1
EXHIBIT 4.a
U.S. $150,000,000
AMENDED AND RESTATED CREDIT AGREEMENT,
dated as of June 1, 1995
among
POGO PRODUCING COMPANY,
as the Borrower,
and
CERTAIN COMMERCIAL LENDING INSTITUTIONS,
as the Lenders,
and
BANK OF MONTREAL,
acting through its Chicago, Illinois branch
as the Agent for the Lenders,
and
BANQUE PARIBAS,
acting through its Houston Agency
as the Co-Agent for the Lenders.
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ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Use of Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
1.3. Cross-References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
1.4. Accounting and Financial Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTES . . . . . . . . . . . . . . . . . . . . . . . . 25
2.1. Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.1.1. Revolving Loan Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.1.3. Lenders Not Permitted or Required To Make Loans in Excess of Commitment . . . . . . . . . . 26
2.2. Termination, Reduction, and Extension of the Commitment Amounts . . . . . . . . . . . . . . 26
2.2.1. Optional . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.2.2. Mandatory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.2.3. Mandatory as to Term Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.3. Borrowing Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.4. Continuation and Conversion Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.5. Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.6. Determination of Borrowing Base . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.7. Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES . . . . . . . . . . . . . . . . . . . . . . . . 30
3.1. Repayments and Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.1.1. Repayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.1.2. Mandatory Prepayments on Revolving Loans . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.1.3. Mandatory Prepayments on Term Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.1.4. Repayment Upon Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.2. Voluntary Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.3. Interest Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.3.1. Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.3.2. Post-Maturity Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.3.3. Payment Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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3.3.4. Interest Rate Determination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.3.5. Maximum Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.4. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.4.1. Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.4.2. Other Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE IV
CERTAIN CD RATE, LIBO RATE AND OTHER PROVISIONS . . . . . . . . . . . . . . . . . . . . . . 37
4.1. Fixed Rate Lending Unlawful . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.2. Rates Unavailable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.3. Increased Fixed Rate Loan Costs, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.4. Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.5. Increased Capital Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.6. Period of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.7. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.8. Payments, Computations, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.9. Sharing of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.10. Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.11. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE V
CONDITIONS TO BORROWING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.1. Initial Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.1.1. Corporate or Partnership Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.1.2. Resolutions, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.1.3. Compliance with Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . 43
5.1.4. Delivery of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.1.5. [Intentionally Omitted.]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.1.6. Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.1.7. Closing Fees, Expenses, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.2. Conditions Precedent to Revolving Loans . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.2.1. Compliance with Warranties, No Default, etc. . . . . . . . . . . . . . . . . . . . . . . . . 43
5.2.2. Borrowing Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.2.3. Satisfactory Legal Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.1. Organization, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.2. Due Authorization, Non-Contravention, etc. . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.3. Government Approval, Regulation, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.4. Validity, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.5. Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.6. No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.7. Litigation, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.8. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.9. Ownership of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.10. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.11. Pension and Welfare Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.12. Environmental Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.13. Regulations G, T, U and X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.14. Rank of Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.15. Absence of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.16. Accuracy of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.17. No Contractual Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE VII
AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.1. Performance of Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.2. Financial Information, Reports, Notices, etc. . . . . . . . . . . . . . . . . . . . . . . . 51
7.3. Compliance with Laws, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.4. Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.5. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.6. Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.7. Environmental Covenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
7.8. [Intentionally Omitted] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
7.9. Payment of Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
7.10. Subsidiary Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
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ARTICLE VIII
NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.1. Performance of Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.2. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.3. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.4. Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.5. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.6. Restricted Payments, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
8.7. Consolidation, Merger, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.8. Asset Dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.9. Modification of Certain Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
8.10. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
8.11. [Intentionally Omitted] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
8.12. Negative Pledges, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE IX
EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
9.1. Listing of Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
9.1.1. Non-Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
9.1.2. Breach of Warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
9.1.3. Non-Performance of Certain Covenants and Obligations . . . . . . . . . . . . . . . . . . . . 63
9.1.4. Non-Performance of Other Covenants and Obligations . . . . . . . . . . . . . . . . . . . . . 63
9.1.5. Default on Other Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
9.1.6. Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
9.1.7. Pension Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
9.1.8. Control of the Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
9.1.9. Bankruptcy, Insolvency, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
9.2. Action if Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
9.3. Action if Other Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE X
THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
10.1. Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
10.2. Funding Reliance, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
10.3. Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
10.4. Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
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10.5. Loans by the Agent and Banque Paribas . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
10.6. Credit Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
10.7. Copies, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
ARTICLE XI
MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
11.1. Waivers, Amendments, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
11.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
11.3. Payment of Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
11.4. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
11.5. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
11.6. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
11.7. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
11.8. Execution in Counterparts, Effectiveness, etc. . . . . . . . . . . . . . . . . . . . . . . . 71
11.9. Governing Law; Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
11.10. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
11.11. Sale and Transfer of Loans and Notes; Participations in Loans and Notes . . . . . . . . . . 71
11.11.1. Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
11.11.2. Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
11.12. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
11.13. Other Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SCHEDULE I - Disclosure Schedule
EXHIBIT A - Form of Note
EXHIBIT B - Form of Borrowing Request
EXHIBIT C - Form of Continuation/Conversion Notice
EXHIBIT D - Form of Lender Assignment Agreement
EXHIBIT E - Form of Opinion of Gerald A. Morton,
Corporate Secretary and Associate General Counsel to the Borrower
EXHIBIT F - Form of Subsidiary Guaranty
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AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of June 1, 1995,
among POGO PRODUCING COMPANY, a Delaware corporation (the "Borrower"), the
various financial institutions which are or may become parties hereto
(collectively, the "Lenders"), and BANK OF MONTREAL, acting through its
Chicago, Illinois branch ("the Bank"), as agent (the "Agent") for the Lenders
and BANQUE PARIBAS, acting through its Houston Agency, as co-agent (the
"Co-Agent") for the Lenders,
W I T N E S S E T H :
WHEREAS, the Borrower, the Lenders, the Agent and the Co-Agent entered
into that certain Credit Agreement dated as of September 23, 1992, which Credit
Agreement was amended and modified from time to time (as so amended and
modified, the "Original Credit Agreement"); and
WHEREAS, the Borrower desires to further amend the Original Credit
Agreement; and
WHEREAS, the Borrower, the Lenders, the Agent and the Co-Agent agree
that it is in the best interests of all parties to restate the Original Credit
Agreement in its entirety in connection with such further amendments sought by
Borrower;
WHEREAS, the Lenders are willing, on the terms and subject to the
conditions hereinafter set forth (including Article V), to extend such
Commitments and make such Loans to the Borrower; and
WHEREAS, there currently exist certain Loans outstanding under the
Original Credit Agreement and it is the intent of all parties that these
outstanding Loans shall become, as of the Effective Date of this Amended and
Restated Credit Agreement, outstanding Loans under the Amended and Restated
Credit Agreement; and
WHEREAS, the proceeds of Loans to be made after the date hereof will
be used for general corporate purposes of the Borrower and its Subsidiaries;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. Defined Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the
8
context otherwise requires, have the following meanings (such meanings to
be equally applicable to the singular and plural forms thereof):
"Activation Amount" means, in each case, any portion of the Inactive
Revolving Loan Commitment Amount that is converted to Active Revolving Loan
Commitment Amount by the Borrower following notice to the Agent in connection
with any Borrowing pursuant to Section 2.3 or, if not in connection with a
Borrowing, in a notice to the Agent pursuant to Section 11.2. Each Activation
Amount shall be in an amount equal to an integral multiple of $12,500,000.
"Active Revolving Loan Commitment Amount" means, on any date,
$100,000,000, plus the net amount of all Activation Amounts, as such Active
Revolving Loan Commitment Amount may be changed from time to time pursuant to
Section 2.2.
"Additional Costs" is defined in Section 4.3.
"Affiliate" of any Person means any other Person which, directly or
indirectly, controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan). A Person shall be deemed to be "controlled by" any
other Person if such other Person possesses, directly or indirectly, power
(a) to vote 10% 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.
"Agent" is defined in the preamble and includes each other Person as
shall have subsequently been appointed as the successor Agent pursuant to
Section 10.4.
"Agreement" means, on any date, this Credit Agreement as originally in
effect on the Effective Date and as thereafter from time to time amended,
supplemented, amended and restated, or otherwise modified and in effect on such
date.
"Alternate Reserve Report" means a report, in form and detail
satisfactory to the Agent and the Required Lenders, on reserves updated
internally by the Borrower making adjustments for any changes in production
volumes, expenses, Applicable Prices and for dispositions of properties in the
six-month period subsequent to the immediately preceding Reserve Report Date
and based upon the immediately preceding Reserve Report and, at the Borrower's
option, for any acquisitions of properties not included in the immediately
preceding Reserve Report or the restoration to the Borrowing Base of properties
previously removed from the Borrowing Base by the Borrower. If any report
which purports to be an Alternate Reserve Report and which is delivered by the
Borrower pursuant to the terms of this Agreement is unsatisfactory
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in substance, form or detail to Lenders with an aggregate Percentage of at
least 75%, or if Lenders with an aggregate Percentage of 75% or more disagree
with the estimate of Proved Reserves insofar as such estimate reflects internal
work by the Borrower rather than estimates by independent engineers in the
preceding Reserve Report, the Borrower shall as promptly as practicable but in
any event within 90 days provide to the Agent and the Lenders an Alternate
Reserve Report Review. Such Alternate Reserve Report so reviewed pursuant to
the Alternate Reserve Report Review shall qualify as an Alternate Reserve
Report for purposes of this Agreement.
"Alternate Reserve Report Review" means a review of any Alternate
Reserve Report by Ryder Scott Company Petroleum Engineers or other independent
petroleum engineers (provided that such other engineers are satisfactory to the
Borrower, the Agent and the Required Lenders), which engineer shall, as a part
of such review, certify that the estimates in the Alternate Reserve Report are
reasonable estimates using generally accepted petroleum engineering and
evaluation principles and that the methods and procedures used in preparing the
Alternate Reserve Report are reasonable. The principles to be utilized are
those set forth in the Standards Pertaining to the Estimating and Auditing of
Oil and Gas Reserve Information promulgated by the Society of Petroleum
Engineers.
"Applicable Gas Price" means the average (rounded to the nearest $.01)
of the natural gas prices being used (including prices for future periods) by
the Agent and the Co-Agent for evaluation of oil and gas reserve lending
transactions in accordance with the Agent's and the Co-Agent's customary
standards (which prices, other than those fixed by contract and subject to BTU
adjustment to reflect the liquids content of Borrower's natural gas, will be
consistent with those then being applied to other borrowers of the Agent or
Co-Agent generally) as of each January 1 or July 1, as applicable; provided,
however, that for purposes of determining the Borrowing Base, production
volumes hedged under fixed price contracts or production volumes committed
under long-term sales contracts (in each case with counterparties acceptable to
the Agent and the Co-Agent) will be included in the Reserve Reports at the
contracted price and the Applicable Gas Price will be BTU-adjusted to reflect
the liquids content of Borrower's natural gas.
"Applicable Margin" means, at any time that the Borrower's Implied
Senior Debt Rating is equal to any rating set forth below, the percentages per
annum set forth opposite such Implied Senior Debt Rating for CD Rate Loans and
LIBO Rate Loans; provided, that if the
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Borrower's Implied Senior Debt Rating shall change at any time, the Applicable
Margin set forth below shall become effective on the immediately next Quarterly
Payment Date:
Minimum Implied Senior Debt
Rating from Standard & Poors
(or an equivalent rating from Moodys
or another approved rating agency) CD Rate Loans LIBO Rate Loans
- ------------------------------------ ------------- ---------------
B+ or lower 1 5/8% 1 1/2%
BB- 1 1/8% 1%
BB 7/8% 3/4%
BB+ or higher 3/4% 5/8%
"Applicable Oil Price" means the average (rounded to the nearest $.01)
of the crude oil prices being used (including prices for future periods) by the
Agent and the Co-Agent for evaluation of oil and gas reserve lending
transactions in accordance with the Agent's and Co-Agent's customary standards
(which prices, other than those fixed by contract and adjusted to reflect the
quality of Borrower's crude oil, will be consistent with those then being
applied to other borrowers of the Agent and Co-Agent generally) as of each
January 1 and July 1, as applicable, provided, however, that, for purposes of
determining the Borrowing Base, production volumes hedged under fixed price
contracts or production volumes committed under long-term sales contracts (in
each case with counterparties acceptable to the Agent and the Co-Agent) will be
included in the Reserve Reports at the contracted price and the Applicable Oil
Price will be adjusted to reflect the quality of Borrower's crude oil.
"Applicable Percentage" means (a) 65% for Proved Developed Producing
Reserves, (b) 33% for Proved Developed Shut-In Reserves, (c) 33% for Proved
Developed Behind Pipe Reserves and (d) 18% for Proved Undeveloped Reserves.
"Applicable Price" means the Applicable Gas Price, the Applicable Oil
Price and the Applicable Products Price, as the case may be.
"Applicable Products Price" means in respect of any year (a) for
volumes not hedged under fixed price contracts or committed under long-term
sales contracts the lesser of (i) (A) for the first two years included in any
calculation, the Current Products Price and (B) for all subsequent years
included in any calculation, the Current Products Price escalated at a rate of
4% per annum, such escalation commencing at the beginning of the third year
from the date such calculation is being made, and (ii) $26 per barrel and (b)
for volumes hedged under fixed price contracts or committed under long-term
sales contracts (in each case with counterparties acceptable to the Agent and
the Co-Agent), the contract price for such volumes.
"Assessment Rate" means, for any Interest Period with respect to a CD
Rate Loan, the net annual assessment rate (rounded upwards, if necessary, to
the next higher 1/100 of 1%)
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actually incurred by the Bank to the Federal Deposit Insurance Corporation (or
any successor) for such Corporation (or such successor) insuring time deposits
at offices of the Bank in the United States during the most recent period for
which such rate has been determined prior to the commencement of such Interest
Period.
"Assignee Lender" is defined in Section 11.11.1.
"Audited Reserve Report" means a report of an independent petroleum
engineer pertaining to, and audit of, any Reserve Report or Updated Reserve
Report previously furnished to the Lenders which shall certify that the
estimates of Proved Reserves and the estimates of production and production
costs employed in such Reserve Report, or Updated Reserve Report, as the case
may be, are reasonable and report only the Proved Reserves attributable to
Borrower's working interest percentage in or Borrower's pro rata share of, as
the case may be, any Proved Reserves located on Borrowing Base Properties,
using generally accepted petroleum engineering and evaluation principles, and
that the methods and procedures used in preparing the Reserve Report, or
Updated Reserve Report, as the case may be are reasonable, or, if such engineer
cannot so certify as to such estimates, providing revised estimates of Proved
Reserves, estimates of production and production costs, which revised estimates
shall be certified to have been prepared in accordance with generally accepted
petroleum engineering and evaluation principles. The principles to be used are
those set forth in the Standards Pertaining to the Estimating and Auditing of
Oil and Gas Reserve Information promulgated by the Society of Petroleum
Engineers. The date of an Audited Reserve Report shall be the Reserve Report
Date of the previously rejected Reserve Report or the date of the previously
rejected Updated Reserve Report, as the case may be.
"Authorized Officer" means, relative to the Borrower, those of its
officers whose signatures and incumbency shall have been certified to the Agent
and the Lenders pursuant to Section 5.1.2.
"Bank" is defined in the preamble.
"Borrower" is defined in the preamble.
"Borrowing" means the Loans of the same Type made by all Lenders on
the same Business Day and pursuant to the same Borrowing Request in accordance
with Section 2.1.
"Borrowing Base" means, at any time, that amount, determined in
accordance with Section 2.6 and calculated using information in the then most
recent Reserve Report or Alternate Reserve Report, which equals the lesser of
(i) the sum total of (a) the Discounted Present Value of the Future Net Income
for each category of Proved Reserves multiplied by (b) the relevant Applicable
Percentage for each category of Proved Reserves, and (ii) the product of 10/7
times sixty-five percent (65%) of the Discounted Present Value of Future Net
Income attributable to the Proved Developed Producing Reserves. During the
period from June 1, 1995, to the date of the next determination of the
Borrowing Base pursuant to the provisions of Section 7.2, the amount of the
Borrowing Base shall be One Hundred and Fifty Million Dollars ($150,000,000)
provided that, if pursuant to a Reserve Report dated January 1st of any
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year the ratio of (x) Borrowing Base to (y) Commitment Amount plus the amount of
Senior Debt (other than the Loans) that is outstanding on such date which is
permitted pursuant to Section 8.2(a)(ii) is at least 1.5 to 1.0, then the
Borrowing Base shall not be redetermined pursuant to the Alternate Reserve
Report dated as of the following July 1st.
"Borrowing Base Properties" means those oil and gas properties of the
Borrower or, to the extent provided below, of a Majority-owned Subsidiary of
the Borrower (including the Borrower's or such Majority-owned Subsidiary's pro
rata share of Qualified Partnership Properties pro rated on the basis of the
lesser of (i) Borrower's or such Majority- owned Subsidiary's share of income
from the partnership and (ii) the Borrower's or such Majority-owned
Subsidiary's share of partnership properties or proceeds thereof upon a
liquidation of the partnership) included in the most recent Reserve Report or
Alternate Reserve Report; provided, however, that Borrowing Base Properties
shall not include: (i) properties located outside the United States (ii)
properties owned by the Borrower's Subsidiaries (other than Qualified
Partnership Properties to the extent of the Borrower's or its Subsidiary's pro
rata share thereof) except as permitted by the provisions of the sentence
immediately following, (iii) properties which secure Non-Recourse Indebtedness
and (iv) properties subject to Liens other than those permitted under clauses
(d), (e), (f), (g) and (i) of Section 8.3; provided that, unless the Discounted
Present Value of such properties, in the aggregate, is no more than $5,000,000,
no properties of the Borrower or any Majority-owned Subsidiary of Borrower
(including the Borrower's or such Majority-owned Subsidiary's pro rata share of
Qualified Partnership Properties) included in the most recently delivered
Reserve Report or Alternate Reserve Report, as the case may be, may be deleted
from a subsequent Reserve Report or Alternate Reserve Report, including the
imposition of a Lien thereon or the securing of Non-Recourse Indebtedness
thereby, without the consent of the Required Lenders, which consent shall not
be unreasonably withheld and shall not require the payment of a fee or other
compensation by the Borrower. Notwithstanding the immediately preceding
sentence, the Borrower or a Subsidiary of the Borrower may transfer Borrowing
Base Properties to one or more Majority-owned Subsidiaries of the Borrower
provided that (i) such transfer is permitted pursuant to Section 8.8(b) and
(ii) the Subsidiary to which such properties are transferred by the Borrower or
any Majority-owned Subsidiary of the Borrower shall have executed and delivered
to the Agent a Subsidiary Guaranty. Nothing herein shall prevent a Subsidiary
from transferring Borrowing Base Properties to the Borrower at any time.
"Borrowing Request" means a loan request and certificate duly executed
by an Authorized Officer of the Borrower, substantially in the form of Exhibit
B hereto.
"Business Day" means any day which is neither a Saturday or Sunday nor
a legal holiday on which banks are authorized or required to be closed in
Chicago, Illinois or Houston, Texas.
"Capitalized Lease Liabilities" means all monetary obligations of the
Borrower or any of its Subsidiaries under any leasing or similar arrangement
which, in accordance with GAAP, would be classified as a capitalized lease,
and, for purposes of this Agreement and each other
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Loan Document, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP, and the stated maturity thereof
shall be the date of the last payment of rent or any other amount due under such
lease prior to the first date upon which such lease may be terminated by the
lessee without payment of a penalty.
"Cash Equivalent Investment" means, at any time:
(a) any evidence of Indebtedness, maturing not more
than one year after such time, issued or guaranteed by the United
States Government;
(b) commercial paper, maturing not more than nine
months from the date of issue, which is issued by
(i) a corporation (other than an Affiliate
of the Borrower) organized under the laws of any state of the
United States or of the District of Columbia and rated to be
of investment grade by Standard & Poor's Corporation or
Moody's Investors Service, Inc., or
(ii) any Lender (or its holding company);
(c) any certificate of deposit or banker's acceptance,
maturing not more than one year after such time, which is issued by
either
(i) a commercial banking institution that
is a member of the Federal Reserve System and has a combined
capital and surplus and undivided profits of not less than
$500,000,000, or
(ii) any Lender;
(d) any repurchase agreement entered into with any
Lender (or other commercial banking institution of the stature
referred to in clause (c)(i)) which
(i) is secured by a fully perfected
security interest in any obligation of the type described in
any of clauses (a) through (c); and
(ii) has a market value at the time such
repurchase agreement is entered into of not less than 100% of
the repurchase obligation of such Lender (or other commercial
banking institution) thereunder; or
(e) any loan participation in a loan which is to a
Borrower with a long-term debt rating of investment grade or higher
from any nationally recognized rating agency and is made by
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(i) a commercial banking institution that
is a member of the Federal Reserve System and has a combined
capital and surplus and undivided profits of not less than
$500,000,000, or
(ii) any Lender.
"CD Rate" means, relative to the Interest Period for each CD Rate Loan
comprising part of the same Borrowing, the rate of interest determined by the
Agent to be the arithmetic average (rounded upwards, if necessary, to the
nearest 1/16 of 1%) of the prevailing rates per annum bid at 10:00 a.m., United
States Central time (or as soon thereafter as practicable), on the first day of
such Interest Period by three or more certificate of deposit dealers of
recognized standing located in New York, New York for the purchase at face
value from each Reference Bank of its certificates of deposit in an amount
comparable to the unpaid principal amount of such Reference Bank's CD Rate Loan
comprising part of such Borrowing to which such Interest Period applies and
having a maturity approximately equal to such Interest Period.
"CD Rate Loan" means a Loan bearing interest, at all times during an
Interest Period applicable to such Loan, at a fixed rate determined by
reference to the CD Rate (Reserve Adjusted).
"CD Rate (Reserve Adjusted)" means, relative to any Lender and to any
Loan to be made, continued or maintained as, or converted into, a CD Rate Loan
for any Interest Period, a rate per annum (rounded upwards, if necessary, to
the nearest 1/16 of 1%) determined pursuant to the following formula:
CDR(RA) = CDR + AR
-----------------
(1.00 - CDRR)
where:
CDR(RA) = CD Rate (Reserve Adjusted)
CDR = CD Rate
CDRR = CD Reserve Requirement
AR = Assessment Rate
The CD Rate (Reserve Adjusted) for the Interest Period for each CD Rate Loan
comprising part of the same Borrowing will be determined by the Agent on the
basis of the Assessment Rate in effect on, and the applicable rates furnished
to and received by the Agent from the Reference Banks on, the first day of such
Interest Period, and the CD Reserve Requirement in effect on the first day of
such Interest Period for each Lender, subject, however, to the provisions of
Section 3.3.4.
"CD Reserve Requirement" means, relative to any Lender and each
Interest Period for each CD Rate Loan comprising part of the same Borrowing, a
percentage (expressed as a
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decimal) equal to the maximum aggregate reserve requirements (including all
basic, supplemental, marginal and other reserves and taking into account any
transitional adjustments or other scheduled changes in reserve requirements
during such Interest Period) on the first day of such Interest Period, as
specified under regulations issued from time to time by the F.R.S. Board for
purposes of determining the maximum aggregate reserve requirements then
applicable to the class of banks of which such Lender is a member, on deposits
of the type and in the same amount used as a reference in determining the CD
Rate and having a maturity approximately equal to such Interest Period.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List.
"Change in Control" means the acquisition by any Person, or two or
more Persons acting in concert, of beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of fifty percent (50%) or more of the outstanding shares
of voting stock of the Borrower.
"Co-Agent" is defined in the preface and includes any successor or
assign of Banque Paribas in such capacity.
"Code" means the Internal Revenue Code of 1986, as amended, reformed
or otherwise modified from time to time.
"Commitment" means, relative to any Lender, such Lender's Revolving
Loan Commitment or Term Loan Commitment, as the case may be.
"Commitment Amount" means either the Revolving Loan Commitment Amount
or Term Loan Commitment Amount.
"Commitment Fees" is defined in Section 3.4.
"Commitment Termination Event" means
(a) the occurrence of any Default described in clauses
(a) through (d) of Section 9.1.9; and
(b) any other Event of Default shall have occurred and
be continuing and either
(i) the Loans are declared to be due and
payable pursuant to Section 9.3, or
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16
(ii) in the absence of such declaration,
the Agent, acting at the direction of the Required Lenders,
gives notice to the Borrower that the Commitments have been
terminated.
"Confidentiality Letter" means the letter agreements entered into by
the Borrower with the Agent, the Co-Agent and each of the other Lenders and to
be entered into with each Assignee Lender or Participant respecting
non-disclosure of the Borrower's confidential information.
"Continuation/Conversion Notice" means a notice of continuation or
conversion and certificate duly executed by an Authorized Officer of the
Borrower, substantially in the form of Exhibit C hereto.
"Controlled Group" means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with the
Borrower, are treated as a single employer under Section 414(b) or 414(c) of
the Code or Section 4001 of ERISA.
"Current Products Price" means at any time the weighted average price
per barrel calculated on a property by property basis received by the Borrower
during the preceding 12 month period for all sales of hydrocarbon products.
"Current Ratio" means the ratio of
(a) consolidated current assets of the Borrower and
its Subsidiaries
to
(b) consolidated current liabilities, less current
maturities of long-term debts (including Non-Recourse Indebtedness),
of the Borrower and its Subsidiaries.
"Default" means any Event of Default or any condition, occurrence or
event which, after notice or lapse of time or both, would constitute an Event
of Default.
"Deficiency Period" means any period commencing upon any date that the
Agent determines that (i) the aggregate principal amount of all Revolving Loans
exceeds the Borrowing Base then in effect or (ii) those ratios with respect to
the Term Loans set forth in Section 3.1.3 are not satisfied, and continuing
until the date that, pursuant to the redetermination of the Borrowing Base or
the determination of a Revised Borrowing Base, or by reason of mandatory
prepayments or scheduled repayments, (i) with respect to Revolving Loans, the
aggregate outstanding principal amount no longer exceeds the Borrowing Base or
(ii) with respect to Term Loans outstanding, the ratios set forth in Section
3.1.3 are satisfied; provided that, pursuant to Sections 3.1.2 and 3.1.3 (i) if
a Reserve Report or Alternate Reserve Report shall be found unsatisfactory in
substance, form or detail, or unsatisfactory by reason
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of the estimate of Proved Reserves, by Lenders having an aggregate Percentage of
at least 75% and (ii) upon the delivery by the Borrower of an Audited Reserve
Report or the results of any Alternate Reserve Report Review, as the case may
be, and the determination of the Borrowing Base pursuant thereto, the Agent
shall determine that as of the date of such Audited Reserve Report or the
Alternate Reserve Report so reviewed pursuant to an Alternate Reserve Report
Review, (A) the aggregate principal amount of all Revolving Loans exceeds the
Borrowing Base in effect or (B) those ratios with respect to Term Loans set
forth in Section 3.1.3 are not satisfied, then the Deficiency Period shall be
deemed to have begun on (i) the April 30th following the date of an Audited
Reserve Report (or the first day thereafter on which the Revolving Loans shall
have exceeded the Borrowing Base as determined pursuant to the Audited Reserve
Report) or (ii) the October 31st following the date of an Alternate Reserve
Report (or the first day thereafter on which the Revolving Loans shall have
exceeded the Borrowing Base as determined after the Alternate Reserve Report
Review) pursuant to the provisions of Sections 3.1.2 and 3.1.3.
"Disclosure Schedule" means the Disclosure Schedule attached hereto as
Schedule I, as it may be amended, supplemented or otherwise modified from time
to time by the Borrower with the written consent of the Agent and the Required
Lenders.
"Discounted Present Value" means, at any time that a calculation
thereof is being made, the sum total of the Future Net Income for each year, or
portion thereof, commencing on or after the date six months from the date of
such calculation, as presented in the then most recent Reserve Report or
Alternate Reserve Report delivered pursuant to Section 7.2(e), discounted to
present value as of the date six months from the date of such calculation at
such rate and in such manner as provided by the requirements of the S.E.C. from
time to time in effect.
"Dollar" and the sign "$" mean lawful money of the United States.
"Domestic Office" means, relative to any Lender, the office of such
Lender designated as such below its signature hereto or designated in the
Lender Assignment Agreement or such other office of a Lender (or any successor
or assign of such Lender) within the United States as may be designated from
time to time by notice from such Lender, as the case may be, to each other
Person party hereto. A Lender may have separate Domestic Offices for purposes
of making, maintaining or continuing, as the case may be, Prime Rate Loans and
CD Rate Loans.
"EBITDA" means, for any period for which a determination thereof is to
be made, on a consolidated basis and without duplication, the sum of the
amounts for such period of (i) net income (or loss) after taxes, (ii) interest
expense, (iii) depreciation expense and depletion expense, (iv) amortization
expense, (v) federal, state and foreign taxes, (vi) other non-cash charges and
expenses and (vii) any losses arising outside of the ordinary course of
business which have been included in the determination of consolidated net
income; less any gains arising outside of the ordinary course of business
which have been included in the
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determination of consolidated net income, all as determined on a consolidated
basis for the Borrower and its Subsidiaries.
"Effective Date" means the date this Agreement becomes effective
pursuant to Section 11.8.
"Environmental Laws" means all applicable federal, state or local
statutes, laws (including common law causes of action), ordinances, codes,
rules, regulations and guidelines (including consent decrees and administrative
orders) relating to public health and safety and protection of
<the environment. "Environmental Laws" shall not include the Occupational
Safety and Health Act of 1970 or similar state statutes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA also refer to any successor sections.
"Event of Default" is defined in Section 9.1.
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum (equal for each day during such period) to
(a) the weighted average of the rates on overnight
federal funds transactions with members of the Federal Reserve System
arranged by federal funds brokers, as published for such day (or, if
such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York; or
(b) if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day on such
transactions received by the Bank from three federal funds brokers of
recognized standing selected by it.
"Fiscal Quarter" means any quarter of a Fiscal Year.
"Fiscal Year" means any period of twelve consecutive calendar months
ending on December 31st; references to a Fiscal Year with a number
corresponding to any calendar year (e.g. the "1995 Fiscal Year") refer to the
Fiscal Year ending on the December 31st occurring during such calendar year.
"Fixed Charges" means, for any period, without duplication, the sum of
(i) the total interest charges (including the interest component of capitalized
leases) which, in accordance with GAAP, would be included on the consolidated
statements of income for the Borrower and its Subsidiaries for such period, net
of interest income, plus (ii) dividends paid by the Borrower on its preferred
and preference stock during such period plus (iii) the current portion of
Specified Debt (including Non-Recourse Indebtedness but excluding current
maturities of any
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Loan outstanding hereunder) and the current portion of production payments to be
paid by the Borrower and its Subsidiaries as of the end of such period, plus
(iv) the amount of mandatory redemptions of preferred stock to be made by the
Borrower in cash during the succeeding twelve-month period (excluding
redemptions of shares of such preferred stock held by Subsidiaries of the
Borrower).
"Fixed Charge Coverage Ratio" at any date means the ratio of EBITDA to
Fixed Charges for the four fiscal quarters most recently ended on such date.
"Fixed Rate Loan" means any CD Rate Loan or any LIBO Rate Loan.
"F.R.S. Board" means the Board of Governors of the Federal Reserve
System or any successor thereto.
"Future Net Income" means, for each year or portion thereof, the
amount for such year or portion thereof, as reflected in the then most recent
Reserve Report or Alternate Reserve Report, as the case may be, which would
result from the expected sale of recoverable hydrocarbons from or attributable
to the Borrower's interest in any Proved Reserves located on Borrowing Base
Properties. Future Net Income shall be calculated by taking the Gross Revenues
less all applicable royalties, net profits interests and similar burdens on
production, and costs and expenses (other than general and administrative costs
and expenses) which the Borrower can reasonably be expected to incur or, in the
case of Qualified Partnership Properties, the Borrower's interest can
reasonably be expected to bear in producing each product from such Proved
Reserves (including production, severance and ad valorem or like taxes,
transportation costs, operating expenses, capital expenses with respect to such
Proved Reserves, and the cost of drilling, completing and equipping additional
wells, including any dry holes, which are reasonably expected to be drilled for
the purpose of completing development of such Proved Reserves and obtaining
therefrom the volumes of such production included for the purposes hereof).
Commencing with the third year from the date such calculation is made, such
costs and expenses will be escalated at a rate of the average (rounded to the
nearest .01 of 1%) of the escalation being used by the Agent and the Co-Agent
for evaluation of oil and gas transactions in accordance with the Agent's and
the Co-Agent's customary standards (which escalations will be consistent with
those being applied to other borrowers of the Agent or Co-Agent generally) as
of each January 1 or July 1, as applicable.
"GAAP" is defined in Section 1.4.
"Gross Revenues" means the sum, for the several product classes of
hydrocarbon production, of annual production attributed to each product
multiplied by the Applicable Prices, as the case may be, per unit volume
applicable to each product.
"Guarantee" means any agreement, undertaking or arrangement by which
any Person guarantees, endorses or otherwise becomes or is contingently liable
upon (by direct or indirect agreement, contingent or otherwise, to provide
funds for payment, to supply funds to, or
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otherwise to invest in, a debtor, or otherwise to assure a creditor against
loss) the debt or other obligation to pay money of or, in respect of, any other
Person (other than by endorsements of instruments in the course of collection),
or guarantees the payment of dividends or other distributions upon the shares of
any other Person. The amount of any Person's obligation under any Guarantee
shall (subject to any limitation set forth therein) be deemed to be the
outstanding principal amount (or maximum outstanding principal amount, if
larger) of the debt, obligation or other liability guaranteed thereby.
"Hazardous Material" means
(a) any "hazardous substance", as defined by CERCLA;
(b) any "hazardous waste", as defined by the Resource
Conservation and Recovery Act, as amended;
(c) any petroleum, crude oil or any fraction thereof;
(d) any hazardous, dangerous or toxic chemical,
material waste or substance within the meaning of any Environmental
Law;
(e) any radioactive material, including any naturally
occurring radioactive material, and any source, special or by-product
material as defined in 42 U.S.C. Section 2011 et. seq., and any
amendments or reauthorizations thereof;
(f) asbestos-containing materials in any form of
condition; or
(g) polychlorinated biphenyls in any form or condition.
"Hedging Obligations" means, with respect to any Person, all
liabilities of such Person under interest rate swap agreements, interest rate
cap agreements and interest rate collar agreements, and all other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates or currency exchange rates.
"herein", "hereof", "hereto", "hereunder" and similar terms contained
in this Agreement or any other Loan Document refer to this Agreement or such
other Loan Document, as the case may be, as a whole and not to any particular
Section, paragraph or provision of this Agreement or such other Loan Document.
"Highest Lawful Rate" is defined in Section 3.3.5.
"Impermissible Qualification" means, relative to the opinion or
certification of any independent public accountant as to any financial
statement of the Borrower, any qualification or exception to such opinion or
certification
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(a) which is of a "going concern" nature;
(b) which relates to the limited scope of examination
of matters relevant to such financial statement; or
(c) which relates to the treatment or classification of
any item in such financial statement and which, as a condition to its
removal, would require an adjustment to such item the effect of which
would be to cause the Borrower to be in default of any of its
obligations under Section 8.4.
"Implied Senior Debt Rating" means that "implied senior debt rating",
if any, from time to time assigned to the Borrower by any of Standard & Poors,
Moody's or another nationally recognized debt rating agency, provided that
such other agency is acceptable to the Agent and Co-Agent.
"Inactive Revolving Loan Commitment Amount" means, on any date,
$50,000,000, less the net amount of all Activation Amounts, as such Inactive
Revolving Loan Commitment Amount may be changed from time to time pursuant to
Section 2.2.
"including" means including without limiting the generality of any
description preceding such term, and, for purposes of this Agreement and each
other Loan Document, the parties hereto agree that the rule of ejusdem generis
shall not be applicable to limit a general statement, which is followed by or
referable to an enumeration of specific matters, to matters similar to the
matters specifically mentioned.
"Indebtedness" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money
and all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments;
(b) all obligations, contingent or otherwise, relative
to the face amount of all letters of credit (except those which have
as collateral cash or Cash Equivalent Investments, whether or not
drawn), and banker's acceptances issued for the account of such
Person;
(c) all obligations of such Person as lessee under
leases which have been or should be, in accordance with GAAP, recorded
as Capitalized Lease Liabilities except to the extent such obligations
are offset by the contractual obligations of a third party to make
payments to such Person to reimburse such Person for a portion of such
Capitalized Lease Liabilities and such third party is current with
respect to such payments;
(d) all other items which, in accordance with GAAP,
would be included as liabilities on the liability side of the balance
sheet of such Person as of the date at
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which Indebtedness is to be determined except that, in the case of the
Borrower, any preferred stock of the Borrower, now existing or
hereafter issued, which by its express terms is not required to be
redeemed in cash, property, notes or other debt instruments by either
the Borrower or the holder of such preferred stock prior to a date
seven years after the Effective Date, is excluded from Indebtedness;
(e) net liabilities of such Person under all Hedging
Obligations;
(f) whether or not so included as liabilities in
accordance with GAAP, advance payment agreements on which performance
is incomplete and all obligations of such Person to pay the deferred
purchase price of property or services, and indebtedness (excluding
prepaid interest thereon) secured by a Lien on property owned or being
purchased by such Person (including indebtedness arising under
conditional sales or other title retention agreements), whether or not
such indebtedness shall have been assumed by such Person or is limited
in recourse; and
(g) all Guarantees of such Person in respect of any of
the foregoing.
For all purposes of this Agreement, the Indebtedness of any Person shall
include the Indebtedness of any partnership or joint venture in which such
Person is a general partner or a joint venturer.
"Indemnified Liabilities" is defined in Section 11.4.
"Indemnified Parties" is defined in Section 11.4.
"Interest Period" means, relative to any Fixed Rate Loans comprising
part of the same Borrowing, the period beginning on (and including) the date on
which such Fixed Rate Loan is made or continued as, or converted into, a Fixed
Rate Loan pursuant to Section 2.3 or 2.4 and shall end on (but exclude) the day
which is, in the case of a CD Rate Loan, 30, 60, 90 or 180 days thereafter, or
which in the case of a LIBO Rate Loan, numerically corresponds to such date
one, two, three or six months thereafter (or, if such month has no numerically
corresponding day, on the last Business Day of such month), in either case as
the Borrower may select in its relevant notice pursuant to Section 2.3 or 2.4;
provided, however, that
(a) the Borrower shall not be permitted to select
Interest Periods to be in effect at any one time which have expiration
dates occurring on more than five different dates;
(b) Interest Periods commencing on the same date for
Loans comprising part of the same Borrowing shall be of the same
duration;
(c) if such Interest Period would otherwise end on a
day which is not a Business Day, such Interest Period shall end on the
next following Business Day
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(unless, if such Interest Period applies to LIBO Rate Loans, such next
following Business Day is the first Business Day of a calendar month,
in which case such Interest Period shall end on the Business Day next
preceding such numerically corresponding day); and
(d) no Interest Period for a Revolving Loan may end
later than 180 days after the Revolving Loan Commitment Termination
Date and no Interest Period for a Term Loan may end later than the
Stated Maturity Date of such Term Loan.
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"Investment" means, relative to any Person,
(a) any loan or advance made by such Person to any
other Person (excluding commission, travel and similar advances to
officers and employees made in the ordinary course of business);
(b) any Guarantee of such Person; and
(c) any ownership or similar interest held by such
Person in any other Person.
The amount of any Investment shall be the original principal or capital amount
thereof less all returns of principal or equity thereon (and without adjustment
by reason of the financial condition of such other Person) and shall, if made
by the transfer or exchange of property other than cash, be deemed to have been
made in an original principal or capital amount equal to the fair market value
of such property.
"Lender Assignment Agreement" means a Lender Assignment Agreement
substantially in the form of Exhibit D hereto.
"Lenders" is defined in the preamble.
"LIBO Rate" means, relative to any Interest Period for LIBO Rate
Loans, the rate of interest equal to the average (rounded upwards, if
necessary, to the nearest 1/16 of 1%) of the rates per annum at which Dollar
deposits in immediately available funds are offered to the Reference Banks'
respective LIBO Office in the London interbank market as at or about 10:00 a.m.
United States Central time two Business Days prior to the beginning of such
Interest Period for delivery on the first day of such Interest Period, and in
an amount approximately equal to the amount of such Reference Bank's LIBO Rate
Loan and for a period approximately equal to such Interest Period.
"LIBO Rate Loan" means a Loan bearing interest, at all times during an
Interest Period applicable to such Loan, at a fixed rate of interest determined
by reference to the LIBO Rate.
"LIBO Office" means, relative to any Lender, the office of such Lender
designated as such below its signature hereto [or designated in the Lender
Assignment Agreement] or such other office of a Lender as designated from time
to time by notice from such Lender to the Borrower and the Agent, whether or
not outside the United States, which shall be making or maintaining LIBO Rate
Loans of such Lender hereunder.
"Lien" means any security interest, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other) of any
kind or nature whatsoever (other than a Guarantee) with respect to any
property, real or personal.
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"Loan" shall mean any Revolving Loan or Term Loan.
"Loan Document" means this Agreement, the Notes and any Subsidiary
Guaranty.
"Majority-owned Subsidiary" means, with respect to any Person, any
partnership or joint venture in which such Person is a general partner and any
corporation of which more than 90% of the outstanding capital stock having
ordinary voting power to elect a majority of the board of directors of such
corporation (irrespective of whether at the time capital stock of any other
class or classes of such corporation shall or might have voting power upon the
occurrence of any contingency) is at the time directly or indirectly owned by
such Person, by such Person and one or more other Subsidiaries of such Person,
or by one or more other Subsidiaries of such Person.
"Non-Recourse Indebtedness" means any Indebtedness of the Borrower and
its Subsidiaries with respect to which the holder thereof agrees that (i) the
Borrower and its Subsidiaries are not personally liable and (ii) such holder
may require payment only to the extent specifically identified properties of
the Borrower and its Subsidiaries are available to provide therefor, such
matters to be set forth in an agreement or other instrument in form and
substance reasonably satisfactory to the Required Lenders.
"Note" means a promissory note of the Borrower payable to any Lender,
in the form of Exhibit A hereto (as such promissory note may be amended,
endorsed or otherwise modified from time to time), evidencing the aggregate
Indebtedness of the Borrower to such Lender resulting from outstanding Loans,
and also means all other promissory notes accepted from time to time in
substitution therefor or renewal thereof.
"Obligations" means all obligations (monetary or otherwise) of the
Borrower arising under or in connection with this Agreement, the Notes and each
other Loan Document.
"Organic Document" means, relative to any Person and as applicable,
its certificate of incorporation, by-laws, or other general rules of governance
or association other than, with respect to publicly held Persons, any
non-public shareholder agreements, voting trusts and similar arrangements
applicable to any of its authorized shares of capital stock.
"Participant" is defined in Section 11.11.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Pension Plan" means a "pension plan", as such term is defined in
section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a
multiemployer plan as defined in section 4001(a)(3) of ERISA), and to which the
Borrower or any corporation, trade or business that is, along with the
Borrower, a member of a Controlled Group, may have liability, including any
liability by reason of having been a substantial employer within the meaning of
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section 4063 of ERISA at any time during the preceding five years, or by reason
of being deemed to be a contributing sponsor under section 4069 of ERISA.
"Percentage" means, relative to any Lender, the percentage set forth
opposite its signature hereto or set forth in the Lender Assignment Agreement,
as such percentage may be adjusted from time to time pursuant to Lender
Assignment Agreement(s) executed by such Lender and its Assignee Lender(s) and
delivered pursuant to Section 11.11.
"Person" means any natural person, corporation, firm, association,
government, governmental agency or any other entity, whether acting in an
individual, fiduciary or other capacity.
"Plan" means any Pension Plan or Welfare Plan.
"Prime Rate" means, on any date and with respect to all Prime Rate
Loans, a fluctuating rate of interest per annum equal to the higher of
(a) the rate of interest most recently announced by
the Agent at its Domestic Office as its Prime Rate; and
(b) the Federal Funds Rate most recently determined by
the Agent plus 1%.
The Prime Rate is not necessarily intended to be the lowest rate of interest
charged by the Agent in connection with extensions of credit. Changes in the
rate of interest on that portion of any Loans maintained as Prime Rate Loans
will take effect simultaneously with each change in the Prime Rate. The Agent
will give notice promptly to the Borrower and the Lenders of changes in the
Prime Rate.
"Prime Rate Loan" means a Loan bearing interest at a fluctuating rate
determined by reference to the Prime Rate.
"Proved Developed Behind Pipe Reserves" means those Proved Reserves
which are recoverable from zones behind casing in existing wells, which will
require additional completion work or a future recompletion prior to the start
of production.
"Proved Developed Producing Reserves" means those Proved Reserves
which are recoverable from completion intervals in existing wells currently
open and producing to market. Improved recovery reserves are considered to be
producing only after an improved recovery project has been installed and is in
operation.
"Proved Developed Shut-in Reserves" means Proved Reserves that are
recoverable from completion intervals open, but not producing.
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"Proved Reserves" means those recoverable hydrocarbons which have been
proved to a high degree of certainty by reason of existing production, adequate
testing, or in certain cases by adequate core data and other engineering and
geologic information on zones which are present in existing wells or in known
reservoirs which are recoverable under existing economic and operating
conditions. Reserves that can be produced economically through the application
of established improved recovery techniques are included in the proved
classification when (a) successful testing by a pilot project or the operation
of any installed program in that reservoir or one in the immediate area with
similar rock and fluid properties provides support for the engineering analysis
on which the project or program was based, and (b) it is reasonably certain the
project will proceed. Reserves to be recovered by improved recovery techniques
that have yet to be established through repeated economically successful
applications are included in the proved category only after successful testing
by a pilot project or after the operation of an installed program in the
reservoir provides support for the engineering analysis on which the project or
program was based. Improved recovery includes all methods for supplementing
natural reservoir forces and energy, or otherwise increasing ultimate recovery
from a reservoir, including (1) pressure maintenance, (2) cycling, and (3)
secondary recovery in its original sense. Improved recovery also includes the
enhanced recovery methods of thermal, chemical flooding, and the use of
miscible and immiscible displacement fluids.
"Proved Undeveloped Reserves" means Proved Reserves that are
recoverable by new wells on undrilled acreage, from existing wells where a
relatively large expenditure is required for recompletion and from acreage
where the application of an improved recovery technique is planned and the
costs required to place the project in operation are relatively large. Proved
Undeveloped Reserves on undrilled acreage shall be limited to those drilling
units offsetting productive units that are reasonably certain of production
when drilled. Proved Reserves for other undrilled units are Proved Undeveloped
Reserves only where it can be demonstrated with certainty that there is
continuity of production from the existing productive formation.
"Qualified Partnership Properties" means Proved Reserves owned by a
partnership or joint venture in which the Borrower or a Majority-owned
Subsidiary is a general partner provided that no consent of any other partner
nor amendment of the partnership agreement or any other agreement is or will be
necessary to the granting of a Lien on such property.
"Quarterly Payment Date" means the last day of each January, April,
July and October or, if any such day is not a Business Day, the next succeeding
Business Day.
"Reference Banks" means the Agent and the Co-Agent.
"Regulatory Change" means, with respect to any Lender, any change in
or adoption of United States federal, state or foreign law, rule or regulations
or the adoption of, making of, or any change in any interpretations or
directives applying to a class of banks including such Lender under any United
States federal, state or foreign law or regulations by any court, governmental
or monetary authority or central bank charged with the interpretation or
administration thereof.
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"Release" means a "release", as such term is defined in CERCLA.
"Required Lenders" means, at any time, Lenders holding at least 60% of
the then aggregate outstanding principal amount of the Notes then held by the
Lenders, or, if no such principal amount is then outstanding, Lenders having at
least 60% of the Commitments.
"Reserve Report" means a report of Ryder Scott Company Petroleum
Engineers or other independent petroleum engineers satisfactory to the Agent
and the Required Lenders showing, in form and detail satisfactory to the Agent
and Required Lenders, such engineers' estimate of the Proved Reserves on the
Borrowing Base Properties and the future Gross Revenue and Future Net Income to
be derived from such Proved Reserves as of the Reserve Report Date for each
year. The Reserve Report shall estimate the Proved Reserves and income data
for the Proved Developed Producing Reserves, the Proved Developed Shut-In
Reserves, the Proved Developed Behind Pipe Reserves and the Proved Undeveloped
Reserves, and shall, in each case, report only the Proved Reserves and income
data attributable to Borrower's working interest percentage in or Borrower's
pro rata share of, as the case may be, any Proved Reserves located on the
Borrowing Base Properties, less the Borrower's obligations or pro rata share of
such obligations, as the case may be, for advance payments for each such
property. All calculations including the calculation of Applicable Prices in
the Reserve Report shall be made on a property-by-property and an
interest-by-interest basis in order to reflect the varying royalties, costs and
expenses, working interests and advance payments applicable to the various
Borrowing Base Properties covered by the Reserve Report. Except as otherwise
specifically required herein, the Reserve Report shall be prepared and
presented in accordance with the requirements of the S.E.C. from time to time
in effect. If any report which purports to be a Reserve Report and which is
delivered by the Borrower pursuant to the terms of this Agreement is
unsatisfactory in substance, form or detail to Lenders with an aggregate
Percentage of at least 75%, or if Lenders with an aggregate Percentage of 75%
or more disagree with the engineers' estimate of Proved Reserves, the Borrower
shall, as promptly as practicable but in any event within 90 days of notice to
the Borrower by the Agent that such report is not satisfactory, deliver to the
Agent and the Lenders an Audited Reserve Report of independent petroleum
engineers (other than the engineers which prepared the report previously deemed
unsatisfactory by such Lenders) which engineers are satisfactory to the
Borrower and the Agent. The Reserve Report so certified or revised by the
Audited Reserve Report shall qualify as a Reserve Report for the purposes of
this Agreement.
"Reserve Report Date" means January 1, with respect to Reserve
Reports, and July 1, with respect to Alternate Reserve Reports, it being
understood that no date shall be deemed a Reserve Report Date until a Reserve
Report or Alternate Reserve Report with respect thereto is available.
"Revised Borrowing Base" is defined in Section 3.1.2.
"Revolving Loan" is defined in Section 2.1.1 of this Agreement.
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"Revolving Loan Commitment" means, relative to any Lender, such
Lender's obligation to make Revolving Loans pursuant to Section 2.1.1 of this
Agreement.
"Revolving Loan Commitment Amount" means, on any date, the sum total
of the Active Revolving Loan Commitment Amount on such date and the Inactive
Revolving Loan Commitment Amount on such date.
"Revolving Loan Commitment Termination Date" means the earliest of
(a) the Stated Maturity Date of the Revolving Loans;
(b) the date on which the Revolving Loan Commitment
Amount is terminated in full or reduced to zero pursuant to Section
2.2; and
(c) the date on which any Commitment Termination Event
occurs.
Upon the occurrence of any event described in clause (b) or (c), the Revolving
Loan Commitment shall terminate automatically and without any further action.
"S.E.C." means the Securities and Exchange Commission or any successor
agency.
"Senior Debt" means all indebtedness for borrowed money (including
Loans outstanding under this Agreement) other than Subordinated Indebtedness
and Non-Recourse Indebtedness.
"Specified Debt" means the principal of all obligations of the
Borrower for borrowed money, and all obligations of the Borrower evidenced by
bonds, debentures, notes or other similar instruments (but excluding
Non-Recourse Indebtedness).
"Stated Maturity Date" means
(a) with respect to Revolving Loans, January 1, 1998; and
(b) with respect to the Term Loans, January 2, 2000.
"Subordinated Indebtedness" means (i) the eight percent (8%)
Convertible Subordinated Debentures due December 31, 2005 issued by the
Borrower pursuant to the Indenture dated as of October 15, 1980, between the
Borrower and First Interstate Bank of Texas, Trustee, (ii) the five and one
half percent (5 1/2%) Convertible Subordinated Notes due 2004 issued by the
Borrower pursuant to the Indenture dated as of March 23, 1994 between the
Borrower and Shawmut Bank Connecticut, National Association, as Trustee and
(iii) new Indebtedness incurred, all or a portion of the proceeds of which are
used to repay in whole or in part any issue of Subordinated Indebtedness of the
Borrower, provided that:
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(a) such new Indebtedness has covenants regarding
the matters set forth in Section 8.4 not materially more
restrictive to the Borrower than the covenants contained in
Section 8.4 of this Agreement;
(b) such new Indebtedness has subordination terms
not materially less favorable to the holders of the Notes than
the Subordinated Indebtedness to be repaid;
(c) the aggregate principal payments for such new
Indebtedness scheduled to be paid (i) in any Fiscal Year
ending prior to the Stated Maturity Date for the Term Loans
are no greater than the aggregate principal payments under the
existing schedule of principal payments of the Subordinated
Indebtedness being repaid and (ii) prior to a period ending
thirty-six (36) months after the Stated Maturity Date for the
Term Loans shall not exceed the aggregate principal payments
under the existing schedule of principal payments of the
Subordinated Indebtedness being repaid; and
(d) the maturity dates thereof are no earlier
than thirty-six (36) months after the Stated Maturity Date of
the Term Loans.
"Subsidiary" means, with respect to any Person, any partnership or
joint venture in which such Person is a general partner and any corporation of
which more than 50% of the outstanding capital stock having ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether at the time capital stock of any other class or
classes of such corporation shall or might have voting power upon the
occurrence of any contingency) is at the time directly or indirectly owned by
such Person, by such Person and one or more other Subsidiaries of such Person,
or by one or more other Subsidiaries of such Person.
"Subsidiary Guaranty" means any Guaranty executed and delivered by a
Subsidiary of the Borrower pursuant to Section 7.10, substantially in the form
of Exhibit F, as the same may from time to time be amended, supplemented,
restated or otherwise modified.
"Taxes" is defined in Section 4.7.
"Term Loan" is defined in Section 2.1.2.
"Term Loan Commitment" means, relative to any Lender, such Lender's
obligation to make Term Loans pursuant to Section 2.1.2 of this Agreement.
"Term Loan Commitment Amount" means the least of (i) the aggregate
Revolving Loans outstanding to all Lenders as of the Revolving Loan Commitment
Termination Date, (ii) the Commitment Amount in effect with respect to
Revolving Loans as of the Resolving Loan Commitment Termination Date, or (iii)
the Borrowing Base in effect on the Revolving Loan
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Commitment Termination Date minus all Senior Debt other than the Revolving Loans
outstanding on such date.
"Term Loan Commitment Termination Date" means the earlier of
(a) the Business Day after the Stated Maturity Date of
the Revolving Loans; and
(b) the date on which any Commitment Termination Event
occurs.
Upon the occurrence of any event described in clause (b), the Term Loan
Commitment shall terminate automatically and without any further action.
"Trade Indebtedness" means all Indebtedness owed by any Person on
ordinary trade terms to vendors, suppliers, and other Persons providing goods
and services used by it in the ordinary course of its business.
"Type" means, relative to any Borrowing or Loan, the portion thereof,
if any, being maintained as a Prime Rate Loan, CD Rate Loan or a LIBO Rate
Loan.
"United States" or "U.S." means the United States of America, its
fifty States and the District of Columbia.
"Updated Reserve Report" means a reserve report prepared internally by
the Borrower and which shall have been reviewed by Ryder Scott Company
Petroleum Engineers or another independent petroleum engineer satisfactory to
the Agent and the Required Lenders who shall have certified that the estimates
in the Updated Reserve Report are reasonable estimates using generally accepted
petroleum engineering and evaluation principles and that the methods and
procedures used in preparing the Updated Reserve Report are reasonable. The
principles to be utilized are those set forth in the Standards Pertaining to
the Estimating and Auditing of Oil and Gas Reserve Information promulgated by
the Society of Petroleum Engineers. If any report which purports to be an
Updated Reserve Report and which is delivered by the Borrower pursuant to the
terms of this Agreement is unsatisfactory in substance, form or detail to
Lenders with an aggregate Percentage of at least 75%, or if Lenders with an
aggregate Percentage of 75% or more disagree with the estimate of Proved
Reserves, the Borrower shall, as promptly as practicable but in any event
within 90 days deliver to the Agent and the Lenders an Audited Reserve Report
of independent petroleum engineers (other than the engineers which reviewed the
report previously deemed unsatisfactory by such Lenders) which engineers are
satisfactory to the Borrower and the Agent. The Updated Reserve Report so
certified or revised by the Audited Reserve Report shall qualify as an Updated
Reserve Report for the purposes of this Agreement.
"Welfare Plan" means a "welfare plan", as such term is defined in
section 3(1) of ERISA.
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SECTION 1.2. Use of Defined Terms. Unless otherwise defined or
the context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in the Disclosure Schedule and in
each Note, Borrowing Request, Continuation/Conversion Notice, Loan Document,
notice and other communication delivered from time to time in connection with
this Agreement or any other Loan Document.
SECTION 1.3. Cross-References. Unless otherwise specified,
references in this Agreement and in each other Loan Document to any Article or
Section are references to such Article or Section of this Agreement or such
other Loan Document, as the case may be, and, unless otherwise specified,
references in any Article, Section or definition to any clause are references
to such clause of such Article, Section or definition.
SECTION 1.4. Accounting and Financial Determinations. Unless
otherwise specified, all accounting terms used herein or in any other Loan
Document shall be interpreted, all accounting determinations and computations
hereunder or thereunder (including under Section 8.4) shall be made, and all
financial statements required to be delivered hereunder or thereunder shall be
prepared in accordance with, those generally accepted accounting principles
("GAAP") applied in the preparation of the financial statements referred to in
Section 6.5.
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTES
SECTION 2.1. Commitments. On the terms and subject to the
conditions of this Agreement (including Article V), each Lender severally
agrees to make Loans pursuant to the Commitments described in this Section 2.1.
SECTION 2.1.1. Revolving Loan Commitment. From time to time on
any Business Day occurring prior to the Revolving Loan Commitment Termination
Date, each Lender will make revolving loans (relative to such Lender, its
"Revolving Loan") to the Borrower equal to such Lender's Percentage of the
aggregate amount of the Borrowing requested by the Borrower to be made on such
day. The Commitment of each Lender described in this Section 2.1.1 is herein
referred to as its "Revolving Loan Commitment". On the terms and subject to
the conditions hereof, the Borrower may from time to time borrow, prepay and
reborrow Revolving Loans.
SECTION 2.1.2. Term Loan Commitment. On the Revolving Loan
Commitment Termination Date (unless such date shall occur as a result of clause
(c) of the definition thereof), each Lender will make one term loan (relative
to such Lender its "Term Loan") to the Borrower equal to the lesser of the then
outstanding principal amount of its Revolving Loan and the amount described in
Section 2.1.3(b). The Commitment of each Lender described in this Section
2.1.2 is herein referred to as its "Term Loan Commitment". No amounts paid or
prepaid with respect to the Term Loan may be reborrowed. Fixed Rate
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Loans for which the Interest Period shall not have terminated as of the
Revolving Loan Commitment Termination Date shall be continued as Fixed Rate
Loans for the applicable Interest Period and Prime Rate Loans shall be continued
as Prime Rate Loans after the Revolving Loan Commitment Termination Date, unless
the Borrower shall have elected otherwise by delivery of a
Continuation/Conversion Notice pursuant to Section 2.4; provided that such Fixed
Rate Loans which shall have converted to Term Loans shall be in a minimum amount
of $5,000,000 and an integral multiple of $1,000,000. Any principal repayments
received on the Revolving Loan Commitment Termination Date for Revolving Loans
not converted into Term Loans shall be applied first to Prime Rate Loans and,
after Prime Rate Loans have been paid in full, to Fixed Rate Loans, unless the
Borrower shall have otherwise instructed the Agent in writing. Upon a Lender
making such Term Loan, its Term Loan Commitment shall terminate and it shall
have no further Commitment to make Loans.
SECTION 2.1.3. Lenders Not Permitted or Required To Make Loans in
Excess of Commitment. No Lender shall be permitted or required to make any
Loan if, after giving effect thereto,
(a) in the case of Revolving Loans, the aggregate
outstanding principal amount of all Revolving Loans outstanding would
exceed the lesser of (i) the Revolving Loan Commitment Amount and (ii)
the Borrowing Base then in effect minus all other Senior Debt
outstanding;
(b) in the case of Term Loans, the aggregate original
principal amount of all Term Loans would exceed the Term Loan
Commitment Amount;
(c) in the case of Revolving Loans, the aggregate
outstanding principal amount of all Revolving Loans of any such Lender
would exceed such Lender's Percentage of the Revolving Loan Commitment
Amount; or
(d) in the case of Term Loans, the aggregate
outstanding principal amount of the Term Loan of any such Lender would
exceed such Lender's Percentage of the Term Loan Commitment Amount.
SECTION 2.2. Termination, Reduction, and Extension of the
Commitment Amounts. Each of the Commitment Amounts is subject to reduction
from time to time pursuant to this Section 2.2.
SECTION 2.2.1. Optional. The Borrower may, from time to time on
any Business Day occurring after the time of the initial Borrowing hereunder,
voluntarily reduce the amount of any Commitment Amount; provided, however, that
all such reductions shall require at least three Business Days' prior notice to
the Agent specifying whether such reduction is temporary or permanent, whether
the reduction relates to the Active Revolving Loan Commitment Amount or the
Inactive Revolving Loan Commitment Amount, and the
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amount by which such Commitment Amount is being reduced which amount shall be
limited as follows:
(a) with respect to any reduction of the Active
Revolving Loan Commitment Amount, (i) if such reduction is a permanent
reduction, such reduction shall be in a minimum amount of $5,000,000
and in increments of $1,000,000 and (ii) if such reduction is in
connection with the redesignation by the Borrower of a portion of the
Active Revolving Loan Commitment Amount as a part of the Inactive
Revolving Loan Commitment Amount, then such reduction shall be in a
minimum amount of $12,500,000 and in increments of $12,500,000; and
(b) with respect to any reduction of the Inactive
Revolving Loan Commitment Amount, (i) if such reduction is a permanent
reduction, such reduction shall be in a minimum amount of $5,000,000
and in increments of $2,500,000 and (ii) if such reduction is in
connection with the conversion by the Borrower of a portion of the
Inactive Revolving Loan Commitment Amount into a part of the Active
Revolving Loan Commitment Amount as part of a Activation Amount, then
such reduction shall be in a minimum amount of $12,500,000 and in
increments of $12,500,000.
SECTION 2.2.2. Mandatory as to Revolving Loans. The Revolving
Loan Commitment Amount shall be reduced or terminated as described below:
(a) Each Lender's Revolving Loan Commitment shall be
automatically terminated on the Revolving Loan Commitment Termination
Date.
(b) Each reduction in the Revolving Loan Commitment
Amount hereunder shall be made ratably among the Lenders in accordance
with their respective Percentages. The Borrower shall pay to the
Agent for the account of the Lenders, on the date of each termination
or reduction, the Commitment Fees accrued pursuant to Section 3.4.1 on
the amount of Commitments so terminated or reduced through the date of
such termination or reduction.
(c) Should the Commitment Amount exceed the Borrowing
Base at any time, the Commitment Amount shall be reduced to the
Borrowing Base that is then in effect. Such reduction in Commitments
shall be allocated first to the Inactive Revolving Credit Commitment
Amount until such Inactive Revolving Credit Commitment Amount is
reduced to zero and thereafter to the Active Revolving Credit
Commitment Amount.
SECTION 2.2.3. Mandatory as to Term Loans. The Term Loan
Commitment Amount shall be reduced or terminated as described below:
(a) Each Lender's Term Loan Commitment shall be
automatically terminated on the Term Loan Commitment Termination Date.
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(b) Each reduction in the Term Loan Commitment Amount
hereunder shall be made ratably among the Lenders in accordance with
their respective Percentages.
SECTION 2.3. Borrowing Procedure. The Borrower may from time to
time irrevocably request that a Borrowing be made in a minimum amount of (i)
$1,000,000 for Prime Rate Loans, (ii) $5,000,000 for CD Rate Loans and (iii)
$5,000,000 for LIBO Rate Loans, and in an integral multiple of $1,000,000 or in
the case of a Revolving Loan, in the unused amount of the Revolving Loan
Commitment Amount. Such request shall be made by delivering a Borrowing Request
to the Agent on or before 10:00 a.m. United States Central time, (x) on the
Business Day of such Borrowing in the case of a Prime Rate Borrowing, (y) on a
Business Day not less than two Business Days in advance of a CD Rate Borrowing
and (z) on a Business Day not less than three Business Days in advance of a LIBO
Rate Borrowing. On the terms and subject to the conditions of this Agreement,
each Borrowing shall be comprised of the Type of Loans, and shall be made on the
Business Day, specified in such Borrowing Request. With respect to any
Borrowing, the Agent shall have given each of the Lenders notice of such
Borrowing on or before 10:30 a.m. United States Central time on the date of such
Borrowing and on or before 11:00 a.m. United States Central time on such
Business Day each Lender shall deposit with the Agent same day funds in an
amount equal to such Lender's Percentage of the requested Borrowing. Such
deposit will be made to an account which the Agent shall specify from time to
time by notice to the Lenders. To the extent funds are received from the
Lenders, the Agent shall make such funds available to the Borrower by wire
transfer to the accounts the Borrower shall have specified in its Borrowing
Request. No Lender's obligation to make any Loan shall be affected by any other
Lender's failure to make any Loan.
SECTION 2.4. Continuation and Conversion Elections. The
Borrower may from time to time irrevocably elect that all, or any portion in an
aggregate minimum amount of $5,000,000 and an integral multiple of $1,000,000,
of any Borrowing be, in the case of Prime Rate Loans, converted into Fixed Rate
Loans or, in the case of Fixed Rate Loans, be converted into Prime Rate Loans
or continued as Fixed Rate Loans of the same or different Type. Such request
for a continuation or conversion of a Borrowing shall be made by delivering a
Continuation/Conversion Notice to the Agent on or before 10:00 a.m., United
States Central time, on a Business Day, such Continuation/Conversion Notice to
be delivered at least (i) two Business Days in advance for any Borrowing
continued as or converted into a CD Rate Loan and (ii) three Business Days in
advance for any Borrowing continued as or converted into a LIBO Rate Loan. In
the absence of delivery of a Continuation/Conversion Notice (i) with respect to
any CD Rate Loan at least two Business Days before the last day of the then
current Interest Period with respect thereto or (ii) with respect to any LIBO
Rate Loan at least three Business Days before the last day of the then current
Interest Period with respect thereto, such Fixed Rate Loan shall, on such last
day, automatically convert to a Prime Rate Loan. Notwithstanding the above, no
portion of the outstanding principal amount of any Loans may be continued as,
or be converted into, Fixed Rate Loans when any Default has occurred and is
continuing.
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SECTION 2.5. Funding. Each Lender may, if it so elects,
fulfill its obligation to make, continue or convert Fixed Rate Loans hereunder
by causing one of its foreign branches or Affiliates (or an international
banking facility created by such Lender) to make or maintain such Fixed Rate
Loan; provided, however, that such Fixed Rate Loan shall nonetheless be deemed
to have been made and to be held by such Lender, and the obligation of the
Borrower to repay such Fixed Rate Loan shall nevertheless be to such Lender for
the account of such foreign branch, Affiliate or international banking
facility. In addition, the Borrower hereby consents and agrees that, for
purposes of any determination to be made for purposes of Sections 4.1, 4.2, 4.3
or 4.4, it shall be conclusively assumed that each Lender elected to fund all
Fixed Rate Loans by purchasing, as the case may be, Dollar certificates of
deposit in the U.S. or Dollar deposits in its LIBO Office's interbank
eurodollar market.
SECTION 2.6. Determination of Borrowing Base. Upon delivery of
a Reserve Report or Alternate Reserve Report pursuant to Section 7.2 hereof and
provided, that (i) such delivery shall be on or before the dates required
therein and (ii) such Reserve Report or Alternate Reserve Report shall not have
been found unsatisfactory in substance, form or detail, or unsatisfactory by
reason of the estimates of Proved Reserves contained therein, by Lenders with
an aggregate Percentage of at least 75%, then the Agent will notify the
Borrower of the new Borrowing Base on or before (i) the next April 30th, in the
case of a Reserve Report and (ii) the next October 31st, in the case of an
Alternate Reserve Report, which Borrowing Base shall remain in effect until the
next October 31st or April 30th (subject to delivery of an Updated Reserve
Report pursuant to Section 3.1.2 or 3.1.3 and the determination of a Revised
Borrowing Base); provided that, if pursuant to a Reserve Report dated January
1st of any year the ratio of (x) Borrowing Base to (y) Commitment Amount plus
the amount of Senior Debt (other than the Loans) that is outstanding on such
date which is permitted pursuant to Section 8.2(a)(ii) is at least 1.5 to 1.0,
then the Agent shall not redetermine the Borrowing Base pursuant to the
Alternate Reserve Report and shall not notify the Borrower of any
redetermination of the Borrowing Base pursuant to the Alternate Reserve Report
dated as of July 1st of such year. Notwithstanding the foregoing, if any
Reserve Report or Alternate Reserve Report pursuant to which a Borrowing Base
is to be determined shall have been unsatisfactory in form, substance or
detail, or unsatisfactory by reason of the estimates of Proved Reserves
therein, to Lenders with an aggregate Percentage of at least 75%, then the
Borrowing Base in effect as of the Reserve Report Date of such Reserve Report
or Alternate Reserve Report shall remain in effect until (i) the Borrower shall
have delivered to the Agent and the Lenders an Audited Reserve Report or the
results of an Alternate Reserve Report Review, as the case may be, which report
shall be delivered within 90 days of notice from the Agent to the Borrower that
the Reserve Report or Alternate Reserve Report, as the case may be, was not
satisfactory, and (ii) the Agent shall have notified the Borrower of the new
Borrowing Base, which notification shall be made within 5 Business Days of the
delivery of such Audited Reserve Report or the results of such Alternate
Reserve Report Review.
SECTION 2.7. Notes. Each of the Lenders' Loans under a
Commitment shall be evidenced by a Note payable to the order of such Lender in
a maximum principal amount equal to such Lender's Percentage of the original
applicable Commitment Amount. The Borrower
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hereby irrevocably authorizes each Lender to make (or cause to be made)
appropriate notations on the grid attached to such Lender's Note (or on any
continuation of such grid), which notations, if made, shall evidence, inter
alia, the date of, the outstanding principal of, and the interest rate and
Interest Period applicable to the Loans evidenced thereby. Such notations shall
be conclusive and binding on the Borrower absent manifest error; provided,
however, that the failure of any Lender to make any such notations shall not
limit or otherwise affect any Obligations of the Borrower.
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1. Repayments and Prepayments. The Borrower shall
make mandatory repayments and prepayments and may also make voluntary
prepayments from time to time pursuant to this Section 3.1. Each prepayment of
any Loans made pursuant to this Section shall be without premium or penalty,
except as may be required by Section 4.4.
SECTION 3.1.1. Repayments. To the extent that Term Loans are
made to the Borrower on the Revolving Loan Commitment Termination Date, such
Term Loans shall be deemed to be for repayment of the principal of Revolving
Loans outstanding as of the Revolving Loan Commitment Termination Date. The
Borrower shall repay in full the unpaid aggregate principal amount of each Loan
upon the Stated Maturity Date therefor. Prior thereto, the Borrower shall, on
each Quarterly Payment Date occurring after the Revolving Loan Commitment
Termination Date, make a scheduled repayment of the outstanding principal
amount of the Term Loans (i) on each of the first four Quarterly Payment Dates
following the Revolving Loan Commitment Termination Date (or if any such day is
not a Business Day, the next succeeding Business Day), each in an amount equal
to 15% of the original principal amount of the Term Loan and (ii) on each of
the next four Quarterly Payment Dates thereafter, in an amount equal to 10% of
the original principal amount of the Term Loan; provided that, in the event
that the first Quarterly Payment Date falls on a date that is less than
eighty-eight (88) days after conversion of a Revolving Loan to a Term Loan, the
first Quarterly Payment Date for such Term Loan shall be the next succeeding
Quarterly Payment Date and provided further that, the final scheduled repayment
shall be in an amount necessary to repay in full the unpaid principal of the
Term Loan.
SECTION 3.1.2. Mandatory Prepayments on Revolving Loans. If at
any time prior to the Revolving Loan Commitment Termination Date, the aggregate
principal amount of all Senior Debt outstanding shall exceed the Borrowing Base
then in effect, the Borrower shall, at the Borrower's option, either (i)
forthwith repay the Revolving Loans in an aggregate amount equal to such excess
or (ii) prepay the Revolving Loans, in no more than five substantially equal
monthly installments, in an amount such that upon the conclusion of such
mandatory prepayments, the aggregate principal amount of all outstanding Senior
Debt will not exceed the Borrowing Base. The first such payment pursuant to
Clause (ii) above shall be due
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within 30 days after the date on which it is first determined that the principal
amount of all Senior Debt exceeds such Borrowing Base, and the remaining
payments shall be due on the numerically corresponding day of each of the
subsequent months. If a subsequent month does not contain a numerically
corresponding day, the Borrower shall make such payment on the last Business Day
of such month, or if the numerically corresponding day is not a Business Day,
such payment will be due on the preceding Business Day.
If any Reserve Report or any Alternate Reserve Report which, pursuant
to Section 2.6, is to serve as the basis for the redetermination of the
Borrowing Base shall be found unsatisfactory in substance, form or detail, or
unsatisfactory by reason of the estimate of Proved Reserves, by Lenders having
an aggregate Percentage of at least 75% and, upon the delivery of an Audited
Reserve Report or the results of an Alternate Reserve Report Review, as the case
may be, by the Borrower, the Agent shall determine that the aggregate principal
amount of all Senior Debt outstanding exceeds the Borrowing Base then in effect
determined pursuant to such Audited Reserve Report or Alternate Reserve Report
Review, then the Deficiency Period shall be deemed to have begun on (i) the
April 30th following the date of an Audited Reserve Report relating to a Reserve
Report (or the first date thereafter on which Senior Debt outstanding shall
have exceeded the Borrowing Base as determined pursuant to the Audited Reserve
Report) or (ii) the October 31st following the date of an Alternate Reserve
Report so reviewed pursuant to the Alternate Reserve Report Review (or the first
date thereafter on which Senior Debt outstanding shall have exceeded the
Borrowing Base as determined pursuant to such Alternate Reserve Report Review)
and, upon notification by the Agent of the new Borrowing Base, any and all
mandatory prepayments of principal which, pursuant to the immediately preceding
paragraph, would have been due and payable on or prior to the date of such
notice from the Agent during the Deficiency Period beginning on the date so
deemed the beginning date for such Deficiency Period, together with accrued
interest thereon, shall be immediately due and payable.
During any Deficiency Period, the Borrower may deliver to the Lenders
an Updated Reserve Report. If the Updated Reserve Report (i) reflects a revised
Borrowing Base ("Revised Borrowing Base"), (ii) is satisfactory in form,
substance and detail and as to the estimates of Proved Reserves, to the Lenders
and/or the Agent as required by the definition of "Updated Reserve Report" and
(iii) such Updated Reserve Report evidences an increase in Proved Reserves over
those shown in the Reserve Report or Alternate Reserve Report, as applicable,
most recently previously delivered pursuant to Section 7.2, the installment
payments otherwise required pursuant to this Section 3.1.2 may be reduced or
eliminated, as the case may be, to the extent that the aggregate principal
amount of all Senior Debt does not exceed the Revised Borrowing Base.
SECTION 3.1.3. Mandatory Prepayments on Term Loans. If at any
time after the making of the Term Loans, the ratio of (a) the lesser of (i) the
Discounted Present Value of Future Net Income attributable to Proved Reserves
or (ii) 10/7 times the Discounted Present Value of Future Net Income
attributable to the Proved Developed Producing Reserves (in either case based
on the data in the Reserve Report or Alternate Reserve Report, as the case may
be,
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used to determine the Borrowing Base then in effect), to (b) the outstanding
principal amount of the Senior Debt shall at any time be less that 1.5 to 1.0,
the Borrower shall, at the Borrower's option, either (i) forthwith repay Term
Loans in an aggregate amount equal to such deficiency, or (ii) prepay the Term
Loans, in no more than five substantially equal monthly installments, in an
amount such that, upon the conclusion of such mandatory prepayments, such ratio
would be at least 1.5 to 1.0. The first such payment pursuant to clause(ii)
above shall be due within 30 days after the date on which it is first determined
that such ratio is less than 1.5 to 1.0, and the remaining payments shall be due
on the numerically corresponding day of each of the subsequent months.
If a subsequent month does not contain a numerically corresponding
day, the Borrower shall make such payment on the last Business Day of such
month, or if the numerically corresponding day is not a Business Day, such
payment will be due on the preceding Business Day. If any Reserve Report or
any Alternate Reserve Report which, pursuant to Section 2.6, is to serve as the
basis for the redetermination of the Borrowing Base shall be found
unsatisfactory in substance, form or detail, or unsatisfactory by reason of the
estimate of Proved Reserves, by Lenders having an aggregate Percentage of at
least 75% and, upon the delivery of an Audited Reserve Report or the results of
an Alternate Reserve Report Review, as the case may be, by the Borrower, the
Agent shall determine that the ratios set forth in clause (a) and (b) of the
preceding paragraph are not satisfied, then the Deficiency Period shall be
deemed to have begun on (i) the April 30th following the date of such Audited
Reserve Report relating to a Reserve Report or (ii) the October 31st following
the date of an Alternate Reserve Report so reviewed by an Alternate Reserve
Report Review relating to an Alternate Reserve Report and, upon notification by
the Agent of the new Borrowing Base, any mandatory prepayments of principal
which, pursuant to the immediately preceding paragraph, would have been due and
payable on or prior to the date of such notice from the Agent during the
Deficiency Period beginning on the date so deemed the beginning date for such
Deficiency Period, together with accrued interest thereon, shall be immediately
due and payable upon notification by the Agent of the Revised Borrowing Base.
Mandatory prepayments pursuant to this Section 3.1.3 shall be in
addition to and not in lieu of payments required pursuant to Section 3.1.1;
provided, that such mandatory prepayments shall be applied to the next
scheduled repayment or repayments required pursuant to Section 3.1.1 if, as of
such repayment date, after giving effect to such scheduled repayment, the
ratios set forth in clauses (a) and (b) of the first paragraph of this Section
3.1.3 are satisfied.
During any Deficiency Period, the Borrower may deliver to the Lenders
an Updated Reserve Report. If the Updated Reserve Report (i) reflects a Revised
Borrowing Base (ii) is satisfactory in form, substance and detail, and as to
estimates of Proved Reserves, to the Lenders and/or Agent as required by the
definition of "Updated Reserve Report" and (iii) such Updated Reserve Report
evidences an increase in Proved Reserves over those shown in the Reserve Report
or Alternate Reserve Report, as applicable, most recently previously delivered
pursuant to Section 7.2, further installment payments otherwise required
pursuant to this
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Section 3.1.3 may be reduced or eliminated, as the case may be, provided that
after such reduction or elimination, the ratios set forth in this Section 3.1.3
shall be satisfied as of the next installment payment date.
SECTION 3.1.4. Repayment Upon Acceleration. The Borrower shall,
immediately upon any acceleration of the Stated Maturity Date of any Loans
pursuant to Section 9.2 or 9.3, repay all Loans.
SECTION 3.2. Voluntary Prepayments. The Borrower may, from time
to time on any Business Day prior to the Stated Maturity Date, make a voluntary
prepayment, in whole or in part, of the outstanding principal amount of all
Loans comprising the same Borrowing; provided, however, that
(i) any such prepayment shall be made pro rata among
the Lenders with respect to Loans of the same Type and, if applicable,
having the same Interest Period;
(ii) no such prepayment of any Fixed Rate Loan may be
made on any day other than the last day of the Interest Period for
such Loan;
(iii) all such voluntary prepayments of Fixed Rate Loans
shall require at least one but no more than five Business Days' prior
written notice to the Agent and the Lenders and all such voluntary
prepayments of Prime Rate Loans shall require prior written notice to
the Agent on or before 10:00 a.m. United States Central Time on the
Business Day of such voluntary repayment; and
(iv) all such voluntary partial prepayments shall be in
a minimum amount equal to $1,000,000 for Prime Rate Loans and
$5,000,000 for Fixed Rate Loans, and an integral multiple of
$1,000,000.
No voluntary prepayment of principal of any Revolving Loan shall cause a
reduction in the Revolving Loan Commitment Amount. No voluntary prepayment of
principal of any Term Loan may be reborrowed. All voluntary prepayments of
Term Loans shall be applied to scheduled repayments as the Borrower may direct
by written notice to the Agent.
SECTION 3.3. Interest Provisions. Interest on the outstanding
principal amount of Loans shall accrue and be payable in accordance with this
Section 3.3.
SECTION 3.3.1. Rates. Pursuant to an appropriately delivered
Borrowing Request or Continuation/Conversion Notice, the Borrower may elect
that Loans comprising a Borrowing accrue interest at a rate per annum:
(a) on that portion maintained from time to time as a
Prime Rate Loan, equal to the Prime Rate from time to time in effect;
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(b) on that portion maintained as a CD Rate Loan,
during each Interest Period applicable thereto, equal to the sum of
the CD Rate (Reserve Adjusted) for such Interest Period plus the
Applicable Margin; and
(c) on that portion maintained as a LIBO Rate Loan,
during each Interest Period applicable thereto, equal to the sum of
the LIBO Rate for such Interest Period plus the Applicable Margin.
The LIBO Rate for any Interest Period for LIBO Rate Loans will be determined by
the Agent on the basis of the applicable rates furnished to and received by the
Agent from the Reference Banks, two Business Days before the first day of such
Interest Period. All Fixed Rate Loans shall bear interest from and including
the first day of the applicable Interest Period to (but not including) the last
day of such Interest Period at the interest rate determined as applicable to
such Fixed Rate Loan.
SECTION 3.3.2. Post-Maturity Rates. After the date any principal
amount of any Loan is due and payable (whether on the Stated Maturity Date,
upon acceleration or otherwise), or after any other monetary Obligation of the
Borrower shall have become due and payable, the Borrower shall pay interest
(after as well as before judgment) on such amounts at a rate per annum equal to
the Prime Rate plus a margin of 2%.
SECTION 3.3.3. Payment Dates. Interest accrued on each Loan
shall be payable, without duplication:
(a) on the Stated Maturity Date therefor;
(b) on the date of any payment or prepayment, in whole
or in part, of principal outstanding on such Loan;
(c) with respect to Prime Rate Loans, on each
Quarterly Payment Date occurring after the date of the initial
Borrowing hereunder;
(d) with respect to Fixed Rate Loans, the last day of
each applicable Interest Period (and, if such Interest Period shall
exceed 90 days, on the 90th day of such Interest Period);
(e) with respect to any Prime Rate Loans converted
into Fixed Rate Loans on a day when interest would not otherwise have
been payable pursuant to clause (c), on the date of such conversion;
and
(f) on any Loans the Stated Maturity Date of which is
accelerated pursuant to Section 9.2 or Section 9.3, immediately upon
such acceleration.
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Interest accrued on Loans or other monetary Obligations arising under this
Agreement or any other Loan Document after the date such amount is due and
payable (whether on the Stated Maturity Date, upon acceleration or otherwise)
shall be payable upon demand. Notwithstanding clauses (a) and (b) above,
except as otherwise provided in this Section 3.3.3, no accrued interest shall
be due and payable on the Revolving Loan Commitment Termination Date on those
Revolving Loans the principal of which is deemed to have been repaid by Term
Loans to the Borrower pursuant to Section 3.1.1.
SECTION 3.3.4. Interest Rate Determination. Each Reference Bank
agrees to furnish to the Agent timely information for the purpose of determining
the CD Rate or LIBO Rate, as applicable. If either of the Reference Banks shall
fail to timely furnish such information to the Agent for such interest rate, the
Agent shall determine such interest rate on the basis of information furnished
by the remaining Reference Bank.
SECTION 3.3.5. Maximum Interest. It is the intention of the
parties hereto to conform strictly to applicable usury laws and, anything
herein to the contrary notwithstanding, the obligations of the Borrower to the
Lenders under this Agreement, the Loan Documents and any other document or
instrument executed in connection herewith or therewith, shall be subject to
the limitation that payments of interest or of other amounts constituting
interest under applicable law to a Lender shall not be required to the extent
that receipt thereof would be in excess of the Highest Lawful Rate, or
otherwise contrary to provisions of law applicable to such Lender limiting
rates of interest which may be charged or collected by such Lender.
Accordingly, if the transactions or the amount paid or otherwise agreed to be
paid for the use, forbearance or detention of money under this Agreement, the
Loan Documents and any other document or instrument executed in connection
herewith or therewith would exceed the Highest Lawful Rate or otherwise be
usurious under applicable law (including the federal and state laws of the
United States of America, or of any other jurisdiction whose laws may be
mandatorily applicable) with respect to any Lender then, in that event,
notwithstanding anything to the contrary in this Agreement or the Loan
Documents and any other document or instrument executed in connection herewith
or therewith, it is agreed as follows as to such Lender:
(a) in respect to such Lender, the provisions of this
Section 3.3.5 shall govern and control over any other provision in
this Agreement, the Loan Documents and any other document or
instrument executed in connection herewith or therewith and each
provision set forth therein is hereby so limited;
(b) the aggregate of all consideration which
constitutes interest under applicable law that is contracted for,
charged or received under this Agreement, or under any of the other
aforesaid agreements or otherwise in connection with this Agreement by
such Lender shall under no circumstances exceed the maximum amount of
interest allowed by applicable law (such maximum lawful interest rate,
if any, with respect to such Lender herein called the Highest Lawful
Rate"), and all amounts owed under this Agreement, the Loan Documents
and any other document or instrument
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executed in connection herewith or therewith shall be held subject to
reduction and (i) the amount of interest which would otherwise be
payable to such Lender hereunder and under the Loan Documents and any
other document or instrument executed in connection herewith or
therewith, shall be automatically reduced to the amount allowed under
applicable law and (ii) any unearned interest paid by the Borrower
in excess of the Highest Lawful Rate shall be credited to the
Borrower by such Lender (or, if such consideration shall have been
paid in full, refunded to the Borrower);
(c) all sums paid, or agreed to be paid, to such Lender
for the use, forbearance and detention of the indebtedness of the
Borrower to such Lender hereunder shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread throughout
the full term of such indebtedness until payment in full so that the
actual rate of interest is uniform throughout the full term thereof;
(d) if at any time the interest provided pursuant to
Sections 3.3.1 or 3.3.2, as the case may be, together with any other
fees payable pursuant to or in connection with this Agreement and
deemed interest under applicable law, with respect to any Lender
exceeds that amount which would have accrued at the Highest Lawful
Rate, the amount of interest and any such fees to accrue to such
Lender pursuant to this Agreement shall be limited, notwithstanding
anything to the contrary in this Agreement to that amount which would
have accrued at the Highest Lawful Rate for such Lender, but any
subsequent reductions, as applicable, shall not reduce the interest to
accrue pursuant to this Agreement below such Lender's Highest Lawful
Rate until the total amount of interest payable to such Lender
(including all consideration which constitutes interest) equals the
amount of interest which would have been payable to such Lender
(including all consideration which constitutes interest) assuming a
varying rate per annum equal to the interest provided pursuant to
Sections 3.3.1 and 3.3.2 at all times in effect, plus the amount of
fees which would have been received but for the effect of this Section
3.3.5.
For purposes of Article 5069-1.04, Vernon's Texas Civil Statutes, as amended,
to the extent, if any, applicable to any Lender, the Borrower agrees that the
Highest Lawful Rate for such Lender shall be the "indicated (weekly) rate
ceiling" as defined in said Article, provided that such Lender may also rely,
to the extent permitted by applicable laws, on alternative maximum rates of
interest under other laws applicable to such Lender if greater. To the extent
that Texas law shall be applicable to the determination of the Highest Lawful
Rate of any Lender, the provisions of Chapter 15 of Subtitle 3, Title 79 of the
Revised Civil Statutes of Texas, 1925, as amended, shall not apply to this
Agreement or the Notes.
SECTION 3.4. Fees. The Borrower agrees to pay the fees set
forth in this Section 3.4. All such fees shall be non-refundable.
SECTION 3.4.1. Commitment Fee. The Borrower agrees to pay to
the Agent for the account of each Lender, for the period (including any portion
thereof when any of
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Commitments are suspended by reason of the Borrower's inability to satisfy
any condition of Article V) commencing on the Effective Date and continuing
through the Revolving Loan Commitment Termination Date, commitment fees
(collectively, the "Commitment Fees") at the rate of:
(a) 5/16 of 1% per annum on such Lender's
Percentage of the sum of the average daily unused portion of
the Active Revolving Loan Commitment Amount;
(b) 1/8 of 1% per annum on such Lender's
Percentage of the sum of the average daily unused portion of
the Inactive Revolving Loan Commitment Amount; and
(c) on each occasion the Borrower elects
to convert any portion of the Inactive Revolving Loan
Commitment Amount into an Active Revolving Loan Commitment
Amount, a fee on such Activation Amount equal to the product
of (i) 1/4 of 1% of such Activation Amount, and (ii) the
lesser of six (6) or the number of calendar months (rounded to
the next highest integer, not to exceed six) that have elapsed
since (A) the Effective Date or (B) the Inactive Designation
Date (as defined hereafter) (in either case, and as
applicable, the "Calculation Period"). For purposes of
determining the Calculation Period, to the extent that any
Activation Amount is converted back into an Inactive Revolving
Loan Commitment Amount (the effective date of such
redesignation herein an "Inactive Designation Date") and then
subsequently redesignated herein an Activation Amount (such
amount herein a "Reactivated Amount"), the Calculation Period
in respect of the portion of the Activation Amount which is
equal to each such Reactivated Amount shall be determined,
with respect to such Reactivated Amount, from the Inactive
Designation Date or Inactive Designation Dates, as the case
may be, of each such Reactivated Amount.
Such Commitment Fees shall be payable by the Borrower in arrears on
each Quarterly Payment Date, commencing with the first such day
following the Effective Date, and on the Revolving Loan Commitment
Termination Date.
SECTION 3.4.2. Other Fees. The Borrower agrees to pay to
the Agent and the Co-Agent, the fees as described in the fee letter agreements
dated as September 23, 1992 between the Borrower and the Agent and Co-Agent.
ARTICLE IV
CERTAIN CD RATE, LIBO RATE AND OTHER PROVISIONS
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SECTION 4.1. Fixed Rate Lending Unlawful. If any Lender shall
determine (which determination shall, upon notice thereof to the Borrower and
the Lenders, be conclusive and binding on the Borrower if made in good faith)
that the introduction of or any change in or in the interpretation of any law
or regulation makes it unlawful for such Lender to make, continue or maintain
any Loan as, or to convert any Loan into, a Fixed Rate Loan, the obligations of
such Lender to make, continue, maintain or convert any such Loans shall, upon
such determination, forthwith be suspended until such Lender shall notify the
Agent that the circumstances causing such suspension no longer exist, and Fixed
Rate Loans of such Lender shall automatically convert into Prime Rate Loans at
the end of the then current Interest Periods with respect thereto or sooner, if
required by such law or regulation.
SECTION 4.2. Rates Unavailable. If the Agent or the Required
Lenders shall have determined that by reason of circumstances affecting the
Agent's or the Required Lenders' relevant market, adequate means do not exist
for ascertaining the interest rate applicable hereunder to Fixed Rate Loans of
such Type, then, upon notice from the Agent (given at the direction of the
Required Lenders if such determination shall have been made by the Required
Lenders) to the Borrower and the Lenders, the obligations of all Lenders under
Section 2.3 and Section 2.4 to make or continue any Loans as, or to convert any
Loans into, Fixed Rate Loans shall forthwith be suspended until the Agent shall
notify the Borrower and the Lenders that the circumstances causing such
suspension no longer exist.
SECTION 4.3. Increased Fixed Rate Loan Costs, etc. The
Borrower agrees to reimburse each Lender for any increase in the cost to such
Lender of, or any reduction in, the amount of any sum receivable by such Lender
in respect of, making, continuing or maintaining (or of its obligation to make,
continue or maintain) any Loans as, or of converting (or of its obligation to
convert) any Loans into, Fixed Rate Loans (such increases in costs and
reductions in amounts receivable, after taking into account such Lender's
estimate, which shall be conclusive if given in good faith, of the net tax
benefit, if any, realized by such Lender from such additional costs and
reductions, being herein called "Additional Costs"), resulting from any
Regulatory Change after the Effective Date which: (i) changes the basis of
taxation of any amounts payable to such Lender under this Agreement in respect
of any of such Fixed Rate Loans (other than taxes imposed on the overall net
income of such Lender for any such Fixed Rate Loans by the jurisdiction in
which such Lender has its principal office) or (ii) imposes or modifies
(without duplication of any other amount required to be paid hereunder) any
reserve, special deposit, minimum capital, capital ratio or similar
requirements relating to the making by such Lender of any Fixed Rate Loans
(including any increase in cost to a Lender by reason of an increase in any
reserve requirement specified from time to time by the F.R.S. Board and
applicable to "Eurodollar Liabilities" as defined in Regulation D of the F.R.S.
Board or other similar reserve requirements affecting eurodollar deposits).
Such Lender shall promptly notify the Agent and the Borrower in writing of the
occurrence of any such event, such notice to state, in reasonable detail, the
reasons therefor and the Additional Costs. Such Additional Costs shall be
payable by the Borrower directly to such Lender within thirty days of the
Borrower's receipt of such notice, and such notice shall, in the absence of
manifest error, be conclusive and binding on the Borrower.
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SECTION 4.4. Funding Losses. In the event any Lender shall
incur any loss or reasonable expense (including any loss or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired
by such Lender to make, continue or maintain any portion of the principal
amount of any Loan as, or to convert any portion of the principal amount of any
Loan into, a Fixed Rate Loan) as a result of
(a) any conversion or repayment or prepayment of the
principal amount of any Fixed Rate Loans on a date other than the
scheduled last day of the Interest Period applicable thereto, whether
pursuant to Section 3.1 or otherwise;
(b) any Loans not being made as Fixed Rate Loans in
accordance with the Borrowing Request therefor; or
(c) any Loans not being continued as, or converted
into, Fixed Rate Loans in accordance with the Continuation/ Conversion
Notice therefor,
then, upon the written notice of such Lender to the Borrower (with a copy to
the Agent), the Borrower shall, within thirty days of its receipt thereof, pay
directly to such Lender such amount as will (in the reasonable determination of
such Lender) reimburse such Lender for such loss or expense, provided that, the
Borrower shall not be liable to a Lender hereunder for any such loss or expense
incurred by such Lender as a result of such Lender's gross negligence or wilful
misconduct, breach of this Agreement or failure to comply with a Borrowing
Request or Continuation/ Conversion Notice. Such written notice (which shall
include calculations in reasonable detail) shall, in the absence of manifest
error, be conclusive and, if made in good faith, binding on the Borrower.
SECTION 4.5. Increased Capital Costs. Without duplication of
any other provision of this Article IV, if any Regulatory Change after the
Effective Date affects the amount of capital required to be maintained by any
Lender or any Person controlling such Lender, and such Lender determines (in
its sole and absolute discretion) that the rate of return on its or such
controlling Person's capital as a consequence of its Commitments or the Loans
made by such Lender is reduced as a result of such Regulatory Change to a level
below that which such Lender or such controlling Person could have achieved but
for the occurrence of such Regulatory Change, then, in any such case upon
notice from time to time by such Lender to the Borrower, the Borrower shall
within thirty days pay directly to such Lender additional amounts (after taking
into account such Lender's estimates, which shall be conclusive if made in good
faith, of the net tax benefit, if any, realized by such Lender resulting from
such Regulatory Change) sufficient to compensate such Lender or such
controlling Person for such reduction in rate of return. A statement of such
Lender as to any such additional amount or amounts (including calculations
thereof in reasonable detail) shall, in the absence of manifest error, be
conclusive and, if made in good faith, binding on the Borrower. In determining
such amount, such Lender may use any method of averaging and attribution that
it (in its sole and absolute discretion) shall deem applicable.
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SECTION 4.6. Period of Liability. The Borrower shall not be
liable to any Lender pursuant to Section 4.3, 4.4, or 4.5 in respect of such
compensation for any period commencing more than one year before the delivery
of any notice pursuant to Sections 4.3, 4.4, or 4.5 except that the Borrower
may be liable for an earlier period if the Regulatory Change resulting in such
notice shall have been given retroactive effect affecting any period beginning
more than 365 days prior to such notice.
SECTION 4.7. Taxes. All payments by the Borrower of principal
of, and interest on, the Loans and all other amounts payable hereunder shall be
made free and clear of and without deduction for any present or future income,
stamp or other taxes, fees, duties, withholdings or other charges of any nature
whatsoever imposed by any taxing authority, other than taxes imposed on or
measured by any Lender's net income or receipts and franchise taxes (such non-
excluded items being called "Taxes"). In the event that any withholding or
deduction from any payment to be made by the Borrower hereunder is required in
respect of any Taxes pursuant to any applicable law, rule or regulation, then
the Borrower will
(a) pay directly to the relevant authority the full
amount required to be so withheld or deducted;
(b) promptly forward to the Agent an official receipt
or other documentation satisfactory to the Agent evidencing such
payment to such authority; and
(c) pay to the Agent for the account of the Lenders
such additional amount or amounts as is necessary to ensure that the
net amount actually received by each Lender will equal the full amount
such Lender would have received had no such withholding or deduction
been required.
Upon the request of the Borrower, each Lender and each subsequent holder of any
Note that is organized under the laws of a jurisdiction other than the U.S.
shall, prior to the due date of any payments under the Notes, execute and
deliver to the Borrower, on or about the first scheduled payment date in each
Fiscal Year, a United States Internal Revenue Service Form 4224 or Form 1001,
as may be applicable (or any successor form), appropriately completed. Without
prejudice to the survival of any other agreement of the Borrower hereunder or
any other Loan Document, the agreements of the Borrower contained in this
Section shall survive the payment in full of all its Obligations.
SECTION 4.8. Payments, Computations, etc. Unless otherwise
expressly provided, all payments by the Borrower pursuant to this Agreement,
the Notes or any other Loan Document shall be made by the Borrower to the Agent
for the pro rata account of the Lenders entitled to receive such payment. The
Borrower shall make each payment required to be made to the Agent not later
than 11:00 a.m., United States Central time, on the date due, in same day or
immediately available funds, to such account as the Agent shall specify from
time to time by notice to the Borrower. Funds received after that time shall
be deemed to have been
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received by the Agent on the next succeeding Business Day. The Agent shall
promptly remit in same day funds to each Lender its share, if any, of such
payments received by the Agent for the account of such Lender. All interest on
Fixed Rate Loans and all fees shall be computed on the basis of the actual
number of days (including the first day but excluding the last day) occurring
during the period for which such interest or fee is payable over a year
comprised of 360 days and in the case of interest on a Prime Rate Loan, 365 days
or, if appropriate, 366 days. Whenever any payment to be made shall otherwise
be due on a day which is not a Business Day, such payment shall be made on the
next succeeding Business Day and such extension of time shall be included in
computing interest, if any, in connection with such payment.
SECTION 4.9. Sharing of Payments. If any Lender shall obtain
any payment or other recovery (whether voluntary, involuntary, by application
of setoff or otherwise) on account of any Loan (other than pursuant to the
terms of Sections 4.3, 4.4 and 4.5 or by reason of differences in CD Reserve
Requirements) in excess of its pro rata share of payments then or therewith
obtained by all Lenders, such Lender shall purchase from the other Lenders such
participations in Loans made by them as shall be necessary to cause such
purchasing Lender to share the excess payment or other recovery ratably with
each of them; provided, however, that if all or any portion of the excess
payment or other recovery is thereafter recovered from such purchasing Lender,
the purchase shall be rescinded and each Lender which has sold a participation
to the purchasing Lender shall repay to the purchasing Lender the purchase
price to the ratable extent of such recovery together with an amount equal to
such selling Lender's ratable share (according to the proportion of
(a) the amount of such selling Lender's required
repayment to the purchasing Lender
to
(b) the total amount so recovered from the purchasing
Lender)
of any interest or other amount paid or payable by the purchasing Lender in
respect of the total amount so recovered. The Borrower agrees that any Lender
so purchasing a participation from another Lender pursuant to this Section may,
to the fullest extent permitted by law, exercise all its rights of payment
(including pursuant to Section 4.10) with respect to such participation as
fully as if such Lender were the direct creditor of the Borrower in the amount
of such participation. If under any applicable bankruptcy, insolvency or other
similar law, any Lender receives a secured claim in lieu of a setoff to which
this Section applies, such Lender shall, to the extent practicable, exercise
its rights in respect of such secured claim in a manner consistent with the
rights of the Lenders entitled under this Section to share in the benefits of
any recovery on such secured claim.
SECTION 4.10. Setoff. Each Lender shall, upon the occurrence of
any Default described in clauses (a) through (d) of Section 9.1.9 with respect
to the Borrower or any
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Subsidiary or, upon the occurrence of any other Event of Default, have the right
to appropriate and apply to the payment of the Obligations owing to it (whether
or not then due), and (as security for such Obligations) the Borrower hereby
grants to each Lender a continuing security interest in, any and all balances,
credits, deposits, accounts or moneys of the Borrower then or thereafter
maintained with such Lender; provided, however, that any such appropriation and
application shall be subject to the provisions of Section 4.9. Each Lender
agrees promptly to notify the Borrower and the Agent after any such setoff and
application made by such Lender; provided, however, that the failure to give
such notice shall not affect the validity of such setoff and application. The
rights of each Lender under this Section are in addition to other rights and
remedies (including other rights of setoff under applicable law or otherwise)
which such Lender may have.
SECTION 4.11. Use of Proceeds. The Borrower shall apply the
proceeds of each Borrowing in accordance with the third recital; without
limiting the foregoing, and except as permitted by Section 8.5(d), no proceeds
of any Loan will be used to acquire any equity security of a class which is
registered pursuant to Section 12 of the Securities Exchange Act of 1934 if
such acquisition would result in the Borrower's owning more than five percent
(5%) of the issuer's outstanding voting stock and no proceeds of any Loan will
be used to acquire such stock if such acquisition would result in any violation
of F.R.S. Board Regulation U by the Borrower or the Lender.
ARTICLE V
CONDITIONS TO BORROWING
SECTION 5.1. Initial Borrowing. The obligations of the Lenders
to fund the initial Borrowing after the date hereof shall be subject to the
prior or concurrent satisfaction of each of the conditions precedent set forth
in this Section 5.1.
SECTION 5.1.1. Corporate or Partnership Existence. The Agent
shall have received from the Borrower and each of its Majority-owned
Subsidiaries that have executed a Subsidiary Guaranty, a copy of its
certificate or articles of incorporation, including all amendments thereto,
certified as of a recent date by the Secretary of State of the state of its
organization, and a certificate as to the good standing of the Borrower or such
Majority-owned Subsidiary as of a recent date, from such Secretary of State.
The Agent shall have received from each of the Borrower's Subsidiaries which is
organized as a limited partnership, a copy of the certificate of limited
partnership, certified as of a recent date by the Secretary of State of the
state of its organization. The Agent shall also receive from any Subsidiary
organized as a partnership, its partnership agreement, including all amendments
thereto, and a certificate of an Authorized Officer of the Borrower dated the
date of the Initial Borrowing stating that the partnership agreement has not
been amended since the date of the last amendment thereto shown. The Agent
shall also receive from the Secretary of the Borrower and each Majority-owned
Subsidiary that has executed a Subsidiary Guaranty, a certificate dated as of
the date
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hereof, stating that the certificate or articles of incorporation of Borrower or
such Majority-owned Subsidiary have not been amended since the date of the last
amendment thereto shown.
SECTION 5.1.2. Resolutions, etc. The Agent shall have received
from the Borrower a certificate, dated the date of this Agreement, of its
Secretary as to
(a) a copy of the by-laws of the Borrower, attached
thereto, that such attached by-laws are a true and complete copy of
the by-laws of the Borrower and that such by-laws had been in effect
since a date prior to the resolutions of its Board of Directors
referred to in (b) below;
(b) resolutions of its Board of Directors then in full
force and effect authorizing the execution, delivery and performance
of this Agreement, the Notes and each other Loan Document to be
executed by it; and
(c) the incumbency and signatures of those of its
officers authorized to act with respect to this Agreement, the Notes
and each other Loan Document executed by it,
upon which certificate each Lender may conclusively rely until it shall have
received a further certificate of the Secretary of the Borrower canceling or
amending such prior certificate.
SECTION 5.1.3. Compliance with Representations and Warranties.
The Agent shall have received a certificate from an Authorized Officer
confirming compliance with Section 5.2.1 and stating that the Reserve Report of
January 1, 1995, previously delivered to the Lenders, includes as a basis for
Future Net Income only Proved Reserves which are either owned by the Borrower,
a Majority-owned Subsidiary that has executed a Subsidiary Guaranty, or qualify
as Qualified Partnership Properties.
SECTION 5.1.4. Delivery of Notes. The Agent shall have received,
for the account of each Lender, its Note duly executed and delivered by the
Borrower.
SECTION 5.1.5. [Intentionally Omitted.].
SECTION 5.1.6. Opinions of Counsel. The Agent shall have
received opinions, dated the date of the initial Borrowing and addressed to the
Agent and all Lenders, from
(a) Gerald A. Morton, Corporate Secretary and
Associate General Counsel to the Borrower, substantially in the form
of Exhibit E hereto; and
(b) Mayer, Brown & Platt, special Illinois counsel to
the Agent in form and substance satisfactory to the Lenders.
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SECTION 5.1.7. Closing Fees, Expenses, etc. The Agent shall have
received for its own account, or for the account of each Lender, as the case
may be, all fees, costs, and expenses due and payable pursuant to Section 3.4
and Section 11.3, if then invoiced.
SECTION 5.2. Conditions Precedent to Revolving Loans. The
obligation of each Lender to fund any Revolving Loan (including the initial
Borrowing) shall be subject to the satisfaction of each of the conditions
precedent set forth in this Section 5.2.
SECTION 5.2.1. Compliance with Warranties, No Default, etc. Both
before and after giving effect to any such Borrowing the following statements
shall be true and correct
(a) the representations and warranties set forth in
Article VI (excluding, however, those contained in Section 6.7) shall
be true and correct with the same effect as if then made (unless
stated to relate solely to an earlier date, in which case such
representations and warranties shall be true and correct as of such
earlier date);
(b) except as disclosed by the Borrower to the Agent
and the Lenders pursuant to Section 6.7;
(i) no labor controversy, litigation,
arbitration or governmental investigation or proceeding shall
be pending or, to the knowledge of the Borrower, threatened
against the Borrower or any of its Subsidiaries which has a
significant probability of consequences that would materially
adversely affect the Borrower's business, operations, assets,
revenues, properties or prospects or which purports to affect
the legality, validity or enforceability of this Agreement,
the Notes or any other Loan Document; and
(ii) no development shall have occurred in
any labor controversy, litigation, arbitration or governmental
investigation or proceeding disclosed pursuant to Section 6.7
which has a significant probability of consequences that would
materially adversely affect the businesses, operations,
assets, revenues, properties or prospects of the Borrower, or
of the Borrower and its Subsidiaries taken as a whole;
(c) no Default shall have then occurred and be
continuing, and neither the Borrower nor any of its Subsidiaries are
in material violation of any law or governmental regulation or court
order or decree; and
(d) the Active Commitment Amount plus all Senior Debt
outstanding other than the Loans does not exceed the Borrowing Base
and the Borrower is in compliance with the Current Ratio and Fixed
Charge Coverage Ratio as required by Sections 8.4(c) and 8.4(d),
respectively, and, immediately after giving effect to the proposed
Borrowing, Senior Debt shall not exceed the Borrowing Base then in
effect and the
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Indebtedness of the Borrower shall not exceed the amount permitted
under clause(a) of Section 8.4.
SECTION 5.2.2. Borrowing Request. The Agent shall have received
a Borrowing Request for such Borrowing. Each of the delivery of a Borrowing
Request and the acceptance by the Borrower of the proceeds of such Borrowing
shall constitute a representation and warranty by the Borrower that on the date
of such Borrowing (both immediately before and after giving effect to such
Borrowing and the application of the proceeds thereof) the statements made in
Section 5.2.1 are true and correct.
SECTION 5.2.3. Satisfactory Legal Form. All documents executed
or submitted pursuant hereto by or on behalf of the Borrower or any of its
Subsidiaries shall be satisfactory in form and substance to the Agent and its
counsel; the Agent and its counsel shall have received all information,
approvals, opinions, documents or instruments as the Agent or its counsel may
reasonably request.
SECTION 5.3. Conditions Precedent to the Making of the Term
Loans. The obligation of each Lender to make its Term Loan is subject to (a)
the condition precedent that the principal of all Revolving Loans and accrued
interest on all Revolving Loans, except those Revolving Loans the principal of
which shall be deemed to have been repaid by Term Loans pursuant to Section
3.1.1 and for which such interest is not otherwise due and payable, shall have
been paid in full prior to or concurrently with the making of such Term Loan,
(b) the conditions precedent set forth in Sections 5.2.1(c) and (d), and (c) the
condition precedent that the representations and warranties set forth in
Sections 6.1, 6.2, 6.3, and 6.4 are true and correct with the same effect as if
then made. The acceptance by the Borrower of the proceeds of the Term Loans
shall constitute a representation and warranty that on the Revolving Loan
Commitment Termination Date (both before and after giving effect to such Term
Loans and the application of the proceeds thereof) the statements made in
Section 5.2.1(c) and (d) are true and correct and the representations and
warranties set forth in Sections 6.1, 6.2, 6.3 and 6.4 are true and correct with
the same effect as if then made.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders and the Agent to enter into this
Agreement and to make Loans hereunder, the Borrower represents and warrants
unto the Agent and each Lender as set forth in this Article VI.
SECTION 6.1. Organization, etc. The Borrower and each of its
corporate Subsidiaries is a corporation validly organized and existing and in
good standing under the laws of the State, or country, of its incorporation,
and is duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction where the nature of its business requires such
qualification, except where failure to qualify would not have a material
adverse effect on the business or financial condition of the Borrower and its
Subsidiaries taken as a whole or the
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Borrower's ability to perform the Loan Documents. Each of the Borrower's
Subsidiaries which is organized as a partnership is validly organized and
existing and in good standing under the laws of the state of its formation, and
is duly qualified to do business and is in good standing as a foreign
partnership where the nature of its business requires such qualification, except
where failure to qualify would not have a material adverse effect on the
business or financial condition of the Borrower, or the Borrower and its
Subsidiaries taken as a whole or the Borrower's ability to perform under the
Loan Documents. The Borrower and each of its Subsidiaries has full power and
authority and holds all requisite governmental licenses, permits and other
approvals to enter into and perform its Obligations under this Agreement, the
Notes and each other Loan Document and to own and hold under lease its property
and to conduct its business substantially as currently conducted by it.
SECTION 6.2. Due Authorization, Non-Contravention, etc. The
execution, delivery and performance by the Borrower or any Subsidiary of this
Agreement, the Notes and each other Loan Document executed or to be executed by
it, are within the Borrower's or the Subsidiary's corporate or partnership
powers, as the case may be, have been duly authorized by all necessary
corporate or partnership action, as the case may be, and do not
(a) contravene the Borrower's or such Subsidiary's
Organic Documents or partnership agreement, as the case may be;
(b) contravene any contractual restriction, law or
governmental regulation or court decree or order binding on or
affecting the Borrower or any Subsidiary; or
(c) result in, or require the creation or imposition
of, any Lien on any properties of the Borrower or its Subsidiaries.
SECTION 6.3. Government Approval, Regulation, etc. No
authorization or approval or other action by, and no notice to or filing with,
any governmental authority or regulatory body is required for the due
execution, delivery or performance by the Borrower or any Subsidiary of this
Agreement, the Notes or any other Loan Document. Neither the Borrower nor any
of its Subsidiaries is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, or a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company", within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
SECTION 6.4. Validity, etc. This Agreement constitutes, and
the Notes and each other Loan Document executed by the Borrower or any
Subsidiary will, on the due execution and delivery thereof, constitute, the
legal, valid and binding obligations of the Borrower or such Subsidiary, as the
case may be, enforceable in accordance with their respective terms except as
such enforceability is subject to the effect of (i) any applicable bankruptcy,
insolvency, reorganization or similar law relating to or affecting creditors'
rights generally and (ii) general principles of equity (regardless of whether
such enforceability is considered in a
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proceeding in equity or at law), including concepts of materiality,
reasonableness, good faith and fair dealing.
SECTION 6.5. Financial Information. The consolidated balance
sheets of the Borrower and its Subsidiaries as at December 31, 1994 and March
31, 1995 and the related consolidated statements of income and cash flow of the
Borrower and its Subsidiaries for the periods then ended, copies of which have
been furnished to the Agent and the Co-Agent and each other Lender, have been
prepared in accordance with GAAP consistently applied, and present fairly the
consolidated financial condition of the corporations and partnerships covered
thereby as at the dates thereof and the results of their operations for the
periods then ended subject, in the case of the consolidated balance sheets of
March 31, 1995 and the related consolidated statements of income and cash flow
as of such date, to the making of normal year-end audit adjustments and the
year-end addition of notes required pursuant to GAAP. Attached hereto as Item
8.5 ("Ongoing Investments") of the Disclosure Schedule is a complete and
correct schedule of loans, investments and advances by the Borrower and its
Subsidiaries as of March 31, 1995. Except as noted on said schedule, since the
date thereof there have been, as of the date of this Agreement, no material
increases in the respective outstanding amounts of or changes in the terms or
conditions of such loans, investments and advances.
SECTION 6.6. No Material Adverse Change. Since March 31, 1995,
there has been no material adverse change in the financial condition,
operations, assets, business, properties or prospects of the Borrower, or the
Borrower and its Subsidiaries taken as a whole other than those changes as may
affect the oil and gas industry generally.
SECTION 6.7. Litigation, etc. There is no pending or, to the
knowledge of the Borrower, threatened labor controversy, litigation, action, or
proceeding against, or to the knowledge of the Borrower, affecting the Borrower
or any of its Subsidiaries, or any of their respective properties, assets or
revenues, which has a significant probability of consequences that would
materially adversely affect the financial condition, operations, assets,
business, properties or prospects of the Borrower, or of the Borrower and any
Subsidiaries taken as a whole, except as disclosed in the Borrower's most
recent Form 10-K or 10-Q filed with the S.E.C. or Item 6.7 ("Litigation") of
the Disclosure Schedule, or which purports to affect the legality, validity or
enforceability of this Agreement, the Notes or any other Loan Document.
Neither the Borrower nor any of its Subsidiaries is in default with respect to
any judgment, order, writ, injunction, decree, rule or regulation of any court
or Federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, which default
could materially adversely affect the business operations, properties, assets
or condition, financial or other, of the Borrower, or of the Borrower and its
Subsidiaries taken as a whole.
SECTION 6.8. Subsidiaries. The Borrower has no existing U.S.
Subsidiaries, except those Subsidiaries
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(a) which are identified in Item 6.8 (a)
("Existing Subsidiaries") of the Disclosure Schedule; or
(b) which are permitted to have been acquired or
formed in accordance with Section 8.5 or 8.7.
As of June 1, 1995, the Borrower is the record or beneficial owner of
the issued and outstanding shares of capital stock of each such
corporate Subsidiary which is identified inItem 6.8(a) of the
Disclosure Schedule. Such shares are free and clear of any Liens,
including, without limitation, claims arising out of any preemptive
rights granted in connection with the issuance of any such shares.
All such shares are duly issued, fully paid and nonassessable and
there are no outstanding options, warrants or other rights entitling
the holder thereof to purchase any shares of capital stock of any such
Subsidiary. The Borrower's partnership interest in any Subsidiary
organized as a partnership is free and clear of any Liens.
SECTION 6.9. Ownership of Properties. The Borrower and each of
its Subsidiaries owns good and marketable title to all of its properties and
assets, real and personal, tangible and intangible, of any nature whatsoever
(including patents, trademarks, trade names, service marks and copyrights), and
all properties and assets and all revenues (present and future) of the Borrower
and its Subsidiaries are free and clear of all Liens, charges or claims
(including infringement claims with respect to patents, trademarks, copyrights
and the like) except (i) as to any such charges or claims (other than Liens) are
disclosed in the Borrower's most recent Form 10-K filed with the S.E.C. or (ii)
as permitted pursuant to Section 8.3.
SECTION 6.10. Taxes. The Borrower and each of its Subsidiaries
has filed all tax returns and reports required by law to have been filed by it
and has paid all taxes and governmental charges thereby shown to be owing,
except any such taxes or charges which are being diligently contested in good
faith by appropriate proceedings and for which adequate reserves in accordance
with GAAP shall have been set aside on its books.
SECTION 6.11. Pension and Welfare Plans. During the
twelve-consecutive-month period prior to the date of the execution and delivery
of this Agreement and prior to the date of any Borrowing hereunder, no steps
have been taken to terminate any Pension Plan, and no contribution failure has
occurred with respect to any Pension Plan sufficient to give rise to a Lien
under section 302(f) of ERISA. No condition exists or event or transaction has
occurred with respect to any Pension Plan which might result in the incurrence
by the Borrower or any member of the Controlled Group of any material
liability, fine or penalty. Except as disclosed in Item 6.11 ("Employee
Benefit Plans") of the Disclosure Schedule, neither the Borrower nor any member
of the Controlled Group has any contingent liability with respect to any
post-retirement benefit under a Welfare Plan, other than liability for
continuation coverage described in Part 6 of Title I of ERISA.
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SECTION 6.12. Environmental Warranties. Except as set forth in
Item 6.12 ("Environmental Matters") of the Disclosure Schedule:
(a) to the best knowledge of the Borrower, all
facilities and property (including underlying groundwater) owned,
leased or operated by the Borrower or any of its Subsidiaries have
been, and continue to be, owned, leased or operated by the Borrower
and its Subsidiaries in material compliance with all Environmental
Laws;
(b) to the best knowledge of the Borrower, there have
been no past, and there are no pending or threatened
(i) claims, complaints, or notices
received by the Borrower or any of its Subsidiaries with
respect to any alleged violation of any Environmental Law, or
(ii) claims, complaints, notices or
inquiries to, or requests for information received by, the
Borrower or any of its Subsidiaries regarding potential
liability under any Environmental Law relating to operations
or the condition of any facilities or property (including
underlying groundwater) owned, leased or operated by the
Borrower or any of its Subsidiaries
that, singly or in the aggregate, have, or may reasonably be
expected to have, a material adverse effect on the properties or
prospects of the Borrower and its Subsidiaries taken as a whole;
(c) to the best knowledge of the Borrower, there have
been no Releases of Hazardous Materials at, on or under any property
now or previously owned, leased or operated by the Borrower or any of
its Subsidiaries that, singly or in the aggregate, have, or may
reasonably be expected to have, a material adverse effect on the
financial condition, operations, assets, business, properties or
prospects of the Borrower and its Subsidiaries taken as a whole;
(d) to the best knowledge of Borrower, the Borrower
and its Subsidiaries have been issued and are in material compliance
with all permits, certificates, approvals, licenses and other
authorizations relating to environmental matters that are necessary
for their businesses;
(e) no property now or previously owned, leased or
operated by the Borrower or any of its Subsidiaries is listed or
proposed for listing (with respect to owned property only) on the
National Priorities List pursuant to CERCLA, on the CERCLIS or on any
similar state list of sites requiring investigation or clean- up where
such listing or proposed listing would have a material adverse effect
on the financial condition, operations, assets, business, properties
or prospects of the Borrower and its Subsidiaries taken as a whole;
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(f) to the best knowledge of the Borrower, there are
no underground storage tanks, active or abandoned, including petroleum
storage tanks, on or under any property now or previously owned,
leased or operated by the Borrower or any of its Subsidiaries that,
singly or in the aggregate, have, or may reasonably be expected to
have, a material adverse effect on the financial condition,
operations, assets, business, properties or prospects of the Borrower
and its Subsidiaries taken as a whole;
(g) to the best knowledge of the Borrower, neither the
Borrower nor any Subsidiary of the Borrower has directly transported
or directly arranged for the transportation of any Hazardous Material
to any location which is listed or proposed for listing on the
National Priorities List pursuant to CERCLA, on the CERCLIS or on any
similar state list or a site which currently is the subject of
federal, state or local enforcement actions or other investigations
which may lead to claims against the Borrower or such Subsidiary
thereof for any remedial work, damage to natural resources or personal
injury, including claims under CERCLA which claims would have a
material adverse effect on the financial condition, operations,
assets, business properties, or prospects of the Borrower and its
Subsidiaries taken as a whole;
(h) to the best knowledge of the Borrower, there are no
polychlorinated biphenyls or friable asbestos present at any property
now or previously owned, leased or operated by the Borrower or any
Subsidiary of the Borrower that, singly or in the aggregate, have, or
may reasonably be expected to have, a material adverse effect on the
financial condition, operations, assets, business, properties or
prospects of the Borrower and its Subsidiaries taken as a whole; and
(i) to the best knowledge of the Borrower, no
conditions exist at, on or under any property now or previously owned,
leased or operated by the Borrower which, with the passage of time, or
the giving of notice or both, would give rise to liability under any
Environmental Law which liability would have a material adverse effect
on the financial condition, operations, assets, business, properties
or prospects of the Borrower and its Subsidiaries taken as a whole.
SECTION 6.13. Regulations G, T, U and X. The Borrower is not
engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock, and no proceeds of any Loans will be used for a purpose
which violates, or would be inconsistent with, F.R.S. Board Regulation G, T, U
or X. Terms for which meanings are provided in F.R.S. Board Regulation G, T, U
or X or any regulations substituted therefor, as from time to time in effect,
are used in this Section with such meanings.
SECTION 6.14. Rank of Indebtedness. The obligations of the
Borrower to pay the principal of and interest on the Loans made hereunder and
the Notes and all other amounts payable by the Borrower hereunder constitute
direct and general obligations of the Borrower and rank in right of payment
prior to or pari passu with all unsecured indebtedness and liabilities for
borrowed money, or other obligations arising out of the extension of credit, of
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the Borrower. As of March 31, 1995, the Borrower does not have outstanding any
such liability or obligation which is subordinated to any other such
indebtedness, liability or obligation but which is not subordinated to all
indebtedness of the Borrower for money borrowed hereunder and under the Notes.
Except as disclosed in the notes to the financial statements filed with the
Borrower's Form 10-Q for the quarter ended March 31, 1995, there is no Senior
Debt outstanding as of March 31, 1995 other than obligations pursuant to this
Agreement, the Notes, and the other Loan Documents.
SECTION 6.15. Absence of Defaults. Neither the Borrower nor any
of its Subsidiaries is in default in the performance, observance or fulfillment
of any of the obligations, covenants or conditions contained in this Agreement
or any other material agreement or instrument governing Indebtedness to which
any of them is a party.
SECTION 6.16. Accuracy of Information. As of March 31, 1995, the
Borrower has no Indebtedness except as disclosed in Item 6.16 ("Ongoing
Indebtedness") of the Disclosure Schedule, which Disclosure Schedule includes
all Indebtedness reported in the Borrower's most recent Form 10-K or 10-Q filed
with the S.E.C. Since March 31, 1995 there have been, as of the date of this
Agreement, no material increases in the respective outstanding amounts of or
(except for Trade Indebtedness and other permitted Senior Debt) changes in the
terms or conditions of such Indebtedness. All factual information heretofore or
contemporaneously furnished by or on behalf of the Borrower in writing to the
Agent or any Lender for purposes of or in connection with this Agreement or any
transaction contemplated hereby is, and all other such factual information
hereafter furnished by or on behalf of the Borrower to the Agent or any Lender
for purposes of or in connection with this Agreement will be, true and accurate
in every material respect on the date as of which such information is dated or
certified, and such information does not, or shall not, as the case may be, omit
to state any material fact necessary to make such information not misleading.
SECTION 6.17. No Contractual Violation. Borrower has no
contract or agreement to which it or any of its Subsidiaries is a party or by
which it or its properties are bound (excluding any agreements or contracts
governing Indebtedness that do not exceed $1,000,000 at any one time
outstanding in the aggregate which have been incurred to vendors to finance
acquisition of assets as to the assets financed with such Indebtedness)
prohibiting or having the effect of prohibiting the creation or assumption of
any Lien upon any of its assets, properties or revenues whether now owned or
hereafter acquired, or restricting the ability of the Borrower to amend or
otherwise modify this Agreement or any other Loan Document, except as provided
in this Agreement and the other Loan Documents.
ARTICLE VII
AFFIRMATIVE COVENANTS
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SECTION 7.1. Performance of Affirmative Covenants. The
Borrower agrees with the Agent and each Lender that, until all Commitments have
terminated and all Obligations have been paid and performed in full, the
Borrower will perform the obligations set forth in this Article VII.
SECTION 7.2. Financial Information, Reports, Notices, etc. The
Borrower will furnish, or will cause to be furnished, to each Lender and the
Agent copies of the following financial statements, reports, notices and
information:
(a) as soon as available and in any event within 45
days after the end of each of the first three Fiscal Quarters of each
Fiscal Year of the Borrower, consolidated balance sheets of the
Borrower and its Subsidiaries as of the end of such Fiscal Quarter and
consolidated statements of income and cash flows of the Borrower and
its Subsidiaries for such Fiscal Quarter and for the period commencing
at the end of the previous Fiscal Year and ending with the end of such
Fiscal Quarter, certified by the chief financial officer of the
Borrower, such certificate further showing in reasonable detail and
with appropriate calculations and computations in all respects
reasonably satisfactory to the Agent compliance with the financial
covenants set forth inSection 8.4;
(b) as soon as available and in any event within 90
days after the end of each Fiscal Year of the Borrower, a copy of the
annual audit report for such Fiscal Year for the Borrower and its
Subsidiaries, including therein consolidated balance sheets of the
Borrower and its Subsidiaries as of the end of such Fiscal Year and
consolidated statements of income and cash flows of the Borrower and
its Subsidiaries for such Fiscal Year, in each case certified by Arthur
Andersen LLP or other independent public accountants reasonably
acceptable to the Agent and the Required Lenders, together with a
certificate from such accountants containing a computation of, and
showing compliance with, each of the financial ratios and restrictions
contained in Section 8.4 and to the effect that, in making the
examination necessary for the signing of such annual report by such
accountants, they have not become aware of any Default or Event of
Default that has occurred and is continuing, or, if they have become
aware of such Default or Event of Default, describing such Default or
Event of Default and the steps, if any, being taken to cure it;
provided that, if such accountants' opinion contains an Impermissible
Qualification, the Borrower must satisfy the Agent and the Required
Lenders that the Impermissible Qualification does not reflect a
condition that materially impairs the timely collectibility by the
Lenders of any monetary Obligations then outstanding;
(c) as soon as available and in any event within the
time limits set for submission of the statements submitted under
clauses (a) and (b) above, a certificate signed by an Authorized
Officer of the Borrower to the effect that a review of the activities
of the Borrower during the preceding Fiscal Year or Fiscal Quarter has
been made under his supervision with a view to determining whether the
Borrower has
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fulfilled all of its obligations under this Agreement and the Notes and
any other Loan Document to which it is a party and that to the best of
his knowledge (i) no Default has occurred, or if any such Default has
occurred, specifying the nature and extent thereof and the nature of
any corrective action taken or proposed to be taken to cure such
Default, (ii) the Borrower has fulfilled all its obligations under this
Agreement and the Notes and (iii) there have been no material adverse
changes in the financial condition, operations, assets, business,
properties or prospects of the Borrower and its Subsidiaries;
(d) as soon as possible and in any event within five
Business Days after the Borrower learns of the occurrence of any
Default, a statement of an Authorized Officer of the Borrower setting
forth details of such Default and the action which the Borrower has
taken and proposes to take with respect thereto;
(e) (i) as soon as available, but in no event later
than 90 days after the close of each Fiscal Year of the Borrower,
commencing with the Fiscal Year ended December 31, 1992, a Reserve
Report prepared by Ryder Scott Company Petroleum Engineers or another
independent engineering firm acceptable to the Agent and the Required
Lenders as of January 1 of the next succeeding year, and (ii) as soon
as available, but in no event later than 45 days after each June 30,
commencing June 30, 1992, an Alternate Reserve Report dated as of
July 1, provided that, if following the determination of the
Borrowing Base pursuant to a Reserve Report dated as of January 1,
the ratio of (x) the Borrowing Base to (y) the Commitment Amount plus
the amount of Senior Debt (other than the Loans) that is outstanding
on such date which is permitted pursuant toSection 8.2(a)(ii) is at
least 1.5 to 1.0, then the Borrower shall deliver the report referred
to in clause (ii) but the Borrowing Base shall not be redetermined
pursuant thereto;
(f) as soon as possible and in any event within five
Business Days after (i) the occurrence of any material adverse
development with respect to any labor controversy, litigation, action
or proceeding described in Section 6.7 or (ii) the commencement of any
labor controversy, litigation, action or proceeding of the type
described in Section 6.7, notice thereof and copies of all
documentation relating thereto;
(g) promptly after the sending or filing thereof,
copies of all reports which the Borrower sends to any of its security
holders, and all reports and registration statements which the
Borrower or any of its Subsidiaries files with the S.E.C. or any
national securities exchange;
(h) with the reports submitted under clause (e) above,
a certificate signed by an Authorized Officer of the Borrower setting
forth, as of the date of the last delivered Reserve Report or
Alternate Reserve Report, the name and location of each property to
which Proved Reserves included in the Reserve Report or Alternate
Reserve Report, as the case may be, submitted concurrently are
attributable and certifying that
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each such property is either owned by the Borrower or constitutes a
Qualified Partnership Property;
(i) with the Reserve Report submitted under clause
(e), a certificate signed by an Authorized Officer of the Borrower
setting forth the Borrowing Base (calculated using data in such
Reserve Report) and the calculations performed to determine the
Borrowing Base;
(j) immediately upon becoming aware of the institution
of any steps by the Borrower or any other Person to terminate any
Pension Plan, or the failure to make a required contribution to any
Pension Plan if such failure is sufficient to give rise to a Lien
under section 302(f) of ERISA, or the taking of any action with
respect to a Pension Plan which could result in the requirement that
the Borrower furnish a bond or other security to the PBGC or such
Pension Plan, or the occurrence of any event with respect to any
Pension Plan which could result in the incurrence by the Borrower of
any material liability, fine or penalty, or any material increase in
the contingent liability of the Borrower with respect to any
post-retirement Welfare Plan benefit, notice thereof and copies of all
documentation relating thereto;
(k) such other information respecting the condition or
operations, financial or otherwise, of the Borrower or any of its
Subsidiaries as any Lender through the Agent may from time to time
reasonably request;
(l) as soon as available, and in any event within 90
days after the end of each Fiscal Year, or at other times as the Agent
may reasonably request, a certificate from the Borrower's risk manager
setting forth the nature and extent of all insurance maintained by the
Borrower and its Subsidiaries;
(m) as soon as reasonably possible and in any event
within ten (10) Business Days if the principal of the Senior Debt
outstanding (including the Loans) shall exceed the Borrowing Base then
in effect, notice of such excess.
SECTION 7.3. Compliance with Laws, etc. The Borrower will, and
will cause each of its Subsidiaries to, comply in all material respects with
all applicable laws, rules, regulations and orders, such compliance to include
(without limitation):
(a) the maintenance and preservation of its corporate or
partnership existence and qualification as a foreign corporation or
partnership except as contemplated by Section 8.7 or except where the
failure to do so would not have a material adverse effect on the
business and operations of the Borrowers and its Subsidiaries taken as
a whole.
(b) the payment, before the same become delinquent, of all
taxes, assessments and governmental charges imposed upon it or upon
its property except to the extent being diligently contested in good
faith by appropriate proceedings and for which
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adequate reserves in accordance with GAAP shall have been set aside on
its books or except where the failure to do so would not have a
material adverse effect on the business or operations of the Borrower
and its Subsidiaries taken as a whole.
SECTION 7.4. Maintenance of Properties. The Borrower will, and
will cause each of its Subsidiaries to, maintain, preserve, protect and keep
its properties, whether owned in fee or leased, in good repair, working order
and condition, and make necessary and proper repairs, renewals and replacements
so that its business carried on in connection therewith may be properly
conducted at all times unless the Borrower determines in good faith that the
continued maintenance of any of its properties is no longer economically
desirable.
SECTION 7.5. Insurance. The Borrower will, and will cause each
of its Subsidiaries to, maintain or cause to be maintained with responsible
insurance companies insurance with respect to its properties and business
(excluding business interruption insurance) against such casualties and
contingencies and of such types and in such amounts as is customary in the case
of similar businesses.
SECTION 7.6. Books and Records. The Borrower will, and will
cause each of its Subsidiaries to, keep books and records which accurately
reflect all of its material business affairs and transactions and permit the
Agent and each Lender or any of their respective representatives, at reasonable
times and intervals, to visit all of its offices, to discuss its financial
matters with its officers and independent public accountant (and the Borrower
hereby authorizes such independent public accountant to discuss the Borrower's
financial matters with each Lender or its representatives whether or not any
representative of the Borrower is present) and to examine (and, at the expense
of the Borrower, photocopy extracts from) any of its books or other corporate
or partnership records. The Borrower shall pay any fees of such independent
public accountant incurred in connection with the Agent's or any Lender's
exercise of its rights pursuant to this Section.
SECTION 7.7. Environmental Covenant. The Borrower will, and
will cause each of its Subsidiaries to,
(a) use, operate and maintain all facilities and
properties under its control in material compliance with all
Environmental Laws, keep all necessary material permits, approvals,
certificates, licenses and other authorizations relating to
environmental matters in effect and remain in material compliance
therewith, and handle all Hazardous Materials in material compliance
with all applicable Environmental Laws; and
(b) promptly notify the Agent and provide copies upon
receipt of all written claims, complaints, or notices of material
violations relating to the condition of its facilities and properties
or compliance with Environmental Laws, and shall promptly furnish to
the Agent a statement of its proposed actions and proceedings relating
to its compliance with Environmental Laws.
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SECTION 7.8. [Intentionally Omitted].
SECTION 7.9. Payment of Indebtedness. The Borrower shall pay
all Trade Indebtedness owed by it as such Trade Indebtedness shall become due
and shall pay and discharge when due all other Indebtedness now or hereafter
owed by it, except in each case to the extent being diligently contested in
good faith by appropriate proceedings.
SECTION 7.10. Subsidiary Guaranties. Prior to, or
contemporaneous with, the transfer by Borrower of a Borrowing Base Property to
a Subsidiary of Borrower, Borrower shall cause such Subsidiary to execute and
deliver to the Lenders a Subsidiary Guaranty if such Subsidiary has not
previously executed a similar Guaranty for the benefit of the Lenders.
ARTICLE VIII
NEGATIVE COVENANTS
SECTION 8.1. Performance of Negative Covenants. The Borrower
agrees with the Agent and each Lender that, until all Commitments have
terminated and all Obligations have been paid and performed in full, the
Borrower will perform the obligations set forth in this Article VIII.
SECTION 8.2. Indebtedness. The Borrower hereby agrees that it
shall not, and shall not permit any of its Subsidiaries to:
(a) create, incur, assume or suffer to exist or
otherwise become or be liable in respect of any Senior Debt, other
than, without duplication, the following:
(i) Senior Debt in respect of the Loans
and other Obligations; and
(ii) other Senior Debt not to exceed
$10,000,000 in the aggregate at any time outstanding; or
(b) create, incur, assume or suffer to exist or
otherwise become or be liable in respect of any Non-Recourse
Indebtedness secured by a Lien on Borrowing Base Properties.
SECTION 8.3. Liens. The Borrower will not, and will not permit
any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien
upon any of its property, revenues or assets, whether now owned or hereafter
acquired, except:
(a) [Intentionally Omitted];
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(b) Liens granted prior to the Effective Date to
secure payment of Indebtedness which is identified in Item 6.16
("Ongoing Indebtedness") of the Disclosure Schedule;
(c) [Intentionally Omitted]
(d) Liens for taxes, assessments or other governmental
charges or levies not at the time delinquent or thereafter payable
without penalty or being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance
with GAAP shall have been set aside on its books;
(e) Liens of carriers, warehousemen, mechanics,
materialmen and landlords incurred in the ordinary course of business
for sums not overdue or being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance
with GAAP shall have been set aside on its books;
(f) Liens incurred in the ordinary course of business
in connection with workmen's compensation, unemployment insurance or
other forms of governmental insurance or benefits, or to secure
performance of tenders, statutory obligations, leases and contracts
(other than for borrowed money) entered into in the ordinary course of
business or to secure obligations on surety or appeal bonds;
(g) judgment Liens in existence less than 15 days
after the entry thereof or with respect to which execution has been
stayed or the payment of which is covered in full (subject to a
customary deductible) by insurance;
(h) Liens on cash or Cash Equivalent Investments which
are collateral for letters of credit;
(i) statutory Liens and easements or other servitudes
arising in the ordinary course of business and minor irregularities of
title which do not materially impair the ownership or use of the
property subject thereto for the purposes for which such property is
owned and held by the Borrower or any of its Subsidiaries; and
(j) Liens which do not encumber Borrowing Base
Properties and which secure or relate to Non-Recourse Indebtedness.
SECTION 8.4. Financial Condition. The Borrower will not permit:
(a) the Indebtedness of the Borrower and its
Subsidiaries, less current liabilities (except for current maturities
of long-term Indebtedness), Non-Recourse Indebtedness, deferred taxes
and deferred credits, to exceed $300,000,000 on a consolidated basis;
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(b) [Intentionally Omitted];
(c) its Current Ratio to be equal to or less than
1.0:1.0 at the end of any Fiscal Quarter; or
(d) its Fixed Charge Coverage Ratio to be equal to or
less than 2.00:1.00 at the end of any Fiscal Quarter;
provided that, no breach of clause (c) or (d) shall be deemed to have occurred
unless and until financial statements for such Fiscal Quarter are available to
the Borrower that reflect such breach.
SECTION 8.5. Investments. The Borrower will not, and will not
permit any of its Subsidiaries to, make, incur, assume or suffer to exist any
Investment in any other Person, except:
(a) Investments existing on the Effective Date and
identified in Item 8.5 ("Ongoing Investments") of the Disclosure
Schedule so long as it is not increased, extended or renewed and so
long as there are no changes in the terms and conditions with respect
thereto;
(b) Cash Equivalent Investments;
(c) in the ordinary course of business, Investments by
the Borrower in any of its Subsidiaries, or by any such Subsidiary in
any of its Subsidiaries whether or not existing on the date hereof, by
way of contributions to capital or loans or advances;
(d) if such Investment shall not result in any
violation of F.R.S. Board Regulation U, other equity Investments of a
class required to be registered pursuant to Section 12 of the
Securities Exchange Act of 1934 provided that the Borrower's ownership
interest will not exceed 5% of the issuer's outstanding shares
entitled to vote, unless such ownership interest is acquired solely in
exchange for capital stock of the Borrower or any of its Subsidiaries
and such exchange complies with Sections 8.7 and 8.8;
(e) loans and advances in the ordinary course of
business which are appropriate in connection therewith and stock,
obligations or securities received in settlement of debts so created
and owing to the Borrower or any Subsidiary of the Borrower;
(f) any evidence of Indebtedness, maturing not more
than one year after such time, issued or guaranteed by any agency of
the United States Government, which has a rating of A- or better from
Standard & Poor's Corporation or a rating of A3 or better from Moody's
Investors Service, Inc.;
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(g) any interest bearing account at, or certificate of
deposit maturing not more than one year after such time issued by, a
U. S. savings and loan association which has a rating of A- or better
from Standard & Poor's Corporation or a rating of A3 or better from
Moody's Investors Service, Inc. on its long term unsecured debt and
which has combined capital and surplus and undivided profits of not
less than $500,000,000;
(h) any interest bearing account at, or certificate of
deposit maturing not more than one year after such time, payable in
U.S. Dollars and issued by, (i) a foreign banking institution or
foreign branch of a U. S. banking institution, which banking
institution has a rating of A- or better from Standard & Poor's
Corporation or a rating of A3 or better from Moody's Investors
Service, Inc. on its long-term unsecured debt and combined capital
and surplus and undivided profits of not less than $500,000,000, or
(ii) any foreign subsidiary of a U.S. banking institution, which U.S.
banking institution has a rating of A- or better from Standard &
Poor's Corporation or a rating of A3 or better from Moody's Investors
Service, Inc. and which subsidiary has combined capital and surplus
and undivided profits of not less than $500,000,000 or (iii) by any
Lender;
(i) any evidence of Indebtedness, maturing not more
than one year after such time, issued by any State of the United
States, by any county or municipality organized or incorporated under
the laws of any State of the United States or by any agency or
subdivision of any of the foregoing, in each case rated A- or better
by Standard & Poor's Corporation or rated A3 or better by Moody's
Investors Service, Inc.; and
(j) auction rate preferred stock of a U. S.
corporation or mutual investment company rated A- or better by
Standard & Poor's Corporation or rated A3 or better by Moody's
Investors Service, Inc. provided that such Investment will not result
in any violation of F.R.S. Board Regulation U and further provided
that the Borrower's ownership interest will not exceed (and will not be
convertible into shares which exceed) 5% of the issuer's outstanding
shares entitled to vote; and
(k) mutual funds or similar investment vehicles
investing primarily in Investments of the types set forth in clauses
(a) through (d) of the definition of Cash Equivalent Investments or in
the foregoing clauses (f) through (k), provided that ratings
requirements shall be applicable to the mutual fund rather than the
underlying Investments, as follows: such mutual funds shall, in each
case, have a rating of A- or better from Standard & Poor's Corporation
or a rating of A3 from Moody's Investors' Service, Inc. or a rating
satisfactory to the Agent from another recognized rating agency
satisfactory to the Agent, provided, however, that it is agreed that
(i) any Investment which when made complies with the requirements of
any of the foregoing clauses (f), (g) or (h) may continue to be held
notwithstanding that such Investment if made thereafter would not
comply with such requirements; and (ii) no Investment otherwise
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permitted by clauses (i) or (j) shall be permitted to be made directly
or indirectly through a mutual fund if, immediately before or after
giving effect thereto, any Default shall have occurred and be
continuing.
provided, however, that
(l) any Investment which when made complies with the
requirements of the definition of the term "Cash Equivalent
Investment" may continue to be held notwithstanding that such
Investment if made thereafter would not comply with such requirements;
and
(m) no Investment otherwise permitted by clause (c) or
(d) shall be permitted to be made if, immediately before or after
giving effect thereto, any Default shall have occurred and be
continuing.
SECTION 8.6. Restricted Payments, etc. On and at all times
after the Effective Date:
(a) the Borrower will not declare, pay or make any
dividend or distribution (in cash, property or obligations) on any
shares of any class of capital stock (now or hereafter outstanding) of
the Borrower or on any warrants, options or other rights with respect
to any shares of any class of capital stock (now or hereafter
outstanding) of the Borrower (other than dividends or distributions
payable in its common stock or rights or warrants to purchase its
capital stock or split-ups or reclassifications of its stock into
additional or other shares of its common stock) or apply, or permit
any of its Subsidiaries to apply, any of its funds, property or assets
to the purchase, redemption, sinking fund or other retirement of any
shares of any class of capital stock (now or hereafter outstanding) of
the Borrower, other than (i) payments of dividends as required on
preferred stock outstanding and (ii) dividends on common stock and
purchases and redemptions of capital stock, provided further that the
aggregate of all such dividends, purchases, and redemptions paid
after January 1, 1992 does not exceed the sum of (x) thirty-three
percent of cumulative income, net of cumulative losses, after
January 1, 1992 and (y) one hundred percent of the cumulative
proceeds from the issuance of any capital stock after January 1,
1992; provided further that no dividends on common stock shall be paid
in cash, property, or obligations unless the net worth of the
Borrower, based on the Borrower's latest available balance sheet,
after subtracting therefrom intangible assets including goodwill,
franchises, licenses, patents, trademarks, tradenames, copyrights,
service marks, and brand names, is positive and provided further that
notwithstanding any restriction contained in this Section 8.6, the
Borrower may redeem any of its shares of capital stock in exchange
for, or out of the proceeds of the substantially concurrent sale of,
shares of capital stock, and any dividend otherwise permitted under
the terms of this Section 8.6 on the date of such dividend's
declaration shall be payable notwithstanding that on the date of
payment, such dividend would not be permitted under this section;
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(b) the Borrower will not, and will not permit any of
its Subsidiaries to,
(i) except to the extent of any payment,
prepayment, redemption, purchase or defeasance paid from the
proceeds of the issuance or sale of Subordinated Indebtedness
or capital stock, make any payment or prepayment of principal
of any Subordinated Indebtedness on any day prior to the
stated, scheduled date for such payment or prepayment set
forth in the documents and instruments memorializing such
Subordinated Indebtedness, or redeem, purchase or defease any
Subordinated Indebtedness if such payments, prepayments,
redemptions, purchases or defeasance shall be in an aggregate
amount in excess of $10,000,000 in any one year, or
$20,000,000 in the aggregate after the date hereof and prior
to February 1, 1998; or
(ii) make any payment or prepayment of
principal of any Subordinated Indebtedness which would violate
the subordination provisions of such Subordinated
Indebtedness; or
(iii) make any payment or prepayment of
interest on any Subordinated Indebtedness, other than payments
or prepayments of interest in connection with any payment,
prepayment, redemption, purchase or defeasance permitted under
Section 8.6.(b)(i), on any day prior to the stated scheduled
date for such payment or prepayment set forth in the documents
memorializing such Subordinated Indebtedness, or which would
violate the subordination provisions of such Subordinated
Indebtedness; and
(c) the Borrower will not, and will not permit any
Subsidiary to, make any deposit for any of the foregoing prohibited
purposes and no payment, dividend, distribution, prepayment,
redemption, purchase or defeasance otherwise permitted by clause (a)
or (b) shall be permitted to be made if, immediately before or after
giving effect thereto, any Default shall have occurred and be
continuing provided that, in determining if any Default pursuant
to Section 8.4 shall have occurred or is continuing immediately
before or after such payment, dividend, distribution, prepayment,
redemption, purchase or defeasance, the Borrower may rely on
financial information available to it since the date of the
financial statements most recently delivered by it pursuant to
Sections 7.2(a) and 7.2(b).
SECTION 8.7. Consolidation, Merger, etc. The Borrower will
not, and will not permit any of its Subsidiaries to, liquidate, wind up or
dissolve, consolidate with, or merge into or with, any other corporation, or
purchase or otherwise acquire all or substantially all of the assets of any
Person (or of any division thereof) except as set forth below and so long as
the Borrower (if the Borrower is a party thereto) is the surviving entity:
(a) any such Subsidiary may liquidate or dissolve
voluntarily into, and may merge with and into, the Borrower or any
other Subsidiary; and
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(b) so long as no Default has occurred and is
continuing or would occur after giving effect thereto, the Borrower or
any of its Subsidiaries may purchase all or substantially all of the
assets of any Person (other than the Borrower), or acquire such Person
(other than the Borrower) by merger.
SECTION 8.8. Asset Dispositions. In either of the first half
or second half of any Fiscal Year:
(a) the aggregate value of assets (including cash
accounts, accounts receivable, production payments, and capital stock
of or partnership interests in Subsidiaries, but excluding oil, gas,
and other liquid or gaseous hydrocarbons sold in the ordinary course
of business) sold, transferred, leased, contributed, or otherwise
conveyed by the Borrower and its Subsidiaries other than to the
Borrower or its Subsidiaries, or to which the Borrower and its
Subsidiaries may grant options, warrants, or other rights, shall not
exceed, in the aggregate, $5,000,000. Notwithstanding the foregoing,
the Borrower and its Subsidiaries may grant, sell, or convey
production payments as permitted by this Agreement in connection with
Non-Recourse Indebtedness. For purposes of this Section 8.8(a), the
value of any asset is the greater of its book value or fair market
value at the time of any disposition; and
(b) the Discounted Present Value of Borrowing Base
Properties sold, transferred, leased, contributed or otherwise
conveyed by the Borrower to any Subsidiary shall not exceed, in the
aggregate, ten percent (10%) of the Borrowing Base determined pursuant
to the most recent Reserve Report or Alternate Reserve Report without
first obtaining the consent of the Required Lenders, which consent
shall not be unreasonably withheld and shall not require the payment
of a fee or other compensation by the Borrower.
SECTION 8.9. Modification of Certain Agreements. The Borrower
will not consent to any amendment, supplement or other modification of any of
the terms or provisions contained in, or applicable to any document or
instrument evidencing or governing any existing Subordinated Indebtedness,
other than any amendment, supplement or other modification which (a) does not
accelerate the date of or increase the amount of any repayment or redemption
required pursuant to such agreements, prior to January 2, 2000, (b) does not
contain covenants regarding the matters set forth in Section 8.4 materially
more restrictive than the covenants contained in Section 8.4 of this Agreement,
(c) does not increase the rate of interest payable or fees and other
compensation, except to the extent such fees and other compensation are usual
and customary for transactions of such type, and (d) does not contain or result
in subordination terms materially less favorable to holders of the Notes than
the original terms. After giving effect to any amendment, supplement, or
modification which conforms to clauses (a), (b), (c), and (d) of this Section
8.9, the Indebtedness of the Borrower shall not exceed the limits permitted
pursuant to clause (a) of Section 8.4.
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SECTION 8.10. Transactions with Affiliates. The Borrower will
not, and will not permit any of its Subsidiaries to, enter into, or cause,
suffer or permit to exist any arrangement or contract with any of its other
Affiliates unless such arrangement, as of the date it was entered into, is fair
and equitable to the Borrower or such Subsidiary and is (as of such date) not
of a sort which would not be entered into by a prudent Person in the position
of the Borrower or such Subsidiary with, or which is on terms which are less
favorable than are obtainable from, any Person which is not one of its
Affiliates.
SECTION 8.11. [Intentionally Omitted].
SECTION 8.12. Negative Pledges, etc. The Borrower will not, and
will not permit any of its Subsidiaries to, enter into any agreement (excluding
this Agreement, any other Loan Document, any agreement related to Indebtedness
permitted under Section 8.2(a)(ii) and any agreement governing Indebtedness not
to exceed $1,000,000 at any one time outstanding in the aggregate which is
incurred to vendors to finance acquisitions of assets as to the assets financed
with proceeds of such Indebtedness) prohibiting or having the effect of
prohibiting the creation or assumption of any Lien upon any of its properties,
revenues or assets, whether now owned or hereafter acquired, or restricting the
ability of the Borrower to amend or otherwise modify this Agreement or any
other Loan Document.
ARTICLE IX
EVENTS OF DEFAULT
SECTION 9.1. Listing of Events of Default. Each of the
following events or occurrences described in this Section 9.1 shall constitute
an "Event of Default".
SECTION 9.1.1. Non-Payment of Obligations. The Borrower shall
default in the payment or prepayment, including any mandatory prepayment
pursuant to Section 3.1.2. or 3.1.3, when due of any principal of any Loan, or
the Borrower shall default (and such default shall continue unremedied for a
period of five days) in the payment when due of interest on any Loan, any
Commitment Fee or other fee provided for in this Agreement or of any other
Obligation.
SECTION 9.1.2. Breach of Warranty. Any representation or
warranty of the Borrower or any Subsidiary made or deemed to be made hereunder
or in any other Loan Document or any other writing or certificate furnished by
or on behalf of the Borrower (including any certificate delivered pursuant to
Article VII) to the Agent or any Lender for the purposes of or in connection
with this Agreement or any such other Loan Document (including any certificates
delivered pursuant to Article V) is or shall be incorrect when made in any
material respect.
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SECTION 9.1.3. Non-Performance of Certain Covenants and
Obligations. The Borrower shall default in the due performance and observance
of any of its obligations under Article VIII (excluding Section 8.4) and, with
respect to Section 8.3, 8.5 or 8.6, such default shall continue unremedied for
a period of five (5) Business Days after notice thereof shall have been given
to the Borrower by the Agent or any Lender.
SECTION 9.1.4. Non-Performance of Other Covenants and
Obligations. The Borrower or any Subsidiary shall default in the due
performance and observance of any other covenant or agreement contained herein,
including Section 8.4, or in any other Loan Document, and such default shall
continue unremedied for a period of 30 days after notice thereof shall have
been given to the Borrower by the Agent or any Lender.
SECTION 9.1.5. Default on Other Indebtedness. A default shall
occur in the payment when due (subject to any applicable grace period), whether
by acceleration or otherwise of any Indebtedness (other than Indebtedness
described in Section 9.1.1 or Non-Recourse Indebtedness) in excess of
$10,000,000 of the Borrower or any of its Subsidiaries, or a default shall
occur in the performance or observance of any obligation or condition with
respect to such Indebtedness if the effect of such default is to accelerate the
maturity of any such Indebtedness or to permit the holder or holders thereof,
or any trustee or agent for such holders, to cause such Indebtedness to become
due and payable prior to its expressed maturity.
SECTION 9.1.6. Judgments. Any judgments or orders for the
payment of money which are, in aggregate, in excess of $10,000,000 at any one
time outstanding shall be rendered against the Borrower or any of its
Subsidiaries and the same shall remain undischarged and either
(a) enforcement proceedings shall have been commenced
by any creditor upon such judgment or order; or
(b) there shall be any period of 30 consecutive days
during which a stay of enforcement of such judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect.
SECTION 9.1.7. Pension Plans. Any of the following events shall
occur with respect to any Pension Plan
(a) the institution of any steps by the Borrower, any
member of its Controlled Group or any other Person to terminate a
Pension Plan if, as a result of such termination, the Borrower or any
such member could be required to make a contribution to such Pension
Plan, or could reasonably expect to incur a liability or obligation to
such Pension Plan, in excess of $1,000,000; or
(b) a contribution failure occurs with respect to any
Pension Plan sufficient to give rise to a Lien under Section 302(f) of
ERISA.
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SECTION 9.1.8. Control of the Borrower. Any Change in Control
shall occur.
SECTION 9.1.9. Bankruptcy, Insolvency, etc. The Borrower or any
of its Subsidiaries shall
(a) generally fail to pay, or admit in writing its
inability or unwillingness to pay, its debts as they become due;
(b) apply for, consent to, or acquiesce in, the
appointment of a trustee, receiver, sequestrator or other custodian
for the Borrower or any of its Subsidiaries or any property of any
thereof, or make a general assignment for the benefit of creditors;
(c) in the absence of such application, consent or
acquiescence, permit or suffer to exist the appointment of a trustee,
receiver, sequestrator or other custodian for the Borrower or any of
its Subsidiaries or for a substantial part of the property of any
thereof, and such trustee, receiver, sequestrator or other custodian
shall not be discharged within 60 days;
(d) permit or suffer to exist the commencement of any
bankruptcy, reorganization, debt arrangement or other case or
proceeding under any bankruptcy or insolvency law, or any dissolution,
winding up or liquidation proceeding (except the voluntary
dissolution, not under any bankruptcy or insolvency law, of a
Subsidiary pursuant to Section 8.7), in respect of the Borrower or any
of its Subsidiaries, and, if any such case or proceeding is not
commenced by the Borrower or such Subsidiary, such case or proceeding
shall be consented to or acquiesced in by the Borrower or such
Subsidiary or shall result in the entry of an order for relief or
shall remain for 60 days undismissed; or
(e) take any corporate, or in the case of a Subsidiary
organized as a partner, partnership action authorizing, or in
furtherance of, any of the foregoing.
SECTION 9.2. Action if Bankruptcy. If any Event of Default
described in clauses (a) through (d) of Section 9.1.9 shall occur, the
outstanding principal amount of all outstanding Loans and all other Obligations
shall automatically be and become immediately due and payable, without notice
or demand.
SECTION 9.3. Action if Other Event of Default. If any Event of
Default (other than any Event of Default described in clauses (a) through (d)
of Section 9.1.9) shall occur for any reason, whether voluntary or involuntary,
and be continuing, the Agent, upon the direction of the Required Lenders, shall
by notice to the Borrower declare the outstanding principal amount of the Loans
and other Obligations to be due and payable, whereupon the full unpaid amount
of such Loans and other Obligations which shall be so declared due and payable
shall be and become immediately due and payable, without further notice, demand
or presentment.
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ARTICLE X
THE AGENT AND THE CO-AGENT
SECTION 10.1. Actions. Each Lender hereby appoints the Agent as
its agent under and for purposes of this Agreement, the Notes and each other
Loan Document. Each Lender authorizes the Agent to act on behalf of such
Lender under this Agreement, the Notes and each other Loan Document and, in the
absence of other written instructions from the Required Lenders received from
time to time by the Agent (with respect to which the Agent agrees that it will
comply, except as otherwise provided in this Section or as otherwise advised by
counsel), to exercise such powers hereunder and thereunder as are specifically
delegated to or required of the Agent by the terms hereof and thereof, together
with such powers as may be reasonably incidental thereto. Each Lender hereby
indemnifies (which indemnity shall survive any termination of this Agreement)
each of the Agent and the Co-Agent, pro rata according to such Lender's
Percentage, from and against any and all liabilities, obligations, losses,
damages, claims, costs or expenses of any kind or nature whatsoever which may
at any time be imposed on, incurred by, or asserted against, the Agent and the
Co-Agent in any way relating to or arising out of this Agreement, the Notes and
any other Loan Document, including reasonable attorneys' fees, and as to which
the Agent or Co-Agent is not reimbursed by the Borrower; provided, however,
that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, claims, costs or expenses which are
determined by a court of competent jurisdiction in a final proceeding to have
resulted solely from the Agent's or the Co-Agent's gross negligence or wilful
misconduct. Neither the Agent nor the Co-Agent shall be required to take any
action hereunder, under the Notes or under any other Loan Document, or to
prosecute or defend any suit in respect of this Agreement, the Notes or any
other Loan Document, unless it is indemnified hereunder to its satisfaction.
If any indemnity in favor of the Agent or the Co-Agent shall be or become, in
the Agent's or the Co-Agent's determination, inadequate, the Agent or the
Co-Agent may call for additional indemnification from the Lenders and cease to
do the acts indemnified against hereunder until such additional indemnity is
given.
SECTION 10.2. Funding Reliance, etc. Unless the Agent shall
have been notified by telephone, confirmed in writing, by any Lender by 5:00
p.m., United States Central time on the day prior to a Borrowing in the case of
Fixed Rate Loans, or by 11:00 a.m. U.S. Central time on the day of any
Borrowing in the case of Prime Rate Loans, that such Lender will not make
available the amount which would constitute its Percentage of such Borrowing on
the date specified therefor, the Agent may assume that such Lender has made
such amount available to the Agent and, in reliance upon such assumption, make
available to the Borrower a corresponding amount. If and to the extent that
such Lender shall not have made such amount available to the Agent, such Lender
and the Borrower severally agree to repay the Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
the Agent made such amount available to the Borrower to the date such amount is
repaid to the Agent, at the Federal Funds Rate at that time.
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SECTION 10.3. Exculpation. Neither the Agent, the Co-Agent nor
any of their directors, officers, employees or agents shall be liable to any
Lender for any action taken or omitted to be taken by it under this Agreement
or any other Loan Document, or in connection herewith or therewith, except for
their own wilful misconduct or gross negligence, nor responsible for any
recitals or warranties herein or therein, nor for the effectiveness,
enforceability, validity or due execution of this Agreement or any other Loan
Document, nor to make any inquiry respecting the performance by the Borrower of
its obligations hereunder or under any other Loan Document. The Agent and the
Co-Agent shall each be entitled to rely upon advice of counsel concerning legal
matters and upon any notice, consent, certificate, statement or writing which
the Agent or the Co-Agent believes to be genuine and to have been presented by
a proper Person.
SECTION 10.4. Successor. The Agent may resign as such at any
time upon at least 30 days' prior notice to the Borrower and all Lenders. If
the Agent at any time shall resign, the Required Lenders, with the consent of
the Borrower, may appoint another Lender or a commercial banking institution
organized under the laws of the U.S. (or any state thereof) or a U.S. branch or
agency of a commercial banking institution, and having a combined capital and
surplus of at least $500,000,000 as a successor Agent which shall thereupon
become the Agent hereunder. If no successor Agent shall have been so appointed
by the Required Lenders, and shall have accepted such appointment, within 30
days after the retiring Agent's giving notice of resignation, then the retiring
Agent may, on behalf of the Lenders, appoint a successor Agent, which shall be
one of the Lenders or a commercial banking institution organized under the laws
of the U.S. (or any State thereof) or a U.S. branch or agency of a commercial
banking institution, and having a combined capital and surplus of at least
$500,000,000. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall be entitled to receive from the
retiring Agent such documents of transfer and assignment as such successor
Agent may reasonably request, and shall thereupon succeed to and become vested
with all rights, powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations under this
Agreement. After any retiring Agent's resignation hereunder as the Agent, the
provisions of
(a) this Article X shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was the Agent
under this Agreement; and
(b) Section 11.3 shall continue to inure to its
benefit.
SECTION 10.5. Loans by the Agent and Banque Paribas. Each of
the Agent and Banque Paribas shall have the same rights and powers with respect
to (x) the Loans made by it or any of its Affiliates, and (y) the Notes held by
it or any of its Affiliates as any other Lender and may exercise the same as if
it were not the Agent or Co-Agent, as the case may be.
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SECTION 10.6. Credit Decisions. Each Lender acknowledges that
it has, independently of the Agent and each other Lender, and based on such
Lender's review of the financial information of the Borrower and such other
documents, information and investigations as such Lender has deemed
appropriate, made its own credit decision to extend its Commitments. Each
Lender also acknowledges that it will, independently of the Agent and each
other Lender, and based on such other documents, information and investigations
as it shall deem appropriate at any time, continue to make its own credit
decisions as to exercising or not exercising from time to time any rights and
privileges available to it under this Agreement or any other Loan Document.
SECTION 10.7. Copies, etc. The Agent shall give prompt notice
to each Lender of each notice or request required or permitted to be given to
the Agent by the Borrower pursuant to the terms of this Agreement (unless
concurrently delivered to the Lenders by the Borrower). The Agent will
distribute to each Lender each document or instrument received for its account
and copies of all other communications received by the Agent from the Borrower
for distribution to the Lenders by the Agent.
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.1. Waivers, Amendments, etc. The provisions of this
Agreement and of each other Loan Document may from time to time be amended,
modified or waived, if such amendment, modification or waiver is in writing and
consented to by the Borrower and the Required Lenders; provided, however, that
no such amendment, modification or waiver which would:
(a) modify any requirement hereunder that any
particular action be taken by all the Lenders or by the Required
Lenders shall be effective unless consented to by each Lender;
(b) modify this Section 11.1, change the definition of
"Required Lenders", increase any Commitment Amount or the Percentage
of any Lender, change the definition of Prime Rate", "CD Rate" or
"LIBO Rate" to reduce interest payable or the Applicable Margin by the
Borrower, reduce any fees described in Article III, or extend any
Commitment Termination Date shall be made without the consent of each
Lender and each holder of a Note;
(c) extend the Stated Maturity Date for, or reduce the
amount of, any scheduled repayment or any mandatory prepayment
(whether pursuant to Section 3.1.2 or 3.1.3 or otherwise) or of any
interest payment due to any Lender on any Loan (or reduce the
principal amount of or rate of interest on any Loan) shall be made
without the consent of the holder of that Note evidencing such Loan;
or
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(d) affect adversely the interests, rights or
obligations of the Agent qua the Agent, or the Co-Agent qua Co-Agent,
shall be made without consent of the Agent or Co-Agent, as the case
may be.
No failure or delay on the part of the Agent, any Lender or the holder of any
Note in exercising any power or right under this Agreement or any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power or right preclude any other or further exercise
thereof or the exercise of any other power or right. No notice to or demand on
the Borrower in any case shall entitle it to any notice or demand in similar or
other circumstances. No waiver or approval by the Agent, any Lender or the
holder of any Note under this Agreement or any other Loan Document shall,
except as may be otherwise stated in such waiver or approval, be applicable to
subsequent transactions. No waiver or approval hereunder shall require any
similar or dissimilar waiver or approval thereafter to be granted hereunder.
SECTION 11.2. Notices. All notices and other communications
provided to any party hereto under this Agreement or any other Loan Document
shall be in writing or by Telex or by facsimile and addressed, delivered or
transmitted to such party at its address, Telex or facsimile number set forth
below its signature hereto or set forth in the Lender Assignment Agreement or
at such other address, Telex or facsimile number as may be designated by such
party in a notice to the other parties. Any notice, if mailed and properly
addressed with postage prepaid, shall be deemed given when received; any
notice, if transmitted by Telex or facsimile, shall be deemed given when
transmitted (answerback confirmed in the case of Telexes).
SECTION 11.3. Payment of Costs and Expenses. The Borrower
agrees to promptly pay all reasonable expenses of each of the Agent and
Co-Agent (including the reasonable fees and out-of-pocket expenses of counsel
to the Agent or Co-Agent and of local counsel, if any, who may, following
reasonable notice to the Borrower, be retained by counsel to the Agent or
Co-Agent) in connection with
(a) the negotiation, preparation, execution and
delivery of this Agreement and of each other Loan Document, including
schedules and exhibits, and any amendments, waivers, consents,
supplements or other modifications to this Agreement or any other Loan
Document as may from time to time hereafter be required, whether or
not the transactions contemplated hereby are consummated, and
(b) the preparation and review of the form of any
document or instrument relevant to this Agreement or any other Loan
Document.
The Borrower further agrees to pay, and to save the Agent and the Lenders
harmless from all liability for, any stamp or other taxes which may be payable
in connection with the execution or delivery of this Agreement, the borrowings
hereunder, or the issuance of the Notes or any other Loan Documents. The
Borrower also agrees to reimburse the Agent and each Lender
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upon demand for all reasonable out-of-pocket expenses (including attorneys'
fees, which attorneys' fees may include those of an attorney who is an employee
of a Lender, and legal expenses) incurred by the Agent or such Lender in
connection with the enforcement of any Obligations.
SECTION 11.4. Indemnification. In consideration of the
execution and delivery of this Agreement by each Lender and the extension of
the Commitments, the Borrower hereby indemnifies, exonerates and holds the
Co-Agent and each Agent, Lender and each of their respective officers,
directors, employees and agents (collectively, the "Indemnified Parties") free
and harmless from and against any and all actions, causes of action, suits,
losses, costs, liabilities and damages, and expenses incurred in connection
therewith (irrespective of whether any such Indemnified Party is a party to the
action for which indemnification hereunder is sought), including reasonable
attorneys' fees and disbursements (collectively, the "Indemnified
Liabilities"), incurred by the Indemnified Parties or any of them as a result
of, or arising out of, or relating to
(a) any transaction financed or to be financed in
whole or in part, directly or indirectly, with the proceeds of any
Loan;
(b) the entering into and performance of this
Agreement and any other Loan Document by any of the Indemnified
Parties (including any action brought by or on behalf of the Borrower
as the result of any determination by the Required Lenders pursuant
to Article V not to fund any Borrowing);
(c) any investigation, litigation or proceeding
related to any acquisition or proposed acquisition by the Borrower or
any of its Subsidiaries of any portion of the stock or assets of any
Person, whether or not the Agent or such Lender is party thereto;
(d) any investigation, litigation or proceeding
related to any environmental cleanup, audit, compliance or other
matter relating to the protection of the environment or the Release by
the Borrower or any of its Subsidiaries of any Hazardous Material; or
(e) the presence on or under, or the escape, seepage,
leakage, spillage, discharge, emission, discharging or releases from,
any real property owned or operated by the Borrower or any Subsidiary
thereof of any Hazardous Material (including any losses, liabilities,
damages, injuries, costs, expenses or claims asserted or arising under
any Environmental Law), regardless of whether caused by, or within the
control of, the Borrower or such Subsidiary,
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the activities of the Indemnified
Party on the property of the Borrower conducted subsequent to a foreclosure on
such property by the Lenders or by reason of the relevant Indemnified Party's
gross negligence or wilful misconduct or breach of this
71
78
Agreement, and if and to the extent that the foregoing undertaking may be
unenforceable for any reason, the Borrower hereby agrees to make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law. The Borrower shall be
obligated to indemnify the Indemnified Parties for all Indemnified Liabilities
subject to and pursuant to the foregoing provisions, regardless of whether the
Borrower or any of its Subsidiaries had knowledge of the facts and
circumstances giving rise to such Indemnified Liability.
Promptly after the receipt by an Indemnified Party of notice of the
commencement of any action to which the Borrower is not a party, such
Indemnified Party will, if a claim for indemnity in respect thereof is to be
made against the Borrower, notify the Borrower of the commencement thereof. If
the Borrower will have acknowledged in writing that this Section 11.4 will
cover any Indemnified Liabilities in any such action, suit, proceeding or
investigation, and, in the sole determination of the Indemnified Party, the
Borrower has the financial ability to pay such Indemnified Liabilities, then
the Borrower will have the right, on behalf of such Indemnified Party, but at
the Borrower's expense, to defend such action, suit or proceeding, or
participate in such investigation, with counsel selected by it, and will have
sole discretion as to whether to litigate, appeal or settle.
SECTION 11.5. Survival. The obligations of the Borrower under
Sections 4.3, 4.4, 4.5, 4.7, 11.3 and 11.4, and the obligations of the Lenders
under Section 10.1 and of the Agent and the Lenders under Section 11.12, shall
in each case survive any termination of this Agreement. The representations
and warranties made by the Borrower in this Agreement and in each other Loan
Document shall survive the execution and delivery of this Agreement and each
such other Loan Document.
SECTION 11.6. Severability. Any provision of this Agreement or
any other Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such provision and such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Agreement or such Loan Document or affecting the
validity or enforceability of such provision in any other jurisdiction.
SECTION 11.7. Headings. The various headings of this Agreement
and of each other Loan Document are inserted for convenience only and shall not
affect the meaning or interpretation of this Agreement or such other Loan
Document or any provisions hereof or thereof.
SECTION 11.8. Execution in Counterparts, Effectiveness, etc.
This Agreement may be executed by the parties hereto in several counterparts,
each of which shall be deemed to be an original and all of which shall
constitute together but one and the same agreement. This Agreement shall
become effective when counterparts hereof executed on behalf of the Borrower
and each Lender (or notice thereof satisfactory to the Agent) shall have been
received by the Agent and notice thereof shall have been given by the Agent to
the Borrower and each Lender.
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79
SECTION 11.9. Governing Law; Entire Agreement. THIS AGREEMENT,
THE NOTES AND EACH OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A CONTRACT
MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS. This
Agreement, the Notes and the other Loan Documents constitute the entire
understanding among the parties hereto with respect to the subject matter
hereof and supersede any prior agreements, written or oral, with respect
thereto.
THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
SECTION 11.10. Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that:
(a) the Borrower may not assign or transfer its rights
or obligations hereunder without the prior written consent of the
Agent and all Lenders; and
(b) the rights of sale, assignment and transfer of the
Lenders are subject to Section 11.11.
SECTION 11.11. Sale and Transfer of Loans and Notes;
Participations in Loans and Notes. Each Lender may assign, or sell
participations in, its Loans and Commitments to one or more other Persons in
accordance with this Section 11.11.
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80
SECTION 11.11.1. Assignments. Any Lender,
(a) with the written consents of the Borrower and the
Agent (which consents shall not be unreasonably delayed or withheld
and which consent, in the case of the Borrower, shall be deemed to
have been given in the absence of a written notice delivered by the
Borrower to the Agent, on or before the tenth Business Day after
receipt by the Borrower of such Lender's request for consent, stating,
in reasonable detail, the reasons why the Borrower proposes to
withhold such consent) may at any time assign and delegate to one or
more commercial banks or other financial institutions, each of which
banks or institutions has capital and surplus and undivided profits of
not less than $500,000,000, and
(b) with notice to the Borrower and the Agent, but
without the consent of the Borrower or the Agent, may assign and
delegate to any of its Affiliates or to any other Lender
(each Person described in either of the foregoing clauses as being the Person
to whom such assignment and delegation is to be made, being hereinafter
referred to as an "Assignee Lender"), all or any fraction of such Lender's
total Loans and Commitment (which assignment and delegation shall be of a
constant, and not a varying, percentage of all the assigning Lender's Loans and
Commitment) in a minimum aggregate amount for any Commitment equal to the
lesser of $5,000,000 or the Lender's entire Commitment; provided, however, that
any such Assignee Lender will comply with Section 11.12 and, if applicable,
with the provisions contained in the penultimate sentence of Section 4.7 and
further, provided, however, that, the Borrower and the Agent shall be entitled
to continue to deal solely and directly with such Lender in connection with the
interests so assigned and delegated to an Assignee Lender until
(c) written notice of such assignment and delegation,
together with payment instructions, addresses and related information
with respect to such Assignee Lender, shall have been given to the
Borrower and the Agent by such Lender and such Assignee Lender,
(d) such Assignee Lender shall have executed and
delivered to the Borrower and the Agent a Lender Assignment Agreement,
accepted by the Agent, and
(e) the processing fees described below shall have
been paid.
From and after the date that the Agent accepts such Lender Assignment Agreement
in accordance with the foregoing, (x) the Assignee Lender thereunder shall be
deemed automatically to have become a party hereto and to the extent that
rights and obligations hereunder have been assigned and delegated to such
Assignee Lender in connection with such Lender Assignment Agreement, shall
have the rights and obligations of a Lender hereunder and under the other Loan
Documents, and (y) the assignor Lender, to the extent that rights and
obligations hereunder have been assigned and delegated by it in connection with
such Lender
74
81
Assignment Agreement, shall be released from its obligations hereunder and
under the other Loan Documents. Within five Business Days after its receipt of
notice that the Agent has received an executed Lender Assignment Agreement, the
Borrower shall execute and deliver to the Agent (for delivery to the relevant
Assignee Lender) new Notes evidencing such Assignee Lender's assigned Loans and
Commitment and, if the assignor Lender has retained any Loans and Commitment
hereunder, replacement Notes in the principal amount of the Loans and
Commitment obligations retained by the assignor Lender hereunder (such Notes to
be in exchange for, but not in payment of, those Notes then held by such
assignor Lender). Each such Note shall be dated the date of the predecessor
Notes. The assignor Lender shall mark the predecessor Notes "exchanged" and
deliver them to the Borrower. Accrued interest on that part of the predecessor
Notes evidenced by the new Notes, and accrued fees, shall be paid as provided
in the Lender Assignment Agreement. Accrued interest on that part of the
predecessor Notes evidenced by the replacement Notes shall be paid to the
assignor Lender. Accrued interest and accrued fees shall be paid at the same
time or times provided in the predecessor Notes and in this Agreement. Such
assignor Lender or such Assignee Lender must also pay a processing fee to the
Agent upon delivery of any Lender Assignment Agreement in the amount of $2,000.
Any attempted assignment and delegation not made in accordance with this
Section 11.11.1 shall be null and void.
SECTION 11.11.2. Participations. Any Lender may at any time sell
to one or more commercial banks or other Persons (each of such commercial banks
and other Persons being herein called a "Participant") participating interests
in any of the Loans, Commitments, or other interests of such Lender hereunder;
provided, however, that
(a) no participation contemplated in this Section
11.11 shall relieve such Lender from its Commitments or its other
obligations hereunder or under any other Loan Document,
(b) such Lender shall remain solely responsible for
the performance of its Commitment and such other obligations,
(c) the Borrower and the Agent shall continue to deal
solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement and each of the other Loan
Documents,
(d) no Participant, unless such Participant is an
Affiliate of such Lender, or is itself a Lender, shall be entitled to
require such Lender to take or refrain from taking any action
hereunder or under any other Loan Document, except that such Lender
may agree with any Participant that such Lender will not, without such
Participant's consent, take any actions of the type described in
clause (b) or (c) of Section 11.1, and
75
82
(e) no Participant shall be entitled to payment of any
amount under Section 4.6 that would not have been required to be paid
to such Lender had no participation occurred.
The Borrower acknowledges and agrees that each Participant, for
purposes of Sections 4.3, 4.4, 4.5, 4.9, 4.10, 11.3 and 11.4, shall be
considered a Lender.
SECTION 11.12. Confidentiality. The Lenders shall hold all
non-public information obtained pursuant to the requirements of this Agreement
in accordance with the Confidentiality Letters, and
(a) may not disclose or discuss such information with
any other persons except that any Lender may disclose such information
(i) to any bank regulatory authority at the request of such authority
or in connection with an examination of such Lender by any such
authority, (ii) pursuant to subpoena, other court process or as
otherwise required by law, (iii) at the express direction of any other
agency of any State of the United States, (iv) to such Lender's
independent auditors, counsel or independent petroleum engineers
retained by such Lender or (v) to any Assignee Lender or proposed
Assignee Lender of all or any portion of any Lender's interests,
rights and obligations under the Agreement and any participant or
proposed participant in all or a portion of a Lender's obligations
under the Agreement, in each case, only if such Assignee Lender or
proposed Assignee Lender or participant or proposed participant shall
execute and deliver to the Borrower prior to any disclosure of
information or conclusions based on such information, a
Confidentiality Letter.
(b) The obligation of confidentiality shall not apply
to such portions of the information which the Lender establishes (i)
are in the public domain, (ii) hereafter become part of the public
domain without breach of this Section 11.12 or any Confidentiality
Letter, (iii) are previously known from some source other than the
Borrower, (iv) are developed without using the Borrower's information
or (v) are hereafter obtained from a third party who owes no
obligation of confidence to the Borrower with respect to such
information.
(c) Unless prohibited by applicable law or court
order, each Lender and the Agent will promptly notify the Borrower (in
advance, if practicable) if it is required to disclose any such
information or conclusions pursuant to clause (a)(ii) above.
(d) Each Lender and the Agent agree that it will not
use any information obtained, inspected or reviewed by it in
connection with the Agreement for the purpose of bidding, or in any
manner advising or assisting in the bidding (including advising or
assisting in advising in the nomination of tracts to be leased), on
future lease sales of tracts in offset tracts or in drainage tracts to
the Borrower's interests or for the purpose of purchasing, selling,
offering to purchase or offering to sell, directly or indirectly, any
76
83
equity securities of the Borrower (or assisting or advising others in
connection therewith).
(e) All obligations of any Lender pursuant to this
Section 11.12 shall terminate on the second anniversary of the date on
which all Obligations of the Borrower to such Lender under the
Agreement and the Notes have been fulfilled.
(f) Each Lender and the Agent agree that it shall be
responsible for the compliance with this Agreement by all its officers
and employees to the same extent as if they were parties hereto.
SECTION 11.13. Other Transactions. Nothing contained herein
shall preclude the Agent or any other Lender from engaging in any transaction,
in addition to those contemplated by this Agreement or any other Loan Document,
with the Borrower or any of its Affiliates in which the Borrower or such
Affiliate is not restricted hereby from engaging with any other Person.
77
84
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized as of the
day and year first above written.
POGO PRODUCING COMPANY
By /s/ D. STEPHEN SLACK
-----------------------------------
Name: D. Stephen Slack
Title: Senior Vice President and
Chief Financial Officer
Address: 5 Greenway Plaza,
Suite 2700
Houston, Texas 77046-0504
Facsimile No.: (713) 297-4950
Attention: Mr. D. Stephen Slack
Senior Vice President
and Chief Financial
Officer
BANK OF MONTREAL,
acting through its U.S. branches
and agencies, including initially
its Chicago, Illinois branch,
as Agent
By /s/ M. D. SMITH
----------------------------------
Name: M. D. Smith
Title: Director
Address: 115 South LaSalle Street
Chicago, Illinois 60603
with copy to:
Bank of Montreal
Houston Agency
700 Louisiana Street
4400 NationsBank Center
Houston, Texas 77002
Facsimile No.: (713) 223-4007
Attention: Mr. M. D. Smith
85
Director
BANQUE PARIBAS
acting through its Houston Agency,
as Co-Agent
By /s/ BARTON D. SCHOUEST
----------------------------------
Name: Barton D. Schouest
Title: Group Vice President
By /s/ MARK M. GREEN
----------------------------------
Name: Mark M. Green
Title: Vice President
Domestic
Office: 1200 Smith, Suite 3100
Houston, Texas 77002
Facsimile No.: (713) 659-3832
Attention: Mr. Mark M. Green
PERCENTAGE LENDERS
31.000% BANK OF MONTREAL
By /s/ M. D. SMITH
---------------------------------
Name: M. D. Smith
Title: Director
Domestic
Office: 115 South LaSalle Street
Chicago, Illinois 60603
LIBOR
Office: 115 South LaSalle Street
Chicago, Illinois 60603
86
with copy to:
Bank of Montreal
Houston Agency
4400 NationsBank Center
700 Louisiana Street
Houston, Texas 77002
Facsimile No.: (713) 223-4007
Attention: Mr. M. D. Smith
Director
25.000% BANQUE PARIBAS
By /s/ BARTON D. SCHOUEST
---------------------------------
Name: Barton D. Schouest
Title: Group Vice President
By /s/ MARK M. SMITH
----------------------------------
Name: Mark M. Green
Title: Vice President
Domestic
Office: 1200 Smith, Suite 3100
Houston, Texas 77002
Attention: Mr. Mark M. Green
Facsimile No.: (713) 659-3832
LIBOR
Office: SAME AS ABOVE
----------------------------
Facsimile No.: SAME AS ABOVE
Attention: LEAH EVANS-HUGHES
87
22.000% THE FIRST NATIONAL BANK OF BOSTON
By /s/ J. B. VAUGHN, JR.
-------------------------------
Name: J. B. VAUGHN, JR.
Title: VICE PRESIDENT AND DIRECTOR
ENERGY & UTILITIES DIVISION
Domestic
Office: 100 Federal Street
Boston, Massachusetts 02110
Facsimile No.: 617/434-3652
Attention: Mr. Terrence Ronan
Assistant Vice-President
LIBOR
Office: _____________________________
_____________________________
Facsimile No.:______________________
Attention:__________________________
22.000% NBD BANK
By /s/ GEORGE R. SCHANZ
--------------------------------
Name: GEORGE R. SCHANZ
Title: Vice President
Domestic
Office: 611 Woodward
Detroit, Michigan 48226
Facsimile No.: 313-225-2649
Attention: George R. Schanz
LIBOR
Office: 611 Woodward
Detroit, Michigan 48213
Facsimile No.: 313-225-2649
Attention: George R. Schanz
88
DISCLOSURE SCHEDULE
ITEM 6.7 Litigation.
Description of Proceeding Action or Claim Sought
------------------------- ----------------------
None
ITEM 6.8(a) Existing Subsidiaries.
Jurisdiction of
Name Organization
---- ------------
Pogo British Isles, Inc. Delaware
Pogo Gulf Coast Limited Texas (L.P.)
Pogo Hungary Oil & Gas Company Kft Hungary (Kft)
Pogo Netherlands, Inc. Delaware
Pogo Offshore Pipeline Co. Delaware
Pogo Petroles Compagnie, Inc. Delaware
Pogo Thailand, Inc. Delaware
Pogo Turkey Inc. Delaware
Sampack Inc. Delaware
Thaipo Limited Thailand
ITEM 6.11. Employee Benefit Plans.
The Company provides medical insurance converage and $3,000
life insurance coverage under its group welfare plans to retirees.
ITEM 6.12 Environmental Matters.
None, except as disclosed in Part I, Item 3 of the Company's
annual report on Form 10-K for the year ended December 31, 1994.
89
ITEM 6.16 Ongoing Indebtedness (as of March 31, 1995)
(a) Obligations for borrowed money: Outstanding Principal
---------------------
Senior debt:
Bank revolving credit agreement $ 21,000,000
Uncommitted credit lines with
banks 9,000,000
Total senior debt 30,000,000
Subordinated debt
5 1/2% Convertible subordinated
notes, due 2004 86,250,000
8% Convertible subordinated
debentures, due 2005 42,910,000
------------
Total subordinated debt 129,160,000
------------
Obligations for borrowed money $159,160,000
============
(b) Letters of credit:
Bank of Boston $ 1,269,000
(c) Capitalized Lease Liabilities: N/A
(d) All other liabilities:
Accounts payable, various creditors $ 7,309,000
Other payables, various creditors 8,642,000
Accrued interest payable 1,178,000
Accrued payroll and related benefits 1,303,000
Other current liabilities 25,000
Deferred federal income taxes 38,299,000
Deferred credits 9,119,000
Pogo Producing Company advances from:
Pogo Offshore Pipeline Company 17,256,000
Pogo British Isles, Inc. 9,014,000
------------
All other liabilities 92,145,000
------------
(e) All Hedging Obligations 3,000
90
(f) Advance payment agreements: N/A
(g) All guarantees in respect to
the foregoing: N/A
Ongoing Indebtedness $252,577,000
------------
ITEM 8.5 Ongoing Investments (as of March 31, 1995)
------------------------------------------
Description of Investment Outstanding Amount
------------------------- ------------------
(a) Any loan or advance:
Pogo Producing Company advances to:
Pogo Netherlands, Inc. $ 785,000
Pogo Turkey Inc. 12,008,000
Pogo Petroles Compagnie, Inc. 110,000
Pogo Thailand, Inc. 1,334,000
Sampack Inc. 4,000
Thaipo Limited 24,081,000
Pogo Hungary Oil and Gas Company Kft 73,000
-----------
38,395,000
-----------
Pogo Producing Company advances from:
Pogo Offshore Pipeline Company 17,256,000
Pogo British Isles, Inc. 9,014,000
-----------
26,270,000
-----------
64,665,000
-----------
(b) Any Guarantee: N/A
(c) Any ownership or similar interest held
Pogo Producing Company's investment in the stock of:
Pogo British Isles, Inc. 1,000
Pogo Gulf Coast Limited 4,017,000
Pogo Hungary Oil & Gas Company Kft 10,000
Pogo Netherlands, Inc. 1,000
Pogo Offshore Pipeline Co. 1,000
Pogo Petroles Compagnie, Inc. 1,000
Pogo Thailand, Inc. 1,000
Pogo Turkey Inc. 1,000
Sampack Inc. 1,000
Thaipo Limited 3,902,000
-----------
7,936,000
-----------
Ongoing Investments $72,601,000
===========
91
Exhibit A
NOTE
Chicago, Illinois
$_______________ June 1, 1995
On or before the Stated Maturity Date therefor (as defined in the
Credit Agreement herein after referred to), the undersigned, FOR VALUE
RECEIVED, promises to pay to the order of _________________ (the "Lender") at
the office of Bank of Montreal (the "Agent") in Chicago, Illinois,
_______________ DOLLARS ($___________) or, if less, the aggregate unpaid
principal amount of all Loans (as defined in the Credit Agreement hereinafter
referred to) made by the Lender to the undersigned pursuant to the Credit
Agreement, as shown in the schedule attached hereto (and any continuation
thereof).
The undersigned also promises to pay interest on the unpaid principal
amount hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Credit Agreement; provided,
however, that in no event shall such interest exceed the Highest Lawful Rate
(as hereinafter defined).
Payments of both principal and interest are to be made in lawful money
of the United States of America in same day or immediately available funds.
This Note is a Note described in, and is subject to the terms and
provisions of, the Amended and Restated Credit Agreement, dated as of June 1,
1995 (as the same may at any time be amended or modified and in effect, the
"Credit Agreement"), among the undersigned, certain financial institutions
(including the Lender), the Agent and Banque Paribas, acting through its
Houston Agency, as co-agent (the "Co-Agent"). Reference is hereby made to the
Credit Agreement for a statement of the prepayment rights and obligations of
the undersigned and for a statement of the terms and conditions under which the
due date of this Note may be accelerated. Upon the occurrence of any Event of
Default as specified in the Credit Agreement, the principal balance hereof and
the interest accrued hereon may be declared to be forthwith due and payable,
and any indebtedness of the holder hereof to the undersigned may be
appropriated and applied hereon.
"Highest Lawful Rate" shall mean the maximum nonusurious interest
rate, if any, that at any time or from time to time may be contracted for,
taken, reserved, charged or received on this Note under laws applicable to the
payee which are presently in effect or, to the extent allowed by applicable
law, under such laws which may hereafter be in effect and which allow a higher
maximum nonusurious interest rate than applicable laws now allow and
determination of the rate of interest for the purpose of determining whether
the loan is usurious under applicable laws shall be made by amortizing,
prorating, allocating, and spreading, in equal parts during the period of the
full stated term of the loan represented hereby, all interest at any time
92
contracted for, charged, or received from the undersigned in connection with
such loan; however, in the event such loan is paid in full by the undersigned
prior to the full stated term of the loan and the interest received for the
actual period of the existence of such loan exceeds the Highest Lawful Rate, the
payee shall refund to the undersigned the amount of the excess or shall credit
the amount of the excess against amounts owing under such loan and shall not be
subject to any of the penalties provided by law for contracting for, charging,
or receiving interest in excess of the Highest Lawful Rate.
It is the intention of the payee to conform strictly to usury laws
applicable to it. Accordingly, if the transactions contemplated hereby would
be usurious as to the payee under laws applicable to it (INCLUDING THE LAWS OF
THE UNITED STATES OF AMERICA AND THE STATE OF ILLINOIS OR ANY OTHER
JURISDICTION WHOSE LAWS MAY BE MANDATORILY APPLICABLE TO SUCH PAYEE
NOTWITHSTANDING THE OTHER PROVISIONS OF THIS NOTE OR THE CREDIT AGREEMENT),
then, in that event, notwithstanding anything to the contrary in this Note, the
Credit Agreement or any other instrument or agreement entered into in
connection with this Note, it is agreed as follows: (i) the aggregate of all
consideration which constitutes interest under law applicable to the payee that
is contracted for, taken, reserved, charged or received by the payee under this
Note, the Credit Agreement, or under any of the aforesaid agreements or
instruments entered into in connection with this Note or otherwise shall under
no circumstances exceed the maximum amount allowed by such applicable law, and
any excess shall be credited by such payee on the principal amount of this Note
(or, if the principal amount of this Note shall have been paid in full,
refunded by such payee to the undersigned); and (ii) in the event that the
maturity of this Note is accelerated by reason of an election of the holder or
holders thereof resulting from any Event of Default under the Credit Agreement
or otherwise, or in the event of any required or permitted prepayment, then
such consideration that constitutes interest under law applicable to the payee
may never include more than the maximum amount allowed by such applicable law,
and excess interest, if any, provided for in the Credit Agreement or otherwise
shall be automatically cancelled by such payee as of the date of such
acceleration or prepayment and, if theretofore paid, shall be credited by such
payee on the principal amount of this Note (or if the principal amount of this
Note shall have been paid in full, refunded by such payee to the undersigned).
To the extent that Article 5069-1.04 of Vernon's Texas Civil Statutes
as amended is relevant to payee for the purpose of determining the Highest
Lawful Rate, payee hereby elects to determine the applicable rate ceiling under
such Article by the "indicated (weekly) rate ceiling", as defined in said
article, from time to time in effect, subject to payee's right subsequently to
change such method in accordance with applicable law and provided that payee
may also rely, to the extent permitted by applicable laws, on alternative
maximum rates of interest under other laws applicable to payee if greater.
In addition to and not in limitation of the foregoing and the
provisions of the Credit Agreement, the undersigned further agrees, subject
only to any limitation imposed by applicable law, to pay all expenses,
including reasonable attorneys' fees and legal expenses,
2
93
incurred by the holder of this Note in endeavoring to collect any amounts
payable hereunder which are not paid when due, whether by acceleration or
otherwise.
All parties hereto, whether as makers, endorsers, or otherwise,
severally waive presentment for payment, demand, protest and notice of
dishonor.
THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY
THE INTERNAL LAWS OF THE STATE OF ILLINOIS.
POGO PRODUCING COMPANY
By______________________________________
D. Stephen Slack,
Senior Vice President and
Chief Financial Officer
3
94
LOANS AND PRINCIPAL PAYMENTS
- -----------------------------------------------------------------------------------------------------------------------------
Amount of Unpaid
Amount of Principal Principal
Loan Made Repaid Balance
- ------------------------ Interest ------------------------- -----------------------
Prime Libo CD Period (if Prime Libo CD Prime Libo CD Notation
Rate Rate Rate applicable) Rate Rate Rate Rate Rate Total Made By
- ---- ---- ---- ----------- ---- ---- ---- ---- ---- ----- --------
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
4
95
Exhibit B
BORROWING REQUEST
Bank of Montreal
Houston Agency
700 Louisiana Street
4400 NationsBank Center
Houston, Texas 77002
Attention: Mr. Mark Smith
Director
Pogo Producing Company Amended and Restated Credit Agreement,
dated as of June 1, 1995.
Gentlemen and Ladies:
This Borrowing Request is delivered to you pursuant to Section 2.3 of
the Amended and Restated Credit Agreement, dated as of June 1, 1995 (together
with all amendments, if any, from time to time made thereto, the "Credit
Agreement"), among Pogo Producing Company, a Delaware corporation (the
"Borrower"), certain financial institutions, the Bank of Montreal, acting
through its Chicago, Illinois branch, as agent (the "Agent") and Banque
Paribas, acting through its Houston Agency, as co-agent (the "Co-Agent").
Unless otherwise defined herein or the context otherwise requires, terms used
herein have the meanings provided in the Credit Agreement.
The Borrower hereby requests that a Loan be made in the aggregate
principal amount of $__________ on __________, 19___ as a [[CD] [LIBO] Rate
Loan having an Interest Period of ____ days] [Prime Rate Loan]. [The Borrower
hereby acknowledges that a Loan made pursuant to this Borrowing Request will
result in Borrower exceeding the current Active Revolving Credit Commitment
Amount. Therefore, Borrower requests that $_________________ of the Inactive
Revolving Loan Commitment Amount be converted to an Active Revolving Loan
Commitment Amount simultaneously with the funding of the Loan pursuant to this
Borrowing Request.]
The Borrower hereby certifies and warrants that on the date the
borrowing requested hereby is made (after giving effect to the making of such
borrowing, but without, if any Default of the type referred to in Section 9.1.5
of the Credit Agreement shall have occurred with respect to any other
Indebtedness, giving effect to the application, directly or indirectly, of the
proceeds thereof):
96
Exhibit B
(a) the representations and warranties set forth in
Article VI of the Credit Agreement (excluding, however, those set
forth in Section 6.7) are and will be true and correct as if then
made, except to the extent such representations and warranties relate
solely to an earlier date (in which case such representations and
warranties shall have been true and correct on and as of such earlier
date);
(b) no Default has occurred and is continuing or will
have occurred and be continuing; and
(c) Senior Debt, both before and after giving effect to
the borrowing requested hereby, is not in excess of the Borrowing
Base.
The Borrower agrees that if prior to the time of the borrowing
requested hereby any matter certified to herein by it will not be true and
correct at such time as if then made, it will immediately so notify the Agent.
Except to the extent, if any, that prior to the time of the borrowing requested
hereby the Agent shall receive written notice to the contrary from the
Borrower, each matter certified to herein shall be deemed once again to be
certified as true and correct at the date of such borrowing as if then made.
Please wire transfer the proceeds of the borrowing to the accounts of
the following person(s) at the financial institution(s) indicated respectively:
Amount to be Person to be Paid Name, Address, etc.
--------------------------
Transferred Name Account No. of Transferee Lender
- ------------ -------------------------- ---------------------
$___________ ____________ ___________ ____________________
____________________
Attention: _________
Balance of The Borrower ___________ ____________________
such proceeds ____________________
Attention: _________
The Borrower has caused this Borrowing Request to be executed and
delivered, and the certification and warranties contained herein to be made, by
its duly Authorized Officer this ___ day of ___________, 19___.
POGO PRODUCING COMPANY
By ______________________________
Title:
2
97
Exhibit C
CONTINUATION/CONVERSION NOTICE
Bank of Montreal
Houston Agency
700 Louisiana Street
4400 NationsBank Center
Houston, Texas 77002
Attention: [Name]
[Title]
Pogo Producing Company Amended and Restated Credit Agreement,
dated as of June 1, 1995
Gentlemen and Ladies:
This Continuation/Conversion Notice is delivered to you pursuant to
Section 2.4 of the Amended and Restated Credit Agreement, dated as of June 1,
1995 (together with all amendments, if any, from time to time made thereto, the
"Credit Agreement"), among Pogo Producing Company, a Delaware corporation (the
"Borrower"), certain financial institutions, the Bank of Montreal, acting
through its Chicago, Illinois branch, as agent (the "Agent") and Banque
Paribas, acting through its Houston Agency, as co-agent (the "Co-Agent").
Unless otherwise defined herein or the context otherwise requires, terms used
herein have the meanings provided in the Credit Agreement.
The Borrower hereby requests that on ____________, 19___,
(1) $___________ of the presently outstanding principal amount of
the Loans originally made on ________, 19___,
(2) and all presently being maintained as *[Prime Rate Loans] [CD
Rate Loans] [LIBO Rate Loans],
(3) be [converted into] [continued as],
__________________________________
* Select appropriate interest rate option.
98
Exhibit C
(4) **[CD Rate Loans] [LIBO Rate Loans] having an Interest Period
of __________ [days] [months] [Prime Rate Loans].
The Borrower hereby:
(a) certifies and warrants that no Default has occurred
and is continuing; and
(b) agrees that if prior to the time of such continuation
or conversion any matter certified to herein by it will not be true
and correct at such time as if then made, it will immediately so
notify the Agent.
Except to the extent, if any, that prior to the time of the continuation or
conversion requested hereby the Agent shall receive written notice to the
contrary from the Borrower, each matter certified to herein shall be deemed to
be certified at the date of such continuation or conversion as if then made.
The Borrower has caused this Continuation/Conversion Notice to be
executed and delivered, and the certification and warranties contained herein
to be made, by its Authorized Officer this ___ day of _________, 19___.
POGO PRODUCING COMPANY
By ______________________________
Title:
__________________________________
** Insert appropriate interest rate option.
2
99
Exhibit D
LENDER ASSIGNMENT AGREEMENT
To: Pogo Producing Company
To: Bank of Montreal,
as the Agent
Re: Assignment by [Assignor] to [Assignee]
of Loans under Credit Facility
Gentlemen and Ladies:
We refer to clause (d) of Section 11.11.1 of the Amended and Restated
Credit Agreement, dated as of June 1, 1995 (together with all amendments and
other modifications, if any, from time to time thereafter made thereto, the
"Credit Agreement"), among Pogo Producing Company, a Delaware corporation (the
"Borrower"), the various financial institutions (the "Lenders") as are, or
shall from time to time become, parties thereto, the Bank of Montreal, acting
through its Chicago, Illinois branch, as agent (the "Agent") and Banque
Paribas, acting through its Houston Agency, as co-agent (the "Co-Agent") for
the Lenders. Unless otherwise defined herein or the context otherwise
requires, terms used herein have the meanings provided in the Credit Agreement.
This agreement is delivered to you pursuant to clause (d) of Section
11.11.1 of the Credit Agreement and also constitutes notice to each of you,
pursuant to clause (c) of Section 11.11.1 of the Credit Agreement, of the
assignment and delegation to ____________ (the "Assignee") of ___% of the Loans
and Commitments of __________ (the "Assignor") outstanding under the Credit
Agreement on the date hereof. After giving effect to the foregoing assignment
and delegation, the Assignor's and the Assignee's Percentages for the purposes
of the Credit Agreement are set forth opposite such Person's name on the
signature pages hereof.
[Add paragraph dealing with accrued interest and fees with respect to
Loans assigned.]
The Assignee hereby acknowledges and confirms that it has received a
copy of the Credit Agreement and the exhibits related thereto, together with
copies of the documents which were required to be delivered under the Credit
Agreement as a condition to the making of the Loans thereunder. The Assignee
further confirms and agrees that in becoming a Lender and in making its
Commitments and Loans under the Credit Agreement, such actions have been and
will be made without recourse to, or representation or warranty by the Agent.
100
Except as otherwise provided in the Credit Agreement, effective as of
the date of acceptance hereof by the Agent
(a) the Assignee
(i) shall be deemed automatically to have become
a party to the Credit Agreement, have all the rights and
obligations of a "Lender" under the Credit Agreement and the
other Loan Documents as if it were an original signatory
thereto to the extent specified in the second paragraph
hereof; and
(ii) agrees to be bound by the terms and
conditions set forth in the Credit Agreement and the other
Loan Documents as if it were an original signatory thereto;
and
(b) the Assignor shall be released from its obligations
under the Credit Agreement and the other Loan Documents to the extent
specified in the second paragraph hereof.
The Assignor and the Assignee hereby agree that the [Assignor]
[Assignee] will pay to the Agent the processing fee referred to in Section
11.11.1 of the Credit Agreement upon the delivery hereof.
The Assignee hereby advises each of you of the following
administrative details with respect to the assigned Loans and Commitments and
requests the Agent to acknowledge receipt of this document:
(A) Address for Notices:
Institution Name:
Attention:
Domestic Office:
Telephone:
Facsimile:
Telex (Answerback):
(B) Payment Instructions:
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101
The Assignee agrees to furnish the tax form required by the second to
last sentence of Section 4.7 (if so required) of the Credit Agreement no later
than the date of acceptance hereof by the Agent).
This Agreement may be executed by the Assignor and Assignee in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.
Adjusted Percentage [ASSIGNOR]
Commitment
and Loan: __%
By:___________________________
Title:
Percentage [ASSIGNEE]
Commitment
and Loan: __%
By:___________________________
Title:
Accepted and Acknowledged
this ___ day of _____, 19___
____________________________,
as Agent
By:_________________________
Title:
3
102
Exhibit E
Opinion of Gerald A. Morton, Corporate Secretary and Associate
General Counsel to the Borrower
June 1, 1995
To Each of the Lenders, Parties to
the Amended and Restated Credit
Agreement hereinafter referred to,
The Bank of Montreal, as Agent
and Banque Paribas, as Co-Agent
c/o Bank of Montreal
115 South LaSalle Street
Chicago, Illinois 60603
Ladies and Gentlemen:
This opinion is being furnished to you in connection with the
preparation, authorization, execution and delivery of, and the consummation of
the transactions contemplated by the Amended and Restated Credit Agreement
dated as of June 1, 1995 (the "Agreement") among Pogo Producing Company, a
Delaware corporation (the "Company"), the financial institutions which are
parties thereto (the "Lenders") and Bank of Montreal, as Agent and Banque
Paribas, as Co-Agent for the Lenders under the Agreement, including the
execution and delivery of the amended and restated Notes (as such term is
defined in the Amendment). Except as otherwise specified, capitalized terms
used in this opinion which are defined in the Agreement are used herein with
the same meaning. I have acted as counsel to the Company in connection with
the execution and delivery by the Company of the Agreement.
In my capacity as counsel to the Company, I have examined the
originals, or copies certified or otherwise identified, of the Agreement, the
Notes, the certificates of incorporation and by-laws of the Company, records of
the Company, certificates of public officials and of representatives of the
Company, statutes and other instruments and documents as a basis for the
opinions hereinafter expressed.
I have assumed that all signatures on documents examined by me
are genuine, that all documents submitted to me as originals are authentic and
all documents submitted to me as certified or photostatic copies conform with
the original copies of those documents. In addition, I have assumed that the
Lenders, the Agent and Co-Agent will perform their obligations under the
Agreement and the Notes reasonably, in good faith and with fair dealing
1
103
Exhibit E
and that they will act reasonably, in good faith and with fair dealing in taking
action, exercising discretion and making determinations thereunder.
Based on the foregoing, and subject to the qualifications
stated herein, I am of the opinion that:
1. The Company and each of its corporate U.S.
Subsidiaries is a corporation duly incorporated, validly existing and in good
standing under the laws of the state of Delaware, and is duly qualified to do
business and is in good standing as a foreign corporation in each jurisdiction
where the nature of its business requires such qualification, except where the
failure to qualify would not have a material adverse effect on business or
financial condition of the Company and its U.S. Subsidiaries taken as a whole.
Pogo Gulf Coast, Ltd. is validly organized and existing and in good standing
under the laws of the State of Texas, and is duly qualified to do business and
is in good standing as a foreign partnership where the nature of its business
requires such qualification, except where the failure to qualify would not have
a material adverse effect on business or financial condition of the Company and
its U.S. Subsidiaries taken as a whole.
2. The Company has all requisite corporate power and
authority to execute and deliver the Agreement and the Notes and to perform its
obligations thereunder. The execution, delivery and performance of the
Agreement by the Company and the consummation by the Company of the
transactions contemplated thereby has been duly authorized by all necessary
corporate action on the part of the Company. The Agreement and the Notes have
been duly and validly executed and delivered by the Company and (assuming the
due authorization, execution and delivery thereof by all the parties thereto)
the Agreement, and the Notes, each constitutes the legal, valid and binding
obligation of the Company, enforceable against the same in accordance with its
terms.
3. The execution and delivery of the Agreement and the
Notes, the consummation of the transactions contemplated thereby and compliance
by the Company with the provisions thereof will not conflict with, constitute a
default under or violate (i) any of the terms, conditions or provisions of the
certificate of incorporation or by-laws of the Company, (ii) any of the terms,
conditions or provisions of any material document, agreement or other
instrument to which the Company is a party or by which it is bound of which I
am aware, the default under or breach of which would have a material adverse
effect on the business, assets or financial condition of the Company and its
subsidiaries taken as a whole, (iii) any Texas, Delaware corporate or federal
law or regulation (other than federal and state securities or blue sky laws, as
to which I express no opinion), or (iv) any judgment, writ, injunction, decree,
order or ruling of any court or governmental authority binding on the Company
of which I am aware. No consent, approval, waiver, license or authorization or
other action by or filing with any Texas, Delaware corporate or federal
governmental authority (other than the filing of the Agreement with the
Securities and Exchange Commission as a material document under Rule
2
104
Exhibit E
601(b)(iv) of Regulation S-K) is required in connection with the execution and
delivery by the Company of the Agreement and Notes.
4. Except as set forth on the Disclosure Schedule to the
Agreement, to the best of my knowledge, there is no litigation, proceeding or
governmental investigation pending or overtly threatened against the Company
(other than those that are common to the oil and gas industry generally) which,
if adversely determined, would have a material adverse effect on the business,
assets or financial condition of the Company and its Subsidiaries taken as a
whole.
5. The Company is not an "investment company" or a
company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended.
6. The Company is not a "holding company" or a
"subsidiary company" of a "holding company," or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company," within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
Additional Assumptions and Qualifications
The opinions express herein are subject to the following
additional assumptions and qualifications:
A. All of the opinions expressed herein are limited to
the laws of the State of Texas, the corporate laws of the State of Delaware and
the federal laws of the United States of America. I am only admitted to
practice law in the State of Texas. Because the amended Notes, and the
Agreement are governed by Illinois law, I have assumed, with your permission,
that the laws of Illinois and Texas are the same.
B. The opinions expressed herein are subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing
(regardless of whether enforcement is sought in a proceeding at law or in
equity), and subject to the qualification that certain remedial provisions of
the Agreement may further be limited by the laws of the States of Illinois and
Texas; however, such limitations do not, in my opinion, make the remedies
afforded by the Agreement inadequate for the practical realization of the
benefits provided thereby.
C. In rendering the opinions above, I express no opinion
as to the (i) enforceability of provisions which purport to restrict access to
legal or equitable remedies or which purport to waive any rights to notices, or
which purport to establish evidentiary
3
105
Exhibit E
standards, or (ii) enforceability of provisions relating to subrogation rights,
delay or omission of enforcement of rights or remedies waivers or ratifications
of future acts, the rights of third parties, prohibitions against the transfer,
alienation, or hypothecation of property, indemnity, severance, marshalling of
assets, transferability of assets which by their nature are non-transferrable,
or sales in inverse order of alienation; provided, however, any limitations
imposed by law or court decisions on the enforceability of said provisions will
not, in my opinion, materially diminish the practical realization of the
benefits intended to be conferred thereby except for the economic consequences
of any delay which may result from such limitations.
D. No opinion is expressed herein as to the validity or
enforceability of any of the following types of provisions in the Agreement:
(i) provisions relating to the waiver of any defense to the performance of a
contract obligation which cannot, as a matter of law, be effectively waived or
(ii) any forum selection provision or waiver of service of process.
E. I express no opinion as to Sections 3.3.5(c), 11.4 or
11.6 of the Agreement.
F. With respect to the opinion expressed in paragraph 3
above, I note that the Company is a general partner of Pogo Gulf Coast, Ltd.
and as such may have duties and responsibilities to its limited partner under
established principles of law, irrespective of the terms of the Agreement.
G. With respect to the opinion set forth in paragraph 2
above, I express no opinion as to any section of the Agreement insofar as such
section authorizes each purchaser of a participation to set off and apply any
deposits at any time held, and any other indebtedness at any time owing, by
such purchaser of a participation to or for the account of the Company.
This opinion is rendered solely for your benefit in connection
with the transaction described above. This opinion may not be used or relied
upon by any other person and may not be disclosed, quoted, filed with a
governmental agency or otherwise referred to without my prior written consent;
provided, however, that a Lender may disclose, refer to or furnish a copy of
this opinion to a governmental agency having oversight authority over such
Lender in connection with ordinary course auditing of such Lender by such
governmental agency, if such disclosure, reference to or furnishing a copy of
is not discretionary on the part of Lender.
Very truly yours,
4
106
EXHIBIT K
Form of Subsidiary Guaranty EXHIBIT F
GUARANTY
THIS GUARANTY (this "Guaranty"), dated as of _____ __, 19__, made by
[NAME OF SUBSIDIARY], a __________ (the "Guarantor"), in favor of each of the
Lender Parties (as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement, dated as of September 23,
1992, and amended as of September 30, 1992 and December ___, 1993 (as so
amended and together with all further amendments and other modifications, if
any, from time to time thereafter made thereto, the "Credit Agreement"), among
Pogo Producing Company, a Delaware corporation (the "Borrower"), the various
commercial lending institutions (individually a "Lender" and collectively the
"Lenders") as are, or may from time to time become, parties thereto and Bank of
Montreal, acting through its Chicago, Illinois branch, as agent (together with
any successor(s) thereto in such capacity, the "Agent") for the Lenders and
Banque Paribas, acting through its Houston Agency, as co-agent (the "Co-Agent")
for the Lenders, the Lenders have extended Commitments to make Loans to the
Borrower; and
WHEREAS, the Guarantor has duly authorized the execution, delivery and
performance of this Guaranty; and
WHEREAS, it is in the best interests of the Guarantor to execute this
Guaranty inasmuch as the Guarantor will derive substantial direct and indirect
benefits from Loans made from time to time to the Borrower by the Lenders
pursuant to the Credit Agreement;
NOW THEREFORE, for good and valuable consideration the receipt of
which is hereby acknowledged, and in order to induce the Lenders to make Loans
(including the initial Loans) to the Borrower pursuant to the Credit Agreement,
the Guarantor agrees, for the benefit of each Lender Party, as follows:
107
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Terms. The following terms (whether or not
underscored) when used in this Guaranty, including its preamble and recitals,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):
"Agent" is defined in the first recital.
"Borrower" is defined in the first recital.
"Co-Agent" is defined in the first recital.
"Credit Agreement" is defined in the first recital.
"Guarantor" is defined in the preamble.
"Guaranty" is defined in the preamble.
"Lender" is defined in the first recital.
"Lender Party" means, as the context may require, any Lender, the
Agent, the Co-Agent or the Collateral Agent and each of the respective
successors, transferees and assigns of any of the foregoing.
"Lenders" is defined in the first recital.
"Obligations" means all obligations (monetary or otherwise) of the
Borrower arising with respect to the Credit Agreement, the Notes, or any other
Loan Document.
"Obligor" means the Borrower or any other Person (other than the
Agent, Co-Agent or any Lender) obligated under any Loan Document.
SECTION 1.2. Credit Agreement Definitions. Unless otherwise
defined herein or the context otherwise requires, terms used in this Guaranty,
including its preamble and recitals, have the meanings provided in the Credit
Agreement.
6
108
ARTICLE II
GUARANTY PROVISIONS
SECTION 2.1. Guaranty. The Guarantor hereby absolutely,
unconditionally and irrevocably
(a) guarantees the full and punctual payment when due,
whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise, of all Obligations of the Borrower
now or hereafter existing under the Credit Agreement, the Notes and
each other Loan Document to which the Borrower is or may become a
party, whether for principal, interest, fees, expenses or otherwise
(including all such amounts which would become due but for the
operation of the automatic stay under Section 362(a) of the United
States Bankruptcy Code, 11 U.S.C. Section 362(a), and the operation of
Sections 502(b) and 506(b) of the United States Bankruptcy Code, 11
U.S.C. Section 502(b) and Section 506(b)), and
(b) indemnifies and holds harmless each Lender Party and
each holder of a Note for any and all costs and expenses (including
reasonable attorney's fees and expenses) incurred by such Lender Party
or such holder, as the case may be, in enforcing any rights under this
Guaranty;
provided, however, that the Guarantor shall be liable under this Guaranty for
the maximum amount of such liability that can be hereby incurred without
rendering this Guaranty, as it relates to the Guarantor, voidable under
applicable law relating to fraudulent conveyance or fraudulent transfer, and
not for any greater amount. This Guaranty constitutes a guaranty of payment
when due and not of collection, and the Guarantor specifically agrees that it
shall not be necessary or required that any Lender Party or any holder of any
Note exercise any right, assert any claim or demand or enforce any remedy
whatsoever against the Borrower or any other Obligor (or any other Person)
before or as a condition to the obligations of the Guarantor hereunder.
SECTION 2.2. Acceleration of Guaranty. The Guarantor agrees that,
in the event of the dissolution or insolvency of the Guarantor, or the
inability or failure of the Guarantor to pay debts as they become due, or an
assignment by the Guarantor for the benefit of creditors, or the commencement
of any case or proceeding in respect of the Guarantor under any bankruptcy,
insolvency or similar laws, and if such event shall occur at a time when any of
the Obligations of the Borrower may not then be due and payable, the Guarantor
will pay to the Lenders forthwith the full amount which would be payable
hereunder by the Guarantor if all such Obligations were then due and payable.
7
109
SECTION 2.3. Guaranty Absolute, etc. This Guaranty shall in all
respects be a continuing, absolute, unconditional and irrevocable guaranty of
payment, and shall remain in full force and effect until all Obligations of the
Borrower have been paid in full, all obligations of the Guarantor hereunder
shall have been paid in full and all Commitments shall have terminated. The
Guarantor guarantees that the Obligations of the Borrower will be paid strictly
in accordance with the terms of the Credit Agreement and each other Loan
Document under which they arise, regardless of any law, regulation or order now
or hereafter in effect in any jurisdiction affecting any of such terms or the
rights of any Lender Party or any holder of any Note with respect thereto. The
liability of the Guarantor under this Guaranty shall be absolute, unconditional
and irrevocable irrespective of:
(a) any lack of validity, legality or enforceability of
the Credit Agreement, any Note or any other Loan Document;
(b) the failure of any Lender Party or any holder of any
Note
(i) to assert any claim or demand or to
enforce any right or remedy against the Borrower, any other
Obligor or any other Person (including any other guarantor)
under the provisions of the Credit Agreement, any Note, any
other Loan Document or otherwise, or
(ii) to exercise any right or remedy against
any other guarantor of, or collateral securing, any
Obligations of the Borrower or any other Obligor;
(c) any change in the time, manner or place of payment
of, or in any other term of, all or any of the Obligations of the
Borrower or any other Obligor, or any other extension, compromise or
renewal of any Obligation of the Borrower or any other Obligor;
(d) any reduction, limitation, impairment or termination
of any Obligations of the Borrower or any other Obligor for any
reason, including any claim of waiver, release, surrender, alteration
or compromise, and shall not be subject to (and the Guarantor hereby
waives any right to or claim of) any defense or setoff, counterclaim,
recoupment or termination whatsoever by reason of the invalidity,
illegality, nongenuineness, irregularity, compromise, unenforceability
of, or any other event or occurrence affecting, any Obligations of the
Borrower, any other Obligor or otherwise;
(e) any amendment to, rescission, waiver, or other
modification of, or any consent to departure from, any of the terms of
the Credit Agreement, any Note or any other Loan Document;
(f) any addition, exchange, release, surrender or
non-perfection of any collateral, or any amendment to or waiver or
release or addition of, or consent to
8
110
departure from, any other guaranty, held by any Lender Party or any
holder of any Note securing any of the Obligations of the Borrower or
any other Obligor; or
(g) any other circumstance which might otherwise
constitute a defense available to, or a legal or equitable discharge
of, the Borrower, any other Obligor, any surety or any guarantor.
SECTION 2.4. Reinstatement, etc. The Guarantor agrees that this
Guaranty shall continue to be effective or be reinstated, as the case may be,
if at any time any payment (in whole or in part) of any of the Obligations is
rescinded or must otherwise be restored by any Lender Party or any holder of
any Note, upon the insolvency, bankruptcy or reorganization of the Borrower,
any other Obligor or otherwise, all as though such payment had not been made.
SECTION 2.5. Waiver, etc. The Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Obligations of the Borrower or any other Obligor and this Guaranty and any
requirement that the Agent, any other Lender Party or any holder of any Note
protect, secure, perfect or insure any security interest or Lien, or any
property subject thereto, or exhaust any right or take any action against the
Borrower, any other Obligor or any other Person (including any other guarantor)
or entity or any collateral securing the Obligations of the Borrower or any
other Obligor, as the case may be.
SECTION 2.6. Waiver of Subrogation. The Guarantor hereby
irrevocably waives any claim or other rights which it may now or hereafter
acquire against the Borrower or any other Obligor that arise from the
existence, payment, performance or enforcement of the Guarantor's obligations
under this Guaranty or any other Loan Document, including any right of
subrogation, reimbursement, exoneration, or indemnification, any right to
participate in any claim or remedy of the Lender Parties against the Borrower
or any other Obligor or any collateral which the Agent or other Lender Party
now has or hereafter acquires, whether or not such claim, remedy or right
arises in equity, or under contract, statute or common law, including the right
to take or receive from the Borrower or any other Obligor, directly or
indirectly, in cash or other property or by set-off or in any manner, payment
or security on account of such claim or other rights. If any amount shall be
paid to the Guarantor in violation of the preceding sentence and the
Obligations shall not have been paid in cash in full and the Commitments have
not been terminated, such amount shall be deemed to have been paid to the
Guarantor for the benefit of, and held in trust for, the Lender Parties, and
shall forthwith be paid to the Lender Parties to be credited and applied upon
the Obligations, whether matured or unmatured. The Guarantor acknowledges that
it will receive direct and indirect benefits from the financing arrangements
contemplated by the Credit Agreement and that the waiver set forth in this
Section is knowingly made in contemplation of such benefits.
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111
SECTION 2.7. Successors, Transferees and Assigns; Transfers of
Notes, etc. This Guaranty shall:
(a) be binding upon the Guarantor, and its successors,
transferees and assigns; and
(b) inure to the benefit of and be enforceable by the
Agent and each other Lender Party.
Without limiting the generality of the foregoing clause (b), any Lender may
assign or otherwise transfer (in whole or in part) any Note or Loan held by it
to any other Person or entity, and such other Person or entity shall thereupon
become vested with all rights benefits, duties and obligations in respect
thereof granted to such Lender under any Loan Document (including this
Guaranty) or otherwise, subject, however, to any contrary provisions in such
assignment or transfer, and to the provisions of Article X and Sections 11.11,
11.12 and 11.14 of the Credit Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties. The Guarantor hereby
represents and warrants unto each Lender Party as set forth in this Article.
SECTION 3.1.1. Organization, etc. [The Guarantor is a corporation
duly organized, validly existing and in good standing under the laws of the
State of its incorporation, and is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction where the nature of its
business requires such qualification, except where failure to qualify would not
have a material adverse effect on the business or financial condition of the
Guarantor or on its ability to perform its Obligations pursuant to this
Guaranty and each other Loan Document to which it is a party.] [The Guarantor
is a partnership duly organized, validly existing and in good standing under
the laws of the State of its formation, and is duly qualified to do business
and is in good standing as a foreign partnership where the nature of its
business requires such qualification, except where failure to qualify would not
have a material adverse effect on the business or financial condition of the
Guarantor or the Guarantor's ability to perform its Obligations under this
Guaranty and any other Loan Documents to which it is a party.] The Guarantor
has full power and authority and holds all requisite governmental licenses,
permits and other approvals to enter into and perform its Obligations under
this Guaranty and each other Loan Document to which it is a party and to own
and hold under lease its property and to conduct its business substantially as
currently conducted by it.
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SECTION 3.1.2. Due Authorization, Non-Contravention, etc. The
execution, delivery and performance by the Guarantor of this Guaranty and each
other Loan Document, including the Security Documents executed or to be
executed by it, are within the Guarantor's [corporate] [partnership] powers,
have been duly authorized by all necessary [corporate] [partnership] action,
and do not
(a) contravene the Guarantor's [Organic Documents]
[partnership agreement];
(b) contravene any contractual restriction, law or
governmental regulation or court decree or order binding on or
affecting the Guarantor; or
(c) result in, or require the creation or imposition of,
any Lien on any properties of the Guarantor, except as Liens will be
imposed, created, or required upon execution and delivery of the
Security Documents pursuant to Section 7.8 of the Credit Agreement.
SECTION 3.1.3. Government Approval, Regulation, etc. No
authorization or approval or other action by, and no notice to or filing with,
any governmental authority or regulatory body is required for the due
execution, delivery or performance by the Guarantor of this Guaranty or any
other Loan Document to which it is or will be a party. The Guarantor is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, or a "holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
SECTION 3.1.4. Validity, etc. This Guaranty constitutes, and the
Security Documents and each other Loan Document executed by the Guarantor will,
on the due execution and delivery thereof, constitute, the legal, valid and
binding obligations of the Guarantor, enforceable in accordance with their
respective terms except as such enforceability is subject to the effect of (i)
any applicable bankruptcy, insolvency, reorganization or similar law relating
to or affecting creditors' rights generally and (ii) general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law), including concepts of materiality, reasonableness, good
faith and fair dealing.
ARTICLE IV
COVENANTS, ETC.
SECTION 4.1. Affirmative Covenants. The Guarantor covenants and
agrees that, so long as any portion of the Obligations shall remain unpaid or
any Lender shall have
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any outstanding Commitment, the Guarantor will, unless the Required Lenders
shall otherwise consent in writing, perform the obligations set forth in this
Section.
SECTION 4.1.1. The Guarantor hereby agrees that upon the occurrence
of any event or condition described in clauses (a) through (d) of Section 7.8
of the Credit Agreement, it will execute and deliver to the Collateral Agent
such Security Documents as may be required or the Agent may request and cause
each such Security Document to be filed, registered and recorded, as the law
may require or the Agent may request, in each jurisdiction where so required or
requested, and deliver to the Collateral Agent an acknowledgment copy, or other
evidence satisfactory to it, of each such filing, registration and recordation,
in order to mortgage, assign, grant a security interest in and pledge to the
Collateral Agent, acting on behalf of the Lenders, the entire right, title and
interest of the Guarantor (and, with respect to any Qualified Partnership
Properties, the Guarantor's pro rata share of the right, title and interest of
any partnership) in and to the Borrowing Base Properties and related property
interests, both real and personal, and the proceeds thereof (the "Collateral")
as set forth in such request, and to perfect and evidence the first priority of
all such Security Documents (subject to liens and encumbrances permitted by the
terms of such instruments). Except as noted below, Section 7.8 of the Credit
Agreement, all related definitions and all ancillary provisions are hereby
incorporated by reference herein as if set out in full herein, provided that (a)
all references in clause (e) to "the Borrower," "the Borrower or any of its
Subsidiaries" and "the Borrower or its Subsidiary" shall be deemed to be a
reference to "the Guarantor", "the Guarantor or any of its Subsidiaries" or "the
Guarantor or its Subsidiaries," as the case may be, and (b) any provision of
such Section 7.8 requiring that the Borrower will cause its Subsidiary or
Subsidiaries to take any action or will not permit its Subsidiary or
Subsidiaries to take any action will be deemed to require that the Guarantor
take, or refrain from taking (as the case may be), such action.
SECTION 4.2. Negative Covenants. The Guarantor covenants and
agrees that, so long as any portion of the Obligations shall remain unpaid or
any Lender shall have any outstanding Commitment, the Guarantor will not,
without the prior written consent of the Required Lenders, do anything
prohibited in this Section.
SECTION 4.2.1. The Guarantor shall not transfer any Borrowing Base
Properties of the Guarantor in any manner except to the Borrower or to another
Subsidiary of the Borrower which has executed a Subsidiary Guaranty in form and
substance satisfactory to the Agent.
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ARTICLE V
MISCELLANEOUS PROVISIONS
SECTION 5.1. Loan Document. This Guaranty is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions thereof.
SECTION 5.2. Binding on Successors, Transferees and Assigns;
Assignment. In addition to, and not in limitation of, Section 2.7, this
Guaranty shall be binding upon the Guarantor and its successors, transferees
and assigns and shall inure to the benefit of and be enforceable by each Lender
Party and each holder of a Note and their respective successors, transferees
and assigns (to the full extent provided pursuant to Section 2.7); provided,
however, the Guarantor may not assign any of its obligations hereunder without
the consent of the Required Lenders.
SECTION 5.3. Amendments, etc. No amendment to or waiver of any
provision of this Guaranty, nor consent to any departure by the Guarantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Agent, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
SECTION 5.4. Addresses for Notices to the Guarantor. All notices
and other communications hereunder to the Guarantor shall be in writing or by
telex, or by facsimile delivered or transmitted to it, addressed to it at the
address, telex or facsimile number set forth below its signature hereto or at
such other address, telex or facsimile number as shall be designated by the
Guarantor in a written notice to the Agent at the address, telex or facsimile
number specified in the Credit Agreement complying as to delivery with the
terms of this Section. Any notice, if mailed and properly addressed with
postage prepaid, shall be deemed given when received; any notice, if
transmitted by telex or facsimile, shall be deemed given when transmitted
(answerback confirmed in the case of telexes).
SECTION 5.5. No Waiver; Remedies. In addition to, and not in
limitation of, Section 2.3 and Section 2.5, no failure on the part of any
Lender Party or any holder of a Note to exercise, and no delay in exercising,
any right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
SECTION 5.6. Section Captions. Section captions used in this
Guaranty are for convenience of reference only, and shall not affect the
construction of this Guaranty.
SECTION 5.7. Setoff. In addition to, and not in limitation of,
any rights of any Lender Party or any holder of a Note under applicable law,
each Lender Party and each such holder shall, upon the occurrence of any
Default described in any of clauses (a) through (d) of Section 9.1.9. of the
Credit Agreement or any Event of Default, have the right to appropriate and
apply to the payment of the obligations of the Guarantor owing to it hereunder,
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whether or not then due, and the Guarantor hereby grants to each Lender Party
and each such holder a continuing security interest in, any and all balances,
credits, deposits, accounts or moneys of the Guarantor then or thereafter
maintained with such Lender Party or such holder and any and all property of
every kind or description of or in the name of the Guarantor now or hereafter,
for any reason or purpose whatsoever, in the possession or control of, or in
transit to, such Lender Party, such holder or any agent or bailee for such
Lender Party or such holder; provided, however, that any such appropriation and
application shall be subject to the provisions of Section 4.9 of the Credit
Agreement.
SECTION 5.8. Severability. Wherever possible each provision of
this Guaranty shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Guaranty shall be prohibited
by or invalid under such law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guaranty.
SECTION 5.9. Governing Law, Entire Agreement, etc. THIS GUARANTY
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF ILLINOIS. THIS GUARANTY AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE
ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT
MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT
THERETO.
THIS GUARANTY 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.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
[NAME OF SUBSIDIARY]
By ________________________________
Title:
Address: _________________________
Attention: ________________________
Telecopy ________________________
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