Exibit 10.1
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
among
PATINA OIL & GAS CORPORATION,
as Borrower,
The Financial Institutions Listed on Schedule 1 hereto,
as Banks,
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION,
as Administrative Agent,
BANK OF AMERICA, N.A.,
as Syndication Agent,
BANK ONE, TEXAS, N.A.,
as Documentation Agent,
and
BANKERS TRUST COMPANY, CREDIT LYONNAIS NEW YORK BRANCH,
FIRST UNION NATIONAL BANK and WELLS FARGO BANK, N.A.,
as Co-Agents
$200,000,000
dated as of July 15, 1999
CHASE SECURITIES INC.,
as Sole Lead Arranger and
Book Runner
TABLE OF CONTENTS
Page
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ARTICLE I AMENDMENT AND RESTATEMENT....................................................... 2
ARTICLE II TERMS DEFINED.................................................................. 2
SECTION 2.1. Definitions....................................................... 2
SECTION 2.2. Accounting Terms and Determinations............................... 22
ARTICLE III THE CREDIT FACILITIES......................................................... 22
SECTION 3.1. Commitment........................................................ 22
SECTION 3.2. Method of Borrowing............................................... 24
SECTION 3.3. Method of Requesting Letters of Credit............................ 25
SECTION 3.4. Notes............................................................. 25
SECTION 3.5. Interest Rates; Payments.......................................... 25
SECTION 3.6. Mandatory Termination of Commitments; Termination Date
and Maturity...................................................... 27
SECTION 3.7. Voluntary Reduction of Total Commitment........................... 28
SECTION 3.8. Application of Payments........................................... 28
SECTION 3.9. Commitment Fee.................................................... 28
SECTION 3.10. Agency and Other Fees............................................. 28
ARTICLE IV GENERAL PROVISIONS............................................................. 28
SECTION 4.1. Delivery and Endorsement of Notes................................. 29
SECTION 4.2. General Provisions as to Payments................................. 29
SECTION 4.3. Funding Losses.................................................... 30
SECTION 4.4. Foreign Lenders, Participants, and Assignees...................... 30
ARTICLE V BORROWING BASE.................................................................. 31
SECTION 5.1. Reserve and Related Asset Report; Proposed Borrowing Base......... 31
SECTION 5.2. Determination of Borrowing Base................................... 31
SECTION 5.3. Special Determination of Borrowing Base........................... 32
SECTION 5.4. Borrowing Base Deficiency......................................... 32
SECTION 5.5. Initial Borrowing Base............................................ 33
ARTICLE VI COLLATERAL..................................................................... 33
SECTION 6.1. Security.......................................................... 33
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SECTION 6.2. Guarantees........................................................ 34
ARTICLE VII CONDITIONS TO BORROWINGS...................................................... 34
SECTION 7.1. Restatement of Existing Credit Agreement/Conditions to
Initial Extension of Credit....................................... 34
SECTION 7.2. Conditions to each Borrowing and each Letter of Credit............ 37
SECTION 7.3. Post-Closing Deliveries........................................... 37
ARTICLE VIII REPRESENTATIONS AND WARRANTIES............................................... 38
SECTION 8.1. Corporate Existence and Power..................................... 38
SECTION 8.2. Existence and Power (Other Companies)............................. 38
SECTION 8.3. Corporate, Limited Liability Company, Partnership and Governmental
Authorization; Contravention...................................... 38
SECTION 8.4. Binding Effect.................................................... 38
SECTION 8.5. Financial Information............................................. 39
SECTION 8.6. Litigation........................................................ 39
SECTION 8.7. ERISA............................................................. 39
SECTION 8.8. Taxes and Filing of Tax Returns................................... 39
SECTION 8.9. Title to Properties; Liens........................................ 40
SECTION 8.10. Business; Compliance.............................................. 40
SECTION 8.11. Licenses, Permits, Etc............................................ 40
SECTION 8.12. Compliance with Law............................................... 40
SECTION 8.13. Ownership Interests............................................... 41
SECTION 8.14. Full Disclosure................................................... 41
SECTION 8.15. Subsidiaries...................................................... 41
SECTION 8.16. Obligations of Unrestricted Subsidiaries.......................... 41
SECTION 8.17. Environmental Matters............................................. 41
SECTION 8.18. Burdensome Obligations............................................ 42
SECTION 8.19. Government Regulations............................................ 42
SECTION 8.20. Year 2000 Matters................................................. 42
ARTICLE IX AFFIRMATIVE COVENANTS.......................................................... 43
SECTION 9.1. Information....................................................... 43
SECTION 9.2. Business of Borrower.............................................. 45
SECTION 9.3. Maintenance of Existence.......................................... 45
SECTION 9.4. Title Data........................................................ 45
SECTION 9.5. Right of Inspection............................................... 45
SECTION 9.6. Maintenance of Insurance.......................................... 46
SECTION 9.7. Payment of Taxes and Claims....................................... 46
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SECTION 9.8. Compliance with Laws and Documents................................ 47
SECTION 9.9. Operation of Properties and Equipment............................. 47
SECTION 9.10. Further Assurances................................................ 48
SECTION 9.11. Environmental Law Compliance and Indemnity........................ 49
SECTION 9.12. Year 2000 Compatibility........................................... 49
ARTICLE X NEGATIVE COVENANTS.............................................................. 50
SECTION 10.1. Debt of Borrower and its Restricted Subsidiaries.................. 50
SECTION 10.2. Restricted Payments............................................... 50
SECTION 10.3. Negative Pledge................................................... 50
SECTION 10.4. Consolidations and Mergers........................................ 51
SECTION 10.5. Asset Dispositions................................................ 51
SECTION 10.6. Amendments to Material Documents.................................. 51
SECTION 10.7. Use of Proceeds................................................... 51
SECTION 10.8. Investments....................................................... 51
SECTION 10.9. Transactions with Affiliates...................................... 52
SECTION 10.10. Plans............................................................. 52
SECTION 10.11. Oil and Gas Hedge Transactions.................................... 52
SECTION 10.12. Obligations of Unrestricted Subsidiaries.......................... 52
SECTION 10.13. Acquisitions...................................................... 52
SECTION 10.14. Operating Leases.................................................. 53
SECTION 10.15. Speculative Hedge Transactions.................................... 53
ARTICLE XI FINANCIAL COVENANTS............................................................ 53
ARTICLE XII DEFAULTS...................................................................... 53
SECTION 12.1. Events of Default................................................. 53
ARTICLE XIII AGENTS....................................................................... 56
SECTION 13.1. Appointment and Authorization..................................... 56
SECTION 13.2. Agents and Affiliates............................................. 56
SECTION 13.3. Action by Agents.................................................. 56
SECTION 13.4. Experts........................................................... 57
SECTION 13.5. Liability of Agents............................................... 57
SECTION 13.6. Delegation of Duties.............................................. 57
SECTION 13.7. Indemnification................................................... 58
SECTION 13.8. Credit Decision................................................... 58
SECTION 13.9. Successor Agents.................................................. 58
SECTION 13.10. Documentation Agent, Syndication Agent, Co-Agents, etc............ 58
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ARTICLE XIV PROTECTION OF YIELD; CHANGE IN LAWS.......................................... 59
SECTION 14.1. Basis for Determining Interest Rate Applicable to Eurodollar
Tranches Inadequate............................................... 59
SECTION 14.2. Illegality of Eurodollar Loans.................................... 59
SECTION 14.3. Increased Cost of Eurodollar Tranche.............................. 60
SECTION 14.4. Adjusted Base Rate Tranche Substituted for Affected Eurodollar
Tranche........................................................... 61
SECTION 14.5. Capital Adequacy.................................................. 61
SECTION 14.6. Taxes............................................................. 62
SECTION 14.7. Discretion of Banks as to Manner of Funding....................... 63
ARTICLE XV MISCELLANEOUS................................................................. 63
SECTION 15.1. Notices........................................................... 63
SECTION 15.2. No Waivers........................................................ 63
SECTION 15.3. Expenses; Documentary Taxes; Indemnification...................... 63
SECTION 15.4. Right and Sharing of Set-Offs..................................... 64
SECTION 15.5. Amendments and Waivers............................................ 65
SECTION 15.6. Survival.......................................................... 65
SECTION 15.7. Limitation on Interest............................................ 66
SECTION 15.8. Invalid Provisions................................................ 66
SECTION 15.9. Waiver of Consumer Credit Laws.................................... 66
SECTION 15.10. Successors and Assigns............................................ 66
SECTION 15.11. TEXAS LAW......................................................... 68
SECTION 15.12. Consent to Jurisdiction; Waiver of Immunities..................... 68
SECTION 15.13. Counterparts; Effectiveness....................................... 69
SECTION 15.14. No Third Party Beneficiaries...................................... 69
SECTION 15.15. COMPLETE AGREEMENT................................................ 69
SECTION 15.16. WAIVER OF JURY TRIAL.............................................. 69
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EXHIBITS
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Exhibit A Note
Exhibit B Restricted Subsidiary Pledge Agreement
Exhibit C Restricted Subsidiary Guaranty
Exhibit D Request for Borrowing
Exhibit E Request for Letter of Credit
Exhibit F Rollover Notice
Exhibit G Assignment and Assumption Agreement
Exhibit H Certificate of Ownership Interests
Exhibit I Certificate of Effectiveness
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SCHEDULES
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Schedule 1 Financial Institutions
Schedule 2 Investments
Schedule 3 Taxes
Schedule 4 Subsidiaries
Schedule 5 Obligations
Schedule 6 Debt
Schedule 7 Section 29 Documents
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SECOND AMENDED AND RESTATED CREDIT AGREEMENT
--------------------------------------------
THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement") is
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entered into as of the 15/th/ day of July, 1999, among Patina Oil & Gas
Corporation, a Delaware corporation ("Borrower"), Chase Bank of Texas, National
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Association, as Administrative Agent ("Administrative Agent"), Bank of America,
--------------------
N.A., as Syndication Agent ("Syndication Agent"), Bank One, Texas, N.A., as
-----------------
Documentation Agent ("Documentation Agent"), Bankers Trust Company, Credit
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Lyonnais New York Branch, First Union National Bank and Wells Fargo Bank, N.A.,
as Co-Agents ("Co-Agents") and the financial institutions listed on Schedule 1
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hereto as Banks (individually a "Bank" and collectively "Banks").
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W I T N E S S E T H
WHEREAS, Borrower, Chase Bank of Texas, National Association, successor to
Texas Commerce Bank National Association, as Administrative Agent, Bank of
America, N.A., successor to NationsBank, N.A., successor to NationsBank of
Texas, N.A., as Documentary Agent, Wells Fargo Bank, N.A., CIBC Inc. and Credit
Lyonnais New York Branch, as Co-Agents, Chase Bank of Texas, National
Association, successor to Texas Commerce Bank National Association, individually
as a Bank ("Chase"), Bank of America, N.A., successor to NationsBank, N.A.,
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successor to NationsBank of Texas, N.A., individually as a Bank, Credit Lyonnais
New York Branch, individually as a Bank, Wells Fargo Bank, N.A., individually as
a Bank, Bank One, Texas, N.A., individually as a Bank and CIBC Inc.,
individually as a Bank are parties to that certain Amended and Restated Credit
Agreement dated as of April 1, 1997, as heretofore amended (the "Existing Credit
---------------
Agreement"), pursuant to which credit is outstanding to Borrower; and
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WHEREAS, pursuant to an Assignment and Assumption Agreement dated effective
as of July 9, 1999 (to be effective immediately prior to the consummation of the
transactions contemplated hereby) (the "Bank One Assignment"), The First
-------------------
National Bank of Chicago has purchased and assumed all of the rights and
interests of Bank One, Texas, N.A. as a Bank under the Existing Credit
Agreement; and
WHEREAS, after giving effect to the Bank One Assignment, but subject to the
conditions precedent set forth herein, the parties hereto desire to amend and
restate the Existing Credit Agreement in the form of this Agreement and Borrower
desires to obtain Borrowings (as herein defined) (a) to refinance the
indebtedness under the Existing Credit Agreement, (b) to redeem in full all
Subordinate Notes, (c) to increase from $140,000,000 to $200,000,000 the
aggregate Commitments of all Banks, and (d) for other purposes permitted herein;
and
WHEREAS, after giving effect to the amendment and restatement of the
Existing Credit Agreement pursuant to the terms hereof, the Commitment
Percentage (as herein defined) of each Bank hereunder will be as set forth on
Schedule 1 hereto; and
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1
WHEREAS, pursuant to Article XIII of this Agreement, Chase Bank of Texas,
------------
National Association has been appointed Administrative Agent for Banks
hereunder, Bank of America, N.A. has been appointed Syndication Agent for Banks
hereunder, Bank One, Texas, N.A. has been appointed Documentation Agent for
Banks hereunder and Bankers Trust Company, Credit Lyonnais New York Branch,
First Union National Bank and Wells Fargo Bank, N.A. have been appointed Co-
Agents for Banks hereunder; and
WHEREAS, pursuant to certain separate agreements among Chase Bank of Texas,
National Association, Chase Securities Inc. ("CSI") and Borrower, CSI has been
---
appointed Sole Lead Arranger and Book Runner for the credit facility provided
herein.
NOW, THEREFORE, in consideration of the premises, the representations,
warranties, covenants and agreements contained herein, and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Borrower, Administrative Agent, Syndication Agent, Documentation
Agent, Co-Agents and Banks hereby agree that the Existing Credit Agreement is
hereby amended and restated in its entirety on the terms and conditions set
forth herein. It is the intention of Borrower, Agents and Banks that this
Agreement supersede and replace the Existing Credit Agreement in its entirety;
provided, that (a) such amendment and restatement shall operate to renew, amend
- -------- ----
and modify the rights and obligations of the parties under the Existing Credit
Agreement as provided herein, but shall not effect a novation thereof, and (b)
the Liens securing the Obligations under and as defined in the Existing Credit
Agreement shall not be extinguished, but shall be carried forward and shall
secure such Obligations as renewed, amended, restated and modified hereby.
Borrower, Administrative Agent, Syndication Agent, Documentation Agent, Co-
Agents and Banks hereby further agree as follows:
ARTICLE I
AMENDMENT AND RESTATEMENT
Subject to the satisfaction of each condition precedent contained in
Section 7.1 hereof, the satisfaction of which shall be evidenced by the
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execution by Borrower and Administrative Agent of the Certificate of
Effectiveness (as hereinafter defined), the Existing Credit Agreement shall be
amended and restated as of the Closing Date in the form of this Agreement.
ARTICLE II
TERMS DEFINED
SECTION II.1. Definitions. The following terms, as used herein, have the
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following meanings:
2
"Additional Preferred Stock" means Borrower's 8.5% Convertible Preferred
--------------------------
Stock containing the rights and preferences set forth in, and issued pursuant
to, the Additional Preferred Stock Designation.
"Additional Preferred Stock Designation" means a Certificate of Designation
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of Rights and Preferences of 8.5% Convertible Preferred Stock filed with the
Secretary of State of Delaware, setting forth the rights and preferences of the
Additional Preferred Stock.
"Adjusted Base Rate" means, on any day, the greater of (a) the Base Rate in
------------------
effect on such day, or (b) the sum of (i) the Federal Funds Rate in effect on
such day, plus (ii) one half of one percent (.5%). Each change in the Adjusted
Base Rate shall become effective automatically and without notice to Borrower or
any Bank upon the effective date of each change in the Federal Funds Rate or the
Base Rate, as the case may be.
"Adjusted Base Rate Tranche" means the portion of the principal of the Loan
--------------------------
bearing interest with reference to the Adjusted Base Rate.
"Adjusted Consolidated EBITDA" means, with respect to any Person for any
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period, Consolidated EBITDA of such Person for such period, adjusted to reflect
all revenues and expenses (including lease operating expense, severance Taxes,
additional overhead and other expenses) attributable to material oil and gas
properties purchased by such Person or any of its Subsidiaries after the first
day of such period as if such properties had been owned by such Person or such
Subsidiaries on the first day of such period. As used in this definition,
"material oil and gas properties" means oil and gas properties purchased for a
purchase price of not less than $25,000,000.
"Adjusted Eurodollar Rate" applicable to any Interest Period, means a rate
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per annum equal to the quotient obtained (rounded upwards, if necessary, to the
next higher 1/16 of 1%) by dividing (a) the applicable Eurodollar Rate by (b)
1.00 minus the Eurodollar Reserve Percentage.
"Administrative Agent" means Chase Bank of Texas, National Association in
--------------------
its capacity as Administrative Agent for Banks hereunder or any successor
thereto.
"Affiliate" means, as to any Person, any Subsidiary of such Person, or any
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other Person which, directly or indirectly, controls, is controlled by, or is
under common control with, such Person. For the purposes of this definition,
"control" (including with correlative meanings, the terms "controlled by" and
"under common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or partnership interests, or by contract or
otherwise.
3
"Agent" means any of Administrative Agent, Syndication Agent, Documentation
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Agent, any Co-Agent, Sole Lead Arranger or Book Runner, and "Agents" means
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Administrative Agent, Syndication Agent, Documentation Agent, Co-Agents, Sole
Lead Arranger and Book Runner, collectively.
"Agreement" means this Second Amended and Restated Credit Agreement,
---------
including the Schedules and Exhibits hereto, as the same may be amended or
supplemented from time to time.
"Applicable Environmental Law" means any law, statute, ordinance, rule,
----------------------------
regulation, order or determination of any governmental authority or any board of
fire underwriters (or other body exercising similar functions), affecting any
real or personal property owned, operated or leased by any Company or any other
operation of any Company in any way pertaining to health, safety or the
environment, including, without limitation, all applicable zoning ordinances and
building codes, flood disaster laws and health, safety and environmental laws
and regulations, and further including without limitation, (a) the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986 (as amended from time
to time, herein referred to as "CERCLA"), (b) the Resource Conservation and
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Recovery Act of 1976, as amended by the Used Oil Recycling Act of 1980, the
Solid Waste Recovery Act of 1976, as amended by the Solid Waste Disposal Act of
1980, and the Hazardous and Solid Waste Amendments of 1984 (as amended from time
to time, herein referred to as "RCRA"), (c) the Safe Drinking Water Act, as
----
amended, (d) the Toxic Substances Control Act, as amended, (e) the Clean Air
Act, as amended, (f) the Occupational Safety and Health Act of 1970, as amended,
(g) the laws, rules and regulations of any state having jurisdiction over any
real or personal property owned, operated or leased by any Company or any other
operation of any Company which relate to health, safety or the environment, as
each may be amended from time to time, and (h) any federal, state or municipal
laws, ordinances or regulations which may now or hereafter require removal of
asbestos or other hazardous wastes or impose any liability related to asbestos
or other hazardous wastes. The terms "hazardous substance," "petroleum,"
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"release" and "threatened release" have the meanings specified in CERCLA, and
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the terms "solid waste" and "disposal" (or "disposed") have the meanings
----------- -------- --------
specified in RCRA; provided, however, in the event either CERCLA or RCRA is
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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 with
respect to all provisions of this Agreement; and provided further that, to the
-------- ------- ----
extent the laws of the state in which any real or personal property owned,
operated or leased by any Company is located establish a meaning for "hazardous
substance," "petroleum," "release," "solid waste" or "disposal" which is broader
than that specified in either CERCLA or RCRA, such broader meaning shall apply
in so far as such broader meaning is applicable to the real or personal property
owned, operated or leased by such Company and located in such state.
"Applicable Margin" means, for purposes of determining the interest rate
-----------------
applicable to the Loan at any time, the amount set forth in the table below
under the applicable Type of Tranche and opposite the applicable Ratio of
Consolidated Funded Debt to Adjusted Consolidated
4
EBITDA. The Applicable Margin in effect at any time shall be based on the Ratio
of Consolidated Funded Debt to Adjusted Consolidated EBITDA as of the last day
of the Fiscal Quarter then most recently ended for which Borrower has provided
to Banks the financial statements required by Section 9.1(b) hereof (in the case
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of the first three (3) Fiscal Quarters of each Fiscal Year) or Section 9.1(a)
--------------
hereof (in the case of the fourth Fiscal Quarter of each Fiscal Year):
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Ratio of Consolidated Funded Debt to Adjusted Base Rate Eurodollar
Adjusted Consolidated EBITDA Tranches Tranches
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* 1.5 to 1 0% 1.000%
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** 1.5 to 1 * 2.0 to 1 0% 1.125%
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** 2.0 to 1 * 2.5 to 1 .250% 1.250%
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** 2.5 to 1 * 3.0 to 1 .375% 1.375%
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** 3.0 to 1 .500% 1.500%
===============================================================================================
* less than or equal to
** Greater than
"Approved Petroleum Engineer" means any one or more of Netherland, Sewell &
---------------------------
Associates, Inc., Ryder Scott Company, Williamson Petroleum Consultants, Inc.,
Barnes and Click, Inc., or such other reputable firm(s) of independent petroleum
engineers as shall be approved by Required Banks and, as to oil and gas
properties aggregating not more than twenty percent (20%) of the total value of
Borrower's and its Restricted Subsidiaries' oil and gas properties (based on the
Recognized Value), Borrower's in-house staff shall be deemed an Approved
Petroleum Engineer.
"Assignee" has the meaning given such term in Section 15.10(c).
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"Assignment and Assumption Agreement" has the meaning given such term in
-----------------------------------
Section 15.10(c).
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"Authorized Officer" means, as to any Person, its Chairman, Vice-Chairman,
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President, Executive Vice President(s), Senior Vice President(s) or Vice
President duly authorized to act on behalf of such Person.
"Availability" means, at any time, (a) the Borrowing Base in effect at such
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time, minus (b) the Outstanding Credit at such time.
"Bank" means any financial institution listed on Schedule 1 hereto as
---- ----------
having a Commitment, and its successors and assigns, and "Banks" shall mean all
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Banks.
5
"Base Rate" means the floating rate of interest established from time to
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time by Administrative Agent as its "prime rate" of interest, which rate is not
the lowest rate of interest which Administrative Agent charges, each change in
the Base Rate to become effective without notice to Borrower on the effective
date of each such change.
"Book Runner" means Chase Securities Inc. in its capacity as book runner
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for the credit facility hereunder or any successor thereto.
"Borrower" means Patina Oil & Gas Corporation, a Delaware corporation.
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"Borrowing" means any disbursement to Borrower under, or to satisfy the
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obligations of any Company under, any of the Loan Papers. Any Borrowing which
will constitute an Adjusted Base Rate Tranche is referred to herein as a "Base
----
Rate Borrowing," and any Borrowing which will constitute a Eurodollar Tranche is
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referred to herein as a "Eurodollar Borrowing."
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"Borrowing Base" has the meaning set forth in Section 5.2 hereof.
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"Borrowing Base Deficiency" means, as of any date, the amount, if any, by
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which (a) the Outstanding Credit on such date, exceeds (b) the Borrowing Base in
effect on such date; provided, that, for purposes of computing the existence and
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amount of any Borrowing Base Deficiency, Letter of Credit Exposure will not
constitute Outstanding Credit to the extent funds have been deposited with
Administrative Agent to secure such Letter of Credit Exposure pursuant to
Section 3.1(b).
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"Borrowing Date" means the Eurodollar Business Day or the Domestic Business
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Day, as the case may be, upon which the proceeds of any Borrowing are made
available to Borrower or to satisfy the obligation of any Company.
"Capital Lease" means, for any Person as of any date, any lease of
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property, real or personal, which would be capitalized on a balance sheet of the
lessee prepared as of such date in accordance with generally accepted accounting
principles.
"Certificate of Effectiveness" means a Certificate of Effectiveness in the
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form of Exhibit I attached hereto to be executed by Borrower and Administrative
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Agent upon the satisfaction of each of the conditions precedent contained in
Section 7.1 hereof.
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"Chase" means Chase Bank of Texas, National Association, a national banking
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association, in its capacity as a Bank.
"Closing Date" means July 15, 1999.
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"Closing Transactions" means the transactions to occur on the Closing Date
--------------------
pursuant to this Agreement, including, without limitation, (a) the redemption in
full by Borrower of all of the Subordinate Notes pursuant to, and in accordance
with, the terms of the Indenture, (b) the
6
refinancing of all Debt of Borrower under the Existing Credit Agreement with
proceeds of the Loan, and (c) the payment of all fees and expenses of
Administrative Agent and its Affiliates in connection with the credit facility
provided herein.
"Co-Agents" means Bankers Trust Company, Credit Lyonnais New York Branch,
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First Union National Bank and Wells Fargo Bank, N.A. in their capacities as Co-
Agents hereunder or any successor thereto, and "Co-Agent" means any one of the
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foregoing.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Collateral Assignment" means a Collateral Assignment of Contract Rights
---------------------
dated as of the Closing Date executed by Borrower in favor of Administrative
Agent, pursuant to which Borrower assigns to Administrative Agent and grants
Administrative Agent a security interest in certain of the Section 29 Documents.
"Commitment" means, with respect to any Bank, the commitment of such Bank
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to lend its Commitment Percentage of the Total Commitment to Borrower pursuant
to Section 3.1 hereof, as such Commitment may be terminated and/or reduced from
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time to time in accordance with the provisions hereof. On the Closing Date, the
amount of each Bank's Commitment is the amount set forth opposite such Bank's
name on Schedule 1 hereto; provided, that, after giving effect to any Assignment
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and Assumption Agreement, the Commitment of each Bank shall be the amount set
forth in the amended Schedule 1 prepared by Administrative Agent and circulated
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to Borrower and Banks pursuant to Section 15.10(c) hereof.
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"Commitment Fee Percentage" means, at any time, the amount set forth in the
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table below opposite the applicable Ratio of Consolidated Funded Debt to
Adjusted Consolidated EBITDA. The Commitment Fee Percentage in effect at any
time pursuant to the table below shall be based on the Ratio of Consolidated
Funded Debt to Adjusted Consolidated EBITDA as of the last day of the Fiscal
Quarter then most recently ended for which Borrower has provided to Banks the
financial statements required by Section 9.1(b) hereof (in the case of the first
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three (3) Fiscal Quarters of each Fiscal Year) or Section 9.1(a) hereof (in the
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case of the fourth Fiscal Quarter of each Fiscal Year).
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Ratio of Consolidated Funded Debt to Commitment Fee
Adjusted Consolidated EBITDA Percentage
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* 2.5 to 1 .250%
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** 2.5 to 1 * 3.0 to 1 .300%
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** 3.0 to 1 .375%
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* less than or equal to
** Greater than
7
"Commitment Percentage" means, with respect to any Bank at any time, the
---------------------
Commitment Percentage for such Bank set forth on Schedule 1 hereto (as the same
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may be amended and reflected in an amended Schedule 1 prepared and circulated by
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Administrative Agent to Borrower and Banks pursuant to Section 15.10(c)).
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"Common Stock" means Borrower's Common Stock, par value $.01 per share.
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"Companies" means Borrower and all direct and indirect Subsidiaries of
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Borrower whether existing on the date hereof or hereafter acquired or created,
and "Company" means any one of the foregoing.
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"Consolidated Current Assets" means, for any Person at any time, the sum of
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(a) consolidated current assets of such Person and its Consolidated Subsidiaries
including accounts or notes receivable (if properly reserved in accordance with
generally accepted accounting principles), but excluding (i) prepaid expenses,
and (ii) assets held for resale, plus (b) the Availability.
"Consolidated Current Liabilities" means, for any Person at any time, the
--------------------------------
current liabilities of such Person and its Consolidated Subsidiaries at such
time, but excluding the current portion of the principal outstanding under the
Loan.
"Consolidated EBITDA" means, for any Person for any period, the
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Consolidated Net Income of such Person for such period, plus each of the
following determined for such Person and its Consolidated Subsidiaries on a
consolidated basis for such period: (a) any provision for (or less any benefit
from) income or franchise Taxes included in determining Consolidated Net Income;
(b) Consolidated Net Interest Expense deducted in determining Consolidated Net
Income; (c) depreciation, depletion and amortization expense deducted in
determining Consolidated Net Income; and (d) other noncash charges deducted in
determining Consolidated Net Income and not already deducted in accordance with
clauses (b) and (c) of this definition.
"Consolidated Free Cash Flow" means, for Borrower for any period, an amount
---------------------------
equal to (a) Borrower's Consolidated EBITDA for such period, minus (b)
Borrower's Consolidated Net Interest Expense for such period, minus (c) all
income and franchise Taxes actually paid in cash by Borrower and its
Consolidated Subsidiaries during such period, plus (d) any other noncash charges
not already deducted in determining Consolidated Net Income.
"Consolidated Funded Debt" means, for Borrower at any time, all Debt of
------------------------
Borrower and its Consolidated Subsidiaries at such time.
"Consolidated Net Income" means, for any Person as of any period, the net
-----------------------
income (or loss) of such Person and its Consolidated Subsidiaries for such
period determined in accordance with generally accepted accounting principles,
but excluding: (a) the income of any other Person (other than its Consolidated
Subsidiaries) in which such Person or any of its Subsidiaries has an ownership
interest, unless received by such Person or its Consolidated Subsidiaries in a
cash
8
distribution; (b) any after-tax gains attributable to asset dispositions; (c) to
the extent not included in clauses (a) and (b) above, any after-tax (i)
extraordinary gains, (ii) non-cash gains or (iii) nonrecurring gains; and (d)
non-cash or nonrecurring charges due to changes in accounting principles
required by generally accepted accounting principles.
"Consolidated Net Interest Expense" means, for any Person for any period,
---------------------------------
the remainder of the following for such Person and its Consolidated Subsidiaries
for such period: (a) interest expense, minus (b) interest income.
"Consolidated Subsidiary" or "Consolidated Subsidiaries" means, for any
----------------------- -------------------------
Person, at any time, any Subsidiary or other entity the accounts of which would
be consolidated with those of such Person in its consolidated financial
statements as of such time.
"Conversion Date" has the meaning set forth in Section 3.5(c).
--------------- --------------
"Credit Period" means the period commencing on the Closing Date and ending
-------------
on the Termination Date.
"CSI" means Chase Securities Inc.
---
"Current Financials" means, collectively, (a) the annual audited
------------------
consolidated balance sheet of Borrower as of December 31, 1998, and the related
consolidated statements of operations and cash flow for the Fiscal Year then
ended, reported on by Arthur Andersen, LLP, and (b) the quarterly unaudited
consolidated balance sheet of Borrower as of March 31, 1999, and the related
consolidated statements of operations and cash flow for the Fiscal Quarter then
ended, copies of which have been provided to Banks.
"Debt" of any Person means, without duplication, (a) all obligations of
----
such Person for borrowed money, (b) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (c) all other
indebtedness (including obligations under Capital Leases, other than Capital
Leases which are usual and customary oil and gas leases) of such Person on which
interest charges are customarily paid or accrued, (d) all Guarantees by such
Person, (e) the unfunded or unreimbursed portion of all letters of credit issued
for the account of such Person, and (f) all liability of such Person as a
general partner of a partnership for obligations of such partnership of the
nature described in (a) through (e) preceding.
"Default" means any condition or event which constitutes an Event of
-------
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Determination" means any Periodic Determination or Special Determination.
-------------
9
"Determination Date" means (a) each May 1 and November 1, and (b) with
------------------
respect to any Special Determination, the first day of the first month which is
not less than twenty (20) Domestic Business Days following the date of a request
for a Special Determination. The Closing Date shall also constitute a
Determination Date for purposes of this Agreement.
"Distribution" by any Person, means (a) with respect to any stock issued by
------------
such Person or any partnership interest of such Person, the retirement,
redemption, purchase, or other acquisition for value of any such stock or
partnership interest, (b) the declaration or payment of any dividend or other
distribution on or with respect to any stock or any partnership interest of any
Person, and (c) any other payment by such Person with respect to such stock or
partnership interest.
"Documentation Agent" means Bank One, Texas, N.A. in its capacity as
-------------------
Documentation Agent for Banks hereunder or any successor thereto.
"Domestic Business Day" means any day except a Saturday, Sunday or other
---------------------
day on which national banks in Houston, Texas, are authorized by law to close.
"Domestic Lending Office" means, as to each Bank, its office identified on
-----------------------
Schedule 1 hereto as its Domestic Lending Office or such other office as such
- ----------
Bank may hereafter designate as its Domestic Lending Office by notice to
Borrower and Administrative Agent.
"Environmental Liability" means any liability, loss, fine, penalty, charge,
-----------------------
lien, damage, cost, or expense of any kind that results directly or indirectly,
in whole or in part (a) from the violation of any Applicable Environmental Law,
(b) from the release or threatened release of any hazardous substance, (c) from
removal, remediation, or other actions in response to the release or threatened
release of any hazardous substance, (d) from actual or threatened damages to
natural resources, (e) from the imposition of injunctive relief or other orders,
(f) from personal injury, death, or property damage which occurs as a result of
any Company's use, storage, handling, or the release or threatened release of a
hazardous substance, or (g) from any environmental investigation performed at,
on, or for any real property owned by any Company.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended.
"Eurodollar Business Day" means any Domestic Business Day on which
-----------------------
commercial banks are open for international business (including dealings in
dollar deposits) in the applicable Eurodollar interbank market.
"Eurodollar Lending Office" means, as to each Bank, its office, branch or
-------------------------
affiliate located at its address identified on Schedule 1 hereto as its
----------
Eurodollar Lending Office or such other office, branch or affiliate of such Bank
as it may hereafter designate as its Eurodollar Lending Office by notice to
Borrower and Administrative Agent.
10
"Eurodollar Rate" means, with respect to any portion of the Loan which is
---------------
the subject of a Eurodollar Tranche for any Interest Period therefor, the rate
per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing
on Telerate Page 3750 (or any successor page) as the London interbank offered
rate for deposits in dollars at approximately 11:00 a.m. (London time) two (2)
Eurodollar Business Days prior to the first day of such Interest Period for a
term comparable to such Interest Period. If for any reason such rate is not
available, the term "Eurodollar Rate" shall mean, for the principal amount of
---------------
the Loan which is the subject of a Eurodollar Tranche for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) appearing on Reuters Screen LIBO Page as the London interbank
offered rate for deposits in dollars at approximately 11:00 a.m. (London time)
two (2) Eurodollar Business Days prior to the first day of such Interest Period
for a term comparable to such Interest Period; provided, however, if more than
-------- -------
one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be
the arithmetic mean of all such rates (rounded upwards, if necessary, to the
nearest 1/100 of 1%).
"Eurodollar Reserve Percentage" means for any day that percentage
-----------------------------
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in Houston, Texas in respect of "Eurocurrency liabilities" (or in
respect of any other category of liabilities which includes deposits by
reference to which the interest rate on Eurodollar Tranches is determined or any
category of extensions of credit or other assets which includes loans by a non-
United States office of any Bank to United States residents). The Adjusted
Eurodollar Rate shall be adjusted automatically on and as of the effective date
of any change in the Eurodollar Reserve Percentage.
"Eurodollar Tranche" means, with respect to any Interest Period, any
------------------
portion of the principal amount outstanding under the Loan which bears interest
at a rate computed by reference to the Adjusted Eurodollar Rate for such
Interest Period.
"Event of Default" has the meaning set forth in Section 12.1 hereof.
---------------- ------------
"Exempt Transfer" means any transfer of oil and gas properties or Related
---------------
Assets (a) by Borrower to any of its Restricted Subsidiaries, or (b) by any of
the Restricted Subsidiaries of Borrower to Borrower or to any other Restricted
Subsidiary of Borrower.
"Exhibit" refers to an exhibit attached to this Agreement and incorporated
-------
herein by reference, unless specifically provided otherwise.
"Existing Credit Agreement" has the meaning set forth in the recitals
-------------------------
hereto.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
------------------
upwards, if necessary, to the nearest 1/16 of 1%) equal to the weighted average
of the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds
11
brokers on such day, as published by the Federal Reserve Bank of New York on the
Domestic Business Day next succeeding such day, provided that (a) if the day for
which such rate is to be determined is not a Domestic Business Day, the Federal
Funds Rate for such day shall be such rate on such transactions on the next
preceding Domestic Business Day as so published on the next succeeding Domestic
Business Day, and (b) if such rate is not so published on such next succeeding
Domestic Business Day, the Federal Funds Rate for any day shall be the average
rate charged to Administrative Agent on such day on such transactions as
determined by Administrative Agent.
"Fiscal Quarter" means the three (3) month periods ending March 31, June
--------------
30, September 30 or December 31 of each Fiscal Year.
"Fiscal Year" means a twelve (12) month period ending December 31.
-----------
"Guarantee" by any Person means any obligation, contingent or otherwise, of
---------
such Person directly or indirectly guaranteeing any Debt or other obligation of
any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (a) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt or other obligation (whether arising by virtue of partnership arrangements,
by agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions, by "comfort letter"
or other similar undertaking of support or otherwise) or (b) entered into for
the purpose of assuring in any other manner the obligee of such Debt or other
obligation of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part), provided that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of
business.
"Indenture" means that certain Indenture dated as of June 30, 1994, by and
---------
between Gerrity Oil & Gas Corporation and Chemical Bank as Trustee, as
supplemented and amended by that certain Supplemental Indenture dated as of
March 31, 1997, by and among Borrower, Gerrity Oil & Gas Corporation and The
Chase Manhattan Bank (formerly known as Chemical Bank), as Trustee, which
Indenture sets forth certain terms applicable to the Subordinate Notes.
"Initial Borrowing Base" means a Borrowing Base in the amount of
----------------------
$160,000,000, which shall be in effect during the period commencing on the
Closing Date and continuing until the first Special Determination or Periodic
Determination after the Closing Date.
"Interest Option" has the meaning given such term in Section 3.5(c).
--------------- --------------
"Interest Period" means, with respect to each Eurodollar Tranche, the
---------------
period commencing on the Borrowing or Conversion Date applicable to such Tranche
and ending one (1), two (2), three (3) or six (6) months thereafter, as Borrower
may elect in the applicable Request for Borrowing; provided that: (a) any
Interest Period which would otherwise end on a day which is not a Eurodollar
Business Day shall be extended to the next succeeding Eurodollar Business Day
unless such Eurodollar Business Day falls in another calendar month, in which
case such Interest
12
Period shall end on the next preceding Eurodollar Business Day; (b) any Interest
Period which begins on the last Eurodollar Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall, subject to clause (c) below,
end on the last Eurodollar Business Day of a calendar month; (c) if any Interest
Period includes a date on which any payment of principal of the Loan subject to
such Eurodollar Tranche is required to be made hereunder, but does not end on
such date, then (i) the principal amount of each Eurodollar Tranche required to
be repaid on such date shall have an Interest Period ending on such date, and
(ii) the remainder of each such Eurodollar Tranche shall have an Interest Period
determined as set forth above; and (d) no Interest Period shall extend past the
expiration of the Credit Period.
"Investment" means, with respect to any Person, any loan, advance,
----------
extension of credit, capital contribution to, investment in or purchase of the
stock securities of, or interests in, any other Person; provided, that
-------- ----
"Investment" shall not include current customer and trade accounts which are
----------
payable in accordance with customary trade terms.
"Lending Office" means, as to any Bank, its Domestic Lending Office or its
--------------
Eurodollar Lending Office, as the context may require.
"Letter of Credit Exposure" of any Bank means, collectively, such Bank's
-------------------------
aggregate participation in the unfunded portion of Letters of Credit outstanding
at any time.
"Letter of Credit Issuer" has the meaning set forth in Section 3.1(b).
----------------------- --------------
"Letters of Credit" means, collectively, letters of credit issued for the
-----------------
account of Borrower and its Restricted Subsidiaries pursuant to Section 3.1(b).
--------------
"Lien" means with respect to any asset, any mortgage, lien, pledge, charge,
----
security interest or encumbrance of any kind in respect of such asset. For
purposes of this Agreement, Borrower and its Subsidiaries shall be deemed to own
subject to a Lien any asset which is acquired or held subject to the interest of
a vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement relating to such asset.
"Loan" means the revolving credit loan made by Banks to Borrower pursuant
----
to the Commitment.
"Loan Papers" means this Agreement, the Notes, each Restricted Subsidiary
-----------
Guarantee now or hereafter executed, each Restricted Subsidiary Pledge Agreement
now or hereafter executed, all Mortgages now or at any time hereafter delivered
pursuant to Section 6.1, the Collateral Assignment, and all other certificates,
-----------
documents or instruments delivered in connection with this Agreement, as the
foregoing may be amended from time to time.
13
"Margin Regulations" mean Regulations T, U and X of the Board of Governors
------------------
of the Federal Reserve System, as in effect from time to time.
"Margin Stock" means "margin stock" as defined in Regulation U.
------------
"Material Agreement" means any material written or oral agreement,
------------------
contract, commitment, or understanding to which a Person is a party, by which
such Person is directly or indirectly bound, or to which any assets of such
Person may be subject, which is not cancelable by such Person upon notice of
ninety (90) days or less without liability for further payment other than
nominal penalty.
"Material Debt" means Debt of Borrower or any of its Subsidiaries issued
-------------
under one or more related or unrelated agreements or instruments in an aggregate
principal amount exceeding $2,500,000.
"Maximum Lawful Rate" means, for each Bank, the maximum rate (or, if the
-------------------
context so permits or requires, an amount calculated at such rate) of interest
which, at the time in question would not cause the interest charged on the
portion of the Loan owed to such Bank at such time to exceed the maximum amount
which such Bank would be allowed to contract for, charge, take, reserve, or
receive under applicable law after taking into account, to the extent required
by applicable law, any and all relevant payments or charges under the Loan
Papers. To the extent the laws of the State of Texas are applicable for purposes
of determining the "Maximum Lawful Rate," such term shall mean the "indicated
-------------------
rate ceiling" from time to time in effect under Chapter 1D of the Texas Credit
Title, Revised Civil Statutes of Texas, 1925, as amended, substituted for or
restated, or, if permitted by applicable law and effective upon the giving of
the notices required by such Chapter 1D (or effective upon any other date
otherwise specified by applicable law), the "quarterly ceiling" or "annualized
ceiling" from time to time in effect under such Chapter 1D, whichever
Administrative Agent (with the approval of Required Banks) shall elect to
substitute for the "indicated rate ceiling," and vice versa, each such
---- -----
substitution to have the effect provided in such Chapter 1D, and Administrative
Agent (with the approval of Required Banks) shall be entitled to make such
election from time to time and one or more times and, without notice to
Borrower, to leave any such substitute rate in effect for subsequent periods in
accordance with subsection (h)(1) of such Chapter 1D.
"Mortgages" means all mortgages, deeds of trust, security agreements,
---------
pledge agreements, collateral assignments, financing statements, assignments of
production and similar documents, instruments and agreements creating,
evidencing, perfecting or otherwise establishing the Liens required by Article
-------
VI hereof as may have been heretofore or may hereafter be granted or assigned to
- --
Administrative Agent for the ratable benefit of Banks to secure payment of the
Obligations or any part thereof.
"Nonrecourse Debt" means Debt (a) secured solely by the assets acquired
----------------
with the proceeds of such Debt, (b) with respect to which neither Borrower nor
any of its Subsidiaries have any liability for repayment beyond the assets
pledged, and (c) with respect to which Borrower has
14
delivered to Banks an opinion in a form satisfactory to Required Banks of
counsel acceptable to Administrative Agent stating that such indebtedness meets
the criteria set forth in (a) and (b) preceding.
"Note" means a promissory note of Borrower, payable to the order of a Bank,
----
in substantially the form of Exhibit A hereto, evidencing the obligation of
---------
Borrower to repay to such Bank its Commitment Percentage of the Loan, together
with all modifications, extensions, renewals and rearrangements thereof, and
"Notes" means all of such Notes.
-----
"Obligations" means, collectively, all present and future indebtedness,
-----------
obligations and liabilities, and all renewals and extensions thereof, or any
part thereof, of Borrower and its Restricted Subsidiaries (including obligations
under the Restricted Subsidiary Guarantee executed by SWAT) to any Bank or to
any Affiliate of any Bank (a) arising pursuant to the Existing Credit Agreement,
(b) arising pursuant to the Loan Papers, and all interest accrued thereon and
costs, expenses and attorneys' fees incurred in the enforcement or collection
thereof, (c) arising under or in connection with any Oil and Gas Hedge
Transaction entered into between Borrower or any of its Restricted Subsidiaries
and any Bank or any Affiliate of any Bank, (d) arising under or in connection
with any interest rate swap, cap, collar, hedge or other interest rate
protection device entered into between Borrower or any of its Restricted
Subsidiaries and any Bank or any Affiliate of any Bank, and (e) arising under or
in connection with any other financial "derivative" product provided by any Bank
or any Affiliate of any Bank to any Company, regardless of whether such
indebtedness, obligations and liabilities are direct, indirect, fixed,
contingent, liquidated, unliquidated, joint, several or joint and several. It
is the intention of Borrower, Agents and Banks that Borrower and its Restricted
Subsidiaries shall be jointly and severally liable for all obligations of each
other.
"Oil and Gas Hedge Transactions" means transactions pursuant to which
------------------------------
Borrower or any of its Subsidiaries hedge the price to be received by them for
future production of hydrocarbons, including price swap agreements under which
Borrower or any of its Subsidiaries agree to pay a price for a specified amount
of hydrocarbons determined by reference to a recognized market on a specified
future date and the contracting party agrees to pay Borrower or its Subsidiaries
a fixed price for the same or similar amount of hydrocarbons.
"Operating Lease" means any lease, sublease, license or similar arrangement
---------------
(other than a Capital Lease and other than leases with a primary term of one
year or less or which can be terminated by the lessee upon notice of one year or
less without incurring a penalty) pursuant to which a Person leases, subleases
or otherwise is granted the right to occupy, take possession of, or use property
whether real, personal or mixed; provided, that "Operating Lease" shall not
-------- ---- ---------------
include oil, gas or mineral leases entered into or assigned to any Company in
the ordinary course of such Company's business.
15
"Original Preferred Stock" means Borrower's 7.125% Series A Convertible
------------------------
Preferred Stock containing the rights and preferences set forth in, and issued
pursuant to, the Original Preferred Stock Designation.
"Original Preferred Stock Designation" means the Certificate of Designation
------------------------------------
of Rights and Preferences of Series A Preferred Stock filed with the Secretary
of State of Delaware on or about May 1, 1996, setting forth the rights and
preferences of the Original Preferred Stock.
"Outstanding Credit" means, at any time, the sum of (i) the aggregate
------------------
Letter of Credit Exposure at such time plus (ii) the aggregate principal balance
of the Loan.
"Participant" has the meaning given such term in Section 15.10(b).
----------- ----------------
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
----
succeeding to any or all of its functions under ERISA.
"Periodic Determination" means any determination of the Borrowing Base
----------------------
pursuant to Section 5.2.
-----------
"Permitted Encumbrances" means with respect to any asset:
----------------------
(a) Liens in favor of Banks or their Affiliates under the Loan Papers;
(b) minor defects in title which do not secure the payment of money
and otherwise have no material adverse effect on the value or operation of oil
and gas properties, and for the purposes of this Agreement, a minor defect in
title shall include (i) those instances where record title to an oil and gas
lease is in a predecessor in title to Borrower or any of its Subsidiaries, but
where Borrower or any of its Subsidiaries, by reason of a farmout or other
instrument is presently entitled to receive an assignment of its interest or
other evidence of title and the appropriate Person is proceeding diligently to
obtain such assignment, and (ii) easements, rights-of-way, servitudes, permits,
surface leases and other similar rights in respect of surface operations, and
easements for pipelines, streets, alleys, highways, telephone lines, power
lines, railways and other easements and rights-of-way, on, over or in respect of
any of the properties of Borrower (or its Subsidiaries, as applicable) that are
customarily granted in the oil and gas industry; so long as, with respect to any
of such minor defects in title, the same are minor defects which are customary
and usual in the oil and gas industry and which are customarily accepted by a
reasonably prudent operator dealing with its properties;
(c) inchoate statutory or operators' liens securing obligations for
labor, services, materials and supplies furnished to oil and gas properties
which are not delinquent (except to the extent permitted by Section 9.7);
-----------
16
(d) mechanic's, materialmen's, warehouseman's, journeyman's and
carrier's liens and other similar liens arising by operation of law or statute
in the ordinary course of business which are not delinquent (except to the
extent permitted by Section 9.7);
-----------
(e) production sales contracts, gas balancing agreements and joint
operating agreements; provided, that the amount of all gas imbalances known to
any Authorized Officer of Borrower and the amount of all production which has
been paid for but not delivered shall have been disclosed or otherwise taken
into account in the Reserve Reports delivered to Banks hereunder;
(f) Liens for Taxes or assessments not yet due or not yet delinquent,
or, if delinquent, that are being contested in good faith in the normal course
of business by appropriate action, as permitted by Section 9.7;
-----------
(g) all rights to consent by, required notices to, filings with, or
other actions by, governmental entities in connection with the sale or
conveyance of oil and gas leases or interests therein if Borrower (or its
Subsidiaries, as applicable) is entitled to such consent, the same are
customarily obtained subsequent to such sale or conveyance and the appropriate
Person is proceeding diligently to obtain such consent, notice or filing;
(h) the terms and provisions of any of the oil and gas leases pursuant
to which Borrower (or its Subsidiaries, as applicable) derives its interests;
(i) lease burdens payable to third parties which are deducted in the
calculation of discounted present value in the Reserve Reports including,
without limitation, any royalty, overriding royalty, net profits interest,
production payment, carried interest or reversionary working interest and which
have been disclosed to the Administrative Agent in writing; provided, however,
-------- -------
that Borrower shall not be required to disclose such lease burdens unless the
same are lease burdens which are not customarily and usually found in the oil
and gas industry or unless the same are lease burdens which obligate Borrower
and/or its Subsidiaries, as applicable, in a fashion not customarily and usually
found in the oil and gas industry;
(j) all applicable laws, rules and orders of governmental authorities
having jurisdiction over the affairs of Borrower;
(k) Liens securing Debt incurred to finance the acquisition of the
assets which are the subject of such Liens (to the extent permitted by Section
-------
10.1 hereof);
- ----
(l) Liens securing the obligations due and owing under the Existing
Credit Agreement; and
(m) the Section 29 Documents.
17
"Permitted Investment" means, with respect to Borrower or any Restricted
--------------------
Subsidiary, (a) readily marketable direct obligations of the United States of
America, (b) fully insured time deposits and certificates of deposit with
maturities of one (1) year or less of any commercial bank operating in the
United States having capital and surplus in excess of $50,000,000.00, (c)
commercial paper of a domestic issuer if at the time of purchase such paper is
rated in one of the two highest ratings categories of Standard and Poor's
Corporation or Moody's Investors Service, (d) any reverse repurchase agreement
entered into with a commercial bank meeting the criteria described in clause (b)
preceding which is secured by a fully perfected security interest in a security
of the type described in clauses (a) through (c) preceding and which security
has a market value at the time such reverse repurchase agreement is entered into
of not less than 100% of the obligation of such commercial bank under such
reverse repurchase agreement, (e) Investments by Borrower and its Restricted
Subsidiaries in Borrower or Restricted Subsidiaries of Borrower, (f) Investments
outstanding as of the Closing Date described on Schedule 2 hereof, and (g)
----------
Investments by Borrower and its Restricted Subsidiaries which when made,
together with all other Investments made pursuant to this clause (g) do not
exceed an amount (measured at cost) greater than five percent (5%) of the
Borrowing Base then in effect.
"Person" means an individual, a corporation, a partnership, an association,
------
a trust or any other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan which is now or
----
was previously covered by Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Code.
"Preferred Stock" means, collectively, the Original Preferred Stock and the
---------------
Additional Preferred Stock.
"Process Agent" has the meaning set forth in Section 15.12.
------------- -------------
"Ratio of Consolidated Funded Debt to Adjusted Consolidated EBITDA" means,
-----------------------------------------------------------------
for any Person as of the last day of any Fiscal Quarter, such Person's ratio of
Consolidated Funded Debt on such day to its Adjusted Consolidated EBITDA for the
period of four (4) Fiscal Quarters ended on such day.
"Recognized Value" means, with respect to oil and gas properties, the
----------------
discounted present value of the estimated net cash flow to be realized from the
production of hydrocarbons from such oil and gas properties as determined by
Chase for purposes of determining the portion of the Borrowing Base which it
attributes to such oil and gas properties in accordance with Article V hereof.
---------
"Regulation U" means Regulation U of the Board of Governors of the Federal
------------
Reserve System as in effect from time to time.
18
"Related Assets" means all pipelines, gathering systems, gas processing
--------------
plants and similar assets owned by Borrower and its Restricted Subsidiaries,
including, related personal property or other fixed assets and all easements,
servitudes and similar real property interests owned by Borrower and its
Restricted Subsidiaries on which such systems are located.
"Related Assets Reports" means reports to be delivered by Borrower to Banks
----------------------
simultaneously with each delivery by Borrower of a Reserve Report pursuant to
Sections 5.1 and 5.3 which shall (a) be in form and substance acceptable to
- ------------ ---
Required Banks, (b) be prepared by the Approved Petroleum Engineer (with the
exception of the Related Asset Report required to be delivered on or before
September 15 of each year or pursuant to any Special Determination which may be
prepared by Borrower's in-house staff) in accordance with customary and prudent
practices of the petroleum engineering industry, and (c) which shall set forth
the discounted present value of the Related Assets owned by Borrower (which
valuation shall be determined as of the same date as the discounted present
value of the oil and gas properties which are the subject of the Reserve Report
delivered simultaneously therewith pursuant to Sections 5.1 and 5.3 as
------------ ---
applicable) as determined by the Approved Petroleum Engineer or Borrower's in-
house staff (as applicable). Each Related Asset Report shall also designate the
owner (either Borrower, or one of its Restricted Subsidiaries) of each Related
Asset which is the subject of such report.
"Rentals" means amounts payable by a lessee under an Operating Lease.
-------
"Request for Borrowing" has the meaning set forth in Section 3.2.
--------------------- -----------
"Request for Letter of Credit" has the meaning given such term in Section
---------------------------- -------
3.3.
- ---
"Required Banks" means Banks holding greater than sixty-six and two-thirds
--------------
percent (66 2/3%) of the Total Commitment.
"Reserve Report" means an engineering analysis of the oil and gas
--------------
properties owned by Borrower and its Restricted Subsidiaries in form and
substance acceptable to Required Banks prepared by the Approved Petroleum
Engineer or reviewed and approved by the Approved Petroleum Engineer (with the
exception of the Reserve Reports required to be delivered on or before September
15 of each year pursuant to Section 5.1 or pursuant to any Special Determination
-----------
pursuant to Section 5.3 which may be prepared by Borrower's in-house staff) in
-----------
accordance with customary and prudent practices in the petroleum engineering
industry and Financial Accounting Standards Board Statement 69.
"Restricted Payment" means (a) any Distribution by Borrower or any of its
------------------
Restricted Subsidiaries other than Distributions by such Restricted Subsidiaries
to Borrower, and (b) the retirement, redemption or prepayment prior to the
scheduled maturity by Borrower or a Restricted Subsidiary of Borrower of Debt of
Borrower or any Restricted Subsidiary of Borrower.
"Restricted Payment Limit" means as of any date (the "measurement date") on
------------------------ ----------------
and after the date of delivery to Banks of Borrower's consolidated financial
statements required by Section
-------
19
9.1(b) for the Fiscal Quarter ending June 30, 1999, the sum of (i) $10,000,000,
plus (ii) an amount equal to twenty percent (20%) of Borrower's Consolidated
Free Cash Flow for the period commencing April 1, 1999 and ending on the last
day of the Fiscal Quarter most recently ended as of the measurement date for
which Borrower's consolidated financial statements required by Section 9.1(b)
--------------
(in the case of the first three quarters of each Fiscal Year, and Section 9.1(a)
--------------
in the case of the fourth Fiscal Quarter of each Fiscal Year) have been
delivered to Banks.
"Restricted Subsidiary" means, as of the date hereof, SWAT. "Restricted
--------------------- ----------
Subsidiary" shall also refer to any other Subsidiary of Borrower which Required
- ----------
Banks and Borrower hereafter, in their sole discretion, designate as a
"Restricted Subsidiary;" provided, that no Subsidiary of Borrower will be a
- ---------------------- -------- ----
Restricted Subsidiary unless (a) one hundred percent (100%) of its issued and
outstanding capital stock has been pledged to Administrative Agent to secure the
Obligations pursuant to a Restricted Subsidiary Pledge Agreement, and (b) it has
executed a Restricted Subsidiary Guaranty.
"Restricted Subsidiary Guarantee" means a Guarantee in the form of Exhibit
------------------------------- -------
C attached hereto to be executed by each Restricted Subsidiary of Borrower
- -
pursuant to which such Restricted Subsidiary shall guarantee payment and
performance of the Obligations.
"Restricted Subsidiary Pledge Agreement" means a Pledge Agreement
--------------------------------------
substantially in the form of Exhibit B attached hereto to be executed by
---------
Borrower or a Restricted Subsidiary pursuant to which Borrower or such
Restricted Subsidiary pledges the issued and outstanding capital stock of each
Restricted Subsidiary owned by Borrower or such Restricted Subsidiary of every
class to Administrative Agent to secure the Obligations.
"Rollover Notice" has the meaning given such term in Section 3.5(c).
--------------- --------------
"Schedule" means a "schedule" attached to this Agreement and incorporated
--------
herein by reference, unless specifically indicated otherwise.
"Section" refers to a "section" or "subsection" of this Agreement unless
------- ------- ----------
specifically indicated otherwise.
"Section 29 Documents" means all documents, instruments and agreements
--------------------
executed in connection with the Section 29 transactions described on Schedule 7
----------
hereto.
"Sole Lead Arranger" means Chase Securities Inc. in its capacity as sole
------------------
lead arranger for the credit facility hereunder or any successor thereto.
"Subordinate Notes" means those certain 11 3/4% Senior Subordinate Notes
-----------------
due July 15, 2004, as the same are more particularly described in the Indenture.
20
"Subsidiary" means, for any Person, any corporation or other entity of
----------
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions (including that of a general partner) are at the time directly or
indirectly owned, collectively, by such Person and any Subsidiaries of such
Person. The term Subsidiary shall include Subsidiaries of Subsidiaries (and so
on).
"Surplus Commitment" has the meaning set forth in Section 14.5.
------------------ ------------
"SWAT" means SOCO Wattenberg Corporation, a Delaware corporation, which is
----
a wholly owned Subsidiary of Borrower.
"Syndication Agent" means Bank of America, N.A. in its capacity as
-----------------
Syndication Agent for Banks hereunder or any successor thereto.
"Taxes" means all taxes, assessments, filing or other fees, levies,
-----
imposts, duties, deductions, withholdings, stamp taxes, interest equalization
taxes, capital transaction taxes, foreign exchange taxes or other charges, or
other charges of any nature whatsoever, from time to time or at any time imposed
by law or any federal, state or local governmental agency. "Tax" means any one
---
of the foregoing.
"Termination Date" means July 15, 2003.
----------------
"Total Commitment" means the aggregate of all Banks' Commitments.
----------------
"Tranche" means an Adjusted Base Rate Tranche or a Eurodollar Tranche and
-------
"Tranches" means Adjusted Base Rate Tranches or Eurodollar Tranches or any
- ---------
combination thereof.
"Type" means with reference to a Tranche, the characterization of such
----
Tranche as an Adjusted Base Rate Tranche or a Eurodollar Tranche based on the
method by which the accrual of interest on such Tranche is calculated.
"Unrestricted Subsidiary" shall mean any Subsidiary of Borrower which is
-----------------------
not a Restricted Subsidiary.
21
SECTION II.2. Accounting Terms and Determinations. Unless otherwise
-----------------------------------
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared, in accordance with
generally accepted accounting principles as in effect from time to time, applied
on a basis consistent with the most recent audited consolidated financial
statements of Borrower and its Consolidated Subsidiaries delivered to Banks
except for changes in which Borrower's independent certified public accountants
concur and which are disclosed to Administrative Agent on the next date on which
financial statements are required to be delivered to Banks pursuant to Sections
--------
9.1(a) and (b); provided that, unless Borrower and Required Banks shall
- ------ --- -------- ----
otherwise agree in writing, no such change shall modify or affect the manner in
which compliance with the covenants contained in Article XI are computed such
----------
that all such computations shall be conducted utilizing financial information
presented consistently with prior periods.
ARTICLE III
THE CREDIT FACILITIES
SECTION III.1. Commitment. (a Each Bank severally agrees, subject to
----------
Sections 3.1(c), 7.1 and 7.2 and the other terms and conditions set forth in
- -------------------- ---
this Agreement, to lend to Borrower from time to time during the Credit Period
amounts not to exceed in the aggregate at any one time outstanding, the amount
of such Bank's Commitment reduced by an amount equal to such Bank's Letter of
Credit Exposure. Each Borrowing shall (i) be in an aggregate principal amount
of $500,000 or any larger integral multiple of $100,000 (except that any
Adjusted Base Rate Borrowing may be in an amount equal to the Availability at
such time), and (ii) be made from each Bank ratably in accordance with its
respective Commitment Percentage. Subject to the foregoing limitations and the
other provisions of this Agreement, Borrower may borrow under this Section
-------
3.1(a), repay amounts borrowed under this Section 3.1(a) and request new
- ------ --------------
Borrowings under this Section 3.1(a).
--------------
(b Administrative Agent, or such Bank designated by Administrative
Agent which (without obligation to do so) consents to the same ("Letter of
---------
Credit Issuer"), will issue Letters of Credit, from time to time during the
- -------------
Credit Period, upon request by Borrower, for the account of Borrower or any
Restricted Subsidiary designated by Borrower, so long as (i) the sum of (A) the
total Letter of Credit Exposure then existing, and (B) the amount of the
requested Letter of Credit does not exceed $10,000,000, and (ii) Borrower would
be entitled to a Borrowing under Sections 3.1(a) and (c) in the amount of the
--------------- ---
requested Letter of Credit. Not less than three (3) Domestic Business Days
prior to the requested date of issuance of any such Letter of Credit, Borrower
(and any Restricted Subsidiary of Borrower for whose account such Letter of
Credit is being issued) shall execute and deliver to Letter of Credit Issuer,
Letter of Credit Issuer's customary letter of credit application. Each Letter
of Credit shall be in form and substance acceptable to Letter of Credit Issuer.
No Letter of Credit shall have an expiration date later than
22
the earlier of (i) the Termination Date, or (ii) one (1) year from the date of
issuance. Upon the date of issuance of a Letter of Credit, Letter of Credit
Issuer shall be deemed to have sold to each other Bank, and each other Bank
shall be deemed to have unconditionally and irrevocably purchased from Letter of
Credit Issuer, a non-recourse participation in the related Letter of Credit and
Letter of Credit Exposure equal to such Bank's Commitment Percentage of such
Letter of Credit and Letter of Credit Exposure. Upon request of any Bank, but
not less often than quarterly, Administrative Agent shall provide notice to each
Bank by telephone, teletransmission or telex setting forth each Letter of Credit
issued and outstanding pursuant to the terms hereof and specifying the Letter of
Credit Issuer, beneficiary and expiration date of each such Letter of Credit,
each Bank's participation percentage of each such Letter of Credit and the
actual dollar amount of each Bank's participation held by Letter of Credit
Issuer(s) thereof for such Bank's account and risk. If any Letter of Credit is
presented for payment by the beneficiary thereof, Administrative Agent shall
cause an Adjusted Base Rate Borrowing to be made from each Bank participating in
such Letter of Credit and Letter of Credit Exposure to reimburse Letter of
Credit Issuer for the payment under the Letter of Credit, whether or not
Borrower would then be entitled to a Borrowing pursuant to the terms hereof, and
each Bank which participated in such Letter of Credit and Letter of Credit
Exposure shall be obligated to lend its Commitment Percentage of such Adjusted
Base Rate Borrowing. At the time of issuance of each Letter of Credit, Borrower
shall pay to Administrative Agent a fee equal to the sum of (i) the greater of
(A) $500, or (B) one-eighth of one percent (1/8%) per annum (based on the face
amount and term of such Letter of Credit), plus (ii) the greater of (A) $500, or
(B) a per annum percentage equal to the Applicable Margin in effect on the date
of issuance of such Letter of Credit (based upon the amount and term of such
Letter of Credit). Administrative Agent shall distribute the fee described in
subclause (i) of the preceding sentence paid on issuance of such Letter of
Credit to the Letter of Credit Issuer which issued such Letter of Credit. The
remaining portion of such fee shall be paid to Banks participating in such
Letter of Credit and Letter of Credit Exposure based on the relative amounts of
their participation in such Letter of Credit and Letter of Credit Exposure.
Upon the occurrence of an Event of Default, Borrower shall, on the next
succeeding Domestic Business Day, deposit with Administrative Agent such funds
as Administrative Agent may request, up to a maximum amount equal to the
aggregate existing Letter of Credit Exposure of all Banks. Any funds so
deposited shall be held by Administrative Agent for the ratable benefit of all
Banks as security for the outstanding Letter of Credit Exposure and the other
Obligations, and Borrower will, in connection therewith, execute and deliver
such security agreements in form and substance satisfactory to Administrative
Agent which it may, in its discretion, require. As drafts or demands for
payment are presented under any Letter of Credit, Administrative Agent shall
apply such funds to satisfy such drafts or demands. When all Letters of Credit
have expired and the Obligations have been repaid in full (and the Commitments
of all Banks have terminated) or such Event of Default has been cured to the
satisfaction of Required Banks, Administrative Agent shall release to Borrower
any remaining funds deposited under this Section 3.1(b). Whenever Borrower is
--------------
required to make deposits under this Section 3.1(b) and fails to do so on the
--------------
day such deposit is due, Administrative Agent or any Bank may, without notice to
Borrower, make such deposit (whether by application of proceeds of any
collateral for the Obligations, by
23
transfers from other accounts maintained with any Bank or otherwise) using any
funds then available to any Bank of Borrower, and of its Restricted
Subsidiaries, any guarantor, or any other Person liable for all or any part of
the Obligations.
(c No Bank will be obligated to lend to Borrower under this Section
-------
3.1 or incur Letter of Credit Exposure, and Borrower shall not be entitled to
- ---
borrow hereunder or obtain Letters of Credit hereunder (i) during the existence
of any Borrowing Base Deficiency, or (ii) in an amount which would cause a
Borrowing Base Deficiency. Nothing in this Section 3.1(c) shall be deemed to
--------------
limit any Bank's obligation to fund its ratable share of Adjusted Base Rate
Borrowings with respect to its participation in Letters of Credit made as a
result of any drawing under any Letter of Credit.
SECTION III.2. Method of Borrowing. (a) In order to request any
-------------------
Borrowing hereunder, Borrower shall hand deliver, telex or telecopy to
Administrative Agent a duly completed Request for Borrowing (herein so called)
prior to 12:00 noon (Houston, Texas time), (i) at least one (1) Domestic
Business Day before the Borrowing Date specified for a proposed Adjusted Base
Rate Borrowing, and (ii) at least three (3) Eurodollar Business Days before the
Borrowing Date of a proposed Eurodollar Borrowing. Each such Request for
Borrowing shall be substantially in the form of Exhibit D hereto, and shall
---------
specify:
(i whether such Borrowing is to be an Adjusted Base Rate Borrowing
or a Eurodollar Borrowing;
(ii the Borrowing Date of such Borrowing, which shall be a Domestic
Business Day in the case of an Adjusted Base Rate Borrowing, or a
Eurodollar Business Day in the case of a Eurodollar Borrowing;
(iii the aggregate amount of such Borrowing; and
(iv in the case of a Eurodollar Borrowing, the duration of the
Interest Period applicable thereto, subject to the provisions of the
definition of Interest Period.
(b Upon receipt of a Request for Borrowing described in Section
-------
3.2(a) above, Administrative Agent shall promptly notify each Bank of the
- ------
contents thereof and the amount of the Borrowing to be loaned by such Bank
pursuant thereto, and such Request for Borrowing shall not thereafter be
revocable by Borrower.
(c Not later than 12:00 noon (Houston, Texas time) on the date of
each Borrowing, each Bank shall make available its Commitment Percentage of such
Borrowing, in Federal or other funds immediately available in Houston, Texas to
Administrative Agent at its address set forth on Schedule 1 hereto.
----------
Notwithstanding the foregoing, if Borrower delivers to Administrative Agent a
Request for Borrowing prior to 10:00 a.m. (Houston, Texas time) on a Domestic
Business Day requesting an Adjusted Base Rate Borrowing on such day, each Bank
shall
24
use its best efforts to make available to Administrative Agent its Commitment
Percentage of such Borrowing by 1:00 p.m. (Houston, Texas time) on the same day.
Unless Administrative Agent determines that any applicable condition specified
in Section 7.2 has not been satisfied, Administrative Agent will make the funds
-----------
so received from Banks available to Borrower at Administrative Agent's aforesaid
address.
SECTION III.3. Method of Requesting Letters of Credit. (a) In order to
--------------------------------------
request any Letter of Credit hereunder, Borrower shall hand deliver, telex or
telecopy to Administrative Agent a duly completed Request for Letter of Credit
(herein so called) prior to 12:00 noon (Houston, Texas time) at least three (3)
Domestic Business Days before the date specified for issuance of such Letter of
Credit. Each Request for Letters of Credit shall be substantially in the form
of Exhibit E hereto, shall be accompanied by the applicable Letter of Credit
---------
Issuer's duly completed and executed letter of credit application and agreement
and shall specify:
(i the requested date for issuance of such Letter of Credit;
(ii the terms of such requested Letter of Credit, including the name
and address of the beneficiary, the stated amount, the expiration date
and the conditions under which drafts under such Letter of Credit are
to be available; and
(iii the purpose of such Letter of Credit.
(b Upon receipt of a Request for Letter of Credit described in
Section 3.3(a) above, Administrative Agent shall promptly notify each Bank and
- --------------
the proposed Letter of Credit Issuer of the contents thereof, including the
amount of the requested Letter of Credit, and such Request for Letter of Credit
shall not thereafter be revocable by Borrower.
(c No later than 12:00 noon (Houston, Texas time) on the date each
Letter of Credit is requested, unless Administrative Agent or the applicable
Letter of Credit Issuer determines that any applicable condition precedent set
forth in Section 7.2 hereof has not been satisfied, the applicable Letter of
-----------
Credit Issuer will issue and deliver such Letter of Credit pursuant to the
instructions of Borrower.
SECTION III.4. Notes. Each Bank's Commitment Percentage of the Loan
-----
shall be evidenced by a single Note payable to the order of such Bank in an
amount equal to such Bank's Commitment.
SECTION III.5. Interest Rates; Payments. (a The principal amount of
------------------------
the Loan outstanding from day to day which is the subject of an Adjusted Base
Rate Tranche shall bear interest at a rate per annum equal to the sum of the
Applicable Margin plus the Adjusted Base Rate in effect from day to day;
provided that in no event shall the rate charged hereunder or under the Notes
- -------- ----
exceed the Maximum Lawful Rate. Interest on any portion of the principal of the
Loan subject to an Adjusted Base Rate Tranche shall be payable as it accrues on
the last day of each calendar month.
25
(b The principal amount of the Loan outstanding from day to day
which is the subject of a Eurodollar Tranche shall bear interest for the
Interest Period applicable thereto at a rate per annum equal to the sum of the
Applicable Margin plus the applicable Adjusted Eurodollar Rate; provided that in
-------- ----
no event shall the rate charged hereunder or under the Notes exceed the Maximum
Lawful Rate. Interest on any portion of the principal of the Loan subject to a
Eurodollar Tranche having an Interest Period of one (1), two (2) or three (3)
months shall be payable on the last day of the Interest Period applicable
thereto. Interest on any portion of the principal of the Loan subject to a
Eurodollar Tranche having an Interest Period of six (6) months shall be payable
on the last day of the Interest Period applicable thereto and on the last day of
each Fiscal Quarter during such Interest Period.
(c So long as no Default or Event of Default shall be continuing,
subject to the provisions of this Section 3.5, Borrower shall have the option of
-----------
having all or any portion of the principal outstanding under the Loan borrowed
by it be the subject of an Adjusted Base Rate Tranche or one (1) or more
Eurodollar Tranches, which shall bear interest at rates based upon the Adjusted
Base Rate and the Adjusted Eurodollar Rate, respectively (each such option is
referred to herein as an "Interest Option"); provided, that each Eurodollar
---------------
Tranche shall be in a minimum amount of $500,000 and shall be in an amount which
is an integral multiple of $100,000. Each change in an Interest Option made
pursuant to this Section 3.5(c) shall be deemed both a payment in full of the
--------------
portion of the principal of the Loan which was the subject of the Adjusted Base
Rate Tranche or Eurodollar Tranche from which such change was made and a
Borrowing (notwithstanding that the unpaid principal amount of the Loan is not
changed thereby) of the portion of the principal of the Loan which is the
subject of the Adjusted Base Rate Tranche or Eurodollar Tranche into which such
change was made. Prior to the termination of each Interest Period with respect
to each Eurodollar Tranche, Borrower shall give written notice (a "Rollover
--------
Notice") in the form of Exhibit F attached hereto to Administrative Agent of the
- ------ ---------
Interest Option which shall be applicable to such portion of the principal of
the Loan upon the expiration of such Interest Period. Such Rollover Notice
shall be given to Administrative Agent at least one (1) Domestic Business Day,
in the case of an Adjusted Base Rate Tranche selection and three (3) Eurodollar
Business Days, in the case of a Eurodollar Tranche selection, prior to the
termination of the Interest Period then expiring. If Borrower shall specify a
Eurodollar Tranche, such Rollover Notice shall also specify the length of the
succeeding Interest Period (subject to the provisions of the definitions of such
term), selected by Borrower. Each Rollover Notice shall be irrevocable and
effective upon notification thereof to Administrative Agent. If the required
Rollover Notice shall not have been timely received by Administrative Agent,
Borrower shall be deemed to have elected that the principal of the Loan subject
to the Interest Period then expiring be the subject of an Adjusted Base Rate
Tranche upon the expiration of such Interest Period and Borrower will be deemed
to have given Administrative Agent notice of such election. Subject to the
limitations set forth in this Section 3.5(c) on the minimum amount of Eurodollar
--------------
Tranches, Borrower shall have the right to convert each Adjusted Base Rate
Tranche to a Eurodollar Tranche by giving Administrative Agent a Rollover Notice
of such election at least three (3) Eurodollar Business Days prior to the date
on which Borrower elects to make such conversion (a "Conversion
----------
26
Date"). The Conversion Date selected by Borrower shall be a Eurodollar Business
- ----
Day. Notwithstanding anything in this Section 3.5 to the contrary, no portion of
-----------
the principal of the Loan which is the subject of an Adjusted Base Rate Tranche
may be converted to a Eurodollar Tranche and no Eurodollar Tranche may be
continued as such when any Default or Event of Default has occurred and is
continuing, but each such Tranche shall be automatically converted to an
Adjusted Base Rate Tranche on the last day of each applicable Interest Period.
In no event shall more than four (4) Interest Options be in effect with respect
to the Loan at any time .
(d Notwithstanding anything to the contrary set forth in Section
-------
3.5(a) or (b) above, all overdue principal of and, to the extent permitted by
- ------ ---
law, overdue interest on the Loan shall bear interest, payable on demand, for
each day until paid at a rate per annum equal to the lesser of (a) the sum of
(i) two percent (2%), plus (ii) the Adjusted Base Rate in effect from day to
day, and (b) the Maximum Lawful Rate.
(e Administrative Agent shall determine each interest rate
applicable to the Loan in accordance with the terms hereof. Administrative
Agent shall promptly notify Borrower and Banks by telex, telecopy or cable of
each rate of interest so determined, and its determination thereof shall be
conclusive in the absence of manifest error.
(f Notwithstanding the foregoing, if at any time, with respect to
any Bank's Loan, the rate of interest calculated with reference to the Adjusted
Base Rate or the Eurodollar Rate hereunder (the "contract rate") is limited to
-------------
such Bank's respective Maximum Lawful Rate, any subsequent reductions in the
contract rate shall not reduce the rate of interest on such Bank's respective
Loan below the Maximum Lawful Rate until the total amount of interest accrued
equals the amount of interest which would have accrued if the contract rate had
at all times been in effect. In the event that at maturity (stated or by
acceleration), or at final payment of any Note, the total amount of interest
paid or accrued on such Note is less than the amount of interest which would
have accrued if the contract rate had at all times been in effect with respect
thereto, then at such time, to the extent permitted by law, Borrower shall pay
to the holder of such Note an amount equal to the difference between (i) the
lesser of the amount of interest which would have accrued if the contract rate
had at all times been in effect and the amount of interest which would have
accrued if the Maximum Lawful Rate had at all times been in effect, and (ii) the
amount of interest actually paid on such Note.
(g Interest payable on the principal of any portion of the Loan
subject to a Eurodollar Tranche shall be computed based on the number of actual
days elapsed assuming that each calendar year consisted of 360 days. Interest
payable on the principal of any portion of the Loan subject to an Adjusted Base
Rate Tranche shall be computed based on the number of actual days elapsed and
based on the actual number of days in the calendar year for which accrued
interest is being computed.
SECTION III.6. Mandatory Termination of Commitments; Termination Date and
----------------------------------------------------------
Maturity. The Commitment of each Bank shall terminate on the Termination
- --------
Date. The
27
outstanding principal balance of the Loan, all accrued but unpaid interest
thereon and all other Obligations shall be due and payable in full on the
Termination Date.
SECTION III.7. Voluntary Reduction of Total Commitment. (a) Borrower
---------------------------------------
may, by notice to Administrative Agent one (1) Domestic Business Day prior to
the effective date of any such reduction, permanently reduce the Total
Commitment (and thereby permanently reduce the Commitment of each Bank ratably
in accordance with such Bank's Commitment Percentage) in amounts not less than
$1,000,000 or any larger multiple of $1,000,000. On the effective date of any
such reduction in the Total Commitment, Borrower shall, to the extent required
as a result of such reduction, make a principal payment on the Loan in an amount
sufficient to cause the Outstanding Credit to be equal to or less than the Total
Commitment as thereby reduced. Notwithstanding the foregoing, Borrower shall
not be permitted to voluntarily reduce the Total Commitment (a) if, as a result
of such reduction, Borrower would be required to prepay all or any portion of
the principal amount of any Eurodollar Tranche prior to the last day of the
Interest Period applicable thereto, or (b) to an amount less than the aggregate
Letter of Credit Exposure of all Banks.
SECTION III.8. Application of Payments. Each repayment pursuant to
-----------------------
Sections 3.6, 3.7, 5.4 and 5.5 shall be made together with accrued interest to
- ---------------------- ---
the date of payment, and shall be applied to payment of the Loan in accordance
with Section 4.2 and the other provisions of this Agreement.
-----------
SECTION III.9. Commitment Fee. On the Termination Date and on the last
--------------
day of each Fiscal Quarter until the Termination Date, commencing on September
30, 1999, Borrower shall pay to Administrative Agent, for the ratable benefit of
each Bank, a commitment fee equal to the Commitment Fee Percentage (computed on
the basis of actual days elapsed and as if each calendar year consisted of 360
days) of the average daily Availability for the Fiscal Quarter (or portion
thereof) ending on such date.
SECTION III.10. Agency and Other Fees. Borrower shall pay to each Agent
---------------------
and its Affiliates such fees and other amounts as Borrower shall be required to
pay to such Agent and its Affiliates from time to time pursuant to any separate
agreement between Borrower and such Agent or any of its Affiliates setting forth
the compensation to be paid to such Agent and its Affiliates in consideration
for acting as Agent hereunder and for providing other services in connection
with the credit facilities provided pursuant hereto. Such fees and other
amounts shall be retained by the applicable Agent and its Affiliates, and no
Bank (other than the applicable Agents) shall have any interest therein.
ARTICLE IV
GENERAL PROVISIONS
28
SECTION IV.1. Delivery and Endorsement of Notes. On or before the
---------------------------------
Closing Date, Administrative Agent shall deliver to each Bank the Note payable
to such Bank. Each Bank may endorse (and prior to any transfer of its Note
shall endorse) on the schedule attached to its Note appropriate notations to
evidence the date and amount of each advance of funds made by it in respect of
any Borrowing, the Interest Period applicable thereto, and the date and amount
of each payment of principal received by such Bank with respect to the Loan;
provided that the failure by any Bank to so endorse its Note shall not affect
- -------- ----
the liability of Borrower for the repayment of all amounts outstanding under
such Notes together with interest thereon. Each Bank is hereby irrevocably
authorized by Borrower to endorse its Note and to attach to and make a part of
any Note a continuation of any such schedule as required.
SECTION IV.2. General Provisions as to Payments. (a Borrower shall
---------------------------------
make each payment of principal of, and interest on, the Loan and all fees
payable by Borrower hereunder not later than 12:00 noon (Houston, Texas time) on
the date when due, in Federal or other funds immediately available in Houston,
Texas, to Administrative Agent at its address set forth on Schedule 1 hereto.
----------
Administrative Agent will promptly (and if such payment is received by
Administrative Agent by 10:00 a.m., and otherwise if reasonably possible, on the
same Domestic Business Day) distribute to each Bank its Commitment Percentage of
each such payment received by Administrative Agent for the account of Banks.
Whenever any payment of principal of, or interest on, that portion of the Loan
subject to an Adjusted Base Rate Tranche or of fees shall be due on a day which
is not a Domestic Business Day, the date for payment thereof shall be extended
to the next succeeding Domestic Business Day (subject to the definition of
Interest Period). Whenever any payment of principal of, or interest on, that
portion of the Loan subject to a Eurodollar Tranche shall be due on a day which
is not a Eurodollar Business Day, the date for payment thereof shall be extended
to the next succeeding Eurodollar Business Day (subject to the definition of
Interest Period). If the date for any payment of principal is extended by
operation of law or otherwise, interest thereon shall be payable for such
extended time. Borrower hereby authorizes Administrative Agent to charge from
time to time against Borrower's account or accounts with Administrative Agent
any amount then due by Borrower.
(b Prior to the occurrence of an Event of Default, all principal
payments received by Banks with respect to the Loan shall be applied first to
Eurodollar Tranches outstanding under the Loan with Interest Periods ending on
the date of such payment, then to the Adjusted Base Rate Tranches outstanding
under the Loan, and then to Eurodollar Tranches outstanding under the Loan next
maturing until such principal payment is fully applied.
(c After the occurrence of an Event of Default, all amounts
collected or received by Administrative Agent or any Bank from Borrower and its
Restricted Subsidiaries or in respect of any of the Assets of Borrower or any of
its Restricted Subsidiaries shall be applied first to the payment of all proper
costs incurred by Administrative Agent in connection with the collection thereof
(including reasonable expenses and disbursements of counsel to Administrative
Agent), second to the payment of all proper costs incurred by Banks in
connection with the collection thereof (including reasonable expenses and
disbursements of counsel to Banks), third to the reimbursement of any advances
made by Banks to effect performance of any unperformed
29
covenants of Borrower or any of its Restricted Subsidiaries under any of the
Loan Papers, fourth to the payment of any unpaid fees required pursuant to
Section 3.10, fifth to the payment of any unpaid fees required pursuant to
- ------------
Sections 3.1(b) and 3.9, sixth, to each Bank for application to its Commitment
- --------------- ---
Percentage of the outstanding balance of the Loan then outstanding (including
accrued but unpaid interest thereon) in accordance with their respective
Commitment Percentages, and seventh to establish the deposits required by
Section 3.1(b) if any. All payments received by a Bank after the occurrence of
- --------------
an Event of Default for application to the principal of the Loan pursuant to
this Section 4.2(c) shall be applied by such Bank in the manner provided in
--------------
Section 4.2(b).
- --------------
SECTION IV.3. Funding Losses. If Borrower makes any payment of
--------------
principal subject to a Eurodollar Tranche (whether pursuant to Section 3.6, 3.7,
-----------------
5.4, 5.5, Article XII or XIV and whether as a voluntary or mandatory prepayment
- -------- ----------- ---
or otherwise) on any day other than the last day of an Interest Period
applicable thereto, or if Borrower fails to borrow any Eurodollar Borrowing,
after notice has been given to any Bank in accordance with Section 3.2, Borrower
-----------
shall reimburse each Bank on demand for any resulting loss or expense incurred
by it, including (without limitation) any loss incurred in obtaining,
liquidating or employing deposits from third parties, or any loss arising from
the reemployment of funds at rates lower than the cost to such Bank of such
funds and related costs, which in the case of the payment or prepayment prior to
the end of the Interest Period for any Eurodollar Tranche, shall include the
amount, if any, by which (a) the interest which such Bank would have received
absent such payment or prepayment for the applicable Interest Period exceeds (b)
the interest which such Bank would receive if its Commitment Percentage of the
amount of such Eurodollar Borrowing were deposited, loaned, or placed by such
Bank in the interbank eurodollar market on the date of such payment or
prepayment for the remainder of the applicable Interest Period. Such Bank shall
promptly deliver to Borrower and Administrative Agent a certificate as to the
amount of such loss or expense, which certificate shall be conclusive in the
absence of manifest error.
SECTION IV.4. Foreign Lenders, Participants, and Assignees. Each Bank,
--------------------------------------------
Participant (by accepting a participation interest under this Agreement), and
Assignee (by executing an Assignment and Assumption Agreement) that is not
organized under the laws of the United States of America or one of its states
(a) represents to Administrative Agent and Borrower that (i) no Taxes are
required to be withheld by Administrative Agent or Borrower with respect to any
payments to be made to it in respect of the Obligations, and (ii) it has
furnished to Administrative Agent and Borrower two (2) duly completed copies of
either U.S. Internal Revenue Service Form 4224, Form 1001, Form W-8, or other
form acceptable to Administrative Agent that entitles it to exemption from U.S.
federal withholding Tax on all interest payments under the Loan Papers, and (b)
covenants to (i) provide Administrative Agent and Borrower a new Form 4224, Form
1001, Form W-8, or other form acceptable to Administrative Agent upon the
expiration or obsolescence of any previously delivered form according to
applicable laws and regulations, duly executed and completed by it, and (ii)
comply from time to time with all applicable laws and regulations with regard to
the withholding Tax exemption. If any of the foregoing is not true or the
applicable forms are not provided, then Borrower and Administrative Agent (but
without
30
duplication) may deduct and withhold from interest payments under the
Loan Papers any United States federal-income Tax at the maximum rate under the
Code.
ARTICLE V
BORROWING BASE
SECTION V.1. Reserve and Related Asset Report; Proposed Borrowing Base. As
---------------------------------------------------------
soon as available and in any event by March 15 and September 15 of each year
commencing September 15, 1999, Borrower shall deliver to each Bank a Reserve
Report and Related Asset Report prepared as of the immediately preceding
December 31 and June 30, respectively; provided, that Borrower shall not be
-------- ----
required to deliver a Related Asset Report unless Borrower intends to request
Administrative Agent and Banks to take the value of Related Assets into account
for purposes of establishing the Borrowing Base. On or before each April 10 and
October 10 of each year commencing October 10, 1999, Borrower shall notify each
Bank of the Borrowing Base that Borrower requests for the period commencing on
the next Determination Date.
SECTION V.2. Determination of Borrowing Base. Based in part on the Reserve
-------------------------------
Reports and Related Asset Reports delivered pursuant to Section 5.1,
-----------
Administrative Agent shall, not later than ten (10) days prior to each
Determination Date commencing with the Determination Date falling on November 1,
1999, submit a proposed Borrowing Base to become effective on such Determination
Date to Banks for their approval. In the event Required Banks, or all Banks in
the event of a proposed increase in the Borrowing Base, fail to promptly approve
such proposed Borrowing Base, Administrative Agent shall propose one or more
alternative Borrowing Bases to Banks and shall consult with Banks regarding the
proposed Borrowing Base until such time as Required Banks, or all Banks in the
event of a proposed increase in the Borrowing Base, approve a Borrowing Base
proposed by Administrative Agent. Promptly upon the approval by Required Banks,
or all Banks in the event of a proposed increase in the Borrowing Base to become
effective on a Determination Date, Administrative Agent shall provide written
notice of the amount of such Borrowing Base to Borrower. In the event
Administrative Agent and Required Banks, or all Banks in the event of a proposed
increase in the Borrowing Base, fail to approve a Borrowing Base (and notify
Borrower of the amount thereof) on or prior to any applicable Determination
Date, the Borrowing Base in effect prior to such Determination Date shall remain
in effect thereafter until such time as Administrative Agent and Required Banks,
or all Banks in the event of a proposed increase in the Borrowing Base, approve
such Borrowing Base (which shall each become effective immediately upon notice
to Borrower from Administrative Agent setting forth the amount thereof). Any
determination of a proposed Borrowing Base by Administrative Agent and any
decision by Banks regarding the approval or disapproval of any Borrowing Base
shall be made by Administrative Agent and Banks in their sole discretion in
accordance with their respective standards for oil and gas loans, which may vary
between Administrative Agent and Banks and from Bank to Bank. Without limiting
the right of Administrative Agent to propose the amount of any Borrowing Base or
the right of Banks to approve or disapprove such proposed Borrowing
31
Base in their sole discretion, Borrower acknowledges and agrees that subject to
Administrative Agent's and Banks' consistent application of their respective
standards for similar loans, Administrative Agent and Banks (i) may make such
assumptions regarding appropriate existing and projected pricing for
hydrocarbons as they deem appropriate in their sole discretion, (ii) may make
such assumptions regarding projected rates and quantities of future production
of hydrocarbons from oil and gas properties and Related Assets owned by Borrower
and its Restricted Subsidiaries as they deem appropriate in their sole
discretion, (iii) may consider the projected cash requirements of Borrower and
its Subsidiaries, including, without limitation, obligations under the Preferred
Stock, and debt service and lease obligations of Borrower and its Subsidiaries,
(iv) will not consider any asset other than oil and gas reserves and Related
Assets, (v) will not consider any asset owned by an entity other than Borrower
and its Restricted Subsidiaries, and (vi) may make such other assumptions,
considerations and exclusions as each Bank deems appropriate in the exercise of
its sole discretion.
SECTION V.3. Special Determination of Borrowing Base. In addition to the
---------------------------------------
redeterminations of the Borrowing Base pursuant to Section 5.2, Borrower,
-----------
Administrative Agent or Required Banks may each request Special Determinations
of the Borrowing Base from time to time; provided, that Borrower shall not
-------- ----
request more than two (2) Special Determinations in any Fiscal Year. In the
event Administrative Agent or Required Banks request such a Special
Determination, Administrative Agent shall promptly deliver notice of such
request to Borrower and Borrower shall, within ten (10) days following the date
of such request, deliver to Banks a Related Asset Report and a Reserve Report
prepared as of the last day of the calendar month preceding the date of such
request. In the event Borrower requests a Special Determination, Borrower shall
deliver written notice of such request to Banks which shall include (i) a
Related Asset Report and a Reserve Report prepared as of a date not more than
thirty (30) days prior to the date of such request, and (ii) the amount of the
Borrowing Base requested by Borrower and to become effective on the
Determination Date applicable to such Special Determination. Upon receipt of
such Reserve Report and Related Asset Report, Administrative Agent shall,
subject to approval of Required Banks, or all Banks in the event of a proposed
increase in the Borrowing Base, redetermine the Borrowing Base in accordance
with the procedure set forth in Section 5.2 which Borrowing Base shall become
-----------
effective on the Determination Date applicable to such Special Determination (or
as soon thereafter as Administrative Agent and Required Banks, or all Banks in
the event of a proposed increase in the Borrowing Base, approve such Borrowing
Base and provide notice thereof to Borrower).
SECTION V.4. Borrowing Base Deficiency. If a Borrowing Base Deficiency
-------------------------
exists at any time, Borrower shall, within ninety (90) days following the date
such Borrowing Base Deficiency first occurs, at its option, either (a) make a
prepayment of principal on the Loan in an amount sufficient to eliminate such
Borrowing Base Deficiency, and if such Borrowing Base Deficiency cannot be
eliminated by prepaying the Loan in full (as a result of outstanding Letter of
Credit Exposure), Borrower jointly and severally shall also deposit with
Administrative Agent sufficient funds to be held by Administrative Agent as
security for outstanding Letter of Credit Exposure in the manner contemplated by
Section 3.1(b) as necessary to eliminate such Borrowing
- --------------
32
Base Deficiency, (b) submit additional oil and gas properties owned by Borrower
and its Restricted Subsidiaries for consideration in connection with the
determination of the Borrowing Base which Administrative Agent and Banks deem
sufficient in their sole discretion to eliminate such Borrowing Base Deficiency,
or (c) take such other action as Administrative Agent and Required Banks shall
deem appropriate in their sole discretion to eliminate such Borrowing Base
Deficiency.
SECTION V.5. Initial Borrowing Base. Notwithstanding anything contained
----------------------
herein to the contrary, the Borrowing Base in effect during the period from the
Closing Date until the date of the first Special or Periodic Determination after
the Closing Date shall be the Initial Borrowing Base.
ARTICLE VI
COLLATERAL AND GUARANTEES
SECTION VI.1. Security. (a The Obligations shall be secured by first
--------
and prior Liens (subject only to Permitted Encumbrances) encumbering one hundred
percent (100%) of the issued and outstanding capital stock of every class of
each Restricted Subsidiary of Borrower. On or before the Closing Date, Borrower
shall (i) execute and deliver to Administrative Agent (A) a Restricted
Subsidiary Pledge Agreement, and (B) such UCC-1 financing statements as
Administrative Agent shall request to fully evidence and perfect the Liens in
favor of Administrative Agent (as secured party for the ratable benefit of
Banks) created by such Restricted Subsidiary Pledge Agreement, and (ii) deliver
to Administrative Agent (to the extent not previously delivered pursuant to the
terms of the Existing Credit Agreement) the certificate(s) evidencing the issued
and outstanding capital stock of SWAT, duly endorsed or accompanied by
appropriate blank stock powers.
(b The Obligations shall be further secured by first and prior Liens
(subject only to Permitted Encumbrances) in favor of Administrative Agent for
the ratable benefit of Banks encumbering (i) certain oil and gas properties
owned by Borrower and its Restricted Subsidiaries designated by Administrative
Agent and Required Banks, and (ii) all Related Assets (to the extent Borrower
has requested that the value of such Related Assets be taken into account for
purposes of establishing the Borrowing Base). Within fifteen (15) days after
the Closing Date, Borrower shall deliver to Administrative Agent for the ratable
benefit of each Bank, Mortgages in form and substance acceptable to
Administrative Agent and duly executed by Borrower or its Restricted
Subsidiaries, together with such other assignments, conveyances, amendments,
agreements and other writings, including, without limitation, UCC-1 financing
statements (each duly authorized and executed) as Administrative Agent shall
deem necessary or appropriate to grant, evidence and perfect first and prior
Liens in all oil and gas properties and other interests of Borrower and its
Restricted Subsidiaries required by this Section 6.1(b).
--------------
33
SECTION VI.2. Guarantees. Payment and performance of the Obligations
----------
shall be fully guaranteed by each Restricted Subsidiary of Borrower pursuant to
a Restricted Subsidiary Guarantee. On or before the Closing Date, Borrower
shall deliver to Administrative Agent a Restricted Subsidiary Guarantee duly
authorized and executed by SWAT.
ARTICLE VII
CONDITIONS TO BORROWINGS
SECTION VII.1. Restatement of Existing Credit Agreement/Conditions to
------------------------------------------------------
Initial Extension of Credit. Borrower hereby acknowledges that Administrative
- ---------------------------
Agent and each Bank have relied on the documents, instruments, agreements and
actions referred to in this Article VII in amending and restating the Existing
-----------
Credit Agreement on the terms set forth herein, and but for Borrower's execution
and/or delivery and/or performance (as applicable) of the documents,
instruments, agreements, conditions and obligations referred to in this Article
-------
VII, Banks and Agents would not have amended and restated the Existing Credit
- ---
Agreement on the terms set forth herein. The obligation of each Bank to loan
its Commitment Percentage of the initial Borrowing hereunder, and the obligation
of Administrative Agent to issue (or cause another Bank to issue), the initial
Letter of Credit issued hereunder is subject to the satisfaction of each of the
following conditions:
(a Closing Deliveries. Administrative Agent shall have received
------------------
each of the following documents, instruments and agreements, each of which shall
be in form and substance and executed in such counterparts as shall be
acceptable to Administrative Agent and Required Banks and each of which shall,
unless otherwise indicated, be dated the date hereof:
(i) a Note payable to the order of each Bank in the amount of such
Bank's Commitment, duly executed by Borrower;
(ii) a Restricted Subsidiary Guarantee duly executed by SWAT;
(iii) a Restricted Subsidiary Pledge Agreement duly executed by
Borrower together with (A) to the extent not previously delivered
pursuant to the terms of the Existing Credit Agreement, certificates
evidencing one hundred percent of the issued and outstanding capital
stock of SWAT of every class (all certificates delivered pursuant to
this Section 7.1(a)(iii) shall be duly endorsed or accompanied by duly
-------------------
executed blank stock powers), and (B) such financing statements
executed by Borrower as Administrative Agent shall request to perfect
the Liens granted in favor of Administrative Agent (as secured party
for the ratable benefit of Banks) pursuant to such Pledge Agreement;
(iv) a Certificate of Ownership Interests substantially in the form
of Exhibit H, duly executed and delivered by an Authorized Officer of
---------
Borrower;
34
(v) an opinion of Keith Crouch, counsel for Borrower, favorably
opining as to such matters as Administrative Agent or Required Banks
may request;
(vi) an opinion of Vinson & Elkins L.L.P., special counsel to
Administrative Agent, in form and substance satisfactory to
Administrative Agent;
(vii) a certificate dated the Closing Date executed by an Authorized
Officer of Borrower stating that (A) the representations and
warranties of Borrower contained in this Agreement and the other Loan
Papers are true and correct in all respects, (B) no Default or Event
of Default has occurred which is continuing, and (C) all conditions
set forth in this Section 7.1 and Section 7.2 have been satisfied;
----------- -----------
(viii) such resolutions, certificates and other documents relating to
the existence of the Companies, the corporate authority for the
execution, delivery and performance of this Agreement, the Notes, the
other Loan Papers, and certain other matters relevant hereto, in form
and substance satisfactory to Administrative Agent, which resolutions,
certificates and documents include resolutions of the directors of
each of the Companies authorizing the execution, delivery and
performance of the Loan Papers and certificates of incumbency for each
Company;
(ix) such UCC-11 search reports as Administrative Agent shall
require, prepared as of a date not more than twenty (20) days prior to
the Closing Date, conducted in such jurisdictions and reflecting such
names as Administrative Agent shall request; and
(x) certificates from Borrower's insurance broker setting forth the
insurance maintained by Borrower and its Subsidiaries, stating that
such insurance is adequate and complies with the requirements of
Section 9.6.
-----------
(b) Closing Transactions. Subject only to the disbursement and
--------------------
application of the initial Borrowing, the Closing Transactions shall have
occurred (or Administrative Agent shall be satisfied that such transactions will
occur simultaneously therewith). Without limiting the foregoing, each of the
following shall have occurred (or Administrative Agent shall be satisfied that
each of the following shall occur simultaneously with the disbursement and
application of the initial Borrowing):
(i) Borrower shall have redeemed in full all of the Subordinate
Notes pursuant to, and in accordance with, the terms of the Indenture,
and shall have provided Administrative Agent with evidence that such
Subordinate Notes have been properly redeemed in accordance with the
terms of the Indenture;
(ii) Borrower shall have refinanced in full with proceeds of a
Borrowing under this Agreement, all Obligations accrued and
outstanding under the Existing Credit
35
Agreement as of the Closing Date, including, without limitation, (A)
the entire outstanding principal balance of the Loans made thereunder,
(B) all accrued but unpaid interest, (C) all accrued but unpaid
commitment and other fees, and (D) all amounts payable under Section
-------
3.3 of the Existing Credit Agreement as a result of the prepayment of
---
the other Obligations thereunder; and
(iii) all fees and expenses of Administrative Agent and its
Affiliates in connection with the credit facility provided herein
shall have been paid.
(c) No Material Adverse Change. In the sole discretion of each
--------------------------
Bank, no material adverse change shall have occurred in the assets, liabilities,
financial condition or prospects of any of the Companies.
(d) No Legal Prohibition. The transactions contemplated by this
--------------------
Agreement and the other Loan Papers shall be permitted by applicable law and
regulation and shall not subject Agents, any Bank, Borrower or any of its
Subsidiaries to any material adverse change in their assets, liabilities,
financial condition or prospects.
(e) No Litigation. No litigation, arbitration or similar proceeding
-------------
shall be pending which calls into question the validity or enforceability of
this Agreement or the other Loan Papers.
(f) Closing Fees. Borrower shall have paid to each Agent any fees
------------
payable to such Agent pursuant to Section 3.10, and shall have paid to each Bank
------------
all upfront and other fees payable to such Bank prior to the initial Borrowing
hereunder in connection with the transactions contemplated hereby.
(g) Other Matters. All matters related to this Agreement, the other
-------------
Loan Papers, the Closing Transactions, Borrower and its Subsidiaries shall be
acceptable to Administrative Agent and each Bank in their sole discretion, and
Borrower shall have delivered to Administrative Agent and each Bank such
evidence as they shall request to substantiate any matters related to this
Agreement, the other Loan Papers, Borrower and its Subsidiaries as
Administrative Agent or any Bank shall request.
Upon the satisfaction of each of the conditions set forth in this Section
-------
7.1, Borrower and Administrative Agent shall execute the Certificate of
- ---
Effectiveness. Upon the execution and delivery of the Certificate of
Effectiveness, the Existing Credit Agreement shall automatically and completely
be amended and restated on the terms set forth herein without necessity of any
other action on the part of any Bank, any Agent or any Company. Until execution
and delivery of the Certificate of Effectiveness, the Existing Credit Agreement
shall remain in full force and effect in accordance with its terms. Each Bank
hereby authorizes Administrative Agent to execute the Certificate of
Effectiveness on its behalf and acknowledges and agrees that the execution of
the Certificate of Effectiveness by Administrative Agent shall be binding on
each such Bank. Upon
36
the satisfaction of each of the conditions set forth in this Section 7.1 and the
-----------
execution and delivery of the Certificate of Effectiveness, this Agreement shall
become effective as of the Closing Date.
SECTION VII.2. Conditions to each Borrowing and each Letter of Credit.
------------------------------------------------------
The obligation of each Bank to loan its Commitment Percentage of each Borrowing
and the obligation of any Letter of Credit Issuer to issue Letters of Credit on
the date any Letter of Credit is to be issued is subject to the further
satisfaction of the following conditions:
(a) timely receipt by Administrative Agent of a Request for Borrowing
or Request for Letter(s) of Credit;
(b) immediately before and after giving effect to such Borrowing or
issuance of such Letter(s) of Credit, no Default or Event of Default shall have
occurred and be continuing and neither such Borrowing nor the issuance of such
Letter(s) of Credit shall cause a Default or Event of Default;
(c) the representations and warranties of Borrower contained in this
Agreement shall be true and correct on and as of the date of such Borrowing or
the issuance of such Letter(s) of Credit;
(d) the funding of such Borrowing or the issuance of such Letter(s) of
Credit and all other Borrowings to be made and/or Letter(s) of Credit to be
issued on the same day under this Agreement, shall not cause a Borrowing Base
Deficiency; and
(e) following the issuance of any Letter(s) of Credit, the aggregate
Letter of Credit Exposure shall not exceed $10,000,000.
Each Borrowing and the issuance of each Letter of Credit hereunder shall
constitute a representation and warranty by Borrower that on the date of such
Borrowing or issuance of such Letter of Credit the statements contained in
subclauses (b), (c), (d) and (e) above are true.
SECTION VII.3. Post-Closing Deliveries. Within fifteen (15) days after
-----------------------
the Closing Date, Borrower shall have executed and delivered, or caused SWAT to
execute and deliver, to Administrative Agent for the ratable benefit of each
Bank (a) the Mortgages as required by Section 6.1(b) hereof, (b) the Collateral
--------------
Assignment, and (c) such financing statements in form and substance acceptable
to Administrative Agent in favor of Administrative Agent (as secured party for
the ratable benefit of Banks) as Administrative Agent shall specify to fully
evidence and perfect all Liens contemplated by the Loan Papers, all of which
shall be filed of record in such jurisdictions as Administrative Agent shall
require in its sole discretion.
ARTICLE VIII
37
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants that each of the following statements is
true and correct on the date hereof, will be true and correct on the Closing
Date after giving effect to the Closing Transactions, and will be true and
correct on the occasion of each Borrowing and the issuance of each Letter of
Credit:
SECTION VIII.1. Corporate Existence and Power. Borrower (a) is a
-----------------------------
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, (b) has all corporate power and all material
governmental licenses, authorizations, consents and approvals required to carry
on its businesses as now conducted and as proposed to be conducted, and (c) is
duly qualified to transact business as a foreign corporation in each
jurisdiction where a failure to be so qualified could have a material adverse
effect on its financial condition or operations.
SECTION VIII.2. Existence and Power (Other Companies). Each Company other
-------------------------------------
than Borrower (a) is a corporation, limited liability company or partnership
duly incorporated or organized (as applicable), validly existing and in good
standing under the laws of its state of incorporation or organization (as
applicable), (b) has all corporate, limited liability company or partnership
power (as applicable) and all material governmental licenses, authorizations,
consents and approvals required to carry on its businesses as now conducted and
as proposed to be conducted, and (c) is duly qualified to transact business as
foreign corporations, foreign limited liability companies or foreign
partnerships (as applicable) in each jurisdiction where a failure to be so
qualified could have a material adverse effect on their respective financial
condition or operations.
SECTION VIII.3. Corporate, Limited Liability Company, Partnership and
-----------------------------------------------------
Governmental Authorization; Contravention. The execution, delivery and
- -----------------------------------------
performance of this Agreement, the Notes, and the other Loan Papers by each
Company purporting to execute the same are within such Company's corporate,
limited liability company or partnership powers (as applicable), when executed
will be duly authorized by all necessary corporate, limited liability company or
partnership action (as applicable), require no action by or in respect of, or
filing with, any governmental body, agency or official and do not contravene, or
constitute a default under, any provision of applicable law or regulations
(including, without limitation, the Margin Regulations) or of the partnership
agreement, articles of incorporation, certificate of incorporation, bylaws,
regulations or other organizational documents (as applicable) of such Companies
or of any agreement, judgment, injunction, order, decree or other instrument
binding upon such Company or result in the creation or imposition of any Lien on
any asset of any such Company except Liens securing the Notes.
SECTION VIII.4. Binding Effect. This Agreement constitutes a valid and
--------------
binding agreement of Borrower; the Notes and the other Loan Papers when executed
and delivered in
38
accordance with this Agreement, will then constitute valid and binding
obligations of each Company executing the same; and each Loan Paper is
enforceable against each Company executing the same in accordance with its terms
except as (a) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors rights generally, and (b) the
availability of equitable remedies may be limited by equitable principles of
general applicability.
SECTION VIII.5. Financial Information. (a) The Current Financials fairly
---------------------
present, in conformity with generally accepted accounting principles, the
consolidated financial position of Borrower as of December 31, 1998 and March
31, 1999 and its consolidated results of operations and cash flows for the
periods covered thereby.
(b) There has been no material adverse change in the business,
financial position, results of operations or prospects of any Company since (i)
December 31, 1998 to the extent this representation and warranty is made or
deemed to be made as of any date prior to the receipt by Banks of the financial
statements for Borrower and its Subsidiaries required to be delivered by
Borrower to Banks pursuant to Sections 9.1(a) and (b) hereof, prepared as of the
--------------- ---
end of the first complete Fiscal Quarter following the Closing Date, or (ii) the
date of the most recent financial statements delivered to Banks pursuant to
Sections 9.1(a) and (b) hereof to the extent this representation and warranty is
- --------------- ---
made or deemed made as of any date after receipt by Banks of the financial
statements prepared as of the end of the first complete Fiscal Quarter following
the Closing Date required to be delivered by Borrower to Banks pursuant to
Sections 9.1(a) and (b) hereof.
- --------------- ---
SECTION VIII.6. Litigation. Except for matters disclosed in the Existing
----------
Credit Agreement or arising after the date of this Agreement which are promptly
disclosed in writing to Banks, there is no action, suit or proceeding pending
against, or to the knowledge of Borrower, threatened against or affecting any
Company before any court or arbitrator, any governmental body, agency or
official in which there is a reasonable possibility of an adverse decision which
could materially adversely affect the business, consolidated financial position
or consolidated results of operations of any Company or which could in any
manner draw into question the validity of the Loan Papers.
SECTION VIII.7. ERISA. No Company is a party to or bound by, or at any
-----
time prior to the date hereof, has been a party to, or bound by, any Plan.
SECTION VIII.8. Taxes and Filing of Tax Returns. Except as disclosed on
-------------------------------
Schedule 3, each Company and its predecessors have filed all material tax
- ----------
returns required to have been filed and have paid all Taxes shown to be due and
payable on such returns, including interest and penalties, and all other Taxes
which are payable by such party, to the extent the same have become due and
payable other than Taxes with respect to which a failure to pay would not have a
material adverse effect on any Company. Except as disclosed on Schedule 3,
----------
Borrower does not know of any proposed material Tax assessment against any
Company, and all Tax liabilities of each Company and its predecessors are
adequately provided for. Except as disclosed on
39
Schedule 3 and except as hereinafter disclosed in writing to Banks, no income
- ----------
tax liability of any Company or any of their respective predecessors or
Subsidiaries has been asserted by the Internal Revenue Service for Taxes in
excess of those already paid.
SECTION VIII.9. Title to Properties; Liens. Borrower and each of its
--------------------------
Subsidiaries has good and valid title to all material assets purported to be
owned by it subject only to Permitted Encumbrances. Without limiting the
foregoing, (a) Borrower and its Restricted Subsidiaries have good and valid
title to all oil and gas properties and all Related Assets owned by Borrower and
its Restricted Subsidiaries which are included in the most recent Reserve
Reports and Related Asset Reports provided to Banks (except for oil and gas
properties disposed of in compliance with Section 10.5 to the extent this
------------
representation and warranty is made or deemed made after the Closing Date) and
except for Permitted Encumbrances, and (b) the Companies have good and valid
title to all material assets reflected in the Current Financials and any
subsequent financial statements delivered to Banks pursuant to Sections 9.1(a)
---------------
and (b) hereof.
---
SECTION VIII.10. Business; Compliance. Each Company has performed and
--------------------
abided by all obligations required to be performed under each license, permit,
order, authorization, grant, contract, agreement, or regulation to which any
Company is a party or by which any Company or any of the assets of any Company
are bound to the extent a failure to perform and abide by such obligations could
have a material adverse effect on the assets, liabilities, financial condition,
operations or prospects of such Company individually or the Companies taken as a
whole; provided that to the extent oil and gas properties owned by any Company
-------- ----
are operated by operators other than a Company or an Affiliate of a Company,
Borrower does not have any knowledge that any such obligation remains
unperformed and the appropriate Person has diligently enforced all contractual
obligations of such operators to insure performance.
SECTION VIII.11. Licenses, Permits, Etc. Each Company possesses such
----------------------
valid franchises, certificates of convenience and necessity, operating rights,
licenses, permits, consents, authorizations, exemptions and orders of tribunals,
as are necessary to carry on its business as now being conducted except to the
extent a failure to obtain any such item would not have a material adverse
effect on such Company individually or on the Companies taken as a whole;
provided that to the extent oil and gas properties owned by any Company are
- -------- ----
operated by operators other than a Company or an Affiliate of a Company,
Borrower does not have any knowledge that possession of such items has not been
obtained, and the appropriate Person has diligently enforced all contractual
obligations of such operators to obtain such items.
SECTION VIII.12. Compliance with Law. The business and operations of each
-------------------
Company have been and are being conducted in accordance with all applicable
laws, rules and regulations of all tribunals, other than laws, rules and
regulations the violation of which could not (either individually or
collectively) have a material adverse effect on any Company's individual
financial condition or operations or on the financial condition or operations of
the Companies taken as a whole; provided that to the extent oil and gas
-------- ----
properties owned by any Company are operated by operators other than a Company
or an Affiliate of a Company, Borrower does not
40
have any knowledge of non-compliance and the appropriate Person has diligently
enforced all contractual obligations of such operators to insure compliance.
SECTION VIII.13. Ownership Interests. The Reserve Reports and Related
-------------------
Asset Reports most recently provided to Banks accurately reflect, and all
Reserve Reports and Related Asset Reports hereafter delivered pursuant to this
Agreement will reflect, in all material respects, the ownership interests in the
oil and gas properties and Related Assets referred to therein (including all
before and after payout calculations).
SECTION VIII.14. Full Disclosure. All information heretofore furnished by
---------------
any Company (or any other party on any Company's behalf) to any Agent or any
Bank for purposes of or in connection with this Agreement or any transaction
contemplated hereby is, and all such information hereafter furnished by any
Company or on behalf of any Company to any Agent or any Bank will be, true,
complete and accurate in every material respect or based on reasonable estimates
on the date as of which such information is stated or certified. Borrower has
disclosed to Banks in writing any and all facts (other than facts of general
public knowledge) which might reasonably be expected to materially and adversely
affect or might affect (to the extent Borrower can now reasonably foresee), the
business, operations, prospects or condition, financial or otherwise, of any
Company or the ability of Borrower or any Company to perform its obligations
under this Agreement and the other Loan Papers.
SECTION VIII.15. Subsidiaries. Schedule 4 hereto accurately reflects (i)
------------ ----------
the name and jurisdiction of incorporation of each Subsidiary of Borrower, (ii)
each jurisdiction in which each Subsidiary of Borrower is qualified to transact
business as a foreign corporation, partnership or limited liability company,
(iii) the authorized, issued and outstanding capital stock of each such
Subsidiary, including, the record (and to Borrower's knowledge, beneficial)
owner of such capital stock, and (iv) all outstanding warrants, options,
subscription rights, convertible securities or other rights to purchase capital
stock of each Subsidiary of Borrower.
SECTION VIII.16. Obligations of Unrestricted Subsidiaries. Except as set
----------------------------------------
forth on Schedule 5 hereto, neither Borrower nor any of its Restricted
----------
Subsidiaries has any obligation of any nature to any Unrestricted Subsidiary of
Borrower.
SECTION VIII.17. Environmental Matters. No real or personal property
---------------------
owned or leased by any Company (including without limitation, oil and gas
properties and Related Assets) and no operations conducted thereon, and to
Borrower's knowledge, no operations of any prior owner, lessee or operator of
any such properties, is or has been in violation of any Applicable Environmental
Law other than violations which individually and in the aggregate will not have
a material adverse effect on any Company individually or the Companies taken as
a whole, nor is any such property or operation the subject of any existing,
pending or, to Borrower's knowledge, threatened action, suit, investigation,
inquiry or preceding with respect to Applicable Environmental Laws which could,
individually or in the aggregate, have a material adverse effect on Borrower and
its Subsidiaries taken as a whole. All notices, permits, licenses, and similar
41
authorizations, if any, required to be obtained or filed in connection with the
ownership or operation of any and all real and personal property owned, leased
or operated by any of the Companies, including, without limitation, notices,
licenses, permits and authorizations required in connection with any past or
present treatment, storage, disposal, or release of hazardous substances,
petroleums, or solid waste into the environment, have been duly obtained or
filed except to the extent the failure to obtain or file such notices, licenses,
permits and authorizations would not have a material adverse effect on any
Company individually or the Companies taken as a whole. To Borrower's
knowledge, all hazardous substances, if any, generated at any and all real and
personal property owned, leased or operated by the Companies have been
transported, treated, and disposed of only by carriers maintaining valid permits
under RCRA and any other Applicable Environmental Laws. Except as disclosed in
the Existing Credit Agreement, there has been no release or threatened release
of any quantity of any hazardous substances or petroleum on, to or from any real
or personal property owned, leased, or operated by the Companies which was not
in compliance with Applicable Environmental Laws other than releases which would
not, individually or in the aggregate, have a material adverse effect on any
Company individually or the Companies taken as a whole. Except as disclosed in
the Existing Credit Agreement, no Company has any contingent liability in
connection with any release or threatened release of any hazardous substance,
petroleum, or solid waste into the environment which could have a material
adverse effect on any Company individually or the Companies taken as a whole.
SECTION VIII.18. Burdensome Obligations. Except as disclosed in writing
----------------------
to Banks prior to the date hereof, neither any Company nor the properties of any
Company is subject to any law or regulation or subject to any restriction under
the certificate or articles of incorporation, partnership agreement, regulations
or other organizational documents of any Company or under any agreement or
instrument to which any Company is a party or by which any of their respective
properties may be subject or bound, which is so unusual or burdensome as to be
likely in the foreseeable future to have a material adverse effect on the
assets, liabilities, financial condition, operations or prospects of any Company
individually or the Companies taken as a whole.
SECTION VIII.19. Government Regulations. No Company is subject to
----------------------
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act, the Investment Company Act of 1940 (as
any of the preceding acts have been amended) or any other law or regulation
which regulates the incurring by it of Debt, including, but not limited to, laws
relating to common carriers or the sale of electricity, gas, steam, water or
other public utility services.
SECTION VIII.20. Year 2000 Matters. Any reprogramming required to permit
-----------------
the proper functioning (but only to the extent that such proper functioning
would otherwise be impaired by the occurrence of the year 2000) in and following
the year 2000 of computer systems and other equipment containing imbedded
microchips, in either case owned or operated by any Company or used or relied
upon in the conduct of their business (including, to Borrower's knowledge, any
such systems and other equipment supplied by others or with which the computer
systems of any Company interface) and the testing of all such systems and other
equipment as so
42
reprogrammed, has been completed. The costs to Borrower and any other Company
that have not been incurred as of the date hereof for such reprogramming and
testing and for other reasonably foreseeable consequences to them of any
improper functioning of other computer systems and equipment containing imbedded
microchips due to the occurrence of the year 2000 could not reasonably be
expected to result in a Default, Event of Default or a material adverse change
in the assets, liabilities, financial condition or prospects of any of the
Companies. Except for any reprogramming referred to above, the computer systems
of each Company are and, with ordinary course upgrading and maintenance, will
continue for the term of this Agreement to be, sufficient for the conduct of
their business as currently conducted.
ARTICLE IX
AFFIRMATIVE COVENANTS
Borrower agrees that, so long as any Bank has any commitment to lend or
participate in Letter of Credit Exposure hereunder or any amount payable under
any Note remains unpaid or any Letter of Credit remains outstanding:
SECTION IX.1. Information. Borrower will deliver, or cause to be
-----------
delivered, to each Bank:
(a) as soon as available and in any event within ninety (90) days
after the end of each Fiscal Year of Borrower, consolidated balance sheets of
Borrower as of the end of such Fiscal Year and the related consolidated
statements of income and cash flow for such Fiscal Year, setting forth in each
case in comparative form the figures for the previous Fiscal Year, all reported
by Borrower in accordance with generally accepted accounting principles and
audited by Arthur Andersen LLP or other independent public accountants of
nationally recognized standing acceptable to Administrative Agent;
(b) as soon as available and in any event within forty-five (45) days
after the end of each of the first three (3) Fiscal Quarters of each Fiscal Year
of Borrower, consolidated balance sheets of Borrower as of the end of such
quarter and the related consolidated statements of income and cash flow for such
quarter and for the portion of Borrower's Fiscal Year ended at the end of such
quarter, setting forth in each case in comparative form the figures for the
corresponding quarter and the corresponding portion of Borrower's previous
Fiscal Year. All financial statements delivered pursuant to this Section 9.1(b)
--------------
shall be certified as to fairness of presentation, generally accepted accounting
principles and consistency by the chief financial officer or the chief
accounting officer of Borrower;
(c) simultaneously with the delivery of each set of financial
statements referred to in Sections 9.1(a) and (b), a certificate of an
--------------- ---
Authorized Officer of Borrower, (i) setting forth in reasonable detail the
calculations required to establish whether Borrower was in compliance
43
with the requirements of Article XI on the date of such financial statements,
----------
(ii) stating whether there exists on the date of such certificate any Default
and, if any Default then exists, setting forth the details thereof and the
action which Borrower is taking or proposes to take with respect thereto, and
(iii) stating whether or not such financial statements fairly reflect the
business and financial condition of Borrower as of the date of the delivery of
such financial statements;
(d) immediately upon any Authorized Officer of Borrower becoming aware
of the occurrence of any Default, including, without limitation, a Default under
Article XI, a certificate of an Authorized Officer of Borrower setting forth the
- ----------
details thereof and the action which Borrower is taking or proposes to take with
respect thereto;
(e) promptly upon the mailing thereof to the stockholders of Borrower
generally, copies of all financial statements, reports and proxy statements so
mailed;
(f) promptly upon the filing thereof, copies of all final registration
statements (other than the exhibits thereto and any registration statements on
Form S-8 or its equivalent), post effective amendments thereto and annual,
quarterly or special reports which Borrower shall have filed with the Securities
and Exchange Commission;
(g) promptly notify Banks (i) of any material adverse change in the
financial condition of Borrower or any of its Subsidiaries, or (ii) of the
occurrence of any acceleration of the maturity of any Debt owing by Borrower or
any of its Subsidiaries or any default under any indenture, mortgage, agreement,
contract or other instrument to which any of them is a party or by which any of
them or any of their properties is bound, if such default or acceleration might
have a material adverse effect upon their financial condition;
(h) [intentionally deleted];
(i) promptly upon receipt of same, any notice or other information
received by Borrower or any Subsidiary of Borrower indicating any potential,
actual or alleged (i) non-compliance with or violation of the requirements of
any Applicable Environmental Law which could result in liability to Borrower or
any Subsidiary for fines, clean up or any other remediation obligations or any
other liability in excess of $250,000 in the aggregate; (ii) release or
threatened release of any toxic or hazardous waste, substance, or constituent,
or other substance into the environment which release would impose on Borrower
or any Subsidiary a duty to report to a governmental authority or to pay cleanup
costs or to take remedial action under any Applicable Environmental Law which
could result in liability to Borrower or any Subsidiary for fines, clean up and
other remediation obligations or any other liability in excess of $250,000 in
the aggregate; or (iii) the existence of any Lien arising under any Applicable
Environmental Law securing any obligation to pay fines, clean up or other
remediation costs or any other liability in excess of $250,000 in the aggregate.
Without limiting the foregoing, Borrower shall provide to Banks promptly upon
receipt of same copies of all environmental consultants or engineers reports
received by Borrower or any Subsidiary of Borrower which would render the
representation and warranty contained in Section 8.17 untrue or inaccurate in
------------
any respect;
44
(j) In the event any notification is provided by Borrower to any Bank
or Administrative Agent pursuant to Section 9.1(i) hereof or Administrative
--------------
Agent or any Bank otherwise learns of any event or condition under which any
such notice would be required, then, upon request of Required Banks, Borrower
shall, within ninety (90) days of such request, cause to be furnished to each
Bank a report by an environmental consulting firm acceptable to Administrative
Agent and Required Banks, stating that a review of such event, condition or
circumstance has been undertaken (the scope of which shall be acceptable to
Administrative Agent and Required Banks) and detailing the findings,
conclusions, and recommendations of such consultant. Borrower shall bear all
expenses and costs associated with such review and updates thereof, as well as
all remediation or curative action recommended by any such environmental
consultant; and
(k) from time to time such additional information regarding the
financial position or business of Borrower and its Subsidiaries as the
Administrative Agent, at the request of any Bank, may reasonably request.
SECTION IX.2. Business of Borrower. The primary business of Borrower and
--------------------
its Subsidiaries will be the acquisition, exploration for, development,
production, transportation, processing and marketing of liquid or gaseous
hydrocarbons and accompanying elements and related businesses.
SECTION IX.3. Maintenance of Existence. Borrower shall, and shall cause
------------------------
each Restricted Subsidiary to, at all times (a) maintain its corporate,
partnership or limited liability company existence in its state of incorporation
or organization except to the extent any Restricted Subsidiary ceases to be in
existence as a result of a merger or consolidation expressly permitted pursuant
to Section 10.4, and (b) maintain its good standing and qualification to
------------
transact business in all jurisdictions where the failure to maintain good
standing or qualification to transact business could have a material adverse
effect on the financial condition or operations of Borrower or any of its
Restricted Subsidiaries individually or Borrower and its Restricted Subsidiaries
taken as a whole.
SECTION IX.4. Title Data. Borrower shall, upon the reasonable request of
----------
Required Banks, cause to be delivered to Administrative Agent such title
opinions and other information in its possession, control or direction regarding
title to the oil and gas properties owned by Borrower and its Restricted
Subsidiaries as are appropriate to determine the status thereof.
SECTION IX.5. Right of Inspection. Borrower will permit, and will cause
-------------------
each of its Subsidiaries to permit, any officer, employee or agent of
Administrative Agent or any Bank to visit and inspect any of the assets of
Borrower and its Subsidiaries, examine Borrower's and its Subsidiaries' books
of record and accounts, take copies and extracts therefrom, and discuss the
affairs, finances and accounts of Borrower and its Subsidiaries with any of
Borrower's and its Subsidiaries' officers, accountants and auditors, all at such
reasonable times and as often as
45
Administrative Agent or any Bank may desire, which, after and during the
continuance of an Event of Default, shall all be at the expense of Borrower.
Banks covenant and agree to preserve the confidentiality of any information with
respect to which Borrower or any of its Subsidiaries have an obligation of
confidentiality to a third party (to the extent such obligation has been
disclosed to Banks), except to the extent Banks are required to disclose such
information pursuant to any applicable law, rule or regulation of any
governmental body or pursuant to the order of any court of competent
jurisdiction.
SECTION IX.6. Maintenance of Insurance. Borrower will, and will cause
------------------------
each of its Subsidiaries to (and will use its best efforts to cause all
operators of oil and gas properties owned by Borrower and its Subsidiaries and
Related Assets to) at all times maintain or cause to be maintained insurance
covering such risks as are customarily carried by businesses similarly situated
including, without limitation, the following: (a) workmen's compensation
insurance; (b) employer's liability insurance; (c) comprehensive general public
liability and property damage insurance in respect of all activities in which
Borrower or any of its Subsidiaries might incur personal liability for the death
or injury of an employee or third person, or damage to or destruction of
another's property; (d) insurance against loss or damage by fire, lightning,
hail, tornado, explosion or other similar risk to buildings, building contents
and field inventory, excluding wellhead equipment and production facilities; and
(e) comprehensive automobile liability insurance. All loss payable clauses or
provisions in all policies of insurance maintained by Borrower pursuant to this
Section 9.6 shall be endorsed in favor of and made payable to Administrative
- -----------
Agent for the ratable benefit of Banks, as their interests may appear.
Administrative Agent for the ratable benefit of Banks shall have the right to
collect, and Borrower hereby assigns to Administrative Agent for the ratable
benefit of Banks, any and all monies that may become payable under any such
policies of insurance by reason of damage, loss or destruction of any property
which stands as security for the Obligations or any part thereof, and
Administrative Agent may, upon request from all Banks, at their election, either
apply for the ratable benefit of Banks all or any part of the sums so collected
toward payment of the Obligations (or the portion thereof with respect to which
such property stands as security), whether or not such Obligations are then due
and payable, in such manner as Administrative Agent may elect or release same to
Borrower.
SECTION IX.7. Payment of Taxes and Claims. Borrower will, and will cause
---------------------------
each of its Subsidiaries to, pay (a) all Taxes imposed upon it or any of its
assets or with respect to any of its franchises, business, income or profits
before any material penalty or interest accrues thereon, and (b) all material
claims (including, without limitation, claims for labor, services, materials and
supplies) for sums which have become due and payable and which by law have or
might become a Lien (other than a Permitted Encumbrance) on any of its assets;
provided, however, no payment of Taxes or claims shall be required if (i) the
amount, applicability or validity thereof is currently being contested in good
faith by appropriate action promptly initiated and diligently conducted in
accordance with good business practices and no material part of the property or
assets of Borrower or any of its Subsidiaries are subject to levy or execution,
(ii) Borrower, as and to the extent required in accordance with generally
accepted accounting principles, shall have set aside on its books, reserves
(segregated to the extent required by generally accepted accounting practices)
46
deemed by it to be adequate with respect thereto, and (iii) Borrower has
notified Administrative Agent of such circumstances, in detail satisfactory to
Administrative Agent.
SECTION IX.8. Compliance with Laws and Documents. Borrower will, and will
----------------------------------
cause each of its Subsidiaries to, comply with all laws, their respective
articles and certificates of incorporation, bylaws, partnership agreements,
regulations and similar organizational documents and all Material Agreements to
which Borrower or any Subsidiary of Borrower is a party, if a violation, alone
or when combined with all other such violations, could have a material adverse
effect on the financial condition or operations of Borrower or any of its
Restricted Subsidiaries individually or Borrower and its Restricted Subsidiaries
taken as a whole.
SECTION IX.9. Operation of Properties and Equipment. (a) Borrower will,
-------------------------------------
and will cause each of its Subsidiaries to, maintain, develop and operate their
respective oil and gas properties and Related Assets in a good and workmanlike
manner, and observe and comply with all of the terms and provisions, express or
implied, of all oil and gas leases relating to such properties so long as such
oil and gas leases are capable of producing hydrocarbons and accompanying
elements in paying quantities, to the extent that the failure to so observe and
comply could have a material adverse effect on the financial condition or
operations of Borrower individually or Borrower and its Subsidiaries taken as a
whole.
(b) Borrower will, and will cause each of its Subsidiaries to, comply
in all respects with all contracts and agreements applicable to or relating to
their respective oil and gas properties or the production and sale of
hydrocarbons and accompanying elements therefrom, except to the extent a failure
to so comply could not have a material adverse effect on the financial condition
or operations of Borrower individually or Borrower and its Subsidiaries taken as
a whole.
(c) Borrower will, and will cause each of its Subsidiaries at all
times to, maintain, preserve and keep all operating equipment used with respect
to the oil and gas properties of Borrower in proper repair, working order and
condition, and make all necessary or appropriate repairs, renewals,
replacements, additions and improvements thereto so that the efficiency of such
operating equipment shall at all times be properly preserved and maintained,
provided that no item of operating equipment need be so repaired, renewed,
replaced, added to or improved, if Borrower shall in good faith determine that
such action is not necessary or desirable for the continued efficient and
profitable operation of the business of Borrower and its Subsidiaries.
(d) With respect to the oil and gas properties of Borrower and its
Subsidiaries which are operated by operators other than Borrower or one of its
Subsidiaries, Borrower and its Subsidiaries shall not be obligated to directly
perform any undertakings contemplated by the covenants and agreements contained
in this Section 9.9 which are performable only by such operators and are beyond
-----------
the control of Borrower, but shall be obligated to seek to enforce such
operators' contractual obligations to maintain, develop and operate the oil and
gas properties subject to such operating agreements.
47
SECTION IX.10. Further Assurances. Borrower will execute and deliver or
------------------
cause to be executed and delivered such other and further instruments or
documents and take such further action as in the judgment of Administrative
Agent may be required to carry out the provisions and purposes of the Loan
Papers including without limitation to create, preserve, protect and perfect the
Liens of the Administrative Agent for the ratable benefit of Banks as required
by Section 6.1.
-----------
48
SECTION IX.11. Environmental Law Compliance and Indemnity. Borrower will,
------------------------------------------
and will cause each of its Subsidiaries to, comply in all material respects with
all Applicable Environmental Laws, including, without limitation, (a) all
licensing, permitting, notification and similar requirements of Applicable
Environmental Laws, and (b) all provisions of Applicable Environmental Law
regarding storage, discharge, release, transportation, treatment and disposal of
hazardous substances, petroleum, solid waste or other contaminants. Borrower
will, and will cause each of its Subsidiaries to, promptly pay and discharge
when due all debts, claims, liabilities and obligations with respect to any
clean-up or remediation measures necessary to comply with Applicable
Environmental Laws. Borrower hereby indemnifies and agrees to defend and hold
Banks and their successors and assigns harmless from and against any and all
claims, demands, causes of action, loss, damage, liabilities, costs and expenses
(including reasonable attorneys' fees and court costs) of any and every kind or
character, known or unknown, fixed or contingent, asserted against or incurred
by any of the Banks at any time and from time to time including, without
limitation, those asserted or arising subsequent to the payment or other
satisfaction of the Loan, by reason of or arising out of the ownership,
construction, occupancy, operation, use and maintenance of any of the collateral
for the Loan, including matters arising out of the negligence of Banks;
provided, however, this indemnity shall not apply with respect to matters caused
by or arising out of (i) the gross negligence or willful misconduct of Banks (IT
BEING THE EXPRESS INTENTION HEREBY THAT BANKS SHALL BE INDEMNIFIED FROM THE
CONSEQUENCES OF THEIR NEGLIGENCE); and (ii) the construction, occupancy,
operation, use and maintenance of the collateral for the Loan by any owner,
lessee or party in possession of the collateral for the Loan subsequent to the
ownership of the collateral for the Loan by Borrower or any of its Subsidiaries
(as applicable), provided further, however, that this subclause (ii) shall not
exclude from the foregoing indemnity and agreement, liability, claims, demands,
causes of action, loss, damage, costs and expenses imposed by reason of the
ownership of the collateral for the Loan by Banks after purchase by Banks at any
foreclosure sale or transfer in lieu thereof from Borrower or any Restricted
Subsidiary in partial or entire satisfaction of the Loan (unless the same shall
be solely attributable to the subsequent use of the collateral by Banks during
their ownership thereof). The foregoing indemnity and agreement applies to the
violation of any Applicable Environmental Law prior to the payment or other
satisfaction of the Loan and any act, omission, event or circumstance existing
or occurring on or about the collateral for the Loan (including without
limitation the presence on the collateral for the Loan or release from the
collateral for the Loan of asbestos or other hazardous substances or solid waste
disposed of or otherwise present in or released prior to the payment or other
satisfaction of the Loan). It shall not be a defense to the covenant of
Borrower to indemnify that the act, omission, event or circumstance did not
constitute a violation of any Applicable Environmental Law at the time of its
existence or occurrence. The provisions of this Section 9.11 shall survive the
------------
repayment of the Loan and shall continue thereafter in full force and effect.
In the event of the transfer of the Loan or any portion thereof, Banks or any
prior holder of the Loan and any participants shall continue to be benefitted by
this indemnity and agreement with respect to the period of such holding of the
Loan.
SECTION IX.12. Year 2000 Compatibility. Borrower will, and will cause
-----------------------
each other Company to, take all actions reasonably necessary to assure that
Borrower's and each such other
49
Company's computer based systems are able to operate and effectively process
data which includes dates on and after January 1, 2000. At the request of
Administrative Agent or any Bank, Borrower and each other Company shall provide
reasonable assurances satisfactory to Administrative Agent and any such Bank of
Borrower's and each such other Company's year 2000 compatibility.
ARTICLE X
NEGATIVE COVENANTS
Borrower agrees that, so long as any Bank has any commitment to lend or
participate in Letter of Credit Exposure hereunder or any amount payable under
any Note remains unpaid or any Letter of Credit remains outstanding:
SECTION X.1. Debt of Borrower and its Restricted Subsidiaries. Neither
------------------------------------------------
Borrower nor any Restricted Subsidiary of Borrower will incur, become or remain
liable for any Debt other than (a) Debt secured by Permitted Encumbrances
described in subpart (k) of the definition of Permitted Encumbrances, (b)
Nonrecourse Debt, (c) the Loan, (d) Debt outstanding on the Closing Date
described on Schedule 6 hereto, and (e) Guarantees by Borrower or a Restricted
----------
Subsidiary of Borrower of Debt and other liabilities of Borrower or other
Restricted Subsidiaries of Borrower provided that such Debt and other
liabilities are permitted pursuant to this Agreement; provided, that the Debt
-------- ----
permitted pursuant to Section 10.1(a) and (b) incurred by Borrower and its
--------------- ---
Restricted Subsidiaries shall not exceed $1,000,000 in the aggregate.
SECTION X.2. Restricted Payments. Neither Borrower nor any Restricted
-------------------
Subsidiary of Borrower will declare or make any Restricted Payment; provided,
--------
that, so long as no Default, Event of Default or Borrowing Base Deficiency then
- ----
exists, and provided that no Default or Event of Default would result therefrom,
Borrower shall be permitted to (a) declare and pay accrued dividends on the
Preferred Stock and the Common Stock, and (b) repurchase any of its Common Stock
or Preferred Stock or warrants, options or other rights to acquire such Common
Stock or Preferred Stock, so long as, at any date, the sum of (y) the aggregate
amount of all such dividends declared and paid pursuant to clause (a) above
during the period commencing on April 1, 1999 to and including such date, plus
(z) the aggregate amount paid by Borrower and its Restricted Subsidiaries in
respect of the repurchase of all such Common Stock or Preferred Stock or
warrants, options or other rights to acquire such Common Stock or Preferred
Stock pursuant to clause (b) above, shall not exceed the Restricted Payment
Limit in effect at such date.
SECTION X.3. Negative Pledge. Neither Borrower nor any Restricted
---------------
Subsidiary will create, assume or suffer to exist any Lien on any asset owned by
it (other than Permitted Encumbrances).
50
SECTION X.4. Consolidations and Mergers. Neither Borrower nor any
--------------------------
Subsidiary of Borrower will consolidate or merge with or into any other Person;
provided, that so long as no Default or Event of Default exists or will result
- -------- ----
(a) Borrower may merge or consolidate with another Person so long as Borrower is
the surviving corporation, (b) any Restricted Subsidiary of Borrower may merge
or consolidate with or into another Restricted Subsidiary of Borrower, (c) any
Unrestricted Subsidiary may merge with or into another Unrestricted Subsidiary,
(d) any Unrestricted Subsidiary may merge with any other Person other than a
Restricted Subsidiary so long as such Unrestricted Subsidiary is the surviving
corporation, and (e) any Restricted Subsidiary may merge with any other Person
so long as such Restricted Subsidiary is the surviving corporation and is a
wholly owned Subsidiary of Borrower after giving effect thereto.
SECTION X.5. Asset Dispositions. Except as provided in this Section 10.5,
------------------ ------------
neither Borrower nor any Restricted Subsidiary shall sell, lease, abandon or
otherwise transfer any of its assets to any other Person other than pursuant to
an Exempt Transfer. Borrower and its Restricted Subsidiaries shall be permitted
to sell or otherwise dispose of any asset other than (a) oil and gas properties,
(b) Related Assets, (c) debt and equity securities issued by any Restricted
Subsidiary, and (d) accounts (as such term is defined in the Uniform Commercial
Code). Borrower and its Restricted Subsidiaries shall be permitted to sell oil
and gas properties and Related Assets; provided, that the aggregate value of all
-------- ----
oil and gas properties and Related Assets sold by Borrower and its Restricted
Subsidiaries during any period between Periodic Determinations shall not exceed
the greater of (i) $5,000,000, or (ii) five percent (5%) of the Borrowing Base
then in effect.
SECTION X.6. Amendments to Material Documents. Borrower will not, nor will
--------------------------------
Borrower permit any of its Restricted Subsidiaries to, enter into any material
modification or amendment of, grant any material consent under, or waive any
material right or obligation of any Person under its certificate or articles of
incorporation, bylaws, partnership agreement, regulations or other
organizational documents.
SECTION X.7. Use of Proceeds. The proceeds of Borrowings under the
---------------
Commitment will not be used for any purpose other than (a) working capital, (b)
to finance the acquisition, exploration and development of oil and gas
properties and Related Assets and the transportation, processing and marketing
of hydrocarbons by Borrower and its Restricted Subsidiaries, (c) Restricted
Payments permitted pursuant to Section 10.2, (d) Investments permitted pursuant
------------
to Section 10.8, (e) to refinance the obligations outstanding under the Existing
------------
Credit Agreement, and (f) to redeem all of the Subordinate Notes. None of the
proceeds of the Loan nor any Letter of Credit issued hereunder will be used,
directly or indirectly, (i) for the purpose, whether immediate, incidental or
ultimate, of purchasing or carrying any Margin Stock, or (ii) in violation of
applicable law or regulation (including, without limitation, the Margin
Regulations).
SECTION X.8. Investments. Neither Borrower nor any Restricted Subsidiary
-----------
of Borrower will, directly or indirectly, make any Investment other than
Permitted Investments.
51
SECTION X.9. Transactions with Affiliates. Borrower will not, and
----------------------------
Borrower will not permit any of its Subsidiaries to, engage in any material
transaction with an affiliated Person (other than, in the case of Borrower and
its Restricted Subsidiaries, with each other) unless such transaction is
generally as favorable to Borrower or such Subsidiary as could be obtained in an
arm's length transaction with an unaffiliated Person in accordance with
prevailing industry customs and practices.
SECTION X.10. Plans. Borrower will not, and Borrower will not permit any
-----
of its Subsidiaries to, create, adopt or become bound by any Plan.
SECTION X.11. Oil and Gas Hedge Transactions. Borrower will not, and
------------------------------
Borrower will not permit any of its Restricted Subsidiaries to, enter into Oil
and Gas Hedge Transactions which would cause the volume of (a) (i) the aggregate
notional volume of oil which is the subject of Oil and Gas Hedge Transactions in
existence at any time to exceed eighty percent (80%) of Borrower's and its
Restricted Subsidiaries' anticipated production of oil from proved, developed
producing reserves during the entire term of such existing Oil and Gas Hedge
Transactions, and (ii) the notional volume of oil with respect to which a
settlement is required on a particular settlement date under such Oil and Gas
Hedge Transactions to exceed eighty percent (80%) of Borrower's and its
Restricted Subsidiaries' anticipated production of oil from proved, developed
producing reserves for the period (a "Settlement Period") from the immediately
-----------------
preceding settlement date under any Oil and Gas Hedge Transaction (or the
commencement of such Oil and Gas Hedge Transactions in the event there is no
prior settlement date) to such settlement date, and (b) (i) the aggregate
notional volume of gas which is the subject of gas Oil and Gas Hedge
Transactions in existence at any time to exceed eighty percent (80%) of
Borrower's and its Restricted Subsidiaries' anticipated production of gas from
proved, developed producing reserves during the entire term of such existing Oil
and Gas Hedge Transactions, and (ii) the notional volume of gas with respect to
which a settlement is required on a particular settlement date under such gas
Oil and Gas Hedge Transactions to exceed eighty percent (80%) of Borrower's and
its Restricted Subsidiaries' anticipated production of gas from proved,
developed producing reserves for any Settlement Period.
SECTION X.12. Obligations of Unrestricted Subsidiaries. Except as
----------------------------------------
expressly permitted by Section 10.2, Borrower will not, nor will Borrower permit
------------
any of its Restricted Subsidiaries to, incur any liability or obligation to any
Unrestricted Subsidiary of Borrower of any nature, or have any liability
(whether by operation of law or otherwise) for any liability, Debt or obligation
of any Unrestricted Subsidiary.
SECTION X.13. Acquisitions. Borrower will not, nor will Borrower permit
------------
any of its Restricted Subsidiaries to, acquire, in a single transaction or a
series of related transactions, all or substantially all of the assets or
capital stock (or other outstanding equity interests of any Person) or all or
substantially all of the assets comprising a division of any Person; provided,
--------
that nothing contained in this Section 10.13 shall prohibit Borrower or any
- ---- -------------
Restricted Subsidiary of Borrower from making any acquisition of assets
consisting of oil and gas properties or any other acquisition which is also a
Permitted Investment.
52
SECTION X.14. Operating Leases. Borrower will not, nor will Borrower
----------------
permit any of its Subsidiaries to, incur, become, or remain liable under any
Operating Lease which would cause the aggregate amount of all Rentals payable by
Borrower and its Restricted Subsidiaries in any Fiscal Year to be greater than
$3,000,000.
SECTION X.15. Speculative Hedge Transactions. Borrower will not, nor will
------------------------------
Borrower permit any of its Restricted Subsidiaries to, enter into any commodity,
interest rate, currency or other swap, option, collar or other derivative
transaction pursuant to which Borrower or such Restricted Subsidiary speculates
on the movement of commodity prices, securities prices, interest rates,
financial markets, currency markets or other items; provided, that nothing
-------- ----
contained in this Section 10.15 shall prohibit Borrower from (a) entering into
-------------
interest rate swaps or other interest rate hedge transactions pursuant to which
Borrower hedges interest rate risk with respect to the interest reasonably
anticipated to be incurred pursuant to this Agreement, (b) entering into Oil and
Gas Hedge Transactions permitted by Section 10.11 hereof, or (c) making
-------------
Permitted Investments.
ARTICLE XI
FINANCIAL COVENANTS
Borrower agrees that, so long as any Bank has any commitment to lend or
participate in Letter of Credit Exposure hereunder or any amount payable under
any Note remains unpaid or any Letter of Credit remains outstanding:
(a) Borrower will not permit its ratio of Consolidated Current Assets
to its Consolidated Current Liabilities as of the end of any Fiscal Quarter to
be less than 1 to 1.
(b) Borrower will not permit its Ratio of Consolidated Funded Debt to
Adjusted Consolidated EBITDA as of the end of any Fiscal Quarter to exceed 3.5
to 1.
ARTICLE XII
DEFAULTS
SECTION XII.1. Events of Default. If one or more of the following events
-----------------
(collectively "Events of Default" and individually an "Event of Default") shall
----------------- ----------------
have occurred and be continuing:
(a) Borrower shall fail to pay when due any principal of any Note or
any reimbursement obligation with respect to any Letters of Credit when due;
53
(b) Borrower shall fail to pay any accrued interest due and owing on
any Note or any fees or any other amount payable hereunder when due and such
failure shall continue for a period of five (5) days;
(c) Borrower shall fail to observe or perform any covenant or
agreement contained in Section 7.3, Article X or Article XI;
----------- --------- ----------
(d) Borrower or any Restricted Subsidiary shall fail to observe or
perform any covenant or agreement contained in this Agreement or the other Loan
Papers (other than those covered by Sections 12.1(a), (b) and (c)) for thirty
---------------- --- ---
(30) days after written notice thereof has been given to Borrower by
Administrative Agent at the request of any Bank, provided, that, as to Defaults
under Sections 9.1(d) and (g), Borrower shall not be entitled to more than one
--------------- ---
(1) notice and period of cure during each calendar year, and as to each other
type of Default, Borrower shall not be entitled to more than two (2) notices and
periods of cure during any calendar year;
(e) Borrower shall fail to cause the financial statements described in
Section 9.1(a) to be accompanied by the opinion without qualification (except
- --------------
for qualifications required by changes in accounting methods with which
Borrower's auditors concur) of the accountants preparing such opinion, that such
financial statements were prepared in accordance with generally accepted
accounting principles and fairly present the consolidated financial position and
results of operations of Borrower;
(f) any representation, warranty, certification or statement made or
deemed to have been made by any Company in this Agreement or by any Company or
any other Person on behalf of any Company in any other Loan Paper or any other
certificate, financial statement or other document delivered pursuant to this
Agreement shall prove to have been incorrect in any material respect when made;
(g) any Company shall fail to pay any Material Debt at maturity or any
event or condition (i) shall occur which results in the acceleration of the
maturity of any Material Debt of any Company, or (ii) shall occur and continue
for a period of thirty (30) days (or such shorter cure period as is provided
pursuant to the terms of such Material Debt) which entitles (or, with the giving
of notice or lapse of time or both, would unless cured or waived, entitle) the
holder of such Material Debt to accelerate the maturity thereof;
(h) any Company shall commence a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to itself or
its debts under any bankruptcy, insolvency or other similar law now or hereafter
in effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of its
property, or shall consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other proceeding
commenced against it, or shall make a general assignment for the benefit of
creditors, or shall fail generally to pay its debts as they become due, or shall
take any corporate action to authorize any of the foregoing;
54
(i) an involuntary case or other proceeding shall be commenced against
any Company seeking liquidation, reorganization or other relief with respect to
it or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of sixty (60) days; or an order for relief
shall be entered against any Company under the federal bankruptcy laws as now or
hereafter in effect;
(j) one (1) or more judgments or orders for the payment of money
aggregating in excess of $1,000,000 shall be rendered against any Company and
such judgment or order (i) shall continue unsatisfied and unstayed (unless
bonded with a supersedeas bond at least equal to such judgment or order) for a
period of thirty (30) days or (ii) is not fully paid and satisfied at least ten
(10) days prior to the date on which any of its assets may be lawfully sold to
satisfy such judgment or order;
(k) one (1) or more judgments or orders for the payment of money
aggregating in excess of the sum of (i) ten percent (10%) of the Borrowing Base
then in effect, plus (ii) (A) the amount of such judgment which is covered by
----
insurance to the satisfaction of Administrative Agent and its counsel, and (B)
any amounts which Borrower or any of its Restricted Subsidiaries has deposited
with Administrative Agent to be held by Administrative Agent as security for the
payment of such judgment shall be rendered against Borrower or any of its
Subsidiaries, whether or not otherwise bonded or stayed;
(l) [intentionally deleted];
(m) any Company shall incur Environmental Liabilities which,
individually or when considered in the aggregate for all Companies, exceeds
$10,000,000;
(n) this Agreement or any other Loan Paper shall cease to be in full
force and effect or shall be declared null and void or the validity or
enforceability thereof shall be contested or challenged by Borrower or any
Restricted Subsidiary of Borrower, or Borrower or any Restricted Subsidiary of
Borrower shall deny that it has any further liability or obligation under any of
the Loan Papers, or any Lien created by the Loan Papers shall for any reason
(other than the release thereof in accordance with the Loan Papers) cease to be
a valid, first priority, perfected Lien upon any of the property purported to be
covered thereby; and
(o) any Person or group (as defined in Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934) shall become the direct or indirect
beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of
1934) of more than thirty percent (30%) of the total voting power of all classes
of capital stock then outstanding of Borrower entitled (without regard to the
occurrence of any contingency) to vote in elections of directors of Borrower;
55
then, and in every such event, Administrative Agent shall without presentment,
notice or demand (unless expressly provided for herein) of any kind (including,
without limitation, notice of intention to accelerate and acceleration), all of
which are hereby waived, (a) if requested by Required Banks, terminate the
Commitment and it shall thereupon terminate, and (b) if requested by Required
Banks, take such other actions as may be permitted by the Loan Papers including,
declaring the Notes, or any of them, (together with accrued interest thereon) to
be, and the Notes, or any of them, shall thereupon become, immediately due and
payable; provided that (c) in the case of any of the Events of Default specified
-------- ----
in Section 12.1(h) or (i), without any notice to Borrower or any other act by
--------------- ---
Administrative Agent or Banks, the Commitment shall thereupon terminate and the
Notes (together with accrued interest thereon) shall become immediately due and
payable.
ARTICLE XIII
AGENTS
SECTION XIII.1. Appointment and Authorization. Each Bank irrevocably
-----------------------------
appoints and authorizes each Agent to take such action as agent on its behalf
and to exercise such powers under this Agreement, the Notes and the other Loan
Papers as are delegated to such Agent by the terms hereof or thereof, together
with all such powers as are reasonably incidental thereto, provided that, as
-------- ----
between and among Banks and Agents, no Agent will prosecute, settle or
compromise any claim against Borrower or release or institute enforcement
proceedings, except with the consent of Required Banks. Each Bank and Borrower
agree that none of the Agents are a fiduciary for Banks or for Borrower but each
simply is acting in the capacity described herein to alleviate administrative
burdens for both Borrower and Banks and that no Agent has any duties or
responsibilities to Banks or Borrower except those expressly set forth herein.
SECTION XIII.2. Agents and Affiliates. Each Agent in its individual
---------------------
capacity and not as Agent hereunder shall have the same rights and powers under
this Agreement as any other Bank and may exercise or refrain from exercising the
same as though it were not an Agent hereunder and each Agent in its individual
capacity and not as Agent hereunder may accept deposits from, lend money to, and
generally engage in any kind of business with Borrower and its Subsidiaries and
Affiliates as if such parties were not Agents hereunder.
SECTION XIII.3. Action by Agents. The obligations of Agents hereunder are
----------------
only those expressly set forth herein. Without limiting the generality of the
foregoing, no Agent shall be required to take any action with respect to any
Default or Event of Default, except as expressly provided in Article XII.
-----------
Notwithstanding the administrative authority delegated to Agents, no Agent shall
without the prior written approval of all Banks cause or permit any modification
of the Loan Papers which would (a) increase the Commitment of any Bank or
subject any Bank to any additional obligations, (b) forgive any of the principal
or reduce the rate of interest on the Loan or any fees hereunder, (c) postpone
the date fixed for payment of principal of or interest on
56
the Loan or any fees hereunder including the Termination Date, (d) change the
percentage of the Total Commitment, change the definition of "Required Banks"
with respect to the percentage comprising same, or change the number of Banks
which shall be required for Banks or any of them to take any action under
Section 15.5 or any other provision of this Agreement, (e) permit Borrower to
- ------------
assign any of its rights hereunder, (f) amend or waive any of the provisions of
Article V or of the definitions contained in Section 2.1 applicable thereto, or
- --------- -----------
(g) provide for the release or substitution of collateral for the Loan other
than releases required pursuant to sales of collateral which are expressly
permitted under Section 10.5. Subject to the foregoing, each Agent shall make
------------
such requests or take such actions in respect of Borrower as the Required Banks
shall direct. Further, subject to the foregoing, each Agent shall grant such
waivers, consents or approvals in favor of Borrower as the Required Banks shall
direct.
SECTION XIII.4. Experts. Each Agent may consult with legal counsel (who
-------
may be counsel for Borrower), independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken by it in good faith in accordance with the advice of such counsel,
accountants or experts.
SECTION XIII.5. Liability of Agents. None of the Agents nor any of their
-------------------
respective directors, officers, agents, or employees shall be liable for any
action taken or not taken by such Agent in connection herewith (a) with the
consent or at the request of Required Banks, or (b) in the absence of its own
gross negligence or willful misconduct, IT BEING THE INTENTION OF BANKS THAT
SUCH PARTIES SHALL NOT BE LIABLE FOR THE CONSEQUENCES OF THEIR ORDINARY
NEGLIGENCE. None of the Agents nor any of their respective officers, directors,
agents or employees shall be responsible for or have any duty to ascertain,
inquire into or verify (i) any statement, warranty or representation made in
connection with this Agreement or any borrowing hereunder, (ii) the performance
or observance of any of the covenants or agreements of Borrower, (iii) the
satisfaction of any condition specified in Article V, except receipt of items
---------
required to be delivered to Administrative Agent, or (iv) the validity,
effectiveness or genuineness of this Agreement, the Notes or any other
instrument or writing furnished in connection herewith. No Agent shall incur
any liability by acting in reliance upon any notice, consent, certificate,
statement, or other writing (which may be a bank wire, telex or similar writing)
believed by it to be genuine or to be signed by the proper party or parties or
upon any oral notice which Agent believes will be confirmed in writing by the
proper party or parties. If any Agent fails to take any action required to be
taken by it under the Loan Papers after the occurrence of an Event of Default
and within a reasonable time after being requested to do so by any Bank (after
such requesting Bank has obtained the approval of such other Banks as required),
such Agent shall not suffer or incur any liability as a result thereof, but such
requesting Bank may request such Agent to resign, whereupon such Agent shall so
resign pursuant to Section 13.9.
------------
SECTION XIII.6. Delegation of Duties. Each Agent may execute any of its
--------------------
duties hereunder by or through officers, directors, employees, attorneys, or
agents.
57
SECTION XIII.7. Indemnification. Each Bank shall, ratably in accordance
---------------
with its Commitment Percentage, indemnify each Agent (to the extent not
reimbursed by Borrower) against any cost, expense (including counsel fees and
disbursements), claim, demand, action, loss or liability (except such as result
from such Agent's gross negligence or willful misconduct) that such Agent may
suffer or incur in connection with this Agreement or any action taken or omitted
by such Agent hereunder, including without limitation, matters arising out of
such Agent's own negligence. IT BEING THE INTENTION OF EACH BANK THAT EACH
AGENT SHALL BE INDEMNIFIED FOR THE CONSEQUENCES OF ITS ORDINARY NEGLIGENCE.
SECTION XIII.8. Credit Decision. Each Bank acknowledges that it has,
---------------
independently and without reliance upon any Agent or any other Bank, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently and without reliance upon any Agent or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under this Agreement.
SECTION XIII.9. Successor Agents. Each Agent may resign at any time by
----------------
giving written notice thereof to Banks and Borrower. In addition, Borrower may,
prior to a Default, request the designation by Banks of a successor Agent. Upon
any such request by Borrower or resignation by an Agent, Required Banks shall
have the right to appoint a successor Agent, which shall be one of Banks. If no
successor Agent shall have been so appointed by Required Banks and accepted such
appointment within thirty (30) days after the retiring Agent's giving of notice
of resignation or Borrower's request for a successor Agent, then the retiring
Agent may, on behalf of Banks, appoint a successor Agent (as applicable), which
shall (a) be a commercial bank organized under the laws of the United States of
America or of any State thereof and having a combined capital and surplus of at
least $500,000,000 and (b) unless the successor Agent is a Bank, be reasonably
acceptable to Borrower. Upon the acceptance of its appointment as a successor
Agent hereunder, such successor Agent shall thereupon succeed to and become
vested with all the rights and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder. After any
Agent's resignation hereunder, the provisions of this Section 13.9 shall
------------
continue to inure to its benefit as to any actions taken or omitted to be taken
by it while it was Agent hereunder. Borrower shall be entitled to recommend a
successor Agent at the time of designation of any successor Agent pursuant to
this Section 13.9. Banks shall give due consideration to the successor
------------
nominated by Borrower, but shall have no obligation to approve such nominee.
SECTION XIII.10. Documentation Agent, Syndication Agent, Co-Agents, etc..
------------------------------------------------------
Except as otherwise expressly set forth herein, none of Documentation Agent,
Syndication Agent nor any Co-Agent shall have any right, power, obligation,
liability, responsibility or duty under this Agreement other than those
applicable to such parties in their individual capacities as Banks hereunder.
Without limiting the foregoing, none of the Documentation Agent, Syndication
Agent nor any Co-Agent shall have or be deemed to have a fiduciary relationship
with any Bank.
58
ARTICLE XIV
PROTECTION OF YIELD; CHANGE IN LAWS
SECTION XIV.1. Basis for Determining Interest Rate Applicable to Eurodollar
------------------------------------------------------------
Tranches Inadequate. If on or prior to the first day of any Interest Period
- -------------------
with respect to a Borrowing:
(a) Administrative Agent is advised by any Bank that deposits in
dollars (in the applicable amounts) are not being offered to such Bank(s) in the
relevant market for such Interest Period, or
(b) Banks having fifty percent (50%) or more of the aggregate amount
of the Total Commitment advise Administrative Agent that the Adjusted Eurodollar
Rate as determined by Administrative Agent will not adequately and fairly
reflect the cost to such Banks of funding their respective shares of the
requested Borrowing which will be subject to a Eurodollar Tranche for such
Interest Period, Administrative Agent shall give notice thereof to Borrower and
Banks, whereupon the obligations of Banks to allow interest to be computed by
reference to the Adjusted Eurodollar Rate shall be suspended until
Administrative Agent notifies Borrower that the circumstances giving rise to
such suspension no longer exist. Unless Borrower notifies Administrative Agent
at least two (2) Domestic Business Days before the date of any Borrowing for
which a Request for Borrowing has previously been given that it elects not to
borrow on such date, such Borrowing shall instead be made as an Adjusted Base
Rate Borrowing.
SECTION XIV.2. Illegality of Eurodollar Loans. (a) If, after the date of
------------------------------
this Agreement, the adoption of any applicable law, rule or regulation, or any
change therein, or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or its
Eurodollar Lending Office) with any request or directive (whether or not having
the force of law) of any such authority, central bank or comparable agency shall
make it unlawful or impossible for any Bank (or its Eurodollar Lending Office)
to make, maintain or fund any portion of the Loan subject to a Eurodollar
Tranche and such Bank shall so notify Administrative Agent, Administrative Agent
shall forthwith give notice thereof to the other Banks and Borrower. Until such
Bank notifies Borrower and Administrative Agent that the circumstances giving
rise to such suspension no longer exist, the obligation of such Bank to maintain
or fund any portion of the Loan subject to a Eurodollar Tranche shall be
suspended. Before giving any notice to Administrative Agent pursuant to this
Section 14.2, such Bank shall designate a different Eurodollar Lending Office if
- ------------
such designation will avoid the need for giving such notice and will not, in the
judgment of such Bank, be otherwise disadvantageous to such Bank. If such Bank
shall determine that it may not lawfully continue to maintain and fund any
portion of the Loan outstanding subject to a Eurodollar Tranche to maturity and
shall so specify in such notice, Borrower shall immediately convert the
principal amount of the Loan which is subject to a
59
Eurodollar Tranche to an Adjusted Base Rate Tranche of an equal principal amount
from such Bank (on which interest and principal shall be payable
contemporaneously with the unaffected Eurodollar Tranches of the other Banks).
(b) No Bank shall be required to make the Loan (or any portion
thereof) hereunder if the making of the Loan (or any portion thereof) would be
in violation of any law applicable to such Bank.
SECTION XIV.3. Increased Cost of Eurodollar Tranche. If after the date
------------------------------------
hereof, the adoption of any applicable law, rule or regulation, or any change
therein, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or its
Lending Office) with any request or directive (whether or not having the force
of law) of any such authority, central bank or comparable agency:
(a) shall subject any Bank (or its Lending Office) to any tax, duty
or other charge with respect to maintaining or funding any portion of the Loan
subject to a Eurodollar Tranche, its Note or its obligation to allow interest to
be computed by reference to the Adjusted Eurodollar Rate shall change the basis
of taxation of payments to any Bank (or its Lending Office) of the principal of
or interest on any portion of the Loan which is subject to any Eurodollar
Tranche or any other amounts due under this Agreement in respect of any portion
of the Loan which is subsequent to any Eurodollar Tranche or its obligation to
allow interest to be computed by reference to the Adjusted Eurodollar Rate
(except for changes in the rate of Tax on the overall net income of such Bank or
its Lending Office imposed by the jurisdiction in which such Bank's principal
executive office or Lending Office is located); or
(b) shall impose, modify or deem applicable any reserve, special
deposit or similar requirement (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve System, but
excluding with respect to any Eurodollar Tranche any such requirement included
in an applicable Eurodollar Reserve Percentage) against assets of, deposits with
or for the account of or credit extended by, any Bank's Lending Office or shall
impose on any Bank (or its Lending Office) or the applicable interbank
Eurodollar market or any other condition affecting Eurodollar Tranches, its Note
or its obligation to allow interest to be computed by reference to the Adjusted
Eurodollar Rate;
and the result of any of the foregoing is to increase the cost to such Bank (or
its Lending Office) of funding or maintaining any portion of the Loan subject to
a Eurodollar Tranche, or to reduce the amount of any sum received or receivable
by such Bank (or its Lending Office) under this Agreement or under its Note with
respect thereto, by an amount deemed by such Bank to be material, then, within
five (5) days after demand by such Bank (with a copy to the Administrative
Agent), Borrower shall pay to such Bank such additional amount or amounts as
will compensate such Bank for such increased cost or reduction. Each Bank will
promptly notify Borrower and Administrative Agent of any event of which it has
knowledge, occurring after the date hereof,
60
which will entitle such Bank to compensation pursuant to this Section 14.3 and
------------
will designate a different Lending Office if such designation will avoid the
need for, or reduce the amount of, such compensation and will not, in the
judgment of such Bank, be otherwise disadvantageous to such Bank. A certificate
of any Bank claiming compensation under this Section 14.3 and setting forth the
------------
additional amount or amounts to be paid to it hereunder shall be conclusive in
the absence of manifest error. In determining such amount, such Bank may use any
reasonable averaging and attribution methods.
SECTION XIV.4. Adjusted Base Rate Tranche Substituted for Affected
---------------------------------------------------
Eurodollar Tranche. If (a) the obligation of any Bank to fund or maintain any
- ------------------
portion of the Loan subject to a Eurodollar Tranche has been suspended pursuant
to Section 14.2, or (b) any Bank has demanded compensation under Section 14.3
------------ ------------
and Borrower shall, by at least five (5) Eurodollar Business Days prior notice
to such Bank through the Administrative Agent, have elected that the provisions
of this Section 14.4 shall apply to such Bank, then, unless and until such Bank
------------
notifies Borrower that the circumstances giving rise to such suspension or
demand for compensation no longer apply:
(a) any Tranche which would otherwise be characterized by such Bank
as a Eurodollar Tranche shall instead be deemed an Adjusted Base Rate Tranche
(on which interest and principal shall be payable contemporaneously with the
unaffected Eurodollar Tranches of the other Banks); and
(b) after all of its Eurodollar Tranches have been repaid, all
payments of principal which would otherwise be applied to repay Eurodollar
Tranches shall be applied to repay its Adjusted Base Rate Tranches instead.
SECTION XIV.5. Capital Adequacy. If after the date hereof, the adoption of
----------------
any applicable law, rule or regulation, or any change therein, or any change in
the interpretation or administration thereof, by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its Lending Office) with
any request or directive (whether or not having the force of law), shall:
(a) impose, modify or deem applicable any reserve, special deposit,
compensatory loan, deposit insurance, capital adequacy, minimum capital, capital
ratio or similar requirement against all or any assets held by, deposits or
accounts with, credit extended by or to, or commitments to extend credit or any
other acquisition of funds by any Bank (or its Lending Office), or impose on any
Bank (or its Lending Office) any other condition, with respect to the
maintenance by such Bank of all or any part of its Commitment; or
(b) subject any Bank (or its Lending Office) to, or cause the
termination or reduction of a previously granted exemption with respect to, any
Tax with respect to the maintenance by such Bank of all or any part of its
Commitment (other than Taxes assessed against such Bank's overall net income);
and the result of any of the foregoing is to increase the cost to such Bank (or
its Lending Office) of maintaining its Commitment or to reduce the amount of any
61
sums received or receivable by it (or its Lending Office) under this Agreement
or any other Loan Paper, or to reduce the rate of return on such Bank's equity
in connection with this Agreement, as the case may be, by an amount which such
Bank deems material then, in any such case, within five (5) days of demand by
such Bank (or its Lending Office) (with a copy to Administrative Agent),
Borrower shall pay to such Bank (or its Lending Office) such additional amount
or amounts as will compensate such Bank for any additional cost, reduced
benefit, reduced amount received or reduced rate of return. Each Bank will
promptly notify Borrower and Administrative Agent of any event of which it has
knowledge, occurring after the date hereof, which will entitle such Bank to
compensation pursuant to this Section 14.5. A certificate of any Bank claiming
------------
compensation under this Section 14.5 and setting forth the additional amount or
------------
amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error. In determining such amount, such Bank may use any reasonable
averaging and attribution methods.
Without limiting the foregoing, in the event any event or condition
described in this Section 14.5 shall occur or arise which relates to the
------------
maintenance by any Bank of that part of its Commitment which is in excess of its
Commitment Percentage of the Borrowing Base then in effect (such excess portion
of such Commitment of any Bank is hereinafter referred to as its "Surplus
-------
Commitment"), such Bank shall notify Administrative Agent and Borrower of the
- ----------
occurrence of such event or the existence of such condition and of the amount of
a fee (to be computed on a per annum basis with respect to such Bank's Surplus
Commitment) which such Bank determines in good faith will compensate such Bank
for such additional cost, reduced benefit, reduced amount received or reduced
rate of return. Within five (5) Domestic Business Days following receipt of
such notice, Borrower shall notify such Bank whether it accepts or rejects such
fee (if Borrower fails to timely respond to such notice it will be deemed to
have accepted such fee). If Borrower rejects such fee, the applicable
Commitment of each Bank will be automatically and permanently reduced to the
Borrowing Base applicable to such Commitment and then in effect. If Borrower
accepts such fee, such fee shall accrue from and after the date of such Bank's
notice and shall be payable in arrears (based on the daily average balance of
such Bank's Surplus Commitment) on the last day of each Fiscal Quarter and on
the Termination Date. Such fee shall be in lieu of any amounts to which such
Bank would otherwise be entitled in respect of its Surplus Commitment pursuant
to the other provisions of this Section 14.5 for the period on and after the
------------
date of such notice unless such Bank determines that such fee is not adequate to
fully compensate such Bank for any additional cost, reduced benefit, reduced
amount received or reduced rate of return such Bank may thereafter incur in
respect of such Bank's Surplus Commitment. In that event such Bank shall be
entitled to such additional compensation to which such Bank is otherwise
entitled pursuant to this Section 14.5.
------------
SECTION XIV.6. Taxes. All amounts payable by Borrower under the Loan
-----
Papers (whether principal, interest, fees, expenses, or otherwise) to or for the
account of each Bank shall be paid in full, free of any deductions or
withholdings for or on account of any Taxes. If Borrower is prohibited by law
from paying any such amount free of any such deductions and withholdings, then
(at the same time and in the same manner that such original amount is otherwise
due under the Loan Papers) Borrower shall pay to or for the account of such Bank
such
62
additional amount as may be necessary in order that the actual amount received
by such Bank after deduction and/or withholding (and after payment of any
additional Taxes due as a consequence of the payment of such additional amount,
and so on) will equal the amount such Bank would have received if such deduction
or withholding were not made.
SECTION XIV.7. Discretion of Banks as to Manner of Funding.
-------------------------------------------
Notwithstanding any provisions of this Agreement to the contrary, each Bank
shall be entitled to fund and maintain its funding of all or any part of its
Commitment in any manner it sees fit, it being understood, however, that for the
purposes of this Agreement all determinations hereunder shall be made as if such
Bank had actually funded and maintained the Loan (or any portion thereof)
subject to a Eurodollar Tranche during the Interest Period for the Loan (or any
portion thereof) through the purchase of deposits having a maturity
corresponding to the last day of such Interest Period and bearing an interest
rate equal to the Adjusted Eurodollar Rate for such Interest Period.
ARTICLE XV
MISCELLANEOUS
SECTION XV.1. Notices. All notices, requests and other communications to
-------
any party hereunder shall be in writing (including bank wire, telecopy or
similar writing) and shall be given (a) if to Agent or any Bank, to such party
at its address, telex or telecopy number set forth on Schedule 1 hereof, or (b)
----------
if to Borrower or any of its Subsidiaries, at the address, telex or telecopy
number for Borrower set forth on the signature page hereto or such other
address, telex or telecopy number as such party may hereafter specify for the
purpose by notice to Administrative Agent and Borrower, as the case may be.
Each such notice, request or other communication shall be effective (a) if given
by telecopy, when such telecopy is transmitted to the telecopy number specified
in this Section 15.1 and the appropriate answerback is received or receipt is
------------
otherwise confirmed, (b) if given by mail, one (1) Domestic Business Day after
deposit in the mails with first class postage prepaid, addressed as aforesaid,
or (c) if given by any other means, when delivered at the address specified in
this Section 15.1; provided that notices to Administrative Agent under Article
------------ -------- ---- -------
III or XIV shall not be effective until received.
- --- ---
SECTION XV.2. No Waivers. No failure or delay by any Agent or any Bank in
----------
exercising any right, power or privilege hereunder or under any Note or other
Loan Paper shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law
or in any of the other Loan Papers.
SECTION XV.3. Expenses; Documentary Taxes; Indemnification. (a) Borrower
--------------------------------------------
shall pay (i) all out-of-pocket expenses of Administrative Agent, including
reasonable fees and disbursements of special counsel for Administrative Agent,
in connection with the preparation of
63
this Agreement and the other Loan Papers and, if appropriate, the recordation of
the Loan Papers, any waiver or consent hereunder or any amendment hereof or any
Default or alleged Default hereunder, and (ii) if an Event of Default occurs,
all out-of-pocket expenses incurred by each Agent and each Bank, including fees
and disbursements of counsel in connection with such Event of Default and
collection and other enforcement proceedings resulting therefrom, fees of
auditors and consultants incurred in connection therewith and investigation
expenses incurred by each Agent and each Bank in connection therewith. Borrower
shall indemnify each Bank against any Taxes imposed by reason of the execution
and delivery of this Agreement or the Notes.
(b) Borrower agrees to indemnify each Agent and each Bank and hold
each Agent and each Bank harmless from and against any and all liabilities,
losses, damages, costs and expenses of any kind (including, without limitation,
the reasonable fees and disbursements of counsel for each Agent and each Bank in
connection with any investigative, administrative or judicial proceeding,
whether or not such Bank shall be designated a party thereto) which may be
incurred by any Agent or any Bank relating to or arising out of this Agreement
or any actual or proposed use of proceeds of the Loan; provided that no Bank
-------- ----
shall have the right to be indemnified hereunder for its own gross negligence or
willful misconduct, IT BEING THE INTENTION HEREBY THAT EACH BANK AND EACH AGENT
SHALL BE INDEMNIFIED FOR THE CONSEQUENCES OF ITS OWN ORDINARY NEGLIGENCE.
SECTION XV.4. Right and Sharing of Set-Offs. (a) Upon the occurrence and
-----------------------------
during the continuance of any Event of Default, each Bank is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by such Bank to or for the credit or the account of Borrower against any and all
of the obligations of Borrower now or hereafter existing under this Agreement
and any Note held by such Bank, irrespective of whether or not such Bank shall
have made any demand under this Agreement or such Note and although such
obligations may be unmatured. Each Bank agrees promptly to notify Borrower
after any such setoff and application made by such Bank, provided that the
failure to give such notice shall not affect the validity of such setoff and
application. The rights of each Bank under this Section 15.4(a) are in addition
---------------
to other rights and remedies (including, without limitation, other rights of
setoff) which such Bank may have.
64
(b) Each Bank agrees that if it shall, by exercising any right of
setoff or counterclaim or otherwise, receive payment after the occurrence and
during the continuance of an Event of Default of a proportion of the aggregate
amount of principal and interest due with respect to the Loan which is greater
than the proportion received by any other Bank in respect of the Loan, the Bank
receiving such proportionately greater payment shall purchase such
participations in the interests in the Loan held by the other Banks, and such
other adjustments shall be made, as may be required so that all such payments of
principal and interest with respect to the Loan held by Banks shall be shared by
Banks ratably in accordance with their respective Commitment Percentages;
provided that nothing in this Section 15.4 shall impair the right of any Bank to
- -------- ---- ------------
exercise any right of setoff or counterclaim it may have and to apply the amount
subject to such exercise to the payment of indebtedness of Borrower other than
its indebtedness under the Loan. Borrower agrees, to the fullest extent it may
effectively do so under applicable law, that Participants may exercise rights of
setoff or counterclaim and other rights with respect to such participation as
fully as if such holder of a participation were a direct creditor of Borrower in
the amount of such participation.
SECTION XV.5. Amendments and Waivers. Any provision of this Agreement,
----------------------
the Notes or the other Loan Papers may be amended or waived if, but only if such
amendment or waiver is in writing and is signed by Borrower and Required Banks
(and, if the rights or duties of any Agent are affected thereby, by such Agent);
provided that no such amendment or waiver shall, unless signed by all Banks, (a)
- -------- ----
increase the Commitment of any Bank or subject any Bank to any additional
obligation, (b) forgive any of the principal of or reduce the rate of interest
on the Loan or any fees hereunder, (c) postpone the date fixed for any payment
of principal of or interest on the Loan or any fees hereunder including the
Termination Date, (d) change the percentages of the Total Commitment, or the
number of Banks which shall be required for the Banks or any of them to take any
action under this Section 15.5 or any other provision of this Agreement, (e)
------------
permit Borrower to assign any of its rights hereunder, (f) amend or waive any of
the provisions of Article V or the definitions contained in Section 2.1
--------- -----------
applicable thereto, or (g) provide for release or substitution of collateral for
the Obligations or any part thereof other than releases required pursuant to
sales of collateral which are expressly permitted by Section 10.5 hereof.
------------
Borrower, Agent and each Bank further acknowledge that any decision by any Agent
or any Bank to enter into any amendment, waiver or consent pursuant hereto shall
be made by such Bank or Agent in its sole discretion, and in making any such
decision each such Agent and each such Bank shall be permitted to give due
consideration to any credit or other relationship any such Agent or any such
Bank may have with Borrower, any Affiliate of Borrower, or any other
Unrestricted Subsidiary of Borrower.
SECTION XV.6. Survival. All representations, warranties and covenants
--------
made by Borrower herein or in any certificate or other instrument delivered by
it or in its behalf under the Loan Papers shall be considered to have been
relied upon by Banks and shall survive the delivery to Banks of such Loan Papers
or the extension of the Loan (or any part thereof), regardless of any
investigation made by or on behalf of Banks.
65
SECTION XV.7. Limitation on Interest. Regardless of any provision
----------------------
contained in the Loan Papers, Banks shall never be entitled to receive, collect,
or apply, as interest on the Loan, any amount in excess of the Maximum Lawful
Rate applicable to each Bank, respectively, and in the event any Bank ever
receives, collects or applies as interest any such excess, such amount which
would be deemed excessive interest shall be deemed a partial prepayment of
principal and treated hereunder as such; and if the Loan is paid in full, any
remaining excess shall promptly be paid to Borrower. In determining whether or
not the interest paid or payable under any specific contingency exceeds the
Maximum Lawful Rate, Borrower and Banks shall, to the extent permitted under
applicable law, (a) characterize any nonprincipal payment as an expense, fee or
premium rather than as interest, (b) exclude voluntary prepayments and the
effects thereof and (c) amortize, prorate, allocate and spread, in equal parts,
the total amount of the interest throughout the entire contemplated term of the
applicable Notes, so that the interest rate is the Maximum Lawful Rate
throughout the entire term of the Notes; provided, however, that if the unpaid
-------- -------
principal balance thereof is paid and performed in full prior to the end of the
full contemplated term thereof, and if the interest received for the actual
period of existence thereof exceeds the Maximum Lawful Rate, Banks shall refund
to Borrower the amount of such excess and, in such event, Banks shall not be
subject to any penalties provided by any laws for contracting for, charging,
taking, reserving or receiving interest in excess of the Maximum Lawful Rate.
SECTION XV.8. Invalid Provisions. If any provision of the Loan Papers is
------------------
held to be illegal, invalid, or unenforceable under present or future laws
effective during the term thereof, such provision shall be fully severable, the
Loan Papers shall be construed and enforced as if such illegal, invalid, or
unenforceable provision had never comprised a part thereof, and the remaining
provisions thereof shall remain in full force and effect and shall not be
affected by the illegal, invalid, or unenforceable provision or by its severance
therefrom. Furthermore, in lieu of such illegal, invalid, or unenforceable
provision there shall be added automatically as a part of the Loan Papers a
provision as similar in terms to such illegal, invalid, or unenforceable
provision as may be possible and be legal, valid and enforceable.
SECTION XV.9. Waiver of Consumer Credit Laws. Pursuant to Chapter 346 of
------------------------------
the Texas Finance Code, as amended, Borrower agrees that such Chapter 346 shall
not govern or in any manner apply to the Loan.
SECTION XV.10. Successors and Assigns. (a) Each Loan Paper binds and
----------------------
inures to the parties to it, any intended beneficiary of it, and each of their
respective successors and permitted assigns. No Company may assign or transfer
any rights or obligations under any Loan Paper without first obtaining all
Banks' consent, and any purported assignment or transfer without all Banks'
consent is void. No Bank may transfer, pledge, assign, sell any participation
in, or otherwise encumber its portion of the Obligations except as permitted by
clauses (b) or (c) below.
(b) Any Bank may (subject to the provisions of this section, in
accordance with applicable law, in the ordinary course of its business, and at
any time) sell to one or more Persons (each a "Participant") participating
-----------
interests in its portion of the Obligations. The selling Bank
66
remains a "Bank" under the Loan Papers, the Participant does not become a "Bank"
under the Loan Papers, and the selling Bank's obligations under the Loan Papers
remain unchanged. The selling Bank remains solely responsible for the
performance of its obligations and remains the holder of its share of the
outstanding Loan for all purposes under the Loan Papers. Borrower and each Agent
shall continue to deal solely and directly with the selling Bank in connection
with that Bank's rights and obligations under the Loan Papers, and each Bank
must retain the sole right and responsibility to enforce due obligations of the
Companies. Participants have no rights under the Loan Papers except certain
voting rights as provided below. Subject to the following, each Bank may obtain
(on behalf of its Participants) the benefits of Article XIV with respect to all
-----------
participations in its part of the Obligations outstanding from time to time so
long as Borrower is not obligated to pay any amount in excess of the amount that
would be due to that Bank under Article XIV calculated as though no
-----------
participations have been made. No Bank may sell any participating interest under
which the Participant has any rights to approve any amendment, modification, or
waiver of any Loan Paper except as to matters in Sections 14.5(a) through
----------------
14.5(g).
- -------
(c) Each Bank may make assignments to the Federal Reserve Bank. Each
Bank may also assign to one or more assignees (each an "Assignee") all or any
--------
part of its rights and obligations under the Loan Papers so long as (i) the
assignor Bank and Assignee execute and deliver to each Agent and Borrower for
their consent and acceptance (that may not be unreasonably withheld) an
assignment and assumption agreement in substantially the form of Exhibit G (an
---------
"Assignment and Assumption Agreement") and pay to Administrative Agent a
- ------------------------------------
processing fee of $2,500, (ii) the Assignee acquires an identical percentage
interest in the Commitment of the assignor Bank and an identical percentage of
the interests in the outstanding Loan held by such assignor Bank, (iii) except
in the case of an assignment to another Bank or an assignment of all of a Bank's
rights and obligations under this Agreement, any partial assignment shall be in
an amount equal to $5,000,000 or an integral multiple of $100,000 in excess
thereof, and (iv) the conditions (including, without limitation, minimum amounts
of the Total Commitment that may be assigned or that must be retained) for that
assignment set forth in the applicable Assignment and Assumption Agreement are
satisfied. The "Effective Date" in each Assignment and Assumption Agreement
must (unless a shorter period is agreeable to Borrower and Administrative Agent)
be at least five (5) Domestic Business Days after it is executed and delivered
by the assignor Bank and Assignee to Administrative Agent and Borrower for
acceptance. Once that Assignment and Assumption Agreement is accepted by
Administrative Agent and Borrower, then, from and after the Effective Date
stated in it (i) Assignee automatically becomes a party to this Agreement and,
to the extent provided in that Assignment and Assumption Agreement, has the
rights and obligations of a Bank under the Loan Papers, (ii) the assignor Bank,
to the extent provided in that Assignment and Assumption Agreement, is released
from its obligations to fund Borrowings under this Agreement and its
reimbursement obligations under this Agreement and, in the case of an Assignment
and Assumption Agreement covering all of the remaining portion of the assignor
Bank's rights and obligations under the Loan Papers, that Bank ceases to be a
party to the Loan Papers, (iii) Borrower shall execute and deliver to the
assignor Bank and Assignee the appropriate Notes in accordance with this
Agreement following the
67
transfer, (iv) upon delivery of the Notes under clause (iii) preceding, the
assignor Bank shall return to Borrower all Notes previously delivered to that
Bank under this Agreement, and (v) Schedule 1 is automatically deemed to be
----------
amended to reflect the name, address, telecopy number, and Commitment of
Assignee and the remaining Commitment (if any) of the assignor Bank, and
Administrative Agent shall prepare and circulate to Borrower and Banks an
amended Schedule 1 reflecting those changes.
----------
SECTION XV.11. TEXAS LAW. THIS AGREEMENT, EACH NOTE AND THE OTHER LOAN
---------
PAPERS HAVE BEEN EXECUTED AND DELIVERED IN THE STATE OF TEXAS AND SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND
THE LAWS OF THE UNITED STATES OF AMERICA, EXCEPT TO THE EXTENT THAT THE LAWS OF
ANY STATE WHICH MAY BE APPLICABLE TO ANY BANK WHICH PERMITS A MAXIMUM LAWFUL
RATE WHICH IS GREATER THAN THE RATE PERMITTED UNDER TEXAS LAW, AND EXCEPT TO THE
EXTENT THAT THE LAWS OF ANY STATE IN WHICH ANY PROPERTY INTENDED AS SECURITY FOR
THE OBLIGATIONS IS LOCATED NECESSARILY GOVERN (A) THE PERFECTION AND PRIORITY OF
THE LIENS IN FAVOR OF ADMINISTRATIVE AGENT AND BANKS WITH RESPECT TO SUCH
PROPERTY, AND (B) THE EXERCISE OF ANY REMEDIES (INCLUDING FORECLOSURE) WITH
RESPECT TO SUCH PROPERTY.
SECTION XV.12. Consent to Jurisdiction; Waiver of Immunities. (a)
----------------------------------------------
Borrower hereby irrevocably submits to the jurisdiction of any Texas State or
Federal court sitting in the Northern District of Texas over any action or
proceeding arising out of or relating to this Agreement or any other Loan
Papers, and Borrower hereby irrevocably agrees that all claims in respect of
such action or proceeding may be heard and determined in such Texas State or
Federal court. Borrower hereby irrevocably appoints The Corporation Company
(the "Process Agent"), with an office on the date hereof at 1675 Broadway,
-------------
Denver, Colorado 80202, as its Agent to receive on behalf of Borrower proper
service of copies of the summons and complaint and any other process which may
be made by mailing or delivering a copy of such process to Borrower (as
applicable) in care of the Process Agent at the Process Agent's above address,
and Borrower hereby irrevocably authorizes and directs the Process Agent to
accept such service on their behalf. As an alternative method of service,
Borrower also irrevocably consents to the service of any and all process in any
such action or proceeding by the mailing of copies of such process to Borrower
at its address specified in Section 15.1. Borrower agrees that a final judgment
------------
on any such action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
law.
(b) Nothing in this Section 15.12 shall affect any right of Banks to
-------------
serve legal process in any other manner permitted by law or affect the right of
any Bank to bring any action or proceeding against Borrower or any of its
Subsidiaries or their properties in the courts of any other jurisdictions.
68
(c) To the extent that Borrower has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property,
Borrower hereby irrevocably waives such immunity in respect of its obligations
under this Agreement and the other Loan Papers.
SECTION XV.13. Counterparts; Effectiveness. This Agreement may be signed
---------------------------
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when Administrative Agent shall have
received counterparts hereof signed by all of the parties hereto or, in the case
of any Bank as to which an executed counterpart shall not have been received,
Administrative Agent shall have received telegraphic or other written
confirmation from such Bank of execution of a counterpart hereof by such Bank.
SECTION XV.14. No Third Party Beneficiaries. It is expressly intended that
----------------------------
there shall be no third party beneficiaries of the covenants, agreements,
representations or warranties herein contained other than Book Runner and Sole
Lead Arranger, and Participants and Assignees permitted pursuant to Section
-------
15.10 and Affiliates of any Bank which hold any part of the Obligations.
- -----
SECTION XV.15. COMPLETE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN
------------------
PAPERS COLLECTIVELY REPRESENT THE FINAL AGREEMENT BY AND AMONG BANKS, AGENTS AND
BORROWER AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF BANKS, AGENTS AND BORROWER. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN OR AMONG BANKS, AGENTS AND BORROWER.
SECTION XV.16. WAIVER OF JURY TRIAL. BORROWER, AGENTS AND BANKS HEREBY
--------------------
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN PAPERS AND FOR
ANY COUNTERCLAIM THEREIN.
[Remainder of page intentionally left blank]
69
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective Authorized Officers effective as of the day
and year first above written.
BORROWER:
- --------
PATINA OIL & GAS CORPORATION,
a Delaware corporation
By:_____________________________________________
David J. Kornder,
Vice President and Chief Financial Officer
1625 Broadway
Denver, Colorado 80202
Attn: David J. Kornder
Telecopy No.: (303) 595-7407
with a copy to:
Thomas J. Edelman
595 Madison Avenue
27/th/ Floor
New York, New York 10022
Telecopy No.: (212) 888-6877
Signature Page
BANKS:
- -----
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
By: _________________________________
Dale S. Hurd, Managing Director
Signature Page
BANK OF AMERICA, N.A.
By: ___________________________________
J. Scott Fowler, Managing Director
Signature Page
THE FIRST NATIONAL BANK OF CHICAGO
By: ___________________________
Name:__________________________
Title:_________________________
Signature Page
BANKERS TRUST COMPANY
By: ____________________________
Name:___________________________
Title:__________________________
Signature Page
CREDIT LYONNAIS NEW YORK BRANCH
By: ___________________________
Name:__________________________
Title:_________________________
Signature Page
FIRST UNION NATIONAL BANK
By: ___________________________
Name:__________________________
Title:_________________________
Signature Page
WELLS FARGO BANK, N.A.
By: __________________________
Name:_________________________
Title:________________________
Signature Page
ADMINISTRATIVE AGENT:
- --------------------
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
By: -------__________________________
Dale S. Hurd, Managing Director
Signature Page
SYNDICATION AGENT:
- -----------------
BANK OF AMERICA, N.A.
By: _____________________________________
J. Scott Fowler, Managing Director
Signature Page
DOCUMENTATION AGENT:
- -------------------
BANK ONE, TEXAS, N.A.
By: _____________________________
Name:____________________________
Title:___________________________
Signature Page
CO-AGENT:
- --------
BANKERS TRUST COMPANY
By: ____________________________
Name:___________________________
Title:__________________________
Signature Page
CO-AGENT:
- --------
CREDIT LYONNAIS NEW YORK BRANCH
By: ___________________________
Name:__________________________
Title:_________________________
Signature Page
CO-AGENT:
- --------
FIRST UNION NATIONAL BANK
By: _____________________________
Name:____________________________
Title:___________________________
Signature Page
CO-AGENT:
- --------
WELLS FARGO BANK, N.A.
By: _____________________________
Name:____________________________
Title:___________________________
Signature Page
SCHEDULE 1
FINANCIAL INSTITUTIONS
======================================================================================================
Banks Commitment Amount Commitment Percentage
------------------------------------------------------------------------------------------------------
Chase Bank of Texas, National Association $ 35,000,000 17.50%
------------------------------------------------------------------------------------------------------
Bank of America, N.A. $ 32,500,000 16.25%
------------------------------------------------------------------------------------------------------
The First National Bank of Chicago $ 32,500,000 16.25%
------------------------------------------------------------------------------------------------------
Bankers Trust Company $ 25,000,000 12.50%
------------------------------------------------------------------------------------------------------
Credit Lyonnais New York Branch $ 25,000,000 12.50%
------------------------------------------------------------------------------------------------------
First Union National Bank $ 25,000,000 12.50%
------------------------------------------------------------------------------------------------------
Wells Fargo Bank, N.A. $ 25,000,000 12.50%
Totals: $200,000,000 100%
=====================================================================================================
====================================================================================================================================
Banks Domestic Lending Office Eurodollar Lending Office Address for Notice
- ------------------------------------------------------------------------------------------------------------------------------------
Chase Bank of Texas, 2200 Ross Avenue, 3/rd/ Floor 2200 Ross Avenue, 3/rd/ Floor 2200 Ross Avenue, 3/rd/ Floor
National Association Dallas, Texas 75201 Dallas, Texas 75201 Dallas, Texas 75201
Fax No. (214) 965-2389 Fax No. (214) 965-2389 Fax No. (214) 965-2389
-----------------------------------------------------------------------------------------------------------------------------------
Bank of America, N.A. 901 Main Street, 64/th/ Floor 901 Main Street, 64/th/ Floor 901 Main Street, 64/th/ Floor
Dallas, Texas 75202 Dallas, Texas 75202 Dallas, Texas 75202
Fax No. (214) 209-1285 Fax No. (214) 209-1285 Fax No. (214) 209-1285
- ------------------------------------------------------------------------------------------------------------------------------------
The First National Bank Mail Code IL1-0634 Mail Code IL1-0634 Mail Code IL1-0362
of Chicago One First National Plaza One First National Plaza One First National Plaza
Chicago, Illinois 60670 Chicago, Illinois 60670 Chicago, Illinois 60670
Attn: Kenneth J. Fecko Attn: Kenneth J. Fecko Attn: Energy & Minerals
Fax No. (312) 732-4840 Fax No. (312) 732-4840 Fax No. (312) 732-3055
-----------------------------------------------------------------------------------------------------------------------------------
Bankers Trust Company 130 Liberty, 14/th/ Floor 130 Liberty, 14/th/ Floor 130 Liberty, 34/th/ Floor
New York, New York 10006 New York, New York 10006 New York, New York 10006
Fax No. (212) 250-7351 Fax No. (212) 250-7351 Fax No. (212) 250-8693
-----------------------------------------------------------------------------------------------------------------------------------
Credit Lyonnais New York 1000 Louisiana, Suite 5360 1000 Louisiana, Suite 5360 1000 Louisiana, Suite 5360
Branch Houston, Texas 77002 Houston, Texas 77002 Houston, Texas 77002
Fax No. (713) 751-0307 Fax No. (713) 751-0307 Fax No. (713) 751-0307
-----------------------------------------------------------------------------------------------------------------------------------
First Union National Bank 1001 Fannin, Suite 2255 1001 Fannin, Suite 2255 1001 Fannin, Suite 2255
Houston, Texas 77002 Houston, Texas 77002 Houston, Texas 77002
Fax No. (713) 650-6354 Fax No. (713) 650-6354 Fax No. (713) 650-6354
-----------------------------------------------------------------------------------------------------------------------------------
Wells Fargo Bank, N.A. 633 Seventeenth Street, 633 Seventeenth Street, 633 Seventeenth Street,
3/rd/ Floor, North Tower 3/rd/ Floor, North Tower 3/rd/ Floor, North Tower
Denver, Colorado 80270 Denver, Colorado 80270 Denver, Colorado 80270
Fax No. (303) 293-5120 Fax No. (303) 293-5120 Fax No. (303) 293-5120
====================================================================================================================================
Administrative Agent - Address:
Chase Bank of Texas, N.A.
One Chase Manhattan Plaza, 8/th/ Floor with a copy to: 2200 Ross Avenue, 3/rd/ Floor
New York, New York 10081 Dallas, Texas 75201
Attn: Muniram Appanna Agency Services Attn: Dale Hurd
Fax No. (212) 552-5777 Fax No. (214) 965-2389
Syndication Agent - Address:
Bank of America, N.A.
901 Main Street, 64/th/ Floor
Dallas, Texas 75202
Fax No. (214) 209-1285
Documentation Agent - Address:
Bank One, Texas, N.A.
Mail Code TX1-2448
1717 Main Street
Dallas, Texas 75201
Attn: Timothy E. Merrell
Fax No. (214) 290-2275
Co-Agents - Addresses:
Bankers Trust Company
130 Liberty Street, 34/th/ Floor
New York, New York 10006
Fax No. (212) 250-8693
Credit Lyonnais New York Branch
1301 Avenue of the Americas
New York, New York 10019
Fax No. (212) 261-3379
First Union National Bank
1001 Fannin, Suite 2255
Houston, Texas 77002
Fax No. (713) 650-6354
Wells Fargo Bank, N.A.
633 17/th/ Street, 3/rd/ Floor, North Tower
Denver, Colorado 80270
Fax No. (303) 293-5120
SCHEDULE 2
INVESTMENTS
None
SCHEDULE 3
TAXES
None
SCHEDULE 4
SUBSIDIARIES
Name and Qualified Issued and Outstanding Options,
State of Incorporation Jurisdictions Stock and Holder Warrants, etc.
- ---------------------- ------------- ---------------- --------------
SOCO Wattenberg Colorado 1,000 None
Corporation Nebraska Common
Delaware Patina Oil & Gas Corporation
Patina Well Services, Inc. Colorado 100 None
Colorado Patina Oil & Gas Corporation
SCHEDULE 5
OBLIGATIONS
None
SCHEDULE 6
DEBT
(as of June 30, 1999)
Existing Senior Debt $ 63,000,000
Subordinate Notes $ 72,278,000
------------
Total: $135,278,000
SCHEDULE 7
SECTION 29 DOCUMENTS
List of Documents Company Effective Date
----------------- ------- --------------
Koch Exploration Company Patina October 13, 1995
DJ Investments, LLC SWAT May 18, 1996
Julesburg Investments, LLC 8/96 Patina August 1, 1996
Julesburg Investments, LLC 12/97 SWAT December 1, 1997
Julesburg Investments, LLC 12/97 Patina December 15, 1997
Julesburg Investments, LLC 2/98 Patina February 15, 1998
Julesburg Investments, LLC 3/99 SWAT March 1, 1999
Julesburg Investments, LLC 3/99 Patina March 1, 1999
Julesburg Investments, LLC 6/99 SWAT June 1, 1999
Julesburg Investments, LLC 6/99 Patina June 1, 1999