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Execution Copy
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AMENDED AND RESTATED CREDIT AGREEMENT
-------------------------------------
HARCOR ENERGY, INC.
and
INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL CORPORATION
as Agent
and
LENDERS
(identified herein)
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$15,000,000
July 19, 1995
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TABLE OF CONTENTS
Page
AMENDED AND RESTATED CREDIT AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I - Amendment and Restatement, Definitions and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Amendment and Restatement; Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Exhibits and Schedules; Additional Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 1.3 Amendment of Defined Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 1.4 References and Titles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 1.5 Calculations and Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE II - The Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.1. Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.2. Requests for Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.3. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.4. Rate Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.5. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.6. Agent's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.7. Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.8. Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.9. Loan Amortization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.10. Payments to Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.11. Initial Borrowing Base . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.12. Subsequent Determinations of Borrowing Base . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.13. Borrower's Reduction of Borrowing Base . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.14. Capital Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.15. Increased Cost of Fixed Rate Portions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.16. Availability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.17. Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.18. Reimbursable Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE III - Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.1. Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.2. Documents to be Delivered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.3. Additional Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE IV - Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.1. Borrower's Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.2. Representation by Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE V - Covenants of Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.1. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
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Section 5.2. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE VI - Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 6.1. The Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 6.2. Agreement to Deliver Security Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 6.3. Perfection and Protection of Security Interests and Liens . . . . . . . . . . . . . . . . . . . . . 31
Section 6.4. Offset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 6.5. Guaranties of Borrower's Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 6.6. Production Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE VII - Events of Default and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 7.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 7.2. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 7.3. INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE VIII - Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 8.1. Appointment and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 8.2. Exculpation, Agent's Reliance, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 8.3. Lenders' Credit Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 8.4. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 8.5. Rights as Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 8.6. Sharing of Set-Offs and Other Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 8.7. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 8.8. Benefit of Article VIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 8.9. Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE IX - Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 9.1. Waivers and Amendments; Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 9.2. Survival of Agreements; Cumulative Nature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 9.3. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 9.4. Joint and Several Liability; Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 9.5. GOVERNING LAW; SUBMISSION TO PROCESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 9.6. Limitation on Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 9.7. Termination; Limited Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 9.8. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 9.9. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 9.10. ACKNOWLEDGEMENT OF NO CLAIMS, OFFSETS OR DEFENSES; RELEASE BY THE RELATED PARTIES . . . . . . . . . 41
SECTION 9.11. WAIVER OF JURY TRIAL, PUNITIVE DAMAGES, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
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AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT is made as of July 19,
1995, by and among HarCor Energy, Inc., a Delaware corporation (herein called
"Borrower"), Internationale Nederlanden (U.S.) Capital Corporation, a Delaware
corporation ("INCC"), individually as a Lender, and the other Lenders from time
to time party to this Agreement, and INCC as agent for the Lenders (in such
capacity, "Agent").
RECITALS
1. Borrower and Internationale Nederlanden (U.S.) Capital Corporation
entered into that certain Credit Agreement dated June 24, 1994 (the "Prior
Agreement") which amended and restated in its entirety an Amended and Restated
Credit Agreement, dated as of March 18, 1994, and various amendments thereto;
and
2. Borrower and Lenders desire to amend and restate the Prior
Agreement in its entirety as provided herein;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein the parties hereto agree as follows:
ARTICLE I - Amendment and Restatement, Definitions and References
Section 1.1 Amendment and Restatement; Defined Terms. The parties
hereto agree that the Prior Agreement shall be amended and restated in its
entirety by this Agreement, and all of the terms and provisions hereof shall
supersede the terms and provisions of the Prior Agreement. As used in this
Agreement, each of the following terms has the meaning given it in this Section
1.1 or in the sections and subsections referred to below:
"Advance" has the meaning given it in Section 2.1.
"Aggregate Maximum Loan Amount" means the sum of the Maximum Loan
Amount for all Lenders, which shall initially be $15,000,000, subject to
reduction as provided herein.
"Affiliate" means, as to any Person, each other Person that directly
or indirectly (through one or more intermediaries or otherwise) controls, is
controlled by, or is under common control with, such Person. A Person shall be
deemed to be "controlled by" any other Person if such other Person possesses,
directly or indirectly, power
(a) to vote 30% or more of the securities (on a fully
diluted basis) having ordinary voting power for the election of
directors or managing general partners; or
(b) to direct or cause the direction of the management
and policies of such Person whether by contract or otherwise.
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"Agent" shall have the meaning assigned to such term in the first
paragraph of this Agreement as agent hereunder, and its successors in such
capacity; provided, however, that until such time as a Lender other than INCC
becomes a party hereto, "Agent" shall mean INCC individually.
"Agreement" means this Credit Agreement.
"Base Rate" means the rate of interest one half of one percent (0.5%)
above the Reference Rate. For purposes of this definition, "Reference Rate"
means the arithmetic average of the rates of interest publicly announced by The
Chase Manhattan Bank (National Association), Citibank, N.A. and Morgan Guaranty
Trust Company of New York (or their respective successors) as their respective
prime commercial lending rates (or, as to any such bank that does not announce
such a rate, such bank's 'base' or other rate determined by Agent to be the
equivalent rate announced by such bank), except that, if any such bank shall,
for any period, cease to announce publicly its prime commercial lending (or
equivalent) rate, Agent shall, during such period, determine the "Base Rate"
based upon the prime commercial lending (or equivalent) rates announced
publicly by the other such banks. The Base Rate shall in no event, however,
exceed the Highest Lawful Rate.
"Base Rate Portion" means that portion of the unpaid principal balance
of the Loans which is not made up of Fixed Rate Portions.
"Borrowing Base" means, at the particular time in question, either the
amount provided for in Section 2.11 or the amount determined by Agent in
accordance with the provisions of Section 2.12, as reduced by Borrower pursuant
to Section 2.13; provided, however, that in no event shall the Borrowing Base
ever exceed the Aggregate Maximum Loan Amount.
"Business Day" means a day, other than a Saturday or Sunday, on which
commercial banks are open for business with the public in New York, New York.
Any Business Day in any way relating to Fixed Rate Portions (such as the day on
which an Interest Period begins or ends) must also be a day on which, in the
judgment of Agent, significant transactions in dollars are carried out in the
London interbank market.
"Capital Expenditures" means those costs and expenses associated with
the development and redevelopment of the oil and gas properties of Borrower and
its Consolidated Subsidiaries which pursuant to GAAP are required to be
capitalized and subject to depletion, depreciation or amortization.
"Change of Control" means the occurrence of any of the following
events (whether or not approved by the board of directors of the Borrower): (i)
Borrower consolidates with or merges with or into another Person or any Person
consolidates with, or merges with or into, Borrower (in each case, whether or
not in compliance with the terms of this Agreement), in any such event pursuant
to a transaction in which immediately after the consummation thereof Persons
owning a majority of the Voting Stock of Borrower immediately prior to such
consummation shall cease to own a majority of the Voting Stock of the Borrower
or the surviving entity if other than Borrower; (ii) Borrower or any of its
Subsidiaries, directly or
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indirectly, sells, assigns, conveys, transfers, leases or otherwise disposes
of, in one transaction or a series of related transactions, all or
substantially all of the property or assets of the Borrower and its
Subsidiaries (determined on a Consolidated basis) to any Person or group of
related Persons for purposes of Section 13(d) of the Securities Act of 1934, as
amended ("Group of Persons"); (iii) the adoption of any plan of liquidation or
dissolution of Borrower; (iv) any Person or Group of Persons is or becomes the
"beneficial owner" (as defined in Rule 13d-3 of the Securities and Exchange
Commission under the Securities Act of 1934, as amended ("Exchange Act"),
directly or indirectly, of 40% of the Voting Stock of Borrower; or (v) the
first day on which a majority of the members of the board of directors of
Borrower are not Continuing Directors.
"Collateral" means all property of any kind which is subject to a Lien
in favor of Lenders (or in favor of Agent for the benefit of Lenders) or which,
under the terms of any Security Document, is purported to be subject to such a
Lien.
"Commitment Period" means the period from and including the Effective
Date and including January 31, 1996 (or, if earlier, the day on which the Notes
first become due and payable in full, or the date on which the Commitment
Period is terminated pursuant to Section 7.1 as a result of the occurrence of
an Event of Default).
"Consolidated" refers to the consolidation of any Person, in
accordance with GAAP, with its properly consolidated subsidiaries. References
herein to a Person's Consolidated financial statements, financial position,
financial condition, liabilities, etc. refer to the consolidated financial
statements, financial position, financial condition, liabilities, etc. of such
Person and its properly consolidated subsidiaries.
"Continuing Directors" means, as of the date of determination, any
member of the board of directors of Borrower, who (i) was a member of such
board of directors on the date of this Agreement, or (ii) was nominated for
election or elected to such board of directors with the affirmative vote of a
majority of the Continuing Directors who were members of such board at the time
of such election or nomination.
"Debt" means, as to any Person, all indebtedness, liabilities and
obligations of such Person, whether matured or unmatured, liquidated or
unliquidated, primary or secondary, direct or indirect, absolute, fixed or
contingent, and whether or not required to be considered pursuant to GAAP.
"Default" means any Event of Default and any default, event or
condition which would, with the giving of any requisite notices and the passage
of any requisite periods of time, constitute an Event of Default.
"Determination Date" has the meaning given it in Section 2.12.
"Disclosure Report" means either a notice given by Borrower under
Section 5.1(d) or a certificate given by Borrower's chief financial officer
under Section 5.1(b)(ii).
"Disclosure Schedule" means Schedule 1 hereto.
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"Effective Date" has the meaning given it in Section 3.1.
"Engineering Report" means the Initial Engineering Report and each
engineering report delivered pursuant to Section 5.1(b)(iv).
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
other governmental restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes into the
environment including ambient air, surface water, ground water, or land, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or
wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations promulgated
with respect thereto.
"ERISA Plan" means any pension benefit plan subject to Title IV of
ERISA maintained by any Related Person or any Affiliate thereof with respect to
which any Related Person has a fixed or contingent liability.
"Eurodollar Rate" means, with respect to each particular Fixed Rate
Portion and the related Interest Period, a rate per annum (rounded upwards, if
necessary, to the nearest 1/16 of 1%) reported, on the date two Business Days
prior to the first day of such Interest Period, on Telerate Access Service Page
3750 (British Bankers Association Settlement Rate) as the London Interbank
Offered Rate for dollar deposits having a term comparable to such Interest
Period and in an amount of $1,000,000 or more (or, if such Page shall cease to
be publicly available or if the information contained on such Page, in Agent's
sole judgment, shall cease to accurately reflect such London Interbank Offered
Rate, as reported by any publicly available source of similar market data
selected by Agent that, in Agent's sole judgment, accurately reflects such
London Interbank Offered Rate).
"Event of Default" has the meaning given it in Section 7.1.
"Excess Cash Flow" has the meaning set forth in the 2002 Indenture.
"Fiscal Quarter" means a three-month period ending on March 31, June
30, September 30 or December 31 of any year.
"Fiscal Year" means a twelve-month period ending on December 31 of any
year.
"Fixed Rate" means, with respect to each particular Fixed Rate Portion
and the associated Eurodollar Rate and Reserve Percentage, the rate per annum
calculated by Agent (rounded upwards, if necessary, to the next higher 0.01%)
determined on a daily basis pursuant to the following formula:
Fixed Rate = Eurodollar Rate
------------------------------- + A
100.0% - Reserve Percentage
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where A means 2.5%. If the Reserve Percentage changes during the Interest
Period for a Fixed Rate Portion, Agent may, at its option, either change the
Fixed Rate for such Fixed Rate Portion or leave it unchanged for the duration
of such Interest Period. The Fixed Rate shall in no event, however, exceed the
Highest Lawful Rate.
"Fixed Rate Portion" means any portion of the unpaid principal balance
of the Loan which Borrower designates as such in a Rate Election.
"GAAP" means those generally accepted accounting principles and
practices which are recognized as such by the Financial Accounting Standards
Board (or any generally recognized successor) and which, in the case of
Borrower and its Consolidated subsidiaries, are applied for all periods after
the date hereof in a manner consistent with the manner in which such principles
and practices were applied to the Initial Financial Statements. If any change
in any accounting principle or practice is required by the Financial Accounting
Standards Board (or any such successor) in order for such principle or practice
to continue as a generally accepted accounting principle or practice, all
reports and financial statements required hereunder with respect to Borrower or
with respect to Borrower and its Consolidated subsidiaries may be prepared in
accordance with such change, but all calculations and determinations to be made
hereunder may be made in accordance with such change only after notice of such
change is given to each Lender and Majority Lenders agree to such change
insofar as it affects the accounting of Borrower or of Borrower and its
Consolidated subsidiaries.
"Guarantor" means any Person who has guaranteed some or all of the
Obligations pursuant to a guaranty listed on the Security Schedule or any other
Person who has guaranteed some or all of the Obligations and who has been
accepted by Agent as a Guarantor or any Subsidiary of Borrower which now or
hereafter executes and delivers a guaranty to Agent pursuant to Section 6.5.
"Hazardous Materials" means any substances regulated under any
Environmental Law, whether as pollutants, contaminants, or chemicals, or as
industrial, toxic or hazardous substances or wastes, or otherwise.
"Highest Lawful Rate" means the maximum nonusurious rate of interest
that each Lender is permitted under applicable law to contract for, take,
charge, or receive with respect to its Loan.
"Initial Engineering Report" means, the engineering report concerning
oil and gas properties of Borrower dated March 17, 1995 prepared by Ryder Scott
Company as of December 31, 1994.
"Initial Financial Statements" means (i) the audited annual
Consolidated financial statements of Borrower dated as of December 31, 1994,
and (ii) the unaudited quarterly Consolidated financial statements of Borrower
dated as of March 31, 1995.
"Interest Period" means, with respect to each particular Fixed Rate
Portion, a period of 1, 2, 3 or 6 consecutive calendar months, as specified in
the Rate Election applicable thereto, beginning on and including the date
specified in such Rate Election (which must be a
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Business Day), and ending on but not including the same day of the month as the
day on which it began (e.g., a period beginning on the third day of one month
shall end on but not include the third day of another month), provided that
each Interest Period which would otherwise end on a day which is not a Business
Day shall end on the next succeeding Business Day (unless such next succeeding
Business Day is the first Business Day of a calendar month, in which case such
Interest Period shall end on the immediately preceding Business Day) and each
Interest Period which commences on a day for which there is no numerically
corresponding day in the appropriate subsequent month shall end on the last day
of the appropriate subsequent month. No Interest Period may be elected which
would extend past the date on which the Notes are due and payable in full.
"Intercreditor Agreement" means the Intercreditor Agreement dated as
of the date of the 2002 Indenture among the Agent, the trustee for the holders
of the 2002 Notes, Guarantor, and Borrower.
"Late Payment Rate" means, at the time in question, four percent
(4.0%) per annum plus the Base Rate then in effect; provided that, with respect
to any Fixed Rate Portion with an Interest Period extending beyond the date
such Fixed Rate Portion becomes due and payable, "Late Payment Rate" shall mean
four percent (4.0%) per annum plus the related Fixed Rate. The Late Payment
Rate shall in no event, however, exceed the Highest Lawful Rate.
"Lenders" means each signatory hereto (other than Borrower), including
Internationale Nederlanden (U.S.) Capital Corporation, in its capacity as a
lender hereunder rather than as Agent, and the successors of each as holder of
a Note.
"Lien" means, with respect to any property or assets, any right or
interest therein of a creditor to secure Debt owed to him or any other
arrangement with such creditor which provides for the payment of such Debt out
of such property or assets or which allows him to have such Debt satisfied out
of such property or assets prior to the general creditors of any owner thereof,
including any lien, mortgage, security interest, pledge, deposit, production
payment, rights of a vendor under any title retention or conditional sale
agreement or lease substantially equivalent thereto, tax lien, mechanic's or
materialman's lien, or any other charge or encumbrance for security purposes,
whether arising by law or agreement or otherwise, but excluding any right of
offset which arises without agreement in the ordinary course of business.
"Lien" also means any filed financing statement, any registration of a pledge
(such as with an issuer of uncertificated securities), or any other arrangement
or action which would serve to perfect a Lien described in the preceding
sentence, regardless of whether such financing statement is filed, such
registration is made, or such arrangement or action is undertaken before or
after such Lien exists.
"Loan" has the meaning given it in Section 2.1.
"Loan Documents" means this Agreement, the Notes, the Security
Documents, the Intercreditor Agreement, the warrants to purchase common stock
of Borrower issued to each Lender, any Permitted Swap Agreements, and all other
agreements, certificates, documents, instruments and writings at any time
delivered in connection herewith or therewith (exclusive
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of term sheets, commitment letters, correspondence and similar documents used
in the negotiation hereof, except to the extent the same contain information
about Borrower or its Affiliates, properties, business or prospects).
"Majority Lenders" means at the time in question one or more Lenders
whose Percentage Shares total not less than 50%.
"Maximum Loan Amount" means with respect to each Lender, the amount
set forth for such Lender opposite its signature hereto, as such amount is
reduced pursuant to Section 2.8.
"Note" has the meaning given it in Section 2.1.
"Obligations" means the sum of all Debt from time to time owing by any
of the Related Persons to Agent or any Lender under or pursuant to any of the
Loan Documents. "Obligation" means any part of the Obligations.
"Percentage Share" means, with respect to any Lender (a) when used in
Sections 2.1 or 2.5, in any Request for Advance or when no Loans are
outstanding hereunder the percentage set forth opposite such Lender's name on
the signature pages of this Agreement, and (b) when used otherwise, the
percentage equal to the unpaid principal balance of such Lender's Loan at the
time in question divided by the aggregate unpaid principal balance of all Loans
at such time.
"Permitted Investments" means investments:
(a) in open market commercial paper, maturing within 270
days after acquisition thereof, which has the highest or second
highest credit rating given by either Standard & Poor's Corporation or
Moody's Investors Service, Inc.
(b) in marketable obligations, maturing within 12 months
after acquisition thereof, issued or unconditionally guaranteed by the
United States of America or an instrumentality or agency thereof and
entitled to the full faith and credit of the United States of America.
(c) in demand deposits, and time deposits (including
certificates of deposit) maturing within 12 months from the date of
deposit thereof, with a domestic office of any national or state bank
or trust company which is organized under the laws of the United
States of America or any state therein, which has capital, surplus and
undivided profits of at least $500,000,000, and whose certificates of
deposit have at least the third highest credit rating given by either
Standard & Poor's Corporation or Moody's Investors Service, Inc.
"Permitted Swap Agreements" means the Master Forward and Protection
Agreement dated as of September 16, 1991 between ING Capital Corp. and
Borrower, that certain Master Forward and Protection Agreement dated as of
August, 1994 between Internationale Nederladen (U.S.) Capital Corporation and
Borrower, and any other similar master swap
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agreements between a Related Person and any Lender (or its Affiliates) together
with all transactions and confirmations under such agreements.
"Person" means an individual, corporation, partnership, limited
liability company, association, joint stock company, trust or trustee thereof,
estate or executor thereof, unincorporated organization or joint venture, court
or governmental unit or any agency or subdivision thereof, or any other legally
recognizable entity.
"Prior Agreement" shall have the meaning set forth in the recitals to
this Agreement.
"Prior Note" means that certain Promissory Note dated as of June 24,
1994, made by Borrower payable to the order of Internationale Nederlanden
(U.S.) Capital Corporation in the maximum principal amount of $17,200,000.
"Prior Unsecured Senior Credit Agreement" means that certain Unsecured
Senior Credit Agreement dated June 24, 1994 between Borrower and Internationale
Nederlanden (U.S.) Capital Corporation.
"Prohibited Lien" means any Lien not expressly allowed under Section
5.2(b).
"Projected Production" means the projected production of oil or gas
(measured by volume unit or BTU equivalent, not sales price) for a specified
period of time from properties and interests owned by any Related Person which
are located in or offshore of the United States and which have attributable to
them proved oil or gas reserves, as such production is projected in the most
recent report delivered pursuant to Section 5.1(b)(iv), after deducting
projected production from any properties or interests sold or under contract
for sale that had been included in such report and after adding projected
production from any such properties or interests that had not been reflected in
such report but that are reflected in separate or supplemental reports meeting
the requirements of such Section 5.1(b)(iv) and otherwise are satisfactory to
Agent.
"Rate Election" has the meaning given it in Section 2.4.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect.
"Related Person" means any of Borrower, each Subsidiary of Borrower,
and each Guarantor.
"Request for Advance" means a written or telephonic request, or a
written confirmation, made by Borrower which meets the requirements of Section
2.2.
"Reserve Percentage" means, on any day with respect to each particular
Fixed Rate Portion, the maximum reserve requirement, as determined by Agent
(including without limitation any basic, supplemental, marginal, emergency or
similar reserves), expressed as a percentage and rounded to the next higher
0.01%, which would then apply under Regulation D with respect to "Eurocurrency
liabilities" (as such term is defined in Regulation D) equal in
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amount to such Fixed Rate Portion. If such reserve requirement shall change
after the date hereof, the Reserve Percentage shall be automatically increased
or decreased, as the case may be, from time to time as of the effective time of
each such change in such reserve requirement.
"Restricted Debt" of any Person means Debt in any of the following
categories:
(a) Debt for borrowed money,
(b) Debt constituting an obligation to pay the deferred
purchase price of property,
(c) Debt evidenced by a bond, debenture, note or similar
instrument,
(d) Debt which (i) would under GAAP be shown on such Person's
balance sheet as a liability, and (ii) is payable more than one year
from the date of creation thereof (other than reserves for taxes and
reserves for contingent obligations),
(e) Debt arising under futures contracts, swap contracts, or
similar agreements,
(f) Debt constituting principal under leases capitalized in
accordance with GAAP,
(g) Debt arising under conditional sales or other title
retention agreements,
(h) Debt owing under direct or indirect guaranties of Debt of
any other Person or constituting obligations to purchase or acquire or
to otherwise protect or insure a creditor against loss in respect of
Debt of any other Person (such as obligations under working capital
maintenance agreements, agreements to keep-well, or agreements to
purchase Debt, assets, goods, securities or services), but excluding
endorsements in the ordinary course of business of negotiable
instruments in the course of collection,
(i) Debt (for example, repurchase agreements) consisting of
an obligation to purchase securities or other property, if such Debt
arises out of or in connection with the sale of the same or similar
securities or property,
(j) Debt with respect to letters of credit or applications or
reimbursement agreements therefor,
(k) Debt with respect to payments received in consideration
of oil, gas, or other minerals yet to be acquired or produced at the
time of payment (including obligations under "take-or-pay" contracts
to deliver gas in return for payments already received and the
undischarged balance of any production payment created by such Person
or for the creation of which such Person directly or indirectly
received payment), or
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(l) Debt with respect to other obligations to deliver goods
or services in consideration of advance payments therefor;
provided, however, that the "Restricted Debt" of any Person shall not include
Debt that was incurred by such Person on ordinary trade terms to vendors,
suppliers, or other Persons providing goods and services for use by such Person
in the ordinary course of its business, unless and until such Debt is
outstanding more than 120 days after the incurrence thereof.
"Security Documents" means the instruments listed in the Security
Schedule and all other security agreements, deeds of trust, mortgages, chattel
mortgages, pledges, guaranties, financing statements, continuation statements,
extension agreements and other agreements or instruments now, heretofore, or
hereafter delivered by any Related Person to Agent in connection with this
Agreement or any transaction contemplated hereby to secure or guarantee the
payment of any part of the Obligations or the performance of any Related
Person's other duties and obligations under the Loan Documents.
"Security Schedule" means Schedule 2 hereto.
"Subsidiary" means, with respect to any Person, any corporation,
association, partnership, joint venture, or other business or corporate entity,
enterprise or organization which is directly or indirectly (through one or more
intermediaries) controlled by or owned fifty percent or more by such Person.
"Termination Event" means (a) the occurrence with respect to any ERISA
Plan of (i) a reportable event described in Sections 4043(b)(5) or (6) of ERISA
or (ii) any other reportable event described in Section 4043(b) of ERISA other
than a reportable event not subject to the provision for 30-day notice to the
Pension Benefit Guaranty Corporation pursuant to a waiver by such corporation
under Section 4043(a) of ERISA, or (b) the withdrawal of any Related Person or
of any Affiliate of any Related Person from an ERISA Plan during a plan year in
which it was a "substantial employer" as defined in Section 4001(a)(2) of
ERISA, or (c) the filing of a notice of intent to terminate any ERISA Plan or
the treatment of any ERISA Plan amendment as a termination under Section 4041
of ERISA, or (d) the institution of proceedings to terminate any ERISA Plan by
the Pension Benefit Guaranty Corporation under Section 4042 of ERISA, or (e)
any other event or condition which might constitute grounds under Section 4042
of ERISA for the termination of, or the appointment of a trustee to administer,
any ERISA Plan.
"Tranche" has the meaning given it in Section 2.4.
"Voting Stock" means, with respect to any Person, securities of any
class or classes of capital stock in such Person entitling the holders thereof
(whether at all times or only so long no senior class of stock has voting power
by reason of any contingency) to vote in the election of members of the board
of directors of such Person.
"2002 Indenture" means that certain Indenture dated as of July 24,
1995 between Borrower and Texas Commerce Bank National Association, as Trustee,
pursuant to which the 2002 Notes were issued.
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"2002 Notes" means Borrower's 14 7/8% Senior Notes due 2002 issued
pursuant to the 2002 Indenture in the aggregate principal amount of
$65,000,000.
Section 1.2 Exhibits and Schedules; Additional Definitions. All
Exhibits and Schedules attached to this Agreement are a part hereof for all
purposes. Reference is hereby made to the Security Schedule for the meaning of
certain terms defined therein and used but not defined herein, which
definitions are incorporated herein by reference.
Section 1.3 Amendment of Defined Instruments. Unless the context
otherwise requires or unless otherwise provided herein the terms defined in
this Agreement which refer to a particular agreement, instrument or document
also refer to and include all renewals, extensions, modifications, amendments
and restatements of such agreement, instrument or document, provided that
nothing contained in this section shall be construed to authorize any such
renewal, extension, modification, amendment or restatement.
Section 1.4 References and Titles. All references in this Agreement
to Exhibits, Schedules, articles, sections, subsections and other subdivisions
refer to the Exhibits, Schedules, articles, sections, subsections and other
subdivisions of this Agreement unless expressly provided otherwise. Titles
appearing at the beginning of any subdivisions are for convenience only and do
not constitute any part of such subdivisions and shall be disregarded in
construing the language contained in such subdivisions. The words "this
Agreement", "this instrument", "herein", "hereof", "hereby", "hereunder" and
words of similar import refer to this Agreement as a whole and not to any
particular subdivision unless expressly so limited. The phrases "this section"
and "this subsection" and similar phrases refer only to the sections or
subsections hereof in which such phrases occur. The word "or" is not
exclusive, and the word "including" (in its various forms) means "including
without limitation". Pronouns in masculine, feminine and neuter genders shall
be construed to include any other gender, and words in the singular form shall
be construed to include the plural and vice versa, unless the context otherwise
requires.
Section 1.5 Calculations and Determinations. All calculations under
the Loan Documents of fees and of interest shall be made on the basis of actual
days elapsed (including the first day but excluding the last) and a year of 360
days. Each determination by Agent or a Lender of amounts to be paid under
Sections 2.14 through 2.18 or any other matters which are to be determined
hereunder by Agent or a Lender (such as any Eurodollar Rate, Fixed Rate,
Business Day, Interest Period, or Reserve Percentage) shall, in the absence of
manifest error, be conclusive and binding. Unless otherwise expressly provided
herein or unless Lenders otherwise consent all financial statements and reports
furnished to Agent or any Lender hereunder shall be prepared and all financial
computations and determinations pursuant hereto shall be made in accordance
with GAAP.
ARTICLE II - The Loan
Section 2.1. Advances. Subject to the terms and conditions hereof,
each Lender agrees to the extent that the principal of the indebtedness
outstanding hereunder does not
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exceed the Borrowing Base such Lender will make Advances to Borrower (herein
called "Advances") upon request from time to time during the Commitment Period
so long as (a) each Advance by such Lender does not exceed such Lender's
Percentage Share of the aggregate amount of Advances then requested from all
Lenders, and (b) the aggregate amount of Advances outstanding at any time does
not exceed the lesser of such Lender's Percentage Share of the Borrowing Base
or such Lender's Maximum Loan Amount, as determined as of the date on which the
requested Advance is to be made. The aggregate amount of all Advances
requested of all Lenders in any Request for Advance must be greater than or
equal to $100,000 or must equal the unadvanced portion of the Borrowing Base.
The obligation of Borrower to repay to each Lender the aggregate amount of all
Advances made by such Lender (herein called such Lender's "Loan"), together
with interest accruing in connection therewith, shall be evidenced by a single
promissory note (herein called such Lender's "Note") made by Borrower payable
to the order of such Lender in the form of Exhibit A with appropriate
insertions. The amount of principal owing on any Lender's Note at any given
time shall be the aggregate amount of all Advances theretofore made by such
Lender minus all payments of principal theretofore received by such Lender on
such Note. Interest on each Note shall accrue and be due and payable as
provided herein and therein. Subject to the terms and conditions hereof,
Borrower may borrow, repay, and reborrow hereunder.
Section 2.2. Requests for Advances. Borrower must give notice to
Agent of any requested Advance as follows:
(a) if all of such Advance is designated as a Base Rate
Portion, by 10:00 a.m., Eastern Time, on the first Business Day
preceding the date such Advance is requested to be made; and
(b) if any part of such Advance is designated as a Fixed Rate
Portion, by 10:00 a.m., Eastern Time, on the third Business Day
preceding the date such Advance is requested to be made.
Each request for Advance shall be made in writing or by telephonic notice
promptly confirmed in writing. Each such written request or confirmation must
be made in writing in the form and substance of the "Request for Advance"
attached hereto as Exhibit B, duly completed. Each such telephonic request
shall be deemed a representation, warranty, acknowledgment and agreement by
Borrower as to the matters which are to be set out in such written
confirmation. Promptly after receiving any telephonic request for Advance,
Agent shall notify each Lender thereof and Agent shall promptly provide to each
Lender a copy of any written Request for Advance received from Borrower. If
all conditions precedent to such Advance have been met, each Lender will on the
date requested make such Advance available to Agent in immediately available
funds by transfer to Agent's account at Morgan Guaranty Trust Company of New
York in New York, New York. Agent shall then promptly make the Advance
available to Borrower at such bank account as may be modified from time to time
by agreement of the parties hereto. Unless Agent shall have received prompt
notice from a Lender that such Lender will not make available to Agent such
Lender's Advance, Agent may in its discretion assume that such Lender has made
such Advance and, in reliance upon such assumption, may (but shall not be
required to) make the amount thereof available to Borrower. If and to the
extent such Lender shall not so make its Advance available to Agent,
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Borrower agrees to repay to Agent, and such Lender agrees that to the extent
that Borrower shall fail to make such repayment such Lender shall pay to Agent,
within three days after demand, the amount of such Advance so made available by
the Agent together with interest thereon, for each day from the date such
amount is made available by Agent to Borrower until the date such amount is
paid or repaid to Agent, at the interest rate applicable at the time to the
other Advances made on such date. The failure of any Lender to make any
Advance to be made by it hereunder shall not relieve any other Lender of its
obligation hereunder, if any, to make its Advance, but no Lender shall be
responsible for the failure of any other Lender to make any Advance to be made
by such other Lender.
Section 2.3. Use of Proceeds. Borrower shall use all funds lent
hereunder to finance working capital, the acquisition of new oil and gas
properties and the development of new and existing oil and gas properties. In
no event shall the funds from any Advance be used directly or indirectly by any
Person for personal, family, household or agricultural purposes or for the
purpose, whether immediate, incidental or ultimate, of purchasing, acquiring or
carrying any "margin stock" or any "margin securities" (as such terms are
defined respectively in Regulation U and Regulation G promulgated by the Board
of Governors of the Federal Reserve System) or to extend credit to others
directly or indirectly for the purpose of purchasing or carrying any such
margin stock or margin securities. Borrower represents and warrants that
Borrower is not engaged principally, or as one of Borrower's important
activities, in the business of extending credit to others for the purpose of
purchasing or carrying such margin stock or margin securities.
Section 2.4. Rate Elections. Borrower may from time to time
designate all or any portion of the Loans (including any yet to be made
Advances which are to be made prior to or at the beginning of the designated
Interest Period but excluding any portion of the Loan which is required to be
repaid prior to the end of the designated Interest Period) as a "Tranche",
which term refers to a set of Fixed Rate Portions with identical Interest
Periods and with each Lender participating in such Tranche in accordance with
its Percentage Share. Without the consent of Majority Lenders, Borrower may
make no such election during the continuance of a Default and Borrower may make
such an election with respect to outstanding Fixed Rate Portions only if such
election will take effect at or after the termination of the Interest Period
applicable thereto. Each election by Borrower of a Tranche shall:
(a) Be made in writing in the form and substance of the "Rate
Election" attached hereto as Exhibit C, duly completed;
(b) Specify the amount of the Loans which Borrower desires to
designate as such Tranche, the first day of the Interest Period which
is to apply thereto, and the length of such Interest Period; and
(c) Be received by Agent not later than 10:00 a.m., Eastern
Time, on the third Business Day preceding the first day of the
specified Interest Period.
Promptly after receiving any such election (herein called a "Rate Election")
which meets the requirements of this section, Agent shall notify each Lender
thereof. Each Rate Election shall
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be irrevocable. Borrower may make no Rate Election which does not specify an
Interest Period complying with the definition of "Interest Period" in Section
1.1, and the aggregate amount of the Tranche elected in any Rate Election must
be an integral multiple of $100,000. Upon the termination of each Interest
Period, the portion of each Loan within the related Tranche shall, unless the
subject of a new Rate Election then taking effect, automatically become a part
of the Base Rate Portion of such Loan and become subject to all provisions of
the Loan Documents governing such Base Rate Portion. Borrower shall have no
more than five (5) Tranches in effect at any time.
Section 2.5. Fees. In consideration of each Lender's commitment to
make Advances, Borrower will pay, in addition to any payments made prior to the
date hereof, the following fees:
(a) to Agent for the account of each Lender, on or before the
Effective Date, a facility fee as determined under a separate
agreement between Borrower and Agent.
(b) to Agent for the account of each Lender a commitment fee
determined on a daily basis by applying a rate of one-half of one
percent (0.5%) per annum to the unused portion of the Borrowing Base
on each day during the Commitment Period, determined for each such day
by deducting from the amount of the Borrowing Base at the end of such
day the unpaid principal balance of all Loans at the end of such day.
This commitment fee shall be due and payable in arrears on the last
day of each March, June, September and December and at the end of the
Commitment Period.
Section 2.6. Agent's Fees. In addition to all other amounts due to
Agent under the Loan Documents, Borrower will pay a non-refundable annual fee
of $25,000 to Agent on each anniversary of this Agreement until the Obligations
have been paid in full; provided that, no such fee shall be due during any
period, or any portion thereof, in which there shall be only one Lender under
this Agreement. Each such fee shall be payable in arrears, for the period
commencing on the date following the previous payment (or for the first period,
the date hereof) and ending on the date of such payment.
Section 2.7. Optional Prepayments. Borrower may, upon one (1)
Business Days' notice to each Lender, from time to time and without premium or
penalty prepay the Notes, in whole or in part, so long as the aggregate amount
of all partial prepayments of principal on the Notes is greater than or equal
to $100,000, and so long as Borrower does not prepay any Fixed Rate Portion
except on the last day of the relevant Interest Period, and so long as Borrower
does not make any prepayments which would reduce the aggregate unpaid principal
balance of the Loans to less than $100,000 without first either (a) terminating
this Agreement or (b) providing assurance satisfactory to Agent in its
discretion that Lenders' legal rights under the Loan Documents are in no way
affected by such reduction. Each partial prepayment of principal made after
the end of the Commitment Period shall be applied to the regular installments
of principal due under the Notes in the inverse order of their maturities.
Each prepayment of principal under this section shall be accompanied by all
interest then accrued and unpaid on the principal so prepaid. Any principal or
interest prepaid pursuant to this section shall be in addition to, and not in
lieu of, all payments otherwise required to be paid under the Loan Documents at
the time of such prepayment.
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Section 2.8. Mandatory Prepayments. If the aggregate unpaid
principal balance of the Loans ever exceeds the Borrowing Base Borrower shall,
within thirty (30) Business Days after Agent gives notice of such fact to
Borrower, prepay the principal of the Loans in an amount at least equal to such
excess. Each prepayment of principal under this section shall be accompanied
by all interest then accrued and unpaid on the principal so prepaid. Any
principal or interest prepaid pursuant to this section shall be in addition to,
and not in lieu of, all payments otherwise required to be paid under the Loan
Documents at the time of such prepayment.
Section 2.9. Loan Amortization. The principal of the Loans will be
due and payable in quarterly installments on the last day of December, March,
June, and September, beginning March 31, 1996, and continuing regularly
thereafter until December 31, 1998. Each installment shall be equal to a
percentage of the outstanding principal balance of the Notes at the end of the
Commitment Period (prior to any payments on that date) which percentage is set
out opposite such installment as follows:
INSTALLMENT DATE PAYMENT PERCENTAGE
---------------- ------------------
March 31, 1996 6.00%
June 30, 1996 6.00%
September 30, 1996 6.00%
December 31, 1996 6.00%
March 31, 1997 11.25%
June 30, 1997 11.25%
September 30, 1997 11.25%
December 31, 1997 11.25%
March 31, 1998 7.75%
June 30, 1998 7.75%
September 30, 1998 7.75%
December 31, 1998 7.75% (or outstanding balance)
All unpaid principal of the Loans together with all accrued unpaid
interest thereon shall be due and payable in full on December 31, 1998.
Section 2.10. Payments to Lenders. Borrower will make each payment
which it owes under the Loan Documents to Agent for the account of the Lender
to whom such payment is owed. Each such payment must be received by Agent not
later than 11:00 a.m., Eastern Time, on the date such payment becomes due and
payable, in lawful money of the United States of America, without set-off,
deduction or counterclaim, and in immediately available funds. Any payment
received by Agent after such time will be deemed to have been made on the next
following Business Day. Should any such payment become due and payable on a
day other than a Business Day, the maturity of such payment shall be extended
to the next succeeding Business Day, and, in the case of a payment of principal
or past due interest, interest shall accrue and be payable thereon for the
period of such extension as provided in the Loan Document under which such
payment is due. Each payment under a Loan Document shall be due and payable at
the place provided therein and, if no specific place of payment is provided,
shall be due and payable at the place of payment of the Agent's
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Note. When Agent collects or receives money on account of the Obligations
which is insufficient to pay all the Obligations then due and payable, Agent
may apply such money as it elects to the various Obligations which are then due
and payable.
Section 2.11. Initial Borrowing Base. Subject to the provisions of
Section 2.12 and 2.13, during the period from the date hereof to the first
Determination Date, the Borrowing Base shall be $10,000,000.
Section 2.12. Subsequent Determinations of Borrowing Base. By
September 30, 1995 Borrower shall furnish to each Lender all information,
reports and data which Agent has then requested concerning Borrower's
businesses and properties (including Borrower's oil and gas properties and
interests and the reserves and production relating thereto), together with the
Engineering Report described in Section 5.1(b)(iv). Within forty-five (45)
days after receiving such information, reports and data, or as promptly
thereafter as practicable, Lenders whose Percentage Shares total not less than
75% shall by notice to Borrower designate the new Borrowing Base available to
Borrower hereunder, which designation shall take effect immediately on the date
such notice is sent (herein called a "Determination Date") and shall remain in
effect until but not including the next date as of which the Borrowing Base is
redetermined. If Borrower does not furnish all such information, reports and
data by the date specified in the first sentence of this section Agent may
nonetheless designate the Borrowing Base at any amount which Lenders whose
Percentage Shares total not less than 75% determine and may redesignate the
Borrowing Base from time to time thereafter until each Lender receives all such
information, reports and data, whereupon Lenders whose Percentage Shares total
not less than 75% shall designate a new Borrowing Base as described above.
Lenders whose Percentage Shares total not less than 75% shall determine the
amount of the Borrowing Base based upon the loan collateral value which they in
their discretion assign to the various oil and gas properties of Borrower at
the time in question and based upon such other credit factors (including
without limitation the assets, liabilities, cash flow, business, properties,
prospects, management and ownership of Borrower and its Affiliates) as they in
their discretion deem significant. It is expressly understood that Lenders and
Agent have no obligation to designate the Borrowing Base at any particular
amount, whether in relation to the Maximum Loan Amount or otherwise, and that
Lenders' commitment to advance funds hereunder is determined by reference to
the Borrowing Base from time to time in effect, which Borrowing Base shall be
used for calculating commitment fees under Section 2.5(b) and, to the extent
permitted by law and regulatory authorities, for the purposes of Section 2.14.
In addition to the foregoing, Lenders whose Percentage Shares total not less
than 75% shall also have the right to redetermine the Borrowing Base at any
time and from time to time upon the occurrence of any event or condition which
causes any loss of or damage to any Collateral (regardless of whether covered
by insurance), upon the institution of any condemnation proceedings involving
any Collateral, if such loss, damage or condemnation is reasonably likely to
result in at least a $100,000 diminution in the value of the Collateral
(without regard to any insurance which may be available), upon the sale of any
part of the Collateral with a value in excess of $100,000 which is not in the
ordinary course of business, and upon the occurrence of any event or condition
which could reasonably be expected to have a material adverse effect upon the
value of the Collateral.
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Section 2.13. Borrower's Reduction of Borrowing Base. Until the
termination of the Commitment Period Borrower may at any time by notice to
Agent reduce the Borrowing Base then in effect to any lesser amount. Each such
notice shall take effect on the date specified therein, which may not be
earlier than the date on which such notice is received by Agent, and shall
continue in effect until the next date as of which the Borrowing Base is
redetermined.
Section 2.14. Capital Reimbursement. If either (a) the introduction
or implementation of or the compliance with or any change in or in the
interpretation of any law, rule or regulation, or (b) the introduction or
implementation of or the compliance with any request, directive or guideline
from any central bank or other governmental authority (whether or not having
the force of law) affects or would affect the amount of capital required or
expected to be maintained by any Lender or any corporation controlling any
Lender based on the existence of such Lender's Loan or commitments under this
Agreement, then, upon demand by such Lender, Borrower will pay to Agent for the
benefit of such Lender, from time to time as specified by such Lender, such
additional amount or amounts which such Lender shall determine to be
appropriate to compensate such Lender or any corporation controlling such
Lender in light of such circumstances, to the extent that such Lender
reasonably determines that the amount of any such capital would be increased or
the rate of return on any such capital would be reduced by or in whole or in
part based on the existence of such Lender's Loan or commitments under this
Agreement.
Section 2.15. Increased Cost of Fixed Rate Portions. If any
applicable domestic or foreign law, treaty, rule or regulation (whether now in
effect or hereinafter enacted or promulgated, including Regulation D) or any
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof (whether or not having the
force of law):
(a) shall change the basis of taxation of payments to any
Lender of any principal, interest, or other amounts attributable to
any Fixed Rate Portion or otherwise due under this Agreement in
respect of any Fixed Rate Portion (other than taxes imposed on the
overall net income of any Lender or any lending office of any Lender
by any jurisdiction in which such Lender or any such lending office is
located); or
(b) shall change, impose, modify, apply or deem applicable
any reserve, special deposit or similar requirements in respect of any
Fixed Rate Portion owing to any Lender (excluding those for which such
Lender is fully compensated pursuant to adjustments made in the
definition of Fixed Rate) or against assets of, deposits with or for
the account of, or credit extended by, such Lender; or
(c) shall impose on any Lender or the London interbank
deposit market any other condition affecting any Fixed Rate Portion,
the result of which is to increase the cost to such Lender of funding
or maintaining any Fixed Rate Portion or to reduce the amount of any
sum receivable by such Lender in respect of any Fixed Rate Portion by
an amount deemed by such Lender to be material,
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then such Lender shall promptly notify Agent and Borrower in writing of the
happening of such event and of the amount required to compensate such Lender
for such event (on an after-tax basis, taking into account any taxes on such
compensation), whereupon (i) Borrower shall pay such amount to Agent for the
account of such Lender and (ii) Borrower may elect, by giving to Agent and such
Lender not less than three Business Days' notice, to convert all (but not less
than all) of any such Fixed Rate Portion into a part of the Base Rate Portion.
Section 2.16. Availability. If (a) any change in applicable laws,
treaties, rules or regulations or in the interpretation or administration
thereof of or in any jurisdiction whatsoever, domestic or foreign, shall make
it unlawful or impracticable for any Lender to fund or maintain Fixed Rate
Portions, or shall materially restrict the authority of such Lender to purchase
or take offshore deposits of dollars (i.e., "eurodollars"), or (b) such Lender
determines that matching deposits appropriate to fund or maintain any Fixed
Rate Portion are not available to it, or (c) such Lender determines that the
formula for calculating the Adjusted Eurodollar Rate does not fairly reflect
the cost to such Lender of making or maintaining loans based on such rate, then
Borrower's right to elect Fixed Rate Portions shall be suspended to the extent
and for the duration of such illegality, impracticability or restriction and
all Fixed Rate Portions of such Lender's Loan (or portions thereof) which are
then outstanding or are then the subject of any Rate Election and which cannot
lawfully or practicably be maintained or funded shall immediately become or
remain part of the Base Rate Portion of such Lender's Loan. Borrower agrees to
indemnify each Lender and hold it harmless against all costs, expenses, claims,
penalties, liabilities and damages which may result from any such change in
law, treaty, rule, regulation, interpretation or administration. Such
indemnification shall be on an after-tax basis, taking into account any taxes
imposed on the amounts paid as indemnity.
Section 2.17. Funding Losses. In addition to its other obligations
hereunder, Borrower will indemnify Agent and each Lender against, and reimburse
Agent and each Lender on demand for, any loss or expense incurred or sustained
by Agent or such Lender (including any loss or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by a Lender
to fund or maintain Fixed Rate Portions or Advances), as a result of (a) any
payment or prepayment (whether authorized or required hereunder or otherwise)
of all or a portion of a Fixed Rate Portion on a day other than the day on
which the applicable Interest Period ends, (b) any payment or prepayment,
whether required hereunder or otherwise, of the Loan made after the delivery,
but before the effective date, of a Rate Election, if such payment or
prepayment prevents such Rate Election from becoming fully effective, (c) the
failure of any Advance to be made or of any Rate Election to become effective
due to any condition precedent not being satisfied or due to any other action
or inaction of any Related Person, or (d) any conversion (whether authorized or
required hereunder or otherwise) of all or any portion of any Fixed Rate
Portion into the Base Rate Portion or into a different Fixed Rate Portion on a
day other than the day on which the applicable Interest Period ends. Such
indemnification shall be on an after-tax basis, taking into account any taxes
imposed on the amounts paid as indemnity.
Section 2.18. Reimbursable Taxes. Borrower covenants and agrees that:
(a) Borrower will indemnify Agent and each Lender against and
reimburse Agent and each Lender for all present and future income,
stamp and other taxes,
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levies, costs and charges whatsoever imposed, assessed, levied or
collected on or in respect of this Agreement or any Fixed Rate
Portions (whether or not legally or correctly imposed, assessed,
levied or collected), excluding, however, any taxes imposed on or
measured by the overall net income of Agent or such Lender or any
lending office of Agent or such Lender (all such non-excluded taxes,
levies, costs and charges being collectively called "Reimbursable
Taxes" in this section). Such indemnification shall be on an
after-tax basis, taking into account any taxes imposed on the amounts
paid as indemnity.
(b) All payments on account of the principal of, and interest
on, each Lender's Loan and each Lender's Note, and all other amounts
payable by Borrower to Agent and each Lender hereunder, shall be made
in full without set-off or counterclaim and shall be made free and
clear of and without deductions or withholdings of any nature by
reason of any Reimbursable Taxes, all of which will be for the account
of Borrower. In the event of Borrower being compelled by law or other
regulations to make any such deduction or withholding from any payment
to Agent or any Lender, Borrower shall pay on the due date of such
payment, by way of additional interest, such additional amounts as are
needed to cause the amount receivable by Agent or such Lender after
such deduction or withholding to equal the amount which would have
been receivable in the absence of such deduction or withholding. If
Borrower should make any deduction or withholding as aforesaid,
Borrower shall within 60 days thereafter forward to Agent or such
Lender an official receipt or other official document evidencing
payment of such deduction or withholding.
(c) If Borrower is ever required to pay any Reimbursable Tax
with respect to any Fixed Rate Portion, Borrower may elect, by giving
to Agent and each Lender not less than three Business Days' notice, to
convert all (but not less than all) of any such Fixed Rate Portion
into a part of the Base Rate Portion, but such election shall not
diminish Borrower's obligation to pay all Reimbursable Taxes.
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ARTICLE III - Conditions Precedent
Section 3.1. Conditions Precedent. This Agreement shall not become
effective for any purpose and no Lender shall have any obligation to make the
initial Advance unless and until Borrower shall have received, before July 31,
1995, at least $64,500,000 in gross proceeds from the issuance of the 2002
Notes (including warrants) and shall have applied a portion of such proceeds to
(i) pay in full all obligations of Borrower under the Prior Unsecured Senior
Credit Agreement, (ii) redeem Borrower's Series D Preferred Stock, and (iii)
pay all obligations under the Prior Agreement, other than the portion of the
principal of Lender's Loan thereunder which is not in excess of the Borrowing
Base hereunder, which to the extent not so paid will be deemed to constitute
the initial Advance under this Agreement. The date on which the conditions set
forth in this Section 3.1 shall be satisfied shall be deemed to be the
effective date of this Agreement ("Effective Date").
Section 3.2. Documents to be Delivered. In addition, no Lender has
any obligation to make the initial Advance unless Agent shall have received all
of the following, at Agent's office in New York, New York, duly executed and
delivered and in form, substance and date satisfactory to Agent and each
Lender:
(a) A Note payable to each Lender in the principal amount
equal to the Maximum Loan Amount for such Lender.
(b) The Intercreditor Agreement.
(c) An "Omnibus Certificate" of the Secretary and of the
Chairman of the Board or President of Borrower, which shall contain
the names and signatures of the officers of Borrower authorized to
execute Loan Documents and which shall certify to the truth,
correctness and completeness of the following exhibits attached
thereto: (i) a copy of resolutions duly adopted by the Board of
Directors of Borrower and in full force and effect at the time this
Agreement is entered into, authorizing the execution of this Agreement
and the other Loan Documents delivered or to be delivered in
connection herewith and the consummation of the transactions
contemplated herein and therein, (ii) a copy of the charter documents
of Borrower and all amendments thereto, certified by the appropriate
official of Borrower's state of organization, and (iii) a copy of any
bylaws of Borrower and all amendments thereto.
(d) A certificate (or certificates) of the due formation,
valid existence and good standing of Borrower in its state of
organization, issued by the appropriate authorities of such
jurisdiction.
(e) A "Compliance Certificate" of the Chairman of the Board
or President and of the chief financial officer of Borrower, of even
date with such Advance, in which such officers certify to the
satisfaction of the conditions set out in subsections (a), (b), (c)
and (d) of Section 3.3.
(f) An opinion of Messrs. Vinson & Elkins L.L.P., counsel for
Borrower in form and substance satisfactory to each Lender.
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(g) An opinion of Messrs. Donovan Leisure Newton & Irvine,
special New York counsel for Agent as to the enforceability of the
Loan Documents governed by New York law.
(h) Each Security Document listed in the Security Schedule.
(i) Certificates of Borrower's good standing and due
qualification to do business, issued by appropriate officials in any
states in which Borrower owns property subject to Security Documents
(including, without limitation, California).
Section 3.3. Additional Conditions Precedent. No Lender has any
obligation to make any Advance (including the initial Advance) unless the
following conditions precedent have been satisfied:
(a) All representations and warranties made by any Related
Person in any Loan Document shall be true on and as of the date of
such Advance as if such representations and warranties had been made
as of the date of such Advance, and all Security Documents shall be in
full force and effect and provide the security intended thereby.
(b) No Default shall exist or will occur as a result of the
making of such Advance.
(c) No material adverse change shall have occurred to
Borrower's individual or Consolidated financial condition or
businesses, since the date of this Agreement.
(d) Each Related Person shall have performed and complied
with all agreements and conditions required in the Loan Documents to
be performed or complied with by it on or prior to the date of such
Advance.
(e) The making of such Advance shall not be prohibited by any
law or any regulation or order of any court or governmental agency or
authority and shall not subject such Lender to any penalty or other
onerous condition under or pursuant to any such law, regulation or
order.
(f) Agent shall have received all documents and instruments
provided for herein which Agent has then requested, in addition to
those described in Section 3.2 (including opinions of legal counsel
for the Related Persons and Agent; corporate documents and records;
documents evidencing governmental authorizations, consents, approvals,
licenses and exemptions; and certificates of public officials and of
officers and representatives of Borrower and other Persons), as to (i)
the accuracy and validity of or compliance with all representations,
warranties and covenants made by any of the Related Persons in this
Agreement and the other Loan Documents, (ii) the satisfaction of all
conditions contained herein or therein, and (iii) all other matters
pertaining hereto and thereto. All such additional documents and
instruments shall be reasonably satisfactory to Agent and each Lender
in form, substance and date.
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(g) All legal matters relating to the Loan Documents and the
consummation of the transactions contemplated thereby shall be
satisfactory to Messrs. Thompson & Knight, P.C. counsel to Agent.
ARTICLE IV - Representations and Warranties
Section 4.1. Borrower's Representations and Warranties. To confirm
each Lender's understanding concerning Borrower and Borrower's business,
properties and obligations and to induce each Lender to enter into this
Agreement and to make the Loan, Borrower represents and warrants to Agent and
each Lender that:
(a) No Default. Borrower is not in default in the
performance of any of the covenants and agreements contained herein.
No event has occurred and is continuing which constitutes a Default.
(b) Organization and Good Standing. Each Related Person
which is a corporation or partnership is duly organized, validly
existing and in good standing under the laws of its state of
organization, having all corporate or partnership powers required to
carry on its business and enter into and carry out the transactions
contemplated hereby. Each such Related Person is duly qualified, in
good standing, and authorized to do business in all other
jurisdictions within the United States wherein the character of the
properties owned or held by it or the nature of the business
transacted by it makes such qualification necessary, except where the
failure to so qualify would not have, or be likely to have a material
adverse effect on any such person. Each such Related Person has taken
all actions and procedures customarily taken in order to enter, for
the purpose of conducting business or owning property, each
jurisdiction outside the United States wherein the character of the
properties owned or held by it or the nature of the business
transacted by it makes such actions and procedures desirable.
(c) Authorization. Each Related Person which is a
corporation or partnership has duly taken all corporate or partnership
action necessary to authorize the execution and delivery by it of the
Loan Documents to which it is a party and to authorize the
consummation of the transactions contemplated thereby and the
performance of its obligations thereunder. Borrower is duly
authorized to borrow funds hereunder.
(d) No Conflicts or Consents. The execution and delivery by
the various Related Persons of the Loan Documents to which each is a
party, the performance by each of its obligations under such Loan
Documents, and the consummation of the transactions contemplated by
the various Loan Documents, do not and will not (i) conflict with any
provision of (1) any domestic or foreign law, statute, rule or
regulation, (2) the articles or certificate of incorporation, bylaws,
charter, or partnership agreement or certificate of any Related
Person, or (3) any agreement, judgment, license, order or permit
applicable to or binding upon any Related Person, (ii) result in the
acceleration of any Debt owed by any Related Person, or (iii) result
in or require the creation of any Lien upon any assets or properties
of any Related Person
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except as expressly contemplated in the Loan Documents. Except as
expressly contemplated in the Loan Documents no consent, approval,
authorization or order of, and no notice to or filing with, any court
or governmental authority or third party is required in connection
with the execution, delivery or performance by any Related Person of
any Loan Document or to consummate any transactions contemplated by
the Loan Documents.
(e) Enforceable Obligations. This Agreement is, and the
other Loan Documents when duly executed and delivered will be, legal,
valid and binding obligations of each Related Person which is a party
hereto or thereto, enforceable in accordance with their terms except
as such enforcement may be limited by bankruptcy, insolvency or
similar laws of general application relating to the enforcement of
creditors' rights.
(f) Initial Financial Statements. The Initial Financial
Statements fairly present Borrower's Consolidated financial position
at the respective dates thereof and the Consolidated results of
Borrower's operations and Borrower's Consolidated cash flows for the
respective periods thereof. Since the date of the audited annual
Initial Financial Statements no material adverse change has occurred
in Borrower's financial condition or businesses or in Borrower's
Consolidated financial condition or businesses, except as reflected in
the quarterly Initial Financial Statements or in the Disclosure
Schedule. All Initial Financial Statements were prepared in
accordance with GAAP.
(g) Other Obligations and Restrictions. No Related Person
has any outstanding Debt of any kind (including contingent
obligations, tax assessments, and unusual forward or long-term
commitments) which is, in the aggregate, material to Borrower or
material with respect to Borrower's Consolidated financial condition
and not shown in the Initial Financial Statements or disclosed in the
Disclosure Schedule or a Disclosure Report. Except as shown in the
Initial Financial Statements or disclosed in the Disclosure Schedule,
no Related Person is subject to or restricted by any franchise,
contract, deed, charter restriction, or other instrument or
restriction which is reasonably likely in the foreseeable future to
materially and adversely affect the businesses, properties, prospects,
operations, or financial condition of such Related Person or of
Borrower on a Consolidated basis.
(h) Full Disclosure. No certificate, statement or other
information delivered herewith or heretofore by any Related Person to
Agent or any Lender in connection with the negotiation of this
Agreement or in connection with any transaction contemplated hereby
contains any untrue statement of a material fact or omits to state any
material fact known to any Related Person (other than industry-wide
risks normally associated with the types of businesses conducted by
the Related Persons) necessary to make the statements contained herein
or therein not misleading as of the date made or deemed made. There
is no fact known to any Related Person (other than industry-wide risks
normally associated with the types of businesses conducted by the
Related Persons) that has not been disclosed to Agent and each Lender
in writing which could materially and adversely affect Borrower's
properties, business, prospects
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or condition (financial or otherwise) or Borrower's Consolidated
properties, businesses, prospects or condition (financial or
otherwise). There are no statements or conclusions in any Engineering
Report which are based upon or include misleading information or fail
to take into account material information regarding the matters
reported therein, it being understood that each Engineering Report is
necessarily based upon professional opinions, estimates and
projections and that Borrower does not warrant that such opinions,
estimates and projections will ultimately prove to have been accurate.
Borrower has heretofore delivered to Agent and each Lender true,
correct and complete copies of the Initial Financial Statements and
the Initial Engineering Report.
(i) Litigation. Except as disclosed in the Initial Financial
Statements or in the Disclosure Schedule: (i) there are no actions,
suits or legal, equitable, arbitrative or administrative proceedings
pending, or to the knowledge of any Related Person threatened, against
any Related Person before any federal, state, municipal or other
court, department, commission, body, board, bureau, agency, or
instrumentality, domestic or foreign, which do or may materially and
adversely affect Borrower or, on a Consolidated basis, Borrower and
its properly Consolidated subsidiaries, their ownership or use of any
of their assets or properties, their businesses or financial condition
or prospects, or the right or ability of any Related Person to enter
into the Loan Documents to which it is a party or to consummate the
transactions contemplated thereby or to perform its obligations
thereunder and (ii) there are no outstanding judgments, injunctions,
writs, rulings or orders by any such governmental entity against any
Related Person or any Related Person's stockholders, partners,
directors or officers which have or may have any such effect.
(j) ERISA Liabilities. All currently existing ERISA Plans
are listed in the Disclosure Schedule or a Disclosure Report. Except
as disclosed in the Initial Financial Statements or in the Disclosure
Schedule, no Termination Event has occurred with respect to any ERISA
Plan and the Related Persons are in compliance with ERISA in all
material respects. No Related Person is required to contribute to, or
has any other absolute or contingent liability in respect of, any
"multiemployer plan" as defined in Section 4001 of ERISA. Except as
set forth in the Disclosure Schedule: (i) no "accumulated funding
deficiency" (as defined in Section 412(a) of the Internal Revenue Code
of 1986, as amended) exists with respect to any ERISA Plan, whether or
not waived by the Secretary of the Treasury or his delegate, and (ii)
the current value of each ERISA Plan's benefits does not exceed the
current value of such ERISA Plan's assets available for the payment of
such benefits by more than $500,000.
(k) Environmental and Other Laws. As used in this
subsection: "CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, "CERCLIS" means
the Comprehensive Environmental Response, Compensation and Liability
Information System List of the Environmental Protection Agency, and
"Release" has the meaning given such term in 42 U.S.C. Section
9601(22). Except as set forth in the Disclosure Schedule:
(i) The Related Persons are conducting their
businesses in material compliance with all applicable federal,
state and local laws, including
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Environmental Laws, and have all permits, licenses and
authorizations required in connection with the conduct of
their businesses. Each Related Person is in compliance with
the terms and conditions of all such permits, licenses and
authorizations, and is also in compliance with all other
limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and
timetables contained in any applicable Environmental Law or in
any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, except to the extent
failure to comply would not have a material adverse effect on
the financial condition, operations, business or prospects of
any Related Person.
(ii) No notice, notification, demand, request for
information, citation, summons or order has been issued, no
complaint has been filed, no penalty has been assessed, and no
investigation or review is pending or threatened by any
governmental agency or entity or any other Person with respect
to (1) any alleged generation, treatment, storage, recycling,
transportation, disposal, or Release of any Hazardous
Materials, either by any Related Person or on any property
owned by any Related Person, (2) any material remedial action
which might be needed to respond to any such alleged
generation, treatment, storage, recycling, transportation,
disposal, or Release, or (3) any alleged failure by any
Related Person to have any permit, license or authorization
required in connection with the conduct of its business or
with respect to any such generation, treatment, storage,
recycling, transportation, disposal, or Release.
(iii) No Related Person otherwise has any known
material contingent liability in connection with any alleged
generation, treatment, storage, recycling, transportation,
disposal, or Release of any Hazardous Materials.
(iv) No Related Person has handled any Hazardous
Materials, other than as a generator, on any properties now or
previously owned or leased by any Related Person to an extent
that such handling has, or may reasonably be expected to have,
a material adverse effect on the financial condition,
operations, business or prospects of any Related Person; and
(1) no PCBs are or have been present at any
properties now owned or leased by any Related
Person or, to the best knowledge of each
Related Person, previously owned or leased by
any Related Person;
(2) no asbestos is or has been present at any
properties now owned or leased by any Related
Person or, to the best knowledge of each
Related Person, previously owned or leased by
any Related Person;
(3) there are no underground storage tanks for
Hazardous Materials, active or abandoned, at
any properties now owned or leased by
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any Related Person or, the best knowledge of
each Related Person, previously owned or
leased by any Related Person;
(4) no Hazardous Materials have been released, in
a reportable quantity, where such a quantity
has been established by statute, ordinance,
rule, regulation or order, at, on or under
any properties now owned or leased by any
Related Person or, the best knowledge of each
Related Person, previously owned or leased by
any Related Person;
(5) no Hazardous Materials have been otherwise
released at, on or under any properties now
owned or leased by any Related Person or, the
best knowledge of each Related Person,
previously owned or leased by any Related
Person, to an extent that such release has,
or may reasonably be expected to have, a
material adverse effect on the financial
condition, operations, business or prospects
of any Related Person.
(v) No Related Person has transported or arranged
for the transportation of any Hazardous Material to any
location which is listed on the National Priorities List under
CERCLA, listed for possible inclusion on the National
Priorities List by the Environmental Protection Agency in
CERCLIS, or listed on any similar state list or which is the
subject of federal, state or local enforcement actions or
other investigations which may lead to claims against any
Related Person for clean-up costs, remedial work, damages to
natural resources or for personal injury claims, including,
but not limited to, claims under CERCLA.
(vi) No Hazardous Material generated by any
Related Person has been recycled, treated, stored, disposed of
or released by any Related Person at any location other than
those listed in the Disclosure Schedule.
(vii) No oral or written notification of a Release
of a Hazardous Material has been filed by or on behalf of any
Related Person (and to the best knowledge of Borrower, no such
notification has been filed with respect to any Related Person
by any other Person), and no property now owned or leased by
any Related Person, or, the best knowledge of each Related
Person, previously owned or leased by any Related Person, is
listed or proposed for listing on the National Priority list
promulgated pursuant to CERCLA, in CERCLIS, or on any similar
state list of sites requiring investigation or clean-up.
(viii) There are no Liens arising under or pursuant
to any Environmental Laws on any of the real properties or
properties now owned or leased by any Related Person or, the
best knowledge of each Related Person, previously owned or
leased by any Related Person, and no government actions have
been taken or are in process which could subject any of such
properties to such Liens; nor would any Related Person be
required to place any notice or
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restriction relating to the presence of Hazardous Materials at
any properties owned by it in any deed to such properties.
(ix) There have been no environmental
investigations, studies, audits, tests, reviews or other
analyses conducted by or which are in the possession of any
Related Person in relation to any properties or facility now
or previously owned or leased by any Related Person which have
not been made available to Agent and the Lenders.
(l) Names and Places of Business. Borrower has not, during
the preceding five years, had, been known by, or used any other
corporate, trade, or fictitious name, except as disclosed in the
Disclosure Schedule. Except as otherwise indicated in the Disclosure
Schedule or a Disclosure Report, the chief executive office and
principal place of business of Borrower are (and for the preceding
five years have been) located at the address of Borrower specified on
the signature pages hereto. Except as indicated in the Disclosure
Schedule, Borrower has no other office or place of business.
(m) Borrower's Subsidiaries. Borrower does not presently
have any Subsidiary or own any stock in any other corporation or
association except those listed in the Disclosure Schedule. Borrower
is not a member of any general or limited partnership, joint venture
or association of any type whatsoever except those listed in the
Disclosure Schedule. Except as otherwise revealed in a Disclosure
Report, Borrower owns, directly or indirectly, the equity interest in
each of its Subsidiaries which is indicated in the Disclosure
Schedule.
(n) Title to Properties. Each Related Person has good
and defensible title to all of its material properties and assets,
free and clear of all Prohibited Liens and of all impediments to the
use of such properties and assets in such Related Person's business,
except that no representation or warranty is made with respect to any
oil, gas or mineral property or interest to which no proved oil or gas
reserves are attributed in the latest Engineering Report.
(o) Government Regulation. Neither Borrower nor any
other Related Person owing Obligations is subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act,
the Investment Company Act of 1940 (as any of the preceding acts have
been amended) or any other statute, law, regulation or decree which
regulates the incurring by such Person of Debt, including statutes,
laws, regulations or decrees relating to common contract carriers or
the sale of electricity, gas, steam, water or other public utility
services.
(p) Insider. Neither Borrower, nor any other Related
Person, nor any Person having "control" (as that term is defined in 12
U.S.C. Section 375b(9) or in regulations promulgated pursuant
thereto) of Borrower, is a "director" or an "executive officer" or
"principal shareholder" (as those terms are defined in 12 U.S.C.
Section 375b(8) or (9) or in regulations promulgated pursuant
thereto) of Agent or any Lender, of a
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bank holding company of which Agent or any Lender is a Subsidiary or
of any Subsidiary of a bank holding company of which Agent or any
Lender is a Subsidiary.
Section 4.2. Representation by Lenders. Each Lender hereby
represents that it will acquire its Note for its own account in the ordinary
course of its commercial lending business; however, the disposition of such
Lender's property shall at all times be and remain within its control and, in
particular and without limitation, such Lender may sell or otherwise transfer
its Note, any participation interest or other interest in its Note, or any of
its other rights and obligations under the Loan Documents. In the event of any
transfer of a Note or an interest therein, Agent agrees to give notice thereof
to Borrower within a reasonable time after such transfer.
ARTICLE V - Covenants of Borrower
Section 5.1. Affirmative Covenants. To conform with the terms and
conditions under which each Lender is willing to have credit outstanding to
Borrower, and to induce such Lender to enter into this Agreement and make the
Loans, Borrower shall, and shall cause each Related Person to, warrant,
covenant and agree that until the full and final payment of the Obligations and
the termination of this Agreement, unless Majority Lenders have previously
agreed otherwise:
(a) Payment and Performance. Borrower will pay all amounts
due under the Loan Documents in accordance with the terms thereof and
will observe, perform and comply with every covenant, term and
condition expressed or implied in the Loan Documents. Borrower will
cause the other Related Persons to observe, perform and comply with
every such term, covenant and condition.
(b) Books, Financial Statements and Reports. Each Related
Person will at all times maintain full and accurate books of account
and records. Borrower will maintain and will cause its Subsidiaries
to maintain a standard system of accounting and will furnish the
following statements and reports to Agent and each Lender at
Borrower's expense:
(i) As soon as available, and in any event within 90
days after the end of each Fiscal Year, complete Consolidated
and consolidating financial statements of Borrower together
with all notes thereto, prepared in reasonable detail in
accordance with GAAP, together with an opinion, based on an
audit using generally accepted auditing standards, by Arthur
Andersen & Co., or other independent certified public
accountants selected by Borrower and acceptable to Majority
Lenders, stating that such Consolidated financial statements
have been so prepared. These financial statements shall
contain a Consolidated and consolidating balance sheet as of
the end of such Fiscal Year and Consolidated and consolidating
statements of earnings, of cash flows, and of changes in
owners' equity for such Fiscal Year, each setting forth in
comparative form the corresponding figures for the preceding
Fiscal Year. In addition, within 120 days after the end of
each Fiscal Year Borrower will
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furnish a report signed by such accountants stating that they
have read this Agreement, containing calculations showing
compliance (or non-compliance) at the end of such Fiscal Year
with the requirements of Sections 5.2(f), (l) and (m), and
further stating that in making the examination and reporting
on the Consolidated financial statements described above they
did not conclude that any Default existed at the end of such
Fiscal Year or at the time of their report, or, if they did
conclude that a Default existed, specifying its nature and
period of existence.
(ii) As soon as available, and in any event within
45 days after the end of each Fiscal Quarter, Borrower's
Consolidated and consolidating balance sheet as of the end of
such Fiscal Quarter and Consolidated and consolidating
statements of Borrower's earnings and cash flows for the
period from the beginning of the then current Fiscal Year to
the end of such Fiscal Quarter, all in reasonable detail and
prepared in accordance with GAAP, subject to changes resulting
from normal year-end adjustments. In addition Borrower will,
together with each such set of financial statements and each
set of financial statements furnished under subsection (b)(i)
of this section, furnish a certificate in the form of Exhibit
D signed by the chief financial officer of Borrower stating
that such financial statements are accurate and complete,
stating that he has reviewed the Loan Documents, containing
calculations showing compliance (or non-compliance) at the end
of such Fiscal Quarter with the requirements of Sections
5.2(f), (l) and (m), and stating that no Default exists at the
end of such Fiscal Quarter or at the time of such certificate
or specifying the nature and period of existence of any such
Default.
(iii) Promptly upon their becoming available, copies
of all financial statements, reports, notices and proxy
statements sent by any Related Person to its stockholders and
all registration statements, periodic reports and other
statements and schedules filed by any Related Person with any
securities exchange, the Securities and Exchange Commission or
any similar governmental authority.
(iv) By March 31 of each year, engineering reports
prepared by Huddleston & Co., Inc. and Ryder Scott Company, or
other independent petroleum engineers chosen by Borrower and
acceptable to Majority Lenders, and by September 30 of the
each year engineering reports prepared by Borrower (or at
Borrower's option, by an independent petroleum engineers
chosen by Borrower and acceptable to Majority Lenders), each
such report to address all oil and gas properties and
interests owned by Borrower which are located in or offshore
of the United States and which have attributable to them
proved oil or gas reserves. Each report shall be in form and
substance satisfactory to Agent, shall contain sufficient
information to enable Borrower to meet the reporting
requirements concerning oil and gas reserves contained in
Regulations S-K and S-X promulgated by the Securities and
Exchange Commission, shall take into account any
"over-produced" status under gas balancing arrangements, and
shall contain information and analysis comparable
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in scope to that contained in the Initial Engineering Report.
Each report shall distinguish (or shall be delivered together
with a certificate from an appropriate officer of Borrower
which distinguishes) those properties treated in the report
which are Collateral from those properties treated in the
report which are not Collateral.
(v) As soon as available, and in any event within
forty-five (45) days after the end of each month, a report
describing by lease or unit the net and gross volumes of
production and sales attributable to production during such
month from the properties described in subsection (b)(iv)
above and describing the related severance taxes, other taxes,
leasehold operating expenses and capital costs attributable
thereto and incurred during such month.
(vi) As soon as available, and in any event within
thirty (30) days after the end of each Fiscal Year, Borrower
shall deliver to Agent an environmental compliance certificate
signed by the president or chief executive officer of Borrower
in the form attached hereto as Exhibit E. Further, if
requested by Agent, Borrower shall permit and cooperate with
an environmental and safety review made in connection with the
operations of Borrower's oil and gas properties one time
during each Fiscal Year beginning with the Fiscal Year 1995,
by Pilko & Associates or other consultants selected by
Majority Lenders which review shall, if requested by Agent, be
arranged and supervised by environmental legal counsel for
Agent, all at Borrower's cost and expense. The consultant
shall render a verbal or written report, as specified by
Agent, based upon such review at Borrower's cost and expense.
(vii) Concurrently with the annual renewal of the
Borrower's insurance policies, Borrower shall, if requested by
Agent in writing, cause a certificate or report to be issued
by J. H. Blades & Co., Inc. or other insurance consultants
satisfactory to Agent certifying that Borrower's insurance for
the next succeeding year after such renewal (or for such
longer period for which such insurance is in effect) complies
with the provisions of this Agreement and the Security
Documents.
(viii) As soon as available, and in any event by May
31 of each year, Borrower shall prepare and deliver to Agent
and each Lender budgets, forecasts and business plans of
Borrower's operations for the then current Fiscal Year.
(ix) As soon as available, and in any event within
forty five (45) days after the end of each Fiscal Quarter,
Borrower shall deliver to Agent and each Lender a detailed
summary of (A) its Consolidated general and administrative
expenses and capital and other expenditures for the Fiscal
Quarter most recently ended and (B) its projected Consolidated
general and administrative expenses and capital and other
expenditures for the then current Fiscal Quarter.
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(x) By March 31 and September 30 of each year,
Borrower shall prepare and submit to Agent and each Lender for
Majority Lender's prior approval, a capital expense budget
setting forth all Capital Expenditures expected to paid by
Borrower and it Consolidated Subsidiaries in the next six
month period, describing the nature of such expenditures, the
budgeted amount and the expected date of payment thereof.
(c) Other Information and Inspections. Each Related Person
will furnish to Agent and each Lender any information which Agent may
from time to time reasonably request concerning any covenant,
provision or condition of the Loan Documents or any matter in
connection with the Related Persons' businesses and operations. Each
Related Person will permit representatives appointed by Agent or any
Lender (including independent accountants, agents, attorneys,
appraisers and any other Persons), to visit and inspect, during normal
business hours, any of such Related Person's property, including its
books of account, other books and records, and any facilities or other
business assets, and to make extra copies therefrom and photocopies
and photographs thereof, and to write down and record any information
such representatives obtain, and each Related Person shall permit
Agent or its representatives to investigate and verify the accuracy of
the information furnished to Agent or any Lender in connection with
the Loan Documents and to discuss all such matters with its officers,
employees and representatives. Each of Agent and Lenders agrees that,
until the occurrence of a Default, it will take all reasonable steps
to keep confidential any proprietary information given to it by any
Related Person, provided, however, that this restriction shall not
apply to information which (i) has at the time in question entered the
public domain, (ii) is required to be disclosed by law or by any
order, rule or regulation (whether valid or invalid) of any court or
governmental agency, or authority, (iii) is disclosed to any Lender's
Affiliates, auditors, attorneys, or agents, or (iv) is furnished to
any purchaser or prospective purchaser of participations or other
interests in the Loan or any Loan Document.
(d) Notice of Material Events and Change of Address.
Borrower will promptly notify Agent and each Lender:
(i) of any material adverse change in Borrower's
financial condition or Borrower's Consolidated financial
condition or in the aggregate value of the Collateral or any
event or condition which could reasonably be expected to have
a material adverse effect on Borrower's financial condition or
Borrower's Consolidated financial condition or in the
aggregate value of the Collateral.
(ii) of the occurrence of any Default,
(iii) of the acceleration of the maturity of any
Debt owed by any Related Person or of any default by any
Related Person 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 acceleration or default might have a material adverse
effect upon Borrower's
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Consolidated financial condition or on the value of any
material part of the Collateral,
(iv) of the occurrence of any Termination Event,
(v) of any claim of $250,000 or more, any notice
of potential liability under any Environmental Laws which
might exceed such amount, or any other material adverse claim
asserted against any Related Person or with respect to any
Related Person's properties, and
(vi) of the filing of any suit or proceeding
against any Related Person in which an adverse decision could
have a material adverse effect upon any Related Person's
financial condition, business or operations or on the value of
any Collateral.
Upon the occurrence of any of the foregoing the Related Persons will
take all necessary or appropriate steps to remedy promptly any such
material adverse change, Default, acceleration, default or Termination
Event, to protect against any such adverse claim, to defend any such
suit or proceeding, and to resolve all controversies on account of any
of the foregoing. Borrower will also notify Agent and Agent's counsel
in writing at least twenty Business Days prior to the date that any
Related Person changes its name or the location of its chief executive
office or principal place of business or the place where it keeps its
books and records concerning the Collateral, furnishing with such
notice any necessary financing statement amendments or requesting
Agent and its counsel to prepare the same.
(e) Maintenance of Properties. Each Related Person will
maintain, preserve, protect, and keep all Collateral and all other
property used or useful in the conduct of its business in good
condition and in compliance with all applicable laws, rules and
regulations, and will from time to time make all repairs, renewals and
replacements needed to enable the business and operations carried on
in connection therewith to be promptly and advantageously conducted at
all times.
(f) Maintenance of Existence and Qualifications. Each
Related Person which is a corporation or partnership will maintain and
preserve its corporate or partnership existence and its rights and
franchises in full force and effect and will qualify to do business as
a foreign corporation or partnership in all states or jurisdictions
where required by applicable law, except where the failure so to
qualify will not have any material adverse effect on Borrower or the
rights or remedies of Agent or any Lender under the Loan Documents.
(g) Payment of Trade Debt, Taxes, etc. Each Related Person
will (i) timely file all required tax returns; (ii) timely pay all
taxes, assessments, and other governmental charges or levies imposed
upon it or upon its income, profits or property; (iii) within 120 days
after the same was incurred pay all Debt owed by it on ordinary trade
terms to vendors, suppliers and other Persons providing goods and
services used by it in the ordinary course of its business, except as
permitted by
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Section 5.2(a); (iv) pay and discharge when due all other Debt now or
hereafter owed by it; and (v) maintain appropriate accruals and
reserves for all of the foregoing in accordance with GAAP. Each
Related Person may, however, delay paying or discharging any of the
foregoing so long as it is in good faith contesting the validity
thereof by appropriate proceedings and has set aside on its books
adequate reserves therefor.
(h) Insurance. Each Related Person will keep or cause to be
kept insured by financially sound and reputable insurers its property
in accordance with Schedule 3. Borrower will maintain the additional
insurance coverage as described in the respective Security Documents.
Upon demand by Agent any insurance policies covering Collateral shall
be endorsed (i) to provide for payment of losses to Agent as its
interests may appear, (ii) to provide that such policies may not be
cancelled or reduced or affected in any material manner for any reason
without fifteen days prior notice to Agent, (iii) to provide for any
other matters specified in any applicable Security Document or which
Agent may reasonably require; and (iv) to provide for insurance
against fire, casualty and any other hazards normally insured against,
in the amount of the full value (less a reasonable deductible not to
exceed amounts customary in the industry for similarly situated
businesses and properties) of the property insured. Each Related
Person shall at all times maintain insurance against its liability for
injury to persons or property in accordance with Schedule 3, which
insurance shall be by financially sound and reputable insurers.
Without limiting the foregoing, each Related Person shall at all time
maintain liability insurance in the amounts set out on Schedule 3.
(i) Payment of Expenses. Whether or not the transactions
contemplated by this Agreement are consummated, Borrower will promptly
(and in any event, within 30 days after any invoice or other statement
or notice) pay (i) all reasonable costs and expenses incurred by or on
behalf of Agent or any Lender (including travel expenses, similar
out-of-pocket costs, attorneys' fees, consultants fees and engineering
fees) in connection with (1) the negotiation, preparation, execution
and delivery of the Loan Documents, and any and all consents, waivers
or other documents or instruments relating thereto, (2) the filing,
recording, refiling and re-recording of any Loan Documents and any
other documents or instruments or further assurances required to be
filed or recorded or refiled or re-recorded by the terms of any Loan
Document, (3) the borrowings hereunder and other action reasonably
required in the course of administration hereof, (4) monitoring or
confirming (or preparation or negotiation of any document related to)
Borrower's compliance with any covenants or conditions contained in
this Agreement or in any Loan Document, and (5) the defense or
enforcement of the Loan Documents (including this section) or the
defense of Agent's or any Lender's exercise of its rights under any of
the Loan Documents; and (ii) all transfer, stamp, mortgage,
documentary or other similar taxes, assessments or charges levied by
any governmental or revenue authority in respect of this Agreement or
any of the other Loan Documents or any other document referred to
herein or therein. In addition to the foregoing, until all
Obligations have been paid in full, Borrower will also pay or
reimburse Agent for all reasonable out-of-pocket costs and expenses of
Agent or its agents or employees in connection with the continuing
administration of
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the Loans and the related due diligence of Agent, including travel and
miscellaneous expenses and fees and expenses of Agent's outside
counsel, reserve engineers and consultants engaged in connection with
the Loan Documents.
(j) Performance on Borrower's Behalf. If any Related Person
fails to pay any taxes, insurance premiums, expenses, attorneys' fees
or other amounts it is required to pay under any Loan Document, Agent
may pay the same. Borrower shall immediately reimburse Agent for any
such payments and each amount paid by Agent shall constitute an
Obligation owed hereunder which is due and payable on the date such
amount is paid by Agent.
(k) Interest. Borrower hereby promises to pay interest to
Agent and Lenders at the Late Payment Rate on all Obligations which
Borrower has in this Agreement promised to pay (including Obligations
to pay fees or to reimburse or indemnify Agent or any Lender) and
which are not paid when due. Such interest shall accrue from the date
such Obligations become due until they are paid.
(l) Compliance with Agreements and Law. Each Related Person
will perform all material obligations it is required to perform under
the terms of each indenture, mortgage, deed of trust, security
agreement, lease, franchise, agreement, contract or other instrument
or obligation to which it is a party or by which it or any of its
properties is bound. Each Related Person will conduct its business
and affairs in compliance with all laws, regulations, and orders
applicable thereto.
(m) Environmental Matters; Environmental Reviews.
(i) Each Related Person will comply in all
material respects with all Environmental Laws now or hereafter
applicable to such Related Person or its property and shall
obtain, at or prior to the time required by applicable
Environmental Laws, all environmental, health and safety
permits, licenses and other authorizations necessary for its
operations and will maintain such authorizations in full force
and effect.
(ii) Borrower will promptly furnish to Agent all
written notices of violation, orders, claims, citations,
complaints, penalty assessments, suits or other proceedings
received by Borrower, or of which it has notice, pending or
threatened against Borrower, by any governmental authority
with respect to any alleged violation of or non-compliance
with any Environmental Laws or any permits, licenses or
authorizations in connection with its ownership or use of its
properties or the operation of its business.
(iii) Borrower will promptly furnish to Agent all
requests for information, notices of claim, demand letters,
and other notifications, received by Borrower in connection
with its ownership or use of its properties or the conduct of
its business, relating to potential responsibility with
respect to any investigation or clean-up of Hazardous Material
at any location.
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(n) Evidence of Compliance. Each Related Person will furnish
to each Lender at such Related Person's or Borrower's expense all
evidence which Agent or any Lender from time to time reasonably
requests as to the accuracy and validity of or compliance with all
representations, warranties and covenants made by any Related Person
in the Loan Documents, the satisfaction of all conditions contained
therein, and all other matters pertaining thereto.
(o) Additional Reports to be Delivered to Agent. Within 30
days following the date of the Agreement, Agent shall have received,
in form and substance satisfactory to Agent, a favorable report of
J.H. Blades & Co., Inc. regarding their assessment of the insurance
maintained by the Related Persons.
(p) Excess Cash Flow Offer. If the Borrower has Excess Cash
Flow in excess of $1,000,000 in any Fiscal Year, beginning with the
Fiscal Year ending December 31, 1996, Borrower is required to apply an
amount equal to fifty percent (50%) of all Excess Cash Flow for such
Fiscal Year (not just the amount in excess of $1,000,000) to (i) the
prepayment of the Notes as provided in Section 2.7 and/or (ii) the
acquisition and/or development of new and existing oil and gas
properties.
Section 5.2. Negative Covenants. To conform with the terms and
conditions under which each Lender is willing to have credit outstanding to
Borrower, and to induce Agent and each Lender to enter into this Agreement and
make the Loans, Borrower shall, and shall cause each Related Person to,
warrant, covenant and agree that until the full and final payment of the
Obligations and the termination of this Agreement, unless Majority Lenders have
previously agreed otherwise:
(a) Restricted Debt. No Related Person will in any manner
owe or be liable for Restricted Debt except:
(i) the Obligations.
(ii) (A) the indebtedness and obligations of
Borrower under the 2002 Notes and the 2002 Indenture (as such
instruments are in effect on the date hereof), and (B) the
indebtedness and obligations of any Related Person under any
guaranties of the indebtedness and obligations of Borrower
under subsection (A) above.
(iii) obligations under Permitted Swap Agreements.
(iv) obligations under hedging agreements incurred
pursuant to the provisions of Section 5.2(c).
(v) obligations under the Gas Purchase and Sale
Agreement dated October 2, 1992 and the Gas Price Agreement
dated March 1, 1993, each between Washington Energy Marketing,
Inc. and Borrower, as successor in interest to South Texas
Limited Partnership.
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(vi) Debt incurred by such Related Person on
ordinary trade terms to service contractors (each a
"Contractor") which is contemplated to be paid more than 120
days after the same is incurred, provided that (A) such Debt
is not delinquent, and (B) the Contractor (x) has entered into
an agreement with Lenders, in form satisfactory to Agent,
expressly subordinating the Debt of such Related Person to the
Contractor to the Obligations, and (y) has executed and
delivered such lien waivers and other agreements, in form
satisfactory to Agent, as Agent may request in its sole
discretion.
(b) Limitation on Liens. No Related Person will create,
assume or permit to exist any Lien upon any of the properties or
assets which it now owns or hereafter acquires, except, to the extent
not otherwise forbidden by the Security Documents:
(i) Liens which secure Obligations only.
(ii) Liens which secure the 2002 Notes, provided
such Liens are subordinate to any Liens upon the same
properties or assets which secure Obligations.
(iii) statutory Liens for taxes, statutory
mechanics' and materialmen's Liens incurred in the ordinary
course of business, Liens under operating agreements in the
ordinary course of business, and other similar Liens incurred
in the ordinary course of business, provided such Liens do not
secure Restricted Debt and secure only Debt which is not
delinquent or which is being contested in good faith by
appropriate proceedings and as to which adequate reserves in
accordance with GAAP have been established.
(iv) the "Permitted Encumbrances" as such term is
defined in the Security Documents, and any Liens expressly
permitted under any similar provisions of any other Security
Document.
(c) Hedging Contracts. No Related Person will be a party to
or in any manner be liable on any forward, future, swap or hedging
contract, including any Permitted Swap Agreements, except:
(i) contracts entered into with the purpose and
effect of fixing prices on oil or gas expected to be produced
by the Related Persons, provided that at all times: (1) no
such contract fixes a price for a term of more than twelve
(12) months; (2) the aggregate monthly production covered by
all such contracts (determined, in the case of contracts that
are not settled on a monthly basis, by a monthly proration
acceptable to Majority Lenders) for any single month does not
in the aggregate exceed eighty-five percent (85%) of the
Related Persons' aggregate Projected Production of oil and gas
anticipated to be sold in the ordinary course of the Related
Persons' businesses for such month, (3) no such contract
(other than a Permitted Swap Agreement) requires any Related
Person to put up money, assets, letters of credit or other
security against the event of its nonperformance prior to
actual default by such Related
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Person in performing its obligations thereunder, and (4) each
such contract is with a counterparty or has a guarantor of the
obligation of the counterparty who (unless such counterparty
is a Lender or one of its Affiliates) at the time the contract
is made has long-term obligations rated AA or Aa2 or better,
respectively, by Standard & Poor's Ratings Group or Moody's
Investors Services, Inc. (or a successor credit rating
agency).
(ii) contracts entered into by a Related Person
with the purpose and effect of fixing interest rates on a
principal amount of indebtedness of such Related Person that
is accruing interest at a variable rate, provided that (1) the
aggregate notional amount of such contracts never exceeds
seventy-five percent (75%) of the anticipated outstanding
principal balance of the indebtedness to be hedged by such
contracts or an average of such principal balances calculated
using a generally accepted method of matching interest swap
contracts to declining principal balances, (2) the floating
rate index of each such contract generally matches the index
used to determine the floating rates of interest on the
corresponding indebtedness to be hedged by such contract and
(3) each such contract is with a counterparty or has a
guarantor of the obligation of the counterparty who (unless
such counterparty is a Lender or one of its Affiliates) at the
time the contract is made has long-term obligations rated AA
or Aa2 or better, respectively, by Standard & Poor's Ratings
Group or Moody's Investors Services, Inc. (or a successor
credit rating agency).
(d) Limitation on Mergers, Issuances of Securities. Except
as expressly provided in this subsection no Related Person will merge
or consolidate with or into any other business entity. Any Subsidiary
of Borrower may, however, be merged into or consolidated with (i)
another Subsidiary of Borrower, so long as a Guarantor is the
surviving business entity, or (ii) Borrower, so long as Borrower is
the surviving business entity. Borrower will not issue any securities
other than shares of its common or preferred stock and any options or
warrants giving the holders thereof only the right to acquire such
shares, except the 2002 Notes issued as of the date hereof. No
Subsidiary of Borrower will issue any additional shares of its capital
stock or other securities or any options, warrants or other rights to
acquire such additional shares or other securities except to Borrower
and only to the extent not otherwise forbidden under the terms hereof.
No Subsidiary of Borrower which is a partnership will allow any
diminution of Borrower's interest (direct or indirect) therein.
(e) Limitation on Sales of Property. No Related Person will
sell, transfer, lease, exchange, alienate or dispose of any of its
material assets or properties or any material interest therein except,
to the extent not otherwise forbidden under the Security Documents:
(i) equipment which is worthless or obsolete or
which is replaced by equipment of equal suitability and value.
(ii) inventory (including oil and gas sold as
produced and seismic data) which is sold in the ordinary
course of business on ordinary trade terms.
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(iii) interests in oil and gas leases, or portions
thereof (if released or abandoned but not otherwise sold or
transferred), so long as no well situated on the property
transferred, or located on any unit containing all or any part
thereof, is capable (or is subject to being made capable
through commercially feasible operations) of producing oil,
gas or other hydrocarbons or minerals in commercial
quantities.
(iv) other property which is sold for fair
consideration if (A) the aggregate of such consideration in
any fiscal year of the Borrower does not exceed $500,000 with
respect to properties with values, as set forth in the
Engineering Reports delivered to Agent and each Lender, taken
into account in determining the most recent Borrowing Base, or
$750,000 for properties not used in determining the most
recent Borrowing Base, and (B) the sale of such properties
will not materially impair or diminish the value of the assets
subject to the Security Documents or the Borrower's and its
Subsidiaries' consolidated financial condition, businesses or
operations.
Neither Borrower nor any of Borrower's Subsidiaries will sell,
transfer or otherwise dispose of capital stock of any of Borrower's
Subsidiaries except that any Subsidiary of Borrower may sell or issue
its own capital stock to the extent not otherwise prohibited
hereunder. No Related Person will discount, sell, pledge or assign
any notes payable to it, accounts receivable or future income except
to the extent expressly permitted under the Loan Documents.
(f) Limitation on Dividends and Redemptions. No Related
Person will declare or pay any dividends on, or make any other
distribution in respect of, any class of its capital stock or any
partnership or other interest in it, nor will any Related Person
directly or indirectly make any capital contribution to or purchase,
redeem, acquire or retire any shares of the capital stock of or
partnership interests in any Related Person (whether such interests
are now or hereafter issued, outstanding or created), or cause or
permit any reduction or retirement of the capital stock of any Related
Person, except as expressly provided in this section. Such dividends,
distributions, contributions, purchases, redemptions, acquisitions,
retirements or reductions may be made (i) by the Guarantors without
limitation to Borrower, and (ii) so long as no Default shall have
occurred and be continuing, by Borrower to pay cash dividends on its
Series A, Series B, Series C and Series E preferred stock (but no
other stock), provided that the aggregate amount of such dividends
(determined on the basis of when such dividends are paid) shall not
exceed $530,000 in any Fiscal Year.
(g) Limitation on Investments and New Businesses. No Related
Person will (i) make any expenditure or commitment or incur any
obligation or enter into or engage in any transaction except in the
ordinary course of business, (ii) engage directly or indirectly in any
business or conduct any operations except in connection with or
incidental to its present businesses and operations, (iii) make any
acquisitions of or capital contributions to or other investments in
any Person, other than Permitted Investments, or (iv) make any
acquisitions or investments in any properties, other than oil and gas
properties, with a purchase price in excess of $500,000.
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(h) Limitation on Credit Extensions. Except for Permitted
Investments, no Related Person will extend credit, make advances or
make loans other than (i) normal and prudent extensions of credit to
customers buying goods and services in the ordinary course of
business, which extensions shall not be for longer periods than those
extended by similar businesses operated in a normal and prudent manner
and (ii) loans to Borrower.
(i) Transactions with Affiliates. Neither Borrower nor any
of its Subsidiaries will engage in any material transaction with any
of its Affiliates on terms which are less favorable to it than those
which would have been obtainable at the time in arm's-length dealing
with Persons other than such Affiliates.
(j) Certain Contracts; Amendments; Multiemployer ERISA Plans.
Except as expressly provided for in the Loan Documents, no Related
Person will, directly or indirectly, enter into, create, or otherwise
allow to exist any contract or other consensual restriction on the
ability of any Person to: (i) pay dividends or make other
distributions to Borrower, (ii) to redeem equity interests held in it
by Borrower, (iii) to repay loans and other indebtedness owing by it
to Borrower, or (iv) to transfer any of its assets to Borrower. No
Related Person will enter into any "take-or-pay" contract or other
contract or arrangement for the purchase of goods or services which
obligates it to pay for such goods or service regardless of whether
they are delivered or furnished to it. No Related Person will amend
or permit any amendment to any contract or lease which releases,
qualifies, limits, makes contingent or otherwise detrimentally affects
the rights and benefits of Agent or any Lender under or acquired
pursuant to any Loan Documents. No Related Person will incur any
obligation to contribute to any "multiemployer plan" as defined in
Section 4001 of ERISA.
(k) Fiscal Year. No Related Person will change its Fiscal
Year.
(l) Working Capital and Current Ratio. The ratio of
Borrower's Consolidated current assets to Borrower's Consolidated
current liabilities will never be less than 1.0 to 1.0. For purposes
of this subsection, Borrower's Consolidated current liabilities will
be calculated without including any payments of principal on the Notes
which are required to be repaid within one year from the time of
calculation.
(m) Tangible Net Worth. The remainder of (i) all
Consolidated assets of Borrower, other than intangible assets
(including without limitation as intangible assets such assets as
patents, copyrights, licenses, franchises, goodwill, trade names,
trade secrets and leases other than oil, gas or mineral leases or
leases required to be capitalized under GAAP), minus (ii) all
Consolidated liabilities and similar balance sheet items of Borrower
will never be less than the sum of (i) $6,750,000, plus (ii) seventy
five percent (75%) of Borrower's cumulative Consolidated net income
beginning with the 1995 Fiscal Year plus (iii) ninety percent (90%) of
the net proceeds from the sale of any equity securities issued by
Borrower or any of its Subsidiaries on or after the date hereof.
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ARTICLE VI - Security
Section 6.1. The Security. The Obligations will be secured by the
Security Documents listed in the Security Schedule and any additional Security
Documents hereafter delivered by any Related Person and accepted by Agent.
Section 6.2. Agreement to Deliver Security Documents. Borrower
agrees to deliver and to cause its Subsidiaries to deliver, to further secure
the Obligations whenever requested by Agent in its sole and absolute
discretion, deeds of trust, mortgages, chattel mortgages, security agreements,
financing statements and other Security Documents in form and substance
satisfactory to Agent for the purpose of granting, confirming, and perfecting
first and prior liens or security interests in any real or personal property
now owned or hereafter acquired by any of the Related Persons. Borrower also
agrees to deliver, whenever requested by Agent in its sole and absolute
discretion, title opinions from legal counsel acceptable to Agent with respect
to any Related Person's properties and interests designated by Agent, based
upon abstract or record examinations to dates acceptable to Agent and (a)
stating that such Related Person has good and defensible title to such
properties and interests, free and clear of all Prohibited Liens, (b)
confirming that such properties and interests are subject to Security Documents
securing the Obligations that constitute and create legal, valid and duly
perfected first deed of trust or mortgage liens in such properties and
interests and first priority assignments of and security interests in the oil
and gas attributable to such properties and interests and the proceeds thereof,
and (c) covering such other matters as Agent may request.
Section 6.3. Perfection and Protection of Security Interests and
Liens. Borrower will from time to time deliver to Agent any financing
statements, continuation statements, extension agreements and other documents,
properly completed and executed (and acknowledged when required) by the Related
Persons in form and substance satisfactory to Agent, which Agent requests for
the purpose of perfecting, confirming, or protecting any Liens or other rights
in Collateral securing any Obligations.
Section 6.4. Offset. To secure the repayment of the Obligations
Borrower hereby grants to Agent and each Lender a security interest, a lien,
and a right of offset, each of which shall be in addition to all other
interests, liens, and rights of Agent or any Lender at common law, under the
Loan Documents, or otherwise, and each of which shall be upon and against (a)
any and all moneys, securities or other property (and the proceeds therefrom)
of Borrower now or hereafter held or received by or in transit to Agent or any
Lender from or for the account of Borrower, whether for safekeeping, custody,
pledge, transmission, collection or otherwise, (b) any and all deposits
(general or special, time or demand, provisional or final) of Borrower with
Agent or any Lender, and (c) any other credits and claims of Borrower at any
time existing against Agent or any Lender, including claims under certificates
of deposit. Upon the occurrence of any Default, each of Agent and Lenders is
hereby authorized to foreclose upon, offset, appropriate, and apply, at any
time and from time to time, without notice to Borrower, any and all items
hereinabove referred to against the Obligations then due and payable.
Section 6.5. Guaranties of Borrower's Subsidiaries. Each Subsidiary
of Borrower now existing or created, acquired or coming into existence after
the date hereof shall, promptly
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upon request by Agent, execute and deliver to Agent an absolute and
unconditional guaranty of the timely repayment of the Obligations and the due
and punctual performance of the obligations of Borrower hereunder, which
guaranty shall be satisfactory to Agent in form and substance. Borrower will
cause each of its Subsidiaries to deliver to Agent, simultaneously with its
delivery of such a guaranty, written evidence satisfactory to Agent and its
counsel that such Subsidiary has taken all corporate or partnership action
necessary to duly approve and authorize its execution, delivery and performance
of such guaranty and any other documents which it is required to execute.
Section 6.6. Production Proceeds. Notwithstanding that, by the terms
of the various Security Documents, Borrower is and will be assigning to Agent
and Lenders all of the "Production Proceeds" (as defined therein) accruing to
the property covered thereby, so long as no Default has occurred Borrower may
continue to receive from the purchasers of production all such Production
Proceeds, subject, however, to the Liens created under the Security Documents,
which Liens are hereby affirmed and ratified. Upon the occurrence of a
Default, Agent and Lenders may exercise all rights and remedies granted under
the Security Documents, including the right to obtain possession of all
Production Proceeds then held by Borrower or to receive directly from the
purchasers of production all other Production Proceeds. In no case shall any
failure, whether purposed or inadvertent, by Agent or Lenders to collect
directly any such Production Proceeds constitute in any way a waiver, remission
or release of any of its rights under the Security Documents, nor shall any
release of any Production Proceeds by Agent or Lenders to Borrower constitute a
waiver, remission, or release of any other Production Proceeds or of any rights
of Agent or Lenders to collect other Production Proceeds thereafter.
ARTICLE VII - Events of Default and Remedies
Section 7.1. Events of Default. Each of the following events
constitutes an Event of Default under this Agreement:
(a) Any Related Person fails to pay any Obligation when due
and payable, whether at a date for the payment of a fixed installment
or as a contingent or other payment becomes due and payable or as a
result of acceleration or otherwise;
(b) Any "default" or "event of default" occurs under any Loan
Document which defines either such term, and the same is not remedied
within the applicable period of grace (if any) provided in such Loan
Document;
(c) Any Related Person fails to duly observe, perform or
comply with any covenant, agreement or provision of Section 5.1(d) or
Section 5.2 (other than Section 5.2(l));
(d) Any Related Person fails (other than as referred to in
subsections (a), (b) or (c) above) to duly observe, perform or comply
with any covenant, agreement, condition or provision of any Loan
Document, and such failure remains unremedied for a period of thirty
(30) days after notice of such failure is given by Agent to
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Borrower, provided that such grace period shall not apply to any such
failure if Borrower has not given notice thereof to Agent and Lenders
as required in Section 5.1(d)(ii);
(e) Any representation or warranty previously, presently or
hereafter made in writing by or on behalf of any Related Person in
connection with any Loan Document shall prove to have been false or
incorrect in any material respect on any date on or as of which made,
or any Loan Document at any time ceases to be valid, binding and
enforceable as warranted in Section 4.1(e) for any reason other than
its release or subordination by Agent;
(f) Any Related Person fails to duly observe, perform or
comply with any agreement with any Person or any term or condition of
any instrument, if such agreement or instrument is materially
significant to Borrower or to Borrower and its subsidiaries on a
Consolidated basis, and such failure is not remedied within the
applicable period of grace (if any) provided in such agreement or
instrument;
(g) Any Related Person (i) fails to pay any portion, when
such portion is due, of any of its Debt under the 2002 Notes or the
2002 Indenture or any of its other Debt in excess of $100,000, or (ii)
breaches or defaults in the performance of any agreement or instrument
by which any such Debt is issued, evidenced, governed, or secured, and
any such failure, breach or default continues beyond any applicable
period of grace provided therefor;
(h) Either (i) any "accumulated funding deficiency" (as
defined in Section 412(a) of the Internal Revenue Code of 1986, as
amended) in excess of $100,000 exists with respect to any ERISA Plan,
whether or not waived by the Secretary of the Treasury or his
delegate, or (ii) any Termination Event occurs with respect to any
ERISA Plan and the then current value of such ERISA Plan's benefit
liabilities exceeds the then current value of such ERISA Plan's assets
available for the payment of such benefit liabilities by more than
$100,000 (or in the case of a Termination Event involving the
withdrawal of a substantial employer, the withdrawing employer's
proportionate share of such excess exceeds such amount);
(i) Any Related Person:
(i) suffers the entry against it of a judgment,
decree or order for relief by a court of competent
jurisdiction in an involuntary proceeding commenced under any
applicable bankruptcy, insolvency or other similar law of any
jurisdiction now or hereafter in effect, including the federal
Bankruptcy Code, as from time to time amended, or has any such
proceeding commenced against it which remains undismissed for
a period of thirty days; or
(ii) commences a voluntary case under any applicable
bankruptcy, insolvency or similar law now or hereafter in
effect, including the federal Bankruptcy Code, as from time to
time amended; or applies for or consents to the entry of an
order for relief in an involuntary case under any such law; or
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makes a general assignment for the benefit of creditors; or
fails generally to pay (or admits in writing its inability to
pay) its debts as such debts become due; or takes corporate or
other action to authorize any of the foregoing; or
(iii) suffers the appointment of or taking
possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official of all or a
substantial part of its assets or of any part of the
Collateral in a proceeding brought against or initiated by it,
and such appointment or taking possession is neither made
ineffective nor discharged within thirty days after the making
thereof, or such appointment or taking possession is at any
time consented to, requested by, or acquiesced to by it; or
(iv) suffers the entry against it of a final
judgment for the payment of money in excess of $250,000,
unless the same is discharged within thirty days after the
date of entry thereof or an appeal or appropriate proceeding
for review thereof is taken within such period and a stay of
execution pending such appeal is obtained; or
(v) suffers a writ or warrant of attachment or any
similar process to be issued by any court against all or any
substantial part of its assets or any material part of the
Collateral, and such writ or warrant of attachment or any
similar process is not stayed or released within thirty days
after the entry or levy thereof or after any stay is vacated
or set aside;
(j) A Change of Control occurs.
Upon the occurrence of an Event of Default described in subsection (i)(i),
(i)(ii) or (i)(iii) of this section with respect to Borrower, all of the
Obligations shall thereupon be immediately due and payable, without demand,
presentment, notice of demand or of dishonor and nonpayment, protest, notice of
protest, notice of intention to accelerate, declaration or notice of
acceleration, or any other notice or declaration of any kind, all of which are
hereby expressly waived by Borrower and each Related Person who at any time
ratifies or approves this Agreement. During the continuance of any other Event
of Default, Agent at any time and from time to time may (and upon written
instructions from Majority Lenders, or from any Lender as provided in Section
2.3(c) of the Intercreditor Agreement, Agent shall) without notice to Borrower
or any other Related Person declare any or all of the Obligations immediately
due and payable, and all such Obligations shall thereupon be immediately due
and payable, without demand, presentment, notice of demand or of dishonor and
nonpayment, protest, notice of protest, notice of intention to accelerate,
declaration or notice of acceleration, or any other notice or declaration of
any kind, all of which are hereby expressly waived by Borrower and each Related
Person who at any time ratifies or approves this Agreement. After any such
acceleration (whether automatic or due to declaration by Agent), any obligation
of Lenders to make any further Advances or loans of any kind under any
agreement with any Related Person shall be permanently terminated. In
addition, upon the occurrence of any Event of Default, the Majority Lenders
shall have the right to terminate the Commitment Period.
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Section 7.2. Remedies. If any Default shall occur and be continuing,
each Lender may protect and enforce its rights under the Loan Documents by any
appropriate proceedings, including proceedings for specific performance of any
covenant or agreement contained in any Loan Document, and each Lender may
enforce the payment of any Obligations due or enforce any other legal or
equitable right. All rights, remedies and powers conferred upon Agent and
Lenders under the Loan Documents shall be deemed cumulative and not exclusive
of any other rights, remedies or powers available under the Loan Documents or
at law or in equity.
Section 7.3. INDEMNITY. Borrower agrees to indemnify Agent and each
Lender, upon demand, from and against any and all liabilities, obligations,
claims, losses, damages, penalties, fines, actions, judgments, suits,
settlements, costs, expenses or disbursements (including reasonable fees of
attorneys, accountants, experts and advisors) of any kind or nature whatsoever
(in this section collectively called "liabilities and costs") which to any
extent (in whole or in part) may be imposed on, incurred by, or asserted
against Agent or any Lender growing out of, resulting from or in any other way
associated with any of the Collateral, the Loan Documents, or the transactions
and events (including the enforcement or defense thereof) at any time
associated therewith or contemplated therein (including any violation or
noncompliance with any Environmental Laws by any Related Person or any
liabilities or duties of any Related Person or of Agent or any Lender with
respect to Hazardous Materials found in or released into the environment). THE
FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND COSTS
ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM OR
THEORY OF STRICT LIABILITY, OR ARE CAUSED, IN WHOLE OR IN PART, BY ANY
NEGLIGENT ACT OR OMISSION OF ANY KIND BY AGENT OR ANY LENDER, provided only
that neither Agent nor any Lender shall be entitled under this section to
receive indemnification for that portion, if any, of any liabilities and costs
which is proximately caused by its own individual gross negligence or willful
misconduct, as determined in a final judgment. If any Person (including
Borrower or any of its Affiliates) ever alleges such gross negligence or
willful misconduct by Agent or any Lender, the indemnification provided for in
this section shall nonetheless be paid upon demand, subject to later adjustment
or reimbursement, until such time as a court of competent jurisdiction enters a
final judgment as to the extent and effect of the alleged gross negligence or
willful misconduct. AS USED IN THIS SECTION THE TERMS "AGENT" AND "LENDERS"
SHALL REFER NOT ONLY TO THE PERSON DESIGNATED AS SUCH IN SECTION 1.1 BUT ALSO
TO EACH DIRECTOR, OFFICER, SHAREHOLDER, SUBSIDIARY, SUCCESSOR, ASSIGN, AGENT,
ATTORNEY, EMPLOYEE, REPRESENTATIVE AND AFFILIATE OF SUCH PERSON.
ARTICLE VIII - Agent
Section 8.1. Appointment and Authority. Each Lender hereby
irrevocably authorizes Agent, and Agent hereby undertakes, to receive payments
of principal, interest and other amounts due hereunder as specified herein, to
hold and deal with all Liens securing the Obligations, and to take all other
actions and to exercise such powers under the Loan Documents as are
specifically delegated to Agent by the terms hereof or thereof, together
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with all other powers reasonably incidental thereto, subject, with respect to
the Security Documents, to the provisions of the Intercreditor Agreement. The
relationship of Agent to Lenders is only that of one commercial bank acting as
administrative agent for others, and nothing in the Loan Documents shall be
construed to constitute Agent a trustee or other fiduciary for any holder of
any of the Notes or of any participation therein nor to impose on Agent duties
and obligations other than those expressly provided for in the Loan Documents.
With respect to any matters not expressly provided for in the Loan Documents
and any matters which the Loan Documents place within the discretion of Agent,
Agent shall not be required to exercise any discretion or take any action, and
it may request instructions from Lenders with respect to any such matter, in
which case it shall be required to act or to refrain from acting (and shall be
fully protected and free from liability to all Lenders in so acting or
refraining from acting) upon the instructions of Majority Lenders (including
itself), provided, however, that Agent shall not be required to take any action
which exposes it to a risk of personal liability that it considers unreasonable
or which is contrary to the Loan Documents or to applicable law. Upon receipt
by Agent from Borrower of any communication calling for action on the part of
Lenders or upon notice from any Lender to Agent of, or Agent otherwise
obtaining actual knowledge of, any Default or Event of Default, Agent shall
promptly notify each Lender thereof.
Section 8.2. Exculpation, Agent's Reliance, Etc. NEITHER AGENT NOR
ANY OF ITS DIRECTORS, OFFICERS, AGENTS, ATTORNEYS, OR EMPLOYEES SHALL BE LIABLE
FOR ANY ACTION TAKEN OR OMITTED TO BE TAKEN BY ANY OF THEM UNDER OR IN
CONNECTION WITH THE LOAN DOCUMENTS, INCLUDING THEIR NEGLIGENCE OF ANY KIND,
EXCEPT THAT EACH SHALL BE LIABLE FOR ITS OWN GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT. Without limiting the generality of the foregoing, Agent (a) may
treat the payee of any Note as the holder thereof until Agent receives written
notice of the assignment or transfer thereof in accordance with this Agreement,
signed by such payee and in form satisfactory to Agent; (b) may consult with
legal counsel (including 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 in good faith by it in accordance with the advice of
such counsel, accountants or experts; (c) makes no warranty or representation
to any Lender and shall not be responsible to any Lender for any statements,
warranties or representations made in or in connection with the Loan Documents;
(d) except as otherwise expressly provided in any Loan Document, shall not have
any duty to ascertain or to inquire as to the performance or observance of any
of the terms, covenants or conditions of the Loan Documents on the part of any
Related Person or to inspect the property (including the books and records) of
any Related Person; (e) shall not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness, sufficiency or
value of any Loan Document or any instrument or document furnished in
connection therewith; (f) may rely upon the representations and warranties of
the Related Persons and Lenders in exercising its powers hereunder; and (g)
shall incur no liability under or in respect of the Loan Documents by acting
upon any notice, consent, certificate or other instrument or writing (including
any telecopy, telegram, cable or telex) believed by it to be genuine and signed
or sent by the proper Person or Persons.
Section 8.3. Lenders' Credit Decisions. Each Lender acknowledges
that it has, independently and without reliance upon Agent or any other Lender,
made its own analysis of Borrower and the transactions contemplated hereby and
its own independent decision to enter
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into this Agreement and the other Loan Documents. Each Lender also
acknowledges that it will, independently and without reliance upon Agent or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Loan Documents.
Section 8.4. INDEMNIFICATION. EACH LENDER AGREES TO INDEMNIFY AGENT
(TO THE EXTENT NOT REIMBURSED BY BORROWER WITHIN TEN (10) DAYS AFTER DEMAND)
FROM AND AGAINST SUCH LENDER'S PERCENTAGE SHARE OF ANY AND ALL LIABILITIES,
OBLIGATIONS, CLAIMS, LOSSES, DAMAGES, PENALTIES, FINES, ACTIONS, JUDGMENTS,
SUITS, SETTLEMENTS, COSTS, EXPENSES OR DISBURSEMENTS (INCLUDING REASONABLE FEES
OF ATTORNEYS, ACCOUNTANTS, EXPERTS AND ADVISORS) OF ANY KIND OR NATURE
WHATSOEVER (IN THIS SECTION COLLECTIVELY CALLED "LIABILITIES AND COSTS") WHICH
TO ANY EXTENT (IN WHOLE OR IN PART) MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED
AGAINST AGENT GROWING OUT OF, RESULTING FROM OR IN ANY OTHER WAY ASSOCIATED
WITH ANY OF THE COLLATERAL, THE LOAN DOCUMENTS AND THE TRANSACTIONS AND EVENTS
(INCLUDING THE ENFORCEMENT THEREOF) AT ANY TIME ASSOCIATED THEREWITH OR
CONTEMPLATED THEREIN (INCLUDING ANY VIOLATION OR NONCOMPLIANCE WITH ANY
ENVIRONMENTAL LAWS BY ANY PERSON OR ANY LIABILITIES OR DUTIES OF ANY PERSON
WITH RESPECT TO HAZARDOUS MATERIALS FOUND IN OR RELEASED INTO THE ENVIRONMENT).
THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND
COSTS ARE IN ANY WAY OR TO ANY EXTENT CAUSED, IN WHOLE OR IN PART, BY ANY
NEGLIGENT ACT OR OMISSION OF ANY KIND BY AGENT, PROVIDED ONLY THAT NO LENDER
SHALL BE OBLIGATED UNDER THIS SECTION TO INDEMNIFY AGENT FOR THAT PORTION, IF
ANY, OF ANY LIABILITIES AND COSTS WHICH IS PROXIMATELY CAUSED BY AGENT'S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT, AS DETERMINED IN A FINAL JUDGMENT.
CUMULATIVE OF THE FOREGOING, EACH LENDER AGREES TO REIMBURSE AGENT OR ANY OTHER
LENDER PROMPTLY UPON DEMAND FOR SUCH LENDER'S PERCENTAGE SHARE OF ANY COSTS AND
EXPENSES TO BE PAID TO AGENT OR SUCH OTHER LENDER BY BORROWER UNDER SECTION
5.1(I) TO THE EXTENT THAT AGENT OR SUCH OTHER LENDER IS NOT TIMELY REIMBURSED
FOR SUCH EXPENSES BY BORROWER AS PROVIDED IN SUCH SECTION. AS USED IN THIS
SECTION THE TERM "AGENT" SHALL REFER NOT ONLY TO THE PERSON DESIGNATED AS SUCH
IN SECTION 1.1 BUT ALSO TO EACH DIRECTOR, OFFICER, AGENT, ATTORNEY, EMPLOYEE,
REPRESENTATIVE AND AFFILIATE OF SUCH PERSON.
Section 8.5. Rights as Lender. In its capacity as a Lender, Agent
shall have the same rights and obligations as any Lender and may exercise such
rights as though it were not Agent. Subject to the Intercreditor Agreement,
Agent may accept deposits from, lend money to, act as Trustee under indentures
of, and generally engage in any kind of business with any of the Related
Persons or their Affiliates, all as if it were not Agent hereunder and without
any duty to account therefor to any other Lender.
Section 8.6. Sharing of Set-Offs and Other Payments. Each of Agent
and Lender agrees that if it shall, whether through the exercise of rights
under Security Documents or rights of banker's lien, set off, or counterclaim
against Borrower or otherwise, obtain payment of a portion of the aggregate
Obligations owed to it which, taking into account all distributions made by
Agent under Section 2.10, causes Agent or such Lender to have received more
than it would have received had such payment been received by Agent and
distributed pursuant to Section 2.10, then (a) it shall be deemed to have
simultaneously purchased and shall be obligated to purchase interests in the
Obligations as necessary to cause
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Agent and all Lenders to share all payments as provided for in Section 2.10,
and (b) such other adjustments shall be made from time to time as shall be
equitable to ensure that Agent and all Lenders share all payments of
Obligations as provided in Section 2.10; provided, however, that nothing herein
contained shall in any way affect the right of Agent or any Lender to obtain
payment (whether by exercise of rights of banker's lien, set-off or
counterclaim or otherwise) of indebtedness other than the Obligations, subject,
however, to the terms of the Intercreditor Agreement. Borrower expressly
consents to the foregoing arrangements and agrees that any holder of any such
interest or other participation in the Obligations, whether or not acquired
pursuant to the foregoing arrangements, may to the fullest extent permitted by
law exercise any and all rights of banker's lien, set-off, or counterclaim as
fully as if such holder were a holder of the Obligations in the amount of such
interest or other participation. If all or any part of any funds transferred
pursuant to this section is thereafter recovered from the seller under this
section which received the same, the purchase provided for in this section
shall be deemed to have been rescinded to the extent of such recovery, together
with interest, if any, if interest is required pursuant to court order to be
paid on account of the possession of such funds prior to such recovery.
Section 8.7. Investments. Whenever Agent in good faith determines
that it is uncertain about how to distribute to Lenders any funds which it has
received, or whenever Agent in good faith determines that there is any dispute
among Lenders about how such funds should be distributed, Agent may choose to
defer distribution of the funds which are the subject of such uncertainty or
dispute. If Agent in good faith believes that the uncertainty or dispute will
not be promptly resolved, or if Agent is otherwise required to invest funds
pending distribution to Lenders, Agent shall invest such funds pending
distribution; all interest on any such investment shall be distributed upon the
distribution of such investment and in the same proportion and to the same
Persons as such investment. All moneys received by Agent for distribution to
Lenders (other than to the Person who is Agent in its separate capacity as a
Lender) shall be held by Agent pending such distribution solely as Agent for
such Lenders, and Agent shall have no equitable title to any portion thereof.
Section 8.8. Benefit of Article VIII. The provisions of this Article
(other than the following Section 8.9) are intended solely for the benefit of
Agent and Lenders, and no Related Person shall be entitled to rely on any such
provision or assert any such provision in a claim or defense against Agent or
any Lender. Agent and Lenders may waive or amend such provisions as they
desire without any notice to or consent of Borrower or any Related Person.
Section 8.9. Resignation. Agent may resign at any time by giving
written notice thereof to Lenders and Borrower. Each such notice shall set
forth the date of such resignation. Upon any such resignation Borrower may,
with the written concurrence of Lenders whose aggregate Percentage Shares
exceed fifty percent (50%), designate a successor Agent. If within fifteen
days after the date of such resignation Borrower makes no such designation or
such written concurrence is not given, Majority Lenders shall have the right to
appoint a successor Agent. A successor must be appointed for any retiring
Agent, and such Agent's resignation shall become effective when such successor
accepts such appointment. If, within thirty days after the date of the
retiring Agent's resignation, no successor Agent has been appointed and has
accepted such appointment, then the retiring Agent may appoint a
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successor Agent, which shall be a commercial bank organized or licensed to
conduct a banking or trust business under the laws of the United States of
America or of any state thereof. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, the retiring Agent shall be discharged
from its duties and obligations under this Agreement and the other Loan
Documents. After any retiring Agent's resignation hereunder the provisions of
this Article VIII shall continue to inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under the Loan Documents.
ARTICLE IX - Miscellaneous
Section 9.1. Waivers and Amendments; Acknowledgments.
(a) Waivers and Amendments. No failure or delay (whether by
course of conduct or otherwise) by Agent or any Lender in exercising
any right, power or remedy which Agent or such Lender may have under
any of the Loan Documents shall operate as a waiver thereof or of any
other right, power or remedy, nor shall any single or partial exercise
by Agent or such Lender of any such right, power or remedy preclude
any other or further exercise thereof or of any other right, power or
remedy. No waiver of any provision of any Loan Document and no
consent to any departure therefrom shall ever be effective unless it
is in writing and signed as provided below in this Section, and then
such waiver or consent shall be effective only in the specific
instances and for the purposes for which given and to the extent
specified in such writing. No notice to or demand on any Related
Person shall in any case of itself entitle any Related Person to any
other or further notice or demand in similar or other circumstances.
This Agreement and the other Loan Documents set forth the entire
understanding and agreement of the parties hereto and thereto with
respect to the transactions contemplated herein and therein and
supersede all prior discussions and understandings with respect to the
subject matter hereof and thereof. No modification or amendment of or
supplement to this Agreement or the other Loan Documents, no waiver of
any provision of any Loan Document and no consent to any departure
therefrom shall be valid or effective against any party unless the
same is in writing and is signed by such party (and if such party is a
Lender, is signed by such Lender or by Agent on behalf of Lenders with
the written consent of Majority Lenders or, in the circumstances set
forth in the next sentence, each Lender). Notwithstanding the
foregoing or anything to the contrary herein, Agent shall not, without
the prior consent of each individual Lender, execute and deliver on
behalf of such Lender any waiver or amendment which would: (1) waive
any of the conditions specified in Article III (provided that Agent
may in its discretion withdraw any request it has made under Section
3.3(f)), (2) increase the Maximum Loan Amount of such Lender or
subject such Lender to any additional obligations, (3) reduce any fees
hereunder, or the principal of, or interest on, such Lender's Note or
any other Obligation owing to such Lender, (4) postpone any date fixed
for any payment of any fees hereunder, or principal of, or interest
on, such Lender's Note or any other Obligation owing to such Lender,
(5) amend the definition herein of "Majority Lenders" or otherwise
change the aggregate amount of Percentage Shares or percentage of
Obligations held which is required for Agent, Lenders or any of them
to take any particular action under the
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Loan Documents, (6) release during any Fiscal Year, Collateral with an
aggregate value in excess of $250,000, as set forth in the latest
Engineering Reports delivered to Agent and each Lender, and (7)
release Borrower from its obligation to pay such Lender's Note or any
other Obligation owing to such Lender or release any Guarantor from
its guaranty of such payment, or (8) amend or waive any provision of
the Intercreditor Agreement.
(b) Acknowledgements and Admissions. Borrower hereby
represents, warrants, acknowledges and admits that (i) it has been
advised by counsel in the negotiation, execution and delivery of the
Loan Documents to which it is a party, (ii) it has made an independent
decision to enter into this Agreement and the other Loan Documents to
which it is a party, without reliance on any representation, warranty,
covenant or undertaking by Agent or any Lender, whether written, oral
or implicit, other than as expressly set out in this Agreement or in
another Loan Document delivered on or after the date hereof, (iii)
there are no representations, warranties, covenants, undertakings or
agreements by Agent or any Lender as to the Loan Documents except as
expressly set out in this Agreement or in another Loan Document
delivered on or after the date hereof, (iv) neither Agent nor any
Lender owes any fiduciary duty to Borrower with respect to any Loan
Document or the transactions contemplated thereby, (v) the
relationship pursuant to the Loan Documents between Borrower, on one
hand, and Agent and each Lender, on the other hand, is and shall be
solely that of debtor and creditor, respectively, (vi) no partnership
or joint venture exists with respect to the Loan Documents between any
of Borrower, Agent and Lenders, (vii) Agent is not Borrower's Agent,
but Agent for Lenders, (viii) should an Event of Default or Default
occur or exist Agent and each Lender will determine in its sole
discretion and for its own reasons what remedies and actions it will
or will not exercise or take at that time, subject however, to the
terms of the Loan Documents, (ix) without limiting any of the
foregoing, Borrower is not relying upon any representation or covenant
by Agent or any Lender, or any representative thereof, and no such
representation or covenant has been made, that Agent or any Lender
will, at the time of an Event of Default or Default, or at any other
time, waive, negotiate, discuss, or take or refrain from taking any
action permitted under the Loan Documents with respect to any such
Event of Default or Default or any other provision of the Loan
Documents, and (x) Agent and all Lenders have relied upon the
truthfulness of the acknowledgements in this section in deciding to
execute and deliver this Agreement and to make the Loans.
THIS WRITTEN AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE
FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
Section 9.2. Survival of Agreements; Cumulative Nature. All of the
Related Persons' various representations, warranties, covenants and agreements
in the Loan Documents shall survive the execution and delivery of this
Agreement and the other Loan Documents and the
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performance hereof and thereof, including the making or granting of the Loan
and the delivery of the Note and the other Loan Documents, and shall further
survive until all of the Obligations are paid in full to Agent and Lenders and
all of Agent's and Lenders' obligations to Borrower are terminated. All
statements and agreements contained in any certificate or other instrument
delivered by any Related Person to Agent or any Lender under any Loan Document
shall be deemed representations and warranties by Borrower or agreements and
covenants of Borrower under this Agreement. The representations, warranties,
and covenants made by the Related Persons in the Loan Documents, and the
rights, powers, and privileges granted to Agent and Lenders in the Loan
Documents, are cumulative, and, except for expressly specified waivers and
consents, no Loan Document shall be construed in the context of another to
diminish, nullify, or otherwise reduce the benefit to Agent or any Lender of
any such representation, warranty, covenant, right, power or privilege. In
particular and without limitation, no exception set out in this Agreement to
any representation, warranty or covenant herein contained shall apply to any
similar representation, warranty or covenant contained in any other Loan
Document, and each such similar representation, warranty or covenant shall be
subject only to those exceptions which are expressly made applicable to it by
the terms of the various Loan Documents.
Section 9.3. Notices. All notices, requests, consents, demands and
other communications required or permitted under any Loan Document shall be in
writing, unless otherwise specifically provided in such Loan Document, and
shall be deemed sufficiently given or furnished if delivered by personal
delivery, by telecopy, by delivery service with proof of delivery, or by
registered or certified United States mail, postage prepaid, to Borrower and
the Related Persons at the address of Borrower specified on the signature pages
hereto and to Agent and the other Lenders at their addresses specified on the
signature pages hereto (unless changed by similar notice in writing given by
the particular Person whose address is to be changed). Any such notice or
communication shall be deemed to have been given (a) in the case of personal
delivery or delivery service, as of the date of first attempted delivery at the
address and in the manner provided herein, (b) in the case of telecopy, upon
receipt, or (c) in the case of registered or certified United States mail,
three days after deposit in the mail; provided, however, that no Request for
Advance or Rate Election shall become effective until actually received.
Section 9.4. Joint and Several Liability; Parties in Interest. All
Obligations which are incurred by two or more Related Persons shall be their
joint and several obligations and liabilities. All grants, covenants and
agreements contained in the Loan Documents shall bind and inure to the benefit
of the parties thereto and their respective successors and assigns; provided,
however, that no Related Person may assign or transfer any of its rights or
delegate any of its duties or obligations under any Loan Document without the
prior consent of Lenders.
SECTION 9.5. GOVERNING LAW; SUBMISSION TO PROCESS. EXCEPT TO THE
EXTENT THAT THE LAW OF ANOTHER JURISDICTION IS EXPRESSLY ELECTED IN A LOAN
DOCUMENT, THE LOAN DOCUMENTS SHALL BE DEEMED CONTRACTS AND INSTRUMENTS MADE
UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND THE
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LAWS OF THE UNITED STATES OF AMERICA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS
OF LAW. IN CHOOSING NEW YORK LAW, THE PARTIES SPECIFICALLY INTEND TO AVOID
THE APPLICATION OF ANY OTHER STATE'S LAWS CONCERNING, INTER ALIA, THE
AVAILABILITY OF A DEFICIENCY JUDGEMENT BEFORE, DURING OR AFTER JUDICIAL OR
NONJUDICIAL FORECLOSURES OF ANY OR ALL OF THE COLLATERAL AND TO AVOID ANY SUCH
OTHER STATE'S REQUIREMENTS THAT RESORT MUST BE HAD BY AGENT OR LENDERS FIRST TO
ALL OR ANY PART OF THE COLLATERAL PRIOR TO PURSUING OTHER ASSETS OF ANY RELATED
PARTY OR OBTAINING A PERSONAL JUDGEMENT AGAINST BORROWER OR ANY RELATED PARTY
FOR ALL OR ANY PART OF THE OBLIGATIONS AND/OR ANY REQUIREMENT THAT ONLY "ONE
ACTION" MAY BE HAD BY AGENT OR LENDERS IN ENFORCING SOME OR ALL OF THEIR RIGHTS
UNDER ANY LOAN DOCUMENT. SPECIFICALLY, BORROWER ACKNOWLEDGES, UNDERSTANDS, AND
WAIVES THE BENEFITS OF ANY AND ALL SUCH OTHER STATE'S LAWS, OR CHOICE OF LAW
RULES OF SUCH OTHER STATE, WHICH WOULD OTHERWISE DETRACT FROM THE ELECTION OF
NEW YORK LAW HEREUNDER, INCLUDING WITHOUT LIMITATION SPECIFICALLY ACKNOWLEDGING
AND WAIVING ANY BENEFIT OR PROTECTION THAT MIGHT OTHERWISE HAVE ARISEN UNDER
CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 580A, 580D AND/OR 726, OR ANY CLAIM
THAT ANY SIMILAR LAWS OF A STATE OTHER THAN NEW YORK SHALL GOVERN THE
SUBSTANTIVE OR PROCEDURAL RIGHTS OF AGENT AND LENDERS AS REGARDS THE
OBLIGATIONS AND/OR THE COLLATERAL. TO THIS END, BORROWER REPRESENTS, WARRANTS
AND ACKNOWLEDGES THAT SUFFICIENT CONTACTS EXIST BETWEEN BORROWER AND THE STATE
OF NEW YORK TO JUSTIFY AND RENDER REASONABLE THE NEW YORK CHOICE OF LAW
PROVISIONS HEREIN, THAT THE CHOICE OF LAW PROVISION HAS BEEN EXPRESSLY
NEGOTIATED AND ANALYZED BY THE PARTIES, AND THAT BORROWER KNOWINGLY ACCEPTS THE
CONSEQUENCES OF THE CHOICE OF NEW YORK LAW TO GOVERN THIS AGREEMENT, THE OTHER
LOAN DOCUMENTS, THE OBLIGATIONS AND THE COLLATERAL.
BORROWER HEREBY AGREES THAT ANY LEGAL ACTION OR PROCEEDING AGAINST
BORROWER WITH RESPECT TO THIS AGREEMENT, THE NOTES OR ANY OF THE LOAN DOCUMENTS
MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES
OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK AS AGENT, AT THE DIRECTION OF
THE MAJORITY LENDERS, MAY ELECT, AND, BY EXECUTION AND DELIVERY HEREOF,
BORROWER ACCEPTS AND CONSENTS FOR ITSELF AND IN RESPECT TO ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS AND
AGREES THAT SUCH JURISDICTION SHALL BE EXCLUSIVE, UNLESS WAIVED BY AGENT AND
LENDERS IN WRITING, WITH RESPECT TO ANY ACTION OR PROCEEDING BROUGHT BY IT
AGAINST AGENT AND LENDERS AND ANY QUESTIONS RELATING TO USURY. BORROWER AGREES
THAT SECTIONS 5- 1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF
NEW YORK SHALL APPLY TO THE LOAN DOCUMENTS AND WAIVES ANY RIGHT TO STAY OR TO
DISMISS ANY ACTION OR
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PROCEEDING BROUGHT BEFORE SAID COURTS ON THE BASIS OF FORUM NON CONVENIENS. IN
FURTHERANCE OF THE FOREGOING, BORROWER HEREBY IRREVOCABLY DESIGNATES AND
APPOINTS CT CORPORATION SYSTEM, 1633 BROADWAY, NEW YORK, NEW YORK, AS AGENT OF
BORROWER TO RECEIVE SERVICE OF ALL PROCESS BROUGHT AGAINST BORROWER WITH
RESPECT TO ANY SUCH PROCEEDING IN ANY SUCH COURT IN NEW YORK, SUCH SERVICE
BEING HEREBY ACKNOWLEDGED BY BORROWER TO BE EFFECTIVE AND BINDING SERVICE IN
EVERY RESPECT. COPIES OF ANY SUCH PROCESS SO SERVED SHALL ALSO, IF PERMITTED
BY LAW, BE SENT BY REGISTERED MAIL TO BORROWER AT ITS ADDRESS SET FORTH BELOW,
BUT THE FAILURE OF BORROWER OR SUCH LAW FIRM TO RECEIVE SUCH COPIES SHALL NOT
AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS AS AFORESAID. BORROWER SHALL
FURNISH TO AGENT A CONSENT OF CT CORPORATION SYSTEM AGREEING TO ACT HEREUNDER
PRIOR TO THE EFFECTIVE DATE OF THIS AGREEMENT. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF AGENT, AT THE DIRECTION OF MAJORITY LENDERS, TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF AGENT, AT THE
DIRECTION OF MAJORITY LENDERS, TO BRING PROCEEDINGS AGAINST BORROWER IN THE
COURTS OF ANY OTHER JURISDICTION. IF FOR ANY REASON CT CORPORATION SYSTEM
SHALL RESIGN OR OTHERWISE CEASE TO ACT AS AGENT, BORROWER HEREBY IRREVOCABLY
AGREES TO (a) IMMEDIATELY DESIGNATE AND APPOINT A NEW AGENT ACCEPTABLE TO AGENT
AND MAJORITY LENDERS TO SERVE IN SUCH CAPACITY AND, IN SUCH EVENT, SUCH NEW
AGENT SHALL BE DEEMED TO BE SUBSTITUTED FOR CT CORPORATION SYSTEM FOR ALL
PURPOSES HEREOF AND (b) PROMPTLY DELIVER TO AGENT THE WRITTEN CONSENT (IN FORM
AND SUBSTANCE SATISFACTORY TO AGENT) OF SUCH NEW AGENT AGREEING TO SERVE IN
SUCH CAPACITY.
Section 9.6. Limitation on Interest. Agent, each Lender, the Related
Persons and the other parties to the Loan Documents intend to contract in
strict compliance with applicable usury law from time to time in effect. In
furtherance thereof such persons stipulate and agree that none of the terms and
provisions contained in the Loan Documents shall ever be construed to provide
for interest in excess of the maximum amount of interest permitted to be
charged by applicable law from time to time in effect. Neither any Related
Person nor any present or future guarantors, endorsers, or other Persons
hereafter becoming liable for payment of any Obligation shall ever be liable
for unearned interest thereon or shall ever be required to pay interest thereon
in excess of the maximum amount that may be lawfully charged under applicable
law from time to time in effect, and the provisions of this section shall
control over all other provisions of the Loan Documents which may be in
conflict or apparent conflict herewith.
Section 9.7. Termination; Limited Survival. In its sole and absolute
discretion Borrower may at any time that no Obligations are owing elect in a
notice delivered to Agent to terminate this Agreement. Upon receipt by Agent
of such a notice, if no Obligations are then owing this Agreement and all other
Loan Documents shall thereupon be terminated and the parties thereto released
from all prospective obligations thereunder. Notwithstanding the
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foregoing or anything herein to the contrary, any waivers or admissions made by
any Related Person in any Loan Documents, any Obligations under Sections 2.14
through 2.18, and any obligations which any Person may have to indemnify or
compensate Agent or any Lender shall survive any termination of this Agreement
or any other Loan Document. At the request and expense of Borrower, Agent
shall prepare and execute all necessary instruments to reflect and effect such
termination of the Loan Documents. Agent is hereby authorized to execute all
such instruments on behalf of all Lenders, without the joinder of or further
action by any Lender.
Section 9.8. Severability. If any term or provision of any Loan
Document shall be determined to be illegal or unenforceable all other terms and
provisions of the Loan Documents shall nevertheless remain effective and shall
be enforced to the fullest extent permitted by applicable law.
Section 9.9. Counterparts. This Agreement may be separately executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to constitute one
and the same Agreement.
SECTION 9.10. ACKNOWLEDGEMENT OF NO CLAIMS, OFFSETS OR DEFENSES;
RELEASE BY THE RELATED PARTIES. BORROWER, ON BEHALF OF ITSELF AND EACH OF THE
OTHER RELATED PERSONS, ACKNOWLEDGES THAT NO RELATED PERSON NOR ANY OF THEIR
RESPECTIVE OWNERS, DIRECTORS, SUCCESSORS, ASSIGNS, AGENTS, OFFICERS, EMPLOYEES,
AND REPRESENTATIVES (COLLECTIVELY, THE "BORROWER AFFILIATED PARTIES") HAS ANY
CLAIM, DEMAND, RIGHT OF OFFSET, CAUSE OF ACTION IN LAW OR IN EQUITY, LIABILITY
OR DAMAGES OF ANY NATURE WHATSOEVER, WHETHER FIXED OR CONTINGENT (HEREINAFTER
COLLECTIVE CALLED "CLAIMS") THAT COULD BE ASSERTED IN CONNECTION WITH, OR WHICH
WOULD IN ANY OTHER MANNER BE RELATED TO, THE PRIOR NOTE, THE PRIOR AGREEMENT OR
ANY OTHER AGREEMENTS, TRANSACTIONS OR OTHER ACTIONS PRIOR TO THE DATE HEREOF
INVOLVING ANY OF THE BORROWER AFFILIATED PARTIES AND INTERNATIONALE NEDERLANDEN
(U.S.) CAPITAL CORPORATION OR ANY OR ITS PREDECESSORS IN INTEREST ("THE PRIOR
INCC AGREEMENTS AND ACTIVITIES"). NOTWITHSTANDING THE FOREGOING, HOWEVER,
BORROWER HEREBY AGREES THAT IN CONSIDERATION OF THE CREDIT EXTENDED TO BORROWER
AND THE RELATED PARTIES UNDER THE LOAN DOCUMENTS AND AS A MATERIAL INDUCEMENT
TO THE LENDERS TO ENTER INTO SUCH LOAN DOCUMENTS AND EXTEND SUCH CREDIT TO
BORROWER, BORROWER, ON BEHALF OF ITSELF AND ALL OF THE OTHER BORROWER
AFFILIATED PARTIES HEREBY RELEASES AND FOREVER DISCHARGES, EACH LENDER, EACH
SUBSEQUENT HOLDER OF ANY OF THE OBLIGATIONS, AND EACH AND ALL OF THEIR PARENT,
SUBSIDIARY AND AFFILIATED CORPORATIONS PAST AND PRESENT, AS WELL AS THEIR
RESPECTIVE OWNERS, DIRECTORS, SUCCESSORS, ASSIGNS, AGENTS, OFFICERS, EMPLOYEES,
AND REPRESENTATIVES (COLLECTIVELY, THE "RELEASED PARTIES"), OF AND FROM ANY AND
ALL CLAIMS WHICH BORROWER AND THE OTHER BORROWER AFFILIATED PARTIES MAY HAVE OR
HEREAFTER ACQUIRE AGAINST ANY OR ALL OF THE RELEASED
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PARTIES BY REASON OF, OR RELATED IN ANY WAY TO, THE PRIOR INCC AGREEMENTS AND
ACTIVITIES.
SECTION 9.11. WAIVER OF JURY TRIAL, PUNITIVE DAMAGES, ETC. TO THE
EXTENT PERMITTED BY LAW, EACH OF AGENT, LENDERS AND BORROWER HEREBY KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF SUCH PERSONS OR BORROWER. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR AGENT'S AND LENDERS' ENTERING INTO THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS. EACH OF BORROWER, AGENT AND LENDERS HEREBY FURTHER
(a) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT
IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO,
ACTUAL DAMAGES; (b) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR
AGENT OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVERS, AND (c) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND THE TRANSACTIONS
CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS CONTAINED IN THIS SECTION.
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IN WITNESS WHEREOF, this Agreement is executed as of the date first
written above.
HARCOR ENERGY, INC.
By: /s/
---------------------------------------
Name:
Title:
Address:
Five Post Oak Park
Suite 2220
Houston, Texas 77027-3416
Attention: Chairman of the Board and Chief
Executive Officer
Telephone: (713) 961-1804
Telecopy: (713) 961-9773
INTERNATIONALE NEDERLANDEN (U.S.)
CAPITAL CORPORATION, Agent and Lender
By: /s/ Trond O. Rokholt
---------------------------------------
Name: Trond O. Rokholt
Title: Vice President
Address:
135 East 57th Street
New York, New York 10022-2101
Attention: Trond O. Rokholt
Telephone: (212) 446-1943
Telecopy: (212) 832-3616
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SCHEDULE 1
DISCLOSURE SCHEDULE
To supplement the following sections of the Agreement of which this
Schedule is a part, Borrower hereby makes the following disclosures:
1. Section 4.1(f) Initial Financial Statements:
2. Section 4.1(g) Other Obligations and Restrictions:
3. Section 4.1(i) Litigation:
4. Section 4.1(j) ERISA Liabilities:
5. Section 4.1(k) Environmental and Other Laws:
6. Sections 4.1(l) and 8.3 Names and Places of Business:
Borrower has not used a name other than HarCor Energy, Inc.
Borrower's Subsidiaries' names during this period are as
follows:
HTAC Investments
HCO Energy
HTAC Partners
Warrior, Inc.
HarCor Capital Markets
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Previous Addresses:
11766 Wilshire Blvd. 9401 Wilshire Blvd.
Suite 720 Suite 520
Los Angeles, CA 90045 Beverly Hills, CA 90212
Current Address:
Five Post Oak
Suite 2220
Houston, Texas 77027-3416
7. Section 4.1(m) Borrower's Subsidiaries:
Warrior, Inc.
HTAC Investments
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SCHEDULE 2
SECURITY SCHEDULE
1. First Amendment to Deed of Trust, Mortgage, Line of Credit Mortgage,
Assignment, Security Agreement, Fixture Filing and Financing Statement
of even date herewith executed by Borrower in favor of Agent.
2. UCC-1 Financing Statements executed by Borrower in favor of Agent in
connection with the Mortgages.
3. Second Amendment to Deed of Trust, Mortgage, Line of Credit Mortgage,
Assignment, Security Agreement and Financing Statement of even date
herewith executed by Borrower in favor of Agent.
4. Amended and Restated Guaranty of even date herewith executed by
Warrior, Inc., a Texas corporation ("Warrior"), in favor of Agent.
5. Amended and Restated Stock Pledge Agreement executed by Borrower in
favor of Agent.
6. Second Amendment to Deed of Trust, Mortgage, Assignment, Security
Agreement and Financing Statement of even date herewith executed by
Warrior in favor of Agent (the "Warrior Mortgage").
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SCHEDULE 3
INSURANCE
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EXHIBIT A
PROMISSORY NOTE
$_________________ New York, New York July ___, 1995
FOR VALUE RECEIVED, the undersigned, HarCor Energy, Inc., a Delaware
corporation (herein called "Borrower"), hereby promises to pay to the order of
_______________ (herein called "Lender"), the principal sum of _______________
_______________ DOLLARS ($_______________) or, if less, the aggregate unpaid
principal amount of the Loan made under this Note by Lender to Borrower
pursuant to the terms of the Credit Agreement (as hereinafter defined),
together with interest on the unpaid principal balance thereof as hereinafter
set forth, both principal and interest payable as herein provided in lawful
money of the United States of America at the offices of Agent, 135 East 57th
Street, New York, New York or at such other place (or account which is held)
within New York County, New York, as from time to time may be designated by the
holder of this Note.
This Note (a) is issued and delivered under that certain Amended and
Restated Credit Agreement dated July 19, 1995 among Borrower, Internationale
Nederlanden (U.S.) Capital Corporation, as Agent, and the Lenders (including
Lender) referred to therein (herein, as from time to time, supplemented,
amended or restated, called the "Credit Agreement"), and is a Note as defined
therein, (b) is subject to the terms and provisions of the Credit Agreement,
which contains provisions for payments and prepayments hereunder and
acceleration of the maturity hereof upon the happening of certain stated
events, and (c) is secured by and entitled to the benefits of certain Security
Documents (as identified and defined in the Credit Agreement). Payments on
this Note shall be made and applied as provided herein and in the Credit
Agreement. Reference is hereby made to the Credit Agreement for a description
of certain rights, limitations of rights, obligations and duties of the parties
hereto and for the meanings assigned to terms used and not defined herein and
to the Security Documents for a description of the nature and extent of the
security thereby provided and the rights of the parties thereto.
This Note is given in renewal and restatement of (but not in
extinguishment or novation of) that certain Promissory Note dated as of June
24, 1994, made by Borrower payable to the order of Lender in the stated
principal amount of $17,200,000.
For the purposes of this Note, the following terms have the meanings
assigned to them below:
"Base Rate Payment Date" means (i) the last day of each month,
beginning March 31, 1996, and (ii) any day on which past due interest
or principal is owed hereunder and is unpaid. If the terms hereof or
of the Credit Agreement provide that payments of interest or principal
hereon shall be deferred from one Base Rate Payment Date to another
day, such other day shall also be a Base Rate Payment Date.
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"Fixed Rate Payment Date" means, with respect to any Fixed
Rate Portion: (i) the day on which the related Interest Period ends
(and, if such Interest Period is three months or longer, the
three-month anniversary of the first day of such Interest Period), and
(ii) any day on which past due interest or past due principal is owed
hereunder with respect to such Fixed Rate Portion and is unpaid. If
the terms hereof or of the Credit Agreement provide that payments of
interest or principal with respect to such Fixed Rate Portion shall be
deferred from one Fixed Rate Payment Date to another day, such other
day shall also be a Fixed Rate Payment Date.
The principal of this Note shall be due and payable in quarterly
installments, each of which shall be due on the last day of December, March,
June and September, beginning March 31, 1996 and continuing regularly
thereafter until December 31, 1998. Each installment due in one of the years
listed in the following table (the "Quarterly Amortization Schedule") shall be
equal to a percentage of the outstanding principal balance of this Note at the
end of the Commitment Period (prior to any payments on that date) which
percentage is set out opposite such year as follows:
INSTALLMENT DATE PAYMENT PERCENTAGE
---------------- ------------------
March 31, 1996 6.00%
June 30, 1996 6.00%
September 30, 1996 6.00%
December 31, 1996 6.00%
March 31, 1997 11.25%
June 30, 1997 11.25%
September 30, 1997 11.25%
December 31, 1997 11.25%
March 31, 1998 7.75%
June 30, 1998 7.75%
September 30, 1998 7.75%
December 31, 1998 7.75% (or outstanding balance)
All outstanding principal of this Note and all accrued and unpaid
interest thereon shall be due and payable on December 31, 1998.
The outstanding principal of this Note is also required to be prepaid
pursuant to the Credit Agreement, including, without limitation, quarterly
prepayments from Quarterly Net Cash Flow.
The Base Rate Portion of the Loan (exclusive of any past due principal
or interest) from time to time outstanding shall bear interest on each day
outstanding at the Base Rate in effect on such day. On each Base Rate Payment
Date Borrower shall pay to the holder hereof all unpaid interest which has
accrued on the Base Rate Portion to but not including such Base Rate Payment
Date. Each Fixed Rate Portion of the Loan (exclusive of any past due principal
or interest) shall bear interest on each day during the related Interest Period
at the related Fixed Rate in effect on such day. On each Fixed Rate Payment
Date relating to such Fixed Rate Portion Borrower shall pay to the holder
hereof all unpaid interest which has
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accrued on such Fixed Rate Portion to but not including such Fixed Rate Payment
Date. All past due principal of and past due interest on the Loan shall bear
interest on each day outstanding at the Late Payment Rate in effect on such
day, and such interest shall be due and payable daily as it accrues.
Notwithstanding the foregoing paragraph and all other provisions of
this Note, in no event shall the interest payable hereon, whether before or
after maturity, exceed the maximum interest which, under applicable law, may be
charged on this Note, and this Note is expressly made subject to the provisions
of the Credit Agreement which more fully set out the limitations on how
interest accrues hereon.
If this Note is placed in the hands of an attorney for collection
after default, or if all or any part of the indebtedness represented hereby is
proved, established or collected in any court or in any bankruptcy,
receivership, debtor relief, probate or other court proceedings, Borrower and
all endorsers, sureties and guarantors of this Note jointly and severally agree
to pay reasonable attorneys' fees and collection costs to the holder hereof in
addition to the principal and interest payable hereunder.
Borrower and all endorsers, sureties and guarantors of this Note
hereby severally waive demand, presentment, notice of demand and of dishonor
and nonpayment of this Note, protest, notice of protest, notice of intention to
accelerate the maturity of this Note, declaration or notice of acceleration of
the maturity of this Note, diligence in collecting, the bringing of any suit
against any party and any notice of or defense on account of any extensions,
renewals, partial payments or changes in any manner of or in this Note or in
any of its terms, provisions and covenants, or any releases or substitutions of
any security, or any delay, indulgence or other act of any trustee or any
holder hereof, whether before or after maturity.
THIS NOTE AND THE RIGHTS AND DUTIES OF THE PARTIES HERETO SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW), EXCEPT TO THE EXTENT THE SAME ARE GOVERNED BY APPLICABLE
FEDERAL LAW.
HARCOR ENERGY, INC.
By:
-----------------------------------
Name:
Title:
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EXHIBIT B
REQUEST FOR ADVANCE
Reference is made to that certain Amended and Restated Credit
Agreement dated as of July ___, 1995 (as from time to time amended, the
"Agreement"), by and among HarCor Energy, Inc. ("Borrower"), Internationale
Nederlanden (U.S.) Capital Corporation, as Agent ("Agent") and certain
financial institutions ("Lenders"). Terms which are defined in the Agreement
are used herein with the meanings given them in the Agreement. Pursuant to the
terms of the Agreement Borrower hereby requests Lenders to make Advances to
Borrower in the principal amount of $ __________ and specifies ____________,
19__, as the date Borrower desires for Lenders to make such Advances and for
Agent to deliver to Borrower the proceeds thereof.
To induce Lenders to make such Advances, Borrower hereby represents,
warrants, acknowledges, and agrees that:
(a) The officer of Borrower signing this instrument is the
duly elected, qualified and acting officer of Borrower as indicated
below such officer's signature hereto having all necessary authority
to act for Borrower in making the request herein contained.
(b) The representations and warranties of Borrower set forth
in the Agreement and the other Loan Documents are true and correct on
and as of the date hereof (except to the extent that the facts on
which such representations and warranties are based have been changed
by the extension of credit under the Agreement), with the same effect
as though such representations and warranties had been made on and as
of the date hereof.
(c) There does not exist on the date hereof any condition or
event which constitutes a Default which has not been waived in writing
as provided in Section 9.1(a) of the Agreement; nor will any such
Default exist upon Borrower's receipt and application of the Advance
requested hereby. Borrower will use the Advance hereby requested in
compliance with Section 2.3 of the Agreement.
(d) Except to the extent waived in writing as provided in
Section 9.1(a) of the Agreement, Borrower has performed and complied
with all agreements and conditions in the Agreement required to be
performed or complied with by Borrower on or prior to the date hereof,
and each of the conditions precedent to Advances contained in the
Agreement remains satisfied.
(e) The unpaid principal balance of the Loan, after the
making of the Advance requested hereby, will not be in excess of the
Borrowing Base on the date requested for the making of such Advance.
(f) The Loan Documents have not been modified, amended or
supplemented by any unwritten representations or promises, by any
course of dealing, or by any
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other means not provided for in Section 9.1(a) of the Agreement. The
Agreement and the other Loan Documents are hereby ratified, approved,
and confirmed in all respects.
The officer of Borrower signing this instrument hereby certifies that,
to the best of his knowledge after due inquiry, the above representations,
warranties, acknowledgements, and agreements of Borrower are true, correct and
complete.
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68
IN WITNESS WHEREOF, this instrument is executed as of ____________,
19__.
HARCOR ENERGY, INC.
By:
-----------------------------------
Name:
Title:
3
69
EXHIBIT C
RATE ELECTION
Reference is made to that certain Amended and Restated Credit
Agreement dated as of July ___, 1995 (as from time to time amended, the
"Agreement"), by and among HarCor Energy, Inc. ("Borrower"), Internationale
Nederlanden (U.S.) Capital Corporation, as Agent ("Agent") and certain
financial institutions ("Lenders"). Terms which are defined in the Agreement
and which are used but not defined herein are used herein with the meanings
given them in the Agreement. Pursuant to the terms of the Agreement Borrower
hereby elects a Tranche of Fixed Rate Portions in the aggregate amount of
$__________ with an Interest Period beginning on _______________ and continuing
for a period of _________________.
To meet the conditions set out in the Agreement for the making of such
election, Borrower hereby represents, warrants, acknowledges and agrees that:
(a) The officer of Borrower signing this instrument is a duly
elected, qualified and acting ____________ of Borrower, having all
necessary authority to act for Borrower in making the election herein
contained.
(b) There does not exist on the date hereof any condition or
event which constitutes a Default which has not been waived in writing
as provided in Section 9.1(a) of the Agreement.
(c) The Loan Documents have not been modified, amended or
supplemented by any unwritten representations or promises, by any
course of dealing, or by any other means not provided for in Section
9.1(a) of the Agreement. The Agreement and the other Loan Documents
are hereby ratified, approved, and confirmed in all respects.
The officer of Borrower signing this instrument hereby certifies that,
to the best of his knowledge after due inquiry, the above representations,
warranties, acknowledgements, and agreements of Borrower are true, correct and
complete.
IN WITNESS WHEREOF this instrument is executed as of ________________.
HARCOR ENERGY, INC.
By:
-----------------------------------
Name:
Title:
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EXHIBIT D
CERTIFICATE ACCOMPANYING
FINANCIAL STATEMENTS
Reference is made to that certain Amended and Restated Credit
Agreement dated as of July ___, 199___ (as from time to time amended, the
"Agreement"), by and among HarCor Energy, Inc. ("Borrower"), Internationale
Nederlanden (U.S.) Capital Corporation, as Agent ("Agent") and certain
financial institutions ("Lenders"), which Agreement is in full force and effect
on the date hereof. Terms which are defined in the Agreement are used herein
with the meanings given them in the Agreement.
This Certificate is furnished pursuant to Section 5.1(b)(ii) of the
Agreement. Together herewith Borrower is furnishing to Agent and each Lender
Borrower's *[audited/unaudited] financial statements (the "Financial
Statements") as at ____________ (the "Reporting Date"). Borrower hereby
represents, warrants, and acknowledges to Agent and each Lender that:
(a) the officer of Borrower signing this instrument is the
duly elected, qualified and acting ____________ of Borrower and as
such is Borrower's chief financial officer;
(b) the Financial Statements are accurate and complete and
satisfy the requirements of the Agreement;
(c) attached hereto is a schedule of calculations showing
Borrower's compliance as of the Reporting Date with the requirements
of Sections ____________ of the Agreement *[and Borrower's
non-compliance as of such date with the requirements of Section(s)
____________ of the Agreement];
(d) on the Reporting Date Borrower was, and on the date
hereof Borrower is, in full compliance with the disclosure
requirements of Section 5.1(d) of the Agreement, and no Default
otherwise existed on the Reporting Date or otherwise exists on the
date of this instrument *[except for Default(s) under Section(s)
____________ of the Agreement, which [is/are] more fully described on
a schedule attached hereto].
The officer of Borrower signing this instrument hereby certifies that
he has reviewed the Loan Documents and the Financial Statements and has
otherwise undertaken such inquiry as is in his opinion necessary to enable him
to express an informed opinion with respect to the above representations,
warranties and acknowledgments of Borrower and, to the best of his knowledge,
such representations, warranties, and acknowledgments are true, correct and
complete.
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IN WITNESS WHEREOF, this instrument is executed as of ____________,
19__.
HARCOR ENERGY, INC.
By:
-----------------------------------
Name:
Title:
2
72
EXHIBIT E
ENVIRONMENTAL COMPLIANCE CERTIFICATE
Reference is made to that certain Amended and Restated Credit
Agreement dated as of July ___, 1995 (as from time to time amended, the
"Agreement"), by and among HarCor Energy, Inc. ("Borrower"), Internationale
Nederlanden (U.S.) Capital Corporation, as Agent ("Agent") and certain
financial institutions ("Lenders"). Terms which are defined in the Agreement
are used herein with the meanings given them in the Agreement. The
undersigned, being the *[President/Chief Executive Officer] of Borrower, hereby
certifies to each Lender as follows:
1. For the Fiscal Year ending immediately prior to the
date hereof, Borrower has complied and is complying with Section
5.1(m) of the Credit Agreement *[except as set forth in Schedule I
attached hereto];
2. To the best knowledge of the undersigned after due
inquiry, Borrower is on the date hereof in compliance with all
applicable Environmental Laws, noncompliance with which could have a
material adverse effect on the financial condition or operations of
Borrower;
3. Borrower has taken (and continues to take) steps to
minimize the generation of potentially harmful effluents;
4. Borrower has established an ongoing program of
conducting an internal audit of each operating facility of Borrower to
identify actual or potential environmental liabilities which could
have a material adverse effect on the financial condition or
operations of Borrower; and
5. Borrower has established an ongoing program of
training its employees in issues of environmental, health and safety
compliance, and Borrower presently has one or more individuals in
charge of implementing such training program.
The officer of Borrower signing this instrument hereby certifies that,
to the best of his knowledge after due inquiry and consultation with the
operating officers of Borrower, the above representations, warranties,
acknowledgements, and agreements of Borrower are true, correct and complete.
IN WITNESS WHEREOF, this instrument is executed as of ____________,
19__.
HARCOR ENERGY, INC.
By:
-----------------------------------
Name:
Title:
1