, or
_______________ six (6) months.
113
2. No Event of Default has occurred and is continuing, or
will result from such conversion or continuance. [Do not include if converting
to ABR Borrowing.]
Dated:____________________________, 199___.
Very truly yours,
PENN VIRGINIA CORPORATION
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
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114
SUBSIDIARY GUARANTY
This SUBSIDIARY GUARANTY (this "Guaranty"), dated as of August 2,
1996, is made by each of the parties listed on the signatures pages hereof,
together with each other person who may become a party hereto pursuant to
Section 22 of this Guaranty (each a "Subsidiary Guarantor" and collectively,
"Subsidiary Guarantors"), jointly and severally, in favor of TEXAS COMMERCE
BANK NATIONAL ASSOCIATION, a national banking association ("TCB") as agent (the
"Agent") on behalf of the Banks (as defined below), with reference to the
following facts:
RECITALS
A. Pursuant to that certain Credit Agreement of even date
herewith between PENN VIRGINIA CORPORATION, a Virginia corporation
("Borrower"), the banks which are parties thereto (the "Banks"), and the Agent
(the "Credit Agreement"), the Banks are making certain credit facilities
available to Borrower.
B. Each Subsidiary Guarantor is a Subsidiary (as defined in the
Credit Agreement) of Borrower.
C. As a condition to the availability of the above referenced
credit facilities, each Subsidiary Guarantor is required to enter into this
Guaranty and to guaranty the Guaranteed Obligations as hereinafter provided.
D. The proceeds of Loans (as defined in the Credit Agreement)
will be used in part to enable Borrower to make Investments (as defined in the
Credit Agreement) in the Subsidiary Guarantors which Investments shall be used
by the Subsidiary Guarantors (i) to provide working capital, (ii) to finance
capital expenditures and acquisitions of oil and gas properties and (iii) to
refinance existing indebtedness of such Subsidiary Guarantor.
E. Borrower and the Subsidiary Guarantors are engaged in related
businesses and each Subsidiary Guarantor expects to realize direct and indirect
benefits as the result of the availability of the aforementioned credit
facilities, and as a result of the execution of this Guaranty.
AGREEMENT
NOW, THEREFORE, in order to induce the Banks to enter into the Credit
Agreement, and for other good and valuable consideration, the receipt and
adequacy of which hereby is acknowledged, each Subsidiary Guarantor hereby
represents, warrants, covenants, agrees and guarantees as to itself as follows:
DEFINITIONS
1.1 Definitions. Terms defined in the Credit Agreement
and not otherwise defined in this Guaranty shall have the meanings given those
terms in the Credit Agreement when used herein and such definitions are
incorporated herein by reference as though set forth in full. In addition, as
used herein, the following term shall the meaning set forth after such term:
"Guaranty" means this Subsidiary Guaranty dated as of August
2, 1996, as it may be amended, supplemented or otherwise
modified from time to time.
115
"Guaranteed Obligations" has the meaning assigned to that term
in Section 2.1 hereof.
"Loan Documents" has the meaning set forth for that term in
the Credit Agreement. This Guaranty is the Subsidiary Guaranty
referred to in the Credit Agreement and is one of the Loan
Documents.
"Payment in full", "paid in full" or any such similar term
means the final and indefeasible payment in full in cash or
such other type of payment or satisfaction as the Banks may
approve of the Guaranteed Obligations including, without
limitation, all principal, interest, reasonable costs, fees
and expenses (including, without limitation, reasonably
attorneys' fees and out-of-pocket disbursements) of the Banks
and the Agent as required under the Loan Documents.
1.2 Interpretation.
a. Reference to "Sections" and "subsections"
shall be to Sections and subsections, respectively, of this
Guaranty unless otherwise specifically provided.
b. In the event of any conflict or inconsistency
between the terms, conditions and provision of this Guaranty
and the terms, conditions and provision of the Credit
Agreement, the terms, conditions and provisions of this
Guaranty shall prevail.
THE GUARANTY
2.1 Guaranty of Guaranteed Obligations. Subject to the
provisions of Section 2.2(a), for valuable consideration, each Subsidiary
Guarantor hereby irrevocably and unconditionally, guaranties and promises to
pay and perform on demand the Guaranteed Obligations and each and every one of
them, including, without limitation, all amendments, modifications,
supplements, renewals or extensions of any of them, whether such amendments,
modifications, supplements, renewals or extensions are evidenced by new or
additional instruments, documents or agreements or change the rate of interest
on any Guaranteed Obligations or the security therefor, or otherwise. The term
"Guaranteed Obligations" is used herein in its most comprehensive sense and
includes all obligations of Borrower arising out of the Credit Agreement, the
Notes and the other Loan Documents, including, without limitation, all of the
following:
(a) any and all other notes, advances,
borrowings, loans, debts, fees, costs, expenses (including,
without limitation, reasonable attorneys' fees and
out-of-pocket disbursements), indemnities and liabilities of
Borrower now or hereafter made, incurred or created, whether
absolute or contingent, liquidated or unliquidated, whether
yet due or not yet due, and however arising pursuant to the
Credit Agreement and the Notes and the other Loan Documents;
(b) an amount equal to all accrued and unpaid
interest on the foregoing amounts (including any interest that
would have accrued but for the commencement of a case or
proceeding under any Debtor Relief Laws) at the rate
applicable to the Loans and the Notes: and
(c) all or any portion of the foregoing
Guaranteed Obligations that are paid;
-2-
116
to the extent all or any part of such payment is avoided or
recovered directly or indirectly from any Bank or the Agent as
a preference, fraudulent transfer or otherwise.
2.2 Limitation of Amount Guaranteed; Contribution among
the Subsidiary Guarantors.
a. Anything contained in this Guaranty to the
contrary notwithstanding, the obligations of each Subsidiary
Guarantor hereunder shall be limited to a maximum aggregate
amount equal to the largest amount that would not render such
Subsidiary Guarantor's obligations hereunder subject to
avoidance as a fraudulent transfer or conveyance under Section
548 of Title 11 of the United States Code or any applicable
provisions of comparable state law (collectively, the
"Fraudulent Transfer laws"), in each case after giving effect
to all other liabilities of such Subsidiary Guarantor,
contingent or otherwise, that are relevant under the
Fraudulent Transfer laws.
b. Each Subsidiary Guarantor under this
Guaranty, and each guarantor under other guarantees, if any,
relating to the Guaranteed Obligations (the "Related
Guaranties") which contain a contribution provision similar to
that set forth in this Section 2.2(b), together desire to
allocate among themselves (collectively, the "Contributing
Guarantors"), in a fair and equitable manner, their
obligations arising under this Guaranty and the Related
Guaranties. Accordingly, in the event any payment or
distribution is made by any Subsidiary Guarantor under this
Guaranty or a guarantor under a Related Guaranty (a "Funding
Guarantor") that exceeds its Fair Share (as defined below),
that Funding Guarantor shall be entitled to a contribution
from each of the other Contributing Guarantors in the amount
of such other Contributing Guarantor's Fair Share Shortfall
(as defined below), with the result that all such
contributions will cause each Contributing Guarantor's
Aggregate Payments (as defined below) to equal its Fair Share.
"Fair Share" means, with respect to a Contributing Guarantor
as of any date of determination, an amount equal to (i) the
ratio of (x) the Adjusted Maximum Amount (as defined below)
with respect to such Contributing Guarantor to (y) the
aggregate of the Adjusted Maximum Amounts with respect to all
Contributing Guarantors, multiplied by (ii) the aggregate
amount paid or distributed on or before such date by all
Funding Guarantors under this Guaranty and the Related
Guaranties in respect of the obligations guaranteed. "Fair
Share Shortfall" means, with respect to a Contributing
Guarantor as of any date of determination, the excess, if any,
of the Fair Share of such Contributing Guarantor over the
Aggregate Payments of such Contributing Guarantor, "Adjusted
Maximum Amount" means, with respect to a Contributing
Guarantor as of any date of determination, the maximum
aggregate amount of the obligations of such Contributing
Guarantor under this Guaranty and the Related Guaranties,
determined in accordance with Section 2.2(a) or, if
applicable, a similar provision contained in a Related
Guaranty; provided that, solely for purposes of calculating
the "Adjusted Maximum Amount" with respect to any Contributing
Guarantor for purposes of this Section 2.2(b), the assets or
liabilities arising by virtue of any rights to or obligations
of contribution hereunder or under any similar provision
contained in a Related Guaranty shall not be considered as
assets or liabilities of such Contributing Guarantor.
"Aggregate Payments" means, with respect to a Contributing
Guarantor as of any date of determination, the aggregate
amount of all payments and distributions made on or before
such date by such Contributing Guarantor in respect of this
Guaranty and the Related Guaranties (including, without
limitation, in respect of this Section 2.2(b) or any similar
provision contained in
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a Related Guaranty). The amounts payable as contributions
hereunder and under similar provisions in the Related
Guaranties shall be determined as of the date of which the
related payment or distribution is made by the applicable
Funding Guarantor. The allocation among Contributing
Guarantors of their obligations as set forth in this Section
2.2(b) or any similar provision contained in a Related
Guaranty shall not be construed in any way to limit the
liability of any Contributing Guarantor hereunder or under a
Related Guaranty. Each Contributing Guarantor under a Related
Guaranty is a third party beneficiary to the contribution
agreement in this Section 2.2(b). The right of contribution
set forth in this Section 2.2(b) shall exist only in the event
that a Subsidiary Guarantor makes payments under Section 2.1
of this Guaranty, and shall not apply to payments by such
Subsidiary Guarantor of its own obligations under the Credit
Agreement.
3. Nature of Guaranty. This Guaranty is irrevocable and
continuing in nature and relates to any Guaranteed Obligations now existing or
hereafter arising under or in connection with the Credit Agreement. This
Guaranty is a guaranty of prompt and punctual payment and performance and is
not merely a guaranty of collection.
4. Relationship to Other Agreements. Nothing herein
shall in any way modify or limit the effect of terms or conditions set forth in
any other document, instrument or agreement executed by a Subsidiary Guarantor
or in connection with the Guaranteed Obligations, but each and every term and
condition hereof shall be in addition thereto. All provision contained in the
Credit Agreement that apply to Loan Documents generally are fully applicable to
this Guaranty and are incorporated herein by this reference.
5. Subordination of Indebtedness of Borrower to the
Subsidiary Guarantors to the Guaranteed Obligations. Each Subsidiary Guarantor
agrees that:
a. Any indebtedness of Borrower now or hereafter
owed to any Subsidiary Guarantor hereby is
subordinated to the Guaranteed Obligations
pursuant to the provisions of this Section 5.
b. Upon the occurrence and during the
continuance of an Event of Default, if the
Agent so requests, any such indebtedness of
Borrower now or hereafter owed to any
Subsidiary Guarantor shall be collected,
enforced and received by such Subsidiary
Guarantor as trustee for the Banks and shall
be paid over to the Agent for the benefit of
the Banks in kind on account of the
Guaranteed Obligations, but without reducing
or affecting in any manner the obligations of
any Subsidiary Guarantor under the other
provisions of this Guaranty. Notwithstanding
the foregoing, the term "indebtedness" as
used in this subsection 5(b) shall not
include amount owed by Borrower to any
Subsidiary Guarantor for payments made by
such Subsidiary Guarantor for taxes, payroll
obligations, third-party royalty obligations,
and operating expenses incurred in the
ordinary course of business.
c. Upon the occurrence and during the
continuance of an Event of Default,
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should any Subsidiary Guarantor fail to
collect or enforce any such indebtedness of
Borrower now or hereafter owed to such
Subsidiary Guarantor and pay the proceeds
thereof to the Agent, the Agent as each
Subsidiary Guarantor's attorney-in-fact may
do such acts and sign such documents in such
Subsidiary Guarantor's name as the Agent
considers necessary or desirable to effect
such collection, enforcement and/or payment.
6. Laws. Until the Guaranteed Obligations shall have
been paid in full, all of the rights, privileges, powers and remedies granted
to the Agent or the Banks hereunder shall continue to exist and may be
exercised by the Agent for the benefit of the Banks at any time and from time
to time irrespective of any circumstance which might otherwise constitute a
defense available to, or a discharge of, Borrower or its Guaranteed Obligations
under the Loan Documents. Each Subsidiary Guarantor expressly WAIVES, to the
extent permitted by applicable law, the benefit of any and all laws providing
for exemption of property from execution or for valuation and appraisal upon
foreclosure.
7. Modification of Guaranteed Obligations. Each
Subsidiary Guarantor acknowledges that the obligations undertaken herein
involve the guaranty of obligations of Persons other than any Subsidiary
Guarantor and, in full recognition of that fact, consents and agrees that the
Banks may, in accordance with the terms set forth in the Loan Documents, at any
time and from time to time, without notice or demand, and without affecting the
enforceability or continuing effectiveness hereof: (a) supplement, modify,
amend, extend, renew, accelerate or otherwise change the time for payment or
the terms of the Guaranteed Obligations or any part thereof, including any
increase or decrease of the rate(s) of interest thereon; (b) supplement,
modify, amend or waive, or enter into or give any agreement, approval or
consent with respect to, the Guaranteed Obligations or any part thereof, or any
of the Loan Documents or any additional guaranties or security, or any
condition, covenant, default, remedy, right, representation or term thereof or
thereunder; (c) accept new or additional instruments, documents or agreements
in exchange for or relative to any of the Loan Documents or the Guaranteed
Obligations or any part thereof; (d) accept partial payments on the Guaranteed
Obligations; (e) receive and hold additional guaranties or security for the
Guaranteed Obligations or any part thereof; (f) release, reconvey, terminate,
waive, abandon, fail to perfect, subordinate, exchange, substitute, transfer
and/or enforce any security or guaranties, and apply any security and direct
the order or manner of sale thereof as the Agent in it sole and absolute
discretion may determine (g) release any Person from any personal liability
with respect to the Guaranteed Obligations or any part thereof; (h) settle,
release on terms satisfactory to the Agent or by operation of applicable laws
or otherwise liquidate or enforce any Guaranteed Obligations and any security
or guaranty therefore in any manner, consent to the transfer of any security
and bid and purchase at any sale; and/or (i) consent to the merger, change or
any other restructuring or termination of the corporate existence of Borrower,
any Subsidiary Guarantor or any other Person, and correspondingly restructure
the Guaranteed Obligations, and any such merger, change, restructuring or
termination shall not affect the liability of any Subsidiary Guarantor or the
continuing effectiveness hereof, or the enforceability hereof with respect to
all or any part of the Guaranteed Obligations.
8. No Exhaustion of Other Remedies. Upon the occurrence
and during the continuance of any Event of Default, the Agent for the ratable
benefit of the Banks may enforce this Guaranty independently of any other
remedy or security the Agent at any time may have or hold in connection with
the Guaranteed Obligations, and it shall not be necessary for the Agent to
marshal assets in favor of Borrower, any Subsidiary Guarantor or any other
Person or to proceed upon or against and/or exhaust any security or remedy
before proceeding to enforce this Guaranty. Each Subsidiary Guarantor
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expressly WAIVES, to the extent permitted by applicable law, any right to
require the Agent to marshal assets in favor of Borrower, any Subsidiary
Guarantor or any other Person or to proceed against Borrower, any Subsidiary
Guarantor or any collateral provided by any Person, and agrees that the Agent
may proceed against Borrower, any Subsidiary Guarantor and/or any collateral in
such order as it shall determine in its sole and absolute discretion. The Agent
may file a separate action or actions against Borrower and/or any Subsidiary
Guarantor without regard to whether action is brought or prosecuted with
respect to any security or against any other Person, or whether any other
Person is joined in any such action or actions.
9. Continuing Effect of Guaranty. The rights of the
Agent for the ratable benefit of the Banks created or granted herein and the
enforceability of this Guaranty with respect to each Subsidiary Guarantor at
all times shall remain effective to guaranty the full amount of all the
Guaranteed Obligations even though the Guaranteed Obligations, or any part
thereof, or any security or guaranty therefor, may be or hereafter may become
invalid or otherwise unenforceable as against Borrower or any other guarantor or
surety and whether or not Borrower shall have any personal liability with
respect thereto. The rights of the Agent hereunder shall be restated and
revived, and the enforceability of this Guaranty shall continue, with respect
to any amount at any time paid on account of the Guaranteed Obligations which
thereafter shall be required to be restored or returned by the Agent upon the
bankruptcy, insolvency or reorganization of Borrower or any other Person, or
otherwise, all as though such amount had not been paid.
10. Waiver of Defenses and Other Matters. Each
Subsidiary Guarantor expressly WAIVES, to the fullest extent permitted by
applicable law, any and all defenses now or hereafter arising or asserted by
reason of (a) any disability or other defense of Borrower with respect to the
Guaranteed Obligations, (b) the unenforceability or invalidity of any security
or guaranty for the Guaranteed Obligations or the lack of perfection or
continuing perfection or failure of priority of any security for the Guaranteed
Obligations, (c) the cessation for any cause whatsoever of the liability of
Borrower (other than by reason of the full payment of all Guaranteed
Obligations), (d) any failure of the Agent to marshal assets in favor of
Borrower or any other Person, (e) any failure of the Agent to give notice of
sale or other disposition of any collateral to Borrower, any Subsidiary
Guarantor or any other Person or any defect in any notice that may be given in
connection with any sale or disposition of any collateral, (f) any act or
omission of the Agent or others that directly or indirectly results in or aids
the discharge or release of Borrower or the Guaranteed Obligations of any
security or guaranty therefor by operation of law or otherwise, (g) to the
extent permitted by applicable law, any law which provides that the obligation
of a surety or guarantor must neither be larger in amount nor in other respects
more burdensome than that of the principal or which reduces a surety's or
guarantor's obligation in proportion to the principal obligation, (h) any
failure of the Agent to file or enforce a claim in any bankruptcy or other
proceeding with respect to any Person other than the Subsidiary Guarantor
against whom this Guaranty is to be enforced, or (i) any action taken by the
Agent that is authorized by any provision of any Loan Document. Further, each
Subsidiary Guarantor expressly WAIVES each and every right to which such
Subsidiary Guarantor may be entitled by virtue of the suretyship law of the
State of Texas, including, without limitation, any rights such Subsidiary
Guarantor may have pursuant to Rule 31 of the Texas Rules of Civil Procedure,
Section 17.001 of the Texas Civil Practice and Remedies Code and/or Section
34.02 of the Texas Business and Commerce Code.
11. Subrogation. Until such time, if any, as all of the
Guaranteed Obligations have been paid and performed in full and no Commitment
to advance funds to, or issue Letters of Credit for the account of, Borrower
remains in effect, no Subsidiary Guarantor shall have any rights of
subrogation,
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contribution, reimbursement or indemnity with respect to Borrower, any other
Subsidiary Guarantor or any other Person liable for any portion of the
Guaranteed Obligations, and each Subsidiary Guarantor expressly WAIVES, to the
extent permitted by applicable law and until such time as all of the Guaranteed
Obligations of Borrower have been paid and performed in full and no Commitment
to advance funds to, or issue Letters of Credit for the account of, Borrower
remains in effect, any right to enforce any remedy that the Agent for the
benefit of the Banks now has or hereinafter may have against Borrower, any
Subsidiary Guarantor or any other Person liable for any portion of the
Guaranteed Obligations and WAIVES the benefit of, or any right to participate
in, any collateral now or hereafter held by the Agent for the benefit of the
Banks. Each Subsidiary Guarantor expressly WAIVES to the fullest extent
permitted by applicable law and until such time as all of the Guaranteed
Obligations of Borrower have been paid and performed in full and no Commitment
to advance funds to, or issue Letters of Credit for the account of, Borrower
remains in effect, all setoffs and counterclaims against the Agent for the
benefit of the Banks. Each Subsidiary Guarantor expressly WAIVES to the fullest
extent permitted by applicable law all presentments for payment, demands for
payment or performance, notices of nonpayment or nonperformance, protests,
notices of protest, notices of dishonor, notice of intent to accelerate, notice
of acceleration and all other notices or demands of any kind or nature
whatsoever with respect to the Guaranteed Obligations, and all notices of
acceptance of this Guaranty or of the existence, creation or incurring of new
or additional Guaranteed Obligations.
12. Reporting Requirements. Each Subsidiary Guarantor
shall deliver, or cause to be delivered, to the Banks, to the extent not
previously delivered to the Banks by Borrower pursuant to Section 6.1 of the
Credit Agreement:
(a) Promptly and in any event within three (3) Business Days after
any Responsible Officer of a Subsidiary Guarantor obtains knowledge thereof,
notice of (i) the institution of or threat in writing of, any material action,
suit, proceeding, governmental investigation or arbitration against or
affecting such Subsidiary Guarantor not previously disclosed in writing to the
Banks or any material adverse development in any action, suit, proceeding,
governmental investigation or arbitration already disclosed to the Banks or
(ii) the occurrence of any event which constitutes a Default or Event of
Default, such notice to specify the nature and period of existence of such
Default or Event of Default, and what action such Subsidiary Guarantor has
taken, is taking or proposes to take with respect thereto.
(b) promptly upon request therefor by the Agent, such title
opinions and other information in either such Subsidiary Guarantor's
possession, control or direction regarding title to the Borrowing Base Assets
purported to be owned by such Subsidiary Guarantor as are appropriate to
determine the status of title with respect thereto;
(c) promptly upon receipt of same, any notice or other information
received by such Subsidiary Guarantor indicating any potential, actual or
alleged (i) non-compliance with or violation of the requirements of any
Environmental Law which could result in liability to such Subsidiary Guarantor
for fines, clean up or any other remediation obligations or any other liability
in excess of $1,000,000 in the aggregate; (ii) release or threatened release of
any toxic or hazardous waste, substance, or constituent, or other substance
into the environment which release would impose on such Subsidiary Guarantor a
duty to report to a governmental authority or to pay cleanup costs or to take
remedial action under any Environmental Law which could result in liability to
such Subsidiary Guarantor for fines, clean up and other remediation obligations
or any other liability in excess of $1,000,000 in the aggregate; or (iii) the
existence of any Environmental Lien arising under any Environmental Law
securing any obligation of such Subsidiary Guarantor to pay fines, clean up or
other remediation costs or any other liability in
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excess of $1,000,000 in the aggregate. Without limiting the foregoing, such
Subsidiary Guarantor shall provide to Agent, promptly upon request, copies of
all environmental consultant or engineers reports received by such Subsidiary
Guarantor which reflect the existence of any circumstance or condition which
would require delivery of a notice or other information to the Banks pursuant
to this Section 12(c) or Section 6.1(h) of the Credit Agreement.
(d) Promptly (but in all events within three (3) Domestic Business
Days) after any Responsible Officer becomes aware of same), notice of any
material adverse change in the business, financial condition, operations or
prospects of such Subsidiary Guarantor;
(e) Promptly (but in all events within three (3) Domestic Business
days) after any Responsible Officer becomes aware of same), notice of the
intended sale, transfer, encumbrance or other disposition of any Borrowing Base
Asset purported to be owned by such Subsidiary Guarantor other than a sale,
transfer, encumbrance or other disposition permitted pursuant to Section 7.8 of
the Credit Agreement; and
(f) From time to time such additional information regarding the
financial position or business of such Subsidiary Guarantor as the Agent, at
the request of any Bank, may reasonably request.
13. Set Off. In addition to any other rights any Bank or
the Agent may have under law or in equity, if any amount shall at any time be
due and owing by a Subsidiary Guarantor to any Bank or the Agent under this
Guaranty, such Bank or the Agent is authorized at any time or from time to
time, without notice (any such notice being hereby expressly waived) to set off
and appropriate and to apply any and all deposits (general or special,
including but not limited to, indebtedness evidenced by certificates of
deposit, whether matured or unmatured) and any other indebtedness of any Bank
or the certificates of deposit, whether matured or unmatured) and any other
indebtedness of any Bank or the Agent owing to such Subsidiary Guarantor and
any other property of such Subsidiary Guarantor or against and on account of
the Guaranteed Obligations and liabilities of such Subsidiary Guarantor to any
Bank or the Agent under this Guaranty. Notwithstanding any other provisions of
this Guaranty, the provisions of this Section 13 (except for the provisions of
this sentence) will not apply to any amounts held by any Subsidiary Guarantor
for the benefit of working interest owners and/or royalty owners for the
purpose of paying ad valorem taxes, development costs and/or operating costs
or for the purpose of making distributions to the revenue interest owners of
revenue from various Oil and Gas Interests owned by such Subsidiary Guarantor.
14. Covenants. Each Subsidiary Guarantor covenants and
agrees that, so long as any part of the Guaranteed Obligations shall remain
unpaid or any Bank shall have Commitment outstanding under the Credit
Agreement, such Subsidiary Guarantor will, unless the Required Banks shall
otherwise consent in writing, comply with all of the obligations, requirements,
and restrictions in the covenants contained in the Credit Agreement to the
extent they are applicable to the Subsidiaries of Borrower.
15. REPRESENTATIONS AND WARRANTIES
In order to induce the Banks and the Agent to accept this Guaranty and
to enter into the Credit Agreement and to make the Loans thereunder, each
Subsidiary Guarantor hereby represents and warrants as to itself to the Agent
and the Banks that the following statements are true and correct:
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a. Corporate Existence. Such Subsidiary
Guarantor is duly organized, validly existing
and in good standing under the laws of the
state of its incorporation, has the requisite
corporate power to own its assets and to
transact the business in which it is now
engaged and is duly qualified as a foreign
corporation and in good standing under the
laws of each jurisdiction where its ownership
or lease of property or the conduct of its
business requires such qualification, except
for failures to be so qualified, authorized
or licensed that could not in the aggregate
have a material adverse effect on the
business, operations, assets or financial
condition or such Subsidiary Guarantor.
b. Corporate Power; Authorization; Enforceable
Guaranteed Obligations. Such Subsidiary
Guarantor has the requisite corporate power,
authority and legal right to execute, deliver
and perform this Guaranty and all obligations
required hereunder and has taken all
necessary corporate action to authorize its
guaranty hereunder on the terms and
conditions hereof and its execution, delivery
and performance of this Guaranty and all
obligations required hereunder. No consent of
any other Person including, without
limitation, stockholders and creditors of
such Subsidiary Guarantor, and no license,
permit, approval or authorization of,
exemption by, notice or report to, or
registration, filing or declaration with, any
governmental authority is required by such
Subsidiary Guarantor in connection with the
execution, delivery, performance, validity or
enforceability of this Guaranty and all
obligations required hereunder. This Guaranty
has been, and each instrument or document
required hereunder will be, executed and
delivered by a duly authorized officer of
such Subsidiary Guarantor, and this Guaranty
constitutes, and each instrument or document
required hereunder when executed and
delivered hereunder will constitute, the
legally valid and binding obligation of such
Subsidiary Guarantor, enforceable against
such Subsidiary Guarantor in accordance with
its terms, except as enforcement may be
limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar
laws or equitable principles relating to or
limiting creditors' rights generally.
c. No Legal Bar to this Guaranty. The
execution, delivery and performance of this
Guaranty and the documents or instruments
required hereunder, and the use of the
proceeds of the borrowings under the Credit
Agreement, will not violate any provision of
any existing law or regulation binding on
such Subsidiary Guarantor, or any order,
judgment, award or decree of any court,
arbitrator or governmental authority binding
or such Subsidiary Guarantor, or the
certificate of incorporation or bylaws of, or
any securities issued by such Subsidiary
Guarantor, or of any mortgage, indenture,
lease, contract or other agreement,
instrument or undertaking to which such
Subsidiary Guarantor is a party or by which
such Subsidiary Guarantor or any of its
assets may be bound, and will not result in,
or require, the creation or imposition of any
Lien on any of its property, assets of
revenues
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pursuant to the provisions of any such
mortgage, indenture, lease, contract or other
agreement, instrument or undertaking.
d. Benefit to Guarantor. Such Subsidiary
Guarantor is a Subsidiary of Borrower and
will receive direct and indirect benefits
from making of the Loans and the issuance of
the Letters of Credit in connection with the
execution of this Guaranty.
16. Condition of Borrower. Each Subsidiary Guarantor
represents and warrants to the Agent and the Banks that it has established
adequate means of obtaining financial and other information pertaining to the
businesses, operations and condition (financial and otherwise) of Borrower and
its properties on a continuing basis, and that each Subsidiary Guarantor now is
and hereafter will be completely familiar with the businesses, operations and
condition (financial and otherwise) of Borrower and its properties. Each
Subsidiary Guarantor hereby expressly WAIVES, to the extent permitted by
applicable law, and relinquishes any duty on the part of the Agent (should any
such duty exist) to disclose to any Subsidiary Guarantor any matter, fact or
thing related to the businesses, operations or condition (financial or
otherwise) of Borrower or its properties, whether now known or hereafter known
by the Agent during the life of this Guaranty. With respect to any of the
Guaranteed Obligations, the Agent need not inquire into the powers of Borrower
or the officers or employees acting or purporting to act on its behalf, and all
Guaranteed Obligations made or created in good faith reliance upon the
professed exercise of such powers shall be guarantied hereby.
17. Understanding With Respect to Waivers and Consents.
Each Subsidiary Guarantor warrants and agrees that each of the waivers and
consents set forth herein are made with full knowledge of their significance
and consequences, with the understanding that events giving rise to any defense
or right waived may diminish, destroy or otherwise adversely affect rights
which such Subsidiary Guarantor otherwise may have against Borrower, the Agent
or others, or against any collateral. If any of the waivers or consents herein
are determined to be unenforceable under applicable law, such waivers and
consents shall be effective to the maximum extent permitted by law.
18. Costs and Expenses. Each Subsidiary Guarantor agrees
to pay to the Agent all reasonable out-of-pocket costs and expenses (including,
without limitation, reasonable attorneys' fees and out-of-pocket disbursements)
incurred by the Agent in the enforcement or attempted enforcement of this
Guaranty against such Subsidiary Guarantor, whether or not an action is filed
in connection therewith, and in connection with any waiver or amendment of any
term or provision hereof. All reasonable advances, charges, costs and expenses,
including reasonable attorney's fees and out-of-pocket disbursements, incurred
or paid by the Agent in exercising any right, privilege, power or remedy
conferred by this Guaranty, or in the enforcement or attempted enforcement
thereof, shall be subject hereto and shall become a part of the Guaranteed
Obligations and shall be due and payable to the Agent by such Subsidiary
Guarantor within thirty (30) days of written demand therefor.
19. Liability.
a. The liability of each Subsidiary Guarantor
hereunder is independent of the guarantees of
the other Subsidiary Guarantors and any other
guaranties at any time in effect with respect
to all or any part of the Guaranteed
Obligations, and each Subsidiary Guarantor's
liability hereunder may be enforced
regardless of the existence of the other
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Subsidiary Guarantors under this Guaranty or
any such other guaranties. Any termination by
or release of any other guarantor (including,
without limitation, a Subsidiary Guarantor)
in whole or in part shall not affect the
continuing liability of any of the other
Subsidiary Guarantors hereunder, and no
notice of any such termination or release
shall be required. The execution hereof by
the Subsidiary Guarantors is not founded upon
an expectation or understanding that there
will be any additional guarantor(s) of the
Guaranteed Obligations.
b. Notwithstanding the foregoing, the liability
of each Contributing Guarantor under this
Guaranty shall not exceed Adjusted Maximum
Amount with respect to such Contributing
Guarantor, as determined pursuant to Section
2.2(a).
20. Governing Law. This Guaranty and the rights and
obligations of the Subsidiary Guarantors, the Agent, and the Banks and all
other aspects hereof shall be deemed to be made under,, shall be governed by,
and shall be construed and enforced in accordance with the laws of the State of
Texas applicable to contracts made and performed in such state.
21. Notices. (a) all notices, requests, demands,
directions and other communications provided for hereunder must be in writing
and must be mailed, telegraphed, telecopied, delivered or sent by telex or
cable to the appropriate party at the address set forth on the signature pages
of this Guaranty, or at any other address as may be designated by it in a
written notice sent to the other party in accordance with this Section 21; and
(b) Any notice, request, demand, direction or other communication given by
telegram, telecopier, telex or cable must be confirmed within 48 hours by
letter mailed or delivered to the appropriate party at its respective address.
Except as otherwise expressly provided herein, if any notice, request, demand,
direction or other communication required or permitted hereunder is given by
mail it will be effective on the earlier of receipt or the fifth calendar day
after deposit in the United States mail with first class or airmail postage
prepaid; if given by telegraph or cable, when delivered to the telegraph
company with charges prepaid; if given by telex or telecopier, when received;
or if given by personal delivery when delivered.
22. Joinder. Any other Person may become a Subsidiary
Guarantor under and become bound by the terms and conditions of, this Guaranty
by executing and delivering to the Agent and Instrument of Joinder
substantially in the form attached hereto as Exhibit A, accompanied by such
documentation as the Agent may require to establish the due organization, valid
existence and good standing of such Person, its qualification to engage in
business in each material jurisdiction in which it is required to be so
qualified, its authority to execute, deliver and perform this Guaranty, and the
identity, authority and capacity of each officer thereof authorized to act on
its behalf.
23. Construction of This Guaranty. THIS GUARANTY IS
INTENDED TO GIVE RISE TO ABSOLUTE AND UNCONDITIONAL OBLIGATIONS ON THE PART OF
EACH SUBSIDIARY GUARANTOR; HENCE, IN ANY CONSTRUCTION HEREOF, NOTWITHSTANDING
ANY PROVISION OF ANY LOAN DOCUMENT TO THE CONTRARY, THIS GUARANTY SHALL BE
CONSTRUED STRICTLY IN FAVOR OF THE AGENT FOR THE BENEFIT OF THE BANKS IN ORDER
TO ACCOMPLISH ITS STATED PURPOSE.
24. Amendments; Consents. NO AMENDMENT, MODIFICATION,
SUPPLEMENT, EXTENSION, TERMINATION OR WAIVER OF ANY PROVISION OF THIS
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GUARANTY, NO APPROVAL OR CONSENT THEREUNDER, AND NO CONSENT TO ANY DEPARTURE BY
ANY SUBSIDIARY GUARANTOR OR ANY OTHER PARTY THEREFROM, MAY IN ANY EVENT BE
EFFECTIVE UNLESS IN WRITING SIGNED BY THE AGENT AND EACH SUBSIDIARY GUARANTOR,
AND THEN ONLY IN THE SPECIFIC INSTANCE AND FOR THE SPECIFIC PURPOSE GIVEN.
25. Final Agreement of the Parties. THIS GUARANTY
(INCLUDING THE EXHIBITS HERETO), THE CREDIT AGREEMENT, THE NOTES AND THE OTHER
LOAN DOCUMENTS TO WHICH BORROWER OR ANY OF THE SUBSIDIARY GUARANTORS IS A PARTY
CONSTITUTE A "LOAN AGREEMENT" AS DEFINED IN SECTION 26.02(A) OF THE TEXAS
BUSINESS AND COMMERCE CODE, AND REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO ORAL AGREEMENTS BETWEEN THE PARTIES.
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IN WITNESS WHEREOF, each Subsidiary Guarantor has executed
this Guarantor as of the date first written above.
"SUBSIDIARY GUARANTORS"
PENN VIRGINIA OIL AND GAS CORPORATION
By: /s/ DAVID R. BARKER
-----------------------------------
Its: President
----------------------------------
PENN VIRGINIA COAL COMPANY
By: /s/ KEITH D. HORTON
-----------------------------------
Its: President
----------------------------------
PENN VIRGINIA RESOURCES CORPORATION
By: /s/ KEITH D. HORTON
-----------------------------------
Its: President
----------------------------------
PENN VIRGINIA RESOURCES CORPORATION
By: /s/ A. JAMES DEARLOVE
-----------------------------------
Its: President
----------------------------------
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EXHIBIT "A"
TO
SUBSIDIARY GUARANTY
INSTRUMENT OF JOINDER
THIS INSTRUMENT OF JOINDER ("Joinder") is executed as of
_________________, 19__, by ________________________, a ___________________
("Joining Party"), and delivered to the Agent pursuant to the Subsidiary
Guaranty dated as of August 2, 1996 (the "Guaranty"). Terms used but not
defined in this Joinder shall have the meanings defined for those terms in the
Guaranty.
RECITALS
A. The Guaranty was made by the Subsidiary Guarantors in favor of
the Agent for the benefit of the Banks that are parties to that certain Credit
Agreement dated as of August 2, 1996 (the "Credit Agreement") among Penn
Virginia Corporation, a Virginia corporation ("Borrower"), the Banks which are
parties thereto and Texas Commerce Bank National Association, a national
banking association, as agent for the Banks (the "Agent").
B. Joining Party has become a Subsidiary of Borrower, and as such
is required pursuant to Section 6.11 of the Credit Agreement to become a
Subsidiary Guarantor.
C. Joining Party expects to realize direct and indirect benefits
as a result of the availability to Borrower of a credit facility pursuant to
the Loan Documents, and as a result of becoming a party to the Guaranty.
NOW THEREFORE, Joining Party agrees as follows:
AGREEMENT
1. By this Joinder, Joining Party becomes a "Subsidiary
Guarantor" under the pursuant to Section 22 of the Guaranty. Joining Party
agrees that, upon its execution hereof, it will become a Subsidiary Guarantor
under the Guaranty with respect to all indebtedness of Borrower heretofore or
hereafter incurred under the Loan Documents, and will be bound by all terms,
conditions, and duties applicable to a Subsidiary Guarantor under the Guaranty.
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2. The effective date of this Joinder
is _________________________.
"Joining Party"
------------------------------------
a
-----------------------------------
By:
---------------------------------
Its:
--------------------------------
ACKNOWLEDGED:
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
By:
-------------------------
Its:
------------------------
PENN VIRGINIA CORPORATION
By:
-------------------------
Its:
------------------------
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PENN VIRGINIA CORPORATION
OFFICER'S CERTIFICATE
I, the undersigned, Vice President and Chief Financial Officer of
Penn Virginia Corporation, a Virginia corporation (the "Borrower"), DO HEREBY
CERTIFY that:
1. This Certificate is furnished pursuant to Section 4.1(b)
of that certain Credit Agreement dated as of August 2, 1996 (the "Credit
Agreement") among the Borrower, the banks listed on the signature pages thereto
(the "Banks") and Texas Commerce Bank National Association, a national banking
association ("TCB) as agent for the Banks (in such capacity, the "Agent").
Unless otherwise defined herein, capitalized terms used in this Certificate
have the meanings assigned to such terms in the Credit Agreement.
2. The representation and warranties of the Borrower
contained in Article V of the Credit Agreement and, in all material respects,
in each of the other Loan Documents to which the Borrower is a party are true
and correct in all material respects on the Effective Date both before and
after giving effect to the making of the initial Revolving Credit Loans.
3. The representations and warranties of each Subsidiary
Guarantor contained in any Loan Document to which such Subsidiary Guarantor is
a party are true and correct in all material respects on the Effective Date
both before and after giving effect to the initial Revolving Credit Loans.
4. No Default or Event of Default under the Credit Agreement
has occurred and is continuing on the Effective Date either before or after
giving effect to the making of the initial Revolving Credit Loans.
5. No events or state of affairs which could reasonably be
expected to result (or has resulted) in a Material Adverse Effect has occurred
since December 31, 1995.
6. Subject to the information set forth herein, the
conditions precedent to the obligations of the Banks to make the initial
Revolving Credit Loans contemplated by the Credit Agreement which are contained
in Section 4.1 thereof have been met (assuming the satisfaction or
acceptability of this conditions required to be "satisfactory" or "acceptable"
to the Agent, the Borrower not being aware of any indication by the Agent to
the contrary).
IN WITNESS WHEREOF, I have hereunto set my hand as of the 2nd day
of August, 1996.
/s/ STEVEN W. THOLEN
-------------------------------------------
Steven W. Tholen
Vice President and Chief Financial Officer
130
BORROWING REQUEST
Texas Commerce Bank National Association
712 Main Street
Houston, Texas 77002
Attention: Gina Hardwick August 2, 1996
Ladies and Gentlemen:
Pursuant to that certain Credit Agreement dated as of August 2, 1996
(said Credit Agreement as from time to time amended being the "Credit
Agreement," the terms defined therein being used herein as therein defined)
among Penn Virginia Corporation, a Virginia corporation ("Borrower"), the banks
party thereto (the "Banks") and Texas Commerce Bank National Association, as
agent for the Banks (in such capacity, the "Agent"), the Borrower hereby:
1. Gives you notice, irrevocably pursuant to Section 2.2 or
Section 2.3, as applicable, of the Credit Agreement that Borrower hereby:
(A) Requests (check as applicable):
_X_ that a Borrowing be made under the
Credit Agreement ("Proposed Borrowing") which
request is made pursuant to Section 2.2 of
the Credit Agreement.
___ that a Letter of Credit be issued under
the Credit Agreement ("Proposed Letter of
Credit"), which request is made pursuant to
Section 2.3 of the Credit Agreement.
2. In connection with the Proposed Borrowing or Proposed
Letter of Credit, set forth below is the information required by Section 2.2 of
the Credit Agreement with respect to such Proposed Borrowing, or required by
Section 2.3 of the Credit Agreement with respect to such Proposed Letter of
Credit, as applicable (complete the applicable portions):
(a) Information applicable to the Proposed
Borrowing:
(i) The Borrowing Date of the Proposed
Borrowing is August 2, 1996;
(ii) The amount of the Proposed Borrowing
is $21,350,000;
(iii) The account of Borrower into which
proceeds of the Proposed Borrowing should be
deposited is Account Number 0004930822, First
Union National Bank of North Carolina, ABA #
031201467;
(iv) The Type of the Proposed Borrowing is a
(check one)
X ABR Borrowing
----
____ Eurodollar Borrowing. The Interest
Period is (check one)
______ one (1) month,
______ two (2) months,
131
______ three (3) months,
______ six (6) months.
(b) Information applicable to the Proposed Letter
of Credit:
(i) The issuance date of the Proposed
Letter of Credit
is ___________________, 199__.
(ii) The expiry date of the Proposed Letter
of Credit is ___________________, 199__.
(iii) The face amount of the Proposed Letter
of Credit is _______________________.
3. Certifies that (a) immediately after giving effect to
the Proposed Borrowing or the Proposed Letter of Credit, as applicable, the
aggregate Utilized Credit does not exceed the Available Commitment, (b) the
representations and warranties of the Borrower and each Subsidiary contained in
Article V of the Credit Agreement and, in all material respects, in each of the
other Loan Documents to which the Borrower or such Subsidiary is a party, are
true and correct in all material respects (both before and after giving effect
to the making of such Proposed Borrowing or the issuing of such Proposed Letter
of Credit) on and as of the Borrowing Date as if made on and as of such date
(or, if stated to have been made solely as of an earlier date, were true and
correct in all material respects as of such earlier date); (c) no event or
state of affairs which could reasonably be expected to result in a Material
Adverse Effect has occurred since [Date of the fiscal year end of the Fiscal
Year for which audited financial statements conforming to the requirements of
Section 6.1(b) of the Credit Agreement have been delivered to the Banks
pursuant to Section 6.1(b) of the Credit Agreement]; (d) no Default or Event of
Default has occurred and is continuing or would result from such Proposed
Borrowing or the issuance of such Proposed Letter of Credit, or both as the
case may be,; and (e) no new material litigation (other than Existing
Litigation) is pending or, to the best knowledge of the Borrower after due
inquiry, threatened against the Borrower or any Subsidiary and no material
adverse development has occurred in any Existing Litigation, and (f) with
respect to the Proposed Letter of Credit, the aggregate face amount of all
Letters of Credit then outstanding plus the aggregate amount of payments
theretofore made by the Issuing Bank(s) in respect of Letters of Credit and not
theretofore reimbursed by Borrower to the Issuing Bank(s) or deemed a
Revolving Credit Loan pursuant to Section 2.3(d) of the Credit Agreement does
not exceed the Letter of Credit Commitment then in effect.
Dated as of August 2, 1996.
Very truly yours,
PENN VIRGINIA CORPORATION
By: /s/ STEVEN W. THOLEN
----------------------------
Name: Steven W. Tholen
Title: Vice President and Chief
Financial Officer
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INTERCREDITOR AGREEMENT
This INTERCREDITOR AGREEMENT is made as of the 2nd day of August,
1996, by and among METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation
("MLIC"), TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a national banking
association ("TCB"), FIRST UNION NATIONAL BANK OF North Carolina, a national
banking association ("First Union") and The First National Bank of Chicago, a
national banking association ("First Chicago"; TCB, First Union and First
Chicago being hereinafter referred to collectively as the "Banks") and TEXAS
COMMERCE BANK NATIONAL ASSOCIATION, as agent for the benefit of the Banks (the
"Agent"; the Banks and the Agent being hereinafter referred to collectively as
the "Bank Group").
BACKGROUND
A. MLIC and Penn Virginia Corporation, a Virginia corporation ("PVC") are
parties to a note agreement dated May 10, 1991 (the "MLIC Note Agreement")
pursuant to which PVC issued $10,000,000 aggregate principal amount of its
8.83% Senior Notes due May 10, 1998, of which $4,000,000 principal amount is
outstanding on the date hereof (the "MLIC Senior Notes").
B. Each of Penn Virginia Coal Company, a Virginia corporation ("Coal")
and Penn Virginia Oil & Gas Corporation, a Virginia corporation ("Oil & Gas"),
Penn Virginia Resources Corporation, a Virginia corporation ("Resources") and
Penn Virginia Equities Corporation, a Delaware corporation ("Equities" and
collectively with Coal, Oil & Gas and Resources, called the "MLIC Debt
Guarantors") have entered into guaranty agreements, each dated as of February
3, 1995 in favor of MLIC pursuant to which the Subsidiary Guarantors guaranteed
all of the obligations of PVC to MLIC pursuant to the MLIC Note Agreement and
the MLIC Senior Notes (the "MLIC Guaranty Agreements").
B. The Bank Group and PVC are currently negotiating the terms of a Credit
Agreement dated as of August 2, 1996 ("Bank Credit Agreement") pursuant to
which PVC will issue notes payable to the order of each of the Banks in the
aggregate principal amount of $50,000,000 (the "Senior Bank Notes").
C. As consideration for entering into the Bank Credit Agreement, the Bank
Group is requiring that Coal, Oil & Gas, Resources and Equities and each
additional subsidiary of the Borrower formed or acquired after the date hereof
(the "Bank Debt Guarantors"; and collectively with the MLIC Debt Guarantors
referred to herein as the "Subsidiary Guarantors") to enter into, or join by
execution and delivery of a joinder to, a Subsidiary Guaranty Agreement in
favor of the Agent for the ratable benefit of the Banks dated as of August 2,
1996 pursuant to which each such subsidiary will agree to guaranty all of the
obligations of PVC arising under or relating to the Bank Credit Agreement and
the Senior Bank Notes (the "Bank Subsidiary Guaranty Agreement"; the Bank
Subsidiary Guaranty Agreement and the MLIC Guaranty Agreements being
hereinafter referred to individually as a "Subsidiary Guaranty" and
collectively as the "Subsidiary Guaranties").
D. MLIC has agreed to waive the provisions of the MLIC Note Agreement
that would be violated by the Bank Subsidiary Guaranty Agreement. As
consideration for such waiver, MLIC is requiring that the Bank Group, PVC and
MLIC enter into this Intercreditor Agreement with respect to the obligations
evidenced by the MLIC Senior Notes and the Senior Bank Notes.
NOW THEREFORE, in consideration of the foregoing, and intending to be
legally bound hereby, the parties agree as follows:
1. Definitions. As used in this Intercreditor Agreement:
133
"Bank Senior Obligations" shall mean all obligations,
liabilities and indebtedness of every nature of PVC and the Subsidiary
Guarantors from time to time owing to the Bank Group under the Bank Credit
Agreement and/or any other Loan Document, as that term is defined in the Bank
Credit Agreement, to which the Borrower or such Subsidiary Guarantor is a
party, including, without limitation, (a) the due and punctual payment of (x)
the principal of and interest on the "Loans, Letters of Credit and
reimbursement obligations under Letter of Credit Applications" (as each of
those terms are defined in the Bank Credit Agreement), when and as due, whether
at maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, including, to the extent permitted by applicable law, interest that
accrues after the commencement of any proceeding by or against the Borrower or
any of its subsidiaries under the Bankruptcy Code and all other applicable
Debtor Relief Laws and (y) all other monetary obligations of the Borrower and
the Subsidiary Guarantors to the Bank Group under the Bank Credit Agreement and
each of the other Loan Documents to which the Borrower or such Subsidiary
Guarantor is a party, including any and all fees, costs, expenses and
indemnities and (b) the due and punctual performance of all other obligations
of the Borrower and Subsidiary Guarantors under this Credit Agreement and each
other Loan Document to which the Borrower or such Subsidiary Guarantor is a
party.
"Bank Group" shall mean the Banks and the Agent, and their
successors and assigns.
"Creditor" and "Creditors" shall mean either MLIC or the Agent
for the benefit of the Bank Group, individually, or MLIC and the Bank Group,
collectively.
"Excess Guaranty Payment" shall mean, as of the date of any
Guaranty Payment under a Subsidiary Guaranty, the amount of such Guaranty
Payment received by such Creditor from the Subsidiary Guarantor less the Pro
Rata share of Guaranty Payments from the same Subsidiary Guarantor to which
such Creditor is entitled.
"Event of Default" shall mean any event of default, however
denominated, under any note or agreement (including, without limitation, any of
the Bank Credit Agreement, the Bank Senior Notes, the MLIC Note Agreement or
the MLIC Senior Notes) evidencing or entered into with respect to any of the
Obligations.
"MLIC Senior Obligations" shall mean all indebtedness,
liabilities and obligations of PVC to MLIC under the MLIC Note Agreement and
the MLIC Senior Notes, whether now existing or hereafter incurred or arising
(including all renewals, extensions or modifications thereof and all fees,
costs and expenses incurred by MLIC in connection with the collection or
enforcement thereof).
"Obligations" shall mean, collectively, the Bank Senior
Obligations and the MLIC Senior Obligations.
"Pro-Rata Share of Guaranty Payments" shall mean, as of the
date of any Guaranty Payment to a Creditor under a Subsidiary Guaranty an
amount equal to the product obtained by multiplying (x) the aggregate amount of
all Guaranty Payments concurrently made by the Subsidiary Guarantor to all
Creditors by (y) a fraction, the numerator of which shall be the outstanding
Obligations owing to such Creditor, and the denominator of which is the
aggregate amount of all outstanding Obligations (without giving effect in the
denominator to the application of any Guaranty Payments).
2. Exercise of Rights Under Documents. Nothing in this
Intercreditor Agreement shall prohibit any Creditor from accelerating the
maturity of, or demanding payment from any Subsidiary
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Guarantor on, any Obligations owing to such Creditor or from instituting any
legal action against any Subsidiary Guarantor to obtain a judgment or other
legal process in respect of such Obligations, but any funds received in
connection with any recovery therefrom shall be subject to the terms of this
Intercreditor Agreement.
3. Relation of Creditors. This Intercreditor Agreement is
entered into solely for the purposes set forth herein, and no Creditor assumes
any responsibility to any other Creditor to advise such other Creditor of
information known to such Creditor regarding the financial condition of PVC or
any Subsidiary Guarantor or of any other circumstances bearing upon the risk of
nonpayment of any Obligations. Each Creditor specifically acknowledges and
agrees that nothing contained in this Intercreditor Agreement is or is intended
to be for the benefit of PVC or any Subsidiary Guarantor or any other Person
(other than the Creditors) and nothing contained herein shall limit or in any
way modify any of the Obligations of PVC or any of Subsidiary Guarantor to the
Creditors, except as expressly provided in paragraph 5 of this Intercreditor
Agreement.
4. Effect of Invalidity of Subsidiary Guaranties. The continued
enforceability of this Intercreditor Agreement shall not be affected by the
invalidity or unenforceability of any of the Subsidiary Guaranties.
5. Sharing of Recoveries. In the event that either (A) there
shall exist a default in the payment or prepayment of any principal, premium,
if any, or interest or other amount after the expiration of any applicable
grace period with respect to any of the Bank Senior Obligations or the MLIC
Senior Obligations or (B) there shall exist an event of bankruptcy or
insolvency with respect to PVC as a consequence of which any of the Senior Bank
Notes or the MLIC Senior Notes shall have been accelerated or, pursuant to the
terms of the Senior Bank Notes or the MLIC Senior Notes, are capable of being
accelerated as a consequence of an Event of Default, each Creditor hereby
agrees with each other Creditor that payments (including payments made through
set off of deposit balances or otherwise) made pursuant to the terms of any
Subsidiary Guaranty during the continuation of any of the circumstances
described above (a "Guaranty Payment") shall be shared so that each Creditor
shall receive its Pro Rata Share of all Guaranty Payments. Accordingly, each
Creditor hereby agrees that in the event (i) any Creditor shall receive a
Guaranty Payment (a "Receiving Creditor") and (ii) any other Creditor shall not
have received its Pro Rata Share of Guaranty Payments from the same Subsidiary
Guarantor, then the Receiving Creditor shall promptly remit the Excess
Guaranty Payment with respect to each other Creditor to such other Creditor,
who shall then be entitled thereto so that after giving effect to such payment
(and any other payments then being made by any other Receiving Creditor
pursuant to this Section 5) each Creditor shall have received its Pro Rata
share of Guaranty Payments.
As between PVC and any Receiving Creditor, any Excess Guaranty Payment
paid by a Receiving Creditor to any other Creditor pursuant to the preceding
paragraph shall be treated as not having been received or recovered by such
Receiving Creditor, and PVC agrees that, upon the Receiving Creditor paying any
such Excess Guaranty Payment to any other Creditor, such Receiving Creditor may
thereafter, to the fullest extent permitted by law, exercise all its rights
(including any right of set off) to receive or recover payment in full of all
Obligations as though it had never received or recovered the Excess Guaranty
Payment.
As between PVC and any Creditor receiving any portion of an Excess
Guaranty Payment from a Receiving Creditor pursuant to the second preceding
paragraph, the aggregate amount owing by PVC to such Creditor in respect of all
Obligations shall be treated as having been reduced by the amount of
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any such payment actually received by the Creditor. For purposes of such
reduction, any such payment shall be applied: first, toward the payment of
costs, expenses and other outstanding obligations of PVC to such Creditor
(other than principal, premium or interest on the Senior Bank Notes or the MLIC
Senior Notes); second, toward the payment of accrued interest on the Senior
Bank Notes or the MLIC Senior Notes held by such Creditor; third, toward the
payment of prepayment penalty or premium, if any, on the Senior Bank Notes or
the MLIC Senior Notes held by such Creditor; and fourth, toward the payment of
principal on the Senior Bank Notes or the MLIC Senior Notes held by such
Creditor.
In the event that, following the payment by a Receiving Creditor to
one or more other Creditors of any amount attributable to an Excess Guaranty
Payment, an amount attributable to such Excess Guaranty Payment shall be
recovered from such Receiving Creditor by any Subsidiary Guarantor (including,
without limitation, any trustee in bankruptcy of any Subsidiary Guarantor or
any creditor thereof), each Creditor which received any such amount from the
Receiving Creditor shall promptly repay such amount to the Receiving Creditor,
but without interest. In such event, the original payment by the Receiving
Creditor in respect of the Excess Guaranty Payment shall be treated as not
having been paid to or received by the other Creditors for purposes of the two
preceding paragraphs.
Nothing herein contained shall obligate any Creditor to resort to any
set off, application of deposit balance or other means of payment under any
Subsidiary Guaranty or avail itself of any recourse by resort to any property
of PVC or any Subsidiary Guarantor, the taking of any such action to remain
within the absolute discretion of such Creditor without obligation of any kind
to the other Creditors to take any such action.
6. Continuing Obligations and Rights; Assignment. Subject to the
provisions hereof and except as otherwise prohibited by contract with PVC, each
Creditor may, from time to time, whether before or after termination of this
Intercreditor Agreement, at its sole discretion and without notice to the
other, take any or all of the following actions with respect to the Obligations
owing to such Creditor without affecting any of such Creditor's rights
hereunder: (a) amend any of the notes or agreements (now or hereafter existing)
evidencing or entered into with respect to any of such Obligations, and (b)
increase either the Bank Senior Obligations or the MLIC Senior Obligations
provided that no Creditor may hereafter obtain a lien or security interest in
any property of PVC or any subsidiary of PVC to secure any of the Obligations
unless or until the other Creditor obtains a lien and security interest in such
property, and in such event the liens and security interests of each Creditor
shall rank equally and be pari passu in priority.
Each Creditor may, from time to time, without notice to the
other Creditors, and without affecting any of such Creditor's rights hereunder,
assign or transfer any or all of the Obligations owing to such Creditor or any
interest therein; provided that, a Creditor may not assign any or all of its
interest in the Obligations (or any portion thereof) unless and until the
assignee or transferee of such Creditor shall agree in a writing delivered to
the other Creditors to be bound by the provisions of this Intercreditor
Agreement.
7. Amendment; Waiver. No amendment or waiver of any provisions
of this Intercreditor Agreement shall be effective unless the same shall be in
writing and signed by all Creditors (and PVC shall be deemed to approve and
consent to this Intercreditor Agreement as so amended), and any such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given. No delay on the part of any Creditor in the exercise
of any right, power or remedy shall operate as a waiver thereof, nor shall any
single or partial exercise by such Creditor of any right, power or
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136
remedy preclude any other or further exercise thereof, or the exercise of any
other right, power or remedy.
8. Notices. Notices and communications under this Intercreditor
Agreement shall be in writing and shall be given by (i) hand-delivery, (ii)
reliable overnight commercial courier (charges prepaid), or (iii) telecopy,
with hard copy to follow by overnight delivery, to the addressee and telecopy
numbers listed in this Intercreditor Agreement. Notice by hand delivery shall
be deemed to have been given and received upon delivery. Notice by overnight
courier shall be deemed to have been given and received on the date scheduled
for delivery. Notice by telecopy shall be deemed to have been given and
received when sent. A Creditor may change its address and/or telecopier number
by giving written notice to the other Creditors as specified herein.
9. Entire Agreement. This Intercreditor Agreement embodies the
entire agreement and understanding of the parties hereto and supersedes all
prior agreements and understandings of the parties hereto relating to the
subject matter herein contained.
10. Captions. Section captions used in this Intercreditor
Agreement are for convenience only and shall not affect the interpretation of
the provisions of this Intercreditor Agreement.
11. Counterparts; Effectiveness: This Intercreditor Agreement may
be executed by the parties hereto on any number of separate counterparts and
all of said counterparts taken together shall be deemed to constitute one and
the same instrument. This Intercreditor Agreement shall become effective as of
the date hereof when one or more counterparts has been executed and delivered
by each of the parties hereto.
12. Termination. This Intercreditor Agreement shall terminate
upon the earlier to occur of (i) the payment in full of all Bank Senior
Obligations and the termination of all commitments of the Banks to make loans
to PVC under the Bank Credit Agreement or (ii) the payment in full of all MLIC
Senior Obligations.
13. Governing Law. This Intercreditor Agreement shall be governed
by and construed in accordance with the internal laws (and not the law of
conflicts) of the State of Texas.
14. Successors and Assigns; Benefit of Agreement. This
Intercreditor Agreement is solely for the benefit of the Creditors and their
successors and assigns and no other persons, including, without limitation, PVC
or any Subsidiary Guarantor, shall have any right, benefit, priority or
interest under, or because of the existence of, this Intercreditor Agreement.
15. Severability. In case any one or more of the provisions
contained in this Intercreditor Agreement shall be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions of this Intercreditor Agreement shall not in any way be
affected or impaired thereby.
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137
IN WITNESS WHEREOF, each Creditor has caused this Intercreditor
Agreement to be duly executed by its authorized officer(s) as of this 2nd day
of August, 1996.
METROPOLITAN LIFE INSURANCE COMPANY
By: /s/ JOSEPH A. AUGUSTINI
------------------------------------
Name:
------------------------------
Title:
-----------------------------
Address: 334 Madison Avenue
Convent Station, New Jersey 07961
Telecopy No.: (212) 578-2508
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
individually and as agent
By: /s/ SCOTT H. RICHARDSON
------------------------------------
Name: Scott H. Richardson
------------------------------
Title: Vice President
-----------------------------
Address: Global Oil & Gas
707 Travis, 5 TCBN-86
Houston, TX 77002
Telecopy No.: (713) 216-4117
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
By:
------------------------------------
Name: Michael J. Kolosowsky
Title: Vice President
Address: One First Union Plaza
301 S. College Street, 11th Floor
Charlotte, North Carolina 28288
Telecopy No.: (703) 363-6320
Telephone No.: (703) 374-2756
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THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ WILLIAM V. CLIFFORD
------------------------------------
Name: William V. Clifford
Title: Vice President
Address: One First National Plaza
10th Floor
Chicago, Illinois 60670
Telephone No.: (312) 732-1446
Telecopy No.: (312) 732-3055
APPROVED, AGREED AND CONSENTED TO:
PENN VIRGINIA CORPORATION
By: /s/ STEVEN W. THOLEN
------------------------------
Title: Steven W. Tholen, Vice President
and Chief Financial Officer
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TERMINATION OF CREDIT AGREEMENT AND GUARANTIES
THIS TERMINATION OF CREDIT AGREEMENT, dated as of August 2, 1996 (this
"Agreement"), is entered into by and among PENN VIRGINIA CORPORATION, a
Virginia corporation (herein called "Borrower"), First Union National Bank, a
national banking association formerly known as First Fidelity, N.A. ("First
Union"). First Union National Bank of Virginia, a national banking association
("First Union-Virginia") and Corestates Bank, N.A., a national banking
association ("Corestates" and collectively with First Union and First Union-
Virginia, the "Banks") and First Union as agent for the benefit of the Banks
(herein such capacity, the "Agent").
RECITALS
A. Borrower, the Banks and the Agent have heretofore entered into
a Loan and Agency Agreement dated as of February 3, 1995, as amended (the
"Credit Agreement").
B. Each of Penn Virginia Resources Corporation, a Virginia
corporation and a wholly owned subsidiary of Borrower ("Resources"), Penn
Virginia Equities Corporation, a Delaware corporation and a wholly owned
subsidiary of Borrower ("Equities"), Penn Virginia Oil & Gas Corporation, a
Virginia corporation and a wholly owned subsidiary of Borrower ("PVOG") and
Penn Virginia Coal Company, a Virginia corporation and a wholly owned
subsidiary of Borrower ("PVCC" and collectively with Resources, Equities and
PVOG called the "Subsidiary Guarantors") guaranteed all obligations of Borrower
arising under or in connection with the Credit Agreement pursuant to Guaranty
Agreements, each dated as of February 3, 1995 (the "Guaranty Agreements").
C. Borrower, the Subsidiary Guarantors, the Banks and the Agent
now desire to terminate each of the Credit Agreement and each of the Guaranty
Agreements in its entirety.
TERMINATION
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, Borrower, the Banks and the Agent hereby agree
that, as of the date hereof, Borrower shall repay any and all amounts due
under or in connection with the Credit Agreement, including without limitation
all principal, interest, fees and other amounts due thereunder or in connection
therewith, and, also as of the date hereof, each of the Credit Agreement,
including without limitation all obligations of the Banks and the Agent to make
additional advances thereunder, and each of the Guaranty Agreements shall
terminate in its entirety.
This Agreement shall be governed by and construed under the laws of
the State of Texas and shall be binding upon and inure to the benefit of the
parties hereto and their successors and assigns. This Agreement may be executed
in any number of counterparts, each of which shall be an original, but all of
which together shall constitute one instrument. This Agreement may be delivered
by facsimile, with actual executed counterparts being delivered promptly
thereafter.
140
Executed as of the date first above written.
BORROWER
PENN VIRGINIA CORPORATION
By: /s/ STEVEN W. THOLEN
------------------------------
Steven W. Tholen
Vice President
SUBSIDIARY GUARANTORS
PENN VIRGINIA OIL & GAS CORPORATION
By: /s/ BEVERLY COLE MCGUIRE
------------------------------
Name: Beverly Cole McGuire
---------------------------
Title: Assistant Secretary
---------------------------
PENN VIRGINIA COAL COMPANY
By: /s/ BEVERLY COLE MCGUIRE
------------------------------
Name: Beverly Cole McGuire
---------------------------
Title: Assistant Secretary
---------------------------
PENN VIRGINIA RESOURCES CORPORATION
By: /s/ BEVERLY COLE MCGUIRE
------------------------------
Name: Beverly Cole McGuire
---------------------------
Title: Assistant Secretary
---------------------------
PENN VIRGINIA EQUITIES CORPORATION
By: /s/ BEVERLY COLE MCGUIRE
------------------------------
Name: Beverly Cole McGuire
---------------------------
Title: Assistant Secretary
---------------------------
141
AGENT
FIRST UNION NATIONAL BANK,
AS AGENT
By: /s/ THOMAS C. WOODWARD
-------------------------------
Thomas C. Woodward
Vice President
BANKS
FIRST UNION NATIONAL BANK
By: /s/ THOMAS C. WOODWARD
-------------------------------
Thomas C. Woodward
Vice President
FIRST UNION NATIONAL BANK OF VIRGINIA
By: /s/ LAURENCE M. LEVY
-------------------------------
Laurence M. Levy
Vice President
CORESTATES BANKS, N.A.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
142
TERMINATION OF LINE OF CREDIT
THIS TERMINATION OF LINE OF CREDIT, dated as of August 2, 1996 (this
"Agreement"), is entered into by and among PENN VIRGINIA CORPORATION, a
Virginia corporation (herein called "Borrower") and First Union National Bank,
formerly known as First Fidelity Bank, N.A., a national banking association
("First Union").
RECITALS
A. First Union has heretofore established an uncommitted line of
credit in favor of Borrower in the principal sum of $10,000,000 (the "Line of
Credit").
B. Borrower and First Union now desire to terminate the Line of
Credit in its entirety.
TERMINATION
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, Borrower and First Union hereby agree that, as of
the date hereof, Borrower shall repay any and all amounts due under or in
connection with the Line of Credit, including without limitation all principal,
interest, fees and other amounts due thereunder or in connection therewith,
and, also as of the date hereof, the Line of Credit shall terminate in its
entirety.
This Agreement shall be governed by and construed under the laws of
the State of Texas and shall be binding upon and inure to the benefit of the
parties hereto and their successors and assigns. This Agreement may be
executed in any number of counterparts, each of which shall be an original, but
all of which together shall constitute one instrument. This Agreement may be
delivered by facsimile, with actual executed counterparts being delivered
promptly thereafter.
Executed as of the date first above written.
PENN VIRGINIA CORPORATION
By: /s/ STEVEN W. THOLEN
-----------------------------
Steven W. Tholen
Vice President
FIRST UNION NATIONAL BANK
By: /s/ THOMAS C. WOODWARD
-----------------------------
Thomas C. Woodward
Vice President