EXHIBIT 10.1
CREDIT AGREEMENT
DATED AS OF APRIL 27, 2001
AMONG
ATP OIL & GAS CORPORATION
AS BORROWER,
BNP PARIBAS,
AS ADMINISTRATIVE AGENT,
AND
THE LENDERS SIGNATORY HERETO
$100,000,000 SENIOR SECURED REDUCING REVOLVING CREDIT FACILITY
BNP PARIBAS,
AS ARRANGER
TABLE OF CONTENTS
Page
ARTICLE I Definitions and Accounting Matters........................... 1
Section 1.01 Terms Defined Above.......................................... 1
Section 1.02 Certain Defined Terms........................................ 1
Section 1.03 Accounting Terms and Determinations.......................... 16
ARTICLE II Commitments.................................................. 16
Section 2.01 Loans and Letters of Credit.................................. 16
Section 2.02 Borrowings, Continuations and Conversions, Letters of Credit. 17
Section 2.03 Changes of Commitments....................................... 19
Section 2.04 Fees......................................................... 19
Section 2.05 Several Obligations.......................................... 20
Section 2.06 Notes........................................................ 20
Section 2.07 Prepayments.................................................. 21
Section 2.08 Borrowing Base and Monthly Reduction Amount.................. 22
Section 2.09 Assumption of Risks.......................................... 24
Section 2.10 Obligation to Reimburse and to Prepay........................ 24
Section 2.11 Lending Offices.............................................. 26
ARTICLE III Payments of Principal and Interest........................... 26
Section 3.01 Repayment of Loans........................................... 26
Section 3.02 Interest..................................................... 26
ARTICLE IV Payments; Pro Rata Treatment; Computations; Etc.............. 27
Section 4.01 Payments..................................................... 27
Section 4.02 Pro Rata Treatment........................................... 28
Section 4.03 Computations................................................. 28
Section 4.04 Non-receipt of Funds by the Administrative Agent............. 28
Section 4.05 Set-off, Sharing of Payments, Etc............................ 29
Section 4.06 Taxes........................................................ 30
Section 4.07 Disposition of Proceeds...................................... 32
ARTICLE V Capital Adequacy and Additional Costs........................ 33
Section 5.01 Additional Costs............................................. 33
Section 5.02 Limitation on LIBOR Loans.................................... 34
Section 5.03 Illegality................................................... 35
Section 5.04 Base Rate Loans Pursuant to Sections 5.01, 5.02 and 5.03..... 35
Section 5.05 Compensation................................................. 35
Section 5.06 Replacement Lenders.......................................... 36
ARTICLE VI Conditions Precedent......................................... 37
Section 6.01 Initial Funding.............................................. 37
Section 6.02 Initial and Subsequent Loans and Letters of Credit........... 38
Section 6.03 Conditions Precedent for the Benefit of Lenders.............. 39
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Section 6.04 No Waiver.................................................... 39
ARTICLE VII Representations and Warranties............................... 39
Section 7.01 Corporate Existence.......................................... 39
Section 7.02 Financial Condition.......................................... 40
Section 7.03 Litigation................................................... 40
Section 7.04 No Breach.................................................... 40
Section 7.05 Authority.................................................... 40
Section 7.06 Approvals.................................................... 40
Section 7.07 Use of Loans................................................. 41
Section 7.08 ERISA........................................................ 41
Section 7.09 Taxes........................................................ 42
Section 7.10 Titles, etc.................................................. 42
Section 7.11 No Material Misstatements.................................... 43
Section 7.12 Investment Company Act....................................... 43
Section 7.13 Public Utility Holding Company Act........................... 43
Section 7.14 Subsidiaries................................................. 43
Section 7.15 Location of Business and Offices............................. 43
Section 7.16 Defaults..................................................... 43
Section 7.17 Environmental Matters........................................ 44
Section 7.18 Compliance with the Law...................................... 45
Section 7.19 Insurance.................................................... 45
Section 7.20 Hedging Agreements........................................... 45
Section 7.21 Restriction on Liens......................................... 46
Section 7.22 Material Agreements.......................................... 46
Section 7.23 Gas Imbalances............................................... 46
ARTICLE VIII Affirmative Covenants........................................ 46
Section 8.01 Reporting Requirements....................................... 46
Section 8.02 Litigation................................................... 48
Section 8.03 Maintenance, Etc............................................. 49
Section 8.04 Environmental Matters........................................ 50
Section 8.05 Further Assurances........................................... 51
Section 8.06 Performance of Obligations................................... 51
Section 8.07 Engineering Reports.......................................... 51
Section 8.08 Title Information............................................ 52
Section 8.09 Collateral................................................... 53
Section 8.10 ERISA Information and Compliance............................. 54
Section 8.11 Post-Closing Matters......................................... 54
ARTICLE IX Negative Covenants........................................... 55
Section 9.01 Debt......................................................... 55
Section 9.02 Liens........................................................ 56
Section 9.03 Investments, Loans and Advances.............................. 56
Section 9.04 Dividends, Distributions and Redemptions..................... 57
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Section 9.05 Sales and Leasebacks......................................... 57
Section 9.06 Nature of Business........................................... 58
Section 9.07 Limitation on Leases......................................... 58
Section 9.08 Mergers, Etc................................................. 58
Section 9.09 Proceeds of Notes; Letters of Credit......................... 58
Section 9.10 ERISA Compliance............................................. 58
Section 9.11 Sale or Discount of Receivables.............................. 59
Section 9.12 Capital Expenditures......................................... 59
Section 9.13 Current Ratio................................................ 59
Section 9.14 Debt Service Coverage Ratio.................................. 60
Section 9.15 Interest Coverage Ratio...................................... 60
Section 9.16 Sale of Oil and Gas Properties............................... 60
Section 9.17 Environmental Matters........................................ 60
Section 9.18 Transactions with Affiliates................................. 60
Section 9.19 Subsidiaries................................................. 60
Section 9.20 Negative Pledge Agreements................................... 60
Section 9.21 Gas Imbalances, Take-or-Pay or Other Prepayments............. 60
Section 9.22 Senior Unsecured Notes....................................... 61
ARTICLE X Events of Default; Remedies.................................. 61
Section 10.01 Events of Default............................................ 61
Section 10.02 Remedies..................................................... 63
ARTICLE XI The Administrative Agent..................................... 64
Section 11.01 Appointment, Powers and Immunities........................... 64
Section 11.02 Reliance by Administrative Agent............................. 64
Section 11.03 Defaults..................................................... 65
Section 11.04 Rights as a Lender........................................... 65
Section 11.05 Indemnification.............................................. 65
Section 11.06 Non-Reliance on Administrative Agent and other Lenders....... 65
Section 11.07 Action by Administrative Agent............................... 66
Section 11.08 Resignation or Removal of Administrative Agent............... 66
ARTICLE XII Miscellaneous................................................ 67
Section 12.01 Waiver....................................................... 67
Section 12.02 Notices...................................................... 67
Section 12.03 Payment of Expenses, Indemnities, etc........................ 67
Section 12.04 Amendments, Etc.............................................. 70
Section 12.05 Successors and Assigns....................................... 70
Section 12.06 Assignments and Participations............................... 70
Section 12.07 Invalidity................................................... 71
Section 12.08 Counterparts................................................. 72
Section 12.09 References; Use of Word "Including".......................... 72
Section 12.10 Survival..................................................... 72
Section 12.11 Captions..................................................... 72
Section 12.12 No Oral Agreements........................................... 72
iii
Section 12.13 Governing Law; Submission to Jurisdiction.................... 72
Section 12.14 Interest..................................................... 73
Section 12.15 Confidentiality.............................................. 74
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ANNEXES, EXHIBITS AND SCHEDULES
Annex I - List of Percentage Shares and Maximum Credit Amounts
Exhibit A - Form of Note
Exhibit B - Form of Borrowing, Continuation and Conversion Request
Exhibit C - Form of Compliance Certificate
Exhibit D - List of Security Instruments
Exhibit E - Form of Assignment Agreement
Schedule 7.02 - Liabilities
Schedule 7.03 - Litigation
Schedule 7.09 - Taxes
Schedule 7.10 - Titles, etc.
Schedule 7.14 - Subsidiaries
Schedule 7.17 - Environmental Matters
Schedule 7.19 - Insurance
Schedule 7.20 - Hedging Agreements
Schedule 7.22 - Material Agreements
Schedule 7.23 - Gas Imbalances
Schedule 9.01 - Debt
Schedule 9.02 - Liens
Schedule 9.03 - Investments, Loans and Advances
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THIS CREDIT AGREEMENT dated as of April 27, 2001 is among ATP OIL & GAS
CORPORATION a corporation formed under the laws of the State of Texas (the
"Borrower"); each of the lenders that is a signatory hereto or which becomes a
signatory hereto as provided in Section 12.06 (individually, together with its
successors and assigns, a "Lender" and, collectively, the "Lenders"); and BNP
PARIBAS, a financial institution formed under the laws of France (in its
individual capacity, "Paribas"), as agent for the Lenders (in such capacity,
together with its successors in such capacity, the "Administrative Agent").
R E C I T A L S
A. The Borrower has requested that the Lenders provide certain loans
to and extensions of credit on behalf of the Borrower; and
B. The Lenders have agreed to make such loans and extensions of
credit subject to the terms and conditions of this Agreement.
C. In consideration of the mutual covenants and agreements herein
contained and of the loans, extensions of credit and commitments
hereinafter referred to, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS
Section 1.01 Terms Defined Above. As used in this Agreement, the terms
"Administrative Agent," "Borrower," "Lender," "Lenders," and "Paribas" shall
have the meanings indicated above.
Section 1.02 Certain Defined Terms. As used herein, the following terms
shall have the following meanings (all terms defined in this Article I or in
other provisions of this Agreement in the singular to have equivalent meanings
when used in the plural and vice versa):
"Additional Costs" shall have the meaning assigned such term in
Section 5.01(a).
"Affected Loans" shall have the meaning assigned such term in Section
5.04.
"Affiliate" of any Person shall mean (i) any Person directly or
indirectly controlled by, controlling or under common control with such
first Person, (ii) any director or officer of such first Person or of any
Person referred to in clause (i) above and (iii) if any Person in clause
(i) above is an individual, any member of the immediate family (including
parents, spouse and children) of such individual and any trust whose
principal beneficiary is such individual or one or more members of such
immediate family and any Person who is controlled by any such member or
trust. For purposes of this definition, any Person which owns directly or
indirectly 10% or more of the securities having ordinary voting power for
the election of directors or other governing body of a corporation or 10%
or more of the partnership or other ownership interests of any other Person
(other than as a limited partner of such other Person) will be deemed to
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"control" (including, with its correlative meanings, "controlled by" and
"under common control with") such corporation or other Person.
"Agreement" shall mean this Credit Agreement, as the same may from
time to time be amended or supplemented.
"Aggregate Commitments" at any time shall equal the amount calculated
in accordance with Section 2.03.
"Aggregate Maximum Credit Amounts" at any time shall equal the sum of
the Maximum Credit Amounts of the Lenders, as the same may be reduced
pursuant to Section 2.03(b). As of the Closing Date, the Aggregate Maximum
Credit Amounts equal $100,000,000.
"Applicable Lending Office" shall mean, for each Lender and for each
Type of Loan, the lending office of such Lender (or an Affiliate of such
Lender) designated for such Type of Loan on the signature pages hereof or
such other offices of such Lender (or of an Affiliate of such Lender) as
such Lender may from time to time specify to the Administrative Agent and
the Borrower as the office by which its Loans of such Type are to be made
and maintained.
"Applicable Margin" shall mean, at any time except as otherwise
specifically set out in this definition, the applicable per annum
percentage set forth at the appropriate intersection in the table shown
below, based on the Borrowing Base Utilization as in effect from time to
time:
Borrowing Base Utilization Applicable Margin
-------------------------- ------------------------------
LIBOR Loans Base Rate Loans
----------- ---------------
Less than 25% 1.50% 0.00%
Greater than or equal to 25%, but less 1.75% 0.00%
than 50%
Greater than or equal to 50%, but less 2.00% 0.00%
than 75%
Greater than or equal to 75%, but less 2.25% 0.25%
than 85%
Greater than or equal to 85% 2.75% 0.75%
; provided, however, if the issuance of the Senior Unsecured Debt has not
occurred on or before June 1, 2001, the "Applicable Margin" shall mean, for the
period from and after June 1, 2001 until, but excluding, the date of issuance of
the Senior Unsecured Debt, the applicable per annum percentage set forth at the
appropriate intersection in the table set forth below, based on the Borrowing
Base Utilization as in effect from time to time:
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Borrowing Base Utilization Applicable Margin
-------------------------- -------------------------------
LIBOR Loans Base Rate Loans
----------- ---------------
Less than 25% 1.75% 0.25%
Greater than or equal to 25%, but less 2.00% 0.25%
than 50%
Greater than or equal to 50%, but less 2.25% 0.25%
than 75%
Greater than or equal to 75%, but less 2.50% 0.50%
than 85%
Greater than or equal to 85% 3.00% 1.00%
; further provided, however, at any time that a Borrowing Base Deficiency
exists, the "Applicable Margin" shall be increased by an additional 2.00% in
excess of the Applicable Margin that would otherwise apply if no Borrowing Base
Deficiency existed.
Each change in the Applicable Margin resulting from a change in the Borrowing
Base Utilization shall take effect on the day such change in the Borrowing Base
Utilization occurs.
"Aquila Buy-Back" shall mean the acquisition by the Borrower of all
overriding royalty interests of Aquila Energy Capital Corporation in and to any
of the Oil and Gas Properties in which the Borrower owns an interest.
"Assignment" shall have the meaning assigned such term in Section 12.06(b).
"ATP (UK) " shall mean ATP Oil & Gas (UK) Ltd., a private limited company
formed under the laws of England and Wales.
"Base Rate" shall mean, with respect to any Base Rate Loan, for any day,
the higher of (i) the Federal Funds Rate for any such day plus 1/2 of 1% or (ii)
the Prime Rate for such day. Each change in any interest rate provided for
herein based upon the Base Rate resulting from a change in the Base Rate shall
take effect at the time of such change in the Base Rate.
"Base Rate Loans" shall mean Loans that bear interest at rates based upon
the Base Rate.
"Beneficiaries" shall mean the Administrative Agent, the Lenders, each
Issuing Bank and each Affiliate of a Lender that is a party to a Hedge Agreement
with the Borrower.
"Borrowing Base" shall mean at any time an amount equal to the amount
determined in accordance with Section 2.08.
"Borrowing Base Deficiency" shall mean, and occur at any time when, the
amount by which the aggregate outstanding principal amount of the Loans plus
the LC Exposure exceeds the Borrowing Base, whether as the result of a
redetermination, a scheduled reduction, or otherwise.
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"Borrowing Base Utilization" shall mean at any time, an amount equal to the
quotient of (i) the aggregate principal amount of Loans outstanding plus LC
Exposure, divided by (ii) the Borrowing Base.
"Business Day" shall mean any day other than a day on which commercial
banks are authorized or required to close in Houston, Texas or New York, New
York and, if such day relates to a borrowing or continuation of, a payment or
prepayment of principal of or interest on, or a conversion of or into, or the
Interest Period for, a LIBOR Loan or a notice by the Borrower with respect to
any such borrowing or continuation, payment, prepayment, conversion or Interest
Period, any day which is also a day on which dealings in Dollar deposits are
carried out in the London interbank market.
"Change in Control" shall mean the occurrence of any of the following:
(i) the acquisition by any Person (or group of Persons acting together)
of a direct or indirect interest in more than 30% of the voting
power of the voting stock of the Borrower, by way of merger or
consolidation or otherwise, or
(ii) during any consecutive 12 month period, Continuing Directors cease
to constitute a majority of the board of directors then in office.
For purposes of this definition, any transfer of an equity interest of an
entity that was formed for the purpose of acquiring voting stock of the Borrower
will be deemed to be a transfer of such portion of such voting stock as
corresponds to the portion of the equity of such entity that has been so
transferred, and the acquisition of voting power of the voting stock of the
Borrower by any Subsidiary of the Borrower shall be disregarded.
"Closing Date" shall mean April 27, 2001.
"Closing Hedging Agreements" shall mean Hedging Agreements entered into by
the Borrower during April 2001 and listed in Schedule 7.20 with other existing
Hedging Agreements, in form and substance reasonably satisfactory to the
Administrative Agent, pursuant to which at least 6,000,000,000 Btu/day of the
Borrower's production from its Oil and Gas Properties is hedged for at least six
months during the period from and after the Closing Date until October 31, 2001
for a net realized price of not less than $5.40/MMBtu.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time and any successor statute.
"Commitment" shall mean, for any Lender, its obligation to make Loans and
to participate in the Letters of Credit as provided in Section 2.01(b) up to the
lesser of (i) such Lender's Maximum Credit Amount and (ii) such Lender's
Percentage Share of the amount equal to the then effective Borrowing Base.
"Consolidated Net Income" shall mean with respect to the Borrower and its
Consolidated Subsidiaries, for any period, the aggregate of the net income (or
loss) of the Borrower and its Consolidated Subsidiaries after allowances for
taxes for such period, determined on a consolidated basis in accordance with
GAAP; provided that there shall be excluded from such
4
net income (to the extent otherwise included therein) the following: (i) the net
income of any Person in which the Borrower or any Consolidated Subsidiary has an
interest (which interest does not cause the net income of such other Person to
be consolidated with the net income of the Borrower and its Consolidated
Subsidiaries in accordance with GAAP), except to the extent of the amount of
dividends or distributions actually paid in such period by such other Person to
the Borrower or to a Consolidated Subsidiary, as the case may be; (ii) the net
income (but not loss) of any Consolidated Subsidiary to the extent that the
declaration or payment of dividends or similar distributions or transfers or
loans by that Consolidated Subsidiary is not at the time permitted by operation
of the terms of its charter or any agreement, instrument or Governmental
Requirement applicable to such Consolidated Subsidiary, or is otherwise
restricted or prohibited, in each case determined in accordance with GAAP; (iii)
the net income (or loss) of any Person acquired in a pooling-of-interests
transaction for any period prior to the date of such transaction; (iv) any
extraordinary gains or losses, including gains or losses attributable to
Property sales not in the ordinary course of business; and (v) the cumulative
effect of (A) a change in accounting principles and (B) any gains or losses
attributable to non-cash write-ups or write downs of assets.
"Consolidated Subsidiaries" shall mean each Subsidiary of a Person (whether
now existing or hereafter created or acquired) the financial statements of which
shall be (or should have been) consolidated with the financial statements of
such Person in accordance with GAAP. Unless otherwise indicated, each
reference to the term "Consolidated Subsidiary" shall mean a Subsidiary
consolidated with the Borrower.
"Continuing Directors" shall mean any member of the board of directors of
the Borrower on the Closing Date, any director elected since the date thereof in
an annual meeting of the stockholders upon the recommendation of the board of
directors of the Borrower and any other member of the board of directors of the
Borrower who will be recommended or elected to succeed to a Continuing Director
by a majority of Continuing Directors who are then members of the board of
directors of the Borrower.
"Debt" shall mean, for any Person and at any point in time, the sum of the
following (without duplication): (i) all obligations of such Person for borrowed
money or evidenced by bonds, debentures, notes or other similar instruments
(including principal, interest, fees and charges); (ii) all obligations of such
Person (whether contingent or otherwise) in respect of bankers' acceptances,
letters of credit, surety or other bonds and similar instruments; (iii) all
obligations of such Person to pay the deferred purchase price of Property or
services (other than for borrowed money); (iv) all obligations under leases
which shall have been, or should have been, in accordance with GAAP, recorded as
capital leases in respect of which such Person is liable (whether contingently
or otherwise); (v) all obligations under operating leases which require such
Person or its Affiliate to make payments over the term of such lease, including
payments at termination, based on the purchase price or appraisal value of the
Property subject to such lease plus a marginal interest rate, and used primarily
as a financing vehicle for, or to monetize, such Property; (vi) all Debt (as
described in the other clauses of this definition) and other obligations of
others secured by a Lien on any asset of such Person, whether or not such Debt
is assumed by such Person; (vii) all Debt (as described in the other clauses of
this definition) and other obligations of others guaranteed by such Person or in
which such Person otherwise assures a creditor against loss of the debtor or
obligations of others; (viii) all obligations or undertakings of such Person to
maintain or cause to be maintained the financial
5
position or covenants of others or to purchase the Debt or Property of others;
(ix) obligations to deliver goods or services, including Hydrocarbons, in
consideration of advance payments, except as permitted by Section 9.16 and
disclosed pursuant to Section 8.07(c); (x) obligations to pay for goods or
services whether or not such goods or services are actually received or utilized
by such Person; (xi) any capital stock of such Person in which such Person has a
mandatory obligation to redeem such stock; (xii) any Debt of a Special Entity
for which such Person is liable either by agreement or because of a Governmental
Requirement; (xiii) the undischarged balance of any production payment created
by such Person or for the creation of which such Person directly or indirectly
received payment; and (xiv) the net financial exposure of such Person under all
then existing Hedging Agreements.
"Debt Ratio" shall mean, as of the end of each fiscal quarter, the ratio of
(i) Debt of the Borrower and its Consolidated Subsidiaries as of the end of such
fiscal quarter, less cash on hand exceeding $10,000,000 to (ii) EBITDA (less
interest income) for the immediately preceding four fiscal quarters ending on
such date.
"Default" shall mean an Event of Default or an event which with notice or
lapse of time or both would become an Event of Default.
"Dollars" and "$" shall mean lawful money of the United States of America.
"EBITDA" shall mean, for any period, the sum of Consolidated Net Income for
such period plus the following expenses or charges to the extent deducted from
Consolidated Net Income in such period: interest, taxes, depreciation, depletion
and amortization.
"Engineering Reports" shall have the meaning assigned such term in Section
2.08.
"Environmental Laws" shall mean any and all Governmental Requirements
pertaining to health or the environment in effect in any and all jurisdictions
in which the Borrower or any Subsidiary is conducting or at any time has
conducted business, or where any Property of the Borrower or any Subsidiary is
located, including without limitation, the Oil Pollution Act of 1990 ("OPA"),
the Clean Air Act, as amended, the Comprehensive Environmental, Response,
Compensation, and Liability Act of 1980 ("CERCLA"), as amended, the Federal
Water Pollution Control Act, as amended, the Occupational Safety and Health Act
of 1970, as amended, the Resource Conservation and Recovery Act of 1976
("RCRA"), as amended, the Safe Drinking Water Act, as amended, the Toxic
Substances Control Act, as amended, the Superfund Amendments and Reauthorization
Act of 1986, as amended, the Hazardous Materials Transportation Act, as amended,
and other environmental conservation or protection laws. The term "oil" shall
have the meaning specified in OPA, the terms "hazardous substance" and "release"
(or "threatened release") have the meanings specified in CERCLA, and the terms
"solid waste" and "disposal" (or "disposed") have the meanings specified in
RCRA; provided, however, that (i) in the event either OPA, CERCLA or RCRA is
amended so as to broaden the meaning of any term defined thereby, such broader
meaning shall apply subsequent to the effective date of such amendment and (ii)
to the extent the laws of the state in which any Property of the Borrower or any
Subsidiary is located establish a meaning for "oil," "hazardous substance,"
"release," "solid waste" or "disposal" which is broader than that specified in
either OPA, CERCLA or RCRA, such broader meaning shall apply.
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"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time and any successor statute.
"ERISA Affiliate" shall mean each trade or business (whether or not
incorporated) which together with the Borrower or any Subsidiary would be deemed
to be a "single employer" within the meaning of section 4001(b)(1) of ERISA or
subsections (b), (c), (m) or (o) of section 414 of the Code.
"ERISA Event" shall mean (i) a "Reportable Event" described in Section 4043
of ERISA and the regulations issued thereunder, (ii) the withdrawal of the
Borrower, any Subsidiary or any ERISA Affiliate from a Plan during a plan year
in which it was a "substantial employer" as defined in Section 4001(a)(2) of
ERISA, (iii) the filing of a notice of intent to terminate a Plan or the
treatment of a Plan amendment as a termination under Section 4041 of ERISA, (iv)
the institution of proceedings to terminate a Plan by the PBGC or (v) any other
event or condition which might constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any Plan.
"Event of Default" shall have the meaning assigned such term in Section
10.01.
"Excepted Liens" shall mean: (i) Liens for taxes, assessments or other
governmental charges or levies not yet due or which are being contested in good
faith by appropriate action and for which adequate reserves have been
maintained; (ii) Liens in connection with workmen's compensation, unemployment
insurance or other social security, old age pension or public liability
obligations not yet due or which are being contested in good faith by
appropriate action and for which adequate reserves have been maintained in
accordance with GAAP; (iii) operators', vendors', carriers', warehousemen's,
repairmen's, mechanics', workmen's, materialmen's, construction or other like
Liens arising by operation of law in the ordinary course of business or incident
to the exploration, development, operation and maintenance of Oil and Gas
Properties or statutory landlord's liens, each of which is in respect of
obligations that have not been outstanding more than 90 days or which are being
contested in good faith by appropriate proceedings and for which adequate
reserves have been maintained in accordance with GAAP; (iv) any Liens reserved
in leases or farmout agreements for rent or royalties and for compliance with
the terms of the farmout agreements or leases in the case of leasehold estates,
to the extent that any such Lien referred to in this clause does not materially
impair the use of the Property covered by such Lien for the purposes for which
such Property is held by the Borrower or any Subsidiary or materially impair the
value of such Property subject thereto; (v) encumbrances (other than to secure
the payment of borrowed money or the deferred purchase price of Property or
services), easements, restrictions, servitudes, permits, conditions, covenants,
exceptions or reservations in any rights of way or other Property of the
Borrower or any Subsidiary for the purpose of roads, pipelines, transmission
lines, transportation lines, distribution lines for the removal of gas, oil,
coal or other minerals or timber, and other like purposes, or for the joint or
common use of real estate, rights of way, facilities and equipment, and defects,
irregularities, zoning restrictions and deficiencies in title of any rights of
way or other Property which in the aggregate do not materially impair the use of
such rights of way or other Property for the purposes of which such rights of
way and other Property are held by the Borrower or any Subsidiary or materially
impair the value of such Property subject thereto; (vi) deposits of cash or
securities to secure the performance of bids, trade contracts, leases, statutory
7
obligations and other obligations of a like nature incurred in the ordinary
course of business; and (vii) Liens permitted by the Security Instruments.
"Federal Funds Rate" shall mean, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight federal funds transactions with a member of the
Federal Reserve System arranged by federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day, provided that (i) if the date for which such rate is to be
determined is not a Business Day, the Federal Funds Rate for such day shall be
such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (ii) if such rate is not so
published for any day, the Federal Funds Rate for such day shall be the average
rate charged to the Administrative Agent on such day on such transactions as
determined by the Administrative Agent.
"Fee Letter" shall mean that certain letter agreement between the
Administrative Agent and the Borrower, dated as of even date with this
Agreement, concerning certain fees in connection with this Agreement and any
agreements or instruments executed in connection therewith, as the same may be
amended or replaced from time to time.
"Financial Statements" shall mean the financial statement or statements of
the Borrower and its Consolidated Subsidiaries described or referred to in
Section 7.02.
"GAAP" shall mean generally accepted accounting principles in the United
States of America in effect from time to time.
"Governmental Authority" shall include the country, the state, county, city
and political subdivisions in which any Person or such Person's Property is
located or which exercises valid jurisdiction over any such Person or such
Person's Property, and any court, agency, department, commission, board, bureau
or instrumentality of any of them including monetary authorities which exercises
valid jurisdiction over any such Person or such Person's Property. Unless
otherwise specified, all references to Governmental Authority herein shall mean
a Governmental Authority having jurisdiction over, where applicable, the
Borrower, its Subsidiaries or any of their Property or the Administrative Agent,
any Lender or any Applicable Lending Office.
"Governmental Requirement" shall mean any law, statute, code, ordinance,
order, determination, rule, regulation, judgment, decree, injunction, franchise,
permit, certificate, license, authorization or other directive or requirement
(whether or not having the force of law), including, without limitation,
Environmental Laws, energy regulations and occupational, safety and health
standards or controls, of any Governmental Authority.
"Hedging Agreements" shall mean any commodity, interest rate or currency
swap, cap, floor, collar, forward agreement or other exchange or protection
agreements or any option with respect to any such transaction.
"Highest Lawful Rate" shall mean, with respect to each Lender, the maximum
nonusurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the Notes or on any
other Obligations under laws applicable to such Lender which are presently in
effect or, to the extent allowed by law, under
8
such applicable laws which may hereafter be in effect and which allow a higher
maximum nonusurious interest rate than applicable laws now allow.
"Hydrocarbon Interests" shall mean all rights, titles, interests and
estates now or hereafter acquired in and to oil and gas leases, oil, gas and
mineral leases, or other liquid or gaseous hydrocarbon leases, mineral fee
interests, overriding royalty and royalty interests, net profit interests and
production payment interests, including any reserved or residual interests of
whatever nature.
"Hydrocarbons" shall mean oil, gas, casinghead gas, drip gasoline, natural
gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and
all products refined or separated therefrom.
"Indemnified Parties" shall have the meaning assigned such term in Section
12.03(a)(ii).
"Indemnity Matters" shall mean any and all actions, suits, proceedings
(including any investigations, litigation or inquiries), claims, demands and
causes of action made or threatened against a Person and, in connection
therewith, all losses, liabilities, damages (including, without limitation,
consequential damages) or reasonable costs and expenses of any kind or nature
whatsoever incurred by such Person whether caused by the sole or concurrent
negligence of such Person seeking indemnification.
"Initial Funding" shall mean the funding of the initial Loans or issuance
of the initial Letters of Credit upon satisfaction of the conditions set forth
in Sections 6.01 and 6.02.
"Initial Reserve Reports" shall mean the reports of (i) Ryder Scott
Company, dated October 31, 2000 and December 31, 2000, (ii) Holditch-Reservoir
Technologies dated December 31, 2000 and (iii) Atwater Consultants Ltd., dated
January 1, 2001, with respect to the Oil and Gas Properties then owned or being
acquired by the Borrower, copies of which have been delivered to the
Administrative Agent.
"Interest Coverage Ratio" shall mean, as of the end of each fiscal quarter,
the ratio of (i) EBITDA for the immediately preceding four fiscal quarters
ending on such date to (ii) cash interest payments made by the Borrower and its
Consolidated Subsidiaries for such four fiscal quarters.
"Interest Period" shall mean, with respect to any LIBOR Loan, the period
commencing on the date such LIBOR Loan is made and ending on the numerically
corresponding day in the first, second, third or sixth calendar month
thereafter, as the Borrower may select as provided in Section 2.02 (or such
longer period as may be requested by the Borrower and agreed to by the Majority
Lenders), except that each Interest Period which commences on the last Business
Day of a calendar month (or on any day for which there is no numerically
corresponding day in the appropriate subsequent calendar month) shall end on the
last Business Day of the appropriate subsequent calendar month.
Notwithstanding the foregoing: (i) no Interest Period may end after the
Termination Date; (ii) each Interest Period which would otherwise end on a day
which is not a Business Day shall end on the next succeeding Business Day (or,
if such next succeeding Business Day falls in
9
the next succeeding calendar month, on the next preceding Business Day); and
(iii) no Interest Period shall have a duration of less than one month and, if
the Interest Period for any LIBOR Loans would otherwise be for a shorter period,
such Loans shall not be available hereunder.
"Issuing Bank" shall mean Paribas or any other Lender agreed to among the
Borrower and the Administrative Agent to issue Letters of Credit.
"LC Commitment" at any time shall mean $15,000,000.
"LC Exposure" at any time shall mean the difference between (i) the
aggregate face amount of all undrawn and uncancelled Letters of Credit plus the
aggregate of all amounts drawn under all Letters of Credit and not yet
reimbursed, minus (ii) the aggregate amount of all cash securing outstanding
Letters of Credit pursuant to Section 2.10(b).
"Lender Termination Date" shall have the meaning assigned to such term in
Section 5.06(c).
"Letter of Credit Agreements" shall mean the written agreements with the
Issuing Bank, as issuing lender for any Letter of Credit, executed in connection
with the issuance by the Issuing Bank of the Letters of Credit, such agreements
to be on the Issuing Bank's customary form for letters of credit of comparable
amount and purpose as from time to time in effect or as otherwise agreed to by
the Borrower and the Issuing Bank.
"Letters of Credit" shall mean the letters of credit issued pursuant to
Section 2.01(b) and all reimbursement obligations pertaining to any such letters
of credit, and "Letter of Credit" shall mean any one of the Letters of Credit
and the reimbursement obligations pertaining thereto.
"LIBOR Loans" shall mean Loans the interest rates on which are determined
on the basis of rates referred to in the definition of "LIBOR Rate".
"LIBOR" shall mean the rate of interest determined on the basis of the rate
for deposits in Dollars for a period equal to the applicable Interest Period
commencing on the first day of such Interest Period appearing on Dow Jones
Market Service Page 3750 (or any successor page) as of 11:00 a.m. (London time)
two Business Days prior to the first day of the applicable Interest Period. In
the event that such rate does not appear on Dow Jones Market Service Page 3750
(or a successor page), "LIBOR" shall be determined by the Administrative Agent
to be the rate per annum at which deposits in Dollars are offered by leading
reference banks in the London interbank market to Paribas at approximately 11:00
a.m. (London time) two Business Days prior to the first day of the applicable
Interest Period for a period equal to such Interest Period and in an amount
substantially equal to the amount of the applicable Loan.
"LIBOR Loans" shall mean Loans the interest rates on which are determined
on the basis of rates referred to in the definition of "LIBOR Rate".
"LIBOR Rate" shall mean, with respect to any LIBOR Loan, a rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) determined by the
Administrative Agent to be equal to the quotient of (i) LIBOR for such Loan for
the Interest Period for such Loan divided by (ii) 1 minus the Reserve
Requirement for such Loan for such Interest Period.
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"Lien" shall mean any interest in Property securing an obligation owed to,
or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute or contract, and whether such
obligation or claim is fixed or contingent, and including but not limited to (i)
the lien or security interest arising from a mortgage, encumbrance, pledge,
security agreement, conditional sale or trust receipt or a lease, consignment or
bailment for security purposes or (ii) production payments and the like payable
out of Oil and Gas Properties. The term "Lien" shall include reservations,
exceptions, encroachments, easements, rights of way, covenants, conditions,
restrictions, leases and other title exceptions and encumbrances affecting
Property. For the purposes of this Agreement, the Borrower or any Subsidiary
shall be deemed to be the owner of any Property which it has acquired or holds
subject to a conditional sale agreement, or leases under a financing lease or
other arrangement pursuant to which title to the Property has been retained by
or vested in some other Person in a transaction intended to create a financing.
"Loan Documents" shall mean this Agreement, the Notes, the Fee Letter, all
Letters of Credit, all Letter of Credit Agreements, the Security Instruments and
any other document expressly indicating therein that such document is a "Loan
Document" under this Agreement.
"Loans" shall mean the loans as provided for by Section 2.01(a).
"Majority Lenders" shall mean, at any time while no Loans are outstanding,
Lenders having at least sixty-six and two-thirds percent (66-2/3%) of the
Aggregate Commitments and, at any time while Loans are outstanding, Lenders
holding at least sixty-six and two-thirds percent (66-2/3%) of the outstanding
aggregate principal amount of the Loans (without regard to any sale by a Lender
of a participation in any Loan under Section 12.06(c)).
"Material Adverse Effect" shall mean any set of circumstances or events
that (i) has or could reasonably be expected to have any material and adverse
effect whatsoever upon, or result in or reasonably be expected to result in a
material adverse change in, (A) the assets, liabilities, financial condition,
business, operations or affairs of the Borrower and its Subsidiaries taken as a
whole different from those reflected in the Financial Statements or from the
facts represented or warranted in any Loan Document, or (B) the ability of the
Borrower and its Subsidiaries taken as a whole to carry out their business as at
the Closing Date or as proposed as of the Closing Date to be conducted or meet
their obligations under the Loan Documents on a timely basis, (ii) impairs
materially or could be reasonably expected to impair materially the ability of
the Borrower and its Subsidiaries to duly and punctually pay and perform their
obligations under the Loan Documents or (iii) impairs materially or could
reasonably be expected to impair materially the ability of the Administrative
Agent or any of the Lenders, to the extent permitted, to enforce its legal
remedies pursuant to the Loan Documents.
"Maximum Credit Amount" shall mean, as to each Lender, the amount set forth
opposite such Lender's name on Annex I under the caption "Maximum Credit
Amounts" (as the same may be reduced pursuant to Section 2.03(b) pro rata to
each Lender based on its Percentage Share), as modified from time to time to
reflect any assignments permitted by Section 12.06(b).
"Monthly Reduction Amount" shall mean the amount by which the Borrowing
Base shall automatically reduce on the first day of each calendar month,
commencing June 1, 2001, as determined by the Administrative Agent and the
Lenders in accordance with Section 2.08.
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"Mortgaged Property" shall mean the Property owned by the Borrower and
which is subject to the Liens existing and to exist under the terms of the
Security Instruments.
"Multiemployer Plan" shall mean a Plan defined as such in Section 3(37) or
4001(a)(3) of ERISA.
"Notes" shall mean the Notes provided for by Section 2.06, together with
any and all renewals, extensions for any period, increases, rearrangements,
substitutions or modifications thereof.
"Notice of Termination" shall have the meaning assigned to such term in
Section 5.06(a).
"Obligations" shall mean all indebtedness, obligations and liabilities of
the Borrower or any Subsidiary to any of the Lenders, any of the Lenders'
Affiliates, the Administrative Agent, or the Issuing Bank, individually or
collectively, existing on the date of this Agreement or arising thereafter,
direct or indirect, joint or several, absolute or contingent, matured or
unmatured, liquidated or unliquidated, secured or unsecured, arising or incurred
under any Hedge Agreement, under this Agreement or any of the other Loan
Documents or in respect of any of the Loans made or reimbursement obligations
incurred or any of the Notes, Letters of Credit or other instruments at any time
evidencing any thereof, including interest accruing subsequent to the filing of
a petition or other action concerning bankruptcy or other similar proceedings,
and all renewals, extensions, refinancings and replacements for the foregoing.
"Oil and Gas Properties" shall mean Hydrocarbon Interests; the Properties
now or hereafter pooled or unitized with Hydrocarbon Interests; all presently
existing or future unitization, pooling agreements and declarations of pooled
units and the units created thereby (including without limitation all units
created under orders, regulations and rules of any Governmental Authority) which
may affect all or any portion of the Hydrocarbon Interests; all operating
agreements, contracts and other agreements which relate to any of the
Hydrocarbon Interests or the production, sale, purchase, exchange or processing
of Hydrocarbons from or attributable to such Hydrocarbon Interests; all
Hydrocarbons in and under and which may be produced and saved or attributable to
the Hydrocarbon Interests, including all oil in tanks, the lands covered thereby
and all rents, issues, profits, proceeds, products, revenues and other incomes
from or attributable to the Hydrocarbon Interests; all tenements, hereditaments,
appurtenances and Properties in any manner appertaining, belonging, affixed or
incidental to the Hydrocarbon Interests; and all Properties, rights, titles,
interests and estates described or referred to above, including any and all
Property, real or personal, now owned or hereafter acquired and situated upon,
used, held for use or useful in connection with the operation, production or
development of any of such Hydrocarbon Interests or Property (excluding drilling
rigs, automotive equipment or other personal property which may be on such
premises for the purpose of drilling a well or for other temporary uses) and
including any and all oil wells, gas wells, injection wells or other wells,
buildings, structures, fuel separators, liquid extraction plants, plant
compressors, pumps, pumping units, field gathering systems, tanks and tank
batteries, fixtures, valves, fittings, machinery and parts, engines, boilers,
meters, apparatus, equipment, appliances, tools, implements, cables, wires,
towers, casing, tubing and rods, surface leases, rights-of-way, easements and
servitudes together with all additions, substitutions, replacements, accessions
and attachments to any and all of the foregoing.
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"Other Taxes" shall have the meaning assigned such term in Section 4.06(b).
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions.
"Percentage Share" shall mean the percentage of the Aggregate Commitments
to be provided by a Lender under this Agreement as indicated on Annex I hereto,
as modified from time to time to reflect any assignments permitted by Section
12.06(b).
"Person" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, trust, unincorporated organization or
government or any agency, instrumentality or political subdivision thereof, or
any other form of entity.
"Plan" shall mean any employee pension benefit plan, as defined in Section
3(2) of ERISA, which (i) is currently or hereafter sponsored, maintained or
contributed to by the Borrower, any Subsidiary or an ERISA Affiliate or (ii) was
at any time during the preceding six calendar years sponsored, maintained or
contributed to, by the Borrower, any Subsidiary or an ERISA Affiliate.
"Post-Default Rate" shall mean, in respect of any principal of any Loan or
any other amount payable by the Borrower under this Agreement or any other Loan
Document , a rate per annum during the period commencing on the date of
occurrence of an Event of Default until such amount is paid in full or all
Events of Default are cured or waived equal to 2% per annum above the Base Rate
as in effect from time to time plus the Applicable Margin (if any), but in no
event to exceed the Highest Lawful Rate; provided, however, for a LIBOR Loan,
the "Post-Default Rate" for such principal shall be, for the period commencing
on the date of occurrence of an Event of Default and ending on the earlier to
occur of the last day of the Interest Period therefor or the date all Events of
Default are cured or waived, 2% per annum above the interest rate for such Loan
as provided in Section 3.02(a)(ii), but in no event to exceed the Highest Lawful
Rate.
"Prime Rate" shall mean the rate of interest from time to time announced
publicly by the Administrative Agent at the Principal Office as its prime
commercial lending rate. Such rate is set by the Administrative Agent as a
general reference rate of interest, taking into account such factors as the
Administrative Agent may deem appropriate, it being understood that many of the
Administrative Agent's commercial or other loans are priced in relation to such
rate, that it is not necessarily the lowest or best rate actually charged to any
customer and that the Administrative Agent may make various commercial or other
loans at rates of interest having no relationship to such rate.
"Principal Office" shall mean the principal office of the Administrative
Agent, presently located at 1200 Smith Street, Suite 3100, Houston, Texas 77002.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Quarterly Dates" shall mean the last day of each March, June, September,
and December, in each year, the first of which shall be June 30, 2001; provided,
however, that if any such day is not a Business Day, such Quarterly Date shall
be the next succeeding Business Day.
13
"Redetermination Date" shall mean the date that the redetermined Borrowing
Base becomes effective subject to the notice requirements specified in Section
2.08(e) both for scheduled redeterminations and unscheduled redeterminations.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be amended or
supplemented from time to time.
"Regulatory Change" shall mean, with respect to any Lender, any change
after the Closing Date in any Governmental Requirement (including Regulation D)
or the adoption or making after such date of any interpretations, directives or
requests applying to a class of lenders (including such Lender or its Applicable
Lending Office) of or under any Governmental Requirement (whether or not having
the force of law) by any Governmental Authority charged with the interpretation
or administration thereof.
"Replacement Lenders" shall have the meaning assigned to such term in
Section 5.06(b).
"Required Payment" shall have the meaning assigned such term in Section
4.04.
"Reserve Report" shall mean a report, in form and substance satisfactory to
the Administrative Agent, setting forth, as of each January 1 (or such other
date in the event of an unscheduled redetermination or the redetermination
scheduled to occur on or around July 31, 2001); (i) the oil and gas reserves
attributable to the Borrower's Oil and Gas Properties together with a projection
of the rate of production and future net income, taxes, operating expenses and
capital expenditures with respect thereto as of such date, based upon the
pricing assumptions provided by the Administrative Agent and consistent with
pricing assumptions used in connection with credit facilities of a similar
nature extended to other borrowers similarly situated and (ii) such other
information as the Administrative Agent may reasonably request. The term
"Reserve Report" shall also include the information to be provided by the
Borrower as of July 1 of each year pursuant to Section 8.07(a).
"Reserve Requirement" shall mean, for any Interest Period for any LIBOR
Loan, the average maximum rate at which reserves (including any marginal,
supplemental or emergency reserves) are required to be maintained during such
Interest Period under Regulation D by member banks of the Federal Reserve System
in New York City with deposits exceeding one billion Dollars against
"Eurocurrency liabilities" (as such term is used in Regulation D). Without
limiting the effect of the foregoing, the Reserve Requirement shall reflect any
other reserves required to be maintained by such member banks by reason of any
Regulatory Change against (i) any category of liabilities which includes
deposits by reference to which LIBOR is to be determined as provided in the
definition of "LIBOR" or (ii) any category of extensions of credit or other
assets which include a LIBOR Loan.
"Responsible Officer" shall mean, as to any Person, the Chief Executive
Officer, the President or any Vice President of such Person and, with respect to
financial matters, the term "Responsible Officer" shall include the Chief
Financial Officer of such Person. Unless otherwise specified, all references to
a Responsible Officer herein shall mean a Responsible Officer of the Borrower.
14
"Scheduled Redetermination Date" shall have the meaning assigned to such
term in Section 2.08(d).
"SEC" shall mean the Securities and Exchange Commission or any successor
Governmental Authority.
"Security Instruments" shall mean the Letters of Credit, Letter of Credit
Agreements, the agreements or instruments described or referred to in Exhibit D,
and any and all other agreements or instruments now or hereafter executed and
delivered by the Borrower or any other Person (other than participation or
similar agreements between any Lender and any other lender or creditor with
respect to any Obligations pursuant to this Agreement) in connection with, or as
security for the payment or performance of, the Notes, this Agreement, or
reimbursement obligations under the Letters of Credit, as such agreements may be
amended, supplemented or restated from time to time.
"Senior Unsecured Debt" shall mean the Senior Unsecured Debt of up to
$150,000,000 issued pursuant to terms approved by the Administrative Agent
(which approval will not be unreasonably withheld or delayed).
"Special Entity" shall mean any joint venture, limited liability company or
partnership, general or limited partnership or any other type of partnership or
company other than a corporation in which a Person or one or more of its other
Subsidiaries is a member, owner, partner or joint venturer and owns, directly or
indirectly, at least a majority of the equity of such entity or controls such
entity, but excluding any tax partnerships that are not classified as
partnerships under state law. For purposes of this definition, any Person which
owns directly or indirectly an equity investment in another Person which allows
the first Person to manage or elect managers who manage the normal activities of
such second Person will be deemed to "control" such second Person (e.g. a sole
general partner controls a limited partnership).
"Subsidiary" shall mean (i) any corporation of which at least a majority of
the outstanding shares of stock having by the terms thereof ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether or not at the time stock of any other class or classes
of such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time directly or indirectly owned or
controlled by another Person or one or more of such Person's Subsidiaries or by
such Person and one or more of its Subsidiaries and (ii) any Special Entity.
Unless otherwise indicated herein, each reference to the term "Subsidiary" shall
mean a Subsidiary of the Borrower.
"Taxes" shall have the meaning assigned such term in Section 4.06(a).
"Terminated Lender" shall have the meaning assigned to such term in Section
5.06(a).
"Termination Date" shall mean the earlier to occur of (i) December 31, 2003
or (ii) the date that the Commitments are sooner terminated pursuant to Sections
2.03(b) or 10.02.
"Transfer" shall mean any sale, assignment, farm-out, conveyance or other
transfer of any Oil and Gas Property, or any interest in any Oil and Gas
Property (including, without limitation, any working interest, overriding
royalty interest, production payments, net profits
15
interest, royalty interest, or mineral fee interest) of the Borrower or ATP
(UK), except for (i) the sale of Hydrocarbons in the ordinary course of
business, (ii) the sale or transfer of equipment that is (A) obsolete, worn out,
depleted or uneconomic and disposed of in the ordinary course of business, (B)
no longer necessary for the business of the Borrower or ATP (UK) or (C)
contemporaneously replaced by equipment of at least comparable value and use,
and (iii) the sale, in any one fiscal year of Oil and Gas Properties of the
Borrower or ATP (UK) which in the aggregate have a fair market value of $250,000
or less.
"Type" shall mean, with respect to any Loan, a Base Rate Loan or a LIBOR
Loan.
Section 1.03 Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be furnished to the Administrative Agent or the Lenders hereunder
shall be prepared, in accordance with GAAP, applied on a basis consistent with
the audited financial statements of the Borrower referred to in Section 7.02
(except for changes concurred with by the Borrower's independent public
accountants).
ARTICLE II
COMMITMENTS
Section 2.01 Loans and Letters of Credit.
(a) Loans. Each Lender severally agrees, on the terms and conditions
of this Agreement, to make loans to the Borrower during the period from and
including (i) the Closing Date or (ii) such later date that such Lender
becomes a party to this Agreement as provided in Section 12.06(b), to and
up to, but excluding, the Termination Date in an aggregate principal amount
at any one time outstanding up to, but not exceeding, the amount of such
Lender's Commitment as then in effect; provided, however, that the
aggregate principal amount of all such Loans by all Lenders hereunder at
any one time outstanding together with the LC Exposure shall not exceed the
Aggregate Commitments. Subject to the terms of this Agreement, during the
period from the Closing Date to and up to, but excluding, the Termination
Date, the Borrower may borrow, repay and reborrow the amount described in
this Section 2.01(a).
(b) Letters of Credit. During the period from and including the
Closing Date to, but excluding, the Termination Date, the Issuing Bank, as
issuing bank for the Lenders, agrees to extend credit for the account of
the Borrower or any Subsidiary at any time and from time to time by
issuing, renewing, extending or reissuing Letters of Credit; provided,
however, the LC Exposure at any one time outstanding shall not exceed the
lesser of (i) the LC Commitment or (ii) the Aggregate Commitments, as then
in effect, minus the aggregate principal amount of all Loans and the LC
Exposure then outstanding. The Lenders shall participate in such Letters
of Credit according to their respective Percentage Shares. Each of the
Letters of Credit shall (i) be issued by the Issuing Bank, (ii) contain
such terms and provisions as are reasonably required by the Issuing Bank,
16
(iii) be for the account of the Borrower or a Subsidiary and (iv) expire
not later than two (2) days before the Termination Date.
(c) Limitation on Types of Loans. Subject to the other terms and
provisions of this Agreement, at the option of the Borrower, the Loans may
be Base Rate Loans or LIBOR Loans; provided that, without the prior written
consent of the Majority Lenders, no more than six (6) LIBOR Loans may be
outstanding at any time.
Section 2.02 Borrowings, Continuations and Conversions, Letters of Credit.
(a) Borrowings. The Borrower shall give the Administrative Agent
(which shall promptly notify the Lenders) advance notice as hereinafter
provided of each borrowing hereunder, which shall specify (i) the aggregate
amount of such borrowing, (ii) the Type and (iii) the date (which shall be
a Business Day) of the Loans to be borrowed, and (iv) in the case of LIBOR
Loans, the duration of the Interest Period therefor.
(b) Minimum Amounts. All Base Rate Loan borrowings shall be in
amounts of at least $1,000,000 or the remaining balance of the Aggregate
Commitments, if less, or any whole multiple of $500,000 in excess thereof,
and all LIBOR Loans shall be in amounts of at least $5,000,000 or any whole
multiple of $1,000,000 in excess thereof.
(c) Notices. All borrowings, continuations and conversions shall
require advance written notice to the Administrative Agent (which shall
promptly notify the Lenders) in the form of Exhibit B (or telephonic
notice promptly confirmed by such a written notice), which in each case
shall be irrevocable, from the Borrower to be received by the
Administrative Agent not later than 11:00 a.m. Houston, Texas time at least
one Business Day prior to the date of each Base Rate Loan borrowing and
three Business Days prior to the date of each LIBOR Loan borrowing,
continuation or conversion. Without in any way limiting the Borrower's
obligation to confirm in writing any telephonic notice, the Administrative
Agent may act without liability upon the basis of telephonic notice
believed by the Administrative Agent in good faith to be from the Borrower
prior to receipt of written confirmation. In each such case, the Borrower
hereby waives the right to dispute the Administrative Agent's record of the
terms of such telephonic notice except in the case of gross negligence or
willful misconduct by the Administrative Agent.
(d) Continuation Options. Subject to the provisions made in this
Section 2.02(d), the Borrower may elect to continue all or any part of any
LIBOR Loan beyond the expiration of the then current Interest Period
relating thereto by giving advance notice as provided in Section 2.02(c) to
the Administrative Agent (which shall promptly notify the Lenders) of such
election, specifying the amount of such Loan to be continued and the
Interest Period therefor. In the absence of such a timely and proper
election, the Borrower shall be deemed to have elected to convert such
LIBOR Loan to a Base Rate Loan pursuant to Section 2.02(e). All or any
part of any LIBOR Loan may be continued as provided herein, provided that
(i) any continuation of any such Loan shall be (as to each Loan as
continued for an applicable Interest Period) in amounts of at least
$3,000,000 or any whole multiple of $1,000,000 in excess thereof and (ii)
no Default shall have occurred and be continuing. If a Default shall have
occurred and be
17
continuing, each LIBOR Loan shall be converted to a Base Rate Loan on the
last day of the Interest Period applicable thereto.
(e) Conversion Options. The Borrower may elect to convert all or any
part of any LIBOR Loan on the last day of the then current Interest Period
relating thereto to a Base Rate Loan by giving advance notice to the
Administrative Agent (which shall promptly notify the Lenders) of such
election. Subject to the provisions made in this Section 2.02(e), the
Borrower may elect to convert all or any part of any Base Rate Loan at any
time and from time to time to a LIBOR Loan by giving advance notice as
provided in Section 2.02(c) to the Administrative Agent (which shall
promptly notify the Lenders) of such election. All or any part of any
outstanding Loan may be converted as provided herein, provided that (i) any
conversion of any Base Rate Loan into a LIBOR Loan shall be (as to each
such Loan into which there is a conversion for an applicable Interest
Period) in amounts of at least $3,000,000 or any whole multiple of
$1,000,000 in excess thereof and (ii) no Default shall have occurred and be
continuing. If a Default shall have occurred and be continuing, no Base
Rate Loan may be converted into a LIBOR Loan.
(f) Advances. Not later than 11:00 a.m. Houston, Texas time on the
date specified for each borrowing hereunder, each Lender shall make
available the amount of the Loan to be made by it on such date to the
Administrative Agent, to an account which the Administrative Agent shall
specify, in immediately available funds, for the account of the Borrower.
The amounts so received by the Administrative Agent shall, subject to the
terms and conditions of this Agreement, be made available to the Borrower
by depositing the same, in immediately available funds, in an account of
the Borrower, designated by the Borrower and maintained at the Principal
Office.
(g) Letters of Credit. The Borrower shall give the Issuing Bank
(which shall promptly notify the Lenders of such request and their
Percentage Share of such Letter of Credit) advance notice to be received by
the Issuing Bank not later than 11:00 a.m. Houston, Texas time not less
than two Business Days prior thereto of each request for the issuance, and
at least 30 Business Days prior to the date of the renewal or extension, of
a Letter of Credit hereunder which request shall specify (i) the amount of
such Letter of Credit, (ii) the date (which shall be a Business Day) such
Letter of Credit is to be issued, renewed or extended, (iii) the duration
thereof, (iv) the name and address of the beneficiary thereof, (v) the type
of the Letter of Credit and (vi) such other information as the
Administrative Agent may reasonably request, all of which shall be
reasonably satisfactory to the Administrative Agent. Subject to the terms
and conditions of this Agreement, on the date specified for the issuance,
renewal or extension of a Letter of Credit, the Administrative Agent shall
issue, renew or extend such Letter of Credit to the beneficiary thereof.
In conjunction with the issuance of each Letter of Credit, the
Borrower and the relevant Subsidiary, if the account party, shall execute a
Letter of Credit Agreement. In the event of any conflict between any
provision of a Letter of Credit Agreement and this Agreement, the Borrower,
the Issuing Bank, the Administrative Agent and the Lenders hereby agree
that the provisions of this Agreement shall govern.
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The Issuing Bank will send to the Borrower and each Lender,
immediately upon issuance of any Letter of Credit, or an amendment thereto,
a true and complete copy of such Letter of Credit, or such amendment
thereto.
Section 2.03 Changes of Commitments.
(a) The Aggregate Commitments shall at all times be equal to the
lesser of (i) the Aggregate Maximum Credit Amounts after adjustments
resulting from reductions pursuant to Sections 2.03(b) and (c) or (ii) the
Borrowing Base as determined from time to time.
(b) The Borrower shall have the right to terminate or to reduce the
amount of the Aggregate Maximum Credit Amounts at any time, or from time to
time, upon not less than two Business Days' prior notice to the
Administrative Agent (which shall promptly notify the Lenders) of each such
termination or reduction, which notice shall specify the effective date
thereof and the amount of any such reduction (which shall not be less than
$5,000,000 or any whole multiple of $1,000,000 in excess thereof) and shall
be irrevocable and effective only upon receipt by the Administrative Agent.
(c) Concurrent with the issuance of the Senior Unsecured Notes, the
Aggregate Maximum Credit Amounts shall automatically reduce to $25,000,000.
(d) The Aggregate Maximum Credit Amounts once terminated or reduced
may not be reinstated.
Section 2.04 Fees.
(a) Commitment Fee. The Borrower shall pay to the Administrative
Agent for the account of each Lender a commitment fee on the daily average
unused amount of the Aggregate Commitments for the period from and
including the Closing Date up to, but excluding, the earlier of the date
the Aggregate Commitments are terminated or the Termination Date at a rate
per annum equal to 1/2 of 1%. Accrued commitment fees shall be payable
quarterly in arrears on each Quarterly Date and on the earlier of the date
the Aggregate Commitments are terminated or the Termination Date.
(b) Letter of Credit Fees.
(i) The Borrower agrees to pay the Administrative Agent, for the
account of each Lender, commissions for issuing the Letters of Credit on
the daily average outstanding amount of the maximum liability of the
Issuing Bank existing from time to time under such Letter of Credit
(calculated separately for each Letter of Credit) at the rate per annum
equal to the Applicable Margin in effect from time to time for LIBOR Loans,
provided that each Letter of Credit shall bear a minimum commission of
$1,000.00. Each Letter of Credit shall be deemed to be outstanding up to
the full face amount of such Letter of Credit until the Issuing Bank has
received the canceled Letter of Credit or a written cancellation of the
Letter of Credit from the beneficiary of such Letter of Credit in form and
substance acceptable to the Issuing Bank or, for any reductions in the
amount of the Letter of Credit (other than from a drawing), written
notification from
19
the beneficiary of such Letter of Credit. Such commissions are payable
quarterly in arrears on each Quarterly Date and upon cancellation or
expiration of each such Letter of Credit.
(ii) The Borrower agrees to pay the Administrative Agent, for the
account of the Issuing Bank, commissions for issuing the Letters of Credit
(calculated separately for each Letter of Credit) equal to the greater of
(x) 0.25% of the face amount of each Letter of Credit and (y) $1000,
payable upon issuance of such Letter of Credit.
(iii) The Borrower shall pay to the Issuing Bank such other
usual and customary fees associated with any transfers, amendments,
drawings, negotiations or reissuances of any Letters of Credit.
(c) Other Fees. The Borrower shall pay such other fees as are set
forth in the Fee Letter pursuant to the provisions thereof and on the dates
specified therein.
Section 2.05 Several Obligations. The failure of any Lender to make any
Loan to be made by it or to provide funds for disbursements or reimbursements
under Letters of Credit on the date specified therefor shall not relieve any
other Lender of its obligation to make its Loan or provide funds on such date,
but no Lender shall be responsible for the failure of any other Lender to make a
Loan to be made by such other Lender or to provide funds to be provided by such
other Lender.
Section 2.06 Notes. The Loans made by each Lender shall be evidenced by a
single promissory note of the Borrower in substantially the form of Exhibit A,
dated (i) the Closing Date or (ii) the effective date of an Assignment pursuant
to Section 12.06(b), payable to the order of such Lender in a principal face
amount equal to its Maximum Credit Amount as originally in effect and otherwise
duly completed and such substitute Notes as required by Section 12.06(b). The
date, amount, Type, interest rate and Interest Period of each Loan made by each
Lender, and all payments made on account of the principal thereof, shall be
recorded by such Lender on its books for its Note, and, prior to any transfer
may be endorsed by such Lender on the schedule attached to such Note or any
continuation thereof or on any separate record maintained by such Lender.
Failure to make any such notation or to attach a schedule shall not affect any
Lender's or the Borrower's rights or obligations in respect of such Loans or
affect the validity of such transfer by any Lender of its Note.
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Section 2.07 Prepayments.
(a) Voluntary Prepayments. The Borrower may prepay the Base Rate
Loans upon not less than one Business Day's prior notice to the
Administrative Agent (which shall promptly notify the Lenders), which
notice shall specify the prepayment date (which shall be a Business Day)
and the amount of the prepayment (which shall be at least $1,000,000 or the
remaining aggregate principal balance outstanding on the Notes) and shall
be irrevocable and effective only upon receipt by the Administrative Agent,
provided that interest on the principal prepaid, accrued to the prepayment
date, shall be paid on the prepayment date. The Borrower may prepay LIBOR
Loans on the same conditions as for Base Rate Loans (except that prior
notice to the Administrative Agent shall be not less than three Business
Days for LIBOR Loans) and in addition such prepayments of LIBOR Loans shall
be subject to the terms of Section 5.05 and shall be in an amount equal to
all of the LIBOR Loans for the Interest Period prepaid.
(b) Mandatory Prepayments.
(i) Termination or Reduction of Aggregate Maximum Credit Amounts.
If, after giving effect to any termination or reduction of the Aggregate
Maximum Credit Amounts pursuant to Section 2.03(b), the outstanding
aggregate principal amount of the Loans plus the LC Exposure exceeds the
Aggregate Maximum Credit Amounts, the Borrower shall (i) prepay the Loans
on the date of such termination or reduction in an aggregate principal
amount equal to the excess, together with interest on the principal amount
paid accrued to the date of such prepayment and (ii) if any excess remains
after prepaying all of the Loans because of LC Exposure, pay to the
Administrative Agent on behalf of the Lenders an amount equal to the excess
to be held as cash collateral as provided in Section 2.10(b) hereof.
(ii) Redetermination of Borrowing Base. Upon any redetermination
of the amount of the Borrowing Base in accordance with Section 2.08, if the
redetermined Borrowing Base results in a Borrowing Base Deficiency, then
the Borrower shall within 30 days after written notice thereof (i) prepay
the Loans in an aggregate principal amount sufficient to eliminate such
Borrowing Base Deficiency, together with interest on the principal amount
paid accrued to the date of each such prepayment, (ii) grant to the
Administrative Agent a first priority Lien in additional Properties of the
Borrower, which in the Lenders' sole determination, have sufficient value
to eliminate such Borrowing Base Deficiency, or (iii) eliminate such
Borrowing Base Deficiency, through a combination of the actions described
in clauses (i) and (ii). If, because of LC Exposure, a Borrowing Base
Deficiency remains after prepaying all of the Loans and granting first
priority Liens in additional Properties to the Administrative Agent, the
Borrower shall pay to the Administrative Agent on behalf of the Lenders an
amount equal to such remaining Borrowing Base Deficiency to be held as cash
collateral as provided in Section 2.10(b).
(iii) Monthly Reduction Amount. If any reduction of the amount
of the Borrowing Base by operation of the Monthly Reduction Amount in
accordance with Section 2.08 results in a Borrowing Base Deficiency, then
the Borrower shall immediately upon receipt of written notice thereof
prepay the Loans in an aggregate
21
principal amount equal to such Borrowing Base Deficiency, together with
interest on the principal amount paid accrued to the date of such
prepayment. If, because of LC Exposure, a Borrowing Base Deficiency remains
after prepaying all of the Loans, the Borrower shall pay to the
Administrative Agent on behalf of the Lenders an amount equal to such
remaining Borrowing Base Deficiency to be held as cash collateral as
provided in Section 2.10(b).
(iv) Issuance of Senior Unsecured Notes. Proceeds received by
the Borrower from the issuance of the Senior Unsecured Notes shall, no
later than three Business Days after receipt thereof by the Borrower, be
used, to the extent necessary, to prepay the aggregate principal amount of
all Loans then outstanding, together with interest on the principal amount
paid accrued to the date of such prepayment.
(c) Generally. Prepayments permitted or required under this Section
2.07 shall be without premium or penalty, except as required under Section
5.05 for prepayment of LIBOR Loans. Any prepayment may be reborrowed
subject to the then effective Aggregate Commitments.
Section 2.08 Borrowing Base and Monthly Reduction Amount.
(a) Generally. The Borrowing Base and the Monthly Reduction Amount
shall be determined in accordance with Section 2.08(b) by the
Administrative Agent with the concurrence of the Lenders and is subject to
redetermination in accordance with Section 2.08(d). Upon any
redetermination of the Borrowing Base or the Monthly Reduction Amount, such
redetermination shall remain in effect until the next successive
Redetermination Date. So long as any of the Commitments are in effect or
any LC Exposure or Loans are outstanding hereunder, this facility shall be
governed by the then effective Borrowing Base and Monthly Reduction Amount.
During the period from and after the Closing Date until the first
redetermination pursuant to Section 2.08(d) or adjusted pursuant to Section
8.08(c), the amount of the Borrowing Base shall be $65,000,000 and the
Monthly Reduction Amount shall be $5,000,000.00; provided, however, if the
Aquila Buy-Back and Closing Hedging Agreements are not completed prior to
or on the Closing Date, the initial Borrowing Base shall be $60,000,000.
No delay for any reason whatsoever in a redetermination of the Monthly
Reduction Amount shall affect the Borrower's obligations under Section
2.07(b)(iii).
(b) Redetermination Procedure. Upon receipt of the reports required
by Section 8.07 and such other reports, data and supplemental information
as may from time to time be reasonably requested by the Administrative
Agent (the "Engineering Reports"), the Administrative Agent will
redetermine the Borrowing Base and the Monthly Reduction Amount. Such
redetermination will be in accordance with its normal and customary
procedures for evaluating oil and gas reserves and other related assets as
such exist at that particular time. The Administrative Agent, in its sole
discretion, may make adjustments to the rates, volumes and prices and other
assumptions set forth therein in accordance with its normal and customary
procedures for evaluating oil and gas reserves and other related assets as
such exist at that particular time. The Administrative Agent shall propose
to the Lenders a new Borrowing Base and Monthly Reduction Amount within 15
days following receipt by the Administrative Agent and the Lenders of
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the Engineering Reports in a timely and complete manner. After having
received notice of such proposal by the Administrative Agent, the Lenders
shall have 15 days to agree or disagree with such proposal. If at the end
of the 15 days, the Lenders have not communicated their approval or
disapproval, such silence shall be deemed to be an approval and the
Administrative Agent's proposal shall be the new Borrowing Base and Monthly
Reduction Amount. If however, the Lenders notify the Administrative Agent
within 15 days of their disapproval, the Lenders shall, within a reasonable
period of time, agree on a new Borrowing Base and Monthly Reduction Amount.
The Administrative Agent and all of the Lenders must approve a new
Borrowing Base and Monthly Reduction Amount.
(c) Exclusions. The Administrative Agent may exclude any Oil and Gas
Property or portion of production therefrom or any income from any other
Property from the Borrowing Base, at any time, because title information is
not reasonably satisfactory, such Property is not Mortgaged Property or
such Property is not assignable.
(d) Redetermination Dates. So long as any of the Commitments are in
effect and until payment in full of all Loans hereunder, on or around the
first Business Day of each April and October (each being a "Scheduled
Redetermination Date"), the Lenders shall redetermine the amount of the
Borrowing Base and the Monthly Reduction Amount in accordance with Section
2.08(b); provided, however, an interim redetermination of the Borrowing
Base shall occur on or around July 31, 2001, which date shall be deemed a
"Scheduled Redetermination Date". In addition, (i) the Borrower may
initiate a redetermination of the Borrowing Base and the Monthly Reduction
Amount at any other time as it so elects by specifying in writing to the
Administrative Agent (who will promptly notify the Lenders) the date by
which the Borrower will furnish to the Administrative Agent and the Lenders
a Reserve Report in accordance with Section 8.07(b) and the date by which
such redetermination is requested to occur; provided, however, that the
Borrower may initiate only one such unscheduled redetermination per
calendar year and (ii) the Administrative Agent may initiate a
redetermination of the Borrowing Base and the Monthly Reduction Amount at
any other time as it so elects by specifying in writing to the Borrower the
date by which the Borrower is to furnish a Reserve Report in accordance
with Section 8.07(b) and the date on which such redetermination is to
occur; provided, however, that the Administrative Agent may initiate only
one such unscheduled redetermination between each Scheduled Redetermination
Date. Concurrently with the delivery of each Reserve Report delivered in
connection with each unscheduled Borrowing Base redetermination requested
by the Borrower, the Borrower shall pay an engineering fee to the
Administrative Agent, for its own account, of $10,000.
(e) Effective Date. The Administrative Agent shall promptly notify in
writing the Borrower and the Lenders of the new Borrowing Base and Monthly
Reduction Amount. Any redetermination of the Borrowing Base and the
Monthly Reduction Amount shall not be in effect until written notice is
received by the Borrower.
(f) Redetermination Upon Issuance of Senior Unsecured Notes. The
Borrowing Base and the Monthly Reduction Amount may be redetermined by the
Administrative Agent and the Lenders, in accordance with their respective
normal and
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customary procedures for evaluating oil and gas reserves and other related
assets as such exist at that particular time, promptly after the date of
issuance of the Senior Unsecured Debt and such redetermination shall become
effective in accordance with the procedures in Section 2.08(f). The
foregoing redetermination of the Borrowing Base is in addition to any other
unscheduled redetermination allowed pursuant to Section 2.08(d).
Notwithstanding anything herein to the contrary, from and after the
effective date of such redetermination until the next redetermination
thereafter pursuant to Section 2.08(d), the Borrowing Base shall not exceed
$20,000,000.
Section 2.09 Assumption of Risks. The Borrower assumes all risks of the
acts or omissions of any beneficiary of any Letter of Credit or any transferee
thereof with respect to its use of such Letter of Credit. Neither the Issuing
Bank (except in the case of gross negligence or willful misconduct on the part
of the Issuing Bank or any of its employees), its correspondents nor any Lender
shall be responsible for the validity, sufficiency or genuineness of
certificates or other documents or any endorsements thereon, even if such
certificates or other documents should in fact prove to be invalid,
insufficient, fraudulent or forged; for errors, omissions, interruptions or
delays in transmissions or delivery of any messages by mail, telex, or
otherwise, whether or not they be in code; for errors in translation or for
errors in interpretation of technical terms; the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign any
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in
whole or in part, which may prove to be invalid or ineffective for any reason;
the failure of any beneficiary or any transferee of any Letter of Credit to
comply fully with conditions required in order to draw upon any Letter of
Credit; or for any other consequences arising from causes beyond the Issuing
Bank's control or the control of the Issuing Bank's correspondents unless, as to
any of the foregoing, constituting gross negligence or willful misconduct on the
part of the Administrative Agent or any Lender. In addition, neither the Issuing
Bank, the Administrative Agent nor any Lender shall be responsible for any
error, neglect, or default of any of the Issuing Bank's correspondents; and none
of the above shall affect, impair or prevent the vesting of any of the Issuing
Bank's, the Administrative Agent's or any Lender's rights or powers hereunder or
under the Letter of Credit Agreements, all of which rights shall be cumulative,
unless, as to any of the foregoing, constituting gross negligence or willful
misconduct on the part of the Administrative Agent or any Lender. The Issuing
Bank and its correspondents may accept certificates or other documents that
appear on their face to be in order, without responsibility for further
investigation of any matter contained therein regardless of any notice or
information to the contrary. In furtherance and not in limitation of the
foregoing provisions, the Borrower agrees that any action, inaction or omission
taken or not taken by the Issuing Bank or by any correspondent for the Issuing
Bank in good faith in connection with any Letter of Credit, or any related
drafts, certificates, documents or instruments, shall be binding on the Borrower
and shall not put the Issuing Bank or its correspondents under any resulting
liability to the Borrower.
Section 2.10 Obligation to Reimburse and to Prepay.
(a) If a disbursement by the Issuing Bank is made under any Letter of
Credit, the Borrower shall pay to the Administrative Agent within two (2)
Business Days after notice of any such disbursement is received by the
Borrower, the amount of each such disbursement made by the Issuing Bank
under the Letter of Credit (if such payment is not sooner effected as may
be required under this Section 2.10 or under other provisions of
24
the Letter of Credit), together with interest on the amount disbursed from
and including the date of disbursement until payment in full of such
disbursed amount at a varying rate per annum equal to (i) the then
applicable interest rate for Base Rate Loans through the second Business
Day after notice of such disbursement is received by the Borrower and (ii)
thereafter, the Post-Default Rate for Base Rate Loans (but in no event to
exceed the Highest Lawful Rate) for the period from and including the third
Business Day following the date of such disbursement to and including the
date of repayment in full of such disbursed amount. The obligations of the
Borrower under this Agreement with respect to each Letter of Credit shall
be absolute, unconditional and irrevocable and shall be paid or performed
strictly in accordance with the terms of this Agreement under all
circumstances whatsoever, including, without limitation, but only to the
fullest extent permitted by applicable law, the following circumstances:
(i) any lack of validity or enforceability of this Agreement, any Letter of
Credit or any of the Security Instruments; (ii) any amendment or waiver of
(including any default), or any consent to departure from this Agreement
(except to the extent permitted by any amendment or waiver), any Letter of
Credit or any of the Security Instruments; (iii) the existence of any
claim, set-off, defense or other rights which the Borrower may have at any
time against the beneficiary of any Letter of Credit or any transferee of
any Letter of Credit (or any Persons for whom any such beneficiary or any
such transferee may be acting), the Issuing Bank, the Administrative Agent,
any Lender or any other Person, whether in connection with this Agreement,
any Letter of Credit, the Security Instruments, the transactions
contemplated hereby or any unrelated transaction; (iv) any statement,
certificate, draft, notice or any other document presented under any Letter
of Credit proves to have been forged, fraudulent, insufficient or invalid
in any respect or any statement therein proves to have been untrue or
inaccurate in any respect whatsoever; (v) payment by the Issuing Bank under
any Letter of Credit against presentation of a draft or certificate which
appears on its face to comply, but does not comply, with the terms of such
Letter of Credit; and (vi) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing.
Notwithstanding anything in this Agreement to the contrary, the Borrower
will not be liable for payment or performance that results from the gross
negligence or willful misconduct of the Issuing Bank, except (i) where the
Borrower or any Subsidiary actually recovers the proceeds for itself or the
Issuing Bank of any payment made by the Issuing Bank in connection with
such gross negligence or willful misconduct or (ii) in cases where the
Administrative Agent makes payment to the named beneficiary of a Letter of
Credit.
(b) In the event of the occurrence of any Event of Default, a payment
or prepayment pursuant to Section 2.07(b) or the maturity of the Notes,
whether by acceleration or otherwise, an amount equal to the LC Exposure
(or the excess in the case of Section 2.07(b)) shall be deemed to be
forthwith due and owing by the Borrower to the Issuing Bank, the
Administrative Agent and the Lenders as of the date of any such occurrence;
and the Borrower's obligation to pay such amount shall be absolute and
unconditional, without regard to whether any beneficiary of any such Letter
of Credit has attempted to draw down all or a portion of such amount under
the terms of a Letter of Credit, and, to the fullest extent permitted by
applicable law, shall not be subject to any
25
defense or be affected by a right of set-off, counterclaim or recoupment
which the Borrower may now or hereafter have against any such beneficiary,
the Issuing Bank, the Administrative Agent, the Lenders or any other Person
for any reason whatsoever. Such payments shall be held by the Issuing Bank
on behalf of the Lenders as cash collateral securing the LC Exposure in an
account or accounts at the Principal Office; and the Borrower hereby grants
to and by its deposit with the Administrative Agent grants to the
Administrative Agent a security interest in such cash collateral. In the
event of any such payment by the Borrower of amounts contingently owing
under outstanding Letters of Credit and in the event that thereafter drafts
or other demands for payment complying with the terms of such Letters of
Credit are not made prior to the respective expiration dates thereof, the
Administrative Agent agrees, if no Event of Default has occurred and is
continuing or if no other amounts are outstanding under this Agreement, the
Notes or the Security Instruments, to remit to the Borrower amounts for
which the contingent obligations evidenced by the Letters of Credit have
ceased.
(c) Each Lender severally and unconditionally agrees that it shall
promptly reimburse the Issuing Bank an amount equal to such Lender's
Percentage Share of any disbursement made by the Issuing Bank under any
Letter of Credit that is not reimbursed according to this Section 2.10.
Section 2.11 Lending Offices. The Loans of each Type made by each Lender
shall be made and maintained at such Lender's Applicable Lending Office for
Loans of such Type.
ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST
Section 3.01 Repayment of Loans.
(a) Loans. On the Termination Date the Borrower shall repay the
outstanding aggregate principal amount of the Notes.
(b) Generally. The Borrower will pay to the Administrative Agent, for
the account of each Lender, the principal payments required by this Section
3.01.
Section 3.02 Interest.
(a) Interest Rates. The Borrower will pay to the Administrative
Agent, for the account of each Lender, interest on the unpaid principal
amount of each Loan made by such Lender for the period commencing on the
date such Loan is made to, but excluding, the date such Loan shall be paid
in full, at the following rates per annum:
(i) if such a Loan is a Base Rate Loan, the Base Rate (as in
effect from time to time) plus the Applicable Margin, but in no event to
exceed the Highest Lawful Rate; and
26
(ii) if such a Loan is a LIBOR Loan, for each Interest Period
relating thereto, the LIBOR Rate for such Loan plus the Applicable Margin
(as in effect from time to time), but in no event to exceed the Highest
Lawful Rate.
(b) Post-Default Rate. Notwithstanding the foregoing, the Borrower
will pay to the Administrative Agent, for the account of each Lender,
interest at the applicable Post-Default Rate on any principal of any Loan
made by such Lender, and (to the fullest extent permitted by law) on any
other amount payable by the Borrower hereunder, under any Loan Document or
under any Note held by such Lender to or for the account of such Lender,
for the period commencing on the date of an Event of Default until the same
is paid in full or all Events of Default are cured or waived.
(c) Due Dates. Accrued interest on Base Rate Loans shall be payable
on each Quarterly Date commencing on June 30, 2001, and accrued interest on
each LIBOR Loan shall be payable on the last day of the Interest Period
therefor and, if such Interest Period is longer than three months, at
three-month intervals following the first day of such Interest Period,
except that interest payable at the Post-Default Rate shall be payable from
time to time on demand and interest on any LIBOR Loan that is converted
into a Base Rate Loan (pursuant to Section 5.04) shall be payable on the
date of conversion (but only to the extent so converted). Any accrued and
unpaid interest on the Loans on the Termination Date shall be paid on such
date.
(d) Determination of Rates. Promptly after the determination of any
interest rate provided for herein or any change therein, the Administrative
Agent shall notify the Lenders to which such interest is payable and the
Borrower thereof. Each determination by the Administrative Agent of an
interest rate or fee hereunder shall, except in cases of manifest error, be
final, conclusive and binding on the parties.
ARTICLE IV
PAYMENTS; PRO RATA TREATMENT; COMPUTATIONS; ETC.
Section 4.01 Payments. Except to the extent otherwise provided herein, all
payments of principal, interest and other amounts to be made by the Borrower or
any Subsidiary under this Agreement, the Notes and the Letter of Credit
Agreements shall be made in Dollars, in immediately available funds, to the
Administrative Agent at such account as the Administrative Agent shall specify
by notice to the Borrower from time to time, not later than 11:00 a.m. Houston,
Texas time on the date on which such payments shall become due (each such
payment made after such time on such due date to be deemed to have been made on
the next succeeding Business Day). Such payments shall be made without (to the
fullest extent permitted by applicable law) defense, set-off or counterclaim.
Each payment received by the Administrative Agent under this Agreement or any
Note for account of a Lender shall be paid promptly to such Lender in
immediately available funds. Except as otherwise provided in the definition of
"Interest Period", if the due date of any payment under this Agreement or any
Note would otherwise fall on a day which is not a Business Day such date shall
be extended to the next succeeding Business Day and interest shall be payable
for any principal so extended for the period of such extension. At the time of
each payment to the Administrative Agent of any
27
principal of or interest on any borrowing, the Borrower shall notify the
Administrative Agent of the Loans to which such payment shall apply. In the
absence of such notice the Administrative Agent may specify the Loans to which
such payment shall apply, but to the extent possible such payment or prepayment
will be applied first to the Loans comprised of Base Rate Loans.
Section 4.02 Pro Rata Treatment. Except to the extent otherwise provided
herein each Lender agrees that: (i) each borrowing from the Lenders under
Section 2.01 and each continuation and conversion under Section 2.02 shall be
made from the Lenders pro rata in accordance with their Percentage Share, each
payment of fees under Section 2.04(a) shall be made for account of the Lenders
pro rata in accordance with their Percentage Share, and each termination or
reduction of the amount of the Aggregate Maximum Credit Amounts under Section
2.03(b) shall be applied to the Commitment of each Lender, pro rata according to
the amounts of its respective Commitment; (ii) each payment of principal of
Loans by the Borrower shall be made for account of the Lenders pro rata in
accordance with the respective unpaid principal amount of the Loans held by the
Lenders; and (iii) each payment of interest on Loans by the Borrower shall be
made for account of the Lenders pro rata in accordance with the amounts of
interest due and payable to the respective Lenders; and (iv) each reimbursement
by the Borrower of disbursements under Letters of Credit shall be made for
account of the Issuing Bank or, if funded by the Lenders, pro rata for the
account of the Lenders, in accordance with the amounts of reimbursement
obligations due and payable to each respective Lender.
Section 4.03 Computations. Interest on LIBOR Loans and fees shall be
computed on the basis of a year of 360 days and actual days elapsed (including
the first day but excluding the last day) occurring in the period for which such
interest is payable, unless such calculation would exceed the Highest Lawful
Rate, in which case interest shall be calculated on the per annum basis of a
year of 365 or 366 days, as the case may be. Interest on Base Rate Loans shall
be computed on the basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed (including the first day but excluding the last day)
occurring in the period for which such interest is payable.
Section 4.04 Non-receipt of Funds by the Administrative Agent. Unless the
Administrative Agent shall have been notified by a Lender or the Borrower prior
to the date on which such notifying party is scheduled to make payment to the
Administrative Agent (in the case of a Lender) of the proceeds of a Loan or a
payment under a Letter of Credit to be made by it hereunder or (in the case of
the Borrower) a payment to the Administrative Agent for account of one or more
of the Lenders hereunder (such payment being herein called the "Required
Payment"), which notice shall be effective upon receipt, that it does not intend
to make the Required Payment to the Administrative Agent, the Administrative
Agent may assume that the Required Payment has been made and may, in reliance
upon such assumption (but shall not be required to), make the amount thereof
available to the intended recipient(s) on such date and, if such Lender or the
Borrower (as the case may be) has not in fact made the Required Payment to the
Administrative Agent, the recipient(s) of such payment shall, on demand, repay
to the Administrative Agent the amount so made available together with interest
thereon in respect of each day during the period commencing on the date such
amount was so made available by the Administrative Agent until, but excluding,
the date the Administrative Agent recovers such amount at a rate per annum
which, for any Lender as recipient, will be equal to the Federal Funds
28
Rate, and for the Borrower as recipient, will be equal to the Base Rate plus the
Applicable Margin.
Section 4.05 Set-off, Sharing of Payments, Etc.
(a) The Borrower agrees that, in addition to (and without limitation
of) any right of set-off, bankers' lien or counterclaim a Lender may
otherwise have, each Lender shall have the right and be entitled (after
consultation with the Administrative Agent), at its option, to offset
balances held by it or by any of its Affiliates for account of the Borrower
at any of its offices, in Dollars or in any other currency, against any
principal of or interest on any of such Lender's Loans, or any other amount
payable to such Lender hereunder, which is not paid when due (regardless of
whether such balances are then due to the Borrower), in which case it shall
promptly notify the Borrower and the Administrative Agent thereof, provided
that such Lender's failure to give such notice shall not affect the
validity thereof.
(b) If any Lender shall obtain payment of any principal of or interest
on any Loan made by it to the Borrower under this Agreement (or
reimbursement as to any Letter of Credit) through the exercise of any right
of set-off, banker's lien or counterclaim or similar right or otherwise,
and, as a result of such payment, such Lender shall have received a greater
percentage of the principal or interest (or reimbursement) then due
hereunder by the Borrower to such Lender than the percentage received by
any other Lenders, it shall promptly (i) notify the Administrative Agent
and each other Lender thereof and (ii) purchase from such other Lenders
participations in (or, if and to the extent specified by such Lender,
direct interests in) the Loans (or participations in Letters of Credit)
made by such other Lenders (or in interest due thereon, as the case may be)
in such amounts, and make such other adjustments from time to time as shall
be equitable, to the end that all the Lenders shall share the benefit of
such excess payment (net of any expenses which may be incurred by such
Lender in obtaining or preserving such excess payment) pro rata in
accordance with the unpaid principal and/or interest on the Loans held by
each of the Lenders (or reimbursements of Letters of Credit). To such end
all the Lenders shall make appropriate adjustments among themselves (by the
resale of participations sold or otherwise) if such payment is rescinded or
must otherwise be restored. The Borrower agrees that any Lender so
purchasing a participation (or direct interest) in the Loans made by other
Lenders (or in interest due thereon, as the case may be) may exercise all
rights of set-off, banker's lien, counterclaim or similar rights with
respect to such participation as fully as if such Lender were a direct
holder of Loans (or Letters of Credit) in the amount of such participation.
Nothing contained herein shall require any Lender to exercise any such
right or shall affect the right of any Lender to exercise, and retain the
benefits of exercising, any such right with respect to any other
indebtedness or obligation of the Borrower. If under any applicable
bankruptcy, insolvency or other similar law, any Lender receives a secured
claim in lieu of a set-off to which this Section 4.05 applies, such Lender
shall, to the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Lenders
entitled under this Section 4.05 to share the benefits of any recovery on
such secured claim.
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Section 4.06 Taxes.
(a) Payments Free and Clear. Any and all payments by the Borrower
hereunder shall be made, in accordance with Section 4.01, free and clear of
and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding, in the case of each Lender, the Issuing Bank
and the Administrative Agent, taxes imposed on its income, and franchise or
similar taxes imposed on it, by (i) any jurisdiction (or political
subdivision thereof) of which the Administrative Agent, the Issuing Bank or
such Lender, as the case may be, is a citizen or resident or in which such
Lender has an Applicable Lending Office, (ii) the jurisdiction (or any
political subdivision thereof) in which the Administrative Agent, the
Issuing Bank or such Lender is organized, or (iii) any jurisdiction (or
political subdivision thereof) in which such Lender, the Issuing Bank or
the Administrative Agent is presently doing business which taxes are
imposed solely as a result of doing business in such jurisdiction (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Borrower
shall be required by law to deduct any Taxes from or in respect of any sum
payable hereunder to the Lenders, the Issuing Bank or the Administrative
Agent (i) the sum payable shall be increased by the amount necessary so
that after making all required deductions (including deductions applicable
to additional sums payable under this Section 4.06) such Lender, the
Issuing Bank or the Administrative Agent (as the case may be) shall receive
an amount equal to the sum it would have received had no such deductions
been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall pay the full amount deducted to the relevant taxing
authority or other Governmental Authority in accordance with applicable
law.
(b) Other Taxes. In addition, to the fullest extent permitted by
applicable law, the Borrower agrees to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement,
any Assignment or any Security Instrument (hereinafter referred to as
"Other Taxes").
(C) INDEMNIFICATION. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, THE BORROWER WILL INDEMNIFY EACH LENDER AND THE ISSUING BANK AND THE
ADMINISTRATIVE AGENT FOR THE FULL AMOUNT OF TAXES AND OTHER TAXES
(INCLUDING, BUT NOT LIMITED TO, ANY TAXES OR OTHER TAXES IMPOSED BY ANY
GOVERNMENTAL AUTHORITY ON AMOUNTS PAYABLE UNDER THIS SECTION 4.06) PAID BY
SUCH LENDER, THE ISSUING BANK OR THE ADMINISTRATIVE AGENT (ON THEIR BEHALF
OR ON BEHALF OF ANY LENDER), AS THE CASE MAY BE, AND ANY LIABILITY
(INCLUDING PENALTIES, INTEREST AND EXPENSES) ARISING THEREFROM OR WITH
RESPECT THERETO, WHETHER OR NOT SUCH TAXES OR OTHER TAXES WERE CORRECTLY OR
LEGALLY ASSERTED UNLESS THE PAYMENT OF SUCH TAXES WAS NOT CORRECTLY OR
LEGALLY ASSERTED AND SUCH LENDER'S PAYMENT OF SUCH TAXES OR OTHER TAXES WAS
THE RESULT OF ITS GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. ANY PAYMENT
PURSUANT TO SUCH INDEMNIFICATION SHALL BE MADE WITHIN 30 DAYS AFTER THE
DATE ANY LENDER, THE ISSUING BANK OR THE ADMINISTRATIVE AGENT,
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AS THE CASE MAY BE, MAKES WRITTEN DEMAND THEREFOR. IF ANY LENDER, THE
ISSUING BANK OR THE ADMINISTRATIVE AGENT RECEIVES A REFUND OR CREDIT IN
RESPECT OF ANY TAXES OR OTHER TAXES FOR WHICH SUCH LENDER, ISSUING BANK OR
THE ADMINISTRATIVE AGENT HAS RECEIVED PAYMENT FROM THE BORROWER IT SHALL
PROMPTLY NOTIFY THE BORROWER OF SUCH REFUND OR CREDIT AND SHALL, IF NO
DEFAULT HAS OCCURRED AND IS CONTINUING, WITHIN 30 DAYS AFTER RECEIPT OF A
REQUEST BY THE BORROWER (OR PROMPTLY UPON RECEIPT, IF THE BORROWER HAS
REQUESTED APPLICATION FOR SUCH REFUND OR CREDIT PURSUANT HERETO), PAY AN
AMOUNT EQUAL TO SUCH REFUND OR CREDIT TO THE BORROWER WITHOUT INTEREST (BUT
WITH ANY INTEREST SO REFUNDED OR CREDITED), PROVIDED THAT THE BORROWER,
UPON THE REQUEST OF SUCH LENDER, THE ISSUING BANK OR THE ADMINISTRATIVE
AGENT, AGREES TO RETURN SUCH REFUND OR CREDIT (PLUS PENALTIES, INTEREST OR
OTHER CHARGES) TO SUCH LENDER OR THE ADMINISTRATIVE AGENT IN THE EVENT SUCH
LENDER OR THE ADMINISTRATIVE AGENT IS REQUIRED TO REPAY SUCH REFUND OR
CREDIT.
(d) Lender Representations.
(i) Each Lender represents that it is either (1) a banking
association or corporation organized under the laws of the United States of
America or any state thereof or (2) it is entitled to complete exemption
from United States withholding tax imposed on or with respect to any
payments, including fees, to be made to it pursuant to this Agreement (A)
under an applicable provision of a tax convention to which the United
States of America is a party or (B) because it is acting through a branch,
agency or office in the United States of America and any payment to be
received by it hereunder is effectively connected with a trade or business
in the United States of America. Each Lender that is not a banking
association or corporation organized under the laws of the United States of
America or any state thereof agrees to provide to the Borrower and the
Administrative Agent on the Closing Date, or on the date of its delivery of
the Assignment pursuant to which it becomes a Lender, and at such other
times as required by United States law or as the Borrower or the
Administrative Agent shall reasonably request, two accurate and complete
original signed copies of either (A) Internal Revenue Service Form W-8ECI
(or successor form) certifying that all payments to be made to it hereunder
will be effectively connected to a United States trade or business (the
"Form W-8ECI Certification") or (B) Internal Revenue Service Form W-8BEN
(or successor form) certifying that it is entitled to the benefit of a
provision of a tax convention to which the United States of America is a
party which completely exempts from United States withholding tax all
payments to be made to it hereunder (the "Form W-8BEN Certification"). In
addition, each Lender agrees that if it previously filed a Form W-8ECI
Certification, it will deliver to the Borrower and the Administrative Agent
a new Form W-8ECI Certification prior to the first payment date occurring
in each of its subsequent taxable years; and if it previously filed a Form
W-8BEN Certification, it will deliver to the Borrower and the
Administrative Agent a new certification prior to the first payment date
falling in the third year following the previous filing of such
certification. Each Lender also agrees to deliver to the Borrower and the
Administrative Agent such other or supplemental forms as may at any time be
required as a result of changes in applicable law or regulation in order to
confirm or maintain in effect its entitlement to exemption
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from United States withholding tax on any payments hereunder, provided that
the circumstances of such Lender at the relevant time and applicable laws
permit it to do so. If a Lender determines, as a result of any change in
either (i) a Governmental Requirement or (ii) its circumstances, that it is
unable to submit any form or certificate that it is obligated to submit
pursuant to this Section 4.06, or that it is required to withdraw or cancel
any such form or certificate previously submitted, it shall promptly notify
the Borrower and the Administrative Agent of such fact. If a Lender is
organized under the laws of a jurisdiction outside the United States of
America, unless the Borrower and the Administrative Agent have received a
Form W-8BEN Certification or Form W-8ECI Certification satisfactory to them
indicating that all payments to be made to such Lender hereunder are not
subject to United States withholding tax, the Borrower shall withhold taxes
from such payments at the applicable statutory rate. Each Lender agrees to
indemnify and hold harmless the Borrower or Administrative Agent, as
applicable, from any United States taxes, penalties, interest and other
expenses, costs and losses incurred or payable by (i) the Administrative
Agent as a result of such Lender's failure to submit any form or
certificate that it is required to provide pursuant to this Section 4.06 or
(ii) the Borrower or the Administrative Agent as a result of their reliance
on any such form or certificate which such Lender has provided to them
pursuant to this Section 4.06.
(ii) For any period with respect to which a Lender has failed to
provide the Borrower with the form required pursuant to this Section 4.06,
if any, (other than if such failure is due to a change in a Governmental
Requirement occurring subsequent to the date on which a form originally was
required to be provided), such Lender shall not be entitled to
indemnification under Section 4.06 with respect to taxes imposed by the
United States which taxes would not have been imposed but for such failure
to provide such forms; provided, however, that if a Lender, which is
otherwise exempt from or subject to a reduced rate of withholding tax,
becomes subject to taxes because of its failure to deliver a form required
hereunder, the Borrower shall take such steps as such Lender shall
reasonably request to assist such Lender to recover such taxes.
(iii) Any Lender claiming any additional amounts payable
pursuant to this Section 4.06 shall use reasonable efforts (consistent with
legal and regulatory restrictions) to file any certificate or document
requested by the Borrower or the Administrative Agent or to change the
jurisdiction of its Applicable Lending Office or to contest any tax imposed
if the making of such a filing or change or contesting such tax would avoid
the need for or reduce the amount of any such additional amounts that may
thereafter accrue and would not, in the sole determination of such Lender,
be otherwise disadvantageous to such Lender.
Section 4.07 Disposition of Proceeds. The Mortgage contains an assignment
by the Borrower unto and in favor of the Administrative Agent for the benefit of
the Lenders of all production and all proceeds attributable thereto which may be
produced from or allocated to the Mortgaged Property, and the Mortgage further
provides in general for the application of such proceeds to the satisfaction of
the Obligations and other indebtedness, liabilities and obligations described
therein and secured thereby. Notwithstanding the assignment contained in the
Mortgage, until the occurrence of an Event of Default, the Lenders agree that
they will neither notify the purchaser or purchasers of such production nor take
any other action to cause such
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proceeds to be remitted to the Lenders, but the Lenders will instead permit such
proceeds to be paid to the Borrower.
ARTICLE V
CAPITAL ADEQUACY AND ADDITIONAL COSTS
Section 5.01 Additional Costs.
(a) LIBOR Regulations, etc. The Borrower shall pay directly to each
Lender from time to time such amounts as such Lender may determine to be
necessary to compensate such Lender for any costs which it determines are
attributable to its making or maintaining of any LIBOR Loans or issuing or
participating in Letters of Credit hereunder or its obligation to make any
LIBOR Loans or issue or participate in any Letters of Credit hereunder, or
any reduction in any amount receivable by such Lender hereunder in respect
of any of such LIBOR Loans, Letters of Credit or such obligation (such
increases in costs and reductions in amounts receivable being herein called
"Additional Costs"), resulting from any Regulatory Change which: (i)
changes the basis of taxation of any amounts payable to such Lender under
this Agreement or any Note in respect of any of such LIBOR Loans or Letters
of Credit (other than taxes imposed on the overall net income of such
Lender or of its Applicable Lending Office for any of such LIBOR Loans by
the jurisdiction in which such Lender has its principal office or
Applicable Lending Office); or (ii) imposes or modifies any reserve,
special deposit, minimum capital, capital ratio or similar requirements
relating to any extensions of credit or other assets of, or any deposits
with or other liabilities of such Lender, or the Commitment or Loans of
such Lender or the London interbank market; or (iii) imposes any other
condition affecting this Agreement or any Note (or any of such extensions
of credit or liabilities) or such Lender's Commitment or Loans. Each
Lender will notify the Administrative Agent and the Borrower of any event
occurring after the Closing Date which will entitle such Lender to
compensation pursuant to this Section 5.01(a) as promptly as practicable
after it obtains knowledge thereof and determines to request such
compensation, and will designate a different Applicable Lending Office for
the Loans of such Lender affected by such event if such designation will
avoid the need for, or reduce the amount of, such compensation and will
not, in the sole opinion of such Lender, be disadvantageous to such Lender,
provided that such Lender shall have no obligation to so designate an
Applicable Lending Office located in the United States. If any Lender
requests compensation from the Borrower under this Section 5.01(a), the
Borrower may, by notice to such Lender, suspend the obligation of such
Lender to make additional Loans of the Type with respect to which such
compensation is requested until the Regulatory Change giving rise to such
request ceases to be in effect (in which case the provisions of Section
5.04 shall be applicable).
(b) Regulatory Change. Without limiting the effect of the provisions
of Section 5.01(a), in the event that at any time (by reason of any
Regulatory Change or any other circumstances arising after the Closing Date
affecting (A) any Lender, (B) the London interbank market or (C) such
Lender's position in such market), the LIBOR Rate, as determined in good
faith by such Lender, will not adequately and fairly reflect the cost
33
to such Lender of funding its LIBOR Loans, then, if such Lender so elects,
by notice to the Borrower and the Administrative Agent, the obligation of
such Lender to make additional LIBOR Loans shall be suspended until such
Regulatory Change or other circumstances ceases to be in effect (in which
case the provisions of Section 5.04 shall be applicable).
(c) Capital Adequacy. Without limiting the effect of the foregoing
provisions of this Section 5.01 (but without duplication), the Borrower
shall pay directly to any Lender from time to time on request such amounts
as such Lender may reasonably determine to be necessary to compensate such
Lender or its parent or holding company for any costs which it determines
are attributable to the maintenance by such Lender or its parent or holding
company (or any Applicable Lending Office), pursuant to any Governmental
Requirement following any Regulatory Change, of capital in respect of its
Commitment, its Note, or its Loans or any interest held by it in any Letter
of Credit, such compensation to include, without limitation, an amount
equal to any reduction of the rate of return on assets or equity of such
Lender or its parent or holding company (or any Applicable Lending Office)
to a level below that which such Lender or its parent or holding company
(or any Applicable Lending Office) could have achieved but for such
Governmental Requirement. Such Lender will notify the Borrower that it is
entitled to compensation pursuant to this Section 5.01(c) as promptly as
practicable after it determines to request such compensation.
(d) Compensation Procedure. Any Lender notifying the Borrower of the
incurrence of Additional Costs under this Section 5.01 shall in such notice
to the Borrower and the Administrative Agent set forth in reasonable detail
the basis and amount of its request for compensation. Determinations and
allocations by each Lender for purposes of this Section 5.01 of the effect
of any Regulatory Change pursuant to Section 5.01(a) or (b), or of the
effect of capital maintained pursuant to Section 5.01(c), on its costs or
rate of return of maintaining Loans or its obligation to make Loans or
issue Letters of Credit, or on amounts receivable by it in respect of Loans
or Letters of Credit, and of the amounts required to compensate such Lender
under this Section 5.01, shall be conclusive and binding for all purposes,
provided that such determinations and allocations are made on a reasonable
basis. Any request for additional compensation under this Section 5.01
shall be paid by the Borrower within thirty (30) days of the receipt by the
Borrower of the notice described in this Section 5.01(d)(c).
Section 5.02 Limitation on LIBOR Loans. Anything herein to the contrary
notwithstanding, if, on or prior to the determination of any LIBOR Rate for any
Interest Period:
(i) the Administrative Agent determines (which determination
shall be conclusive, absent manifest error) that quotations of interest
rates for the relevant deposits referred to in the definition of "LIBOR
Rate" in Section 1.02 are not being provided in the relevant amounts or for
the relevant maturities for purposes of determining rates of interest for
LIBOR Loans as provided herein; or
(ii) the Administrative Agent determines (which determination
shall be conclusive, absent manifest error) that the relevant rates of
interest referred to in the definition of "LIBOR Rate" in Section 1.02 upon
the basis of which the rate of interest
34
for LIBOR Loans for such Interest Period is to be determined are not
sufficient to adequately cover the cost to the Lenders of making or
maintaining LIBOR Loans;
then the Administrative Agent shall give the Borrower prompt notice thereof, and
so long as such condition remains in effect, the Lenders shall be under no
obligation to make additional LIBOR Loans.
Section 5.03 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to honor its obligation to make or maintain LIBOR
Loans hereunder, then such Lender shall promptly notify the Borrower thereof and
such Lender's obligation to make LIBOR Loans shall be suspended until such time
as such Lender may again make and maintain LIBOR Loans (in which case the
provisions of Section 5.04 shall be applicable).
Section 5.04 Base Rate Loans Pursuant to Sections 5.01, 5.02 and 5.03. If
the obligation of any Lender to make LIBOR Loans shall be suspended pursuant to
Sections 5.01, 5.02 or 5.03 ("Affected Loans"), all Affected Loans which would
otherwise be made by such Lender shall be made instead as Base Rate Loans (and,
if an event referred to in Section 5.01(b) or Section 5.03 has occurred and such
Lender so requests by notice to the Borrower, all Affected Loans of such Lender
then outstanding shall be automatically converted into Base Rate Loans on the
date specified by such Lender in such notice) and, to the extent that Affected
Loans are so made as (or converted into) Base Rate Loans, all payments of
principal which would otherwise be applied to such Lender's Affected Loans shall
be applied instead to its Base Rate Loans.
Section 5.05 Compensation. The Borrower shall pay to each Lender within
thirty (30) days of receipt of written request of such Lender (which request
shall set forth, in reasonable detail, the basis for requesting such amounts and
which shall be conclusive and binding for all purposes provided that such
determinations are made on a reasonable basis), such amount or amounts as shall
compensate it for any loss, cost, expense or liability which such Lender
determines are attributable to:
(i) any payment, prepayment or conversion of a LIBOR Loan
properly made by such Lender or the Borrower for any reason (including,
without limitation, the acceleration of the Loans pursuant to Section
10.01) on a date other than the last day of the Interest Period for such
Loan; or
(ii) any failure by the Borrower for any reason (including but
not limited to, the failure of any of the conditions precedent specified in
Article VI to be satisfied) to borrow, continue or convert a LIBOR Loan
from such Lender on the date for such borrowing, continuation or conversion
specified in the relevant notice given pursuant to Section 2.02(c).
Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
which would have accrued on the principal amount so paid, prepaid or converted
or not borrowed for the period from the date of such payment, prepayment or
conversion or failure to borrow to the last day of the Interest Period for such
Loan (or, in the case of a failure to borrow, the Interest Period for such Loan
which would have commenced on the date specified for such borrowing) at the
applicable rate of
35
interest for such Loan provided for herein over (ii) the interest component of
the amount such Lender would have bid in the London interbank market for Dollar
deposits of leading banks in amounts comparable to such principal amount and
with maturities comparable to such period (as reasonably determined by such
Lender).
Section 5.06 Replacement Lenders.
(a) If any Lender has notified the Borrower and the Agent of its
incurring Additional Costs under Section 5.01 or has required the Borrower
to make payments for Taxes under Section 4.06, then the Borrower may,
unless such Lender has notified the Borrower and the Agent that the
circumstances giving rise to such notice no longer apply, terminate, in
whole but not in part, the Commitment of any Lender (other than the Agent)
(the "Terminated Lender") at any time upon five (5) Business Days' prior
written notice to the Terminated Lender and the Agent (such notice referred
to herein as a "Notice of Termination").
(b) In order to effect the termination of the Commitment of the
Terminated Lender, the Borrower shall: (i) obtain an agreement with one or
more Lenders to increase their Commitment or Commitments and/or (ii)
request any one or more other banking institutions to become parties to
this Agreement in place and instead of such Terminated Lender and agree to
accept a Commitment or Commitments; provided, however, that such one or
more other banking institutions are reasonably acceptable to the Agent and
become parties by executing an Assignment (the Lenders or other banking
institutions that agree to accept in whole or in part the Commitment of the
Terminated Lender being referred to herein as the "Replacement Lenders"),
such that the aggregate increased and/or accepted Commitments of the
Replacement Lenders under clauses (i) and (ii) above equal the Commitment
of the Terminated Lender.
(c) The Notice of Termination shall include the name of the Terminated
Lender, the date the termination will occur (the "Lender Termination
Date"), and the Replacement Lender or Replacement Lenders to which the
Terminated Lender will assign its Commitment and, if there will be more
than one Replacement Lender, the portion of the Terminated Lender's
Commitment to be assigned to each Replacement Lender.
(d) On the Lender Termination Date, (i) the Terminated Lender shall by
execution and delivery of an Assignment assign its Commitment to the
Replacement Lender or Replacement Lenders (pro rata, if there is more than
one Replacement Lender, in proportion to the portion of the Terminated
Lender's Commitment to be assigned to each Replacement Lender) indicated in
the Notice of Termination and shall assign to the Replacement Lender or
Replacement Lenders each of its Loans (if any) then outstanding and
participation interests in Letters of Credit (if any) then outstanding pro
rata as aforesaid), (ii) the Terminated Lender shall endorse its Note,
payable without recourse, representation or warranty to the order of the
Replacement Lender or Replacement Lenders (pro rata as aforesaid), (iii)
the Replacement Lender or Replacement Lenders shall purchase the Note held
by the Terminated Lender (pro rata as aforesaid) at a price equal to the
unpaid principal amount thereof plus interest and facility and other fees
accrued and unpaid to the Lender Termination Date, and (iv) the Replacement
Lender or
36
Replacement Lenders will thereupon (pro rata as aforesaid) succeed to and
be substituted in all respects for the Terminated Lender with like effect
as if becoming a Lender pursuant to the terms of Section 12.06(b), and the
Terminated Lender will have the rights and benefits of an assignor under
Section 12.06(b). To the extent not in conflict, the terms of Section
12.06(b) shall supplement the provisions of this Section 5.06(d). For each
assignment made under this Section 5.06, the Replacement Lender shall pay
to the Agent the processing fee provided for in Section 12.06(b). The
Borrower will be responsible for the payment of any breakage costs
associated with termination and Replacement Lenders, as set forth in
Section 5.05.
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.01 Initial Funding.
The obligation of the Lenders to make the Initial Funding is subject
to the receipt by the Administrative Agent and the Lenders of all fees
payable pursuant to Section 2.04 on or before the Closing Date and the
receipt by the Administrative Agent of the following documents (in
sufficient original counterparts, other than the Notes, for each Lender)
and satisfaction of the other conditions provided in this Section 6.01,
each of which shall be reasonably satisfactory to the Administrative Agent
in form and substance:
(a) A certificate of the Secretary or an Assistant Secretary of the
Borrower setting forth (i) resolutions of its board of directors with
respect to the authorization of the Borrower to execute and deliver the
Loan Documents to which it is a party and to enter into the transactions
contemplated in those documents, (ii) the officers of the Borrower (y) who
are authorized to sign the Loan Documents to which the Borrower is a party
and (z) who will, until replaced by another officer or officers duly
authorized for that purpose, act as its representative for the purposes of
signing documents and giving notices and other communications in connection
with this Agreement and the transactions contemplated hereby, (iii)
specimen signatures of the authorized officers, and (iv) the articles or
certificate of incorporation and bylaws of the Borrower, certified as being
true and complete. The Administrative Agent and the Lenders may
conclusively rely on such certificate until the Administrative Agent
receives notice in writing from the Borrower to the contrary.
(b) Certificates of the appropriate state agencies with respect to the
existence, qualification and good standing of the Borrower.
(c) A compliance certificate which shall be substantially in the form
of Exhibit C, duly and properly executed by a Responsible Officer and dated
as of the date of the Initial Funding.
(d) The Notes, duly completed and executed.
37
(e) The Security Instruments, including those described on Exhibit D,
duly completed and executed in sufficient number of counterparts for
recording, if necessary.
(f) An opinion of Jackson Walker L.L.P., counsel to the Borrower, in
form and substance satisfactory to the Administrative Agent, as to such
matters incident to the transactions herein contemplated as the
Administrative Agent may reasonably request.
(g) A certificate of insurance coverage of the Borrower evidencing
that the Borrower is carrying insurance in accordance with Section 7.19.
(h) Title information as the Administrative Agent may require, in form
and substance reasonably satisfactory to the Administrative Agent, setting
forth the status of title to at least 90% of the value of the Oil and Gas
Properties included in the Initial Reserve Report.
(i) The Security Instruments and related financing statements covering
the Mortgaged Property shall have been properly filed and recorded in the
appropriate offices to establish and perfect the Liens and security
interests created thereby.
(j) The Administrative Agent shall have been furnished with
appropriate UCC search certificates reflecting no prior Liens.
(k) The Administrative Agent shall have completed and be satisfied
with the results of due diligence relating to Engineering Reports,
environmental reports, financial statements, balancing agreement positions,
bonding requirements, joint interest billings and Hedging Agreements, as
each relates to the Borrower and its Oil and Gas Properties.
(l) A monthly cash flow forecast, in form and substance reasonably
satisfactory to the Administrative Agent, through September 30, 2001
regarding capital expenditures, working capital payments and payments made
in connection with Hedging Agreements.
(m) All Debt owed or owing to The Chase Manhattan Bank and Aquila
Energy Capital Corporation, their Affiliates, successors or assigns, with
the exception of the liability of the Borrower under the related Letter of
Credit Agreement with The Chase Manhattan Bank and the Letter of Credit
listed in Schedule 9.01, shall have been paid in full and all funding
commitments from such parties shall have been terminated.
(n) Such other documents as the Administrative Agent or any Lender or
special counsel to the Administrative Agent may reasonably request.
(o) The transactions relating to the Aquila Buy-Back and the Closing
Hedging Agreements shall have been completed and all documents to be
entered into in connection therewith shall have been executed and
delivered.
Section 6.02 Initial and Subsequent Loans and Letters of Credit. The
obligation of the Lenders to make Loans to the Borrower upon the occasion of
each borrowing hereunder and to issue, renew, extend or reissue Letters of
Credit for the account of the Borrower (including the
38
Initial Funding) is subject to the further conditions precedent that, as of the
date of such Loans and after giving effect thereto:
(a) no Default shall exist;
(b) no Material Adverse Effect shall have occurred; and
(c) the representations and warranties made by the Borrower in Article
VII and in the Security Instruments shall be true on and as of the date of
the making of such Loans or issuance, renewal, extension or reissuance of a
Letter of Credit with the same force and effect as if made on and as of
such date and following such new borrowing, except to the extent such
representations and warranties are expressly limited to an earlier date or
the Majority Lenders may expressly consent in writing to the contrary.
Each request for a borrowing or issuance, renewal, extension or reissuance
of a Letter of Credit by the Borrower hereunder shall constitute a certification
by the Borrower to the effect set forth in Section 6.02(c) (both as of the date
of such notice and, unless the Borrower otherwise notifies the Administrative
Agent prior to the date of and immediately following such borrowing or issuance,
renewal, extension or resistance of a Letter of Credit as of the date thereof).
Section 6.03 Conditions Precedent for the Benefit of Lenders. All
conditions precedent to the obligations of the Lenders to make any Loan are
imposed hereby solely for the benefit of the Lenders, and no other Person may
require satisfaction of any such condition precedent or be entitled to assume
that the Lenders will refuse to make any Loan in the absence of strict
compliance with such conditions precedent.
Section 6.04 No Waiver. No waiver of any condition precedent shall preclude
the Administrative Agent or the Lenders from requiring such condition to be met
prior to making any subsequent Loan or preclude the Lenders from thereafter
declaring that the failure of the Borrower to satisfy such condition precedent
constitutes a Default.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Administrative Agent and
the Lenders that (each representation and warranty herein is given as of
the Closing Date and shall be deemed repeated and reaffirmed on the dates
of each borrowing and issuance, renewal, extension or resistance of a
Letter of Credit as provided in Section 6.02):
Section 7.01 Corporate Existence. The Borrower and each of its
Subsidiaries: (i) is a corporation duly organized, legally existing and in good
standing under the laws of the jurisdiction of its incorporation; (ii) has all
requisite corporate power, and has all material governmental licenses,
authorizations, consents and approvals necessary to own its assets and carry on
its business as now being or as proposed to be conducted; and (iii) is qualified
to do business in all jurisdictions in which the nature of the business
conducted by it makes such qualification necessary and where failure so to
qualify would have a Material Adverse Effect.
39
Section 7.02 Financial Condition. The audited consolidated balance sheet of
the Borrower and its Consolidated Subsidiaries as at each of December 31, 1997,
December 31, 1998, December 31, 1999 and December 31, 2000 and the related
consolidated statement of income, stockholders' equity and cash flow of the
Borrower and its Consolidated Subsidiaries for the fiscal year ended on each of
said dates, with the opinion thereon of KPMG L.L.P. heretofore furnished to each
of the Lenders are complete and correct and fairly present the consolidated
financial condition of the Borrower and its Consolidated Subsidiaries as at said
dates and the results of its operations for such fiscal years, all in accordance
with GAAP, as applied on a consistent basis. Neither the Borrower nor any
Subsidiary has on the Closing Date any material Debt, contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments, except as referred to or
reflected or provided for in the Financial Statements or in Schedule 7.02. Since
December 31, 2000, there has been no change or event having a Material Adverse
Effect. Since the date of the most recent Financial Statements, neither the
business nor the Properties of the Borrower or any Subsidiary have been
materially and adversely affected as a result of any fire, explosion,
earthquake, flood, drought, windstorm, accident, strike or other labor
disturbance, embargo, requisition or taking of Property or cancellation of
contracts, permits or concessions by any Governmental Authority, riot,
activities of armed forces or acts of God or of any public enemy.
Section 7.03 Litigation. Except as disclosed to the Lenders in Schedule
7.03 hereto, at the Closing Date there is no litigation, legal, administrative
or arbitrage proceeding, investigation or other action of any nature pending or,
to the knowledge of the Borrower, threatened against or affecting the Borrower
or any Subsidiary which involves the possibility of any judgment or liability
against the Borrower or any Subsidiary not fully covered by insurance (except
for normal deductibles) and which would have a Material Adverse Effect.
Section 7.04 No Breach. Neither the execution and delivery of the Loan
Documents, nor compliance with the terms and provisions hereof will conflict
with or result in a breach of, or require any consent which has not been
obtained as of the Closing Date under, the respective charter or by-laws of the
Borrower or any Subsidiary, or any Governmental Requirement or any agreement or
instrument to which the Borrower or any Subsidiary is a party or by which it is
bound or to which it or its Properties are subject, or constitute a default
under any such agreement or instrument, or result in the creation or imposition
of any Lien upon any of the revenues or assets of the Borrower or any Subsidiary
pursuant to the terms of any such agreement or instrument other than the Liens
created by any of the Loan Documents.
Section 7.05 Authority. The Borrower has all necessary corporate power and
authority to execute, deliver and perform its obligations under the Loan
Documents to which it is a party; and the execution, delivery and performance by
the Borrower of the Loan Documents to which it is a party have been duly
authorized by all necessary corporate action on its part; and the Loan Documents
to which it is a party constitute the legal, valid and binding obligations of
the Borrower, enforceable in accordance with their terms.
Section 7.06 Approvals. No authorizations, approvals or consents of, and no
filings or registrations with, any Governmental Authority are necessary for the
execution, delivery or performance by the Borrower of the Loan Documents to
which is a party or for the validity or enforceability thereof, except for the
routine recording and filing of certain of the Security Instruments.
40
Section 7.07 Use of Loans. The proceeds of the Loans shall be used to
retire existing Debt of the Borrower and for the acquisition and development by
the Borrower of its Oil and Gas Properties and working capital in connection
therewith. The Borrower is not engaged principally, or as one of its important
activities, in the business of extending credit for the purpose, whether
immediate, incidental or ultimate, of buying or carrying margin stock (within
the meaning of Regulation T, U or X of the Board of Governors of the Federal
Reserve System) and no part of the proceeds of any Loan hereunder will be used
to buy or carry any margin stock.
Section 7.08 ERISA.
(a) The Borrower, each Subsidiary and each ERISA Affiliate have
complied in all material respects with ERISA and, where applicable, the
Code regarding each Plan.
(b) Each Plan is, and has been, maintained in substantial compliance
with ERISA and, where applicable, the Code.
(c) No act, omission or transaction has occurred which could result in
imposition on the Borrower, any Subsidiary or any ERISA Affiliate (whether
directly or indirectly) of (i) either a civil penalty assessed pursuant to
section 502(c), (i) or (l) of ERISA or a tax imposed pursuant to Chapter 43
of Subtitle D of the Code or (ii) breach of fiduciary duty liability
damages under section 409 of ERISA.
(d) No Plan (other than a defined contribution plan) or any trust
created under any such Plan has been terminated since September 2, 1974.
No liability to the PBGC (other than for the payment of current premiums
which are not past due) by the Borrower, any Subsidiary or any ERISA
Affiliate has been or is expected by the Borrower, any Subsidiary or any
ERISA Affiliate to be incurred with respect to any Plan. No ERISA Event
with respect to any Plan has occurred.
(e) Full payment when due has been made of all amounts which the
Borrower, any Subsidiary or any ERISA Affiliate is required under the terms
of each Plan or applicable law to have paid as contributions to such Plan,
and no accumulated funding deficiency (as defined in section 302 of ERISA
and section 412 of the Code), whether or not waived, exists with respect to
any Plan.
(f) The actuarial present value of the benefit liabilities under each
Plan which is subject to Title IV of ERISA does not, as of the end of the
Borrower's most recently ended fiscal year, exceed the current value of the
assets (computed on a plan termination basis in accordance with Title IV of
ERISA) of such Plan allocable to such benefit liabilities. The term
"actuarial present value of the benefit liabilities" shall have the meaning
specified in section 4041 of ERISA.
(g) None of the Borrower, any Subsidiary or any ERISA Affiliate
sponsors, maintains, or contributes to an employee welfare benefit plan, as
defined in section 3(1) of ERISA, including, without limitation, any such
plan maintained to provide benefits to former employees of such entities,
that may not be terminated by the Borrower, a Subsidiary or any ERISA
Affiliate in its sole discretion at any time without any material
liability.
41
(h) None of the Borrower, any Subsidiary or any ERISA Affiliate
sponsors, maintains or contributes to, or has at any time in the preceding
six calendar years, sponsored, maintained or contributed to, any
Multiemployer Plan.
(i) None of the Borrower, any Subsidiary or any ERISA Affiliate is
required to provide security under section 401(a)(29) of the Code due to a
Plan amendment that results in an increase in current liability for the
Plan.
Section 7.09 Taxes. Except as set out in Schedule 7.09, each of the
Borrower and its Subsidiaries has filed all United States federal income tax
returns and all other tax returns which are required to be filed (giving effect
to any timely filed extensions) by them and have paid all material taxes due
pursuant to such returns or pursuant to any assessment received by the Borrower
or any Subsidiary. The charges, accruals and reserves on the books of the
Borrower and its Subsidiaries in respect of taxes and other governmental charges
are, in the opinion of the Borrower, adequate. No tax lien has been filed and,
to the knowledge of the Borrower, no claim is being asserted with respect to any
such tax, fee or other charge.
Section 7.10 Titles, etc.
(a) Except as set out in Schedule 7.10, each of the Borrower and its
Subsidiaries has good and indefeasible title to its material (individually
or in the aggregate) Properties comprising real or immovable property and
good and marketable title to its material (individually or in the
aggregate) Properties comprising personal or moveable property, free and
clear of all Liens, except Liens permitted by Section 9.02. Except as set
forth in Schedule 7.10, after giving full effect to the Excepted Liens, the
Borrower owns the net interests in production attributable to the
Hydrocarbon Interests reflected in the most recently delivered Reserve
Report and the ownership of such Properties shall not in any material
respect obligate the Borrower to bear the costs and expenses relating to
the maintenance, development and operations of each such Property in an
amount in excess of the working interest of each Property set forth in the
most recently delivered Reserve Report. All information contained in the
most recently delivered Reserve Report is true and correct in all material
respects as of the date thereof.
(b) All leases and agreements necessary for the conduct of the
business of the Borrower and its Subsidiaries are valid and subsisting, in
full force and effect and there exists no default or event or circumstance
which with the giving of notice or the passage of time or both would give
rise to a default under any such lease or leases, which would affect in any
material respect the conduct of the business of the Borrower and its
Subsidiaries.
(c) The rights, Properties and other assets presently owned, leased or
licensed by the Borrower and its Subsidiaries including, without
limitation, all easements and rights of way, include all rights, Properties
and other assets necessary to permit the Borrower and its Subsidiaries to
conduct their business in all material respects in the same manner as its
business has been conducted prior to the Closing Date.
42
(d) All of the assets and Properties of the Borrower and its
Subsidiaries which are reasonably necessary for the operation of its
business are in good working condition and are maintained in accordance
with prudent business standards.
(e) The Borrower is approved by the Minerals Management Service to own
interests in and serve as operator of United States federal offshore Oil
and Gas Properties.
Section 7.11 No Material Misstatements. No written information, statement,
exhibit, certificate, document or report furnished to the Administrative Agent
and the Lenders (or any of them) by the Borrower or any Subsidiary in connection
with the negotiation of this Agreement contained any material misstatement of
fact or omitted to state a material fact or any fact necessary to make the
statement contained therein not materially misleading in the light of the
circumstances in which made and with respect to the Borrower and its
Subsidiaries taken as a whole. There is no fact peculiar to the Borrower or any
Subsidiary which has a Material Adverse Effect or in the future is reasonably
likely to have (so far as the Borrower can now foresee) a Material Adverse
Effect and which has not been set forth in this Agreement or the other
documents, certificates and statements furnished to the Administrative Agent by
or on behalf of the Borrower or any Subsidiary prior to, or on, the Closing Date
in connection with the transactions contemplated hereby.
Section 7.12 Investment Company Act. Neither the Borrower nor any
Subsidiary is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
Section 7.13 Public Utility Holding Company Act. Neither the Borrower nor
any Subsidiary is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," or a "public utility" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
Section 7.14 Subsidiaries. Except as set forth on Schedule 7.14, the
Borrower has no Subsidiaries. Except for ATP (UK), none of the Subsidiaries own
any Property or any interest in any Property of any material value.
Section 7.15 Location of Business and Offices. The Borrower's principal
place of business and chief executive offices are located at the address stated
on the signature page of this Agreement. The principal place of business and
chief executive office of each Subsidiary are located at the addresses stated on
Schedule 7.14.
Section 7.16 Defaults. Neither the Borrower nor any Subsidiary is in
default nor has any event or circumstance occurred which, but for the expiration
of any applicable grace period or the giving of notice, or both, would
constitute a default under any material agreement or instrument to which the
Borrower or any Subsidiary is a party or by which the Borrower or any Subsidiary
is bound which default would have a Material Adverse Effect. No Default
hereunder has occurred and is continuing.
43
Section 7.17 Environmental Matters. Except (i) as provided in Schedule 7.17
or (ii) as would not have a Material Adverse Effect (or with respect to (c), (d)
and (e) below, where the failure to take such actions would not have a Material
Adverse Effect):
(a) Neither any Property of the Borrower or any Subsidiary nor the
operations conducted thereon violate any order or requirement of any court
or Governmental Authority or any Environmental Laws;
(b) Without limitation of clause (a) above, no Property of the
Borrower or any Subsidiary nor the operations currently conducted thereon
or, to the best knowledge of the Borrower, by any prior owner or operator
of such Property or operation, are in violation of or subject to any
existing, pending or threatened action, suit, investigation, inquiry or
proceeding by or before any court or Governmental Authority or to any
remedial obligations under Environmental Laws;
(c) All notices, permits, licenses or similar authorizations, if any,
required to be obtained or filed in connection with the operation or use of
any and all Property of the Borrower and each Subsidiary, including without
limitation past or present treatment, storage, disposal or release of a
hazardous substance or solid waste into the environment, have been duly
obtained or filed, and the Borrower and each Subsidiary are in compliance
with the terms and conditions of all such notices, permits, licenses and
similar authorizations;
(d) All hazardous substances, solid waste, and oil and gas exploration
and production wastes, if any, generated at any and all Property of the
Borrower or any Subsidiary have in the past been transported, treated and
disposed of in accordance with Environmental Laws and so as not to pose an
imminent and substantial endangerment to public health or welfare or the
environment, and, to the best knowledge of the Borrower, all such transport
carriers and treatment and disposal facilities have been and are operating
in compliance with Environmental Laws and so as not to pose an imminent and
substantial endangerment to public health or welfare or the environment,
and are not the subject of any existing, pending or threatened action,
investigation or inquiry by any Governmental Authority in connection with
any Environmental Laws;
(e) The Borrower has taken all steps reasonably necessary to determine
and has determined that no hazardous substances, solid waste, or oil and
gas exploration and production wastes, have been disposed of or otherwise
released and there has been no threatened release of any hazardous
substances on or to any Property of the Borrower or any Subsidiary except
in compliance with Environmental Laws and so as not to pose an imminent and
substantial endangerment to public health or welfare or the environment;
(f) To the extent applicable, all Property of the Borrower and each
Subsidiary currently satisfies all design, operation, and equipment
requirements imposed by the OPA or scheduled as of the Closing Date to be
imposed by OPA during the term of this Agreement, and the Borrower does not
have any reason to believe that such Property, to the extent subject to
OPA, will not be able to maintain compliance with the OPA requirements
during the term of this Agreement; and
44
(g) Neither the Borrower nor any Subsidiary has any known contingent
liability in connection with any release or threatened release of any oil,
hazardous substance or solid waste into the environment.
Section 7.18 Compliance with the Law. Neither the Borrower nor any
Subsidiary has violated any Governmental Requirement or failed to obtain any
license, permit, franchise or other governmental authorization necessary for the
ownership of any of its Properties or the conduct of its business, which
violation or failure would have (in the event such violation or failure were
asserted by any Person through appropriate action) a Material Adverse Effect.
Except for such acts or failures to act as would not have a Material Adverse
Effect, the Oil and Gas Properties (and properties unitized therewith) have been
maintained, operated and developed in a good and workmanlike manner and in
conformity with all applicable laws and all rules, regulations and orders of all
duly constituted authorities having jurisdiction and in conformity with the
provisions of all leases, subleases or other contracts comprising a part of the
Hydrocarbon Interests and other contracts and agreements forming a part of the
Oil and Gas Properties; specifically in this connection, (i) after the Closing
Date, no Oil and Gas Property is subject to having allowable production reduced
below the full and regular allowable (including the maximum permissible
tolerance) because of any overproduction (whether or not the same was
permissible at the time) prior to the Closing Date and (ii) none of the wells
comprising a part of the Oil and Gas Properties (or properties unitized
therewith) are deviated from the vertical more than the maximum permitted by
applicable laws, regulations, rules and orders, and such wells are, in fact,
bottomed under and are producing from, and the well bores are wholly within, the
Oil and Gas Properties (or in the case of wells located on properties unitized
therewith, such unitized properties).
Section 7.19 Insurance. Schedule 7.19 attached hereto contains an accurate
and complete description of all material policies of fire, liability, workmen's
compensation and other forms of insurance owned or held by the Borrower and each
Subsidiary. All such policies are in full force and effect, all premiums with
respect thereto covering all periods up to and including the date of the closing
have been paid, and no notice of cancellation or termination has been received
with respect to any such policy. Such policies are sufficient for compliance
with all requirements of law and of all agreements to which the Borrower or any
Subsidiary is a party; are valid, outstanding and enforceable policies; provide
adequate insurance coverage in at least such amounts and against at least such
risks (but including in any event public liability) as are usually insured
against in the same general area by companies engaged in the same or a similar
business for the assets and operations of the Borrower and each Subsidiary; will
remain in full force and effect through the respective dates set forth in
Schedule 7.19 without the payment of additional premiums; and will not in any
way be affected by, or terminate or lapse by reason of, the transactions
contemplated by this Agreement. Schedule 7.19 identifies all material risks, if
any, which the Borrower and its Subsidiaries and their respective Board of
Directors or officers have designated as being self insured. Neither the
Borrower nor any Subsidiary has been refused any insurance with respect to its
assets or operations, nor has its coverage been limited below usual and
customary policy limits, by an insurance carrier to which it has applied for any
such insurance or with which it has carried insurance during the last three
years.
Section 7.20 Hedging Agreements. Schedule 7.20 sets forth, as of the
Closing Date, a true and complete list of all Hedging Agreements (including
commodity price swap agreements,
45
forward agreements or contracts of sale which provide for prepayment for
deferred shipment or delivery of oil, gas or other commodities) of th e Borrower
and each Subsidiary, the material terms thereof (including the type, term,
effective date, termination date and notional amounts or volumes), the net mark
to market value thereof, all credit support agreements relating thereto
(including any margin required or supplied), and the counter party to each such
agreement.
Section 7.21 Restriction on Liens. Neither the Borrower nor any of its
Subsidiaries is a party to any agreement or arrangement (other than this
Agreement and the Security Instruments), or subject to any order, judgment, writ
or decree, which either restricts or purports to restrict its ability to grant
Liens to secure the Obligations against their respective assets or Properties.
Section 7.22 Material Agreements. Set forth on Schedule 7.22 hereto is a
complete and correct list of all material agreements, leases, indentures,
purchase agreements, obligations in respect of letters of credit, guarantees,
joint venture agreements, and other instruments in effect or to be in effect as
of the Closing Date (other than Hedging Agreements) providing for, evidencing,
securing or otherwise relating to any Debt of the Borrower or any of its
Subsidiaries, and all obligations of the Borrower or any of its Subsidiaries to
issuers of surety or appeal bonds issued for account of the Borrower or any such
Subsidiary, and such list correctly sets forth the names of the debtor or lessee
and creditor or lessor with respect to the Debt or lease obligations outstanding
or to be outstanding and the Property subject to any Lien securing such Debt or
lease obligation. Also set forth on Schedule 7.22 hereto is a complete and
correct list of all material agreements and other instruments of the Borrower
and its Subsidiaries relating to the purchase, transportation by pipeline, gas
processing, marketing, sale and supply of natural gas and other Hydrocarbons.
The Borrower has heretofore delivered to the Administrative Agent and the
Lenders a complete and correct copy of all such material credit agreements,
indentures, purchase agreements, contracts, letters of credit, guarantees, joint
venture agreements, or other instruments, including any modifications or
supplements thereto, as in effect on the Closing Date.
Section 7.23 Gas Imbalances. Except as set forth on Schedule 7.23 or on the
most recent certificate delivered pursuant to Section 8.07(c), on a net basis
there are no gas imbalances, take or pay or other prepayments with respect to
the Borrower's Oil and Gas Properties which would require the Borrower to
deliver, in the aggregate, two percent (2%) or more of the monthly production of
Hydrocarbons produced from the Borrower's Oil and Gas Properties at some future
time without then or thereafter receiving full payment therefor.
ARTICLE VIII
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that, so long as any of the
Commitments are in effect and until payment in full of all Loans hereunder,
all interest thereon and all other amounts payable by the Borrower
hereunder:
Section 8.01 Reporting Requirements. The Borrower shall deliver, or shall
cause to be delivered, to the Administrative Agent with sufficient copies of
each for the Lenders:
46
(a) Annual Financial Statements. As soon as available and in any
event within 95 days after the end of each fiscal year of the Borrower, the
audited consolidated and unaudited consolidating statements of income,
stockholders' equity, changes in financial position and cash flows of the
Borrower and its Consolidated Subsidiaries for such fiscal year, and the
related consolidated and consolidating balance sheets of the Borrower and
its Consolidated Subsidiaries as at the end of such fiscal year, and
setting forth in each case in comparative form the corresponding figures
for the preceding fiscal year, and accompanied by the related opinion of
independent public accountants of recognized national standing reasonably
acceptable to the Administrative Agent, which opinion shall state that said
financial statements fairly present the consolidated financial condition
and results of operations of the Borrower and its Consolidated Subsidiaries
as at the end of, and for, such fiscal year and that such financial
statements have been prepared in accordance with GAAP, except for such
changes in such principles with which the independent public accountants
shall have concurred and such opinion shall not contain a "going concern"
or like qualification or exception, and a certificate of such accountants
stating that, in making the examination necessary for their opinion, they
verified compliance by the Borrower, as of the end of the relevant fiscal
year, with Sections 9.13, 9.14 and 9.15.
(b) Quarterly Financial Statements. As soon as available and in any
event within 50 days after the end of each of the first three fiscal
quarterly periods of each fiscal year of the Borrower, consolidated and
consolidating statements of income, stockholders' equity, changes in
financial position and cash flows of the Borrower and its Consolidated
Subsidiaries for such period and for the period from the beginning of the
respective fiscal year to the end of such period, and the related
consolidated and consolidating balance sheets as at the end of such period,
and setting forth in each case in comparative form the corresponding
figures for the corresponding period in the preceding fiscal year,
accompanied by the certificate of a Responsible Officer, which certificate
shall state that said financial statements fairly present the consolidated
and consolidating financial condition and results of operations of the
Borrower and its Consolidated Subsidiaries in accordance with GAAP, as at
the end of, and for, such period (subject to normal year-end audit
adjustments).
(c) Notice of Default, Etc. Promptly after the Borrower knows that
any Default or any Material Adverse Effect has occurred, a notice of such
Default or Material Adverse Effect, describing the same in reasonable
detail and the action the Borrower proposes to take with respect thereto.
(d) Other Accounting Reports. Promptly upon receipt thereof, a copy
of each other report or letter submitted to the Borrower or any Subsidiary
by independent accountants in connection with any annual, interim or
special audit made by them of the books of the Borrower and its
Subsidiaries, and a copy of any response by the Borrower or any Subsidiary
of the Borrower, or the Board of Directors of the Borrower or any
Subsidiary of the Borrower, to such letter or report.
(e) SEC Filings, Etc. Promptly upon its becoming available, each
financial statement, report, notice or proxy statement sent by the Borrower
to stockholders generally and each regular or periodic report and any
registration statement, prospectus or
47
written communication (other than transmittal letters) in respect thereof
filed by the Borrower with or received by the Borrower in connection
therewith from any securities exchange or the SEC or any successor agency.
(f) Notices Under Other Loan Agreements. Promptly after the
furnishing thereof, copies of any statement, report or notice furnished to
any Person pursuant to the terms of any indenture, loan or credit or other
similar agreement, other than this Agreement and not otherwise required to
be furnished to the Lenders pursuant to any other provision of this Section
8.01.
(g) Other Matters. From time to time such other information regarding
the business, affairs or financial condition of the Borrower or any
Subsidiary (including, without limitation, any Plan or Multiemployer Plan
and any reports or other information required to be filed under ERISA) as
any Lender or the Administrative Agent may reasonably request.
(h) Hedging Agreements. As soon as available and in any event within
ten Business Days after the last day of each calendar quarter, a report,
in form and substance satisfactory to the Administrative Agent, setting
forth as of the last Business Day of such calendar quarter a true and
complete list of all Hedging Agreements (including commodity price swap
agreements, forward agreements or contracts of sale which provide for
prepayment for deferred shipment or delivery of oil, gas or other
commodities) of the Borrower and each Subsidiary, the material terms
thereof (including the type, term, effective date, termination date and
notional amounts or volumes), the net mark to market value therefor, any
new credit support agreements relating thereto not listed on Schedule 7.22,
any margin required or supplied under any credit support document, and the
counter party to each such agreement.
(i) Cash Flow Forecast. Concurrently with the delivery of each
Reserve Report, a report, in form and substance reasonably satisfactory to
the Administrative Agent, forecasting for the immediately succeeding six
month period the capital expenditures, payments made in connection with
Hedging Agreements and working capital payments of the Borrower and its
Consolidated Subsidiaries.
The Borrower will furnish to the Administrative Agent, at the time it furnishes
each set of financial statements pursuant to paragraph (a) or (b) above, a
certificate substantially in the form of Exhibit C executed by a Responsible
Officer (i) certifying as to the matters set forth therein and stating that no
Default has occurred and is continuing (or, if any Default has occurred and is
continuing, describing the same in reasonable detail), and (ii) setting forth in
reasonable detail the computations necessary to determine whether the Borrower
is in compliance with Sections 9.13, 9.14 and 9.15 as of the end of the
respective fiscal quarter or fiscal year.
Section 8.02 Litigation. The Borrower shall promptly give to the
Administrative Agent notice of: (i) all legal or arbitrage proceedings, and of
all proceedings before any Governmental Authority affecting the Borrower or any
Subsidiary, except proceedings which, if adversely determined, would not have a
Material Adverse Effect, and (ii) of any litigation or proceeding against or
adversely affecting the Borrower or any Subsidiary in which the amount involved
is not covered in full by insurance (subject to normal and customary deductibles
and for which the
48
insurer has not assumed the defense), or in which injunctive or similar relief
is sought. The Borrower will, and will cause each of its Subsidiaries to,
promptly notify the Administrative Agent and each of the Lenders of any claim,
judgment, Lien or other encumbrance (other than an Excepted Lien) affecting any
Property of the Borrower or any Subsidiary if the value of the claim, judgment,
Lien, or other encumbrance affecting such Property shall exceed $100,000.
Section 8.03 Maintenance, Etc.
(a) Generally. The Borrower shall and shall cause each Subsidiary to:
preserve and maintain its corporate existence and all of its material
rights, privileges and franchises; keep books of record and account in
which full, true and correct entries will be made of all dealings or
transactions in relation to its business and activities; comply with all
Governmental Requirements if failure to comply with such requirements will
have a Material Adverse Effect; pay and discharge all taxes, assessments
and governmental charges or levies imposed on it or on its income or
profits or on any of its Property prior to the date on which penalties
attach thereto, except for any such tax, assessment, charge or levy the
payment of which is being contested in good faith and by proper proceedings
and against which adequate reserves are being maintained; upon reasonable
notice, permit representatives of the Administrative Agent or any Lender,
during normal business hours, to examine, copy and make extracts from its
books and records, to inspect its Properties, and to discuss its business
and affairs with its officers, all to the extent reasonably requested by
such Lender or the Administrative Agent (as the case may be); and keep, or
cause to be kept, insured by financially sound and reputable insurers all
Property of a character usually insured by Persons engaged in the same or
similar business similarly situated against loss or damage of the kinds and
in the amounts customarily insured against by such Persons and carry such
other insurance as is usually carried by such Persons including, without
limitation, environmental risk insurance to the extent reasonably
available. The Borrower shall promptly obtain endorsements to such
insurance policies naming "BNP Paribas, as Administrative Agent for the
Beneficiaries" as joint loss payee and containing provisions that such
policies will not be canceled without 30 days prior written notice having
been given by the insurance company to the Administrative Agent.
(b) Proof of Insurance. Contemporaneously with the delivery of the
financial statements required by Section 8.01(a) to be delivered for each
year, the Borrower will furnish or cause to be furnished to the
Administrative Agent and the Lenders a certificate of insurance coverage
from the insurer in form and substance satisfactory to the Administrative
Agent and, if requested, will furnish the Administrative Agent and the
Lenders copies of the applicable policies.
(c) Oil and Gas Properties. The Borrower will and will cause each
Subsidiary to, at its own expense, do or cause to be done all things
reasonably necessary to preserve and keep in good repair, working order and
efficiency all Mortgaged Properties and all of its other material Oil and
Gas Properties and other material Properties, including, without
limitation, all material equipment, machinery and facilities, and from time
to time will make all the reasonably necessary repairs, renewals and
replacements so that at all times the state and condition of all Mortgaged
Properties and all of its other material Oil and Gas Properties and other
material Properties will be fully preserved and maintained,
49
except to the extent a portion of such Properties is no longer capable of
producing Hydrocarbons in economically reasonable amounts. The Borrower
will and will cause each Subsidiary to promptly: (i) pay and discharge, or
make reasonable and customary efforts to cause to be paid and discharged,
all delay rentals, royalties, expenses and indebtedness accruing under the
leases or other agreements affecting or pertaining to the Mortgaged
Properties and all of its other material Oil and Gas Properties, (ii)
perform or make reasonable and customary efforts to cause to be performed,
in accordance with industry standards, the obligations required by each and
all of the assignments, deeds, leases, sub-leases, contracts and agreements
affecting its interests in its Oil and Gas Properties and other material
Properties and (iii) do all other things necessary to keep unimpaired,
except for Liens described in Section 9.02, its rights with respect to the
Mortgaged Properties and all of its other material Oil and Gas Properties
and other material Properties and prevent any forfeiture thereof or a
default thereunder, except to the extent a portion of such Properties is no
longer capable of producing Hydrocarbons in economically reasonable amounts
and except for dispositions excluded by definition from Transfers. The
Borrower will and will cause each Subsidiary to operate the Mortgaged
Properties and all of its other material Oil and Gas Properties and other
material Properties or cause or make reasonable and customary efforts to
cause such Oil and Gas Properties and other material Properties to be
operated in a careful and efficient manner in accordance with the practices
of the industry and in compliance with all applicable contracts and
agreements and in compliance in all material respects with all Governmental
Requirements.
Section 8.04 Environmental Matters.
(a) Establishment of Procedures. The Borrower will and will cause
each Subsidiary to establish and implement such procedures as may be
reasonably necessary to continuously determine and assure that any failure
of the following does not have a Material Adverse Effect: (i) all Property
of the Borrower and its Subsidiaries and the operations conducted thereon
and other activities of the Borrower and its Subsidiaries are in compliance
with and do not violate the requirements of any Environmental Laws, (ii) no
oil, hazardous substances or solid wastes are disposed of or otherwise
released on or to any Property owned by any such party except in compliance
with Environmental Laws, (iii) no hazardous substance will be released on
or to any such Property in a quantity equal to or exceeding that quantity
which requires reporting pursuant to Section 103 of CERCLA, and (iv) no
oil, oil and gas exploration and production wastes or hazardous substance
is released on or to any such Property so as to pose an imminent and
substantial endangerment to public health or welfare or the environment.
(b) Notice of Action. The Borrower will promptly notify the
Administrative Agent and the Lenders in writing of any threatened action,
investigation or inquiry by any Governmental Authority of which the
Borrower has knowledge in connection with any Environmental Laws, excluding
routine testing and corrective action.
(c) Future Acquisitions. The Borrower will and will cause each
Subsidiary to provide environmental audits and tests, as reasonably
requested by the Administrative Agent, in connection with any future
acquisitions of Oil and Gas Properties or other material Properties.
50
Section 8.05 Further Assurances. The Borrower will and will cause each
Subsidiary to cure promptly any defects in the creation and issuance of the
Notes and the execution and delivery of the Security Instruments and this
Agreement. The Borrower at its expense will and will cause each Subsidiary to
promptly execute and deliver to the Administrative Agent upon request all such
other documents, agreements and instruments to comply with or accomplish the
covenants and agreements of the Borrower or any Subsidiary, as the case may be,
in the Security Instruments and this Agreement, or to further evidence and more
fully describe the collateral intended as security for the Notes, or to correct
any omissions in the Security Instruments, or to state more fully the security
obligations set out herein or in any of the Security Instruments, or to perfect,
protect or preserve any Liens created pursuant to any of the Security
Instruments, or to make any recordings, to file any notices or obtain any
consents, all as may be necessary or appropriate in connection therewith.
Section 8.06 Performance of Obligations. The Borrower will pay the Notes
according to the reading, tenor and effect thereof; and the Borrower will and
will cause each Subsidiary to do and perform every act and discharge all of the
obligations to be performed and discharged by them under the Security
Instruments and this Agreement, at the time or times and in the manner
specified.
Section 8.07 Engineering Reports.
(a) Not less than 60 days prior to each Scheduled Redetermination Date
(other than the scheduled redetermination date to occur on or around July
31, 2001), commencing with the Scheduled Redetermination Date to occur on
or around October 1, 2001, the Borrower shall furnish to the Administrative
Agent and the Lenders a Reserve Report. Not less than 30 days prior to the
Scheduled Redetermination Date to occur on or around July 31, 2001, the
Borrower shall furnish to the Administrative Agent and the Lenders a
Reserve Report dated as of July 1, 2001. The January 1 Reserve Report of
each year shall be prepared by Ryder Scott Company, S.A. Holditch &
Associates, Inc., or other certified independent petroleum engineers or
other independent petroleum consultant(s) reasonably acceptable to the
Administrative Agent and the July 1 Reserve Report of each year and the
Reserve Report for the July 31, 2001 redetermination shall be prepared by
or under the supervision of the chief engineer of the Borrower who shall
certify such Reserve Report to be true and accurate and to have been
prepared in accordance with the procedures used in the immediately
proceeding January 1 Reserve Report.
(b) In the event of an unscheduled redetermination, the Borrower shall
furnish to the Administrative Agent and the Lenders a Reserve Report
prepared by or under the supervision of the chief engineer of the Borrower
who shall certify such Reserve Report to be true and accurate and to have
been prepared in accordance with the procedures used in the immediately
preceding Reserve Report. For any unscheduled redetermination requested by
the Lenders or the Borrower pursuant to Section 2.08(d)), the Borrower
shall provide such Reserve Report with an "as of" date as required by the
Lenders as soon as possible, but in any event no later than 45 days
following the receipt of the request by the Administrative Agent.
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(c) With the delivery of each Reserve Report, the Borrower shall
provide to the Administrative Agent and the Lenders, a certificate from a
Responsible Officer certifying that, to the best of his knowledge and in
all material respects: (i) the information contained in the Reserve Report
and any other information delivered in connection therewith is true and
correct, (ii) the Borrower owns good and defensible title to the Oil and
Gas Properties evaluated in such Reserve Report and such Properties are
free of all Liens except for Liens permitted by Section 9.02, (iii) except
as set forth on an exhibit to the certificate, on a net basis there are no
gas imbalances, take or pay or other prepayments with respect to its Oil
and Gas Properties evaluated in such Reserve Report which would require the
Borrower to deliver Hydrocarbons produced from such Oil and Gas Properties
at some future time without then or thereafter receiving full payment
therefor, (iv) none of its Oil and Gas Properties have been sold since the
date of the last Borrowing Base determination except as set forth on an
exhibit to the certificate, which certificate shall list all of its Oil and
Gas Properties sold and in such detail as reasonably required by the
Majority Lenders, (v) attached to the certificate is a list of its Oil and
Gas Properties added to and deleted from the immediately prior Reserve
Report and a list showing any change in working interest or net revenue
interest in its Oil and Gas Properties occurring and the reason for such
change, (vi) attached to the certificate is a list of all Persons
disbursing proceeds to the Borrower from its Oil and Gas Properties and
(vii) except as set forth on a schedule attached to the certificate all of
the Oil and Gas Properties evaluated by such Reserve Report are Mortgaged
Property.
(d) As soon as available and in any event within 30 days after the end
of each calendar month, the Borrower shall furnish to the Administrative
Agent production reports by lease for the Mortgaged Properties and its
other material Oil and Gas Properties, which reports shall include
quantities or volume of production which have accrued to the Borrower's
accounts in such period, and such other information with respect thereto as
the Administrative Agent may reasonably require.
Section 8.08 Title Information.
(a) Delivery. On or before the delivery to the Administrative Agent
and the Lenders of each Reserve Report required by Section 8.07(a), the
Borrower will deliver title information in form and substance acceptable to
the Administrative Agent covering enough of the Oil and Gas Properties
evaluated by such Reserve Report that were not included in the immediately
preceding Reserve Report, so that the Administrative Agent shall have
received together with title information previously delivered to the
Administrative Agent, satisfactory title information on at least ninety
percent (90%) of the value of the Oil and Gas Properties evaluated by such
Reserve Report.
(b) Cure of Title Defects. The Borrower shall cure any title defects
or exceptions which are not Excepted Liens raised by such information, or
substitute acceptable Mortgaged Properties with no title defects or
exceptions except for Excepted Liens covering Mortgaged Properties of an
equivalent value, within 45 days after a request by the Administrative
Agent or the Lenders to cure such defects or exceptions.
(c) Failure to Cure Title Defects. If the Borrower is unable to cure
any title defect requested by the Administrative Agent or the Lenders to be
cured within the
52
45 day period or the Borrower does not comply with the requirements to
provide acceptable title information covering ninety percent (90%) of the
value of the Oil and Gas Properties evaluated in the most recent Reserve
Report, such default shall not be a Default or an Event of Default, but
instead the Administrative Agent and the Lenders shall have the right to
exercise the following remedy in their sole discretion from time to time,
and any failure to so exercise this remedy at any time shall not be a
waiver as to future exercise of the remedy by the Administrative Agent or
the Lenders. To the extent that the Administrative Agent or the Lenders are
not satisfied with title to any Mortgaged Property after the time period in
Section 8.08(b) has elapsed, such unacceptable Mortgaged Property shall not
count towards the ninety percent (90%) requirement, and the Administrative
Agent may send a notice to the Borrower and the Lenders that the then
outstanding Borrowing Base shall be reduced by an amount as determined by
all of the Lenders to cause the Borrower to be in compliance with the
requirement to provide acceptable title information on ninety percent (90%)
of the value of the Oil and Gas Properties. This new Borrowing Base shall
become effective immediately after receipt of such notice.
Section 8.09 Collateral.
(a) Collateral. The Obligations shall be secured by a perfected first
priority Lien (subject only to Liens permitted under Section 9.02 entitled
to priority under applicable law or under Section 9.02) granted to the
Administrative Agent for the benefit of the Beneficiaries in (i) the Oil
and Gas Properties of the Borrower, whether now owned or hereafter
acquired, pursuant to the terms of Security Instruments, and which compose
at least ninety percent (90%) of the value of the Oil and Gas Properties
described in the most recent Reserve Report, (ii) all of the accounts
receivable, inventory, equipment, contract rights, general intangibles and
other personal property of the Borrower (but expressly excluding office
furniture, office fixtures and office equipment, other than seismic
workstations) pursuant to terms of Security Instruments, (iii) the Oil and
Gas Properties of ATP (UK), whether now owned or hereafter acquired,
pursuant to the terms of Security Instruments and (iv) sixty-five percent
(65%) of the stock of ATP (UK).
(b) Lien in Acquired Oil and Gas Properties. Should the Borrower or
ATP (UK) acquire any additional Oil and Gas Properties or additional
interests in its existing Oil and Gas Properties, the Borrower or APT (UK)
will grant to the Administrative Agent as security for the Obligations a
first-priority Lien (subject only to Excepted Liens and other liens
permitted pursuant to Section 9.02) on the Borrower's or ATP (UK)'s, as
applicable, interest in any Oil and Gas Properties not already subject to a
Lien of the Security Instruments, which Lien will be created and perfected
by and in accordance with the provisions of mortgages, deeds of trust,
security agreements and financing statements, or other Security
Instruments, all in form and substance satisfactory to the Administrative
Agent in its sole discretion and in sufficient executed (and acknowledged
where necessary or appropriate) counterparts for recording purposes. In
connection with any such creation of a Lien against future-acquired Oil and
Gas Properties, should the Borrower so request and without constituting an
unscheduled redetermination of the Borrowing Base pursuant to Section
2.08(d), the Administrative Agent and the Lenders
53
shall redetermine the Borrowing Base and the Monthly Reduction Amount, on
the basis of information regarding such acquired Oil and Gas Properties and
any other information reasonably requested by the Administrative Agent, but
without obligation on the part of the Borrower to provide a Reserve Report.
Upon each such request for such a Borrowing Base redetermination, the
Borrower shall pay an engineering fee to the Administrative Agent, for its
own account, of $10,000.
(c) Title Information. Concurrently with the granting of the Lien or
other action referred to in Section 8.07(a) above, the Borrower will
provide to the Administrative Agent title information in form and substance
reasonably satisfactory to the Administrative Agent with respect to the
Borrower's interests in such Oil and Gas Properties.
(d) Legal Opinions. Also, promptly after the filing of any new
Security Instrument in any state, upon the reasonable request of the
Administrative Agent, the Borrower will provide to the Administrative Agent
an opinion addressed to the Administrative Agent for the benefit of the
Lenders in form and substance reasonably satisfactory to the Administrative
Agent from counsel acceptable to Administrative Agent, stating that the
Security Instrument is valid, binding and enforceable in accordance with
its terms in legally sufficient form for such jurisdiction, and the means
by which such Security Instrument will perfect the Lien created thereby.
Section 8.10 ERISA Information and Compliance. The Borrower will promptly
furnish and will cause the Subsidiaries and any ERISA Affiliate to promptly
furnish to the Administrative Agent with sufficient copies to the Lenders (i)
promptly after the filing thereof with the United States Secretary of Labor, the
Internal Revenue Service or the PBGC, copies of each annual and other report
with respect to each Plan or any trust created thereunder, (ii) immediately upon
becoming aware of the occurrence of any ERISA Event or of any "prohibited
transaction," as described in section 406 of ERISA or in section 4975 of the
Code, in connection with any Plan or any trust created thereunder, a written
notice signed by a Responsible Officer specifying the nature thereof, what
action the Borrower, the Subsidiary or the ERISA Affiliate is taking or proposes
to take with respect thereto, and, when known, any action taken or proposed by
the Internal Revenue Service, the Department of Labor or the PBGC with respect
thereto, and (iii) immediately upon receipt thereof, copies of any notice of the
PBGC's intention to terminate or to have a trustee appointed to administer any
Plan. With respect to each Plan (other than a Multiemployer Plan), the Borrower
will, and will cause each Subsidiary and ERISA Affiliate to, (i) satisfy in full
and in a timely manner, without incurring any late payment or underpayment
charge or penalty and without giving rise to any lien, all of the contribution
and funding requirements of section 412 of the Code (determined without regard
to subsections (d), (e), (f) and (k) thereof) and of section 302 of ERISA
(determined without regard to sections 303, 304 and 306 of ERISA), and (ii) pay,
or cause to be paid, to the PBGC in a timely manner, without incurring any late
payment or underpayment charge or penalty, all premiums required pursuant to
sections 4006 and 4007 of ERISA.
Section 8.11 Post-Closing Matters.
(a) Promptly after the Closing Date, but in any event within 45 days
after the Closing Date, the Borrower shall have caused ATP (UK) to have (i)
executed and
54
delivered in favor of the Administration Agent fixed and floating charges
on all of the Oil and Gas Properties of ATP (UK) located in the North Sea
to secure the Obligations, (ii) taken all action necessary to obtain all
necessary consents and approvals from all necessary Persons and
Governmental Authorities and to duly register such fixed and floating
charges, (iii) obtained and delivered certificates of the appropriate
Governmental Authorities with respect to the existence, qualification and
good standing (or the functional equivalent under English law) of ATP (UK),
and (iv) caused to be delivered an opinion from counsel to ATP (UK), in
form and substance satisfactory to the Administrative Agent, as to such
matters incident to the transactions herein contemplated relating to ATP
(UK) as the Administrative Agent may reasonably request.
(b) Concurrent with delivery of the fixed and floating charges
described in Section 18.11(a), the Borrower shall cause ATP (UK) to execute
and deliver a certificate of the Secretary or an Assistant Secretary of ATP
(UK) setting forth (i) resolutions of its board of directors with respect
to the authorization of ATP (UK) to execute and deliver the Loan Documents
to which it is a party and to enter into the transactions contemplated in
those documents, (ii) the officers of ATP (UK) (y) who are authorized to
sign the Loan Documents to which ATP (UK) is a party and (z) who will,
until replaced by another officer or officers duly authorized for that
purpose, act as its representative for the purposes of signing documents
and giving notices and other communications in connection with this
Agreement and the transactions contemplated hereby, (iii) specimen
signatures of the authorized officers, and (iv) the memorandum and articles
of association, the certificate of incorporation, certificate of
incorporation on change of name and bylaws of ATP (UK), certified as being
true and complete. The Administrative Agent and the Lenders may
conclusively rely on such certificate until they receive notice in writing
from ATP (UK) to the contrary.
ARTICLE IX
NEGATIVE COVENANTS
The Borrower covenants and agrees that, so long as any of the Commitments
are in effect and until payment in full of Loans hereunder, all interest thereon
and all other amounts payable by the Borrower hereunder, without the prior
written consent of the Majority Lenders:
Section 9.01 Debt. Neither the Borrower nor any Subsidiary will incur,
create, assume or permit to exist any Debt, except:
(a) the Notes or other Obligations or any guaranty of or suretyship
arrangement for the Notes or other Obligations;
(b) Debt of the Borrower existing on the Closing Date which is
disclosed in Schedule 9.01, and any renewals or extensions (but not
increases) thereof;
(c) accounts payable (for the deferred purchase price of Property or
services) from time to time incurred in the ordinary course of business
which, if greater than 90
55
days past the invoice or billing date, are being contested in good faith by
appropriate proceedings if reserves adequate under GAAP shall have been
established therefor;
(d) Debt under capital leases (as required to be reported on the
financial statements of the Borrower pursuant to GAAP) not to exceed
$100,000.
(e) Debt associated with bonds or surety obligations required by
Governmental Requirements in connection with the operation of the Oil and
Gas Properties;
(f) The Senior Unsecured Debt;
(g) Debt of the Borrower under Hedging Agreements with the
Administrative Agent or other counterparties, as approved by the Majority
Lenders (such approval not to be unreasonably withheld), entered into as a
part of its normal business operations as a risk management strategy and/or
hedge against changes resulting from market conditions related to the
Borrower's operations; provided, however, such Hedging Agreement shall not
obligate the Borrower to any margin call requirements; and
(h) Debt consisting of sureties or bonds provided to any Governmental
Authority or other Person and assuring payment of contingent liabilities of
the Borrower or ATP (UK) with respect to plugging, facility removal and
abandonment of its Oil and Gas Properties.
Section 9.02 Liens. Neither the Borrower nor any Subsidiary will create,
incur, assume or permit to exist any Lien on any of its Properties (now owned or
hereafter acquired), except:
(a) Liens securing the payment of any Obligations;
(b) Excepted Liens;
(c) Liens securing leases allowed under Section 9.01(d), but only on
the Property under lease;
(d) Liens disclosed on Schedule 9.02; and
(e) Liens on cash or securities of the Borrower securing the Debt
described in Section 9.01(e).
Section 9.03 Investments, Loans and Advances. Neither the Borrower nor any
Subsidiary will make or permit to remain outstanding any loans or advances to or
investments in any Person, except that the foregoing restriction shall not apply
to:
(a) investments, loans or advances reflected in the Financial
Statements or which are disclosed to the Lenders in Schedule 9.03;
(b) accounts receivable arising in the ordinary course of business;
56
(c) direct obligations of the United States or any agency thereof, or
obligations guaranteed by the United States or any agency thereof, in each
case maturing within one year from the date of creation thereof;
(d) commercial paper maturing within one year from the date of
creation thereof rated in the highest grade by Standard & Poor's
Corporation or Moody's Investors Service, Inc.;
(e) deposits maturing within one year from the date of creation
thereof with, including certificates of deposit issued by, any Lender or
any office located in the United States of any other bank or trust company
which is organized under the laws of the United States or any state
thereof, has capital, surplus and undivided profits aggregating at least
$500,000,000 (as of the date of such Lender's or bank or trust company's
most recent financial reports) and has a short term deposit rating of no
lower than A2 or P2, as such rating is set forth from time to time, by
Standard & Poor's Corporation or Moody's Investors Service, Inc.,
respectively;
(f) deposits in money market funds investing exclusively in
investments described in Section 9.03(c), 9.03(d) or 9.03(e);
(g) investments, loans or advances made by the Borrower in or to ATP
(UK) as reflected on Schedule 9.03 and additional investments, loans or
advances made by the Borrower in or to ATP (UK), not to exceed at any one
time outstanding in the aggregate the amount of any notes issued by ATP
(UK) payable to the order of the Borrower and collaterally assigned to, and
held in the possession of, the Administrative Agent;
(h) other investments, loans or advances not to exceed $250,000 in the
aggregate at any time; and
(i) investments by the Borrower in direct ownership interests in
additional Oil and Gas Properties and gas gathering systems related
thereto.
Section 9.04 Dividends, Distributions and Redemptions. The Borrower will
not declare or pay any dividend, purchase, redeem (except for redemption of
stock options held by employees, as provided in the 1998 and 2000 stock option
plans of the Borrower; provided, however, from and after the Closing Date, the
amount of stock so redeemed and held by the Company shall not exceed at any one
time in the aggregate more than the number of shares that when multiplied by the
then current price of the stock exceeds $500,000) or otherwise acquire for value
any of its stock now or hereafter outstanding, return any capital to its
stockholders or make any distribution of its assets to its stockholders.
Section 9.05 Sales and Leasebacks. Neither the Borrower nor any Subsidiary
will enter into any arrangement, directly or indirectly, with any Person whereby
the Borrower or any Subsidiary shall sell or transfer any of its material
Property, whether now owned or hereafter acquired, and whereby the Borrower or
any Subsidiary shall then or thereafter rent or lease as lessee such Property or
any part thereof or other Property which the Borrower or any Subsidiary intends
to use for substantially the same purpose or purposes as the Property sold or
transferred.
57
Section 9.06 Nature of Business. Neither the Borrower nor any Subsidiary
will allow any material change to be made in the character of its business as an
independent oil and gas exploration and production company, nor will the
Borrower or any Subsidiary operate or carry on business in any jurisdiction
other than the United States, including the Gulf of Mexico, or the United
Kingdom North Sea.
Section 9.07 Limitation on Leases. Neither the Borrower nor any Subsidiary
will create, incur, assume or permit to exist any obligation for the payment of
rent or hire of Property of any kind whatsoever (real or personal including
capital leases, but excluding leases of Hydrocarbon Interests), under leases or
lease agreements which would cause the aggregate amount of all payments made by
the Borrower and its Subsidiaries pursuant to all such leases or lease
agreements to exceed $250,000 in any period of twelve consecutive calendar
months during the life of such leases.
Section 9.08 Mergers, Etc. Neither the Borrower nor any Subsidiary will
merge into or with or consolidate with any other Person, or sell, lease or
otherwise dispose of (whether in one transaction or in a series of transactions)
all or substantially all of its Property or assets to any other Person, except
that the foregoing restriction shall not apply to the merger of any Subsidiary
into the Borrower or another Subsidiary.
Section 9.09 Proceeds of Notes; Letters of Credit. The Borrower will not
permit the proceeds of the Notes or Letters of Credit to be used for any purpose
other than those permitted by Section 7.07. Neither the Borrower nor any Person
acting on behalf of the Borrower has taken or will take any action which might
cause any of the Loan Documents to violate Regulation T, U or X or any other
regulation of the Board of Governors of the Federal Reserve System or to violate
Section 7 of the Securities Exchange Act of 1934 or any rule or regulation
thereunder, in each case as now in effect or as the same may hereinafter be in
effect.
Section 9.10 ERISA Compliance. The Borrower will not at any time:
(a) Engage in, or permit any Subsidiary or ERISA Affiliate to engage
in, any transaction in connection with which the Borrower, any Subsidiary
or any ERISA Affiliate could be subjected to either a civil penalty
assessed pursuant to section 502(c), (i) or (l) of ERISA or a tax imposed
by Chapter 43 of Subtitle D of the Code;
(b) Terminate, or permit any Subsidiary or ERISA Affiliate to
terminate, any Plan in a manner, or take any other action with respect to
any Plan, which could result in any liability to the Borrower, any
Subsidiary or any ERISA Affiliate to the PBGC;
(c) Fail to make, or permit any Subsidiary or ERISA Affiliate to fail
to make, full payment when due of all amounts which, under the provisions
of any Plan, agreement relating thereto or applicable law, the Borrower, a
Subsidiary or any ERISA Affiliate is required to pay as contributions
thereto;
(d) Permit to exist, or allow any Subsidiary or ERISA Affiliate to
permit to exist, any accumulated funding deficiency within the meaning of
Section 302 of ERISA or section 412 of the Code, whether or not waived,
with respect to any Plan;
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(e) Permit, or allow any Subsidiary or ERISA Affiliate to permit, the
actuarial present value of the benefit liabilities under any Plan
maintained by the Borrower, any Subsidiary or any ERISA Affiliate which is
regulated under Title IV of ERISA to exceed the current value of the assets
(computed on a plan termination basis in accordance with Title IV of ERISA)
of such Plan allocable to such benefit liabilities. The term "actuarial
present value of the benefit liabilities" shall have the meaning specified
in section 4041 of ERISA;
(f) Contribute to or assume an obligation to contribute to, or permit
any Subsidiary or ERISA Affiliate to contribute to or assume an obligation
to contribute to, any Multiemployer Plan;
(g) Acquire, or permit any Subsidiary or ERISA Affiliate to acquire,
an interest in any Person that causes such Person to become an ERISA
Affiliate with respect to the Borrower, any Subsidiary or any ERISA
Affiliate if such Person sponsors, maintains or contributes to, or at any
time in the six-year period preceding such acquisition has sponsored,
maintained, or contributed to, (1) any Multiemployer Plan, or (2) any other
Plan that is subject to Title IV of ERISA under which the actuarial present
value of the benefit liabilities under such Plan exceeds the current value
of the assets (computed on a plan termination basis in accordance with
Title IV of ERISA) of such Plan allocable to such benefit liabilities;
(h) Incur, or permit any Subsidiary or ERISA Affiliate to incur, a
liability to or on account of a Plan under sections 515, 4062, 4063, 4064,
4201 or 4204 of ERISA;
(i) Contribute to or assume an obligation to contribute to, or permit
any Subsidiary or ERISA Affiliate to contribute to or assume an obligation
to contribute to, any employee welfare benefit plan, as defined in section
3(1) of ERISA, including, without limitation, any such plan maintained to
provide benefits to former employees of such entities, that may not be
terminated by such entities in their sole discretion at any time without
any material liability; or
(j) Amend or permit any Subsidiary or ERISA Affiliate to amend, a Plan
resulting in an increase in current liability such that the Borrower, any
Subsidiary or any ERISA Affiliate is required to provide security to such
Plan under section 401(a)(29) of the Code.
Section 9.11 Sale or Discount of Receivables. Neither the Borrower nor any
Subsidiary will discount or sell (with or without recourse) any of its notes
receivable or accounts receivable.
Section 9.12 Capital Expenditures. The Borrower will not make any
expenditures for fixed or capital assets not directly associated with the
drilling and development of Oil and Gas Properties if, after giving effect
thereto, the aggregate of all such expenditures would exceed $250,000 during any
fiscal year.
Section 9.13 Current Ratio. The Borrower will not permit its ratio of (i)
consolidated current assets to (ii) consolidated current liabilities (excluding
current maturities of the Notes) to be less than 1.0 to 1.0 at the end of any
fiscal quarter of the Borrower.
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Section 9.14 Debt Coverage Ratio. The Borrower will not permit its Debt
Ratio as of the end of any fiscal quarter of the Borrower (calculated quarterly
at the end of each fiscal quarter) to be less than 3.0 to 1.0. For purposes of
the calculations in this Section 9.14 to be made prior to the first fiscal
quarter of 2002, EBITDA shall be determined by multiplying the sum of EBITDA for
each of the fiscal quarters actually elapsed from and including the first fiscal
quarter of 2001 through and including the fourth fiscal quarter of 2001 by a
fraction, the numerator of which is 4 and the denominator of which is the number
of such actually elapsed fiscal quarters.
Section 9.15 Interest Coverage Ratio. The Borrower will not permit its
Interest Coverage Ratio as of the end of any fiscal quarter of the Borrower
(calculated quarterly at the end of each fiscal quarter) to be less than 3.0 to
1.0.
Section 9.16 Sale of Oil and Gas Properties. The Borrower will not, and
will not permit any Subsidiary to, Transfer any Mortgaged Property or other
material Oil and Gas Property or any interest in any Mortgaged Property or other
material Oil and Gas Property.
Section 9.17 Environmental Matters. Neither the Borrower nor any Subsidiary
will cause or permit any of its Property to be in violation of, or do anything
or permit anything to be done which will subject any such Property to any
remedial obligations under any Environmental Laws, assuming disclosure to the
applicable Governmental Authority of all relevant facts, conditions and
circumstances, if any, pertaining to such Property where such violations or
remedial obligations would have a Material Adverse Effect.
Section 9.18 Transactions with Affiliates. Neither the Borrower nor any
Subsidiary will enter into any transaction, including, without limitation, any
purchase, sale, lease or exchange of Property or the rendering of any service,
with any Affiliate unless such transactions are otherwise permitted under this
Agreement, are in the ordinary course of its business and are upon fair and
reasonable terms no less favorable to it than it would obtain in a comparable
arm's length transaction with a Person not an Affiliate.
Section 9.19 Subsidiaries. Except as permitted by Section 9.03, the
Borrower shall not, and shall not permit any Subsidiary to, create any
additional Subsidiaries. The Borrower shall not and shall not permit any
Subsidiary to sell or to issue any stock or ownership interest of a Subsidiary,
except to the Borrower or another Subsidiary and except in compliance with
Section 9.03.
Section 9.20 Negative Pledge Agreements. Neither the Borrower nor any
Subsidiary will create, incur, assume or permit to exist any contract, agreement
or understanding (other than this Agreement and the Security Instruments) which
in any way prohibits or restricts the granting, conveying, creation or
imposition of any Lien on any of its Property to secure the Obligations or
restricts any Subsidiary from paying dividends to the Borrower, or which
requires the consent of or notice to other Persons in connection therewith.
Section 9.21 Gas Imbalances, Take-or-Pay or Other Prepayments. The Borrower
will not allow gas imbalances, take-or-pay or other prepayments with respect to
the Oil and Gas Properties of the Borrower or any Subsidiary which would require
the Borrower or any Subsidiary to deliver in the aggregate two percent (2%) or
more of their respective Hydrocarbons
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produced on a monthly basis from such Oil and Gas Properties at some future time
without then or thereafter receiving full payment therefor.
Section 9.22 Senior Unsecured Notes.
(a) Guaranties. The obligations, liabilities and indebtedness created
under or evidenced by the Senior Unsecured Notes and any other documents
executed in connection therewith shall not be guaranteed (whether a
guaranty of payment, collection or otherwise) by any Subsidiary of the
Borrower, unless such guaranty results from a guaranty of the Obligations
in favor of the Administrative Agent.
(b) Payment and Modification. The Borrower shall not redeem or
repurchase, nor shall the Borrower or any Subsidiary make any payments of
principal on the Senior Unsecured Notes, prior to stated maturity. Further,
the Borrower shall not amend, supplement, restate or otherwise modify, in
any material respect, the Senior Unsecured Notes or any other document
executed in connection therewith without the prior written consent of the
Majority Lenders.
ARTICLE X
EVENTS OF DEFAULT; REMEDIES
Section 10.01 Events of Default. One or more of the following events shall
constitute an "Event of Default":
(a) the Borrower shall default in the payment or prepayment when due
of any principal of or interest on any Loan, or any reimbursement
obligation for a disbursement made under any Letter of Credit, or any fees
or other amount payable by it hereunder or under any Security Instrument;
or
(b) the Borrower or any Subsidiary shall default in the payment when
due of any principal of or interest on any of its other Debt aggregating
$250,000 or more, or any event specified in any note, agreement, indenture
or other document evidencing or relating to any such Debt shall occur if
the effect of such event is to cause, or (with the giving of any notice or
the lapse of time or both) to permit the holder or holders of such Debt (or
a trustee or agent on behalf of such holder or holders) to cause, such Debt
to become due prior to its stated maturity; or
(c) any representation, warranty or certification made or deemed made
herein or in any Security Instrument by the Borrower or any Subsidiary, or
any certificate furnished to any Lender or the Administrative Agent
pursuant to the provisions hereof or any Security Instrument, shall prove
to have been false or misleading in any material respect as of the time
made or furnished; or
(d) the Borrower shall default in the performance of any of its
obligations under Article IX, Section 8.01(c) or any other Article of this
Agreement other than under Article VIII (excluding Section 8.01(c)); or the
Borrower shall default in the performance of any of its obligations under
Article VIII or any Security Instrument (other than the
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payment of amounts due which shall be governed by Section 10.01(a)) and
such default shall continue unremedied for a period of 30 days after the
earlier to occur of (i) notice thereof to the Borrower by the
Administrative Agent or any Lender (through the Administrative Agent), or
(ii) the Borrower otherwise becoming aware of such default; or ATP (UK)
shall default in the performance of any of its obligations under any Loan
Document to which it is a party (other than the payment of amounts due
which shall be governed by 10.01(a)) and such default shall continue
unremedied for a period of 30 days after the earlier to occur of (i) notice
thereof to the Borrower by the Administrative Agent or any Lender (through
the Administrative Agent), or (ii) the Borrower or ATP (UK) otherwise
becoming aware of such default; or
(e) the Borrower shall admit in writing its inability to, or be
generally unable to, pay its debts as such debts become due; or
(f) the Borrower shall (i) apply for or consent to the appointment of,
or the taking of possession by, a receiver, custodian, trustee or
liquidator of itself or of all or a substantial part of its property, (ii)
make a general assignment for the benefit of its creditors, (iii) commence
a voluntary case under the Federal Bankruptcy Code (as now or hereafter in
effect), (iv) file a petition seeking to take advantage of any other law
relating to bankruptcy, insolvency, reorganization, winding-up, liquidation
or composition or readjustment of debts, (v) fail to controvert in a timely
and appropriate manner, or acquiesce in writing to, any petition filed
against it in an involuntary case under the United States Bankruptcy Code,
or (vi) take any corporate action for the purpose of effecting any of the
foregoing; or
(g) a proceeding or case shall be commenced, without the application
or consent of the Borrower, in any court of competent jurisdiction, seeking
(i) its liquidation, reorganization, dissolution or winding-up, or the
composition or readjustment of its debts, (ii) the appointment of a
trustee, receiver, custodian, liquidator or the like of the Borrower of all
or any substantial part of its assets, or (iii) similar relief in respect
of the Borrower under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, and any
such proceeding or case shall continue undismissed, or an order, judgment
or decree approving or ordering any of the foregoing shall be entered and
continue unstayed and in effect, for a period of 60 days; or (iv) an order
for relief against the Borrower shall be entered in an involuntary case
under the United States Bankruptcy Code; or
(h) a judgment or judgments for the payment of money in excess of
$500,000 in the aggregate and not covered by insurance shall be rendered by
a court against the Borrower or any Subsidiary 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 30 days from the date of
entry thereof and the Borrower or such Subsidiary shall not, within said
period of 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
(i) the Security Instruments after delivery thereof shall for any
reason, except to the extent permitted by the terms thereof, cease to be in
full force and effect and valid,
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binding and enforceable in accordance with their terms, or cease to create
a valid and perfected Lien of the priority required thereby on any of the
collateral purported to be covered thereby, except to the extent permitted
by the terms of this Agreement, or the Borrower shall so state in writing;
or
(j) an event having a Material Adverse Effect shall occur; or
(k) the Borrower discontinues its usual business or a Change of
Control occurs; or
(l) ATP (UK) takes, suffers or permits to exist any of the events or
conditions referred to in paragraphs (e), (f) or (g) or if any provision of
any Loan Document to which it is a party shall for any reason cease to be
valid and binding on ATP (UK) or if ATP (UK) shall so state in writing; or
(m) the occurrence of the loss, theft, substantial damage to or
destruction of a material portion of the collateral the subject of any
Security Instrument not fully covered by insurance, except for deductibles
and allowing for the depreciated value of such collateral.
Section 10.02 Remedies.
(a) In the case of an Event of Default other than one referred to in
clauses (e), (f) or (g) of Section 10.01 or in clause (c) to the extent it
relates to clauses (e), (f) or (g), the Administrative Agent, upon request
of the Majority Lenders, shall, by notice to the Borrower, cancel the
Commitments (in whole or part) and/or declare the principal amount then
outstanding of, and the accrued interest on, the Loans and all other
amounts payable by the Borrower hereunder and under the Notes (including
without limitation the payment of cash collateral to secure the LC Exposure
as provided in Section 2.10(b)) to be forthwith due and payable, whereupon
such amounts shall be immediately due and payable without presentment,
demand, protest, notice of intent to accelerate, notice of acceleration or
other formalities of any kind, all of which are hereby expressly waived by
the Borrower.
(b) In the case of the occurrence of an Event of Default referred to
in clauses (e), (f) or (g) of Section 10.01 or in clause (c) to the extent
it relates to clauses (e), (f) or (g), the Commitments shall be
automatically canceled and the principal amount then outstanding of, and
the accrued interest on, the Loans and all other amounts payable by the
Borrower hereunder and under the Notes (including without limitation the
payment of cash collateral to secure the LC Exposure as provided in Section
2.10(b)) shall become automatically immediately due and payable without
presentment, demand, protest, notice of intent to accelerate, notice of
acceleration or other formalities of any kind, all of which are hereby
expressly waived by the Borrower.
(c) All proceeds received after maturity of the Notes, whether by
acceleration or otherwise shall be applied first to reimbursement of
expenses and indemnities provided for in this Agreement and the Security
Instruments; second to accrued interest on the Notes; third to fees; fourth
pro rata to principal outstanding on the Notes and any other
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Obligations; fifth to serve as cash collateral to be held by the
Administrative Agent to secure the LC Exposure; and any excess shall be
paid to the Borrower or as otherwise required by any Governmental
Requirement.
ARTICLE XI
THE ADMINISTRATIVE AGENT
Section 11.01 Appointment, Powers and Immunities. Each Lender hereby
irrevocably appoints and authorizes the Administrative Agent to act as its agent
hereunder and under the Security Instruments with such powers as are
specifically delegated to the Administrative Agent by the terms of this
Agreement and the Security Instruments, together with such other powers as are
reasonably incidental thereto. The Administrative Agent (which term as used in
this sentence and in Section 11.05 and the first sentence of Section 11.06 shall
include reference to its Affiliates and its and its Affiliates' officers,
directors, employees, attorneys, accountants, experts and agents): (i) shall
have no duties or responsibilities except those expressly set forth in the Loan
Documents, and shall not by reason of the Loan Documents be a trustee or
fiduciary for any Lender; (ii) makes no representation or warranty to any Lender
and shall not be responsible to the Lenders for any recitals, statements,
representations or warranties contained in this Agreement, or in any certificate
or other document referred to or provided for in, or received by any of them
under, this Agreement, or for the value, validity, effectiveness, genuineness,
execution, effectiveness, legality, enforceability or sufficiency of this
Agreement, any Note or any other document referred to or provided for herein or
for any failure by the Borrower or any other Person (other than the
Administrative Agent) to perform any of its obligations hereunder or thereunder
or for the existence, value, perfection or priority of any collateral security
or the financial or other condition of the Borrower, its Subsidiaries or any
other obligor or guarantor; (iii) except pursuant to Section 11.07 shall not be
required to initiate or conduct any litigation or collection proceedings
hereunder; and (iv) shall not be responsible for any action taken or omitted to
be taken by it hereunder or under any other document or instrument referred to
or provided for herein or in connection herewith including its own ordinary
negligence, except for its own gross negligence or willful misconduct. The
Administrative Agent may employ agents, accountants, attorneys and experts and
shall not be responsible for the negligence or misconduct of any such agents,
accountants, attorneys or experts selected by it in good faith or any action
taken or omitted to be taken in good faith by it in accordance with the advice
of such agents, accountants, attorneys or experts. The Administrative Agent may
deem and treat the payee of any Note as the holder thereof for all purposes
hereof unless and until a written notice of the assignment or transfer thereof
permitted hereunder shall have been filed with the Administrative Agent. The
Administrative Agent is authorized to release any collateral that is permitted
to be sold or released pursuant to the terms of the Loan Documents.
Section 11.02 Reliance by Administrative Agent. The Administrative Agent
shall be entitled to rely upon any certification, notice or other communication
(including any thereof by telephone, telex, telecopier, telegram or cable)
believed by it to be genuine and correct and to have been signed or sent by or
on behalf of the proper Person or Persons, and upon advice and statements of
legal counsel, independent accountants and other experts selected by the
Administrative Agent.
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Section 11.03 Defaults. The Administrative Agent shall not be deemed to
have knowledge of the occurrence of a Default (other than the non-payment of
principal of or interest on Loans or of fees or failure to reimburse for Letter
of Credit drawings) unless the Administrative Agent has received notice from a
Lender or the Borrower specifying such Default and stating that such notice is a
"Notice of Default." In the event that the Administrative Agent receives such a
notice of the occurrence of a Default, the Administrative Agent shall give
prompt notice thereof to the Lenders. In the event of a payment Default, the
Administrative Agent shall give each Lender prompt notice of each such payment
Default.
Section 11.04 Rights as a Lender. With respect to its Commitments and the
Loans made by it and its participation in the issuance of Letters of Credit,
Paribas (and any successor acting as Administrative Agent) in its capacity as a
Lender hereunder shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not acting as the
Administrative Agent, and the term "Lender" or "Lenders" shall, unless the
context otherwise indicates, include the Administrative Agent in its individual
capacity. Paribas (and any successor acting as Administrative Agent) and its
Affiliates may (without having to account therefor to any Lender) accept
deposits from, lend money to and generally engage in any kind of banking, trust
or other business with the Borrower (and any of its Affiliates) as if it were
not acting as the Administrative Agent, and Paribas and its Affiliates may
accept fees and other consideration from the Borrower for services in connection
with this Agreement or otherwise without having to account for the same to the
Lenders.
Section 11.05 Indemnification. The Lenders agree to indemnify the
Administrative Agent and the Issuing Bank ratably in accordance with their
Percentage Shares for the Indemnity Matters as described in section 12.03 to the
extent not indemnified or reimbursed by the Borrower under section 12.03, but
without limiting the obligations of the Borrower under said section 12.03 and
for any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind and
nature whatsoever which may be imposed on, incurred by or asserted against the
Administrative Agent or the Issuing Bank in any way relating to or arising out
of: (i) this Agreement, the Security Instruments or any other documents
contemplated by or referred to herein or the transactions contemplated hereby,
but excluding, unless a Default has occurred and is continuing, normal
administrative costs and expenses incident to the performance of its agency
duties hereunder or (ii) the enforcement of any of the terms of this Agreement,
any Security Instrument or of any such other documents; whether or not any of
the foregoing specified in this section 11.05 arises from the sole or concurrent
negligence of the Administrative Agent or the Issuing Bank, provided that no
Lender shall be liable for any of the foregoing to the extent they arise from
the gross negligence or willful misconduct of the Administrative Agent.
Section 11.06 Non-Reliance on Administrative Agent and other Lenders. Each
Lender acknowledges and agrees that it has, independently and without reliance
on the Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of the
Borrower and its decision to enter into this Agreement, and that it will,
independently and without reliance upon the Administrative Agent or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own analysis and decisions in taking or not
taking action under this Agreement. The Administrative Agent shall not be
required to keep itself informed as to the
65
performance or observance by the Borrower of this Agreement, the Notes, the
Security Instruments or any other document referred to or provided for herein or
to inspect the properties or books of the Borrower. Except for notices, reports
and other documents and information expressly required to be furnished to the
Lenders by the Administrative Agent hereunder, the Administrative Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the affairs, financial condition or business of the
Borrower (or any of its Affiliates) which may come into the possession of the
Administrative Agent or any of its Affiliates. In this regard, each Lender
acknowledges that Winstead Sechrest & Minick P.C. is acting in this transaction
as special counsel to the Administrative Agent only, except to the extent
otherwise expressly stated in any legal opinion or any Loan Document. Each
Lender will consult with its own legal counsel to the extent that it deems
necessary in connection with the Loan Documents and the matters contemplated
therein.
Section 11.07 Action by Administrative Agent. Except for action or other
matters expressly required of the Administrative Agent hereunder, the
Administrative Agent shall in all cases be fully justified in failing or
refusing to act hereunder unless it shall (i) receive written instructions from
the Majority Lenders (or all of the Lenders as expressly required by Section
12.04) specifying the action to be taken, and (ii) be indemnified to its
satisfaction by the Lenders against any and all liability and expenses which may
be incurred by it by reason of taking or continuing to take any such action.
The instructions of the Majority Lenders (or all of the Lenders as expressly
required by Section 12.04) and any action taken or failure to act pursuant
thereto by the Administrative Agent shall be binding on all of the Lenders. If
a Default has occurred and is continuing, the Administrative Agent shall take
such action with respect to such Default as shall be directed by the Majority
Lenders (or all of the Lenders as required by Section 12.04) in the written
instructions (with indemnities) described in this Section 11.07, provided that,
unless and until the Administrative Agent shall have received such directions,
the Administrative Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Default as it shall
deem advisable in the best interests of the Lenders. In no event, however,
shall the Administrative Agent be required to take any action which exposes the
Administrative Agent to personal liability or which is contrary to this
Agreement and the Security Instruments or applicable law.
Section 11.08 Resignation or Removal of Administrative Agent. Subject to
the appointment and acceptance of a successor Administrative Agent as provided
below, the Administrative Agent may resign at any time by giving notice thereof
to the Lenders and the Borrower, and the Administrative Agent may be removed at
any time with or without cause by the Majority Lenders. Upon any such
resignation or removal, the Majority Lenders shall have the right to appoint a
successor Administrative Agent. If no successor Administrative Agent shall have
been so appointed by the Majority Lenders and shall have accepted such
appointment within thirty (30) days after the retiring Administrative Agent's
giving of notice of resignation or the Majority Lenders' removal of the retiring
Administrative Agent, then the retiring Administrative Agent may, on behalf of
the Lenders, appoint a successor Administrative Agent. Upon the acceptance of
such appointment hereunder by a successor Administrative Agent, such successor
Administrative Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent, and
the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder. After any retiring Administrative Agent's resignation or
removal hereunder as Administrative Agent, the
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provisions of this Article XI and Section 12.03 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as the Administrative Agent.
ARTICLE XII
MISCELLANEOUS
Section 12.01 Waiver. No failure on the part of the Administrative Agent or
any Lender to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power or privilege under any of the Loan Documents shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege under any of the Loan Documents preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
Section 12.02 Notices. All notices and other communications provided for
herein and in the other Loan Documents (including, without limitation, any
modifications of, or waivers or consents under, this Agreement or the other Loan
Documents) shall be given or made by telex, telecopy, courier or U.S. Mail or in
writing and telexed, telecopied, mailed or delivered to the intended recipient
at the "Address for Notices" specified below its name on the signature pages
hereof or in the Loan Documents or, as to any party, at such other address as
shall be designated by such party in a notice to each other party. Except as
otherwise provided in this Agreement or in the other Loan Documents, all such
communications shall be deemed to have been duly given when transmitted, if
transmitted before 1:00 p.m. local time on a Business Day (otherwise on the next
succeeding Business Day) by telex or telecopier and evidence or confirmation of
receipt is obtained, or personally delivered or, in the case of a mailed notice,
three Business Days after the date deposited in the mails, postage prepaid, in
each case given or addressed as aforesaid.
Section 12.03 Payment of Expenses, Indemnities, etc.
(a) The Borrower agrees:
(i) whether or not the transactions hereby contemplated are
consummated, to pay all reasonable expenses of the Administrative Agent in
the administration (both before and after the execution hereof and
including advice of counsel as to the rights and duties of the
Administrative Agent and the Lenders with respect thereto) of, and in
connection with the negotiation, syndication, investigation, preparation,
execution and delivery of, recording or filing of, preservation of rights
under, enforcement of, and refinancing, renegotiation or restructuring of,
the Loan Documents and any amendment, waiver or consent relating thereto
(including, without limitation, travel, photocopy, mailing, courier,
telephone and other similar expenses of the Administrative Agent, the cost
of environmental audits, surveys and appraisals obtained pursuant to
authority to do so granted herein, the reasonable fees and disbursements of
counsel and other outside consultants for the Administrative Agent and, in
the case of enforcement, the reasonable fees and disbursements of counsel
for the Administrative Agent and any of the Lenders); and promptly
reimburse the Administrative Agent for all amounts expended, advanced or
incurred by the Administrative Agent or the Lenders to
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satisfy any obligation of the Borrower under this Agreement or any Security
Instrument, including without limitation, all costs and expenses of
foreclosure;
(II) TO INDEMNIFY THE ADMINISTRATIVE AGENT AND EACH LENDER AND
EACH OF THEIR AFFILIATES AND EACH OF THEIR OFFICERS, DIRECTORS, EMPLOYEES,
REPRESENTATIVES, AGENTS, ATTORNEYS, ACCOUNTANTS AND EXPERTS ("INDEMNIFIED
PARTIES") FROM, HOLD EACH OF THEM HARMLESS AGAINST AND PROMPTLY UPON DEMAND
PAY OR REIMBURSE EACH OF THEM FOR, THE INDEMNITY MATTERS WHICH MAY BE
INCURRED BY OR ASSERTED AGAINST OR INVOLVE ANY OF THEM (WHETHER OR NOT ANY
OF THEM IS DESIGNATED A PARTY THERETO) AS A RESULT OF, ARISING OUT OF OR IN
ANY WAY RELATED TO (I) ANY ACTUAL OR PROPOSED USE BY THE BORROWER OF THE
PROCEEDS OF ANY OF THE LOANS OR LETTERS OF CREDIT, (II) THE EXECUTION,
DELIVERY AND PERFORMANCE OF THE LOAN DOCUMENTS, (III) THE OPERATIONS OF THE
BUSINESS OF THE BORROWER AND ITS SUBSIDIARIES, (IV) THE FAILURE OF THE
BORROWER OR ANY SUBSIDIARY TO COMPLY WITH THE TERMS OF ANY SECURITY
INSTRUMENT OR THIS AGREEMENT, OR WITH ANY GOVERNMENTAL REQUIREMENT, (V) ANY
INACCURACY OF ANY REPRESENTATION OR ANY BREACH OF ANY WARRANTY OF THE
BORROWER OR ATP (UK) SET FORTH IN ANY OF THE LOAN DOCUMENTS, (VI) THE
ISSUANCE, EXECUTION AND DELIVERY OR TRANSFER OF OR PAYMENT OR FAILURE TO
PAY UNDER ANY LETTER OF CREDIT, OR (VII) THE PAYMENT OF A DRAWING UNDER ANY
LETTER OF CREDIT NOTWITHSTANDING THE NON-COMPLIANCE, NON-DELIVERY OR OTHER
IMPROPER PRESENTATION OF THE MANUALLY EXECUTED DRAFT(S) AND
CERTIFICATION(S), (VIII) ANY ASSERTION THAT THE LENDERS WERE NOT ENTITLED
TO RECEIVE THE PROCEEDS RECEIVED PURSUANT TO THE SECURITY INSTRUMENTS OR
(IX) ANY OTHER ASPECT OF THE LOAN DOCUMENTS, INCLUDING, WITHOUT LIMITATION,
THE REASONABLE FEES AND DISBURSEMENTS OF COUNSEL AND ALL OTHER EXPENSES
INCURRED IN CONNECTION WITH INVESTIGATING, DEFENDING OR PREPARING TO DEFEND
ANY SUCH ACTION, SUIT, PROCEEDING (INCLUDING ANY INVESTIGATIONS, LITIGATION
OR INQUIRIES) OR CLAIM AND INCLUDING ALL INDEMNITY MATTERS ARISING BY
REASON OF THE ORDINARY NEGLIGENCE OF ANY INDEMNIFIED PARTY, BUT EXCLUDING
ALL INDEMNITY MATTERS ARISING SOLELY BY REASON OF CLAIMS BETWEEN THE
LENDERS OR ANY LENDER AND THE ADMINISTRATIVE AGENT OR A LENDER'S
SHAREHOLDERS AGAINST THE ADMINISTRATIVE AGENT OR LENDER OR BY REASON OF THE
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT ON THE PART OF THE INDEMNIFIED
PARTY; AND
(iii) to indemnify and hold harmless from time to time the
Indemnified Parties from and against any and all losses, claims, cost
recovery actions, administrative orders or proceedings, damages and
liabilities to which any such Person may become subject (i) under any
Environmental Law applicable to the Borrower or any Subsidiary or any of
their Properties, including without limitation, the treatment or disposal
of hazardous substances on any of their Properties, (ii) as a result of the
breach or non-compliance by the Borrower or any Subsidiary with any
Environmental Law applicable to the Borrower or any Subsidiary, (iii) due
to past ownership by the Borrower or any Subsidiary of any of their
Properties or past activity on any
68
of their Properties which, though lawful and fully permissible at the time,
could result in present liability, (iv) the presence, use, release,
storage, treatment or disposal of hazardous substances on or at any of the
Properties owned or operated by the Borrower or any Subsidiary, or (v) any
other environmental, health or safety condition in connection with the Loan
Documents; provided, however, no indemnity shall be afforded under this
section 12.03(a)(iii) in respect of any Property for any occurrence arising
from the acts or omissions of the Administrative Agent or any Lender during
the period after which such Person, its successors or assigns shall have
obtained possession of such Property (whether by foreclosure or deed in
lieu of foreclosure, as mortgagee-in-possession or otherwise).
(b) No Indemnified Party may settle any claim to be indemnified
without the consent of the indemnitor, such consent not to be unreasonably
withheld; provided, that the indemnitor may not reasonably withhold consent
to any settlement that an Indemnified Party proposes, if the indemnitor
does not have the financial ability to pay all its obligations outstanding
and asserted against the indemnitor at that time, including the maximum
potential claims against the Indemnified Party to be indemnified pursuant
to this Section 12.03.
(c) In the case of any indemnification hereunder, the Administrative
Agent or Lender, as appropriate shall give notice to the Borrower of any
such claim or demand being made against the Indemnified Party and the
Borrower shall have the non-exclusive right to join in the defense against
any such claim or demand provided that if the Borrower provides a defense,
the Indemnified Party shall bear its own cost of defense unless there is a
conflict between the Borrower and such Indemnified Party.
(d) The foregoing indemnities shall extend to the Indemnified Parties
notwithstanding the sole or concurrent negligence of every kind or
character whatsoever, whether active or passive, whether an affirmative act
or an omission, including without limitation, all types of negligent
conduct identified in the restatement (second) of torts of one or more of
the Indemnified Parties or by reason of strict liability imposed without
fault on any one or more of the Indemnified Parties. To the extent that an
Indemnified Party is found to have committed an act of gross negligence or
willful misconduct, this contractual obligation of indemnification shall
continue but shall only extend to the portion of the claim that is deemed
to have occurred by reason of events other than the gross negligence or
willful misconduct of the Indemnified Party.
(e) The Borrower's obligations under this Section 12.03 shall survive
any termination of this Agreement and the payment of the Notes and shall
continue thereafter in full force and effect.
(f) The Borrower shall pay any amounts due under this Section 12.03
within 30 days of the receipt by the Borrower of notice of the amount due.
69
Section 12.04 Amendments, Etc. Any provision of this Agreement or any
Security Instrument may be amended, modified or waived with the Borrower's and
the Majority Lenders' prior written consent; provided that (i) no amendment,
modification or waiver which extends the final maturity of the Loans, increases
the Aggregate Maximum Credit Amounts, modifies the Borrowing Base or Monthly
Reduction Amount, forgives the principal amount of any Obligations outstanding
under this Agreement, releases any guarantor of any Obligations or releases all
or substantially all of the collateral, reduces the interest rate applicable to
the Loans or the fees payable to the Lenders generally, affects Section 2.03(a),
this Section 12.04 or Section 12.06(a) or modifies the definition of "Majority
Lenders" shall be effective without consent of all Lenders; (ii) no amendment,
modification or waiver which increases the Maximum Credit Amount of any Lender
shall be effective without the consent of such Lender; and (iii) no amendment,
modification or waiver which modifies the rights, duties or obligations of the
Administrative Agent shall be effective without the consent of the
Administrative Agent.
Section 12.05 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
Section 12.06 Assignments and Participations.
(a) The Borrower may not assign its rights or obligations hereunder or
under the Notes or any Letters of Credit without the prior consent of all
of the Lenders and the Administrative Agent.
(b) Any Lender may, upon the written consent of the Administrative
Agent and, if no Event of Default has occurred and is continuing, the
Borrower (which consent will not be unreasonably withheld), assign to one
or more assignees all or a portion of its rights and obligations under this
Agreement pursuant to an Assignment Agreement substantially in the form of
Exhibit E (an "Assignment"); provided, however, that (i) any such
assignment shall be in the amount of at least $5,000,000 or such lesser
amount to which the Borrower has consented and (ii) the assignee or
assignor shall pay to the Administrative Agent a processing and recordation
fee of $5,000 for each assignment. Any such assignment will become
effective upon the execution and delivery to the Administrative Agent of
the Assignment and the consent of the Administrative Agent. Promptly after
receipt of an executed Assignment, the Administrative Agent shall send to
the Borrower a copy of such executed Assignment. Upon receipt of such
executed Assignment, the Borrower, will, at its own expense, execute and
deliver new Notes to the assignor and/or assignee, as appropriate, in
accordance with their respective interests as they appear. Upon the
effectiveness of any assignment pursuant to this Section 12.06(b), the
assignee will become a "Lender," if not already a "Lender," for all
purposes of this Agreement and the Security Instruments. The assignor
shall be relieved of its obligations hereunder to the extent of such
assignment (and if the assigning Lender no longer holds any rights or
obligations under this Agreement, such assigning Lender shall cease to be a
"Lender" hereunder except that its rights under Sections 4.06, 5.01, 5.05
and 12.03 shall not be affected). The Administrative Agent will prepare on
the last Business Day of each month during which an assignment has become
effective pursuant to this Section 12.06(b), a new Annex I giving effect to
all such assignments effected during such month, and will promptly provide
the same to the Borrower and each of the Lenders.
70
(c) Each Lender may transfer, grant or assign participations in all or
any part of such Lender's interests hereunder pursuant to this Section
12.06(c) to any Person, provided that: (i) such Lender shall remain a
"Lender" for all purposes of this Agreement and the transferee of such
participation shall not constitute a "Lender" hereunder; and (ii) no
participant under any such participation shall have rights to approve any
amendment to or waiver of any of the Loan Documents except to the extent
such amendment or waiver would (x) forgive any principal owing on any
Obligations or extend the final maturity of the Loans, (y) reduce the
interest rate (other than as a result of waiving the applicability of any
post-default increases in interest rates) or fees applicable to any of the
Commitments or Loans or Letters of Credit in which such participant is
participating, or postpone the payment of any thereof, or (z) release any
guarantor of the Obligations or release all or substantially all of the
collateral (except as provided in the Loan Documents) supporting any of the
Commitments or Loans or Letters of Credit in which such participant is
participating. In the case of any such participation, the participant
shall not have any rights under this Agreement or any of the Security
Instruments (the participant's rights against the granting Lender in
respect of such participation to be those set forth in the agreement with
such Lender creating such participation), and all amounts payable by the
Borrower hereunder shall be determined as if such Lender had not sold such
participation, provided that such participant shall be entitled to receive
through such Lender additional amounts under Article V on the same basis as
if it were a Lender (subject to the right of the Borrower, pursuant to
Section 5.06, to replace any such Lender seeking additional compensation
from the Borrower) and be indemnified under Section 12.03 as if it were a
Lender. In addition, each agreement creating any participation must
include an agreement by the participant to be bound by the provisions of
Section 12.15.
(d) The Lenders may furnish any information concerning the Borrower in
the possession of the Lenders from time to time to assignees and
participants (including prospective assignees and participants); provided
that, such Persons agree to be bound by the provisions of Section 12.15.
(e) Notwithstanding anything in this Section 12.06 to the contrary,
any Lender may assign and pledge its Note to any Federal Reserve Bank. No
such assignment and/or pledge shall release the assigning and/or pledging
Lender from its obligations hereunder.
(f) Notwithstanding any other provisions of this Section 12.06, no
transfer or assignment of the interests or obligations of any Lender or any
grant of participations therein shall be permitted if such transfer,
assignment or grant would require the Borrower to file a registration
statement with the SEC or to qualify the Loans under the "Blue Sky" laws of
any state.
Section 12.07 Invalidity. In the event that any one or more of the
provisions contained in any of the Loan Documents or the Letters of Credit, the
Letter of Credit Agreements shall, for any reason, be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of the Notes, this Agreement or any other
Loan Document.
71
Section 12.08 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
Section 12.09 References; Use of Word "Including". The words "herein,"
"hereof," "hereunder" and other words of similar import when used in this
Agreement refer to this Agreement as a whole, and not to any particular article,
section or subsection. Any reference herein to a Section or Article shall be
deemed to refer to the applicable Section or Article of this Agreement unless
otherwise stated herein. Any reference herein to an exhibit, schedule, or other
attachment shall be deemed to refer to the applicable exhibit, schedule, or
other attachment attached hereto unless otherwise stated herein. The word
"including", "includes" and words of similar import means "including, without
limitation".
Section 12.10 Survival. The obligations of the parties under Section 4.06,
Article V, and Sections 11.05 and 12.03 shall survive the repayment of the Loans
and the termination of the Commitments. To the extent that any payments on the
Obligations or proceeds of any collateral are subsequently invalidated, declared
to be fraudulent or preferential, set aside or required to be repaid to a
trustee, debtor in possession, receiver or other Person under any bankruptcy
law, common law or equitable cause, then to such extent, the Obligations so
satisfied shall be revived and continue as if such payment or proceeds had not
been received and the Administrative Agent's and the Lenders' Liens, security
interests, rights, powers and remedies under this Agreement and each Security
Instrument shall continue in full force and effect. In such event, each Security
Instrument shall be automatically reinstated and the Borrower shall take such
action as may be reasonably requested by the Administrative Agent and the
Lenders to effect such reinstatement.
Section 12.11 Captions. Captions and section headings appearing herein are
included solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.
Section 12.12 No Oral Agreements. The Loan Documents embody the entire
agreement and understanding between the parties and supersede all other
agreements and understandings between such parties relating to the subject
matter hereof and thereof. The Loan Documents represent the final agreement
between the parties and may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements of the parties. There are no
unwritten oral agreements between the parties.
Section 12.13 Governing Law; Submission to Jurisdiction.
(A) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS, EXCEPT TO THE EXTENT
THAT UNITED STATES FEDERAL LAW PERMITS ANY LENDER TO CHARGE INTEREST AT THE
RATE ALLOWED BY THE LAWS OF THE STATE WHERE SUCH LENDER IS LOCATED. CH. 346
OF THE TEXAS FINANCE CODE (WHICH REGULATES CERTAIN REVOLVING CREDIT LOAN
ACCOUNTS AND REVOLVING TRI-PARTY ACCOUNTS) SHALL NOT APPLY TO THIS
AGREEMENT OR THE NOTES.
72
(B) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THE LOAN DOCUMENTS
SHALL BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS LOCATED IN HOUSTON,
TEXAS OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF
TEXAS, HOUSTON DIVISION, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
THE BORROWER HEREBY ACCEPTS FOR ITSELF AND (TO THE EXTENT PERMITTED BY LAW)
IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION
OF THE AFORESAID COURTS. THE BORROWER HEREBY IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH
RESPECTIVE JURISDICTIONS. THIS SUBMISSION TO JURISDICTION IS NON-EXCLUSIVE
AND DOES NOT PRECLUDE THE ADMINISTRATIVE AGENT OR ANY LENDER FROM OBTAINING
JURISDICTION OVER THE BORROWER IN ANY COURT OTHERWISE HAVING JURISDICTION.
(C) THE BORROWER HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, TO THE BORROWER AT ITS SAID ADDRESS, SUCH SERVICE TO
BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT
THE RIGHT OF THE ADMINISTRATIVE AGENT, ANY LENDER OR ANY HOLDER OF A NOTE
TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE BORROWER OR ITS PROPERTIES IN
ANY OTHER JURISDICTION.
(D) THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER HEREBY
(I) IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE FULLEST EXTENT PERMITTED
BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN; (II)
IRREVOCABLY WAIVE, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT
IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN
ADDITION TO, ACTUAL DAMAGES; (III) CERTIFY THAT NO PARTY HERETO NOR ANY
REPRESENTATIVE, AGENT OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT
OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (IV) ACKNOWLEDGE
THAT IT HAS BEEN INDUCED TO ENTER INTO THIS CREDIT AGREEMENT AND THE OTHER
LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS
SECTION 12.13.
Section 12.14 Interest. It is the intention of the parties hereto that each
Lender shall conform strictly to usury laws applicable to it. Accordingly, if
the transactions contemplated hereby would be usurious as to any Lender under
laws applicable to it (including the laws of the United States of America and
the State of New York or any other jurisdiction whose laws may be mandatorily
applicable to such Lender notwithstanding the other provisions of this
Agreement), then, in that event, notwithstanding anything to the contrary in any
of the Loan
73
Documents or any agreement entered into in connection with or as security for
the Notes, it is agreed as follows: (i) the aggregate of all consideration which
constitutes interest under law applicable to any Lender that is contracted for,
taken, reserved, charged or received by such Lender under any of the Loan
Documents or agreements or otherwise in connection with the Notes shall under no
circumstances exceed the maximum amount allowed by such applicable law, and any
excess shall be canceled automatically and if theretofore paid shall be credited
by such Lender on the principal amount of the Obligations (or, to the extent
that the principal amount of the Obligations shall have been or would thereby be
paid in full, refunded by such Lender to the Borrower); and (ii) in the event
that the maturity of the Notes is accelerated by reason of an election of the
holder thereof resulting from any Event of Default under this Agreement or
otherwise, or in the event of any required or permitted prepayment, then such
consideration that constitutes interest under law applicable to any Lender may
never include more than the maximum amount allowed by such applicable law, and
excess interest, if any, provided for in this Agreement or otherwise shall be
canceled automatically by such Lender as of the date of such acceleration or
prepayment and, if theretofore paid, shall be credited by such Lender on the
principal amount of the Obligations (or, to the extent that the principal amount
of the Obligations shall have been or would thereby be paid in full, refunded by
such Lender to the Borrower). All sums paid or agreed to be paid to any Lender
for the use, forbearance or detention of sums due hereunder shall, to the extent
permitted by law applicable to such Lender, be amortized, prorated, allocated
and spread throughout the full term of the Loans evidenced by the Notes until
payment in full so that the rate or amount of interest on account of any Loans
hereunder does not exceed the maximum amount allowed by such applicable law. If
at any time and from time to time (i) the amount of interest payable to any
Lender on any date shall be computed at the Highest Lawful Rate applicable to
such Lender pursuant to this Section 12.14 and (ii) in respect of any subsequent
interest computation period the amount of interest otherwise payable to such
Lender would be less than the amount of interest payable to such Lender computed
at the Highest Lawful Rate applicable to such Lender, then the amount of
interest payable to such Lender in respect of such subsequent interest
computation period shall continue to be computed at the Highest Lawful Rate
applicable to such Lender until the total amount of interest payable to such
Lender shall equal the total amount of interest which would have been payable to
such Lender if the total amount of interest had been computed without giving
effect to this Section 12.14.
Section 12.15 Confidentiality. In the event that the Borrower provides to
the Administrative Agent or the Lenders written confidential information
belonging to the Borrower, if the Borrower shall denominate such information in
writing as "confidential", the Administrative Agent and the Lenders shall
thereafter maintain such information in confidence in accordance with the
standards of care and diligence that each utilizes in maintaining its own
confidential information. This obligation of confidence shall not apply to such
portions of the information which (i) are in the public domain, (ii) hereafter
become part of the public domain without the Administrative Agent or the Lenders
breaching their obligation of confidence to the Borrower, (iii) are previously
known by the Administrative Agent or the Lenders from some source other than the
Borrower, (iv) are hereafter developed by the Administrative Agent or the
Lenders without using the Borrower's information, (v) are hereafter obtained by
or available to the Administrative Agent or the Lenders from a third party who
owes no obligation of confidence to the Borrower with respect to such
information or through any other means other than through disclosure by the
Borrower, (vi) are disclosed with the Borrower's consent, (vii)
74
must be disclosed either pursuant to any Governmental Requirement or to Persons
regulating the activities of the Administrative Agent or the Lenders, or (viii)
as may be required by law or regulation or order of any Governmental Authority
in any judicial, arbitration or governmental proceeding. Further, the
Administrative Agent or a Lender may disclose any such information to any other
Lender, any independent petroleum engineers or consultants, any independent
certified public accountants, any legal counsel employed by such Person in
connection with this Agreement or any Security Instrument, including without
limitation, the enforcement or exercise of all rights and remedies thereunder,
or any assignee or participant (including prospective assignees and
participants) in the Loans; provided, however, that the Administrative Agent or
the Lenders shall receive a confidentiality agreement from the Person to whom
such information is disclosed such that said Person shall have the same
obligation to maintain the confidentiality of such information as is imposed
upon the Administrative Agent or the Lenders hereunder. Notwithstanding
anything to the contrary provided herein, this obligation of confidence shall
cease three years from the date the information was furnished, unless the
Borrower requests in writing at least 30 days prior to the expiration of such
three year period, to maintain the confidentiality of such information for an
additional three year period. The Borrower waives any and all other rights it
may have to confidentiality as against the Administrative Agent and the Lenders
arising by contract, agreement, statute or law except as expressly stated in
this Section 12.15.
[SIGNATURES BEGIN ON NEXT PAGE]
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The parties hereto have caused this Agreement to be duly executed as of the
day and year first above written.
BORROWER: ATP OIL & GAS CORPORATION
By: /s/ T. Paul Bulmahn
---------------------------------------
T. Paul Bulmahn
President
Address for Notices:
4600 Post Oak Place
Suite 200
Houston, Texas 77027
Telecopier No.: (713) 622-5101
Telephone No.: (713) 622-3311
Attention: Chief Financial Officer
with copy to:
Jackson Walker L.L.P.
1100 Louisiana, Suite 4200
Houston, Texas 77002
Telecopier No.: (713) 752-4221
Telephone No.: (713) 752-4401
Attention: David G. Dunlap
S-1
LENDER AND AGENT: BNP PARIBAS, individually
and as Administrative Agent
By: /s/ Brian Malone
--------------------------------
Brian Malone
Managing Director
By: /s/ Betsy Jocher
--------------------------------
Betsy Jocher
Vice President
Lending Office for Base Rate Loans and
LIBOR Loans:
1200 Smith Street, Suite 3100
Houston, Texas 77002
Address for Notices:
1200 Smith Street, Suite 3100
Houston, Texas 77002
Telecopier No.: (713) 659-6915
Telephone No.: (713) 659-4811
Attention: Brian Malone
S-2
ANNEX I
LIST OF PERCENTAGE SHARES AND MAXIMUM CREDIT AMOUNTS
Name of Lender Percentage Share Maximum Credit Amount
-------------- ---------------- ---------------------
BNP PARIBAS 100% $100,000,000
TOTAL 100% $100,000,000
Annex I-1
EXHIBIT A
FORM OF NOTE
$___________________, ________________, 200__
FOR VALUE RECEIVED, ATP OIL & GAS CORPORATION, a ____________ corporation
(the "Borrower") hereby promises to pay to the order of __________________ (the
"Lender"), at the Principal Office of BNP Paribas (the "Administrative Agent"),
at _______________________________, the principal sum of _____________ Dollars
($____________) (or such lesser amount as shall equal the aggregate unpaid
principal amount of the Loans made by the Lender to the Borrower under the
Credit Agreement, as hereinafter defined), in lawful money of the United States
of America and in immediately available funds, on the dates and in the principal
amounts provided in the Credit Agreement, and to pay interest on the unpaid
principal amount of each such Loan, at such office, in like money and funds, for
the period commencing on the date of such Loan until such Loan shall be paid in
full, at the rates per annum and on the dates provided in the Credit Agreement.
The date, amount, Type, interest rate, Interest Period and maturity of each
Loan made by the Lender to the Borrower, and each payment made on account of the
principal thereof, shall be recorded by the Lender on its books and, prior to
any transfer of this Note, endorsed by the Lender on the schedules attached
hereto or any continuation thereof.
This Note is one of the Notes referred to in the Credit Agreement dated as
of April 27, 2001 among the Borrower, the Lenders which are or become parties
thereto (including the Lender) and the Administrative Agent (as the same may be
amended or supplemented from time to time, the "Credit Agreement"), and
evidences Loans made by the Lender thereunder. Capitalized terms used in this
Note have the respective meanings assigned to them in the Credit Agreement.
This Note is issued pursuant to the Credit Agreement and is entitled to the
benefits provided for in the Credit Agreement and the Security Instruments. The
Credit Agreement provides for the acceleration of the maturity of this Note upon
the occurrence of certain events, for prepayments of Loans upon the terms and
conditions specified therein and other provisions relevant to this Note.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK.
ATP OIL & GAS CORPORATION
By:
-----------------------------------
Name:
Title:
Exhibit A-1
EXHIBIT B
FORM OF BORROWING, CONTINUATION AND CONVERSION REQUEST
_____________________, 200__
ATP OIL & GAS CORPORATION, a ___________ corporation (the "Borrower"),
pursuant to the Credit Agreement dated as of April 27, 2001 among the Borrower,
BNP Paribas, as Administrative Agent for the lenders (the "Lenders") which are
or become parties thereto, and such Lenders (together with all amendments or
supplements thereto, the "Credit Agreement"), hereby makes the requests
indicated below (unless otherwise defined herein, capitalized terms are defined
in the Credit Agreement):
1. Loans:
(a) Aggregate amount of new Loans to be $______________________;
(b) Requested funding date is _________________, 200__;
(c) $_____________________ of such borrowings are to be LIBOR Loans;
$_____________________ of such borrowings are to be Base Rate Loans;
and
(d) Length of Interest Period for LIBOR Loans is:
_________________________.
2. LIBOR Loan Continuation for LIBOR Loans maturing on _________________:
(a) Aggregate amount to be continued as LIBOR Loans is
$____________________;
(b) Aggregate amount to be converted to Base Rate Loans is
$__________________;
(c) Length of Interest Period for continued LIBOR Loans is
____________________.
3. Conversion of Outstanding Base Rate Loans to LIBOR Loans:
Convert $__________________ of the outstanding Base Rate
Loans to LIBOR Loans on ____________________ with an Interest Period
of ______________________.
4. Conversion of outstanding LIBOR Loans to Base Rate Loans:
Convert $__________________ of the outstanding LIBOR Loans
with Interest Period maturing on ______________________, 200_, to
Base Rate Loans.
Exhibit B-1
The undersigned certifies that he is the _____________________ of the
Borrower, and that as such he is authorized to execute this certificate on
behalf of the Borrower. The undersigned further certifies, represents and
warrants on behalf of the Borrower that the Borrower is entitled to receive the
requested borrowing, continuation or conversion under the terms and conditions
of the Credit Agreement.
ATP OIL & GAS CORPORATION
By:
-----------------------------------
Name:
Title:
Exhibit B-2
EXHIBIT C
FORM OF COMPLIANCE CERTIFICATE
The undersigned hereby certifies that he is the ________________ of ATP OIL
& GAS CORPORATION, a ____________ corporation (the "Borrower") and that as such
he is authorized to execute this certificate on behalf of the Borrower. With
reference to the Credit Agreement dated as of April 27, 2001 among the Borrower,
BNP Paribas, as Administrative Agent for the lenders (the "Lenders") which are
or become a party thereto, and such Lenders (together with all amendments or
supplements thereto being the "Credit Agreement"), the undersigned represents
and warrants as follows (each capitalized term used herein having the same
meaning given to it in the Credit Agreement unless otherwise specified):
(a) The representations and warranties of the Borrower contained in
Article VII of the Credit Agreement and in the Security Instruments and
otherwise made in writing by or on behalf of the Borrower pursuant to the
Credit Agreement and the Security Instruments were true and correct when
made, and are repeated at and as of the time of delivery hereof and are
true and correct at and as of the time of delivery hereof, except to the
extent any such representations and warranties are expressly limited to an
earlier date or the Majority Lenders have expressly consented in writing to
the contrary.
(b) The Borrower has performed and complied with all agreements and
conditions contained in the Credit Agreement and in the Security
Instruments required to be performed or complied with by it prior to or at
the time of delivery hereof.
(c) Neither the Borrower nor any Subsidiary has incurred any material
liabilities, direct or contingent, since _________________, except those
set forth in Schedule 9.01 to the Credit Agreement and except those allowed
by the terms of the Credit Agreement or consented to by the Lenders in
writing.
(d) Since __________________, no change has occurred, either in any
case or in the aggregate, in the condition, financial or otherwise, of the
Borrower or any Subsidiary which would have a Material Adverse Effect.
(e) There exists, and, after giving effect to the loan or loans with
respect to which this certificate is being delivered, will exist, no
Default under the Credit Agreement or any event or circumstance which
constitutes, or with notice or lapse of time (or both) would constitute, an
event of default under any loan or credit agreement, indenture, deed of
trust, security agreement or other agreement or instrument evidencing or
pertaining to any Debt of the Borrower or any Subsidiary, or under any
material agreement or instrument to which the Borrower or any Subsidiary is
a party or by which the Borrower or any Subsidiary is bound.
(f) The financial statements furnished to the Administrative Agent
with this certificate fairly present the consolidated financial condition
and results
Exhibit C-1
of operations of the Borrower and its Consolidated Subsidiaries as at the
end of, and for, the [fiscal quarter] [fiscal year] ending
_________________________ and such financial statements have been prepared
in accordance with the accounting procedures specified in the Credit
Agreement.
(g) Attached hereto are the detailed computations necessary to
determine whether the Borrower and its Consolidated Subsidiaries are in
compliance with Sections 9.13, 9.14 and 9.15 of the Credit Agreement as of
the end of the [fiscal quarter] [fiscal year] ending
_________________________.
EXECUTED AND DELIVERED this ____ day of ______________.
ATP OIL & GAS CORPORATION
By:
-------------------------------
Name:
Title:
Exhibit C-2
EXHIBIT D
SECURITY INSTRUMENTS
1. Mortgage, Deed of Trust, Assignment of Production, Security Agreement and
Financing Statement executed by the Borrower relating to its Oil and Gas
Properties offshore of the State of Texas.
2. Act of Mortgage, Assignment of Production, Security Agreement, Fixture
Filing and Financing Statement executed by the Borrower relating to its Oil
and Gas Properties offshore of the State of Louisiana.
3. Security Agreement executed by the Borrower.
4. Financing Statements relating to the documents described in items 1, 2 and
3.
5. Stock Pledge executed by the Borrower relating to 65% of the issued and
outstanding stock of ATP (UK).
6. Assignment Separate from Stock Certificate executed in blank by the
Borrower relating to the foregoing stock pledge.
7. Financing Statements relating to the foregoing stock pledge.
8. Instrument executed by ATP (UK) granting a fixed and floating charge on its
Oil and Gas Properties in the North Sea and any related assets.
9. Registrations of the fixed and floating charges described in the prior
item.
Exhibit D-1
EXHIBIT E
FORM OF ASSIGNMENT AGREEMENT
ASSIGNMENT AGREEMENT ("Agreement") dated as of ________________, 2001
between: _______________________ (the "Assignor") and _____________________ (the
"Assignee").
RECITALS
A. The Assignor is a party to the Credit Agreement dated as of April 27,
2001 (as amended and supplemented and in effect from time to time, the "Credit
Agreement") among ATP Oil & Gas Corporation, a _________________________
corporation (the "Borrower"), each of the lenders that is or becomes a party
thereto as provided in Section 12.06 of the Credit Agreement (individually,
together with its successors and assigns, a "Lender", and collectively, together
with their successors and assigns, the "Lenders"), and BNP Paribas, in its
individual capacity, ("Paribas") and as agent for the Lenders (in such capacity,
together with its successors in such capacity, the "Administrative Agent").
B. The Assignor proposes to sell, assign and transfer to the Assignee, and
the Assignee proposes to purchase and assume from the Assignor, [all][a portion]
of the Assignor's Maximum Credit Amount, outstanding Loans and its Percentage
Share of the outstanding LC Exposure, all on the terms and conditions of this
Agreement.
C. In consideration of the foregoing and the mutual agreements contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
Definitions.
Section 1.01 Definitions. All capitalized terms used but not defined herein
have the respective meanings given to such terms in the Credit Agreement.
Section 1.02 Other Definitions. As used herein, the following terms have
the following respective meanings:
"Assigned Interest" shall mean all of Assignor's (in its capacity as a
"Lender") rights and obligations under the Credit Agreement and the other
Security Instruments in respect of the Commitment of the Assignor relating
to the Assignor's Maximum Credit Amount in the principal amount equal to
$____________________ and the principal amount of the Loans outstanding
thereunder, currently in the amount of $_________________ (the "Loan
Balance"), plus the interest and fees which will accrue from and after the
Assignment Date.
"Assignment Date" shall mean _____________________, 200__.
Exhibit E-1
ARTICLE II
Sale and Assignment.
Section 2.01 Sale and Assignment. On the terms and conditions set forth
herein, effective on and as of the Assignment Date, the Assignor hereby sells,
assigns and transfers to the Assignee, and the Assignee hereby purchases and
assumes from the Assignor, all of the right, title and interest of the Assignor
in and to, and all of the obligations of the Assignor in respect of, the
Assigned Interest. Such sale, assignment and transfer are without recourse and,
except as expressly provided in this Agreement, without representation or
warranty.
Section 2.02 Assumption of Obligations. The Assignee agrees with the
Assignor (for the express benefit of the Assignor and the Borrower) that the
Assignee will, from and after the Assignment Date, perform all of the
obligations of the Assignor in respect of the Assigned Interest. From and after
the Assignment Date: (a) the Assignor shall be released from the Assignor's
obligations in respect of the Assigned Interest, and (b) the Assignee shall be
entitled to all of the Assignor's rights, powers and privileges under the Credit
Agreement and the other Security Instruments in respect of the Assigned
Interest.
Section 2.03 Consent by Administrative Agent. By executing this Agreement
as provided below, in accordance with Section 12.06(b) of the Credit Agreement,
the Administrative Agent hereby acknowledges notice of the transactions
contemplated by this Agreement and consents to such transactions.
ARTICLE III
Payments.
Section 3.01 Payments. As consideration for the sale, assignment and
transfer contemplated by Section 2.01 hereof, the Assignee shall, on the
Assignment Date, assume Assignor's obligations in respect of the Assigned
Interest and pay to the Assignor an amount equal to the Loan Balance, if any.
An amount equal to all accrued and unpaid interest and fees shall be paid to the
Assignor as provided in Section 3.02 (iii) below. Except as otherwise provided
in this Agreement, all payments hereunder shall be made in Dollars and in
immediately available funds, without setoff, deduction or counterclaim.
Section 3.02 Allocation of Payments. The Assignor and the Assignee agree
that (i) the Assignor shall be entitled to any payments of principal with
respect to the Assigned Interest made prior to the Assignment Date, together
with any interest and fees with respect to the Assigned Interest accrued prior
to the Assignment Date, (ii) the Assignee shall be entitled to any payments of
principal with respect to the Assigned Interest made from and after the
Assignment Date, together with any and all interest and fees with respect to the
Assigned Interest accruing from and after the Assignment Date, and (iii) the
Administrative Agent is authorized and instructed to allocate payments received
by it for account of the Assignor and the Assignee as provided in the foregoing
clauses. Each party hereto agrees that it will hold any interest, fees or other
amounts that it may receive to which the other party hereto shall be entitled
pursuant to the
Exhibit E-2
preceding sentence for account of such other party and pay, in like money and
funds, any such amounts that it may receive to such other party promptly upon
receipt.
Section 3.03 Delivery of Notes. Promptly following the receipt by the
Assignor of the consideration required to be paid under Section 3.01 hereof, the
Assignor shall, in the manner contemplated by Section 12.06(b) of the Credit
Agreement, (i) deliver to the Administrative Agent (or its counsel) the Note
held by the Assignor and (ii) notify the Administrative Agent to request that
the Borrower execute and deliver new Notes to the Assignor, if Assignor
continues to be a Lender, and the Assignee, dated the date of this Agreement in
respective principal amounts equal to the respective Maximum Credit Amounts of
the Assignor (if appropriate) and the Assignee after giving effect to the sale,
assignment and transfer contemplated hereby.
Section 3.04 Further Assurances. The Assignor and the Assignee hereby agree
to execute and deliver such other instruments, and take such other actions, as
either party may reasonably request in connection with the transactions
contemplated by this Agreement.
ARTICLE IV
Conditions Precedent.
Section 4.01 Conditions Precedent. The effectiveness of the sale,
assignment and transfer contemplated hereby is subject to the satisfaction of
each of the following conditions precedent:
(a) the execution and delivery of this Agreement by the Assignor and
the Assignee;
(b) the receipt by the Assignor of the payment required to be made by
the Assignee under Section 3.01 hereof; and
(c) the acknowledgment and consent by the Administrative Agent
contemplated by Section 2.03 hereof.
ARTICLE V
Representations and Warranties.
Section 5.01 Representations and Warranties of the Assignor. The Assignor
represents and warrants to the Assignee as follows:
(a) it has all requisite power and authority, and has taken all action
necessary to execute and deliver this Agreement and to fulfill its
obligations under, and consummate the transactions contemplated by, this
Agreement;
(b) the execution, delivery and compliance with the terms hereof by
Assignor and the delivery of all instruments required to be delivered by it
hereunder do not and will not violate any Governmental Requirement
applicable to it;
Exhibit E-3
(c) this Agreement has been duly executed and delivered by it and
constitutes the legal, valid and binding obligation of the Assignor,
enforceable against it in accordance with its terms;
(d) all approvals and authorizations of, all filings with and all
actions by any Governmental Authority necessary for the validity or
enforceability of its obligations under this Agreement have been obtained;
(e) the Assignor has good title to, and is the sole legal and
beneficial owner of, the Assigned Interest, free and clear of all Liens,
claims, participations or other charges of any nature whatsoever; and
(f) the transactions contemplated by this Agreement are commercial
banking transactions entered into in the ordinary course of the banking
business of the Assignor.
Section 5.02 Disclaimer. Except as expressly provided in Section 5.01
hereof, the Assignor does not make any representation or warranty, nor shall it
have any responsibility to the Assignee, with respect to the accuracy of any
recitals, statements, representations or warranties contained in the Credit
Agreement or in any certificate or other document referred to or provided for
in, or received by any Lender under, the Credit Agreement, or for the value,
validity, effectiveness, genuineness, execution, effectiveness, legality,
enforceability or sufficiency of the Credit Agreement, the Notes or any other
document referred to or provided for therein or for any failure by the Borrower
or any other Person (other than Assignor) to perform any of its obligations
thereunder prior or for the existence, value, perfection or priority of any
collateral security or the financial or other condition of the Borrower or the
Subsidiaries [or any other obligor or guarantor], or any other matter relating
to the Credit Agreement or any other Security Instrument or any extension of
credit thereunder.
Section 5.03 Representations and Warranties of the Assignee. The Assignee
represents and warrants to the Assignor as follows:
(a) it has all requisite power and authority, and has taken all action
necessary to execute and deliver this Agreement and to fulfill its
obligations under, and consummate the transactions contemplated by, this
Agreement;
(b) the execution, delivery and compliance with the terms hereof by
Assignee and the delivery of all instruments required to be delivered by it
hereunder do not and will not violate any Governmental Requirement
applicable to it;
(c) this Agreement has been duly executed and delivered by it and
constitutes the legal, valid and binding obligation of the Assignee,
enforceable against it in accordance with its terms;
(d) all approvals and authorizations of, all filings with and all
actions by any Governmental Authority necessary for the validity or
enforceability of its obligations under this Agreement have been obtained;
Exhibit E-4
(e) the Assignee has fully reviewed the terms of the Credit Agreement
and the other Security Instruments and has independently and without
reliance upon the Assignor, and based on such information as the Assignee
has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement;
(f) the Assignee hereby affirms that the representations contained in
Section 4.06(d)(i) of the Credit Agreement are true and accurate as to it
and, the Assignee has contemporaneously herewith delivered to the
Administrative Agent and the Borrower such certifications as are required
thereby to avoid the withholding taxes referred to in Section 4.06; and
(g) the transactions contemplated by this Agreement are commercial
banking transactions entered into in the ordinary course of the banking
business of the Assignee.
ARTICLE VI
Miscellaneous.
Section 6.01 Notices. All notices and other communications provided for
herein (including, without limitation, any modifications of, or waivers,
requests or consents under, this Agreement) shall be given or made in writing
(including, without limitation, by telex or telecopy) to the intended recipient
at its "Address for Notices" specified below its name on the signature pages
hereof or, as to either party, at such other address as shall be designated by
such party in a notice to the other party.
Section 6.02 Amendment, Modification or Waiver. No provision of this
Agreement may be amended, modified or waived except by an instrument in writing
signed by the Assignor and the Assignee, and consented to by the Administrative
Agent.
Section 6.03 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns. The representations and warranties made herein by the
Assignee are also made for the benefit of the Administrative Agent and the
Borrower, and the Assignee agrees that the Administrative Agent and the Borrower
are entitled to rely upon such representations and warranties.
Section 6.04 Assignments. Neither party hereto may assign any of its rights
or obligations hereunder except in accordance with the terms of the Credit
Agreement.
Section 6.05 Captions. The captions and section headings appearing herein
are included solely for convenience of reference and are not intended to affect
the interpretation of any provision of this Agreement.
Section 6.06 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be identical and all of which, taken together,
shall constitute one and the same instrument, and each of the parties hereto may
execute this Agreement by signing any such counterpart.
Exhibit E-5
Section 6.07 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the law of the State of ________________.
Section 6.08 Expenses. To the extent not paid by the Borrower pursuant to
the terms of the Credit Agreement, each party hereto shall bear its own expenses
in connection with the execution, delivery and performance of this Agreement.
Section 6.09 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
Agreement to be executed and delivered as of the date first above written.
ASSIGNOR:
-------------------------------------
By:
----------------------------------
Name:
Title:
Address for Notices:
----------------------------------
----------------------------------
----------------------------------
Telecopier No.:
-------------------
Telephone No.:
--------------------
Attention:
------------------------
ASSIGNEE:
----------------------------------
By:
-------------------------------
Name:
Title:
Exhibit E-6
Address for Notices:
----------------------------------
----------------------------------
----------------------------------
Telecopier No.:
-------------------
Telephone No.:
--------------------
Attention:
------------------------
ACKNOWLEDGED AND CONSENTED TO:
- ------------------------------,
as Administrative Agent
By:
----------------------------
Name:
Title:
Exhibit E-7
SCHEDULE 7.02
LIABILITIES
None except as disclosed in the Financial Statements or on Schedules 7.20
and 7.22.
Schedule 7.02-1
SCHEDULE 7.03
LITIGATION
None
Schedule 7.03-1
SCHEDULE 7.09
TAXES
None
Schedule 7.09-1
SCHEDULE 7.10
TITLES, ETC.
None
Schedule 7.10-1
SCHEDULE 7.14
SUBSIDIARIES
ATP Oil & Gas (UK) Ltd.
No. 1 Farnham Road
Guildford, Surrey GU2 4RG
United Kingdom
ATP Energy, Inc.
4600 Post Oak Place
Suite 200
Houston, Texas 77027
Telecopier No.: (713) 622-5101
Telephone No.: (713) 622-3311
Schedule 7.14-1
SCHEDULE 7.17
ENVIRONMENTAL MATTERS
None
Schedule 7.17-1
SCHEDULE 7.19
INSURANCE
See attached
Schedule 7.19-1
SCHEDULE 7.20
HEDGING AGREEMENTS
See attached
Schedule 7.20-1
SCHEDULE 7.22
MATERIAL AGREEMENTS
Refer to the attached Index to Exhibits to the Post-Effective
Amendment No. 1 to Form S-1 dated February 5, 2001 which are incorporated by
reference.
Refer to the attached Index of Exhibits to the Form 10-K which are
incorporated by reference.
Gas Marketing Agreement dated April, 1999 between Borrower and Aquila
Risk Management.
Gas Marketing Agreement dated March 1, 1999, as amended May 24, 2000,
between the Borrower and Ashland Chemical Company.
Schedule 7.22-1
SCHEDULE 7.23
GAS IMBALANCES
None
Schedule 7.23-1
SCHEDULE 9.01
DEBT
All debt (including renewals and extensions thereof) as disclosed in the
Financial Statement as of December 31, 2000.
Letter of credit in favor of Barclays Bank PLC, London, England issued by
The Chase Manhattan Bank in the amount of GBP 125,400.
Schedule 9.01-1
SCHEDULE 9.02
LIENS
None except as disclosed in the Financial Statements dated December 31,
2000.
Schedule 9.02-1
SCHEDULE 9.03
INVESTMENTS, LOANS AND ADVANCES
1. $1,010,000 loan from ATP Energy to the Borrower.
2. Loans from the Borrower to ATP (UK) of not more than $5,000,000 at
any one time outstanding as of the Closing Date and for a period of 30 days
thereafter.
Schedule 9.03-1