1
Exhibit 4.7
NOTE PURCHASE AGREEMENT
dated as of
November 14, 1997
among
CABOT OIL & GAS CORPORATION
and
THE PURCHASERS LISTED HEREIN
-------------------
$100,000,000 7.19% Notes due 2009
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TABLE OF CONTENTS*
ARTICLE I
DEFINITIONS 1
SECTION 1.01. Definitions 1
SECTION 1.02. Accounting Terms and Definitions 8
ARTICLE II
THE NOTES 8
SECTION 2.01. Sale and Purchase of Notes 8
SECTION 2.02. Closing 9
SECTION 2.03. Prepayments 9
SECTION 2.04. Maximum Interest Rate 11
ARTICLE III
CONDITIONS TO PURCHASE OF NOTES 12
SECTION 3.01. Conditions to Purchase 12
ARTICLE IV
REPRESENTATIONS AND WARRANTIES 13
SECTION 4.01. Corporate Existence and Power 13
SECTION 4.02. Corporate and Governmental Authorization;
No Contravention 13
SECTION 4.03. Binding Effect 14
SECTION 4.04. Financial Information 14
SECTION 4.05. Full Disclosure 14
SECTION 4.06. Litigation 15
SECTION 4.07. Compliance with ERISA 15
SECTION 4.08. Environmental Matters 15
SECTION 4.09. Taxes 16
SECTION 4.10. Titles, etc 16
SECTION 4.11. Casualties; Taking of Properties 16
SECTION 4.12. Gas Imbalances 16
SECTION 4.13. Use of Proceeds 17
SECTION 4.14. Offering of the Notes 17
SECTION 4.15. Ownership of Subsidiaries 17
ARTICLE V
COVENANTS 17
SECTION 5.01. Information 17
SECTION 5.02. Payment of Obligations 19
SECTION 5.03. Maintenance of Property 19
SECTION 5.04. Conduct of Business and Maintenance of Existence 19
SECTION 5.05. Compliance with Laws 20
SECTION 5.06. Inspection of Property, Books and Records 20
SECTION 5.07. Insurance 20
SECTION 5.08. Engineering Reports 20
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* The Table of Contents is not a part of this Agreement.
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SECTION 5.09. Asset Coverage Ratio 20
SECTION 5.10. Liens 21
SECTION 5.11. Transactions with Affiliates 21
SECTION 5.12. Annual Coverage Ratio 22
SECTION 5.13. Consolidations, Mergers and Sales of Assets 22
SECTION 5.14. Subsidiary Debt 23
SECTION 5.15. Sale and Leasebacks 23
ARTICLE VI
DEFAULTS 23
SECTION 6.01. Events of Default 23
SECTION 6.02. Rescission of Acceleration 26
ARTICLE VII
PURCHASE FOR INVESTMENT; SOURCE OF FUNDS 26
SECTION 7.01. Purchase for Investment 26
SECTION 7.02. Source of Funds 26
SECTION 7.03. Securities Act; Legend 28
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Notices 28
SECTION 8.02. No Waiver 28
SECTION 8.03. Expenses; Documentary Taxes; Indemnification
for Litigation 29
SECTION 8.04. Amendments and Waivers 29
SECTION 8.05. New York Law 30
SECTION 8.06. Successors and Assigns 30
SECTION 8.07. Form, Registration, Transfer and Exchange of the Notes;
Transferees 30
SECTION 8.08. Persons Deemed Owners 31
SECTION 8.09. Home Office Payment 31
SECTION 8.10. Substitution 31
SECTION 8.11. Credit Decision 32
SECTION 8.12. Counterparts; Integration; Effectiveness;
Severability 32
SECTION 8.13. Submission to Jurisdiction 32
SECTION 8.14. Confidentiality 32
Schedule A -- Information Relating To Purchasers
Schedule 4.05 -- Certain Disclosure
Schedule 4.06 -- Litigation
Schedule 4.15 -- Subsidiaries
Schedule 5.10 -- Liens
Exhibit A -- Form of Note
Exhibit B -- Form of Opinion of Counsel for the Issuer
Exhibit C -- Form of Opinion of Managing Counsel for the Issuer
Exhibit D -- Form of Opinion of Special Counsel for the Purchasers
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NOTE PURCHASE AGREEMENT
AGREEMENT dated as of November 14, 1997 among CABOT OIL & GAS
CORPORATION, a Delaware corporation (the "Issuer"), and the PURCHASERS listed on
the signature pages hereof (the "Purchasers").
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used
herein, have the following meanings:
"Adjusted Cash" means, as of any date, the lesser of (i) the
amount by which cash and short-term investments of the Issuer and its
Subsidiaries exceed $5,000,000 and (ii) the amount, if any, by which (a) current
assets of the Issuer and its Subsidiaries exceed (b) current liabilities of such
Persons (excluding the aggregate outstanding principal amount of Debt included
in such current liabilities), in each case determined on a consolidated basis as
of such date. If such current liabilities exceed such current assets, Adjusted
Cash shall be zero.
"Affiliate" means each Person who controls, is controlled by
or is under common control with the Issuer. For purposes of this definition, the
term "control" means possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
"Asset Disposition" means any sale, lease, transfer or other
disposition of shares of capital stock of a Subsidiary, property or other assets
by the Issuer or a Subsidiary, other than any such sales, leases, transfers or
other dispositions of assets made in the ordinary course of business.
"Attributable Debt" means, as to any particular lease and at
any date, the total net amount of rent required to be paid by such Person under
such lease during the remaining primary term thereof (or any renewal terms for
which the lease may be extended at the option of the lessor), discounted from
the respective due dates thereof to such date at a rate of 7.19% per annum. The
net amount of rent required to be paid under any such lease for any such period
shall be the aggregate amount of rent payable by the lessee with respect to such
period after excluding amounts required to be paid on account of insurance,
taxes, assessments, utility, operating and labor costs and similar charges. In
the case of any lease which is terminable by the lessee upon the payment of a
penalty, such net amount shall also include the amount of such penalty, but no
rent shall be considered as required to be paid under such lease subsequent to
the first date upon which it may be so terminated.
"Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in Houston, Texas are authorized by law to
close.
"Change of Control" shall have occurred if (i) any Person or
related Persons constituting a "group" for purposes of Section 13(d) of the
Exchange Act shall have acquired "beneficial ownership" of a majority of the
voting stock of the Issuer, or (ii) during any period of 24 consecutive months,
individuals who were directors of the Issuer at the beginning of the period and
Qualifying Directors, in the aggregate, shall cease to constitute a majority of
the Board of Directors of the Issuer.
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"Closing Date" means November 18, 1997.
"Credit Agreement" means the Amended and Restated Credit
Agreement dated May 30, 1995 among the Issuer, the banks party thereto, and
Morgan Guaranty Trust Company of New York, as Agent, as amended from time to
time.
"Debt" of any Person means at any date, without duplication,
(i) all obligations of such Person for borrowed money; (ii) all obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments;
(iii) all long-term obligations of such Person to pay the deferred purchase
price of property or services, except trade accounts payable arising in the
ordinary course of business; (iv) all obligations of such Person as lessee under
capital leases; (v) all Debt of others secured by a Lien on any asset of such
Person, whether or not such Debt is assumed by such Person, provided that to the
extent such Debt is not assumed by such Person the amount of such Debt for
purposes of the provisions of this Agreement shall be equal to the lesser of (a)
the amount of Debt secured by such Lien or (b) the value of the asset which
secures such Debt and to the extent such Debt is assumed by such Person the
amount of such Debt for purposes of the provisions of this Agreement shall equal
the amount of such Debt assumed; and (vi) all Debt of others described in (i)
through (v) above directly or indirectly guaranteed by such Person or in respect
of which such Person is otherwise liable, contingently or otherwise; provided,
that the amount of such Debt for the purposes of this Agreement shall be equal
to the amount of Debt guaranteed by such Person or in respect of which such
Person is otherwise liable, contingently or otherwise.
"Debt and Other Liabilities" means, at any date, the sum of,
without duplication, (i) Debt of the Issuer and its Subsidiaries at such date
plus (ii) the amount, if any, by which Negative Adjusted Working Capital at such
date exceeds 6% of the Present Value of Proved Reserves minus (iii) Non-Recourse
Debt of the Issuer and its Subsidiaries at such date.
"Default" means the occurrence of any of the events specified
in Section 6.01, whether or not any requirement for notice or lapse of time or
other condition precedent has been satisfied.
"Environmental Laws" means any and all federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges or releases of pollutants contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes into
the environment including, without limitation, ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum or petroleum products (including natural
gas), chemicals or industrial, toxic or hazardous substances or wastes or the
clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, or any successor statute.
"ERISA Group" means the Issuer and all members of a controlled
group of corporations and all trades or businesses (whether or not incorporated)
under common control which, together with the Issuer, are treated as a single
employer under Section 414 of the Internal Revenue Code.
"Event of Default" means any of the events specified in
Section 6.01.
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"Excepted Liens" means: (i) Liens for taxes, assessments or
other governmental charges or levies not yet due or which are being contested in
good faith by appropriate action; (ii) Liens in connection with workers'
compensation, unemployment insurance or other social security, old age pension
or public liability obligations but not resulting from the failure of the Issuer
to meet or comply with such obligations; (iii) attachment or judgment Liens
arising in connection with legal proceedings, provided that (A) the execution or
enforcement of such Lien is effectively stayed and the claims secured thereby
are being actively contested in good faith by appropriate proceedings and (B)
such reserve or other appropriate provision, if any, as shall be required by
generally accepted accounting principles shall have been made therefor on the
books of the Issuer and its Subsidiaries; (iv) vendors', carriers',
warehousemen's, repairmen's, mechanics', workmen's, materialmen's, construction
or other like Liens (including, without limitation, Liens arising in favor of
sellers of hydrocarbons) arising by operation of law in the ordinary course of
business incident to obligations which are not yet due or which are being
contested in good faith by appropriate proceedings by or on behalf of the Issuer
or a Subsidiary and for which appropriate provisions, if any, as required by
generally accepted accounting principles shall have been made on the books of
the Issuer and its Subsidiaries; (v) Liens arising in the ordinary course of
business under farm-out agreements, gas sales contracts, operating agreements,
unitization and pooling agreements, and such other documents as are customarily
found in connection with comparable drilling and producing operations; (vi)
letters of credit, pledges or deposits, including bonds, required in the
ordinary course of business to secure public or statutory obligations or to
secure performance in connection with bids or contracts related to the
exploration or development of Petroleum Properties, to the extent that payment
of the underlying obligations is not yet due or is being contested in good faith
by appropriate proceedings by or on behalf of the Issuer or a Subsidiary and
with respect to which appropriate reserves have been established; and (vii)
minor irregularities in title which do not materially interfere with the
occupation, use and enjoyment by the Issuer and its Subsidiaries of their
respective Properties in the normal course of business as presently conducted or
materially impair the value thereof for such business.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute. For purposes of the definitions of "Change of
Control" and "Qualifying Director", unless otherwise defined in such Sections,
the terms enclosed in quotation marks as used therein have the meanings ascribed
to such terms under the Exchange Act and the rules and regulations promulgated
by the Securities and Exchange Commission thereunder.
"Executive Officer" means, with respect to any Person, the
chairman and chief executive officer, the president, any vice president, the
treasurer, the chief financial officer, the chief accounting officer, the
controller or the general counsel or any other person performing similar
functions.
"Holder" means a registered holder from time to time of any
Note.
"Institutional Investor" means (a) any original purchaser of a
Note, (b) any holder of a Note holding more than 5% of the aggregate principal
amount of the Notes then outstanding, and (c) any bank, trust company, savings
and loan association or other financial institution, any pension plan, any
investment company, any insurance company, any broker or dealer, or any other
similar financial institution or entity, regardless of legal form.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended, or any successor statute.
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"Investment" means with respect to any Person (the
"Investor"), any investment by the Investor in any other Person, whether by
means of share purchase, capital contribution, loan, purchase of Debt, guarantee
of Debt, time deposit or otherwise.
"Issuer" means Cabot Oil & Gas Corporation, a Delaware
corporation, and its successors.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset (including without limitation any Production Payment, advance payment, gas
imbalances or similar arrangement with respect to minerals in place) or any
other arrangement the economic effect of which is to give a creditor
preferential access to such asset to satisfy its claim, whether or not filed,
recorded or otherwise perfected under applicable law. For the purposes of this
Agreement, the Issuer or any Subsidiary shall be deemed to own subject to a Lien
(i) any asset that it has acquired or holds subject to the interest of a vendor
or lessor under any conditional sale agreement, capital lease or other title
retention agreement relating to such asset or any capitalized lease obligation
or (ii) any account receivable transferred by it with credit recourse (including
any such transfer subject to a holdback or similar arrangement which effectively
imposes the risk of collectibility upon the transferor).
"Majority Lenders" means Holders of a majority in principal
amount of the Outstanding Notes.
"Make Whole Amount" has the meaning set forth in Section 2.03
and, as used in Section 6.01 with respect to the acceleration of any Note, means
an amount equal to the Make Whole Amount that would be payable with respect to
such Note if the Issuer had elected to prepay the Notes in full pursuant to
Section 2.03(b) on the date of the applicable acceleration..
"Material Debt" means Debt (other than Non-Recourse Debt) of
the Issuer or one or more of its Subsidiaries, arising in one or more related or
unrelated transactions, in an aggregate principal amount exceeding $15,000,000.
"Material Plan" means at any time a Plan or Plans having
aggregate Unfunded Liabilities in excess of $5,000,000.
"Multiemployer Plan" means at any time an employee pension
benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any
member of the ERISA Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made contributions,
including for these purposes any Person which ceased to be a member of the ERISA
Group during such five year period.
"Negative Adjusted Working Capital" means, at any date, the
amount, if any, by which current liabilities other than Debt of the Issuer and
its Subsidiaries exceeds current assets of such Persons, determined on a
consolidated basis as of such date.
"Non-Recourse Debt" of any Person means Debt of such Person in
respect of which (i) the recourse of the holder of such Debt, whether direct or
indirect and whether contingent or otherwise, is effectively limited to the
assets directly securing such Debt; (ii) such holder may not collect by levy of
execution against assets of such Person generally (other than the assets
directly securing such Debt) if such Person fails to pay such Debt when due and
the holder obtains a judgment with respect thereto; and (iii) such holder has
waived, to the extent such holder may effectively do so, such holder's right to
elect recourse treatment under 11 U.S.C. S 1111(b).
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"Notes" means the promissory notes of the Issuer,
substantially in the form of Exhibit A hereto, in an original aggregate
principal amount equal to $100,000,000, evidencing the obligations of the Issuer
hereunder and "Note" means any one of such promissory notes issued hereunder.
"Offering Memorandum" means the Private Placement Memorandum
dated October 1997 provided by the Issuer to the Purchasers in connection with
this Agreement, together with all amendments, supplements, exhibits and
schedules thereto delivered to the Purchasers prior to the execution of this
Agreement.
"Outstanding" means, with respect to the Notes, all Notes
issued pursuant to this Agreement except (i) Notes delivered to the Issuer in
substitution or exchange for which new Notes have been issued, (ii) Notes
delivered to the Issuer for payment upon maturity, prepayment or repurchase and
(iii) Notes held by the Issuer or any of its Affiliates.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"Petroleum Property" means any interest of the Issuer or any
Subsidiary in oil and gas reserves and assets consisting primarily of gas
gathering, processing and storage facilities and transmission pipelines.
"Plan" means at any time an employee pension benefit plan
(other than a Multiemployer Plan) which is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Internal
Revenue Code and either (i) is maintained, or contributed to, by any member of
the ERISA Group for employees of any member of the ERISA Group or (ii) has at
any time within the preceding five years been maintained, or contributed to, by
any Person which was at such time a member of the ERISA Group for employees of
any Person which was at such time a member of the ERISA Group.
"Present Value of Proved Reserves" means at any time the
standardized measure of discounted after-tax future net cash flows, calculated
in accordance with the methods prescribed at such time by Item 302(b) of
Regulation S-K or any successor provision promulgated by the Securities and
Exchange Commission (or if no such methods shall then be prescribed, then on a
basis consistent with those most recently so prescribed), of the Issuer's and
its Subsidiaries' Proved Reserves, excluding reserves subject to any
Non-Recourse Debt. In calculating the Present Value of Proved Reserves, Proved
Undeveloped Reserves shall not be taken into account to the extent that more
than 30% of the Present Value of Proved Reserves is attributable to Proved
Undeveloped Reserves.
"Prime Rate" means the rate of interest publicly announced by
Morgan Guaranty Trust Company of New York from time to time as its Prime Rate.
"Production Payment" means an interest in a Petroleum Property
that (i) is not subject to the costs of production and (ii) terminates at such
time as the interest holder has realized a specified sum from the sale of oil or
gas attributable to such interest.
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"Property" means any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"Proved Developed Producing Reserves" has the meaning assigned
to that term by the Society of Petroleum Engineers, as it may be amended from
time to time, but generally shall mean the subcategory of "Proved Developed
Reserves" (as defined by the Society of Petroleum Engineers) which are
recoverable by natural reservoir energies (including pumping) from the
completion intervals currently open and producing to market. Additional oil and
gas expected to be obtained through the application of fluid injection or other
improved recovery techniques for supplementing the natural forces and mechanisms
of primary recovery will be included as "Proved Developed Producing Reserves"
only after testing by a pilot project or after the operation of an installed
program has confirmed through production response through existing completions
producing to market that increased recovery will be achieved. Proved Developed
Producing Reserves shall not include any Proved Developed Non-Producing
Reserves.
"Proved Developed Non-Producing Reserves" has the meaning
assigned to that term by the Society of Petroleum Engineers, as it may be
amended from time to time, but generally shall mean the subcategory of "Proved
Developed Reserves" (as defined by the Society of Petroleum Engineers) which
will become "Proved Developed Producing Reserves" upon minor capital
expenditures being made with respect to existing wells which will cause formerly
non-producing completions or intervals to become open and producing to market.
"Proved Reserves" means and includes Proved Developed
Producing Reserves, Proved Developed Non-Producing Reserves and Proved
Undeveloped Reserves.
"Proved Undeveloped Reserves" has the meaning assigned to that
term by the Society of Petroleum Engineers, as it may be amended from time to
time, but generally shall mean those reserves that are expected to be recovered
from new wells on undrilled acreage, or from existing wells where a relatively
major expenditure is required for recompletion. 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 Undeveloped
Reserves for other undrilled units can be claimed only where it can be
demonstrated with certainty that there is continuity of production from the
existing productive formation. Under no circumstances should estimates for
Proved Undeveloped Reserves be attributable to any acreage for which an
application of fluid injection or other improved recovery technique is
contemplated, unless such techniques have been proved effective by actual tests
in the area and in the same reservoir.
"QPAM Exemption" means Prohibited Transaction Class Exemption
84-14 issued by the United States Department of Labor.
"Qualifying Director" means any director who (a) is elected by
a majority of the members of the board of directors of the Issuer who were
directors immediately prior to the event that caused the change in directorships
and (b) is not a "person" or member of a "group" of persons, or an "affiliate"
or "associate" of any "person" or "group" member, or an "associate" of an
"affiliate" of any such "person" or "group" member, which "person" or "group" of
persons, together with all of their respective "affiliates" and "associates" and
all "associates" of their respective "affiliates" (other than a "person" or
"group" of persons or an "affiliate" or "associate" of such "person" or "group"
of persons or an "associate" of such "affiliate" in each case which is
affiliated with the Issuer or any Subsidiary) comprise a majority of the board
of directors of the Issuer.
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"Required Lenders" means Holders of at least 66 2/3% in
principal amount of the Outstanding Notes.
"Reserve Report" means the Reserve Summary contained in the
Offering Memorandum and, subsequently, a report delivered by the Issuer pursuant
to Section 5.08(a).
"Subsidiary" means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned by the Issuer.
"Unfunded Liabilities" means, with respect to any Plan at any
time, the amount (if any) by which (i) the present value of all benefits under
such Plan exceeds (ii) the fair market value of all Plan assets allocable to
such benefits (excluding any accrued but unpaid contributions), all determined
as of the then most recent valuation date for such Plan, but only to the extent
that such excess represents a potential liability of the Issuer or any
Subsidiary (whether direct or joint and several with one or more affiliates) to
the PBGC or any other Person under Title IV of ERISA.
"Wholly-Owned Subsidiary" means any Subsidiary all of the
shares of capital stock or other ownership interests of which (except directors'
qualifying shares) are at the time directly or indirectly owned by the Issuer.
SECTION 1.02. Accounting Terms and Definitions. Unless
otherwise specified herein, all accounting terms used in this Agreement shall be
interpreted, all accounting determinations hereunder shall be made and all
financial statements required to be delivered hereunder shall be prepared in
accordance with generally accepted accounting principles as in effect from time
to time, applied on a basis consistent (except for changes concurred by the
Issuer's independent public accountants) with the most recent audited
consolidated financial statements of the Issuer delivered to the Holders.
ARTICLE II
THE NOTES
SECTION 2.01. Sale and Purchase of Notes. The Issuer agrees to
issue and sell to each Purchaser, and subject to the terms and conditions of
this Agreement, each Purchaser, severally and not jointly, agrees to purchase
from the Issuer, at the Closing provided for in Section 2.02, Notes in the
principal amounts specified opposite such Purchaser's name on Schedule A
attached hereto. The purchase price of the Notes to be purchased by each
Purchaser shall be 100% of the principal amount thereof. The Notes to be
purchased by each Purchaser will be dated the date of issue thereof, will mature
on the date set forth therein and will bear interest on the unpaid balance
thereof from the date of issue until the principal thereof shall become due and
payable, at the rate of 7.19% per annum. Interest on the Notes shall be computed
on the basis of a year of 360 days, consisting of 12 30-day months, and accrued
and unpaid interest on the unpaid balance thereof shall be payable semi-annually
on May 15 and November 15 of each year, commencing May 15, 1998, and at
maturity. Any overdue principal of, prepayment charge on, and, to the extent
permitted by law, overdue interest on any Note shall bear interest, payable on
demand, for each day from and including the date payment thereof is due to but
excluding the date of actual payment, at a rate per annum equal to the higher of
(i) 9.19% and (ii) the Prime Rate for such day plus 2%. Whenever any payment of
principal of, or interest on, a Note shall be due on a day which is not a
Business Day, the date for payment thereof shall be extended to the next
succeeding Business Day. If the date for any payment of principal is extended by
operation of law or otherwise, interest thereon will be payable for such
extended time. The Notes will be in registered form substantially in the form of
Exhibit A attached hereto.
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SECTION 2.02. CLOSING. The sale and purchase of the Notes
shall take place- at the offices of Milbank, Tweed, Hadley & McCloy, 1 Chase
Manhattan Plaza, New York, New York 10005, at 10:00 a.m., New York City time, on
November 18, 1997 or at such other time on such day as may be agreed upon by the
Issuer and the Purchasers (the "Closing"). At the Closing, the Issuer will
deliver to each Purchaser the Note or Notes to be purchased by such Purchaser,
dated the date of the Closing and registered in such Purchaser's name (or in the
name of such Purchaser's nominee), against delivery by such Purchaser to the
Issuer or its order of immediately available funds in the amount of the purchase
price thereof. If at the Closing the Issuer shall fail to tender such Note or
Notes to such Purchaser as provided above, or any of the conditions specified in
Article III shall not have been satisfied or waived, such Purchaser shall, at
its election, be relieved of all further obligations under this Agreement,
without thereby waiving any other rights such Purchaser may have by reason of
such failure or such nonfulfillment.
SECTION 2.03. Prepayments. (a) Subject to the provisions of
Section 2.03(e), the Issuer shall pay $20,000,000 of the outstanding principal
amount of the Notes on November 15 of each of the years 2005 through 2008,
inclusive, and shall pay the remaining outstanding principal amount of the Notes
together with all accrued but unpaid interest thereon, and the Notes shall
finally mature, on November 15, 2009.
(b) On any date (but in any event not more than four times in
any fiscal year), the Issuer may prepay all or any portion of the Notes,
provided that, simultaneously with any such prepayment, the Issuer shall pay
accrued but unpaid interest and a prepayment charge with respect to Notes being
prepaid equal to the amount (the "Make Whole Amount") not less than zero that is
the excess of:
(1) the sum of the Present Values of (i) the aggregate
principal amount of the Notes being prepaid (assuming the principal
balance of such Notes payable upon maturity and the required
prepayments pursuant to Section 2.03(a) are paid when due, without
regard to the prepayment in respect of which the Make Whole Amount is
being calculated) and (ii) the amount of interest which would have been
payable on the principal amount of such Notes (assuming the principal
balance of such Notes payable upon maturity, the required prepayments
pursuant to Section 2.03(a) and interest payments pursuant to the terms
of such Notes are paid when due); over
(2) the aggregate principal amount of the Notes being prepaid.
For purposes of the definition of Make Whole Amount, "Present Value" shall be
computed in accordance with generally accepted accounting principles on a
semiannual basis at a discount rate equal to the sum of the Treasury Yield plus
0.50%; and the "Treasury Yield" shall be the yield to maturity implied by (i)
the yields reported, as of 10:00 A.M. (New York City time) on the second
Business Day prior to the date fixed for prepayment, on the display designated
as Bloomberg Financial Markets "Page USD" (or such other display as may replace
Bloomberg Financial Markets "Page USD") for actively traded United States
Treasury securities adjusted to a constant maturity equal to the then remaining
weighted average life of the Notes being prepaid (the "Remaining Life"), or (ii)
if such yields are not reported as of such time or the yields reported as of
such time are not ascertainable, the Treasury Constant Maturity Series Yields
reported, for the latest day for which such yields have been so reported as of
the second Business Day prior to the date fixed for prepayment in Federal
Reserve Statistical Release H.15 (519) (or any comparable successor publication)
for actively traded United States Treasury securities adjusted to a constant
maturity equal to the Remaining Life; provided that if the Remaining Life of the
Notes is not equal to the constant maturity of a United States Treasury
12
security for which a weekly average yield is given, the Treasury Yield shall be
obtained by linear interpolation (calculated to the nearest one-twelfth of a
year) from the most recent weekly average yield of United States Treasury
securities for which such yields are given having a maturity as close as
possible to the Remaining Life.
Prepayments of Notes in accordance with this subsection (b)
shall be made in minimum amounts of $5,000,000 principal amount of Notes and
increments of $1,000,000.
(c) The Issuer shall give each Holder at least 20 Business
Days'(but not more than 60 days') notice of any anticipated prepayment of Notes
pursuant to paragraph (b) of this Section 2.03, which notice shall set forth the
date of the prepayment and the anticipated amount of the prepayment applicable
to such Holder's Notes. Any such notice given by the Issuer hereunder shall be
irrevocable. The Issuer shall, at least one Business Day prior to the date of
the prepayment, give immediate notice to each Holder of the Make Whole Amount
applicable to such prepayment, showing the components of the calculation
thereof.
(d) In the event of a Change of Control, the Issuer shall
prepay the aggregate principal amount of the Notes of any Holder electing
prepayment, together with accrued and unpaid interest thereon and the Make Whole
Amount with respect thereto. The Issuer shall give notice (the "Change of
Control Notice") to each Holder of a Change of Control within 5 Business Days of
knowledge of such event. The Change of Control Notice shall include a statement
of the date of occurrence of such Change of Control and a description of the
facts known to the Issuer underlying such Change of Control and shall state that
the Issuer is obligated, pursuant to this Section 2.03(d), to purchase Notes in
respect of which a Holder shall elect prepayment. Each Holder electing
prepayment shall notify the Issuer in writing of its election of prepayment (the
"Election Notice") within 30-days of the date of the Change of Control Notice.
The Issuer shall promptly upon receipt of an Election Notice from any Holder
forward a copy of such Election Notice to all other Holders. In the event that a
Change of Control occurs but no Change of Control Notice is given by the Issuer,
a Holder may deliver a notice to the Issuer (a "Purchase Notice") stating that
it is electing to exercise its right to require the Issuer to purchase its
Notes. The Issuer shall forthwith upon receipt of any Purchase Notice give
notice of the receipt of such Purchase Notice (and enclose a copy of such
Purchase Notice) to all other Holders, stating that other Holders may give a
similar notice to the Issuer within 30 days of the date of transmission of the
copy of such Purchase Notice by the Issuer. Prepayments required to be made by
this paragraph (d) shall be made on a date specified by the Issuer by at least 5
Business Days notice to the Holders electing prepayment, which date shall be no
later than 15 days after the earlier of (i) the last day for submission of the
Election Notice or Purchase Notice by any Holder and (ii) the date of receipt by
the Issuer of an Election Notice or Purchase Notice from a Holder such that all
Holders of Outstanding Notes have delivered such Notice to the Issuer.
(e) The Issuer will not make any payment of any Note under
this Section 2.03 unless a simultaneous payment is made to all Holders (or in
the case of prepayment under subsection (d) to all Holders electing prepayment)
so as to reduce ratably the obligation of the Issuer under each of the
Outstanding Notes (or, in the case of prepayment under subsection (d), under
each of the Outstanding Notes as to which the Holder has elected prepayment).
The amount of each payment required by subsection (a) shall be reduced ratably
by the aggregate principal amount of Notes prepaid in accordance with subsection
(b) or (d).
(f) The Issuer will not, and will not permit any of its
Affiliates to, acquire directly or indirectly by purchase or prepayment or
otherwise any of the Outstanding Notes except by way of payment or prepayment in
accordance with the provisions of the Notes and of this
13
Agreement. Notes paid or prepaid in full in accordance with this Section 2.03
shall not be deemed Outstanding for any purpose under this Agreement.
SECTION 2.04. Maximum Interest Rate. The Issuer, the
Purchasers and all other Holders of the Notes specifically intend and agree to
limit contractually the amount of interest, and all amounts which shall be
deemed to constitute interest under applicable law, payable under this
Agreement, the Notes and all other instruments and agreements related hereto and
thereto to the maximum amount of interest lawfully permitted to be charged under
applicable law. Therefore, none of the terms of this Agreement, the Notes or any
instrument pertaining to or relating to this Agreement or the Notes shall ever
be construed to create a contract to pay interest at a rate in excess of the
maximum rate permitted to be charged under applicable law, and neither the
Issuer nor any other party liable or to become liable hereunder, under the Notes
or under any other instruments and agreements related hereto and thereto shall
ever be liable for interest in excess of the amount determined at such maximum
rate, and the provisions of this Section 2.04 shall control over all other
provisions of this Agreement, the Notes, or any other instrument pertaining to
or relating to the transactions herein contemplated. If any amount of interest
taken or received by any Holder of a Note shall be in excess of said maximum
amount of interest which, under applicable law, could lawfully have been
collected by such Holder incident to such transactions, then such excess shall
be deemed to have been the result of a mathematical error by all parties hereto
and the amount of interest which would otherwise be payable hereunder or under
the Notes shall be automatically reduced to the amount allowed under applicable
law, and such excess shall be credited ratably against and to the extent of the
unpaid principal amount of the Note or Notes held by such Holder, with the
excess, if any, being refunded to the Issuer. All amounts paid or agreed to be
paid in connection with such transactions which would under applicable law be
deemed "interest" shall, to the extent permitted by such applicable law, be
amortized, prorated, allocated and spread throughout the full stated term of
this Agreement. "Maximum rate" as used in this paragraph means, with respect to
each of the Notes, the maximum lawful, nonusurious rates of interest which under
applicable law may be charged to the Issuer from time to time with respect to
such Notes.
ARTICLE III
CONDITIONS TO PURCHASE OF NOTES
SECTION 3.01. Conditions to Purchase. The obligation of each
Purchaser to purchase a Note or Notes at the Closing is subject to the
satisfaction of such of the following conditions as shall not have been
expressly waived by such Purchaser:
(a) the fact that, immediately before and after such purchase,
no Default shall have occurred and be continuing;
(b) the fact that the representations and warranties of the
Issuer contained in this Agreement shall be true and correct on and as
of the date of such purchase and before and after giving effect to the
issuance and purchase of the Notes;
(c) receipt by such Purchaser of a Note duly executed on
behalf of the Issuer and dated the date of such purchase, substantially
in the form of Exhibit A hereto;
(d) receipt by such Purchaser of an opinion of Baker & Botts,
counsel for the Issuer, substantially in the form of Exhibit B hereto;
14
(e) receipt by such Purchaser of an opinion of Lisa A.
Machesney, Managing Counsel for the Issuer, substantially in the form
Of Exhibit C hereto;
(f) receipt by such Purchaser of an opinion of Milbank, Tweed,
Hadley & McCloy, special counsel for the Purchasers, substantially in
the form of Exhibit D hereto;
(g) receipt by such Purchaser of a certificate signed by the
chief financial officer or the treasurer of the Issuer, to the effect
set forth in clauses (a) and (b) of Section 3.01;
(h) on the Closing Date, the purchase of Notes by such
Purchaser shall (i) be permitted by the laws and regulations of each
jurisdiction to which such Purchaser is subject, without recourse to
provisions (such as Section 1405(a)(8) of the New York Insurance Law)
permitting limited investments by insurance companies without
restriction as to the character of the particular investment, (ii) not
violate any applicable law or regulation (including, without
limitation, Regulation G, T or X of the Board of Governors of the
Federal Reserve System) and (iii) not subject such Purchaser to any
tax, penalty or liability under or pursuant to any applicable law or
regulation, which law or regulation was not in effect on the date
hereof; and, if requested by any Purchaser, such Purchaser shall have
received a certificate of the chief financial officer, principal
accounting officer, treasurer or comptroller of the Issuer or of any
other officer of the Issuer whose responsibilities extend to the
subject matter of such certificate, certifying as to such matters of
fact (but in no event as to a legal conclusion with respect thereto) as
such Purchaser may reasonably specify in a form to be provided by such
Purchaser, to enable such Purchaser to determine whether such purchase
is so permitted;
(i) without limiting the provisions of Section 8.03, the
Issuer shall have paid on or before the Closing Date the fees, charges
and disbursements of special counsel for the Purchasers referred to in
paragraph (f) above to the extent reflected in a statement of such
counsel rendered to the Issuer at least one Business Day prior to the
Closing Date;
(j) evidence satisfactory to such Purchaser of the receipt of
a Private Placement Number for the Notes from the CUSIP Bureau of
Standard & Poor's;
(k) the fact that the Issuer shall have issued and sold
$100,000,000 in aggregate principal amount of Notes hereunder (taking
into account the Notes to be purchased by such Purchaser); and
(l) receipt by such Purchaser of all documents it or its
special counsel may reasonably request relating to the existence of the
Issuer, the corporate authority for and the validity of the Notes and
this Agreement, and any other matters relevant hereto, all in form and
substance satisfactory to special counsel for the Purchasers.
The documents and opinions referred to in this Article III shall be delivered to
each Purchaser no later than the Closing Date. The certificate and opinions
referred to above shall be dated the Closing Date.
15
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Issuer represents and warrants to each Purchaser that:
SECTION 4.01. Corporate Existence and Power. The Issuer and
each Subsidiary is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and has all
corporate powers and all governmental licenses, authorizations, consents and
approvals required to own its assets and to carry on its business as now
conducted and is duly qualified as a foreign corporation in good standing in
each jurisdiction where the nature of its business or the ownership or leasing
of its Properties requires such qualification, except where the failure to
qualify would not materially and adversely affect the conduct of its business or
the enforceability of contractual obligations of the Issuer. Neither the Issuer
nor any Affiliate is subject to regulation under the Public Utility Holding
Company Act of 1935, the Investment Company Act of 1940, the Transportation Act
(49 U.S.C.), as amended, the Federal Power Act, as amended, or any other law or
regulation the application of which limits the incurrence by the Issuer of Debt
hereunder, including, but not limited to, laws relating to common or contract
carriers or the sale of electricity, gas, steam, water or other public utility
services.
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by the Issuer of this
Agreement and the Notes are within the Issuer's corporate powers, have been duly
authorized by all necessary corporate action, require no action by or in respect
of, or filing with, any governmental body, agency or official and do not
contravene, or constitute a default under, any provision of applicable law or
regulation or of the certificate of incorporation or bylaws of the Issuer or of
any agreement or instrument evidencing or governing Debt of the Issuer or any
Affiliate or any other agreement, instrument, judgment, injunction, order or
decree binding upon the Issuer or any Subsidiary or result in the creation or
imposition of any Lien on any asset of the Issuer pursuant to any such
agreement, instrument, judgment, injunction, order or decree.
SECTION 4.03. Binding Effect. The Notes and this Agreement
constitute legal, valid and binding obligations of the Issuer enforceable in
accordance with their terms, except as the enforceability thereof may be limited
by (i) bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (ii) equitable principles of general applicability.
SECTION 4.04. Financial Information
(a) Audited Financial Statements. The consolidated balance
sheets of the Issuer and its Subsidiaries as of the fiscal years ended December
31, 1994 to 1996 and the related consolidated statements of operations, cash
flows and stockholders' equity for the fiscal years then ended, reported on by
Coopers & Lybrand and set forth in the Offering Memorandum, a copy of which has
been delivered to each of the Purchasers, fairly present, in conformity with
generally accepted accounting principles, the consolidated financial position of
the Issuer and its Subsidiaries as of such dates and their consolidated results
of operations and cash flows for such fiscal years.
(b) Reserve Data. There are no statements or conclusions in
the reserve report included in the Offering Memorandum provided to Purchasers
regarding reserves which are based upon or include misleading information or
fail to take into account material information known to the Issuer regarding the
matters reported therein, it being understood that such statements and
conclusions are necessarily based upon professional opinions, estimates and
forecasts, and the Issuer
16
does not warrant that such opinions, estimates and forecasts will ultimately
prove to have been accurate. Such reserve data has, in the judgment of the
Issuer, been properly compiled from engineering tests conducted in accordance
with prevailing industry standards.
(c) The financial projections and estimates and the pro forma
financial statements included in the Offering Memorandum or otherwise furnished
by the Issuer in connection with the Notes and this Agreement have been prepared
by the Issuer in good faith on the basis of information and assumptions that the
Issuer believed to be reasonable as of the date of such information, and no
material assumptions have been omitted as basis for such financial projections
and estimates and pro forma financial statements.
(d) Since December 31, 1996, there has been no material
adverse change in the business, Properties, financial position, results of
operations or prospects of the Issuer or the Issuer and its Subsidiaries,
considered as a whole.
SECTION 4.05. Full Disclosure. None of the financial
statements and other financial or factual information included in the Offering
Memorandum (excluding estimates, financial projections and pro forma financial
statements) contains any untrue statement of material fact or omits to state a
material fact necessary in order to make the statements contained therein not
misleading. All other financial and reserve information, financial statements
and other documents (excluding estimates, projections and pro forma financial
information) furnished by the Issuer to the Purchasers in connection with the
Notes and this Agreement and set forth on Schedule 4.05 do not and will not
contain any untrue statement of material fact or omit to state a material fact
necessary in order to make the statements contained therein not misleading. The
Issuer has disclosed to the Purchasers in writing any and all facts known to the
Issuer which materially, and adversely affect the business, properties,
operations or condition, financial or otherwise, of the Issuer or the Issuer and
its Subsidiaries, considered as a whole or the Issuer's ability to perform its
obligations under the Notes and this Agreement.
SECTION 4.06. Litigation. Except as disclosed on
Schedule 4.06 there is no action, suit or proceeding pending against, or to the
knowledge of the Issuer threatened against or affecting, the Issuer or any of
its Affiliates before any court or arbitrator or any governmental body, agency
or official in which there is a reasonable possibility of an adverse decision
which could individually or in the aggregate materially adversely affect the
financial position of the Issuer or the Issuer and its Subsidiaries, considered
as a whole or which in any manner draws into question the validity of the Notes
and this Agreement.
SECTION 4.07. Compliance with ERISA. (a) Each member of the
ERISA Group has fulfilled its obligations under the minimum funding standards of
ERISA and the Internal Revenue Code with respect to each Plan and is in
compliance in all material respects with the presently applicable provisions of
ERISA and the Internal Revenue Code with respect to each Plan. No member of the
ERISA Group has (i) sought a waiver of the minimum funding standard under
Section 412 of the Internal Revenue Code in respect of any Plan, (ii) failed to
make any contribution or payment to any Plan or Multiemployer Plan, or made any
amendment to any Plan, which, in either case, has resulted or could result in
the imposition of a Lien on Property of the Issuer or any Subsidiary or the
posting of a bond or other security by the Issuer or any Subsidiary under ERISA
or the Internal Revenue Code or (iii) incurred any liability under Title IV of
ERISA (other than a liability to the PBGC for premiums under Section 4007 of
ERISA) which could cause the Issuer or any Subsidiary (whether directly or
jointly and severally with one or more affiliates) to incur any liability.
17
(b) The execution and delivery of this Agreement and the
issuance and sale of the Notes hereunder will not involve any transaction that
is subject to the prohibitions of section 406(a) of ERISA or in connection with
which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of the
Internal Revenue Code. The representation by the Issuer in the immediately
preceding sentence is made in reliance upon and subject to the accuracy of the
representation of each Purchaser in Section 7.02 as to the sources of the funds
used to pay the purchase price of the Notes to be purchased by such Purchaser.
SECTION 4.08. Environmental Matters. In the ordinary course of
its business, the Issuer considers effects of all existing and applicable
Environmental Laws on the business, operations and properties of the Issuer and
its Subsidiaries, in the course of which it identifies and evaluates associated
liabilities and costs (including, without limitation, any capital or operating
expenditures required for cleanup or closure of properties currently or
previously owned, any capital or operating expenditures required to achieve or
maintain compliance with environmental protection standards imposed by law or as
a condition of any license, permit or contract, any related constraints on
operating activities, including any periodic or permanent shutdown of any
facility or reduction in the level of or change in the nature of operations
conducted thereat and any actual or potential liabilities to third parties,
including employees, and any related costs and expenses). The Issuer has
reasonably concluded that existing and applicable Environmental Laws are
unlikely to have a material adverse effect on the business, Properties,
financial condition, results of operations or prospects of the Issuer or the
Issuer and its Subsidiaries, considered as a whole. The Issuer and its
Subsidiaries have conducted and are conducting their respective businesses in
compliance with all applicable Environmental Laws, except where the failure to
so comply would not have a material adverse effect on the Issuer or the Issuer
and its Subsidiaries, considered as a whole.
SECTION 4.09. Taxes. The Issuer and its Subsidiaries have
filed all United States Federal income tax returns and all other material tax
returns which are required to be filed by them and have paid all taxes due
pursuant to such returns or pursuant to any assessment received by the Issuer or
any Subsidiary. The charges, accruals and reserves on the books of the Issuer
and its Subsidiaries in respect of taxes or other governmental charges are
adequate.
SECTION 4.10. Titles, ect. The Issuer and each Subsidiary has
valid and defensible title to its material (individually or in the aggregate)
Petroleum Properties and good, valid, defensible and marketable title to its
other real and personal property, in each case free and clear of all Liens
except Liens expressly permitted by Section 5.10. Each lease under which the
Issuer or any of its Subsidiaries is the lessee which is material to the
business or operations of the Issuer or the Issuer and its Subsidiaries
considered as a whole is valid and subsisting and is in full force and effect.
SECTION 4.11. Casualities; Taking of Properties. Since the
date of the reserve data included in the Offering Memorandum, neither the
business nor the Petroleum Properties of the Issuer or any of its Subsidiaries
have been affected as a result of any fire, explosion, earthquake, flood,
drought, windstorm, accident, strike or other labor disturbance, embargo,
requisition or taking of Property or cancellation of contract, permits or
concessions by any domestic or foreign government or any agency thereof, riot,
activities of armed forces or acts of God or of any public enemy, or any other
event the occurrence of which, would have a material adverse effect on the
business, Properties, financial condition, results of operations or prospects of
the Issuer or the Issuer and its Subsidiaries, considered as a whole.
SECTION 4.12. Gas Imbalances. There exists no gas imbalances,
take or pay or other prepayments with respect to any Petroleum Properties which
would require the Issuer or any Subsidiary to deliver hydrocarbons produced from
any Petroleum Properties at some future time
18
without then or thereafter receiving full payment therefor which would be
reasonably likely to have a material adverse effect on the business, Properties,
financial condition, results of operations or prospects of the Issuer or the
Issuer and its Subsidiaries, considered as a whole.
SECTION 4.13. Use of Proceeds. The proceeds from the sale of
the Notes pursuant to this Agreement will be used by the Issuer to repay
indebtedness under the Credit Agreement and for general corporate purposes. No
part of the proceeds from the sale of the Notes hereunder will be used, directly
or indirectly, for the purpose of buying or carrying any margin stock within the
meaning of Regulation G of the Board of Governors of the Federal Reserve System
(12 CFR 207), or for the purpose of buying or carrying or trading in any
securities under such circumstances as to involve the Issuer in a violation of
Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a
violation of Regulation T of said Board (12 CFR 220). Margin stock does not
constitute more than 5% of the value of the consolidated assets of the Issuer
and its Subsidiaries and the Issuer does not have any present intention that
margin stock will constitute more than 5% of the value of such assets. As used
in this Section, the terms "margin stock" and "purpose of buying or carrying"
shall have the meanings assigned to them in said Regulation G.
SECTION 4.14. Offering of the Notes. Neither the Issuer nor
any Person acting on behalf of the Issuer has, directly or indirectly, offered
any of the Notes or any similar security of the Issuer for sale to, or solicited
any offers to buy any thereof from, or otherwise approached or negotiated with
respect thereto with, anyone other than the Purchasers and not more than 75
other institutional investors, each of whom were offered a portion of the Notes
for purposes of investment and not for distribution. Neither the Issuer nor any
Person acting on behalf of the Issuer has taken or will take any action which
would cause the offer, issuance or sale of any Note to any Purchaser to violate
the provisions of the Securities Act of 1933, as amended, or any other
securities or blue sky laws of any applicable jurisdiction or subject the
issuance or sale of the Notes to the registration requirements of Section 5 of
said Securities Act.
SECTION 4.15. Ownership of Subsidiaries. Schedule 4.15 sets
forth a list of each Subsidiary of the Issuer and its jurisdiction of
incorporation. All of the issued shares of capital stock of such Subsidiary have
been duly and validly authorized and issued, are fully paid and nonassessable,
and are owned directly or indirectly by the Issuer, free and clear of all Liens
and restrictions on transferability or voting.
ARTICLE V
COVENANTS
The Issuer agrees that, so long as any amount payable under
any Note or this Agreement remains unpaid, it will, and will cause each of its
Subsidiaries to, perform and comply with each of the following covenants, unless
such performance and compliance shall have been specifically waived in writing
by the Required Lenders:
19
SECTION 5.01. Information. The Issuer will deliver to each of
the Holders:
(a) as soon as available and in any event within 100 days
after the end of each fiscal year of the Issuer, a consolidated balance
sheet of the Issuer and its Subsidiaries as of the end of such fiscal
year and the related consolidated statements of operations, cash flows
and stockholders' equity for such fiscal year, setting forth in each
case in comparative form the figures for the previous fiscal year, all
reported on in a manner acceptable to the Securities and Exchange
Commission by Coopers & Lybrand or other independent public accountants
of nationally recognized standing;
(b) as soon as available and in any event within 60 days after
the end of each of the first three quarters of each fiscal year of the
Issuer, a consolidated balance sheet of the Issuer and its Subsidiaries
as of the end of such quarter and the related consolidated statements
of operations and cash flows for such quarter and for the portion of
the Issuer's fiscal year ended at the end of such quarter, setting
forth in each case in comparative form the figures for the
corresponding quarter and the corresponding portion of the Issuer's
previous fiscal year, all certified (subject to normal year-end
adjustments) as to fairness of presentation, generally accepted
accounting principles and consistency by the chief financial officer or
the chief accounting officer or treasurer of the Issuer;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of
the chief financial officer or the chief accounting officer or
treasurer of the Issuer (i) setting forth in reasonable detail the
calculations required to establish whether the Issuer was in compliance
with the financial covenants contained herein on the date of such
financial statements, and (ii) stating whether any Default then exists,
setting forth the details thereof and the action which the Issuer is
taking or proposes to take with respect thereto;
(d) within five days after any Executive Officer of the Issuer
obtains knowledge of any Default, if such Default is then continuing, a
certificate of the chief financial officer or the chief accounting
officer or treasurer of the Issuer setting forth the details thereof
and the action which the Issuer is taking or proposes to take with
respect thereto;
(e) promptly upon the mailing thereof to the shareholders of
the Issuer generally, copies of all financial statements, reports and
proxy statements so mailed;
(f) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and any
registration statements on Form S-8, or its equivalent) and reports on
Forms 10K, 10Q and 8K (or their equivalents) which the Issuer shall
have filed with the Securities and Exchange Commission;
(g) if and when any member of the ERISA Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as
defined in Section 4043 of ERISA and the regulations thereunder) with
respect to any Plan which might constitute grounds for a termination of
such Plan under Title IV of ERISA, or any Executive Officer of the
Issuer or any Subsidiary knows that the plan administrator of any Plan
has given or is required to give notice of any such reportable event, a
copy of the notice of such reportable event given or required to be
given to the PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA or notice that any
Multiemployer Plan is in reorganization, is insolvent or has been
terminated, a copy of such notice; (iii) receives notice from the PBGC
under Title IV of ERISA of an intent to terminate, impose liability
(other than for premiums
20
under Section 4007 of ERISA) in respect of, or appoint a trustee to
administer any Plan, a copy of such notice; (iv) applies for a waiver
of the minimum funding standard under Section 412 of the Internal
Revenue Code, a copy of such application; (v) gives notice of intent to
terminate any Plan under Section 4041(c) of ERISA, a copy of such
notice and other information filed with the PBGC; (vi) gives notice of
withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of
such notice; or (vii) fails to make any required payment or
contribution to any Plan or Multiemployer Plan, or makes any amendment
to any Plan which has resulted or could result in the imposition of a
Lien on Property of the Issuer or any Subsidiary or the posting of a
bond or other security by the Issuer or any Subsidiary, a certificate
of the chief financial officer or the chief accounting officer or
treasurer of the Issuer setting forth details as to such occurrence and
action, if any, which the Issuer or applicable member of the ERISA
Group is required or proposes to take; and
(h) from time to time such additional information regarding
the financial position, reserves or business of the Issuer and its
Subsidiaries as any Holder may reasonably request.
SECTION 5.02. Payment of Obligations. The Issuer will pay and
discharge, and will cause each Subsidiary to pay and discharge, at or before
maturity, all their respective material obligations and liabilities, including,
without limitation, tax liabilities, except where, the same may be contested in
good faith by appropriate proceedings, and will maintain, and will cause each
Subsidiary to maintain, in accordance with generally accepted accounting
principles, appropriate reserves for the accrual of any of the same.
SECTION 5.03. Maintenance of Property. The Issuer will keep,
and will cause each Subsidiary to keep, all property useful and necessary in its
business in good working order and condition, ordinary wear and tear excepted.
The Issuer will operate, or will use its best efforts to cause a third party
operator to operate, all Petroleum Properties in a prudent manner, and will
market or will cause to be marketed the production therefrom at the best price
reasonably obtainable at the time the applicable sales contract is executed.
SECTION 5.04. Conduct of Business and Maintenance of
Existence. The Issuer (a) will, and will cause each Subsidiary to continue to,
engage in business of the same general type as now conducted by the Issuer and
its Subsidiaries, and (b) will preserve, renew and keep in full force and
effect, and will cause each Subsidiary to preserve, renew and keep in full force
and effect, their respective corporate existence and their respective rights,
privileges and franchises necessary or desirable in the normal conduct of
business; provided that nothing in this Section 5.04 shall prohibit (i) the
merger of a Wholly-Owned Subsidiary into the Issuer or the merger or
consolidation of a Wholly-Owned Subsidiary with or into another Person if the
corporation surviving such consolidation or merger is a Wholly-Owned Subsidiary
and if, in each case, after giving effect thereto, no Default shall have
occurred and be continuing or (ii) the termination of the corporate existence of
any Subsidiary if the Issuer in good faith determines that such termination is
in the best interest of the Issuer and is not materially disadvantageous to the
Holders.
SECTION 5.05. Compliance with Laws. The Issuer will comply,
and will cause each Subsidiary to comply, in all material respects with all
applicable laws, ordinances, rules, regulations, and requirements of
governmental authorities (including, without limitation, Environmental Laws and
ERISA and the rules and regulations thereunder) except for laws the violation of
which could not have a material adverse effect on the Issuer or any Subsidiary
and where the necessity of compliance therewith is contested in good faith by
appropriate proceedings.
21
SECTION 5.06. Inspection of Property, Books and Records. The
Issuer will keep, and will cause each Subsidiary to keep, proper books of record
and account in which full, true and correct entries shall be made of all
dealings and transactions in relation to its business and activities; and will
permit, and will cause each Subsidiary to permit, representatives of any Holder
at such Holder's expense (except during the continuance of any Default, in which
case at the expense of the Issuer) to visit and inspect any of their respective
Properties, to examine and make copies of any of their respective books and
records and to discuss their respective affairs, finances and accounts with
their respective officers, employees and independent public accountants, all at
such reasonable times and as often as may reasonably be desired.
SECTION 5.07. Insurance. The Issuer and each Subsidiary now
maintains and will cause to be maintained with insurers which the Issuer
believes to be financially sound and reputable, insurance with respect to its
Properties and business against such liabilities, casualties, risks and
contingencies and in such types and amounts as is customary in the case of
Persons engaged in the same or similar businesses and similarly situated.
SECTION 5.08. Engineering Reports
(a) On or before April 10, 1998, and thereafter by April 10th
of each subsequent year, the Issuer shall furnish to each of the Holders a
report in form and substance reasonably satisfactory to the Required Lenders
prepared by or under the supervision of a petroleum engineer who may be an
employee of the Issuer, which shall evaluate all net Proved Reserves owned by
the Issuer and its Subsidiaries as of the preceding December 31 and which shall
set forth the information necessary to determine the Present Value of Proved
Reserves as of such date.
(b) Together with the Reserve Report furnished pursuant to
subsection (a), the Issuer shall furnish to each of the Holders a review report
thereon in form and substance reasonably satisfactory to the Required Lenders by
Miller & Lents, Ltd. or other independent petroleum engineers of nationally
recognized standing.
SECTION 5.09. Asset Coverage Ratio. (a) The ratio of (i)
Present Value of Proved Reserves plus Adjusted Cash to (ii) Debt and Other
Liabilities shall at all times be not less than 1.5:1;
(b) The Present Value of Proved Reserves will be determined
and adjusted periodically as follows:
(i) The calculation of Present Value of Proved Reserves will
be determined from the most recent Reserve Report.
(ii) Upon any sale by the Issuer or any Subsidiary of any
Petroleum Property including but not limited to a sale of a lesser
interest such as a royalty or a net profit interest to the extent the
sale of such lesser interest is not considered to create a Lien (other
than the sale of hydrocarbons after severance occurring in the ordinary
course of the Issuer's business), the calculation of Present Value of
Proved Reserves shall be reduced, effective on the date of consummation
of such sale, by an amount equal to the Present Value of Proved
Reserves attributable to Proved Reserves included in such sale.
(iii) Immediately upon acquisition or development by the
Issuer or any Subsidiary of any Petroleum Property owned directly by
the Issuer or any Subsidiary and not reflected in the most recent
Reserve Report, the calculation of Present Value
22
of Proved Reserves shall be increased in an amount equal to the Present
Value of Proved Reserves attributable to such Petroleum Property.
SECTION 5.10. Liens. The Issuer will not, and will not permit
any Subsidiary to, create, incur, assume or suffer to exist any Lien on any of
its Properties (now owned or hereafter acquired), except:
(a) Excepted Liens;
(b) Liens existing on the Closing Date and listed on Schedule
5.10, but not any renewals and extensions thereof;
(c) a Lien existing on any asset prior to the acquisition
thereof by the Issuer or any of its Subsidiaries but not created in
contemplation of such acquisition;
(d) a Lien on any asset not previously owned by the Issuer or
any Subsidiary securing Debt incurred or assumed for the purpose of
financing any part of the cost of acquiring such asset, provided that
such Lien attaches to such asset concurrently with or within 90 days
after the acquisition thereof;
(e) Liens in respect of gas imbalances in the ordinary course
of business not exceeding 2% of the Present Value of Proved Reserves in
the aggregate at any time; and
(f) Liens securing other Debt of the Issuer or any Subsidiary
the aggregate principal amount of which, when taken together with the
amount of Attributable Debt in respect of sale and leaseback
transactions otherwise restricted by Section 5.15, does not exceed
$5,000,000 at any time.
SECTION 5.11. Transactions with Affiliates. The Issuer will
not, and will not permit any Subsidiary to, directly or indirectly, pay any
funds to or for the account of, make any Investment in, lease, sell, transfer or
otherwise dispose of any assets, tangible or intangible, to, or participate in,
or effect any transaction in connection with any joint enterprise or other joint
arrangement with, any Affiliate; provided, however, that the foregoing
provisions of this Section shall not prohibit (a) the Issuer or any Subsidiary
from making sales to or purchases from any Affiliates and, in connection
therewith, extending credit or making payments, or from making payments for
services rendered by any Affiliates, if such sales or purchases are made or such
services are rendered in the ordinary course of business and on terms and
conditions at least as favorable to it as the terms and conditions which would
apply in a similar transaction with a Person not an Affiliate, (b) the Issuer
from making payments of principal, interest and premium on any Debt of the
Issuer held by an Affiliate if the terms of such Debt are substantially as
favorable to the Issuer as the terms which could have been obtained at the time
of the creation of such Debt from a lender which was not an Affiliate and are
otherwise in accordance with this Agreement, (c) the Issuer or any Subsidiary
from participating in, or effecting any transaction in connection with, any
joint enterprise or other joint arrangement with any Affiliate if it
participates or effects any such transaction in the ordinary course of its
business and on a basis no less advantageous than the basis on which such
Affiliate participates or (d) the Issuer or any Wholly-Owned Subsidiary from
engaging in any of the above listed activities with any other Wholly-Owned
Subsidiary or any Wholly-Owned Subsidiary with the Issuer.
23
SECTION 5.12. Annual Coverage Ratio. (a) The Company will not
permit as of the last day of any fiscal quarter the Annual Coverage Ratio to be
less than 2.8:1. For this purpose:
(i) "Annual Coverage Ratio" means at any date the ratio of
Consolidated Cash Flow to Consolidated Interest Expense for the period
of four consecutive fiscal quarters ending on such date.
(ii) "Consolidated Cash Flow" means, for any period, the net
cash from operating activities of the Issuer and its Consolidated
Subsidiaries for such period, as the same is, or would in accordance
with generally accepted accounting principles be set forth in a
statement of cash flows for such period, plus to the extent deducted in
determining such net cash from operating activities, the sum of (x)
Consolidated Interest Expense for such period and (y) income tax
expense.
(iii) "Consolidated Interest Expense" means, for any period,
the interest expense of the Issuer and its Consolidated Subsidiaries
determined on a consolidated basis for such period in accordance with
generally accepted accounting principles.
(iv) "Consolidated Subsidiaries" means at any date any
Subsidiary or other entity the accounts of which would in accordance
with generally accepted accounting principles be consolidated with
those of the Issuer in its consolidated financial statements if such
statements were prepared as of such date.
SECTION 5.13. Consolidations, Mergers and Sales of Asset. (a)
Without limiting the applicability of Section 2.03(d), the Issuer will not
consolidate or merge with or into any other Person or sell, lease or otherwise
transfer, directly or indirectly, all or substantially all of its assets to any
other Person unless (i) immediately after giving effect to such consolidation,
merger, sale, lease or other transfer, no Default shall exist and the Issuer
would be in compliance with the provisions of Section 5.12 (assuming that the
date of any determination hereunder were the end of a fiscal quarter of the
Issuer), (ii) such Person shall be a corporation organized and existing under
the laws of the United States of America or any state therein or the District of
Columbia and (iii) all of the obligations of the Issuer under the Notes and this
Agreement shall have been expressly assumed in writing by the Person formed by
such consolidation, or into which the Issuer shall have been merged, or which
shall have acquired such assets.
(b) The Issuer will not, and will not permit any Subsidiary
to, make any Asset Disposition to any Person unless such Asset Disposition is
upon fair and reasonable terms no less favorable to the Issuer or such
Subsidiary than would obtain in a comparable arm's-length transaction with a
Person which is not an Affiliate; provided that, this Section 5.13(b) shall not
limit the transactions permitted with Affiliates provided under Section 5.11
hereof.
SECTION 5.14. Subsidiary Debt. The Issuer will not permit any
Subsidiary to incur, create, assume, guarantee or in any other manner become
liable with respect to, or extend the maturity of or become responsible for the
payment of any Debt other than (i) Debt owing to the Issuer or a Wholly-Owned
Subsidiary, (ii) Non-Recourse Debt in an aggregate principal amount (together
with any such Non-Recourse Debt incurred by the Issuer) not to exceed
$150,000,000 at any time incurred to finance the acquisition of assets, and
(iii) other Debt in an aggregate principal amount not to exceed 5% of the
Present Value of Proved Reserves as reflected in the most recent Reserve Report.
24
SECTION 5.15. Sale and Leasebacks. The Issuer shall not, and
shall not permit any of its Subsidiaries to, enter into any arrangement with any
lender or investor (other than the Issuer or any Subsidiary of the Issuer) or to
which such lender or investor is a party providing for the leasing by the Issuer
or any of its Subsidiaries for a period of more than three years (including all
renewals and extensions) of real or personal property that has been or is to be
sold or transferred by the Issuer or any of its Subsidiaries to such lender or
investor or to any Person to whom funds have been or are to be advanced by such
lender or investor on the security of such property or rental obligations of the
Issuer or any of its Subsidiaries, unless the Issuer or such Subsidiary would be
entitled, pursuant to Section 5.10(f), to incur Debt in a principal amount equal
to or exceeding the Attributable Debt in respect of such arrangement, secured by
a Lien on the property to be leased, without any violation of Section 5.09 or
5.14.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more of the
following events shall have occurred and be continuing:
(a) the Issuer shall fail to pay when due any principal on the
Notes or shall fail to pay within five Business Days of the due date
thereof any interest or other amount payable under any of the Notes or
this Agreement;
(b) the Issuer shall fail to observe or perform any covenant
or agreement contained in Section 5.14 for 10 days after it shall have
become aware of such failure;
(c) the Issuer shall fail to observe or perform any covenant
or agreement contained in Sections 5.04(a), 5.09, 5.10, 5.11, 5.12,
5.13 and 5.15;
(d) the Issuer shall fail to observe or perform any of its
covenants or agreements contained in any of the Notes or this Agreement
(other than those covered by clause (a), (b) or (c) above) for 30 days
after it shall have become aware of such failure;
(e) any representation, warranty, certification or statement
made by the Issuer in any of the Notes or this Agreement or in any
certificate, financial statement or other document delivered pursuant
to any of the Notes or this Agreement shall prove to have been
incorrect in any material respect when made;
(f) the Issuer or any Subsidiary shall fail to make any
payment in respect of any Material Debt (other than the Notes) when due
or within any applicable grace period and such default has not been
effectively waived by the holders of such Debt;
(g) any event or condition shall occur which, after the
expiration of any applicable grace period with respect thereto, results
in the acceleration of the maturity of any Material Debt (other than
the Notes) or enables the holder of such Debt or any Person acting on
such holder's behalf to accelerate the maturity thereof and such
default has not been effectively waived by the holders of such Debt
(provided, that prior to the expiration of such grace period, the
occurrence of such event or condition shall constitute a Default
hereunder);
25
(h) the Issuer or any Subsidiary shall commence a voluntary
case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking
the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or
shall consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as
they become due, or shall take any corporate action to authorize any of
the foregoing;
(i) an involuntary case or other proceeding shall be commenced
against the Issuer or any Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under
any bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of
its property, and such involuntary case or other proceeding shall
remain undismissed and unstayed for a period of 60 days; or an order
for relief shall be entered against the Issuer or any Subsidiary under
the federal bankruptcy laws as now or hereafter in effect;
(j) any member of the ERISA Group shall fail to pay when due
an amount or amounts aggregating in excess of $1,000,000 which it shall
have become liable to pay under Title IV of ERISA which failure to pay
could cause the Issuer or any Subsidiary (whether directly or jointly
and severally with one or more affiliates) to incur a liability in
respect of such amount or amounts, except for any such failure which is
being contested in good faith through appropriate proceedings, so long
as such proceedings are diligently prosecuted and no Lien has been
imposed on any Property of the Issuer or any Subsidiary as a
consequence of such failure; or notice of intent to terminate a
Material Plan shall be filed under Title IV of ERISA by any member of
the ERISA Group, any plan administrator or any combination of the
foregoing; or the PBGC shall institute proceedings under Title IV of
ERISA to terminate, to impose liability (other than for premiums under
Section 4007 of ERISA) in respect of, or to cause a trustee to be
appointed to administer any Material Plan; or a condition shall exist
by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any Material Plan must be terminated; or there shall
occur a complete or partial withdrawal from, or a default, within the
meaning of Section 4219(c)(5) of ERISA, with respect to, one or more
Multi-employer Plans which could cause the Issuer or any Subsidiary
(whether directly or indirectly or jointly and severally with one or
more affiliates) of the ERISA Group to incur a current payment
obligation in excess of $1,000,000; or
(k) a judgment or order for the payment of money in excess of
$5,000,000 shall be rendered against the Issuer or any Subsidiary and
such judgment or order shall continue unsatisfied and unstayed pending
appeal for a period of 30 days; then
(i) in the event of any Event of Default specified
in subsection (a) of this Section 6.01, each Holder may, by notice to the Issuer
declare the principal amount of all Notes held by such Holder (together with
accrued interest thereon) and, to the extent permitted under applicable law, the
Make Whole Amount with respect thereto and all other amounts payable by the
Issuer hereunder to such Holder to be, and such Notes and amounts shall
thereupon become, immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Issuer;
26
(ii) in the event of any Event of Default specified
in subsections (h)or (i) of this Section 6.01, without any notice to the Issuer
or any other act by any Holder or the Majority Lenders, the Notes (together with
accrued interest thereon and all other amounts payable by the Issuer hereunder)
and, to the extent permitted under applicable law, the Make Whole Amount with
respect thereto shall become immediately due and payable without presentment,
demand, protest, notice of intent to accelerate, notice of acceleration, or
other notice of any kind, all of which are hereby waived by the Issuer; and
(iii) in the event of any Event of Default specified
in any other subsection of this Section 6.01, the Majority Lenders may, by
notice to the Issuer, declare the Notes (together with accrued interest thereon)
and, to the extent permitted under applicable law, the Make Whole Amount with
respect thereto and all other amounts payable by the Issuer hereunder to be, and
such Notes and amounts shall thereupon become, immediately due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Issuer.
SECTION 6.02. Rescission of Acceleration. At any time after
the principal of, and interest accrued on and the Make Whole Amount on, any or
all of the Notes are declared due and payable, the Required Lenders, by written
notice to the Issuer, may rescind and annul any such declaration and its
consequences if (a) the Issuer has paid all overdue interest on the Notes, the
principal of and Make Whole Amount, if any, on any Notes which have become due
otherwise than by reason of such declaration, and interest on such overdue
principal and Make Whole Amount, (to the extent permitted by applicable law) any
overdue interest in respect of the Notes, (b) all Events of Default, other than
non-payment of amounts which have become due solely by reason of such
declaration, and all conditions and events which constitute a Default have been
cured or waived pursuant to Section 8.04, and (c) no judgment or decree has been
entered for the payment of any monies due pursuant to the Notes or this
Agreement; but no such rescission and annulment shall extend to or affect any
subsequent Default or Event of Default or impair any right consequent thereon.
ARTICLE VII
PURCHASE FOR INVESTMENT; SOURCE OF FUNDS
SECTION 7.01. Purchase for Investment. Each Purchaser
represents that it is purchasing Notes for its own account or for one or more
separate accounts maintained by it or for the account of one or more pension or
trust funds, in each case for investment and not with a view to the distribution
thereof or with any present intention of distributing or selling any of the
Notes, but subject to any requirement of law, the disposition of its or their
property shall at all times be within its or their control.
SECTION 7.02. Source of Funds. Each Purchaser represents that
at least one of the following statements is an accurate representation as to
each source of funds (a "Source") to be used by it to pay the purchase price of
the Notes purchased by it hereunder:
(a) the Source is an "insurance company general account" (as
the term is defined in Prohibited Transaction Exemption ("PTE") 95-60
(issued July 12, 1995)) in respect of which the reserves and
liabilities (as defined by the annual statement for life insurance
companies approved by the National Association of Insurance
Commissioners (the "NAIC Annual Statement")) for the general account
contract(s) held by or on behalf of any employee benefit plan together
with the amount of the reserves and liabilities for the general account
contract(s) held by or on behalf of any other employee benefit plans
maintained by the same employer
27
(or affiliate thereof as defined in PTE 95-60) or by the same employee
organization in the general account do not exceed 10% of the total
reserves and liabilities of the general account (exclusive of separate
account liabilities) plus surplus as set forth in the NAIC Annual
Statement filed with such Purchaser's state of domicile; or
(b) the Source is a separate account that is maintained solely
in connection with such Purchaser's fixed contractual obligations under
which the amounts payable, or credited, to any employee benefit plan
(or its related trust) that has any interest in such separate account
(or to any participant or beneficiary of such plan (including any
annuitant)) are not affected in any manner by the investment
performance of the separate account; or
(c) the Source is either (i) an insurance company pooled
separate account, within the meaning of PTE 90-1 (issued January 29,
1990), or (ii) a bank collective investment fund, within the meaning of
the PTE 91-38 (issued July 12, 1991) and, except as disclosed by such
Purchaser to the Issuer in writing pursuant to this paragraph (c), no
employee benefit plan or group of plans maintained by the same employer
or employee organization beneficially owns more than 10% of all assets
allocated to such pooled separate account or collective investment
fund; or
(d) the Source constitutes assets of an "investment fund"
(within the meaning of Part V of the QPAM Exemption) managed by a
"qualified professional asset manager" or "QPAM" (within the meaning of
Part V of the QPAM Exemption), no employee benefit plan's assets that
are included in such investment fund, when combined with the assets of
all other employee benefit plans established or maintained by the same
employer or by an affiliate (within the meaning of Section V(c) of the
QPAM Exemption) of such employer or by the same employee organization
and managed by such QPAM, exceed 20% of the total client assets managed
by such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption
are satisfied, neither the QPAM nor a person controlling or controlled
by the QPAM (applying the definition of "control" in Section V(e) of
the QPAM Exemption) owns a 5% or more interest in the Issuer and (i)
the identity of such QPAM and (ii) the names of all employee benefit
plans whose assets are included in such investment fund have been
disclosed to the Issuer in writing pursuant to this paragraph (d); or
(e) the Source is a governmental plan; or
(f) the Source is one or more employee benefit plans, or a
separate account or trust fund comprised of one or more employee
benefit plans, each of which has been identified to the Issuer in
writing pursuant to this paragraph (f); or
(g) the Source does not include assets of any employee benefit
plan, other than a plan exempt from the coverage of ERISA.
As used in this Section 7.02, the terms "employee benefit plan", "governmental
plan", "party in interest" and "separate account" shall have the respective
meanings assigned to such terms in Section 3 of ERISA.
28
SECTION 7.03. Securities Act; Legend. Each Purchaser
represents that it is an accredited investor (as defined in Regulation D of the
Rules and Regulations of the Securities and Exchange Commission under the
Securities Act of 1933, as amended) and that it understands the Notes have not
been registered under the Securities Act of 1933. Each Purchaser acknowledges
that upon issuance of the Notes, and until such time, if any, as the same is no
longer required under applicable securities laws, the Notes shall bear the
following legend:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY NOT BE TRANSFERRED, SOLD OR
OTHERWISE DISPOSED OF EXCEPT WHILE REGISTRATION UNDER SAID ACT
IS IN EFFECT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER SAID ACT OR IF SAID ACT DOES NOT APPLY.
Any Holder of a Note may upon surrender of its Note to the
Issuer together with an opinion of counsel to the effect that the foregoing
legend is no longer required under applicable securities laws obtain a like Note
in exchange for its Note without such legend.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Notices. Unless otherwise specified herein, all
notices, requests and other communications to any party hereunder shall be in
writing (including bank wire, facsimile copy or similar writing) and shall be
given (i) if to the Issuer, at its address or facsimile number set forth on its
signature page hereto and to the attention of the Person therein specified, (ii)
if to any Purchaser, at the address or facsimile number specified for such
communication in Schedule A and to the Person therein specified, if any, or
(iii) if to any other Holder, at such address or facsimile number and to such
Person as such other Holder shall have specified to the Issuer in writing, or,
in any case, to such other address or facsimile number or to the attention of
such other Person as such party may hereafter specify for the purpose by notice
in the case of the Issuer to each Holder and in the case of any Holder to the
Issuer; provided, however, that no Holder shall be required to give notice to
any other Holder of any matter under this Agreement. Each such notice, request
or other communication shall be addressed to the attention of the Person
specified pursuant to this Section and shall be effective (i) if given by mail,
ten days after such communication is deposited in the mails with prepaid
certified mail, return receipt requested, addressed as aforesaid or (ii) if
given by courier, facsimile or any other means, when delivered to the Person
specified, if any, at the address or sent to the facsimile number specified
pursuant to this Section 8.01 with confirmation from the addressee of receipt.
SECTION 8.02. No Waiver. No failure or delay by any Holder in
exercising any right, power or privilege under any Note or this Agreement shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies provided in the Notes or this
Agreement shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 8.03. Expenses; Documentary Taxes; Indemnification for
Litigation. (a) The Issuer shall pay on demand (i) all reasonable fees and
out-of-pocket expenses of the Purchasers and the Holders (including, without
limitation, reasonable fees and disbursements of the law firm acting as special
counsel for the Purchasers or the Holders and such local counsel as may be
retained on behalf of the Purchasers or the Holders) in connection with the
preparation, closing and administration of the Notes and this Agreement, any
waiver, consent or amendment of any provision thereof (whether
29
or not any such waiver, consent or amendment becomes effective), or any Default
or alleged Default thereunder, and (ii) if any Event of Default occurs, all
reasonable out-of-pocket expenses incurred by any Holder, including reasonable
fees and disbursements of counsel and funding losses, in connection with such
Event of Default and collection and other enforcement proceedings resulting
therefrom. The Issuer agrees to indemnify each Holder from and hold it harmless
against any transfer taxes, documentary taxes, or other similar assessments or
charges made by any governmental authority by reason of the execution and
delivery of the Notes and this Agreement. The Issuer shall bear the costs of
obtaining a Private Placement Number for the Notes.
(b) The Issuer shall indemnify each Holder and hold each
Holder harmless from and against any and all liabilities, losses, damages, costs
and expenses of any kind (including, without limitation, the reasonable fees and
disbursements of counsel for any Holder in connection with any investigative,
administrative or judicial proceeding, whether or not such Holder shall be
designated a party thereto) which may be incurred by any Holder, relating to or
arising out of the Notes and this Agreement or any actual or proposed use of the
proceeds of the sale of the Notes hereunder, provided that no Holder shall have
the right to be indemnified hereunder for its own gross negligence or willful
misconduct as determined by a court of competent jurisdiction.
SECTION 8.04. Amendments and Waivers. (a) Any provision of
this Agreement or the Notes may be amended or waived if, and only if, such
amendment or waiver is in writing and is signed by the Issuer and the Required
Lenders; provided that no such amendment or waiver shall, unless signed by all
Holders of Outstanding Notes, (i) change the principal of or rate of interest on
any Note, the Make Whole Amount or any other amount payable hereunder, (ii)
waive or change the date fixed for any payment of principal of or interest on
any Note or the Make Whole Amount hereunder, or (iii) change the percentage of
Holders that shall be required for the Holders to take any action under this
Section or any other provision of this Agreement; and provided further that no
such amendment will change the principal amount of Notes to be purchased by any
Purchaser hereunder without the consent of such Purchaser.
(b) The Issuer will provide each Holder (irrespective of the
amount of Notes then owned by it) with sufficient information, sufficiently far
in advance of the date a decision is required, to enable such Holder to make an
informed and considered decision with respect to any proposed amendment, waiver
or consent in respect of any of the provisions hereof or of the Notes. The
Issuer will deliver executed or true and correct copies of each amendment,
waiver or consent effected pursuant to the provisions of this Section 8.04 to
each Holder promptly following the date on which it is executed and delivered
by, or receives the consent or approval of, the requisite Holders.
(c) The Issuer will not directly or indirectly pay or cause to
be paid any remuneration, whether by way of supplemental or additional interest,
fee or otherwise, or grant any security, to any Holder as consideration for or
as an inducement to the entering into by any Holder or any waiver or amendment
of any of the terms and provisions hereof unless such remuneration is
concurrently paid, or security is concurrently granted, on the same terms,
ratably to each Holder even if such Holder did not consent to such waiver or
amendment.
SECTION 8.05. New York Law. This Agreement and each Note shall
be construed in accordance with and governed by the law of the State of New
York.
SECTION 8.06. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Issuer may not assign or transfer any of
its rights or obligations under this Agreement.
30
SECTION 8.07. Form, Registration, Transfer and Exchange of the
Notes; Transferees. (a) The Notes issuable under this Agreement shall be
registered notes substantially in the form of Exhibit A hereto and shall be
issued in denominations of $1,000,000 and any larger multiple of $50,000 (except
as may otherwise be required as a result of prepayments of portions of Notes
pursuant to Section 2.03). The Issuer shall keep at its principal office a
register in which the Issuer shall provide for the registration of the transfers
of Notes. The Issuer's principal office for such purposes shall be maintained in
the continental United States and, until further notice, will be maintained at
the address specified pursuant to Section 8.01. Upon surrender of any Note at
such office for registration of transfer, the Issuer shall execute and deliver,
at its expense, one or more new Notes of a like aggregate unpaid principal
amount. Each such new Note shall be registered in the name of the designated
transferee or transferees (or its nominee or nominees). At the option of the
Holder of any Note such Note may be exchanged for other Notes of any authorized
denominations, of a like aggregate unpaid principal amount upon surrender of the
Note to be exchanged at the principal office of the Issuer. Whenever any Notes
are so surrendered for exchange, the Issuer shall execute and deliver, at its
expense, the Notes which the Holder thereof making the exchange is entitled to
receive. Every Note presented or surrendered for registration of transfer shall
be duly endorsed, or be accompanied by a written instrument of transfer duly
executed by the registered Holder or his attorney duly authorized in writing.
Any Note or Notes issued in exchange for any Note or upon transfer thereof shall
carry the rights to unpaid interest and interest to accrue which were carried by
the Note so exchanged or transferred, and neither gain nor loss of interest
shall result from any such transfer or exchange. Upon the written request of any
Holder, the Issuer shall promptly forward to such Holder the names and addresses
of all other Holders and the principal amount of Notes held by such Holders.
Upon receipt by the Issuer of evidence reasonably satisfactory to it of the
ownership of and loss, theft, destruction or mutilation of any Note and (i) in
case of loss, theft, or destruction, of indemnity reasonably satisfactory to it
(provided that, with respect to Institutional Investors and their nominees, such
Person's agreement of indemnity shall be deemed to be satisfactory) or (ii) in
the case of mutilation, upon surrender and cancellation thereof, the Issuer, at
its expense, will execute and deliver, in lieu thereof, a new Note of like tenor
and dated and bearing interest from the date to which interest has been paid on
such lost, stolen, destroyed or mutilated Note.
SECTION 8.08. Persons Deemed Owners. Prior to due presentment
for registration of transfer, the Issuer may treat the Person in whose name any
Note is registered as the owner and holder of such Note for the purpose of
receiving payment of principal of and interest and premium on such Note and for
all other purposes whatsoever, whether or not such Note is or shall be overdue,
and the Issuer shall not be affected by notice to the contrary.
SECTION 8.09. Home Office Payment. The Issuer agrees that, so
long as a Purchaser listed on the signature pages hereof or its nominee shall
hold any of the Notes, it will make payments of principal of and interest and
Make Whole Amounts (if any) on such Notes not later than 12:00 noon, New York
City time, on the date such payment is due, in immediately available funds, at
the address specified for such purpose on Schedule A or such other account or
address (in the United States of America) as such Purchaser may designate in
writing, notwithstanding any contrary provisions contained herein or in the
Notes and without any requirement of surrendering the Notes (except that, upon
the written request of the Issuer, any Note that has been paid or prepaid in
full shall be surrendered for cancellation to the Issuer at its principal office
maintained by the Issuer pursuant to Section 8.07). Each Purchaser agrees that,
before selling or otherwise transferring any Note, it will make a notation
thereon of all principal payments previously made thereon and of the date to
which interest thereon has been paid. As to any subsequent Holder, the Issuer
will make payments of principal of and interest on the Notes held by such Holder
not later than 12:00 noon, local time, to a place within the United States on
the date such payment is due, in immediately
31
available funds, by credit to the account designated by such Holder or at the
option of such Holder by a check mailed or delivered to the address designated
by such Holder.
SECTION 8.10. Substitution. Each Purchaser may by notice to
the Issuer substitute any of its wholly-owned subsidiaries as a Purchaser
hereunder. Such notice shall be signed by such Purchaser and such wholly-owned
subsidiary, shall contain such wholly-owned subsidiary's agreement to be bound
by this Agreement and shall contain confirmation by such wholly-owned subsidiary
of the accuracy with respect to it of the representations set forth in Article
VII (subject to any exception necessary to reflect the intention, if any, of
such wholly-owned subsidiary to transfer to such Purchaser at a subsequent date
all or any of the Notes to be acquired by such wholly-owned subsidiary). The
Issuer agrees that, upon receipt of such notice, all references to "Purchaser"
hereunder (other than this Section 8.10) shall include a reference to such
wholly-owned subsidiary and that such wholly-owned subsidiary shall have the
right to transfer the Notes acquired by it hereunder to a Purchaser subsequent
to such purchase. In the event that a wholly-owned subsidiary is substituted for
a Purchaser in accordance with this Section 8.10 and thereafter transfers its
Notes or any portion thereof to such Purchaser, the term "Purchaser" shall be
deemed to refer to such wholly-owned subsidiary only if it retains any portion
of the Notes, and shall refer to such Purchaser to the extent such Purchaser
owns all or any portion of the Notes, and such Purchaser and such wholly-owned
subsidiary (if it retains any Notes) shall each have all the rights which an
original purchaser of Notes has under this Agreement.
SECTION 8.11. Credit Decision. Each Purchaser acknowledges
that it has, independently and without reliance upon any other Purchaser, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Purchaser
also acknowledges that it will, independently and without reliance upon any
other Purchaser, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under the Notes and this Agreement.
SECTION 8.12. Counterparts; Integration; Effectiveness;
Severability. (a) This Agreement may be signed in any number to counterparts,
each of which shall be an original, and all of which taken together shall
constitute a single agreement, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement constitutes the entire
agreement and understanding among the parties hereto and supersedes any and all
prior agreements and understandings, oral or written, relating to the subject
matter hereof. This Agreement shall become effective when the Issuer shall have
received counterparts hereof signed by all of the parties hereto (or, in the
case of any Purchaser as to which an original executed counterpart shall not
have been received, the Issuer shall have received from such Purchaser an
executed counterpart hereof by facsimile by such Purchaser).
(b) In case any provision in this Agreement or any Note shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired thereby
and such provision shall be ineffective only to the extent of such invalidity,
illegality or unenforceability.
SECTION 8.13. SUBMISSION TO JURISDICTION. THE ISSUER HEREBY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN
THE CITY OF NEW YORK FOR PURPOSES OF ALL LEGAL PROCEEDINGS WHICH MAY ARISE
HEREUNDER OR UNDER THE NOTES. THE ISSUER IRREVOCABLY WAIVES TO THE FULLEST
EXTENT PERMITTED BY LAW,
32
ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF
ANY SUCH PROCEEDINGS BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
THE ISSUER HEREBY CONSENTS TO PROCESS BEING SERVED IN ANY SUCH PROCEEDING BY THE
MAILING OF A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO
ITS ADDRESS SPECIFIED PURSUANT TO SECTION 8.01 OR IN ANY OTHER MANNER PERMITTED
BY LAW.
SECTION 8.14. Confidentiality. For the purposes of this
Section 8.14, "Confidential Information" means information delivered to a Holder
by or on behalf of the Issuer or any Subsidiary in connection with the
transactions contemplated by or otherwise pursuant to this Agreement that is
proprietary in nature and that was clearly marked or labeled or otherwise
adequately identified when received by such Holder as being confidential
information of the Issuer or such Subsidiary, provided that such term does not
include information that (a) was publicly known or otherwise known to such
Holder prior to the time of such disclosure, (b) subsequently becomes publicly
known through no act or omission by such Holder or any person acting on its
behalf, (c) otherwise becomes known to such Holder other than through disclosure
by the Issuer or any Subsidiary or (d) constitutes financial statements
delivered to such Holder under Section 5.01 that are otherwise publicly
available. Each Holder will maintain the confidentiality of such Confidential
Information in accordance with procedures adopted by such Holder in good faith
to protect confidential information of third parties delivered to it, provided
that such Holder may deliver or disclose Confidential Information to (i) its
directors, trustees, officers, employees, agents, attorneys and affiliates (to
the extent such disclosure reasonably relates to the administration of the
investment represented by Notes held by it), (ii) its financial advisors and
other professional advisors who agree to hold confidential the Confidential
Information substantially in accordance with the terms of this Section 8.14,
(iii) any other holder of any Note, (iv) any Institutional Investor to which
such Holder sells or offers to sell such Note or any part thereof or any
participation therein (if such Person has agreed in writing prior to its receipt
of such Confidential Information to be bound by the provisions of this Section
8.14), (v) any federal or state regulatory authority having jurisdiction over
such Holder, (vi) the National Association of Insurance Commissioners or any
similar organization, or any nationally recognized rating agency that requires
access to information about such Holder's investment portfolio, or (vii) any
other Person to which such delivery or disclosure may be necessary or
appropriate (w) to effect compliance with any law, rule, regulation or order
applicable to such Holder, (x) in response to any subpoena or other legal
process, (y) in connection with any litigation to which such Holder is a party
or (z) if an Event of Default has occurred and is continuing, to the extent such
Holder may reasonably determine such delivery and disclosure to be necessary or
appropriate in the enforcement or for the protection of the rights and remedies
under its Notes and this Agreement. Each holder of a Note, by its acceptance of
a Note, will be deemed to have agreed to be bound by and to be entitled to the
benefits of this Section 8.14 as though it were a party to this Agreement. On
reasonable request by the Issuer in connection with the delivery to any holder
of a Note of information required to be delivered to such holder under this
Agreement or requested by such holder (other than a holder that is a party to
this Agreement or its nominee), such holder will enter into an agreement with
the Issuer embodying the provisions of this Section 8.14.
33
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
date first above written.
CABOT OIL & GAS CORPORATION
By /s/ Edgar J. Milan
------------------------------
Title: Chief Financial Officer
15375 Memorial Drive
Houston, Texas 77079
Attention: Treasurer
Telecopier: (281) 589-4653
34
PURCHASERS:
THE NORTHWESTERN MUTUAL
LIFE INSURANCE COMPANY
By: /s/Richard A. Strait
--------------------------------
Title: Vice President
THE GUARDIAN LIFE INSURANCE
COMPANY OF AMERICA
By: /s/Thomas M. Donohue
--------------------------------
Title: Vice President-Fixed Income
GREAT-WEST LIFE & ANNUITY
INSURANCE COMPANY
By: /s/ James G. Lowery
--------------------------------
Title: Assistant Vice President-
Investments
By: /s/ Julie Bock
--------------------------------
Title: Assistant Vice President
PACIFIC LIFE INSURANCE COMPANY
By: /s/ Diane W. Oales
--------------------------------
Title: Assistant Vice President
By: /s/ Peter S. Fiek
--------------------------------
Title: Assistant Secretary
KEYPORT LIFE INSURANCE COMPANY
by Stein Roe & Farnham
Incorporated, as agent
By: /s/ Richard A. Hedgwood
--------------------------------
Title: Senior Vice President
TRANSAMERICA LIFE INSURANCE AND
ANNUITY COMPANY
By: /s/ John M. Casparian
---------------------
Title: Investment Officer
35
EXHIBIT A
[FORM OF NOTE]
[Add Legend as Appropriate]
CABOT OIL & GAS CORPORATION
7.19% NOTE DUE 2009
No. [_____] [Date]
$[________] PPN 127097 A@ 2
FOR VALUE RECEIVED, the undersigned, CABOT OIL & GAS
CORPORATION (herein called the "Issuer"), a corporation organized and existing
under the laws of the State of Delaware, hereby promises to pay to
[___________________________], or registered assigns, the principal sum of
[___________________________] DOLLARS on November 15, 2009, with interest
(computed on the basis of a 360-day year of twelve 30-day months) (a) on the
unpaid balance thereof at the rate of 7.19% per annum from the date hereof,
payable semiannually, on the 15th day of May and November in each year,
commencing May 15, 1998, until the principal hereof shall have become due and
payable, and (b) to the extent permitted by law on any overdue payment
(including any overdue prepayment) of principal, any overdue payment of interest
and any overdue payment of any Make Whole Amount (as defined in the Note
Purchase Agreement referred to below), payable semiannually as aforesaid (or, at
the option of the registered holder hereof, on demand), at a rate per annum from
time to time equal to the higher of (i) 9.19% or (ii) the Prime Rate (as defined
in said Note Purchase Agreement) for such day plus 2%.
Payments of principal of, interest on and any Make Whole
Amount with respect to this Note are to be made in lawful money of the United
States of America as provided in Section 8.09 of the Note Purchase Agreement
referred to below.
This Note is one of a series of Notes (herein called the
"Notes") issued pursuant to the Note Purchase Agreement, dated as of November
14, 1997 (as from time to time amended, the "Note Purchase Agreement"), between
the Issuer and the Purchasers named therein and is entitled to the benefits
thereof. Each holder of this Note will be deemed, by its acceptance hereof, (i)
to have agreed to the confidentiality provisions set forth in Section 8.14 of
the Note Purchase Agreement and (ii) to have made the representation set forth
in Article VII of the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note
Purchase Agreement, upon surrender of this Note for registration of transfer,
duly endorsed, or accompanied by a written instrument of transfer duly executed,
by the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Issuer may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Issuer will not be affected by any notice to the
contrary.
The Issuer will make required prepayments of principal on the
dates and in the amounts specified in the Note Purchase Agreement. This Note is
also subject to optional prepayment, in whole or from time to time in part, at
the times and on the terms specified in the Note Purchase Agreement, but not
otherwise.
36
If an Event of Default, as defined in the Note Purchase
Agreement, occurs and is continuing, the principal of this Note may be declared
or otherwise become due and payable in the manner, at the price (including any
applicable Make Whole Amount) and with the effect provided in the Note Purchase
Agreement.
This Note shall be construed in accordance with and governed
by the law of the State of New York.
CABOT OIL & GAS CORPORATION
By
------------------------------
Title: