AMENDED AND RESTATED
LOAN AGREEMENT
Between
ST. MARY LAND & EXPLORATION COMPANY
and
NATIONSBANK OF TEXAS, N.A.
and
NORWEST BANK COLORADO, NATIONAL ASSOCIATION
(SUCCESSOR TO NORWEST BANK DENVER, NATIONAL ASSOCIATION)
Dated as of
April 1, 1996
TABLE OF CONTENTS
Page
1. Definitions. . . . . . . . . . . . . . . . .. . . .-1-
2. The Loans. . . . . . . . . . . . . . . . . .. . . .-8-
(a) Commitment Amounts. . . . . . . . . . .. . . .-8-
(i) Tranche A Loan . . . . . . . . . .. . . .-8-
(ii) Tranche B Loan . . . . . . . . . .. . . .-8-
(b) Interest on the Loans . . . . . . . . . . . . -9-
(i) Computation of Interest. . . . . . . . . -9-
(ii) Late Payment Rate. . . . . . . . . . . .-10-
(iii) Maximum Lawful Rate . . . . . . . .-10-
(c) The Revolving Loan Period . . . . . . . . . .-10-
(i) Requests for Advances. . . . . . . . . .-10-
(ii) Prime Rate Advances. . . . . . . . . . .-10-
(iii) LIBOR Advances. . . . . . . . . . .-11-
(d) The Term Loan Period. . . . . . . . . . . . .-11-
(e) The Loan Date and Initial Advances. . . . . .-12-
(f) Payments by Borrower. . . . . . . . . . . . .-12-
(g) Prepayments . . . . . . . . . . . . . . . . .-12-
(h) Fees. . . . . . . . . . . . . . . . . . . . .-13-
(i) Transaction Fee. . . . . . . . . . . . .-13-
(ii) Tranche A Loan Commitment Fee. . . . . .-13-
(iii) Tranche B Loan Commitment Fee . . .-13-
(iv) Engineering Fee. . . . . . . . . . . . .-14-
(v) Conversion Fee . . . . . . . . . . . . .-14-
(vi) Letter of Credit Fee . . . . . . . . . .-14-
(vii) Facility Fee. . . . . . . . . . . .-14-
(i) Inability to Determine Rates. . . . . . . . .-14-
(j) Illegality. . . . . . . . . . . . . . . . . .-14-
(k) Increased Costs and Taxes . . . . . . . . . .-15-
(l) Adjustments . . . . . . . . . . . . . . . . .-16-
(m) Participations. . . . . . . . . . . . . . . .-16-
3. Letters of Credit. . . . . . . . . . . . . . . . .-16-
(a) Issuance of Letters of Credit . . . . . . . .-16-
(b) Payments Treated as Prime Rate Advances . . .-17-
4. Asset Dispositions . . . . . . . . . . . . . . . .-17-
(a) Mandatory Prepayments . . . . . . . . . . . .-17-
(b) Release Values. . . . . . . . . . . . . . . .-17-
(c) Release of Liens. . . . . . . . . . . . . . .-17-
5. Borrowing Base . . . . . . . . . . . . . . . . . .-17-
(a) Initial Aggregate Borrowing Base; Limitations
on Borrowing Base . . . . . . . . . . .. . . -17-
(b) Engineering Report. . . . . . . . . . .. . . -18-
(c) Determination of Aggregate Borrowing Base . -18-
(d) Notification of Aggregate Borrowing Base. . -18-
(e) Acceptance and Application of Aggregate
Borrowing Base . . . . . . . . . . . . . . . -18-
6. Excess Debt. . . . . . . . . . . . . . . . . . . .-19-
(a) Tranche A Loan. . . . . . . . . . . . . . . .-19-
(b) Tranche B Loan. . . . . . . . . . . . . . . .-20-
7. Security . . . . . . . . . . . . . . . . . . . . .-20-
(a) Security Documents. . . . . . . . . . . . . .-20-
(b) Filing and Recordation. . . . . . . . . . . .-20-
8. Representations and Warranties . . . . . . . . . .-21-
(a) Corporate Existence . . . . . . . . . . . . .-21-
(b) Non-Contravention . . . . . . . . . . . . . .-21-
(c) Third Party Authorization . . . . . . . . . .-21-
(d) Corporate Authorization; Binding Effect . . .-22-
(e) Litigation. . . . . . . . . . . . . . . . . .-22-
(f) Taxes . . . . . . . . . . . . . . . . . . . .-22-
(g) Liens . . . . . . . . . . . . . . . . . . . .-22-
(h) Title . . . . . . . . . . . . . . . . . . . .-22-
(i) Chief Executive Office. . . . . . . . . . . .-23-
(j) Use of Proceeds . . . . . . . . . . . . . . .-23-
(k) Margin Stock. . . . . . . . . . . . . . . . .-23-
(l) Subsidiaries. . . . . . . . . . . . . . . . .-23-
(m) ERISA . . . . . . . . . . . . . . . . . . . .-23-
(n) Security Documents. . . . . . . . . . . . . .-23-
(o) Compliance with Laws. . . . . . . . . . . . .-23-
(p) Financial Condition . . . . . . . . . . . . .-24-
(q) Default . . . . . . . . . . . . . . . . . . .-24-
9. Affirmative Covenants. . . . . . . . . . . . . . .-24-
(a) Payment and Performance of Loan . . . . . . .-24-
(b) Financial Statements. . . . . . . . . . . . .-24-
(c) Preservation of Existence, Etc. . . . . . . .-25-
(d) Maintenance of Property . . . . . . . . . . .-25-
(e) Payment of Other Obligations. . . . . . . . .-25-
(f) Insurance . . . . . . . . . . . . . . . . . .-26-
(g) Inspection of Property, Books and Records . .-26-
(h) Notices . . . . . . . . . . . . . . . . . . .-26-
(i) Compliance with Laws. . . . . . . . . . . . .-27-
(j) Further Assurances. . . . . . . . . . . . . .-27-
(k) Maintain Mortgage Collateral. . . . . . . . .-27-
(l) Ratios. . . . . . . . . . . . . . . . . . . .-27-
(m) Use of Proceeds . . . . . . . . . . . . . . .-27-
(n) Shareholders Equity . . . . . . . . . . . . .-27-
10. Negative Covenants . . . . . . . . . . . . . . . .-27-
(a) Indebtedness. . . . . . . . . . . . . . . . .-27-
(b) Liens . . . . . . . . . . . . . . . . . . . .-28-
(c) Guaranty Obligations. . . . . . . . . . . . .-28-
(d) Loans and Advances. . . . . . . . . . . . . .-28-
(e) Investments; Joint Ventures . . . . . . . . .-28-
(f) Mergers and Consolidations. . . . . . . . . .-29-
(g) Change in Business. . . . . . . . . . . . . .-29-
(h) Burdensome Undertakings . . . . . . . . . . .-29-
(i) Change in Location of Business. . . . . . . .-29-
(j) New Subsidiaries. . . . . . . . . . . . . . .-29-
(l) Disposition of Assets . . . . . . . . . . . .-30-
(m) ERISA . . . . . . . . . . . . . . . . . . . .-30-
11. Events of Default. . . . . . . . . . . . . . . . .-30-
(a) Non-Payment . . . . . . . . . . . . . . . . .-30-
(b) Other Defaults. . . . . . . . . . . . . . . .-30-
(c) Representation or Warranty. . . . . . . . . .-30-
(d) Security Documents. . . . . . . . . . . . . .-31-
(e) Judgments . . . . . . . . . . . . . . . . . .-31-
(f) Insolvency. . . . . . . . . . . . . . . . . .-31-
(g) Bankruptcy. . . . . . . . . . . . . . . . . .-31-
(h) Cross-Default . . . . . . . . . . . . . . . .-31-
(i) ERISA . . . . . . . . . . . . . . . . . . . .-32-
(j) Loan Documents. . . . . . . . . . . . . . . .-32-
12. Remedies . . . . . . . . . . . . . . . . . . . . .-32-
(a) Automatic Acceleration of Loan. . . . . . . .-32-
(b) Optional Acceleration of Loan . . . . . . . .-32-
(c) Set-Off . . . . . . . . . . . . . . . . . . .-33-
13. Conditions of Lending. . . . . . . . . . . . . . .-33-
(a) Initial Advance . . . . . . . . . . . . . . .-33-
(b) Subsequent Advances . . . . . . . . . . . . .-34-
14. Indemnity. . . . . . . . . . . . . . . . . . . . .-35-
15. The Agent. . . . . . . . . . . . . . . . . . . . .-36-
(a) Appointment . . . . . . . . . . . . . . . . .-36-
(b) Delegation of Duties. . . . . . . . . . . . .-36-
(c) Exculpatory Provisions. . . . . . . . . . . .-36-
(d) Reliance by Agent . . . . . . . . . . . . . .-36-
(e) Notice of Default . . . . . . . . . . . . . .-37-
(f) Non-Reliance on Agent and Other Banks . . . .-37-
(g) Indemnification . . . . . . . . . . . . . . .-38-
(h) Agent in Its Individual Capacity. . . . . . .-38-
(i) Successor Agent . . . . . . . . . . . . . . .-38-
16. Miscellaneous. . . . . . . . . . . . . . . . . . .-38-
(a) No Waiver; Cumulative Remedies. . . . . . . .-38-
(b) Notices . . . . . . . . . . . . . . . . . . .-39-
(c) Counterpart Execution . . . . . . . . . . . .-40-
(d) Governing Law; Entire Agreement . . . . . . .-40-
(e) Amendments and Waivers. . . . . . . . . . . .-40-
(f) Inconsistent Provisions; Severability . . . .-40-
(g) Costs and Expenses. . . . . . . . . . . . . .-40-
(h) Successors and Assigns. . . . . . . . . . . .-40-
(i) Effectiveness . . . . . . . . . . . . . . . .-40-
(j) Waivers of Jury Trial . . . . . . . . . . . .-41-
(k) Incorporation of Exhibits and Schedules . . .-41-
(l) References and Titles . . . . . . . . . . . .-41-
LIST
OF SCHEDULES
Schedule I: Bank Commitments
Schedule II: Borrower's Shareholders Equity
LIST OF EXHIBITS
Exhibit A - Form of Tranche A Note
Exhibit B - Form of Tranche B Note
Exhibit C - Request for Advance
Exhibit D - Form of Standby Letter of Credit
Exhibit E - Asset Sales Report
Exhibit F - Net Revenue/Payment Calculation
Exhibit G - Subsidiaries
Exhibit H - Compliance Certificate
Exhibit I - Form of Mortgage
Exhibit J - Borrowing Resolution
Exhibit K - Borrower's Form of Opinion
AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT (this "Agreement"),
dated as of April 1, 1996 (the "Effective Date"), is between ST.
MARY LAND & EXPLORATION COMPANY, a Delaware corporation
("Borrower"), with an address of 1776 Lincoln Street, Denver,
Colorado 80203; each of the banks or financial institutions which
is or which may from time to time become a signatory hereto
(individually, a "Bank" and collectively, the "Banks");
NATIONSBANK OF TEXAS, N.A., a national banking association
("NationsBank"), with an address of Energy Banking Group,
#492-49, 901 Main, Dallas, Texas 75202, in its capacity as a Bank
and as agent for the Banks (in its capacity as agent, together
with its successors in such capacity, the "Agent"), and NORWEST
BANK COLORADO, NATIONAL ASSOCIATION (Successor to Norwest Bank
Denver, National Association), a national banking association,
with an address of 1740 Broadway, Denver, Colorado 80274-8699.
RECITALS
A. Borrower, the Banks and the Agent entered into a Loan
Agreement dated as of March 1, 1993 (the "Original Loan
Agreement"), by which the Banks agreed to loan Borrower certain
funds. The Original Loan Agreement was amended by First
Amendment to Loan Agreement dated as of June 15, 1993 (the "First
Amendment"), by Second Amendment to Loan Agreement dated as of
February 25, 1994 (the "Second Amendment"), by Third Amendment to
Loan Agreement dated as of December 1, 1994 (the "Third
Amendment") and by Fourth Amendment to Loan Agreement dated as of
April 1, 1995 (the "Fourth Amendment"). The Original Loan
Agreement as amended by the First Amendment, the Second
Amendment, the Third Amendment and the Fourth Amendment is
hereinafter called the "Loan Agreement."
B. Borrower and the Banks desire to amend the Loan
Agreement and to restate the provisions of the Loan Agreement as
so amended to read in its entirety as set forth herein, such that
the indebtedness which is the subject of this Agreement shall
constitute an extension and renewal of the indebtedness evidenced
by the Loan Agreement.
AGREEMENT
Accordingly, the parties agree as follows:
1. Definitions. As used herein, the following capitalized
terms shall have the following meanings:
"Accounting Quarter" shall mean the three-month period
ending three calendar months preceding the calendar month in
which a payment on a Loan is due.
"Adjusted LIBOR Rate" shall mean the LIBOR Rate plus
the Applicable Margin.
"Adjusted Prime Rate" shall mean the Prime Rate plus
the Applicable Margin.
"Advances" shall have the meaning set forth in
paragraph 2(a)(i).
"Aggregate Borrowing Base" shall have the meaning set
forth in paragraph 5(a).
"Applicable Margin" shall mean the following percentage
points:
(a) When Borrower's Debt to Capitalization Ratio is
less than 30% as of the date of the request for the Advance to
which such Applicable Margin applies:
(i) For a LIBOR Advance during the Tranche A
Revolving Period for the Tranche A Loan and for a LIBOR
Advance during the Tranche B Revolving Period for the
Tranche B Loan: 0.50 percentage points.
(ii) During the Term Loan Period: 0.75 percentage
points.
(iii) For a Prime Rate Advance: zero (0)
percentage points.
(b) When Borrower's Debt to Capitalization Ratio is
equal to or greater than 30% but less than 40% as of the date of
the request for the Advance to which such Applicable Margin
applies:
(i) For a LIBOR Advance during the Tranche A
Revolving Period for the Tranche A Loan and for a LIBOR
Advance during the Tranche B Revolving Period for the
Tranche B Loan: 0.75 percentage points.
(ii) During the Term Loan Period: 1.00 percentage
points.
(iii) For a Prime Rate Advance: zero (0)
percentage points.
(c) When Borrower's Debt to Capitalization Ratio is
equal to or greater than 40% but less than 50% as of the date of
the request for the Advance to which such Applicable Margin
applies:
(i) For a LIBOR Advance during the Tranche A
Revolving Period for the Tranche A Loan and for a LIBOR
Advance during the Tranche B Revolving Period for the
Tranche B Loan: 1.00 percentage points.
(ii) During the Term Loan Period: 1.25 percentage
points.
(iii) For a Prime Rate Advance: zero (0)
percentage points.
(d) When Borrower's Debt to Capitalization Ratio is
equal to or greater than 50% as of the date of the request for
the Advance to which such Applicable Margin applies:
(i) For a LIBOR Advance during the Tranche A
Revolving Period for the Tranche A Loan and for a LIBOR
Advance during the Tranche B Revolving Period for the
Tranche B Loan: 1.25 percentage points.
(ii) During the Term Loan Period: 1.50 percentage
points.
(iii) For a Prime Rate Advance: 0.125
percentage points.
"Business Day" shall mean a day other than Saturdays or
Sundays on which commercial banks are open for business with the
public in Dallas, Texas and Denver, Colorado, and, if the
applicable Business Day relates to a LIBOR Advance, it shall mean
such a day on which dealings are carried on in the applicable
interbank eurodollar market.
"Commitment" shall mean as to any Bank, the obligation
of such Bank, subject to the terms of this Agreement, to make
Advances under the Tranche A Loan and Tranche B Loan to Borrower
hereunder in an aggregate principal amount at any one time
outstanding not to exceed the amount set forth opposite such
Bank's name on Schedule I, as such amount may be reduced from
time to time as provided herein; collectively, as to all Banks,
the "Commitments."
"Commitment Percentage" shall mean as to any Bank at
any time, the percentage of the aggregate Commitments then
constituted by such Bank's Commitment, as more fully set forth
opposite such Bank's name in Schedule I.
"Current Ratio" shall mean the ratio of
Borrower's (i) consolidated current assets to (ii) consolidated
current liabilities less current maturities of long-term debt,
both determined in accordance with GAAP.
"Debt" shall mean all indebtedness, liabilities and
obligations of Borrower on a consolidated basis, whether matured
or unmatured, liquidated or unliquidated, primary or secondary,
direct or indirect, absolute, fixed or contingent.
"Debt to Capitalization Ratio" means, for each Fiscal
Quarter, the ratio of (a) the Debt of Borrower (excluding any
provisions for deferred taxes) to (b) the sum of (i) the Debt of
Borrower (excluding any provisions for deferred taxes) plus (ii)
Borrower's Shareholders' Equity which on the date hereof is the
amount set forth in Schedule II hereto and shall be increased or
decreased only when Borrower notifies the Banks of such increase
or decrease; provided, however, that the Banks may make such
change without receiving notice from Borrower based on
information then available to the Banks, but the Banks will have
no obligation to do so. As used in this definition, the term
"Borrower's Shareholders' Equity" means the remainder of (1)
Borrower's and its subsidiaries' consolidated assets minus (2)
the sum of (x) Borrower's and its subsidiaries' consolidated
liabilities plus (y) all intangible assets (as defined by GAAP)
of Borrower and its subsidiaries.
"Deductible Lease Expenses" shall mean for the
applicable Accounting Quarter the following expenses, determined
on a cash basis, relating to the Oil and Gas Properties: (i)
costs (other than depreciation, depletion or amortization costs)
incurred to operate and maintain or, to the extent not a capital
cost, to work over, wells and related equipment and facilities,
including applicable operating costs of support equipment and
facilities, incurred pursuant to a joint operating agreement
(excluding delay rentals) including management fees assessed for
the administration of the Oil and Gas Properties; (ii) all
royalty payments and other leasehold burdens payable out of
production; (iii) all severance, ad valorem, windfall profit and
similar taxes (excluding income taxes) assessed against either
the proceeds of production or the value of remaining reserves and
related personal property; and (iv) all reasonable out-of-pocket
costs incurred to deliver the product to the purchaser or to make
it marketable (but not including capital expenditures relating to
the delivery of the product or making it marketable). Unless
otherwise provided, Deductible Lease Expenses shall not include
expenses associated with any amortization or impairment of
capitalized costs.
"Designation Date" and "Determination Date" shall have
the meanings set forth in the definition of LIBOR Rate.
"Effective Date" shall have the meaning ascribed to it
in the preamble to this Agreement.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time, together with
all rules and regulations promulgated with respect thereto.
"ERISA Plan" shall mean any pension benefit plan
subject to Title IV of ERISA maintained by Borrower or any member
of a controlled group (as defined in Section 4001 (a)(14) of
ERISA).
"Eurodollar Reserve Percentage" shall mean the maximum
reserve percentage in effect on the date the LIBOR Rate for such
Interest Period is determined under regulations issued from time
to time by the Board of Governors of the Federal Reserve System
for determining the maximum reserve requirement (including any
emergency, supplemental or other marginal reserve requirement)
with respect to liabilities or assets consisting of or including
eurocurrency liabilities (or other, like liabilities representing
offshore dollar deposits) having a term equal to such Interest
Period.
"Event of Default" shall have the meaning set forth in
paragraph 11.
"Excess Debt" shall mean Tranche A Excess Debt or
Tranche B Excess Debt.
"Fiscal Quarter" shall mean a three-month period ending
on the last day of each March, June, September and December of
any year.
"Fiscal Year" shall mean a twelve-month period ending
on December 31 of any year.
"GAAP" shall mean generally accepted accounting
principles and practices as consistently applied (except as
otherwise required due to changes in GAAP) by Borrower and
certified to by the firm of independent certified public
accountants regularly employed as Borrower's auditors, such
principles and practices at all times being consistent with
requirements of the Financial Accounting Standards Board in
effect from time to time, as applicable to the nature of the
business conducted by Borrower. If any change in any accounting
principle or practice is required by the Financial Accounting
Standards Board (or any such successor) in order for such
principle or practice to continue as a generally accepted
accounting principle or practice, all reports and financial
statements required hereunder with respect to Borrower may be
prepared in accordance with such change only after notice of such
change is given to the Agent.
"Gross Revenues" shall mean for the applicable
Accounting Quarter and determined on a cash basis Borrower's
gross revenues from sales of oil and gas production and related
Hydrocarbons from all the Oil and Gas Properties for such
Accounting Quarter, as reflected on Borrower's unaudited
financial statements for such Accounting Quarter.
"Hydrocarbons" shall mean oil, gas, casinghead gas and
other hydrocarbons, whether solid, liquid or gaseous, and all
other associated or related substances in, on, under or
attributed to the Oil and Gas Properties.
"Interest Period" shall have the meaning set forth in
paragraph 2(c)(iii).
"Initial Engineering Reports" shall mean the
engineering report concerning the Oil and Gas Properties of
Borrower located in the state of Louisiana dated April 1, 1992,
prepared by Ryder Scott as of January 1, 1992, and the
engineering report concerning the Oil and Gas Properties of
Borrower located in states other than Louisiana dated March 23,
1992, prepared by Anderman/Smith Operating Company as of December
31, 1991, true and correct copies of which have been delivered to
the Agent.
"Late Payment Rate" shall have the meaning set forth in
paragraph 2(b)(ii).
"LIBOR Advance" shall mean an advance on a Loan for
which the interest accruing thereon is based upon the Adjusted
LIBOR Rate.
"LIBOR Rate" shall mean:
(a) the rate with respect to each Interest Period
determined in good faith by the Agent in accordance with its
usual procedures (which determinations shall be conclusive) to be
the average of the rates per annum for deposits in U.S. dollars
offered for such Interest Period commencing on the first day of
such Interest Period (the "Designation Date") to major money
center banks in the London interbank eurodollar market at
approximately 11:00 a.m. London time two business days prior to
such Designation Date (the "Determination Date") and in an amount
equal to the amount to be subject to the proposed Adjusted LIBOR
Rate for such Interest Period;
(b) divided by 1.0 less the then-applicable Eurodollar
Reserve Percentage determined as of the day two Business Days
prior to the first day of such Interest Period.
"Loan" shall mean each of the loans provided for in
paragraphs 2(a) and 2(b), together with each additional loan, if
any, made to Borrower by the Banks, at the option of the Banks,
existing as well as contemplated; collectively, the "Loans."
"Loan Date" shall have the meaning set forth in
paragraph 2(e).
"Loan Documents" shall mean this Agreement, the Notes
and the Security Documents.
"Mortgage Collateral" shall mean that portion of the
Oil and Gas Properties and related interests covered by the
Mortgages.
"Mortgages" shall mean one or more mortgages, deeds of
trust, collateral mortgages, acts of collateral mortgage,
security agreements and assignments of proceeds of even date
herewith, in favor of the Agent on behalf of the Banks, covering
certain of the Oil and Gas Properties and related interests as
described therein, together with any and all amendments and
modifications of such documents.
"Net Oil and Gas Revenues" for the applicable
Accounting Quarter shall mean Gross Revenues less Deductible
Lease Expenses.
"Note" shall mean a Tranche A Note or a Tranche B Note
made by Borrower and payable to a Bank, together with any and all
renewals, extensions, amendments and changes of, or substitutions
for said note, and every other promissory note, if any, executed
by Borrower in favor of such Bank; collectively, the "Notes."
"Oil and Gas Properties" shall mean those oil and gas
properties and related interests, whether now owned or hereafter
acquired by Borrower, but only to the extent included in the most
recent reserve report delivered pursuant to paragraph 5(b) or,
until the first delivery of such report hereunder, the Initial
Engineering Reports for the purpose of determining the Aggregate
Borrowing Base.
"Prime Rate" shall mean an annual rate which equals the
floating commercial loan rate of NationsBank announced from time
to time as its prime rate but which may not be the lowest rate
charged by NationsBank, adjusted in each case as of the banking
day in which a change in the Prime Rate occurs.
"Prime Rate Advance" shall mean an advance on a Loan
for which the interest accruing thereon is based upon the
Adjusted Prime Rate.
"Release Value" shall mean the present value assigned
by the Agent to any property included in the Oil and Gas
Properties to be sold by Borrower, such value to be determined by
the Required Banks upon receipt of notice of a proposed
disposition pursuant to paragraph 4 and calculated, in accordance
with the standards set forth herein for the Banks' determinations
of the Aggregate Borrowing Base, as a percentage of the total
amount determined by the Banks pursuant to paragraph 5(a)(ii) in
effect at the time of the Release Value determination, such
percentage to be equal to the proportionate value assigned to
such property by the Banks in the total paragraph 5(a)(ii)
amount; provided, however, that if at the time of the Release
Value determination there is any Excess Debt outstanding (as
determined by the Agent pursuant to paragraph 6) or there would
be Excess Debt as the result of the proposed disposition, then
the Release Value shall be an amount determined by the Agent in
its sole discretion, but in any event not to exceed the amount
necessary to eliminate any Excess Debt then existing or arising
after taking into account the sale of such property.
"Required Banks" shall mean at any time Banks, the
Commitment Percentages of which aggregate 75 percent.
"Revolving Loan Period" shall mean the Tranche A
Revolving Period or the Tranche B Revolving Period.
"Security Documents" shall have the meaning set forth
in paragraph 7.
"Shareholders Equity" shall mean consolidated
shareholders' equity, determined in accordance with GAAP.
"Term Loan Period" shall mean the period from the
earlier of (a) July 1, 1999 or (b) conversion of the Tranche A
Loan to a term loan pursuant to subparagraph 6(a)(i)(D), through
and including June 30, 2004.
"Termination Event" shall mean (a) the occurrence with
respect to any ERISA Plan of (i) a reportable event described in
Section 4043(b)(5) of ERISA or (ii) any other reportable event
described in Section 4043 of ERISA other than a reportable event
not subject to the provision for 30-day notice to the Pension
Benefit Guaranty Corporation under such regulations, or (b) the
withdrawal of Borrower from an ERISA Plan during a plan year in
which it was a "substantial employer" as defined in Section
4001(a)(2) of ERISA, or (c) the filing of a notice of intent to
terminate any ERISA Plan or the treatment of any ERISA Plan
amendment as a termination under Section 4041 of ERISA, or (d)
the institution of proceedings to terminate any ERISA Plan by the
Pension Benefit Guaranty Corporation under Section 4042 of ERISA,
or (e) any other event or condition which might constitute
grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any ERISA Plan or the
imposition of any liability or lien on the assets of Borrower
under ERISA.
"Tranche A Borrowing Base" and "Tranche B Borrowing
Base" shall have the meanings set forth in paragraph 5(e).
"Tranche A Excess Debt" and "Tranche B Excess Debt"
shall have the meanings set forth in paragraph 6.
"Tranche A Loan" and "Tranche A Note" shall have the
meanings set forth in subparagraph 2(a)(i).
"Tranche A Revolving Period" shall mean the period from
the date of this Agreement through and including the earlier of
(a) June 30, 1999 or (b) the conversion of the Tranche A Loan to
a term loan pursuant to subparagraph 6(a)(i)(D).
"Tranche B Loan" and "Tranche B Note" shall have the
meanings set forth in subparagraph 2(a)(ii).
"Tranche B Revolving Period" shall mean the period from
the date of this Agreement through and including the later of
(i) March 30, 1997 or (ii) the date to which the Tranche B Loan
is extended pursuant to subparagraph 2(a)(ii)(C).
"Unmatured Event of Default" shall mean any event or
condition which with the passage of time or the giving of notice,
or both, would constitute an Event of Default.
2. The Loans.
a. Commitment Amounts.
i. Tranche A Loan. Subject to the terms and
conditions of this Agreement, each Bank agrees to make
advances to Borrower ("Advances"), in one or more
increments, an aggregate principal amount not to exceed its
Commitment Percentage of $60,000,000 (the "Tranche A Loan").
That part of the Tranche A Loan made by each Bank shall be
evidenced by a promissory note of Borrower, substantially in
the form of Exhibit A hereto, with appropriate insertions
therein as to payee, date and principal amount, payable to
the order of such Bank and evidencing the obligation of the
Borrower to pay a principal amount equal to the aggregate
unpaid principal amount of such Bank's Commitment Percentage
of the Tranche A Loan. Each promissory note executed by the
Borrower in connection with the Tranche A Loan, together
with any and all renewals, extensions, amendments and
changes of, or substitutions for said note, is herein called
a "Tranche A Note" and collectively, the "Tranche A Notes."
Absent an Event of Default, during the Tranche A Revolving
Period Borrower may borrow, prepay and reborrow under the
Tranche A Notes in accordance with paragraph 2(c) below;
thereafter, the Tranche A Loan will be a term loan as
provided in paragraph 2(d) below.
ii. Tranche B Loan.
(1) Subject to the terms and conditions of
this Agreement, each Bank agrees to make Advances to
Borrower, in one or more increments, an aggregate
amount not to exceed its Commitment Percentage of
$30,000,000 (the "Tranche B Loan"). That part of the
Tranche B Loan made by each Bank shall be evidenced by
a promissory note of the Borrower, substantially in the
form of Exhibit B hereto, with appropriate insertions
therein as to payee, date and principal amount, payable
to the order of such Bank and evidencing the obligation
of the Borrower to pay a principal amount equal to the
aggregate unpaid principal amount of such Bank's
Commitment Percentage of the Tranche B Loan. Each
promissory note executed by the Borrower in connection
with the Tranche B Loan, together with any and all
renewals, extensions, amendments and changes of, or
substitutions for said note, is herein called a
"Tranche B Note" and collectively, the "Tranche B
Notes." Absent an Event of Default, until maturity of
the Tranche B Notes Borrower may borrow, prepay and
reborrow under the Tranche B Notes in accordance with
paragraph 2(c) below. All remaining outstanding
principal and interest on the Tranche B Loan shall be
due and payable no later than March 30, 1997, unless
extended pursuant to subparagraph 2(a)(ii)(C) below.
(2) At any time and from time to time until
the maturity of the Tranche A Notes, Borrower may
elect, subject to the approval of the Banks in the
exercise of their sole discretion, to convert all or
any portion of the aggregate Commitments under the
Tranche B Loan into additional Commitments under the
Tranche A Loan. Such election shall be made in writing
delivered to the Agent and, if approved by the Banks,
such conversion shall occur upon payment of the
Conversion Fee described in paragraph 2(h)(v) below and
execution by Borrower of amendments to the Loan
Documents in form and substance satisfactory to the
Banks. Any and all such conversion elections shall be
in the amount of $2,000,000 or more. Notwithstanding
the foregoing, if such election is made concurrently
with a determination of the Aggregate Borrowing Base,
such election may be in any amount not to exceed the
limitations set forth in this Agreement and shall not
require the payment of the Conversion Fee.
(3) Within ten days after an annual
determination of the Aggregate Borrowing Base by the
Banks pursuant to paragraph 5(c) during the Tranche B
Revolving Period, Borrower may elect, subject to the
approval of the Banks in their sole discretion, to
extend the maturity date of the Tranche B Notes by
180 days. Such election shall be made in writing
delivered to the Agent and, if approved by the Banks,
such extension shall be effective on the later of
fifteen days after delivery of such election to the
Agent or the date Borrower executes and delivers
amendments to the Loan Documents in form and substance
satisfactory to the Banks.
b. Interest on the Loans.
i. Computation of Interest. The Loans shall
bear interest on the outstanding principal amounts thereof
at the Adjusted Prime Rate for Prime Rate Advances and at
the Adjusted LIBOR Rate for LIBOR Advances. Interest shall
be computed as simple interest and on the basis of a year of
365 days for Prime Rate Advances and on the basis of a year
of 360 days for LIBOR Advances. Interest on Prime Rate
Advances shall be payable in arrears on the last day of each
calendar quarter, beginning June 30, 1996, for Prime Rate
Advances. Interest on LIBOR Advances having an Interest
Period of three months or less shall be payable in arrears
on the last day of such Interest Period. Interest on LIBOR
Advances having an Interest Period of longer than three
months shall be payable in arrears on each day which is
three months or a whole multiple thereof after the first day
of such Interest Period and on the last day of such Interest
Period.
ii. Late Payment Rate. Notwithstanding anything
to the contrary contained in this Agreement, overdue
principal, and (to the extent permitted under applicable
law) overdue interest, whether caused by acceleration of
maturity or otherwise, shall bear interest at a fluctuating
rate, adjustable the day of any change in such rate, equal
to four percentage points above the Adjusted Prime Rate (the
"Late Payment Rate"), until paid, and shall be payable
monthly or, at the option of the holder or holders of the
Notes, on demand.
iii. Maximum Lawful Rate. Notwithstanding
anything to the contrary herein, no rate of interest
required hereunder shall exceed the maximum legal rate
permitted under applicable law, and if such rate is found to
exceed the maximum legal rate, Borrower shall be required to
pay only the maximum legal rate.
c. The Revolving Loan Period.
i. Requests for Advances. During the applicable
Revolving Loan Period, each Bank shall make advances to
Borrower under such Bank's Tranche A Note and Tranche B Note
as Borrower from time to time requests by submission to the
Agent of a Request for Advance in the form of Exhibit C
hereto. Each request for a Prime Rate Advance shall be in
an amount of at least $100,000 and each request for a LIBOR
Advance shall be in an amount of at least $500,000, or in
each case such lesser amount equal to the unadvanced portion
of the applicable portion of the Aggregate Borrowing Base.
Each such advance shall be evidenced by the Tranche A Note
or Tranche B Note under which it is drawn. Borrower shall
not make any Request for Advance that would result in more
than three LIBOR Advances outstanding at any one time
hereunder. Notwithstanding the foregoing, no Bank shall be
obligated to make any Advance to Borrower that would result
in the aggregate unpaid principal balance outstanding under
either of such Bank's Notes (including, without limitation,
the face amount of any letters of credit issued pursuant to
paragraph 3) exceeding the amount of such Bank's Commitment
Percentage of the Tranche A Borrowing Base or the Tranche B
Borrowing Base, as the case may be, then in effect. Within
these limits and as long as no Event of Default or Unmatured
Event of Default exists, during the applicable Revolving
Loan Period Borrower may borrow, prepay and reborrow under
the Notes.
ii. Prime Rate Advances. Each Request for
Advance relating to a Prime Rate Advance shall be submitted
to the Agent on or before 1:30 p.m. Dallas, Texas time of
the Business Day immediately preceding the day such Prime
Rate Advance is requested to be made. Upon receipt of a
Request for Advance, the Agent shall promptly notify each
Bank thereof. Not later than 11:00 a.m. Dallas time on the
next Business Day, each Bank shall make available to the
Agent the amount of such Bank's Commitment Percentage of the
amount specified in the Request for Advance in immediately
available funds. The Agent shall on such date credit the
account of the Borrower on the books of such office of the
Agent with the aggregate of the amounts made available to
the Agent by the Banks and in like funds as received by the
Agent. Notwithstanding the foregoing, if Agent shall
receive a Request for Advance relating to a Prime Rate
Advance by 11:30 a.m. Dallas, Texas time on a Business Day,
the Banks and Agent shall use their best efforts to fulfill
their funding obligations set forth in paragraph 2(c)(ii) on
the same Business Day.
iii. LIBOR Advances. Each Request for Advance
relating to a LIBOR Advance shall be submitted to the Agent
on or before 11:00 a.m. Dallas, Texas time of the third
Business Day before such LIBOR Advance is requested to be
made. Prior to such time, Borrower shall contact the Agent,
which shall advise Borrower of the Adjusted LIBOR Rate for
such periods as Borrower may reasonably request from among
the following periods: 30, 60, 90 and 180 days (as
available). When Borrower desires to make all or a portion
of the outstanding principal balance of a Loan subject to
the Adjusted LIBOR Rate, the Request for Advance shall
designate one of such periods (the "Interest Period") and
the amount of the outstanding principal balance of such Loan
to be subject to such designation; provided, however, that
no Interest Period shall extend beyond the maturity date of
the applicable Notes, and Borrower may not choose an
Interest Period and principal amount that would result in
the aggregate principal amount subject to the Adjusted LIBOR
Rate at any time during the Term Loan Period being greater
than the then outstanding principal balance under the Loans
after taking into account all principal payments required
pursuant to paragraph 2(d) during such Interest Period. The
Adjusted LIBOR Rate determined on the Determination Date in
accordance with the foregoing provisions for such Interest
Period shall remain in effect until the end of such Interest
Period. Upon receipt of a Request for Advance, the Agent
shall promptly notify each Bank thereof. Not later than
11:00 a.m. Dallas time on the third Business Day after
Agent's receipt of the Request for Advance, each Bank shall
make available to the Agent the amount of such Bank's
Commitment Percentage of the amount specified in the Request
for Advance in immediately available funds. The Agent shall
on such date credit the account of the Borrower on the books
of such office of the Agent with the aggregate of the
amounts made available to the Agent by the Banks and in like
funds as received by the Agent. If Borrower shall not
timely follow the procedures set forth above for the
Adjusted LIBOR Rate to apply at any time during the term of
a Note or shall not designate an Interest Period, the
Adjusted Prime Rate shall apply (and Borrower shall be
deemed to have elected the Adjusted Prime Rate until
completion of the Adjusted LIBOR Rate election procedures
set forth above). The election procedures set forth above
may be effected by telephonic communications of Borrower and
the Agent and confirmed the same day in writing, unless the
Agent shall request the same to be effected in writing.
d. The Term Loan Period. As of July 1, 1999, the
aggregate unpaid principal amount outstanding under the Tranche A
Notes shall be the principal amount of a term loan to Borrower
with a maturity date of June 30, 2004, which principal balance
and accrued interest thereon shall be repaid to the Banks by
quarterly payments, payable on or before the last day of each
calendar quarter, commencing September 30, 1999, in an amount
equal to the greater of (i) 1/20th of the outstanding principal
amount on July 1, 1999 plus accrued interest, or (ii) 60 percent
of Net Oil and Gas Revenues during the applicable Accounting
Quarter. All remaining outstanding principal and interest on the
Tranche A Loan shall be due and payable no later than June 30,
2004.
e. The Loan Date and Initial Advances. The initial
advance under the Loans has been made on a date and at a time
(the "Loan Date") as set forth in the Original Loan Agreement.
f. Payments by Borrower. All payments of principal
and interest hereof shall be made at the Agent's offices at 901
Main, Dallas, Texas 75202 (or at such other place as the Agent
shall have designated to Borrower in writing at least one
Business Day prior to the due date or prepayment date, as the
case may be) by 2:00 p.m. Dallas, Texas time on the date due or
the date of prepayment (as the case may be) in immediately
available funds and without set-off or counterclaim or deduction
of any kind. Each borrowing by Borrower from the Banks hereunder
and any reduction of the Commitments of the Banks shall be made
pro rata according to the respective Commitment Percentages of
the Banks. Each payment (including each prepayment) by Borrower
to the Agent on account of principal of and interest on the Loans
shall be distributed pro rata to the Banks according to the
respective outstanding principal amounts of the Loans then held
by the Banks. All payments received by each Bank hereunder shall
be applied first to accrued interest as of the date of payment
and then pro rata to the outstanding principal balances of such
Bank's Notes. If any payment to be made by Borrower hereunder or
under the Notes shall become due on a day other than a Business
Day, such payment shall be made on the next succeeding Business
Day and such extension of time shall be included in computing any
interest and fees in respect of such payment; provided, however,
that with respect to LIBOR Advances, if the result of such
extension would be to carry such Interest Period into another
calendar month, then the Interest Period shall end on the
immediately preceding Business Day.
g. Prepayments.
i. The Loans may be prepaid in whole or in part,
without penalty but subject to the provisions of
subparagraph (ii) below concerning prepayment of LIBOR
Advances, at any time, and from time to time, in integral
multiples of $50,000. Borrower shall give the Agent one
Business Day's notice in advance of any prepayment of Prime
Rate Advances and three Business Days' notice in advance of
any prepayment of LIBOR Advances. Each prepayment during
the Term Loan Period shall be applied to the payment of
principal indebtedness due in the inverse order of
approaching maturities.
ii. If Borrower prepays any Loan at any time that
such Loan is bearing interest at the Adjusted LIBOR Rate on
any day other than the last day of the applicable Interest
Period, Borrower shall pay on demand to the Banks an amount
sufficient to compensate the Banks for all losses and
expenses incurred by the Banks in connection with such
prepayment (as determined by the Banks in good faith),
including, without limitation losses and expenses incurred
by the Banks in connection with the reemployment of funds
prepaid and penalty charges for the prepayment of matched
funds. The Banks shall use reasonable efforts to mitigate,
and in each case shall provide to Borrower calculations of,
any such incidental losses and expenses.
h. Fees.
i. Transaction Fee. Borrower has paid to the
Agent a transaction fee as set forth in letter agreement
between Borrower and Agent dated March 1, 1993.
ii. Tranche A Loan Commitment Fee. During the
Tranche A Revolving Period, Borrower shall pay to the Banks
an unused commitment fee on the average daily difference
between the Tranche A Borrowing Base then in effect and the
aggregate outstanding principal amounts under the Tranche A
Notes (including, without limitation, the face amount of any
letters of credit issued pursuant to paragraph 3), at the
following annual rates, payable quarterly in arrears,
commencing June 30, 1996 (for the period from April 1, 1996
through June 30, 1996) and ending on June 30, 1999:
(1) When Borrower's Debt to Capitalization
Ratio is less than 50% at all times during such
quarter: 1/4 of 1 percent per annum.
(2) When Borrower's Debt to Capitalization
Ratio is equal to or greater than 50% at any time
during such quarter: 1/2 of 1 percent per annum.
For the purposes of this subparagraph 2(h)(ii), any
increase in the Tranche A Borrowing Base pursuant to
subparagraph 5(e) shall be effective as of the first
day of the calendar quarter in which Borrower elects to
increase the Tranche A Borrowing Base, and any decrease
in the Tranche A Borrowing Base pursuant to
subparagraph 5(e) shall be effective as of the date the
Agent actually receives notice from Borrower of such
reduction.
iii. Tranche B Loan Commitment Fee. During the
Tranche B Revolving Period, Borrower shall pay to the Banks
an unused commitment fee on the average daily difference
between the Tranche B Borrowing Base then in effect and the
aggregate outstanding principal amounts under the Tranche B
Notes (including, without limitation, the face amounts of
any letters of credit issued pursuant to paragraph 3), at
the following annual rates, payable quarterly in arrears,
commencing June 30, 1996 (for the period from April 1, 1996
through June 30, 1996) and ending on the later of May 1,
1997, or the date to which the Tranche B Loan is extended
pursuant to subparagraph 2(a)(ii)(C):
(1) When Borrower's Debt to Capitalization
Ratio is less than 50% at all times during such
quarter: 1/8 of 1 percent per annum.
(2) When Borrower's Debt to Capitalization
Ratio is equal to or greater than 50% at any time
during such calendar quarter: 3/8 of 1 percent per
annum.
For the purposes of this subparagraph 2(h)(iii), any
increase in the Tranche B Borrowing Base pursuant to
subparagraph 5(e) shall be effective as of the first day of
the calendar quarter in which Borrower elects to increase
the Tranche B Borrowing Base, and any decrease in the
Tranche B Borrowing Base pursuant to subparagraph 5(e) shall
be effective as of the date the Agent actually receives
notice from Borrower of such reduction.
iv. Engineering Fee. Borrower shall pay to the
Agent an annual engineering fee as set forth in letter
agreement between Borrower and the Agent dated March 1,
1993.
v. Conversion Fee. Borrower shall pay the Banks
1/4 of 1 percent of the amount of the Commitments under the
Tranche B Loan that are converted to Commitments under the
Tranche A Loan pursuant to subparagraph 2(a)(ii)(C).
vi. Letter of Credit Fee. The fee for issuance
of or renewal of each letter of credit pursuant to
paragraph 3 below shall be one percent per annum of the face
amount of such letter of credit. The first year's fee shall
be payable by Borrower at the time letters of credit are
issued or renewed. Subsequent annual fees shall be due and
payable on the applicable letter of credit's anniversary
date. Annual fees shall be prorated for any period less
than a year that the letter of credit remains outstanding.
vii. Facility Fee. Whenever Borrower accepts an
Aggregate Borrowing Base pursuant to subparagraph 5(e) in
excess of the Aggregate Borrowing Base then in effect,
Borrower shall pay the Banks 1/4 of 1 percent of the amount
of such excess, payable upon the later of the effective date
of the increase in the Aggregate Borrowing Base or the date
Borrower accepts such increase.
i. Inability to Determine Rates. If the Agent
concludes, after following the procedures set forth herein for
determining the Adjusted LIBOR Rate, that the Adjusted LIBOR Rate
for an Interest Period cannot be determined, the Agent shall
forthwith notify Borrower of such conclusion, which shall be
conclusive absent manifest error. Upon the receipt of any such
notice, Borrower's option to specify the Adjusted LIBOR Rate
shall be suspended until the Agent shall have concluded and
notified Borrower that the Adjusted LIBOR Rate may once again be
determined, and Borrower shall follow the procedures set forth
herein for the Adjusted LIBOR Rate to apply. During any such
period that the Adjusted LIBOR Rate shall not apply, the Adjusted
Prime Rate shall apply.
j. Illegality. If at any time any applicable law or
any interpretation or administration thereof (whether having the
force of law or not) by any governmental authority charged with
the interpretation or administration thereof shall make it
unlawful or contrary to any such law for the Agent to apply the
Adjusted LIBOR Rate to any Loan, the Adjusted Prime Rate shall
apply until such time as the Agent shall have concluded and
notified Borrower that the Adjusted LIBOR Rate may apply. At
such time Borrower shall follow the procedures set forth herein
for the Adjusted LIBOR Rate to apply.
k. Increased Costs and Taxes.
i. If at any time any applicable law or any
interpretation or administration thereof by any governmental
authority or interpretation by any Bank of any such law:
(1) shall subject such Bank to any tax, duty
or other charge (including, but not limited to, any tax
designed to discourage the purchase or acquisition of
foreign securities or debt instruments by United States
nationals) with respect to any Loan, Advance or Note,
or shall materially change the basis of taxation of
payments to such Bank of the principal of and interest
on any Note (except for changes in the rate of tax on
the overall net income of such Bank that is imposed by
the jurisdiction in which such Bank's principal
executive office is located); or
(2) shall subject such Bank to, impose,
modify or deem applicable any reserve, special deposit
or similar requirements against assets or liabilities
of, deposits with or for the account of or credit
extended by such Bank or shall impose on such Bank any
other conditions affecting this Agreement or any Loan
or Note;
and the result of any of the foregoing is to impose any cost upon
such Bank or increase any cost to such Bank in order to apply the
Adjusted LIBOR Rate, or to reduce the amount of any sum received
or receivable by such Bank with respect to any Loan, Advance or
Note, then, within 15 calendar days after demand by such Bank
(and from time to time thereafter as specified by such Bank),
Borrower agrees to pay for the account of such Bank such
additional amount or amounts as will compensate such Bank for
such costs imposed or reduction of amount received.
ii. Each Bank will promptly notify Borrower of
any event of which it has knowledge that will entitle such
Bank to any additional amount or amounts pursuant to the
foregoing paragraph. A certificate of such Bank to
Borrower, setting forth the basis for the determination of
such additional amount or amounts necessary to compensate
such Bank and certifying to Borrower that such Bank has
actually incurred such amounts with respect to advances
under any Loan or Note shall be conclusive and binding
absent manifest error.
iii. Upon receiving notice from a Bank that such
Bank's cost of applying the Adjusted LIBOR Rate has been
increased as a result of any of the reasons specified above,
Borrower shall have the right, subject to the terms set
forth in paragraph 2(f) with respect to payments other than
at the end of an Interest Period, upon giving five Business
Days' notice to such Bank, to convert to the Adjusted Prime
Rate.
l. Adjustments. If any bank (a "benefitted Bank")
shall at any time receive any payment of all or part of its
Loans, or interest thereon, or receive any collateral in respect
thereof (whether voluntarily or involuntarily, by set-off,
pursuant to events or proceedings of the nature referred to in
paragraph 12(c), or otherwise), in a greater proportion than any
such payment to or collateral received by any other Bank, if any,
in respect of such other Bank's Loans, or interest thereon, such
benefitted Bank shall purchase for cash from the other Banks such
portion of each such other Bank's Loans, or shall provide such
other Banks with the benefits of any such collateral, or the
proceeds thereof, as shall be necessary to cause such benefitted
Bank to share the excess payment or benefits of such collateral
or proceeds ratably with each of the Banks; provided, however,
that if all or any portion of such excess payment or benefits is
thereafter recovered from such benefitted Bank, such purchase
shall be rescinded, and the purchase price and benefits returned,
to the extent of such recovery, but without interest. Borrower
agrees that each Bank so purchasing a portion of another Bank's
Loans may exercise all rights of payment (including, without
limitation, rights of set-off) with respect to such portion as
fully as if such Bank were the direct holder of such portion.
m. Participations. Each Bank shall have the right to
grant participations in all or any part of such Bank's Notes,
Advances, Loans and Commitments hereunder to one or more pension
plans, investment funds, financial institutions or similar
purchasers; provided that (i) each Bank granting a participation
shall use its best efforts to give prior notice of any such
participation, but in any event shall promptly notify Agent and
Borrower thereof, (ii) each Bank granting a participation shall
retain the right to vote hereunder, and no participant shall be
entitled to vote hereunder on decisions requiring consent or
approval of the Banks, (iii) each Bank and Borrower shall be
entitled to deal with the Bank granting a participation in the
same manner as if no participation had been granted, and (iv) no
participant shall ever have any right by reason of its
participation to exercise any of the rights of the Banks
hereunder. The Bank granting a participation shall be
responsible for any costs arising as a result of such
participation.
3. Letters of Credit.
a. Issuance of Letters of Credit. Upon request of
Borrower received by the Agent at least three days prior to the
date of proposed issuance, the Agent in its sole discretion
consistent with existing bank policies may issue standby letters
of credit during the Tranche A Revolving Loan Period on the form
attached hereto as Exhibit D in such amounts and under such
circumstances as the Agent deems appropriate consistent with
existing bank policies. The Banks may elect to participate in
the letters of credit issued by the Agent up to their respective
Commitment Percentages. The issuance of letters of credit shall
be deemed advances under the Tranche A Loan. Notwithstanding
anything to the contrary set forth herein, the Agent shall not be
obligated to issue, extend or amend any letter of credit such
that the new letter of credit (i) would result in the aggregate
unpaid principal balance outstanding under the Tranche A Loan
(including, without limitation, the face amount of any prior
letters of credit issued by the Agent pursuant to this
paragraph 3 that are still in effect) exceeding the amount of the
Tranche A Borrowing Base then in effect, or (ii) has an
expiration date later than June 30, 2004.
b. Payments Treated as Prime Rate Advances. Each
payment by the Agent under the outstanding letters of credit
shall be deemed to be a Prime Rate Advance bearing interest from
the date of such payment, shall be entitled to all of the
benefits of the Security Documents and shall be subject to all
terms of this Agreement.
4. Asset Dispositions.
a. Mandatory Prepayments. Borrower shall make
mandatory prepayments on the Loan upon the sales, transfers or
other dispositions of any interest in any of the Oil and Gas
Properties. Such prepayments shall be in an amount equal to the
amount by which the aggregate outstanding principal amount under
the Notes (including the face amount of any letters of credit)
exceeds the amount determined by the Banks pursuant to paragraph
5(a)(ii) then in effect after giving effect to such asset sale,
but not to exceed the Release Value. Sales of any Oil and Gas
Properties shall result in an automatic reduction of the amount
determined by the Agent pursuant to paragraph 5(a)(ii) equal to
the Release Value for such assets sold and, to the extent
required under the provisions of paragraph 5, in the Aggregate
Borrowing Base.
b. Release Values. Upon notification by Borrower of
a proposed sale and the properties to be sold, the Agent will
provide Release Values for such properties. Such Release Values
shall be binding upon the Agent only for a period of 90 days
after delivery thereof to Borrower, shall not be binding or
usable between the parties for any purpose other than Release
Value (and with respect to Release Value, only for the property
specified) during such 90-day period and shall not be usable
between the parties for any purpose whatsoever after such 90-day
period, including without limitation as evidence of Release Value
for the applicable property or any other property after such
period.
c. Release of Liens. Upon consummation of any sale
pursuant to paragraph 4(a), Borrower shall immediately submit to
the Banks an Asset Sales Report in the form of Exhibit E hereto
and make any required prepayments resulting from such sale, and
the Agent shall then deliver to Borrower duly executed and
acknowledged releases of the Security Documents for any property
so sold and included in the Mortgage Collateral. Borrower shall
pay all reasonable costs and expenses incurred in connection with
such releases, including without limitation attorneys' fees
incurred by the Agent for the preparation or review thereof and
filing and recording fees therefor. Borrower shall be
responsible for all such filing and recording. The releases
described herein shall be delivered at the closing of such sale
provided that Borrower has complied with all of its obligations
set forth in this paragraph 4(c).
5. Borrowing Base.
a. Initial Aggregate Borrowing Base; Limitations on
Borrowing Base. The initial borrowing base (the "Aggregate
Borrowing Base") under this Agreement on the Effective Date shall
be $25,000,000. The Tranche A Borrowing Base (hereinafter
defined) on the Effective Date shall be $22,000,000; the Tranche
B Borrowing Base (hereinafter defined) on the Effective Date
shall be $3,000,000. During the Revolving Loan Period, the
Aggregate Borrowing Base shall be the lesser of (i) the sum of
the then-existing Banks' Commitments under the Tranche A Loan and
the Tranche B Loan; (ii) the amount determined by the Banks in
the exercise of their sole discretion in accordance with this
paragraph 5; or (iii) the amount requested by Borrower pursuant
to paragraph 5(e). During the Term Loan Period, the Aggregate
Borrowing Base shall be the lesser of: (i) the aggregate
principal amount of the Tranche A Notes outstanding on the date
of the Aggregate Borrowing Base determination, or (ii) the amount
determined by the Banks in the exercise of their sole discretion
in accordance with this paragraph 5.
b. Engineering Report. No later than March 1 of each
year that this Agreement is in effect, commencing March 1, 1997,
Borrower shall submit to the Banks, in a format and using the
pricing and cost assumptions and discount factors required by the
Securities and Exchange Commission, a report, prepared by a
qualified independent or in-house engineer acceptable to the
Agent, setting forth, as of December 31 of the immediately
preceding year, all of the reserves (and the future volumes of
production and revenues to be derived therefrom) attributable to
all proved Oil and Gas Properties owned by Borrower as of such
date.
c. Determination of Aggregate Borrowing Base. The
Banks shall determine the Aggregate Borrowing Base (which shall
never exceed $60,000,000) as of April 1 of each year that this
Agreement is in effect, commencing April 1996, based on the value
of the Oil and Gas Properties, such value to be determined by the
Banks taking into account the reports and information provided
pursuant to subparagraphs 5(b) above and 9(b)(vi) below and any
other information provided by Borrower to the Banks pursuant to
the terms of this Agreement or otherwise acquired by the Banks,
and all other discount factors, assumptions, criteria and general
credit considerations determined as appropriate by the Banks in
their sole discretion. In addition to the annual determinations
of Aggregate Borrowing Base set forth above, the Banks may, or
upon request by Borrower shall, determine the Aggregate Borrowing
Base two additional times during any calendar year period in
accordance with the provisions of this paragraph 5(c). If the
Banks cannot agree on the Aggregate Borrowing Base, the Aggregate
Borrowing Base shall be based on the lowest value assigned by any
Bank to the Oil and Gas Properties as set forth herein.
d. Notification of Aggregate Borrowing Base. The
Agent shall give written notice to Borrower of the amount
determined pursuant to paragraph 5(a)(ii) and the Aggregate
Borrowing Base for such period as soon as possible after it has
made such determination, but in no event later than 45 days after
receipt by the Banks of the appropriate report pursuant to
paragraph 5(b). Until the Agent has notified Borrower of the
Aggregate Borrowing Base for such period pursuant to this
subparagraph 5(d), the Aggregate Borrowing Base shall be the
amount determined pursuant to paragraph 5 for the immediately
preceding period.
e. Acceptance and Application of Aggregate Borrowing
Base. Within ten days after the Agent has given written notice
to Borrower of the Aggregate Borrowing Base offered by the Agent
for a period, Borrower shall give Agent written notice of
Borrower's acceptance of all or a portion of the Aggregate
Borrowing Base for such period. In such notice, Borrower shall
allocate a portion of the Aggregate Borrowing Base so accepted by
the Borrower to the Tranche A Loan (the "Tranche A Borrowing
Base") and the remaining portion to the Tranche B Loan (the
"Tranche B Borrowing Base"), provided, however, that in no event
shall (i) more than $60,000,000 of the Aggregate Borrowing Base
be allocated to the Tranche A Loan, (ii) more than $30,000,000 of
the Aggregate Borrowing Base be allocated to the Tranche B Loan,
or (iii) more than 50 percent of Aggregate Borrowing Base be
allocated to the Tranche B Loan.
6. Excess Debt.
a. Tranche A Loan.
i. If at any time during the Tranche A Revolving
Period the Agent determines that the aggregate unpaid
principal amount outstanding under the Tranche A Notes plus
the aggregate face amount of any outstanding letters of
credit issued hereunder exceeds the Tranche A Borrowing Base
then in effect (such excess is hereinafter called the
"Tranche A Excess Debt"), Borrower shall notify Agent,
within 10 Business Days after notice thereof from the Agent,
of which of the following actions Borrower intends to take
and shall, within the applicable time period provided below
following receipt of notice from the Agent of the existence
of such Tranche A Excess Debt, take such action:
(1) Within thirty calendar days, repay the
Tranche A Loan in an amount equal to the Tranche A
Excess Debt;
(2) Within thirty calendar days, begin
making equal monthly payments of principal in an amount
sufficient to amortize the Tranche A Excess Debt within
six months after receipt of such notice from the Agent;
(3) Within thirty calendar days, provide
additional proved oil and gas properties as collateral
for the Loans, which properties shall be acceptable to
the Banks in their sole discretion, shall have a value
sufficient to increase the Tranche A Borrowing Base by
the amount of the Excess Debt and shall not have been
considered previously by the Banks for inclusion in the
value on which the Borrowing Base is determined, and
within such thirty days, execute amendments to the
Security Documents in form and substance satisfactory
to the Banks; or
(4) Within thirty calendar days, convert the
aggregate outstanding principal amount of the Tranche A
Notes to a term loan, which shall be subject to the
provisions of paragraph 2(d).
Failure of Borrower to comply with this subparagraph 6(a)(i)
within the foregoing time periods shall be an immediate Event of
Default.
ii. If at any time during the Term Loan Period
the Required Banks determine that the ratio of (A) the value
(as determined by the Agent in its sole discretion) of the
Mortgage Collateral supporting the Tranche A Loan to (B) the
aggregate principal amount outstanding under the Tranche A
Notes is less than 1.5 to 1, the amount payable under
paragraph 2(d) shall be increased, in the sole discretion of
the Required Banks, to up to 80 percent of Net Oil and Gas
Revenues, until the aggregate outstanding principal amount
plus the aggregate face amount of any outstanding letter of
credit issued hereunder is equal to the Tranche A Borrowing
Base after which time the amount shall be reduced to the
amount required by paragraph 2(d); provided, however, that
in no event shall the amount payable pursuant to
paragraph 2(d) be reduced by the application of this
subparagraph 6(a)(ii). Any payment made pursuant to this
subparagraph 6(a)(ii) shall be accompanied by a Net
Revenue/Payment calculation in the form of Exhibit F
attached hereto.
b. Tranche B Loan. If at any time the Agent
determines that the aggregate unpaid principal amount outstanding
under the Tranche B Notes exceeds the Tranche B Borrowing Base
then in effect (such excess is hereinafter called the "Tranche B
Excess Debt"), Borrower shall take one of the following actions
within three Business Days following receipt of notice from the
Agent of the existence of such Tranche B Excess Debt:
i. Convert the Tranche B Excess Debt to
principal outstanding under the Tranche A Loan, and execute
and deliver to the Banks amendments to the Loan Documents
satisfactory to the Banks; or
ii. Repay the Tranche B Loan in an amount equal
to the Tranche B Excess Debt.
Failure to timely comply with this paragraph 6(b) shall be an
immediate Event of Default.
7. Security.
a. Security Documents. The repayment of the Loans
and all extensions and renewals thereof, and the performance of
all obligations of Borrower hereunder, shall be secured by the
Mortgages and all other security agreements, deeds of trust,
mortgages, chattel mortgages, assignments of proceeds or
production, pledges, guaranties, financing statements,
continuation statements, extension agreements and other
agreements or instruments along with any extensions, renewals,
rearrangements, amendments and restatements thereof now or
hereafter delivered by Borrower to the Agent on behalf of the
Banks in connection with this Agreement or any transaction
contemplated hereby to secure or guarantee such payment or
performance (collectively, the "Security Documents").
b. Filing and Recordation. Borrower hereby
authorizes the Agent to file and record the Security Documents in
all appropriate offices and jurisdictions upon or after the first
to occur of the following:
i. The commencement of the Term Loan Period;
ii. The aggregate amount of principal, interest,
fees and other debt outstanding under the Loans equals or
exceeds 50% of the amount immediately theretofore determined
by the Banks in accordance with paragraph 5(a)(ii) and of
which the Agent has provided notice to Borrower pursuant to
paragraph 5(d);
or
iii. An Event of Default or Unmatured Event of
Default.
The Agent shall not file or record the Security Documents except
upon or after the occurrence of one of the foregoing events.
Such filing and recording shall be in addition to all other
rights and remedies of the Banks hereunder or under applicable
laws, statutes or equitable principles.
8. Representations and Warranties. Borrower represents
and warrants to the Agent and each Bank that:
a. Corporate Existence.
i. Borrower is a corporation duly organized,
validly existing and in good standing under the laws of
Delaware, and is qualified to do business as a foreign
corporation in every jurisdiction in which the nature of its
business or the ownership of its assets requires such
qualification and failure to so qualify could have a
material adverse effect on Borrower, its business,
operations, property, prospects, assets or condition
(financial or otherwise);
ii. Borrower has the power and authority to own
the property which it owns and to carry on its business as
such business is now conducted; and
iii. Borrower has all franchises, permits,
licenses and similar agreements necessary to carry on its
business as now conducted, and has not received any notices
of default or termination under any of such agreements.
b. Non-Contravention. The execution, delivery and
performance by the Borrower of this Agreement and the other Loan
Documents and the consummation of the transactions contemplated
herein and therein will not conflict with the articles of
incorporation, bylaws or other organizational or governing
documents of Borrower, or conflict with or result in any breach
of any mortgage or lien, or any lease, agreement, instrument,
order, judgment, decree, law, rule, regulation or any other
restriction of any kind or character to which Borrower is a party
or is subject or by which Borrower or its properties are bound or
affected.
c. Third Party Authorization. No consent, approval,
exemption, authorization or order of or other action by, and no
notice to or filing with, any court or governmental authority or
third party is required in connection with the execution,
delivery or performance by Borrower of this Agreement or any
other Loan Document or to consummate any transactions
contemplated hereby or thereby.
d. Corporate Authorization; Binding Effect. Borrower
has full power and authority to enter into this Agreement and the
other Loan Documents. The execution and delivery of this
Agreement and the other Loan Documents, and the performance and
observance of their terms, conditions and obligations, have been
duly authorized by all necessary corporate action by Borrower.
This Agreement and the Notes are, and when executed by Borrower
the Security Documents will be, legal, valid and binding
obligations of Borrower, enforceable in accordance with their
respective terms.
e. Litigation. There are no actions, suits,
proceedings or claims against Borrower or any of its properties
pending or, to the knowledge of Borrower, threatened before any
court or by or before any governmental instrumentality, which
could have a material adverse effect on the business, operations,
property, prospects, assets or condition (financial or otherwise)
of Borrower or the ability of Borrower to perform its obligations
under this Agreement or the other Loan Documents. Borrower has
provided the Agent and the Banks with a copy of Borrower's 1995
annual report with reference to certain litigation as set forth
in Note 7 of the Notes to Consolidated Financial Statement
contained therein. There exists no default or breach by Borrower
with respect to any order, writ, injunction, decree or demand of
any court or governmental instrumentality, nor does the
execution, delivery or performance of this Agreement or the other
Loan Documents result in any such default or breach.
f. Taxes. Borrower has filed all required tax
returns and paid all taxes and other governmental charges or
levies imposed upon or against its income properties, including
the Oil and Gas Properties, before the same became in default,
including without limitation, all ad valorem taxes assessed
against the Oil and Gas Properties or any part thereof and all
occupation taxes and all production, severance, windfall profit,
excise and other taxes assessed against, or measured by,
production or the value or proceeds thereof, except those being
contested in good faith and by appropriate proceedings, for which
adequate reserves have been set up by Borrower and for which
there is no risk of loss of any of the Oil and Gas Properties.
g. Liens. All property and assets of Borrower are
free and clear of all liens and encumbrances except the liens
contemplated hereby and by the Security Documents as described
herein or therein and except easements and rights-of-way
previously existing or arising in the ordinary course of business
which have no material adverse effect on the value of such
property or the operation of Borrower's business. If on the Loan
Date such property or assets shall be subject to a lien in favor
of a third party securing a sum of money in a definitely
ascertainable amount, the Agent shall have the right, but not the
obligation, to deduct from the amount of the initial Advances
under the Loans the full amount of the principal, accrued
interest and prepayment premium, if any, payable thereon and
obtain a release of the lien by payment of the amount deducted.
h. Title. Borrower has good and marketable title to
at least 70%, and good and defensible title to at least 30%, of
the Oil and Gas Properties included in the Aggregate Borrowing
Base, subject only to such liens as are otherwise specifically
permitted hereby or in the Mortgages. As used herein, the term
"defensible title" means title subject to minor defects and
irregularities which are not such as to be likely to interfere
materially with the benefit and enjoyment of production from the
properties.
i. Chief Executive Office. Borrower's place of
business, or if it has more than one, its chief executive office,
and the place where Borrower keeps its books and records
concerning the Oil and Gas Properties (including without
limitation, the records with respect to proceeds of production
from the Oil and Gas Properties and other accounts and contract
rights), is located in Denver, Colorado and has been there for at
least four months immediately preceding the date hereof.
j. Use of Proceeds. The proceeds of the Loans will
be used solely for the following business or commercial purposes:
general working capital, repayment of existing debt, development
drilling and exploration, acquisition of oil and gas properties
and companies as otherwise permitted hereby, issuance of letters
of credit pursuant to the terms of this Agreement, and other
corporate purposes in the ordinary course of Borrower's business.
k. Margin Stock. In no event shall any funds from
the Loans be used directly or indirectly for the purpose, whether
immediate, incidental or ultimate, of purchasing, acquiring or
carrying any "margin stock" or any "margin securities" (as such
terms are defined respectively in Regulation U, Regulation G and
Regulation X promulgated by the Board of Governors of the Federal
Reserve System) or to extend credit to others directly or
indirectly for the purpose of purchasing or carrying any such
margin stock or margin securities. Borrower is not engaged
principally, or as one of Borrower's important activities, in the
business of extending credit to others for the purpose of
purchasing or carrying such margin stock or margin securities.
l. Subsidiaries. Borrower has no subsidiaries,
except as set forth on Exhibit G hereto.
m. ERISA. No Termination Event has occurred with
respect to any ERISA Plan, and Borrower is in compliance with
ERISA in all material respects. Borrower is not required to
contribute to, or has any other absolute or contingent liability
in respect of, any "multiemployer plan" as defined in Section
4001 of ERISA.
n. Security Documents. The warranties and
representations in the Security Documents are true and correct.
o. Compliance with Laws. To the best of Borrower's
knowledge, after due inquiry of appropriate persons within
Borrower, Borrower is in compliance with all laws, rules and
regulations, and determination of any arbitrator or governmental
authority applicable to or binding upon it or any of its property
or to which it or any of its property is subject, except where
failure to so comply would not have a material adverse effect on
Borrower or any of the Oil and Gas Properties.
p. Financial Condition. Since December 31, 1991,
there has been no material adverse change in the business,
financial position or results of operations of Borrower or its
subsidiaries.
q. Default. As of the date hereof, there exists no
Event of Default or Unmatured Event of Default.
9. Affirmative Covenants. Unless waived in writing by the
Required Banks, until payment in full of the Loans and
termination of all Commitments by the Banks to make Advances
hereunder, Borrower shall:
a. Payment and Performance of Loan. Duly and
punctually pay or cause to be paid in lawful money of the United
States, the principal and interest on the Loans upon the dates,
at the place and in the manner set forth in the Notes, in the
Security Documents and herein, and perform and observe all other
obligations of Borrower under this Agreement and the Security
Documents.
b. Financial Statements. Keep proper books of record
and account in which full, true and correct entries will be made
of all business, dealings and affairs in accordance with GAAP,
and deliver to the Banks, at Borrower's expense and in format
acceptable to the Required Banks:
i. Within 120 calendar days after the end of
each Fiscal Year, complete audited consolidated financial
statements of Borrower, together with all notes thereto, and
unaudited consolidating financial statements of Borrower
prepared in reasonable detail in accordance with GAAP,
together with an unqualified opinion, based on an audit
conducted by independent certified public accountants
selected by Borrower and acceptable to the Bank, stating
that such audited consolidated financial statements present
fairly the financial position for the periods indicated in
conformity with GAAP applied on a basis consistent with
prior years (except as otherwise required due to changes in
GAAP);
ii. Within 60 calendar days after the end of each
Fiscal Quarter, excluding the last quarter of each Fiscal
Year, unaudited consolidated and consolidating financial
statements of Borrower prepared in reasonable detail and in
accordance with GAAP;
iii. Together with delivery of each of the
financial statements described in subparagraphs (i) and (ii)
above, a certificate signed by the president or chief
financial officer of Borrower in the form of Exhibit H
attached hereto, stating that he or she has read this
Agreement and made all other necessary investigations,
attesting to the authenticity of such financial statements,
showing the calculation of and compliance with the financial
covenants contained in this Agreement, and stating that in
making the examination and reporting on such financial
statements, he or she concluded that, to the best of such
officer's knowledge, there did not exist any condition or
event at the end of such Fiscal Year or at the time of such
certificate which constituted an Event of Default or
Unmatured Event of Default, or, if such condition or event
existed, specifying the nature and period of existence of
any such condition or event;
iv. Within 60 calendar days after the end of each
calendar quarter, production and expense reports on all
Hydrocarbons produced and marketed from the Oil and Gas
Properties on an aggregate basis during such quarter,
including the quantities involved, the actual revenues
derived and ad valorem, production and severance taxes,
together with information reflecting on a property-by-
property basis all material gas imbalances and other changes
in working interests and net revenue interests of Borrower
with respect to the Oil and Gas Properties;
v. Promptly after the same are filed, copies of
all financial statements and regular, periodical or special
reports that Borrower may make to, or file with, the
Securities Exchange Commission or any stock exchange; and
promptly after the same are sent, copies of all other
information sent to shareholders;
vi. Promptly, such additional financial and other
information as the Banks may from time to time reasonably
request, including without limitation reasonable detail with
respect to the information provided on an aggregate basis
pursuant to subparagraph 9(b)(iv) above; and
vii. Upon each request for an advance pursuant to
subparagraph 2(c)(i) and on the last day of each calendar
quarter, a certificate signed by the president, chief
financial officer, vice president of finance or vice
president of accounting and administration of Borrower
stating the Borrower's Debt to Capitalization Ratio as of
such date and for the quarter just ended.
c. Preservation of Existence, Etc. Maintain in full
force and effect Borrower's existence and good standing under the
laws of the State of Delaware and its rights to transact business
in the State of Colorado and in all other states where its
activities and ownership of assets are such that qualification to
transact business is necessary under the laws of such states and
failure to so qualify could have a material adverse effect on
Borrower, its business or assets.
d. Maintenance of Property. Maintain, preserve and
keep in good repair and in good working order and condition the
Oil and Gas Properties and all properties used and useful in the
business of Borrower; provided, however, that Borrower shall not
be required to maintain any nonproductive oil and gas lease
during or after its primary term so long as such lease is not
included in the Oil and Gas Properties, and provided, further,
that with respect to Oil and Gas Properties operated by third
parties, Borrower shall use its best efforts to ensure compliance
with the foregoing.
e. Payment of Other Obligations.
i. Duly and punctually pay and discharge (A) all
taxes, assessments and other governmental charges assessed
against or imposed upon or with respect to Borrower or its
properties or assets prior to the date when they shall
become delinquent, except to the extent contested in good
faith and by appropriate proceedings; (B) all charges for
labor, materials and supplies which if unpaid might become a
lien against any part of the property of Borrower unless the
same are being contested in good faith and by appropriate
proceedings; and (C) all federal and state social security,
worker's compensation and similar taxes, payments and
contributions for which Borrower may be liable, before the
same become delinquent; and
ii. Duly and punctually pay all debt obligations
(principal and interest), including without limitation,
accounts payable and lease obligations, unless the same are
being contested in good faith and by appropriate
proceedings.
f. Insurance. Except to the extent otherwise
specifically provided in the Security Documents, keep all of
Borrower's insurable property, real and personal, adequately
insured at all times against fire and against such other risks as
are customarily insured against by similar businesses of a
comparable size, and fully insure against its employer's and
public liability risks in financially sound and reputable
insurance companies, all in such amounts and with such carriers
as are consistent with industry standards, and with agreements by
each carrier that the Agent shall receive at least 10 calendar
days' notice prior to cancellation of any such policy. In this
regard, if the Agent so requests, Borrower shall furnish to the
Agent copies of all insurance policies relating to the Oil and
Gas Properties and shall cause the Agent to be named as loss
payee thereof on behalf of the Banks as its or their interests
may appear.
g. Inspection of Property, Books and Records. Upon
reasonable notice from the Agent or the Banks, permit the Banks'
duly authorized officers, employees and agents to inspect the Oil
and Gas Properties and the other property, books and records of
Borrower and to discuss Borrower's affairs, finances and accounts
with Borrower's officers and its independent accountants, and
furnish any other data which the Banks may reasonably request,
including, but not limited to, title, geological and engineering
data, all at the expense of Borrower and at any reasonable time
and as often as the Banks may reasonably request.
h. Notices. Promptly give written notice to the
Agent of any of the following: (i) any material adverse change
in the business, property, prospects, assets, operations or
condition (financial or otherwise), of Borrower, (ii) any Event
of Default or Unmatured Event of Default, (iii) the pendency or
threat of any litigation and of any tax deficiency or other
proceeding before any governmental body or official that could
materially affect Borrower, (iv) the occurrence of any
Termination Event, (v) any dispute, claim or litigation which may
have a material adverse effect on Borrower any of the Oil and Gas
Properties, or (vi) any fact which causes or may cause the Banks
to fail to have any valid, enforceable and perfected first
priority lien on any of the Mortgage Collateral, except as
expressly permitted by this Agreement or the Security Documents.
i. Compliance with Laws. Comply with all applicable
laws, statutes, rules and regulations of the United States and of
any state or municipality, and of any official, arbitrator or
governmental authority, in respect of the conduct of business and
ownership of property by Borrower where failure to comply would
have a material adverse effect on Borrower or any of the Oil and
Gas Properties.
j. Further Assurances. Subject to paragraph 7(b)
hereof, promptly and, insofar as not contrary to applicable law,
at Borrower's own expense, file and refile in such offices, at
such times and as often as may be necessary, every instrument and
every amendment thereto, and take such other action, as may be
necessary or desirable to create, perfect, maintain and preserve
all liens and security interests intended to be created by
Borrower in favor of the Agent on behalf of the Banks and the
rights and remedies of the Agent thereunder, furnish to the Agent
evidence satisfactory to the Agent of all such filings and
refilings, otherwise do all things necessary or expedient to be
done to effectively create, perfect, maintain and preserve the
liens and security interests intended to be created thereby as a
lien on real property and fixtures and a security interest in
personal property and fixtures, and pay all fees and expenses
(including counsel fees) incident to this Agreement and in
compliance with this paragraph 9(j).
k. Maintain Mortgage Collateral. Maintain Mortgage
Collateral having a value of 75 percent of the value of the Oil
and Gas Properties included in the Aggregate Borrowing Base. The
value of the Mortgage Collateral and such Oil and Gas Properties
shall be the same value assigned thereto in the Banks' annual
determination of the value of all the Oil and Gas Properties
pursuant to paragraph 5(c), prior to the application of discount
factors, assumptions, criteria and general credit considerations
used by the Banks to determine the Aggregate Borrowing Base from
such value.
l. Ratios. Maintain a Current Ratio of not less than
1.0 to 1.0.
m. Use of Proceeds. Use the proceeds of the Loans
only for the permitted purposes set forth in paragraph 8(j).
n. Shareholders Equity. Maintain Shareholders Equity
of not less than the sum of (i) $56,000,000 plus (ii) 50% of all
net income accrued after the Effective Date plus (iii) 75% of the
consideration received by Borrower in connection with the sale,
exchange or other transfer of any equity interest in Borrower.
For these purposes, net income shall be determined on a
cumulative basis in accordance with GAAP, except that in the
event net income is less than zero, net income shall be deemed to
be zero.
10. Negative Covenants. Unless waived in writing by the
Required Banks, until payment in full of the Loans and
termination of all Commitments by the Banks to make Advances
hereunder, Borrower shall not, without the prior written consent
of the Banks:
a. Indebtedness. Incur any indebtedness, direct,
contingent, secured or unsecured, except (i) the Loans;
(ii) indebtedness which is secured by property or assets other
than the Oil and Gas Properties included in the Aggregate
Borrowing Base, and for which Borrower has no personal or
recourse liability; and (iii) unsecured indebtedness not
exceeding $1,000,000 in the aggregate.
b. Liens. Create, assume, incur or permit to exist
any mortgage, pledge, security interest, lien or other
encumbrance upon any of the Oil and Gas Properties included in
the Aggregate Borrowing Base, whether now owned or hereafter
acquired, real or personal, except (i) the Mortgages; (ii) liens
for taxes not delinquent or being contested in good faith and by
appropriate proceedings and for which adequate reserves have been
set aside on Borrower's books; (iii) operator's, mechanic's,
workmen's, materialmen's and other like liens arising in the
ordinary course of business in respect of obligations not overdue
or which are being contested in good faith and by appropriate
proceedings and for which adequate reserves have been set aside
on Borrower's books; and (iv) liens supporting the indebtedness
described in paragraph 10(a)(ii).
c. Guaranty Obligations. Assume, guarantee, endorse
or otherwise become liable (whether as a partner or otherwise) in
connection with the obligations or stock of any person, firm or
corporation, except (i) in the ordinary course of its business as
operator or working interest owner of any of the Oil and Gas
Properties; (ii) endorsements of negotiable instruments for
deposit or collection and similar transactions in the ordinary
course of its business; (iii) secured indebtedness of Panterra
Petroleum, a Montana general partnership ("Panterra"), pursuant
to a First Restated Credit Agreement dated as of April 22, 1993,
between Panterra and NationsBank of Texas, N.A., in its
individual capacity (the "Panterra Loan Agreement"), provided
that Borrower's liability for such indebtedness shall not exceed
$15,000,000 in the aggregate; and (iv) other guaranties and
contingent liabilities not to exceed $500,000 in the aggregate.
d. Loans and Advances. During the pendency of any
Event of Default or an Unmatured Event of Default or the
existence of any Excess Debt, make any loans or advances to any
person, firm or corporation, except for (i) accounts receivable
or notes receivable arising from the sale or lease of goods or
services in the ordinary course of business, (ii) as part payment
on its ordinary equipment rental, repair, replacement and
operating needs, or (iii) advances to Subsidiaries in the
ordinary course of business not to exceed $20,000 per month.
e. Investments; Joint Ventures. Purchase or acquire
the capital stock of, or equity interest in, any entity, firm or
corporation, including joint ventures, except (i) in connection
with the acquisition or development of oil and gas properties or
the marketing of production in the ordinary course of its
business or (ii) provided there exists no Unmatured Event of
Default and no Excess Debt at the time of or resulting from such
action, purchases and acquisitions of such capital stock or
equity interest not to exceed $500,000 in the aggregate per year.
Notwithstanding the foregoing, so long as there exists no
Unmatured Event of Default and no Excess Debt at the time of or
resulting from such action, Borrower is authorized to acquire
capital stock or equity interest in Summo Minerals Corporation
or a direct property interest in any property owned by Summo
Minerals Corporation provided that the aggregate consideration
paid by Borrower for such capital stock, equity or property
interest does not exceed the sum of $10,000,000.
f. Mergers and Consolidations. Merge or consolidate
into or with any corporation or other entity, or sell, lease,
convey, transfer or otherwise dispose of all or substantially all
of its assets to or with any corporation or other entity except
(i) in connection with the acquisition of oil and gas properties
in the ordinary course of its business and after the consummation
of which Borrower is the surviving entity, and (ii) any
consolidated subsidiary of the Borrower may merge, consolidate or
combine with or into, or transfer assets to the Borrower,
provided that the Borrower shall be the continuing or surviving
corporation; in both cases, so long as no Event of Default has
occurred or is continuing or would be caused (including without
limitation by the passage of time or the giving of notice or
both) by the consummation of such merger or consolidation or
disposition of assets.
g. Change in Business. Change the nature of the
business conducted by it or engage in a kind of business
materially different from that which it presently conducts.
h. Burdensome Undertakings. Undertake, or become
contractually bound to undertake, any action not in the ordinary
course of business that would materially adversely affect its
business, properties, prospects, assets, operations or condition
(financial or otherwise); or enter into any hedging agreement,
options trading agreement, futures trading agreement, swap
agreement (including, without limitation, any crude oil, natural
gas or other hydrocarbons swap or price swap contract) or any
other agreement or option to swap commodities or prices or hedge
or speculate against future changes in commodity prices
(collectively, "Hedging Agreements"), other than Hedging
Agreements between Borrower and (i) Enron Capital & Trade
Resources Corp., (ii) Natural Gas Clearinghouse, (iii) N.M.
Rothschild & Son, Ltd. or (iv) one or more financial
institutions having a credit rating of Grade A or above as
defined by Moody's Investors Service.
i. Change in Location of Business. Move its place of
business or chief executive office or the place where Borrower
keeps its books and records concerning the Oil and Gas Properties
(including without limitation, the records with respect to the
proceeds of production from the Oil and Gas Properties and other
accounts and contract rights), from one state to another without
giving the Agent forty-five days' prior written notice of the
proposed new location thereof.
j. New Subsidiaries. After the date hereof, form or
acquire any subsidiary corporation except in connection with the
acquisition or development of oil and gas properties or the
marketing of production in the ordinary course of its business.
k. Restricted Distributions. During the pendency of
an Event of Default or Unmatured Event of Default or the
existence of any Excess Debt, purchase, redeem or otherwise re-
acquire any of its capital stock, or any warrants, rights or
options to acquire such capital stock, make any distribution of
assets or declare or pay any cash or liquidating dividends or
make any other cash distribution with respect to its capital
stock; or at any time pay any dividends or other distributions in
an aggregate cumulative amount which would exceed the sum of
$3,000,000 plus 100 percent of Borrower's net income, determined
in accordance with GAAP and computed on a cumulative basis,
earned after December 31, 1991, taking into account dividends
actually declared or made, or distributions previously declared
or made after December 31, 1991. Nothing contained herein shall
be deemed to restrict the payment of stock dividends.
l. Disposition of Assets. Sell, transfer, lease,
exchange, alienate or dispose of any of the Oil and Gas
Properties included in the Aggregate Borrowing Base or any
interest therein except as follows:
i. equipment which is no longer needed and is
disposed of in the ordinary course of business, which is
worthless or obsolete or which is replaced by equipment of
equal suitability and value;
ii. inventory (including oil and gas sold as
produced and seismic data) which is sold in the ordinary
course of business; and
iii. sales of Oil and Gas Properties in compliance
with paragraph 4 above.
m. ERISA. Incur any obligation to contribute to any
"multiemployer plan" as defined in Section 4001 of ERISA.
11. Events of Default. The occurrence of any of the
following shall constitute an event of default ("Event of
Default") hereunder:
a. Non-Payment. Failure to (i) pay any installment
of principal of the Notes, including amounts due under letters of
credit pursuant to paragraph 3(b), as and when due, or (ii) pay
as and when provided any interest on the Notes, any fee or other
amount payable hereunder or under the Notes or any of the
Security Documents within five Business Days after its due date,
or (iii) comply with the provisions of paragraph 6 within the
time periods set forth therein.
b. Other Defaults. Failure to (i) comply with the
covenant set forth in Section 9(m), (ii) observe any negative
covenant set forth in Section 10; or (iii) perform or observe any
other covenant, agreement, indemnity, condition or provision in
this Agreement or in the Notes and (with respect to this item
(iii) only), provided Borrower has given notice to the Agent of
such failure immediately upon Borrower's knowledge thereof or
Agent has given notice to Borrower, such failure continues
unremedied for 30 calendar days after notice from the Agent
confirming such failure, provided, further, that if Borrower
fails to give such notice immediately upon receipt of knowledge
thereof, the grace period described in this item (iii) shall not
apply.
c. Representation or Warranty. Any representation or
warranty of Borrower, whether contained in this Agreement or in
any other Loan Document or in any certificate or other writing
required or contemplated by this Agreement, shall be false or
misleading in any material respect as of the date made or deemed
made; provided that with respect to a failure of the
representations contained in paragraph 8(h) of this Agreement or
Section 2.1 paragraphs B(2) and B(3) of the Mortgages, Borrower
shall have a reasonable opportunity after notice from Agent to
mortgage to Agent substitute oil and gas properties acceptable to
the Required Banks in their sole discretion and having a value at
least equal to the Mortgage Collateral as to which such
representation failed.
d. Security Documents.
i. Occurrence of any of the events of default
defined in any of the Security Documents.
ii. After delivery thereof to the Agent, the
Security Documents shall for any reason (other than pursuant
to the terms thereof) fail to or cease to create a valid
security interest in the collateral purported to be covered
thereby or such security interest shall for any reason cease
to be a first lien and priority security interest, and,
after filing or recording thereof, shall cease to be a
perfected first lien and priority security interest, subject
only to those matters expressly permitted hereby or by the
applicable Security Document.
e. Judgments. Any money judgment, writ or warrant of
attachment, or similar process in an amount of $500,000 (in the
aggregate) or more shall be entered or filed against Borrower or
any of its assets and shall remain unvacated, unbonded or
unstayed for a period of 30 calendar days, or in any event later
than five calendar days prior to the date of any proposed sale
thereunder.
f. Insolvency. Borrower shall become insolvent,
admit in writing its inability to pay its debts as they mature,
or make an assignment for the benefit of creditors; or apply for
or consent to the appointment of a receiver or trustee for it or
for a substantial part of its property or business; or such a
receiver or trustee otherwise shall be appointed and shall not be
discharged within 30 calendar days after such appointment.
g. Bankruptcy. Bankruptcy, insolvency,
reorganization or liquidation proceedings or other proceedings
for relief under any bankruptcy law or any other law for the
relief of debtors shall be instituted by or against Borrower
(except for an involuntary petition against Borrower, which shall
not constitute an Event of Default if such petition is vacated or
dismissed within 15 Business Days after the filing thereof), or
any order, judgment or decree shall be entered against Borrower
decreeing its dissolution or division.
h. Cross-Default. Any event of default shall occur
as to any other agreement now or hereafter existing relating to
extensions of credit in an amount exceeding $500,000 to Borrower
by the Banks or by any third party, or any event which with the
passage of time or giving of notice, or both, would permit the
holder or holders of such indebtedness to cause such indebtedness
to be declared to be due and payable prior to its stated
maturity; or the indebtedness of Panterra under the Panterra Loan
Agreement shall be accelerated by the holder or holders of such
indebtedness.
i. ERISA. Any Termination Event occurs with respect
to any ERISA Plan and the then-current value of such ERISA Plan's
benefits guaranteed under Title IV of ERISA exceeds the then
current value of such ERISA Plan's assets available for the
payment of such benefits by more than $500,000 (or in the case of
a Termination Event involving the withdrawal of a substantial
employer, the withdrawing employer's proportionate share of such
excess exceeds such amount).
j. Loan Documents. Any of this Agreement, the Notes
or the Security Documents shall for any reason be revoked or
invalidated, or otherwise cease to be in full force and effect,
or Borrower shall contest in any manner the validity, binding
effect or enforceability thereof.
12. Remedies.
a. Automatic Acceleration of Loan. Upon the
occurrence of any Event of Default specified in paragraph 11(f)
or 11(g), the obligation of the Banks to make Advances on the
Loans shall automatically terminate and the unpaid principal
amounts of the Loans, together with the undrawn amount of the
outstanding letters of credit, and all interest and other amounts
payable hereunder, under the Notes or any of the Security
Documents, shall automatically become due and payable without
further act of the Banks.
b. Optional Acceleration of Loan. Upon the
occurrence of any Event of Default (other than those specified in
paragraph 11(f) or 11(g), with the consent of the Required Banks,
the Agent may or upon request by the Required Banks, the Agent
shall:
i. declare all or any part of the Loans to be
forthwith due and payable, together with all accrued and
unpaid interest thereon and all other amounts payable
hereunder or under any Note or any of the Security
Documents, without presentment, demand, protest or other
notice of any kind, all of which are expressly waived by
Borrower;
ii. declare the Commitments terminated;
iii. take any action in order to avoid extensions
or renewals of any letters of credit issued pursuant to
paragraph 3 or otherwise;
iv. with respect to any and all letters of credit
issued hereunder that are then partially or wholly undrawn,
and all other contingent, unmatured or unliquidated
obligations of Borrower hereunder, declare and require that
cash in an amount equal to the aggregate outstanding amount
(including an amount equal to the undrawn amount of all
outstanding letters of credit) of all such obligations be
immediately paid over, pledged and delivered to the Agent to
be held as cash collateral for such obligations; and
v. proceed with every remedy provided for herein
or in the Notes, the Security Documents or any contract,
agreement or undertaking supplemental hereto and shall have,
without limitation, all of the rights of a secured party
under the Uniform Commercial Codes as then in effect with
respect to any security then held for the Loans.
The enforcement of any rights of the Agent or the Banks as to the
security for the Loans shall not affect the rights of the Agent
or the Banks to enforce payment of the Loans and to recover
judgment for any portion thereof remaining unpaid.
c. Set-Off. Upon the occurrence of any Event of
Default, each Bank shall have the right (subject to
paragraph 2(f)) at any time and from time to time, without prior
notice to Borrower (which notice is hereby waived by Borrower to
the fullest extent permitted by law), to set-off and apply any
debt owing to Borrower by such Bank, including without
limitation, any deposits (general or special, time or demand,
provisional or final) now or hereafter maintained by Borrower
with such Bank, against any and all obligations of Borrower now
or hereafter existing under this Agreement or any of the other
Loan Documents, although such obligations may be contingent or
unmatured, and for such purpose Borrower hereby grants a security
interest in and assigns to each Bank all such deposit accounts.
13. Conditions of Lending.
a. Initial Advance. This extension and renewal of
the indebtedness evidenced by the Loan Agreement as hereby
amended and the Loan Documents is subject to the following
conditions:
i. Each Bank shall have received its respective
Notes, duly executed and delivered by Borrower.
ii. The Agent shall have received counterparts of
the Mortgages covering the Oil and Gas Properties, duly
executed and acknowledged by the Borrower, together with the
appropriate financing statements, as may be necessary or
advisable under applicable law in order to perfect and
maintain, to the fullest extent permitted by applicable law,
the liens and security interests created thereby. The
Mortgages shall be in the form and substance set forth in
Exhibit I hereto.
iii. All warranties, representations and
covenants in paragraph 8 and in the Security Documents shall
be true on the Effective Date as if then given; Borrower
shall have performed or observed all terms, conditions and
obligations hereunder and under the Security Documents to be
performed or observed on or prior to the Effective Date; and
no condition or event shall exist which constitutes an Event
of Default or Unmatured Event of Default.
iv. The Agent shall have received a certificate,
dated the Effective Date and executed on behalf of Borrower
by its president, vice president of finance, chief financial
officer or vice president of accounting and administation,
in form and content satisfactory to the Agent, stating the
substance of the foregoing subparagraph (iii).
v. The Agent shall have received a certificate,
dated the Effective Date and executed on behalf of Borrower
by its secretary or other appropriate officer, which shall
contain the names and signatures of the officers of Borrower
authorized to execute this Agreement, the Notes and the
Security Documents and which shall certify to the truth,
correctness and completeness of the following exhibits
attached thereto: copies of resolutions duly adopted by the
Board of Directors of Borrower authorizing the execution of
this Agreement, the Notes and the Security Documents and the
consummation of the transactions contemplated herein and
therein; copies of the articles of incorporation of Borrower
and all amendments thereto, certified by the appropriate
official of Borrower's state of incorporation; and copies of
the bylaws of Borrower and all amendments thereto.
vi. The Agent shall have received all other
documents and assurances which it requires or which it may
reasonably request in connection with the transactions
contemplated by this Agreement, and such documents shall be
certified, when appropriate, by proper authorities. All
such documents and all proceedings to be taken in connection
with such transactions shall be satisfactory in form and
substance to the Agent.
vii. All legal matters incident to the Loans shall
be satisfactory to counsel to the Agent, and the Agent shall
have received on the Effective Date the legal opinion(s) of
independent counsel to Borrower, dated the Effective Date
and in a form substantially similar to that set forth in
Exhibit K attached hereto covering legal matters in
connection with the Loans, specifically including the
matters referred to in paragraphs 8(a)(i), (a)(ii), (b),
(c), (d) and (e) and which opinion(s) shall cover such other
matters as the Banks or their counsel may reasonably
request, except opinions on title to the Oil and Gas
Properties.
viii. All fees and other expenses (including
attorneys fees) payable by Borrower under the terms of this
Agreement and ascertainable as of the Effective Date shall
have been paid in full; provided, however, that fees and
expenses other than recording and filing fees to the extent
then due and payable shall be paid in full no later than two
Business Days after the Effective Date. If the first
Advances on the Loans are made simultaneously with the
execution of this Agreement, the foregoing expenses may be
paid out of such Advances.
ix. The Agent shall have received a borrowing
resolution on the printed form as set forth in Exhibit J
hereto, duly executed and delivered by Borrower.
b. Subsequent Advances. The obligation of each of
the Banks to make subsequent Advances under the Loans as set
forth in paragraph 2(c) and issue letters of credit as set forth
in paragraph 3 is subject to satisfaction of the conditions set
forth in such paragraph and in paragraphs 13(a)(iii), (iv), (vi),
and (viii) as of the date of such advance or issuance.
14. Indemnity. Borrower shall reimburse and pay each Bank
for all fees, costs and expenses (including without limitation,
attorneys' fees, court costs and legal expenses and consultants'
and experts' fees and expenses), reasonably incurred or expended
in connection with (i) the breach by Borrower of any
representation or warranty contained in this Agreement, the
Security Documents or any other documents and instruments
evidencing, securing or otherwise relating to the Loans, (ii) the
failure by Borrower to perform any agreement, covenant,
condition, indemnity or obligation contained in this Agreement,
the Security Documents or any other documents or instruments
evidencing, securing or otherwise relating to the Loans,
(iii) such Bank's exercise of any of its rights and remedies
under this Agreement, the Security Documents and the other
documents and instruments evidencing, securing or otherwise
relating to the Loans, or (iv) the protection of the Oil and Gas
Properties and the liens thereon and security interests therein.
Borrower shall indemnify and hold harmless each Bank and persons
or entities owned or controlled by or affiliated with such Bank
and their respective directors, officers, shareholders, partners,
employees, consultants and agents (herein individually called an
"Indemnified Party," and collectively called "Indemnified
Parties") from and against, and reimburse and pay Indemnified
Parties with respect to, any and all claims, demands,
liabilities, losses, damages (including without limitation,
actual, consequential, exemplary and punitive damages), causes of
action, judgments, penalties, fees, costs and expenses (including
without limitation, attorneys' fees, court costs and legal
expenses and consultants' and experts' fees and expenses), of any
and every kind or character, known or unknown, fixed or
contingent, that may be imposed upon, asserted against or
incurred or paid by or on behalf of any Indemnified Party on
account of, in connection with, or arising out of (a) any bodily
injury or death or property damage occurring in or upon or in the
vicinity of the Oil and Gas Properties through any cause
whatsoever, (b) any act performed or omitted to be performed
hereunder or the breach of or failure to perform any warranty,
representation, indemnity, covenant, agreement or condition
contained in this Agreement, the Security Documents or any other
documents and instruments evidencing, securing or relating to the
Loans, (c) any transaction, act, omission, event or circumstance
arising out of or in any way connected with the Oil and Gas
Properties or with this Agreement, the Security Documents or any
other documents and instruments evidencing, securing or relating
to the Loans, and (d) subject to the exceptions and limitations
contained in the Mortgages, the violation of or failure to comply
with any statute, law, rule, regulation or order now existing or
hereafter occurring, including without limitation, "Environmental
Laws" (as defined in the Mortgages) and statutes, laws, rules,
regulations and orders relating to "Hazardous Substances" (as
defined in the Mortgages). The foregoing indemnities shall not
apply to any Indemnified Party to the extent the subject of the
indemnification is caused by or arises out of the gross
negligence or willful misconduct of that or another Indemnified
Party or a successful suit by Borrower against such Indemnified
Party. If Borrower and the Indemnified Party are jointly named
in any action covered by this paragraph 14, the Indemnified Party
shall cooperate in the defense of such action to the extent its
own rights or defenses are not compromised thereby. Subject to
the exceptions and limitations contained in the Mortgages, the
foregoing indemnities shall not terminate upon release,
foreclosure or other termination of this Agreement or the
Security Documents, but shall survive such release, foreclosure
or termination and the repayment of the Loans. Any amount to be
paid hereunder by Borrower to a Bank or for which Borrower has
indemnified an Indemnified Party shall be a demand obligation
owing by Borrower to such Bank and shall bear interest at the
Late Payment Rate until paid, and shall constitute a part of the
Loans and be indebtedness secured by the Security Documents.
15. The Agent.
a. Appointment. Each Bank hereby irrevocably
designates and appoints NationsBank as the Agent of such Bank
under this Agreement and the other Loan Documents, and each such
Bank irrevocably authorizes NationsBank as the Agent for such
Bank, to take such action on its behalf under the provisions of
this Agreement and the other Loan Documents and to exercise such
powers and perform such duties as are expressly delegated to the
Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the
contrary elsewhere in this Agreement, the Agent shall not have
any duties or responsibilities, except those expressly set forth
herein, or any fiduciary relationship with any Bank, and no
implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or
any other Loan Document or otherwise exist against the Agent.
b. Delegation of Duties. The Agent may execute any
of its duties under this Agreement and the other Loan Documents
by or through agents or attorneys-in-fact and shall be entitled
to advice of counsel concerning all matters pertaining to such
duties. The Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
c. Exculpatory Provisions. Neither the Agent nor any
of its officers, directors, employees, agents, attorneys-in-fact
or affiliates shall be (i) liable for any action lawfully taken
or omitted to be taken by it or such person or entity under or in
connection with this Agreement or any other Loan Document (except
for its or such person's or entity's own gross negligence or
willful misconduct) or (ii) responsible in any manner to any of
the Banks for any recitals, statements, representations or
warranties made by the Borrower or any officer thereof contained
in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or
provided for in, or received by the Agent under or in connection
with, this Agreement or any other Loan Document or for the value,
validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or the Notes or any other Loan
Document or for any failure of the Borrower to perform its
obligations hereunder or thereunder. The Agent shall not be
under any obligation to any Bank to ascertain or to inquire as to
the observance or performance of any of the agreements contained
in, or conditions of, this Agreement or any other Loan Document,
or to inspect the properties, books or records of the Borrower.
d. Reliance by Agent. The Agent shall be entitled to
rely, and shall be fully protected in relying, upon any Note,
writing, resolution, notice, consent, certificate, affidavit,
letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it
to be genuine and correct and to have been signed, sent or made
by the proper person or persons and upon advice and statements of
legal counsel (including, without limitation, counsel to the
Borrower), independent accountants and other experts selected by
the Agent. The Agent may deem and treat the payee of any Note as
the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed
with the Agent. The Agent shall be fully justified in failing or
refusing to take any action under this Agreement or any other
Loan Document unless it shall first receive such advice or
concurrence of the Required Banks as it deems appropriate or it
shall first be indemnified to its satisfaction by the Banks
against any and all liability and expense which may be incurred
by it by reason of taking or continuing to take any such action.
The Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the Notes and
the other Loan Documents in accordance with a request of the
Required Banks, and such request and any action taken or failure
to act pursuant thereto shall be binding upon all the Banks and
all future holders of the Notes.
e. Notice of Default. The Agent shall not be deemed
to have knowledge or notice of the occurrence of any Unmatured
Event of Default or Event of Default hereunder unless the Agent
has received notice from a Bank or the Borrower referring to this
Agreement, describing such Unmatured Event of Default or Event of
Default and stating that such notice is a "notice of default."
In the event that the Agent receives such a notice, the Agent
shall give notice thereof to the Banks. The Agent shall take
such action with respect to such Unmatured Event of Default or
event of Default as shall be reasonably directed by the Required
Banks; provided that unless and until the Agent shall have
received such directions, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such
action, with respect to such Unmatured Event of Default or Event
of Default as it shall deem advisable in the best interests of
the Banks.
f. Non-Reliance on Agent and Other Banks. Each Bank
expressly acknowledges that neither the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or
affiliates has made any representations or warranties to it and
that no act by the Agent hereinafter taken, including any review
of the affairs of the Borrower, shall be deemed to constitute any
representation or warranty by the Agent to any Bank. Each Bank
represents to the Agent that it has, independently and without
reliance upon the Agent or any other Bank, and based on such
documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, operations,
property, financial and other condition and creditworthiness of
the Borrower and made its own decision to make its Loans
hereunder and enter into this Agreement. Each Bank also
represents that it will, independently and without reliance upon
the Agent or any other Bank, and based on such documents and
information as it shall deem appropriate at the time, continue to
make its own credit analysis, appraisals and decisions in taking
or not taking action under this Agreement and the other Loan
Documents, and to make such investigation as it deems necessary
to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the
Borrower. Except for notices, reports and other documents
expressly required to be furnished to the Banks by the Agent
hereunder, the Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning
the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Borrower which
may come into the possession of the Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates.
g. Indemnification. The Banks agree to indemnify the
Agent in its capacity as such (to the extent not reimbursed by
the Borrower and without limiting the obligation of the Borrower
to do so), ratably according to the respective amounts of their
original Commitments, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever
which may at any time (including, without limitation, at any time
following the payment of the Notes) be imposed on, incurred by or
asserted against the Agent in any way relating to or arising out
of this Agreement, any of the other Loan Documents or any
documents contemplated by or referred to here in or therein or
the transactions contemplated hereby or thereby or any action
taken or omitted by the Agent under or in connection with any of
the foregoing; provided that no Bank shall be liable for the
payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting solely from the Agent's gross negligence
or willful misconduct. The agreements in this subsection shall
survive the payment of the Notes and all other amounts payable
hereunder.
h. Agent in Its Individual Capacity. The Agent and
its affiliates may make loans to, accept deposits from and
generally engage in any kind of business with the Borrower as
though the Agent were not the Agent hereunder and under the other
Loan Documents. With respect to Advances made by it and any Note
issued to it, the Agent shall have the same rights and powers
under this Agreement and the other Loan Documents as any Bank and
may exercise the same as though it were not the Agent, and the
terms "Bank" and "Banks" shall include the Agent in its
individual capacity.
i. Successor Agent. The Agent may resign as Agent
upon 10 days' notice to the Banks. If the Agent shall resign as
Agent under this Agreement and the other Loan Documents, then the
Required Banks shall appoint from among the Banks a successor
agent for the Banks, which successor agent shall be approved by
the Borrower, whereupon such successor agent shall succeed to the
rights, powers and duties of the Agent, and the term "Agent"
shall mean such successor agent effective upon its appointment,
and the former Agent's rights, powers and duties as Agent shall
be terminated, without any other or further act or deed on the
part of such former Agent or any of the parties to this Agreement
or any holders of the Notes. After any retiring Agent's
resignation as Agent, the provisions of this subsection shall
inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement and the other
Loan Documents.
16. Miscellaneous.
a. No Waiver; Cumulative Remedies. No delay on the
part of any Bank in exercising any right, power, privilege or
remedy hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise or waiver of any right, power,
privilege, or remedy hereunder preclude any other or further
exercise of such right, power, privilege, or remedy hereunder or
the exercise of any other right, power or privilege or remedy.
The rights and remedies of each Bank contained herein are
cumulative and not exclusive of any right or remedy which such
Bank shall otherwise have pursuant to the Security Documents, the
Note or applicable law. The obligations of Borrower contained
herein are cumulative, and compliance by Borrower with any
covenant shall not excuse compliance by Borrower with any other
covenant.
b. Notices. All notices given hereunder shall be in
writing, shall be given by certified mail, return receipt
requested, overnight courier service, telecopy, facsimile or copy
delivered by hand, and, (i) if mailed, shall be deemed received
three Business Days after having been deposited in a receptacle
for United States mail, postage prepaid, (ii) if delivered by
overnight air courier service, shall be deemed received one
Business Day after having been deposited with such overnight air
courier service, postage prepaid, and (iii) if delivered by
telex, telecopy or hand delivery, shall be deemed received on the
day the notice is sent if the sender thereof exercises reasonable
efforts to confirm receipt thereof, in each case addressed as
follows:
If to Borrower, to:
St. Mary Land & Exploration Company
1776 Lincoln Street, 11th Floor
Denver, Colorado 80203
Attention: Richard C. Norris
Fax. No.: (303) 861-0934
If to the Banks, to:
NationsBank of Texas, N.A.
Energy Banking Group
#492-49
901 Main
Dallas, Texas 75202
Fax. No.: (214) 508-1285
with copies to:
NationsBank Energy Group Denver, Inc.
370 17th Street, Suite 3250
Denver, Colorado 80202-5632
Fax. No.: (303) 629-6363
Norwest Bank Colorado, National Association
1740 Broadway
Denver, Colorado 80274-8699
Attention: J. T. Reagan
Fax. No.: (303) 863-5196
Any party may, by written notice so delivered to the other,
change the address or facsimile number to which delivery shall
thereafter be made.
c. Counterpart Execution. This Agreement may be
executed in any number of counterparts which together will be but
one and the same instrument. This Agreement shall become
effective whenever each party shall have signed at least one
counterpart.
d. Governing Law; Entire Agreement. THIS AGREEMENT
AND THE NOTES SHALL BE DEEMED TO BE CONTRACTS UNDER THE LAWS OF
COLORADO AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF SUCH STATE. Such documents, together with the
Security Documents, constitute and incorporate the entire
agreement among the Agent, the Banks and Borrower concerning the
subject matter of hereof and thereof, and supersedes and cancels
any prior or contemporaneous agreements, oral or written, between
any or all of the Agent, the Banks and Borrower concerning the
subject matter hereof.
e. Amendments and Waivers. No amendment or waiver of
any provision of this Agreement, the Notes or any of the Security
Documents, and no consent with respect to any departure by
Borrower therefrom, shall be effective unless the same shall be
in writing and signed by the Required Banks. Any waiver shall be
effective only in the specific instance and for the specific
purpose for which given.
f. Inconsistent Provisions; Severability. In case of
any irreconcilable conflict between the provisions of this
Agreement and those of the Security Documents and the Notes, the
provisions of this Agreement shall govern. The invalidity,
illegality or unenforceability of any provision of this
Agreement, the Notes, any of the Security Documents or any
instrument or agreement required hereunder, shall not in any way
affect or impair the legality or enforceability of the remaining
provisions of this Agreement, the Notes, the Security Documents
and any instruments and agreements required hereunder.
g. Costs and Expenses. Whether or not any funds are
disbursed hereunder, Borrower shall pay all of the Banks' costs
and expenses incurred in connection with the preparation,
execution, delivery and enforcement of this Agreement, the Notes
and the Security Documents, and any amendments, waivers or
modifications thereof, including reasonable fees and
disbursements of legal counsel and other consultants hired by one
or more of the Banks in connection therewith, the costs of the
Bank's inspection of the Oil and Gas Properties and the costs and
expenses of title or lien searches and filing and recording fees
and expenses.
h. Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto
and their respective successors and assigns, except that Borrower
may not transfer or assign any of its rights or obligations
hereunder without the Banks' prior written consent.
i. Effectiveness. Except as set forth in
paragraph 14, this Agreement shall continue in full force and
effect so long as any indebtedness or other obligation of
Borrower to the Banks remains unpaid or outstanding or Borrower
has any right to Advances hereunder.
j. Waivers of Jury Trial. The Borrower, the Agent
and the Banks hereby irrevocably and unconditionally waive trial
by jury in any legal action or proceeding relating to this
Agreement, the Notes or any other Loan Document and for any
counterclaim thereon.
k. Incorporation of Exhibits and Schedules. All
Exhibits and Schedules attached to this Agreement are a part
hereof for all purposes.
l. References and Titles. All references in this
Agreement to Exhibits, Schedules, paragraphs, subparagraphs, and
other subdivisions refer to the Exhibits, Schedules, paragraphs,
subparagraphs and other subdivisions of this Agreement unless
expressly provided otherwise. Headings are for convenience only
and do not constitute any part of such subdivisions and shall be
disregarded in construing the language contained in such
subdivisions. The words "this Agreement," "this instrument,"
"herein," "hereof," "hereby," "hereunder" and words of similar
import refer to this Agreement as a whole and not to any
particular subdivision unless expressly so limited.
m. Ratification. The Loan Agreement and all other
Loan Documents as expressly restated or amended in connection
with the execution and delivery of this Agreement shall remain in
full force and effect. The Loan Agreement and all other rights
and powers created thereunder or under any of the other prior
Loan Documents as expressly restated, amended or reaffirmed in
connection with the execution and delivery of this Agreement and
the other Loan Documents are in all respects ratified, confirmed
and continued in effect. The liens and security interests
created under the original Security Documents are in all respects
brought forward, continued, ratified and reaffirmed as security
for all obligations under this Agreement.
EXECUTED to be effective as of the day and year first above
written.
ST. MARY LAND & EXPLORATION
COMPANY
By:
David L. Henry,
Chief Financial Officer
Vice President, Finance
NATIONSBANK OF TEXAS, N.A.
By:
Michele L. Jones,
Vice President
NORWEST BANK COLORADO,
NATIONAL ASSOCIATION
By:
J. T. Reagan,
Vice President
SCHEDULE I
Bank Commitments
Commitments
Name Tranche Tranche
of Commitment A B
Bank Percentage Loan Loan
NationsBank 55% $33,000,000 $16,500,000
Norwest 45% $27,000,000 $13,500,000
SCHEDULE II
Borrower's Shareholders' Equity
Borrower's Shareholder's Equity as of April 1, 1996, the
date of the Amended and Restated Loan Agreement, is $66,455,000.
LIST OF EXHIBITS
Exhibit Title
A Form of Tranche A Note
B Form of Tranche B Note
C Request for Advance
D Form of Standby Letter of Credit
E Asset Sales Report
F Net Revenue/Payment Calculation
G Subsidiaries
H Compliance Certificate
I Form of Mortgage
J Borrowing Resolution
K Borrower's Form of Opinion
EXHIBIT A
(Form of Tranche A Note)
PROMISSORY NOTE
$______________
Denver, Colorado
April 1, 1996
ST. MARY LAND & EXPLORATION COMPANY, a Delaware corporation
("Borrower"), with an address of 1776 Lincoln Street, Denver,
Colorado 80203, for value received, hereby promises to pay to the
order of _______________________________, a national banking
association (the "Bank"), at the office of NationsBank of Texas,
N.A. at 901 Main, Dallas, Texas 75202, on or before June 30, 2004
(the "Maturity Date"), the principal sum of $_________________,
or so much thereof as may be advanced by the Bank pursuant to the
Amended and Restated Loan Agreement of even date herewith among
Borrower and each of the banks or financial institutions which is
or may from time to time become a signatory thereto, NationsBank
of Texas, N.A., as a bank and as agent for such banks and Norwest
Bank Colorado, National Association (successor to Norwest Bank
Denver, National Association) (as amended and restated, the "Loan
Agreement"), together with interest on the outstanding unpaid
principal balance at the rate provided below. Such principal
amount shall be payable at the times and in the amounts set forth
in the Loan Agreement.
This Note is given in extension, renewal and increase of
the original Promissory Note dated March 1, 1993, as amended by
First Amendment to Promissory Note dated effective as of April 1,
1995, and is issued pursuant to and subject to the terms and
provisions of the Loan Agreement. Except as otherwise defined
herein, capitalized terms used herein shall have the meanings
assigned in the Loan Agreement.
The outstanding principal amount of this Note shall be
payable as provided in the Loan Agreement. The entire
outstanding principal balance of this Note shall be due on the
Maturity Date (unless payable sooner pursuant to the terms of the
Loan Agreement), and shall bear interest initially at the
Adjusted Prime Rate for Prime Rate Advances and at the Adjusted
LIBOR Rate for LIBOR Advances. Interest shall accrue daily and
shall be calculated and payable as provided in the Loan
Agreement.
Notwithstanding anything to the contrary contained in this
Note, overdue principal, and (to the extent permitted under
applicable law) overdue interest, whether caused by acceleration
of maturity or otherwise, shall bear interest at the Late Payment
Rate and shall be payable on the last day of each calendar month
or, at the option of the holder hereof, on demand.
This Note is secured by, and the holder of this Note is
entitled to the benefits of, the "Security Documents" (as defined
in the Loan Agreement). Reference is made to the Security
Documents for a description of the property covered thereby and
the rights, remedies and obligations of the holder hereof in
respect thereto.
The Bank shall maintain a record of all advances and
payments made and letters of credit issued under this Note until
June 30, 1999, as set forth on Schedule I hereto, which record
shall be prima facie evidence of the matters set forth therein
for all purposes, provided, however that the failure, error or
omission by the Bank to maintain such a record shall not diminish
or otherwise affect the obligation of Borrower to repay the Loan
and any other amounts due to the Bank.
Time is of the essence hereof. In the event of (a) any
default in any payment when due of the principal of this Note
when due and payable or the payment of interest on this Note, or
(b) any other "Event of Default" (as such term is defined in the
Loan Agreement), then the whole principal sum of this Note plus
accrued interest and all other obligations of Borrower to holder,
direct or indirect, absolute or contingent, now existing or
hereafter arising, shall, automatically if it is an Event of
Default described in paragraph 11(f) or 11(g) of the Loan
Agreement, or at the option of the Bank as to any other event
referred to above, become immediately due and payable without
notice or demand, and any or all of the rights and remedies
provided herein and in the Loan Agreement and the Security
Documents, as they may be amended, modified or supplemented from
time to time may be exercised by the Bank.
If Borrower fails to pay any amount due under this Note and
the Bank has to take any action to collect the amount due or to
exercise its rights under the Security Documents, including
without limitation retaining attorneys for collection of this
Note, or if any suit or proceeding is brought for the recovery of
all or any part of or for protection of the indebtedness or to
foreclose the Security Documents or to enforce the Bank's rights
under the Security Documents, then Borrower agrees to pay on
demand all reasonable and out-of-pocket costs and expenses of any
such action to collect, suit or proceeding, or any appeal of any
such suit or proceeding, incurred by the Bank, including without
limitation the fees and disbursements of the Bank's attorneys and
their staff.
Borrower waives presentment, notice of dishonor, notice of
acceleration and protest, and assents to any extension of time
with respect to any payment due under this Note, to any
substitution or release of collateral and to the addition or
release of any party, except as provided in the Loan Agreement.
No waiver of any payment or other right under this Note shall
operate as a waiver of any other payment or right.
If any provision in this Note shall be held invalid, illegal
or unenforceable in any jurisdiction, the validity, legality or
enforceability of any defective provisions shall not be in any
way affected or impaired in any other jurisdiction.
No delay or failure of the holder of this Note in the
exercise of any right or remedy provided for hereunder shall be
deemed a waiver of such right by the holder hereof, and no
exercise of any right or remedy shall be deemed a waiver of any
other right or remedy that the holder may have.
It is the intention of Borrower and the Bank to conform
strictly to applicable usury laws. Accordingly, if the
transactions contemplated hereby would be usurious under
applicable law (including the laws of the United States of
America), then, in that event, notwithstanding anything to the
contrary herein or in any agreement entered into in connection
with or as security for this Note, it is agreed as follows:
(i) the aggregate of all consideration which constitutes interest
under applicable law that is taken, reserved, contracted for,
charged or received under this Note or under any of the other
aforesaid agreements or otherwise in connection with this Note
shall under no circumstances exceed the maximum amount of
interest allowed by applicable law, and any excess shall be
canceled automatically and, if theretofore paid, shall be
credited on this Note by the holder hereof (or, to the extent
that this Note shall have been or would thereby be paid in full,
refund to Borrower); and (ii) in the event that maturity of this
Note is accelerated by reason of an election by the holder hereof
resulting from any default hereunder or otherwise, or in the
event of any required or permitted prepayment, then such
consideration that constitutes interest may never include more
than the maximum amount allowed by applicable law, and excess
interest, if any, provided for in this Note or otherwise shall be
canceled automatically as of the date of such acceleration or
prepayment and, if theretofore paid, shall be credited on this
Note (or, to the extent that this Note shall have been or would
thereby be paid in full, refunded to Borrower).
This Note shall be construed in accordance with and governed
by the laws of the State of Colorado and of the United States of
America. If, at any time, Texas law is determined to be
applicable to this Note, Tex. Rev. Civ. Stat. Ann. art. 5069
Ch. 15, as amended (which regulates certain revolving credit loan
accounts and revolving triparty accounts) shall not apply hereto;
and unless changed in accordance with law, the applicable rate
ceiling shall be the indicated (weekly) rate ceiling from time to
time in effect, as provided in Tex. Rev. Civ. Stat. Ann.
art. 5069-1.04, as amended.
All notices given hereunder shall be in writing and shall be
given as provided in paragraph 16(b) of the Loan Agreement.
At the option of the holder hereof, an action may be brought
to enforce this Note in the District Court in and for the City
and County of Denver, State of Colorado, in the United States
District Court for the District of Colorado or in any other court
in which venue and jurisdiction are proper. Borrower and all
signers or endorsers hereof consent to venue and jurisdiction in
the District Court in and for the City and County of Denver,
State of Colorado and in the United States District Court for the
District of Colorado and to jurisdiction and service of process
under Sections 13-1-124(1)(a) and 13-1-125, Colorado Revised
Statutes (1973), as amended, in any action commenced to enforce
this Note.
ST. MARY LAND & EXPLORATION COMPANY
By:____________________
David L. Henry
Chief Financial Officer and
Vice President, Finance
Schedule I to Promissory Note
Principal
Amount LIBOR Outstanding
of Advance or LIBOR Amount of Principal
Date or L/C Prime Period Payment
Balance
EXHIBIT B
(Form of Tranche B Note)
PROMISSORY NOTE
$_____________
Denver, Colorado
April 1, 1996
ST. MARY LAND & EXPLORATION COMPANY, a Delaware
corporation ("Borrower"), with an address of 1776 Lincoln Street,
Denver, Colorado 80203, for value received, hereby promises to
pay to the order of ________________________________, a national
banking association (the "Bank"), at the office of NationsBank of
Texas, N.A. at 901 Main, Dallas, Texas 75202, on or before March
30, 1997 (the "Maturity Date"), the principal sum of
$_____________, or so much thereof as may be advanced by the Bank
pursuant to the Amended and Restated Loan Agreement of even date
herewith among Borrower and each of the banks or financial
institutions which is or may from time to time become a signatory
thereto, NationsBank of Texas, N.A., as a bank and as agent for
such banks and Norwest Bank Colorado, National Association
(successor to Norwest Bank Denver, National Association) (as
amended and restated, the "Loan Agreement"), together with
interest on the outstanding unpaid principal balance at the rate
provided below. Such principal amount shall be payable at the
times and in the amounts set forth in the Loan Agreement.
This Note is given in extension, renewal and increase
of the original Promissory Note dated March 1, 1993 as amended by
First Amendment to Promissory Note dated effective as of February
25, 1994, Second Amendment to Promissory Note dated effective
December 1, 1994, and Third Amendment to Promissory Note dated
effective as of April 1, 1995, and is issued pursuant to and
subject to the terms and provisions of the Loan Agreement.
Except as otherwise defined herein, capitalized terms used herein
shall have the meanings assigned in the Loan Agreement.
The outstanding principal amount of this Note shall
be payable as provided in the Loan Agreement. The entire
outstanding principal balance of this Note shall be due on the
Maturity Date (unless payable sooner pursuant to the terms of the
Loan Agreement) and shall bear interest initially at the Adjusted
Prime Rate for Prime Rate Advances and at the Adjusted LIBOR Rate
for LIBOR Advances. Interest shall accrue daily and shall be
calculated and payable as provided in the Loan Agreement.
Notwithstanding anything to the contrary contained in
this Note, overdue principal, and (to the extent permitted under
applicable law) overdue interest, whether caused by acceleration
of maturity or otherwise, shall bear interest at the Late payment
Rate and shall be payable on the last day of each calendar month
or, at the option of the holder hereof, on demand.
This Note is secured by, and the holder of this Note
is entitled to the benefits of, the "Security Documents" (as
defined in the Loan Agreement). Reference is made to the
Security Documents for a description of the property covered
thereby and the rights, remedies and obligations of the holder
hereof in respect thereto.
The Bank shall maintain a record of all advances and
payments made until the Maturity Date, as set forth on Schedule I
hereto, which record shall be prima facie evidence of the matters
set forth therein for all purposes, provided, however that the
failure, error or omission by the Bank to maintain such a record
shall not diminish or otherwise affect the obligation of Borrower
to repay the Loan and any other amounts due to the Bank.
Time is of the essence hereof. In the event of (a)
any default in any payment when due of the principal of this Note
when due and payable or the payment of interest on this Note, or
(b) any other "Event of Default" (as such term is defined in the
Loan Agreement), then the whole principal sum of this Note plus
accrued interest and all other obligations of Borrower to holder,
direct or indirect, absolute or contingent, now existing or
hereafter arising, shall, automatically if it is an Event of
Default described in paragraph 11(f) or 11(g) of the Loan
Agreement, or at the option of the Bank as to any other event
referred to above, become immediately due and payable without
notice or demand, and any or all of the rights and remedies
provided herein and in the Loan Agreement and the Security
Documents, as they may be amended, modified or supplemented from
time to time may be exercised by the Bank.
If Borrower fails to pay any amount due under this
Note and the Bank has to take any action to collect the amount
due or to exercise its rights under the Security Documents,
including without limitation retaining attorneys for collection
of this Note, or if any suit or proceeding is brought for the
recovery of all or any part of or for protection of the
indebtedness or to foreclose the Security Documents or to enforce
the Bank's rights under the Security Documents, then Borrower
agrees to pay on demand all reasonable and out-of-pocket costs
and expenses of any such action to collect, suit or proceeding,
or any appeal of any such suit or proceeding, incurred by the
Bank, including without limitation the fees and disbursements of
the Bank's attorneys and their staff.
Borrower waives presentment, notice of dishonor,
notice of acceleration and protest, and assents to any extension
of time with respect to any payment due under this Note, to any
substitution or release of collateral and to the addition or
release of any party, except as provided in the Loan Agreement.
No waiver of any payment or other right under this Note shall
operate as a waiver of any other payment or right.
If any provision in this Note shall be held invalid,
illegal or unenforceable in any jurisdiction, the validity,
legality or enforceability of any defective provisions shall not
be in any way affected or impaired in any other jurisdiction.
No delay or failure of the holder of this Note in the
exercise of any right or remedy provided for hereunder shall be
deemed a waiver of such right by the holder hereof, and no
exercise of any right or remedy shall be deemed a waiver of any
other right or remedy that the holder may have.
It is the intention of Borrower and the Bank to
conform strictly to applicable usury laws. Accordingly, if the
transactions contemplated hereby would be usurious under
applicable law (including the laws of the United States of
America), then, in that event, notwithstanding anything to the
contrary herein or in any agreement entered into in connection
with or as security for this Note, it is agreed as follows:
(i) the aggregate of all consideration which constitutes interest
under applicable law that is taken, reserved, contracted for,
charged or received under this Note or under any of the other
aforesaid agreements or otherwise in connection with this Note
shall under no circumstances exceed the maximum amount of
interest allowed by applicable law, and any excess shall be
canceled automatically and, if theretofore paid, shall be
credited on this Note by the holder hereof (or, to the extent
that this Note shall have been or would thereby be paid in full,
refund to Borrower); and (ii) in the event that maturity of this
Note is accelerated by reason of an election by the holder hereof
resulting from any default hereunder or otherwise, or in the
event of any required or permitted prepayment, then such
consideration that constitutes interest may never include more
than the maximum amount allowed by applicable law, and excess
interest, if any, provided for in this Note or otherwise shall be
canceled automatically as of the date of such acceleration or
prepayment and, if theretofore paid, shall be credited on this
Note (or, to the extent that this Note shall have been or would
thereby be paid in full, refunded to Borrower).
This Note shall be construed in accordance with and
governed by the laws of the State of Colorado and of the United
States of America. If, at any time, Texas law is determined to
be applicable to this Note, Tex. Rev. Civ. Stat. Ann. art. 5069
Ch. 15, as amended (which regulates certain revolving credit loan
accounts and revolving triparty accounts) shall not apply hereto;
and unless changed in accordance with law, the applicable rate
ceiling shall be the indicated (weekly) rate ceiling from time to
time in effect, as provided in Tex. Rev. Civ. Stat. Ann.
art. 5069-1.04, as amended.
All notices given hereunder shall be in writing and
shall be given as provided in paragraph 16(b) of the Loan
Agreement.
At the option of the holder hereof, an action may be
brought to enforce this Note in the District Court in and for the
City and County of Denver, State of Colorado, in the United
States District Court for the District of Colorado or in any
other court in which venue and jurisdiction are proper. Borrower
and all signers or endorsers hereof consent to venue and
jurisdiction in the District Court in and for the City and County
of Denver, State of Colorado and in the United States District
Court for the District of Colorado and to jurisdiction and
service of process under Sections 13-1-124(1)(a) and 13-1-125,
Colorado Revised Statutes (1973), as amended, in any action
commenced to enforce this Note.
ST. MARY LAND & EXPLORATION COMPANY
By:
David L. Henry
Chief Financial Officer and
Vice President, Finance
Schedule I to Promissory Note
EXHIBIT C
REQUEST FOR ADVANCE
Reference is made to that certain Amended and Restated Loan
Agreement dated as April 1, 1996, (as from time to time amended,
the "Agreement"), among St. Mary Land & Exploration Company
("Borrower"), each of the banks or financial institutions which
is or may from time to time become a signatory thereto
(individually, a "Bank" and collectively, the "Banks"),
NationsBank of Texas, N.A., as agent for the Banks, and as a
Bank, and Norwest Bank Colorado, National Association.
Capitalized terms not otherwise defined herein shall have the
meanings assigned to them in the Agreement. Pursuant to the
terms of the Agreement, Borrower hereby requests the Banks to
make an advance to Borrower in the amount of $______________,
such advance being evidenced by the Notes, and specifies
___________, 199__, as the date Borrower desires for the Banks to
make such advance. Borrower desires such advance to be:
__________ a Prime Rate Advance
__________ a LIBOR Advance
________ Designated Period: ____ days
________ Interest Rate: ______
Borrower and the officer of Borrower signing this instrument
hereby certify that:
(a) Such officer is the duly elected, qualified and
acting officer of Borrower as indicated below such officer's
signature hereto.
(b) The representations and warranties of Borrower set
forth in the Agreement and the Security Documents delivered to
the Banks are true and correct on and as of the date hereof
(except to the extent that the facts on which such
representations and warranties are based have been changed by the
transactions contemplated by the Agreement), with the same effect
as though such representations and warranties had been made on
and as of the date hereof.
(c) There does not exist on the date hereof any
condition or event which constitutes an Event of Default or an
Unmatured Event of Default which has not been waived in writing
by the Banks; nor will any such Event of Default or Unmatured
Event of Default exist upon Borrower's receipt and application of
the advance requested hereby. Borrower will use the advance
hereby requested in compliance with the Agreement.
(d) Borrower has performed and complied with all
agreements and conditions in the Agreement required to be
performed or complied with by Borrower on or prior to the date
hereof (except those waived in writing by the Banks), and each of
the conditions precedent to advances contained in the Agreement
remains satisfied in all material respects.
(e) On the date hereof, the Debt to Capitalization
Ratio is ______________.
IN WITNESS WHEREOF, this instrument is executed as of
_____________, 199__.
ST. MARY LAND & EXPLORATION
COMPANY
By:
Title:
EXHIBIT D
Form of Standby Letter of Credit
EXHIBIT E
ASSET SALES REPORT
Date of Report: __________
Property Description:
1. Gross Proceeds:
2. Sale Expenses:
3. Net Proceeds:
4. Current amount under Loan Agreement para. 5(a)(ii) (or initial
Aggregate Borrowing Base, if still in effect):
5. Release Value: ( )
6. Revised Aggregate Borrowing Base or para. 5(a)(ii) amount (4
minus 5):
7. Debt Outstanding:
8. Required Payment (7 minus 6; if zero or less, enter "None"):
EXHIBIT F
Calculation of Net Revenues and Payments
Accounting Quarter/Year:____________
Payment Quarter/Year:_______________
1. Gross Revenues $
2. Less Deductible Lease Expenses:
a. Lease Operating Expenses
b. Royalties and lease burdens
c. Production Taxes
d. Transportation and processing costs
3. Net Oil and Gas Revenues (1 minus 2)
4. Dedication Rate %
5. Calculated Payment Amount $
EXHIBIT G
LIST OF SUBSIDIARIES
1. Subsidiaries of Borrower:
a. St. Mary Minerals Inc.
b. Parish Corporation
c. St. Mary Operating Company
2. Subsidiaries of Parish Corporation
a. Chelsea Corporation
b. Lucy Corporation
c. Natasha Corporation
EXHIBIT H
OFFICER'S CERTIFICATE
As Required Under Paragraph 9(b)(iii)
of the Loan Agreement
Dated __________, 199_
The undersigned officer of St. Mary Land & Exploration
Company ("Borrower") pursuant to Section 9(b)(iii) of the Loan
Agreement dated as of April 1, 1996, (the "Loan Agreement") among
Borrower and each of the banks or financial institutions which is
or may from time to time become a signatory thereto
(individually, a "Bank" and collectively, the "Banks"),
NationsBank of Texas, N.A., as agent for the Banks and as a Bank,
and Norwest Bank Colorado, National Association, hereby certifies
as follows:
Computations showing compliance as of ________, 199_ with:
1. [Section 9(l) Current Ratio]
(a) Minimum per agreement ___________
(b) Actual ___________
2. [Section 9(n): Stockholders Equity]
(a) Minimum per agreement $__________
(b) Actual ___________
3. The undersigned hereby certifies that the attached
financial statements are true, correct and complete to the best
of his/her knowledge and belief after due inquiry.
4. The undersigned has read the covenants and conditions
of the Loan Agreement to which this Certificate relates; this
Certificate is based upon an examination of the Loan Agreement
and of the accounts and other pertinent records of the Company.
5. In the opinion of the undersigned, he/she has made such
examination and investigation as is necessary to enable him/her
to express an informed opinion as to whether or not the covenants
and conditions of the Agreement as to which this Certificate
relates have been complied with, and, to the best of his/her
knowledge: (check either (a) or (b))
( ) (a) There exists no Event of Default or unmatured
Event of Default on the date hereof.
( ) (b) There exists no default or Event of Default or
Unmatured Event of Default on the date hereof
except for the following matters: (Describe all
such matters, specifying the nature, duration and
status thereof and what action Borrower has taken
or proposes to take with respect thereto).
Name
Title
Date
EXHIBIT I
Form of Mortgage
EXHIBIT J
[Printed Form
Borrowing Resolution]
EXHIBIT "K"
__________, 1996 Draft
5-22-96 of
Borrowers form
of opinion
NationsBank of Texas, N.A.
Energy Banking Group
#492-49
901 Main
Dallas, Texas 75202
Attention: Michele L. Jones
Norwest Bank Denver, National Association
1740 Broadway
Denver, Colorado 80274-8699
Attention: J. T. Reagan
Re: Loan Agreement dated as of April 1, 1996
Gentlemen:
We have acted as counsel to St. Mary Land & Exploration
Company, a Delaware corporation ("Borrower"), in connection with
the Amended and Restated Loan Agreement (the "Agreement") , dated
as of April 1, 1996, and the other Loan Documents, as defined in
such Agreement, between Borrower and NationsBank of Texas, N.A.
and Norwest Bank of Colorado, National Association and such other
lenders, if any, which may become participants thereunder (the
"Lenders"). While this firm represents Borrower on a regular
basis, our engagement has been limited to specific matters as to
which we have been consulted by Borrower. This opinion of counsel
is being delivered to you pursuant to paragraph 13(a)(vii) of the
Agreement. Capitalized terms not otherwise defined herein shall
have the meanings given to such terms in the Agreement.
In our capacity as such counsel, we have examined the
originals, or copies identified to our satisfaction as being true
copies, of such records, documents and other instruments as in
our judgment are necessary or appropriate to enable us to render
the opinions expressed below.
Based upon the foregoing, and subject to the limitations,
qualifications and exceptions set forth herein, it is our opinion
that:
(a) (i) Borrower is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Delaware, and is qualified to do business as a foreign
corporation in every jurisdiction in which the nature of its
business or the ownership of its assets requires such
qualification and failure to so qualify could have a material
adverse effect on Borrower, its business, operations, property,
prospects, assets or condition (financial or otherwise); and (ii)
Borrower has the power and authority to own the property which it
owns and to carry on its business as such business is now
conducted.
(b) The execution, delivery and performance by
Borrower of the Agreement and the other Loan Documents, and the
consummation of the transactions contemplated therein will not
conflict with the certificate of incorporation, bylaws or other
organizational or governing documents of Borrower, conflict with
any law, rule or regulation to which Borrower is subject, or to
the best of our knowledge conflict with or result in any breach
of any mortgage or lien, or any lease, agreement, instrument,
order, judgment, decree, or any other restriction of any kind or
character to which Borrower is a party or is subject or by which
Borrower or its properties are bound or affected.
(c) No consent, approval, exemption, authorization or
order of or other action by, and no notice to or filing with, any
court or governmental authority or to the best of our knowledge
any third party is required in connection with the execution,
delivery or performance by Borrower of the Agreement or any other
Loan Document or to consummate any transactions contemplated
thereby.
(d) Borrower has full power and authority to enter
into the Agreement and the other Loan Documents. The execution
and delivery of the Agreement and the other Loan Documents, and
the performance and observance of their terms, conditions and
obligations, have been duly authorized by all necessary corporate
action by Borrower. The Agreement and the Notes are, and when
executed by Borrower the Security Documents will be, legal, valid
and binding obligations of Borrower, enforceable in accordance
with their respective terms, except as such validity, binding
effect and enforceability may be limited or affected by
bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights or general principles of equity.
(e) To the best of our knowledge there are no actions,
suits, proceedings or other claims against Borrower or any of its
properties pending or threatened before any court or by or before
any governmental instrumentality, which could have a material
adverse effect on the business, operations, property, prospects,
assets or condition (financial or otherwise) of Borrower or the
ability of Borrower to perform its obligations under the
Agreement or the other Loan Documents. To the best of our
knowledge, there exists no default or breach by Borrower with
respect to any order, writ, injunction, decree or demand of any
court or governmental instrumentality, nor does the execution,
delivery or performance of the Agreement or the other Loan
Documents result in any such default or breach. The knowledge
referred to herein is in each instance without any independent
investigation and is derived solely from a review of our records
of matters on which we have been retained to represent or advise
the Borrower. We have not been retained to represent the
Borrower for all of its litigation matters. The Borrower has
provided you with a copy of Borrower's 1995 annual report with
reference to certain litigation as set forth in Note 7 of the
Notes to Consolidated Financial Statements contained therein.
There may be written agreements or instruments affecting the
Borrower, or claims or possible claims by or against the Borrower
or regulatory authorities with jurisdictions over the Borrower,
of which we have no knowledge. We have made no independent
investigation to verify the accuracy or completeness of our
knowledge, and in particular we have not conducted searches in
the public records of any Court or any federal, state, municipal
or other governmental department, commission, board, agency or
instrumentality.
Our opinions are subject to the following qualifications:
1. Except for the limited opinion expressed
inparagraph (d) above, we express no opinion as to Borrower's
rights in or title to the Oil and Gas Properties and we have not
independently investigated the status of Borrower's title to the
Oil and Gas Properties.
2. Except for the limited opinion expressed in
paragraph (d) above, we have not independently investigated any
real property records, fixture filings or UCC records naming
Borrower as debtor, and we express no opinion with respect to the
priority of the security interest in favor of the Lenders in the
Oil and Gas Properties.
3. We express no opinion as to any laws other than
the laws of the State of Colorado and the federal laws of the
United States.
4. This opinion is rendered as of the above date, and
we do not undertake to advise you of matters which may come to
our attention after the above date which may affect the opinions
expressed herein.
This opinion is solely for the purposes contemplated by the
Agreement. Without our prior written consent, this opinion may
not be utilized for any other purpose, nor may this opinion be
quoted in whole or in part or otherwise referred to in any report
or document or furnished to any person or entity, other than your
counsel or authorized employees, except in response to a valid
subpoena or other lawful purpose.
Very truly yours,
cc: St. Mary Land & Exploration Company