- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
POGO PRODUCING COMPANY
------------------------------
First Amendment
Dated as of December 21, 1998
to
Amended and Restated Credit Agreement
Dated as of August 1, 1997
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT, dated as
of December 21, 1998 (the "AMENDMENT"), between Pogo Producing Company, a
Delaware corporation (the "BORROWER"), the various financial institutions
which are or may become parties to the Credit Agreement, as amended hereby
(collectively, the "LENDERS"), Bank of Montreal, acting through its Chicago,
Illinois branch, (the "BANK"), as administrative agent (the "AGENT") for the
Lenders, and Paribas, formerly known as Banque Paribas, as documentation
agent (the "CO-AGENT", and together with the Agent, the "AGENTS"), for the
Lenders,
W I T N E S S E T H
WHEREAS the Borrower, the Lenders, the Agent and the Co-Agent are
parties to a certain Amended and Restated Credit Agreement, dated as of
August 1, 1997, as previously amended (the "CREDIT AGREEMENT"); and
WHEREAS the Borrower desires to amend certain provisions of the Credit
Agreement;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. DEFINITIONS. Unless otherwise defined herein or the context
otherwise requires, or except as the definition may be amended by this
Amendment, terms used in this Amendment, including its preamble and recitals,
shall have the meanings provided in the Credit Agreement, as hereby amended.
2. AMENDMENTS TO CREDIT AGREEMENT.
(a) The PREAMBLE to the Credit Agreement is amended hereby in its
entirety to the following:
" THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of August 1,
1997, among POGO PRODUCING COMPANY, a Delaware corporation (the
"BORROWER"), the various financial institutions which are or may become
parties hereto (collectively, the "LENDERS"), and BANK OF MONTREAL,
acting through its Chicago, Illinois branch ("the BANK"), as
administrative agent (the "AGENT") for the Lenders and PARIBAS, formerly
known as Banque Paribas, as documentation agent (the "CO-AGENT") for the
Lenders,".
(b) The definitions of "Alternate Thailand Reserve Report", "Alternate
U.S Reserve Report", "Applicable Margin", "Borrowing Base", "Deficiency
Period", "Loan Documents", "Non-Standard Determination", "Revolving Loan
Commitment Amount", "Subordinated Indebtedness" and "U.S. Reserve Report"
appearing in SECTION 1.1 of the Credit Agreement are amended hereby in their
entirety to the following:
" "ALTERNATE THAILAND RESERVE REPORT" means a report, in form and
detail satisfactory to the Agent and the Required Lenders, on reserves
updated internally by the Borrower making adjustments for any changes in
production volumes, expenses, Applicable Prices and for dispositions of
properties in the six-month period subsequent to the immediately
preceding Reserve Report Date and based upon the immediately preceding
Thailand Reserve Report and, at the Borrower's option, for any
acquisitions of properties not included in the immediately preceding
Thailand Reserve Report or the restoration to the Borrowing Base of
properties previously removed from the Borrowing Base by the Borrower."
" "ALTERNATE U.S. RESERVE REPORT" means a report, in form and detail
satisfactory to the Agent and the Required Lenders, on reserves updated
internally by the Borrower making adjustments for any changes in
production volumes, expenses, Applicable Prices and for dispositions of
properties in the six-month period subsequent to the immediately
preceding Reserve Report Date and based upon the immediately preceding
U.S. Reserve Report and, at the Borrower's option, for any acquisitions
of properties not included in the immediately preceding U.S. Reserve
Report or the restoration to the Borrowing Base of properties previously
removed from the Borrowing Base by the Borrower."
" "APPLICABLE MARGIN" means:
(a) for any time prior to or on the Revolving Loan Commitment
Termination Date, (i) with respect to any Prime Rate Loan, LIBO Rate
Loan or the Commitment Fees payable hereunder with respect to Tranche A,
as the case may be, the applicable percentage per annum set forth below
under the caption "Prime Spread", "LIBO Spread" or "Unused Fee", as the
case may be, determined by reference to the percentage of the Borrowing
Base that the outstanding Loans represent at that time:
- -------------------------------------------------------------------------------
BORROWING BASE USAGE PRIME SPREAD LIBO SPREAD UNUSED FEE
- -------------------------------------------------------------------------------
75% of the Borrowing Base 0.25% 2.00% 0.375%
LESS THAN outstanding Loans
LESS THAN OR EQUAL TO 100%
of the Borrowing Base
- -------------------------------------------------------------------------------
60% of the Borrowing Base 0.00% 1.75% 0.375%
LESS THAN outstanding Loans
LESS THAN OR EQUAL TO 75%
of the Borrowing Base
- -------------------------------------------------------------------------------
40% of the Borrowing Base 0.00% 1.50% 0.250%
LESS THAN outstanding Loans
LESS THAN OR EQUAL TO 60%
of the Borrowing Base
- -------------------------------------------------------------------------------
2
- -------------------------------------------------------------------------------
Outstanding Loans LESS THAN 0.00% 1.25% 0.250%
OR EQUAL TO 40% of the
Borrowing Base
- -------------------------------------------------------------------------------
PROVIDED, HOWEVER, that during any Deficiency Period, then the "Prime
Spread" with respect to Prime Rate Loans under Tranche A shall be
"0.25%" per annum and the "LIBO Spread" with respect to LIBO Rate Loans
under Tranche A shall be "2.50%" per annum, and (ii) with respect to any
Prime Rate Loan or LIBO Rate Loan with respect to Tranche B, as the case
may be, the "Prime Spread" shall be "0.75%" per annum and the "LIBO
Spread" shall be "2.50%" per annum, PROVIDED, HOWEVER, that,
notwithstanding the foregoing, if all outstanding amounts under Tranche
B have not been repaid in full prior to February 28, 1999, then the
"Prime Spread" with respect to Prime Rate Loans under Tranche A and
Tranche B shall be "0.75%" per annum and the "LIBO Spread" with respect
to LIBO Rate Loans under Tranche A and Tranche B shall be "2.50%" per
annum; and
(b) for any time after the Revolving Loan Commitment Termination
Date, with respect to any Prime Rate Loan or LIBO Rate Loan, as the case
may be, the "Prime Spread" shall be "0.25%" per annum and the "LIBO
Spread" shall be "2.00%" per annum."
" "BORROWING BASE" means, at any time, that amount, determined in
accordance with SECTION 2.6 and calculated using the Lenders' usual and
customary criteria for oil and gas reserve evaluation. During the
period from December 21, 1998, to the date of the next determination of
the Borrowing Base pursuant to the provisions of SECTION 2.6, the amount
of the Borrowing Base shall be Two Hundred Million Dollars
($200,000,000); PROVIDED, HOWEVER, that in the event that New
Subordinated Debt is issued prior to April 30, 1999, then such Borrowing
Base shall be reduced by 40% of the principal amount of such New
Subordinated Debt."
" "DEFICIENCY PERIOD" means any period commencing upon any date that
the Agent determines that the aggregate principal amount of all Senior
Debt exceeds the Senior Debt Capacity then in effect, and continuing
until the date that, pursuant to the redetermination of the Borrowing
Base, or by reason of mandatory prepayments or scheduled repayments,
with respect to Loans, the aggregate outstanding principal amount of
Senior Debt no longer exceeds the Senior Debt Capacity."
" "LOAN DOCUMENT" means this Agreement, the Notes, any Subsidiary
Guaranty and any Security Documents."
" "NON-STANDARD DETERMINATION" means a determination or
redetermination of the Borrowing Base that may be made either (i) at the
discretion of the Required Borrowing Base Lenders, no more than once
during any six month period ending either October 31st, or April 30th,
as applicable, or (ii) at the request of the
3
Borrower, no more than once during any six month period ending either
October 31st, or April 30th, as applicable, in either case as provided
in SECTION 2.6(b)."
" "REVOLVING LOAN COMMITMENT AMOUNT" means, on any date,
$250,000,000, as such Revolving Loan Commitment Amount may be changed
from time to time pursuant to SECTION 2.2."
" "SUBORDINATED INDEBTEDNESS" means (i) the five and one half percent
(5 1/2%) Convertible Subordinated Notes due 2006 issued by the Borrower
pursuant to the Indenture dated as of June 15, 1996 between the Borrower
and State Street Bank and Trust Company, as Trustee, (ii) the eight and
three quarters percent (8 3/4%) Senior Subordinated Notes due 2007
issued by the Borrower pursuant to the Indenture dated as of May 15,
1997 between the Borrower and State Street Bank and Trust Company, as
Trustee, (iii) the New Subordinated Debt, and (iv) new Indebtedness
incurred, PROVIDED that:
(a) such new Indebtedness has subordination terms not
materially less favorable to the holders of the Notes than the then
existing Subordinated Indebtedness unless such terms are approved
by the Required Lenders;
(b) the aggregate principal payments for such new
Indebtedness scheduled to be paid (i) in any Fiscal Year ending
prior to the Stated Maturity Date for the Term Loans are no greater
than the aggregate principal payments under the existing schedule
of principal payments of the Subordinated Indebtedness being repaid
and (ii) prior to a period ending thirty-six (36) months after the
Stated Maturity Date for the Term Loans shall not exceed the
aggregate principal payments under the existing schedule of
principal payments of the Subordinated Indebtedness being repaid;
(c) the maturity dates thereof are no earlier than thirty-six
(36) months after the Stated Maturity Date of the Term Loans; and
(d) other than with respect to issuance of the New
Subordinated Debt on or before February 28, 1999, the Required
Borrowing Base Lenders shall have the option for a period of 30
days after the issuance of Subordinated Indebtedness to adjust the
Borrowing Base in effect at the time of the issuance of such
Subordinated Indebtedness."
" "U.S. RESERVE REPORT" means a report of Ryder Scott Company
Petroleum Engineers or other independent petroleum engineers
satisfactory to the Agent and the Required Lenders showing, in form and
detail satisfactory to the Agent and Required Lenders, such engineers'
estimate of the Proved Reserves on the Borrowing Base Properties located
in the United States or Canada and the future Gross Revenue and
4
Future Net Income to be derived from such Proved Reserves as of the
Reserve Report Date for each year. The Reserve Report shall estimate
the Proved Reserves and income data for the Proved Developed Producing
Reserves, the Proved Developed Shut-In Reserves, the Proved Developed
Behind Pipe Reserves and the Proved Undeveloped Reserves, and shall, in
each case, report only the Proved Reserves and income data attributable
to Borrower's working interest percentage in or Borrower's pro rata
share of, as the case may be, any Proved Reserves located on the
Borrowing Base Properties located in the United States, less the
Borrower's obligations or pro rata share of such obligations, as the
case may be, for advance payments for each such property. All
calculations including the calculation of Applicable Prices in the
Reserve Report shall be made on a property-by-property and an
interest-by-interest basis in order to reflect the varying royalties,
costs and expenses, working interests and advance payments applicable to
the various Borrowing Base Properties covered by the Reserve Report.
Except as otherwise specifically required herein, the Reserve Report
shall be prepared and presented in accordance with the requirements of
the S.E.C. from time to time in effect."
(c) SECTION 1.1 of the Credit Agreement is amended hereby by adding the
following definitions of "Arch Subsidiaries", "Collateral", "Collateral
Agent", "New Subordinated Capital", "New Subordinated Debt", "Required
Borrowing Base Lenders", "Security Documents", "Senior Debt Capacity",
"Tranche A" and "Tranche B" in appropriate alphabetical order:
" "ARCH SUBSIDIARIES" means Arch Petroleum, Inc., a Delaware
corporation and its Subsidiaries."
" "COLLATERAL" is defined in SECTION 7.11."
" "COLLATERAL AGENT" means BMO Financial, Inc., its successor or such
Person as may be designated pursuant to SECTION 11.14."
" "NEW SUBORDINATED CAPITAL" means the New Subordinated Debt,
convertible preferred, preferred, common stock or any combination
thereof issued by the Borrower in an aggregate principal amount of at
least $125,000,000."
" "NEW SUBORDINATED DEBT" means up to $150,000,000 of subordinated
Indebtedness which (i) complies with the requirements for new
subordinated Indebtedness incurred contained in the definition of
Subordinated Indebtedness and (ii) is issued on or before April 30,
1999."
" "REQUIRED BORROWING BASE LENDERS" means (a) with respect to any
increase in the Borrowing Base, the Agent and Lenders holding at least
100% of the then aggregate outstanding principal amount of the Notes
then held by the Lenders, or, if no such principal amount is then
outstanding, the Agent and Lenders responsible for
5
at least 100% of the then current Commitment Amount, and (b) with
respect to any action other than an increase in the Borrowing Base, the
Agent and Lenders holding at least 66 2/3% of the then aggregate
outstanding principal amount of the Notes then held by the Lenders, or,
if no such principal amount is then outstanding, the Agent and Lenders
responsible for at least 66 2/3% of the then current Commitment Amount."
" "SECURITY DOCUMENTS" means, collectively, the Mortgage, Deed of
Trust, Assignment, Security Agreement and Financing Statement from the
Borrower or any of its Subsidiaries as the case may be, substantially in
the form attached hereto as EXHIBIT G (with any modifications necessary
to comply with applicable state laws or filing requirements), and any
and all further documents, financing statements, agreements and
instruments which may be required under applicable law, or which the
Agent may reasonably request, in order to satisfy the requirements of
SECTION 7.11."
" "SENIOR DEBT CAPACITY" means the sum of (i) the Borrowing Base then
in effect PLUS (ii) when available, Tranche B."
" "TRANCHE A" means that portion of the Commitment Amount equal to
the then effective Borrowing Base."
" "TRANCHE B" means (a) until April 30, 1999, a portion of the
Commitment Amount equal to the greater of (i) $0 or (ii) the sum of
Fifty Million Dollars ($50,000,000) LESS the proceeds from the issuance
of New Subordinated Capital not allocated (as set forth in the
definition of "Borrowing Base") to the reduction of the Borrowing Base,
and (b) at all times after the date of the next scheduled determination
of the Borrowing Base pursuant to the provisions of SECTION 2.6(a), $0."
(d) SECTION 1.1 of the Credit Agreement is amended hereby by deleting
the definitions of "Activation Amount", "Active Revolving Loan Commitment
Amount", "Applicable Percentage", "Audited Reserve Report", "Implied Senior
Debt Rating", "Inactive Revolving Loan Commitment Amount", "Majority
Borrowing Base Lenders", "New Subordinated Indebtedness", "Revised Borrowing
Base", "Thailand Borrowing Base", "Updated Reserve Report" and "U.S.
Borrowing Base".
(e) The definition of "Borrowing Base Properties" appearing in SECTION
1.1 of the Credit Agreement is amended hereby (i) by inserting the phrase "or
Canada" following in the phrase "properties located outside the United
States", and (ii) by inserting the phrase "and properties owned by the Arch
Subsidiaries" following in the phrase "other than Qualified Partnership
Properties".
(f) SECTION 2.1.1 of the Credit Agreement is amended hereby in its
entirety to the following:
6
" SECTION 2.1.1 REVOLVING LOAN COMMITMENT. From time to time on any
Business Day occurring prior to the Revolving Loan Commitment
Termination Date, each Lender will make revolving loans (relative to
such Lender, its "REVOLVING LOAN") to the Borrower equal to such
Lender's Percentage of the aggregate amount of the Borrowing requested
by the Borrower to be made on such day. The Commitment of each Lender
described in this SECTION 2.1.1 is herein referred to as its "REVOLVING
LOAN COMMITMENT". On the terms and subject to the conditions hereof,
the Borrower may from time to time borrow, prepay and reborrow Revolving
Loans attributable to Tranche A. On the terms and subject to the
conditions hereof, the Borrower may borrow on December 21, 1998 the
Revolving Loans attributable to Tranche B, may from time to time prepay
such Revolving Loans attributable to Tranche B and such amounts may not
be reborrowed."
(g) SUBSECTION 2.1.3(a) and SUBSECTION 2.1.3(b) of the Credit Agreement
are amended hereby in their entirety to the following:
" (a) in the case of Revolving Loans, the aggregate outstanding
principal amount of all Revolving Loans outstanding would exceed the
lesser of (i) the Revolving Loan Commitment Amount and (ii) the Senior
Debt Capacity then in effect minus all other Senior Debt outstanding;
(b) in the case of Term Loans, the aggregate original principal
amount of all Term Loans would exceed the lesser of (i) the Term Loan
Commitment Amount and (ii) the Senior Debt Capacity then in effect minus
all other Senior Debt outstanding;".
(h) SECTION 2.2.1 of the Credit Agreement is amended hereby in its
entirety to the following:
" SECTION 2.2.1 OPTIONAL. The Borrower may, from time to time on
any Business Day occurring after the time of the initial Borrowing
hereunder, voluntarily reduce the amount of any Commitment Amount;
PROVIDED, HOWEVER, that all such reductions shall require at least three
Business Days' prior notice to the Agent, and such reduction of the
Commitment Amount shall be in a minimum amount of $5,000,000 and in
increments of $1,000,000."
(i) SECTION 2.2.2 of the Credit Agreement is amended hereby by deleting
SUBSECTION (c) thereof in its entirety.
(j) SECTION 2.6 of the Credit Agreement is amended hereby in its
entirety to the following:
7
" SECTION 2.6 DETERMINATION OF BORROWING BASE. Upon delivery of a
Reserve Report or Alternate Reserve Report pursuant to SECTION 7.2
hereof and PROVIDED, that such delivery shall be on or before the dates
required therein, then:
(a) With respect to the annual or semi-annual, as the case
may be, determination of the Borrowing Base, the Agent will propose
to the Lenders a Borrowing Base for acceptance by the Required
Borrowing Base Lenders. If such Borrowing Base, as proposed by the
Agent is accepted by the Required Borrowing Base Lenders, then such
agreed Borrowing Base shall be communicated by the Agent to the
Borrower on or before (i) the next April 30th, in the case of a
Reserve Report and (ii) the next October 31st, in the case of an
Alternate Reserve Report, and shall remain in effect until the next
October 31st or April 30th; PROVIDED THAT if such proposed
Borrowing Base is not approved by the Required Borrowing Base
Lenders prior to the applicable date then, within thirty (30) days
following the applicable date, the Required Borrowing Base Lenders
will establish and agree to a Borrowing Base, and such amount will
be promptly communicated to the Borrower; PROVIDED THAT the then
current Borrowing Base shall remain in effect until the Borrower is
notified of the new Borrowing Base. The new Borrowing Base shall
become effective as of the date that the Borrower receives
notification from the Agent of the new Borrowing Base. The
Borrowing Base, as determined and established pursuant to this
SECTION 2.6(a) shall be subject, at all times after April 30, 1999,
to the redetermination of the then effective Borrowing Base as a
result of a Non-Standard Determination.
(b) With respect to a redetermination of the Borrowing Base
resulting from a Non-Standard Determination, the Agent or the
Required Lenders and the Borrower shall have the right, but not the
obligation on no more than one occasion during each six month
period ending on April 30th and October 31st, to notify the
Borrower or the Agent, respectively, of its intent to perform a
Non-Standard Determination of the Borrowing Base. In connection
with the Non-Standard Determination and notwithstanding the
delivery of any new Alternate Reserve Report, the Agent shall
propose, and the Required Borrowing Base Lenders shall agree to and
approve, a new Borrowing Base which shall become effective upon
receipt by the Borrower of notice of such new Borrowing Base until
such new Borrowing Base may be redetermined as a result of a
scheduled semi-annual determination of the Borrowing Base pursuant
to SECTION 2.6(a). In connection with any Non-Standard
Determination, the Borrower shall deliver promptly upon the request
of the Agent a new Alternate Reserve Report to the Agent."
(k) SECTION 3.1 of the Credit Agreement is amended hereby by inserting
the following SECTION 3.1.5 following SECTION 3.1.4 thereof:
8
" SECTION 3.1.5 REPAYMENT OF TRANCHE B. The Borrower shall
immediately repay all Loans outstanding under Tranche B on April 30,
1999; PROVIDED, HOWEVER, that in the event of any issuance of New
Subordinated Capital prior to April 30, 1999, the Borrower shall within
seven (7) days of such issuance repay Loans outstanding under Tranche B
in an amount equal to the proceeds from the issuance of such New
Subordinated Capital which were not allocated (as set forth in the
definition of "Borrowing Base") to the reduction of the Borrowing Base."
(l) SECTION 3.1.2 of the Credit Agreement is amended hereby in its
entirety to the following:
" SECTION 3.1.2 MANDATORY PREPAYMENTS ON REVOLVING LOANS. If at any
time prior to the Revolving Loan Commitment Termination Date, the
aggregate principal amount of all Senior Debt outstanding shall exceed
the Senior Debt Capacity then in effect, the Borrower shall forthwith
repay the Revolving Loans in an aggregate amount equal to such excess;
PROVIDED that with respect to prepayment of amounts outstanding under
Tranche A, Borrower shall have the option to prepay such Revolving Loans
under Tranche A, in no more than five substantially equal monthly
installments, in an amount such that upon the conclusion of such
mandatory prepayments, the aggregate principal amount of all outstanding
Senior Debt will not exceed the Senior Debt Capacity. If the aggregate
principal amount of all Senior Debt outstanding exceeds the Senior Debt
Capacity at any time, the first such payment pursuant to the proviso in
the preceding sentence shall be due within 90 days after the
commencement date of a Deficiency Period, and the remaining payments
shall be due on the numerically corresponding day of each of the
subsequent months. If a subsequent month does not contain a numerically
corresponding day, the Borrower shall make such payment on the last
Business Day of such month, or if the numerically corresponding day is
not a Business Day, such payment will be due on the preceding Business
Day."
(m) SECTION 3.1.3 of the Credit Agreement is amended hereby in its
entirety to the following:
" SECTION 3.1.3 MANDATORY PREPAYMENTS ON TERM LOANS. If at any time
after the making of the Term Loans, the aggregate principal amount of
all Senior Debt outstanding shall exceed the Borrowing Base then in
effect, the Borrower shall, at the Borrower's option, either (i)
forthwith repay the Term Loans in an aggregate amount equal to such
excess or (ii) prepay the Term Loans, in no more than five substantially
equal monthly installments, in an amount such that upon the conclusion
of such mandatory prepayments, the aggregate principal amount of all
outstanding Senior Debt will not exceed the Borrowing Base. If the
aggregate principal amount of all Senior Debt outstanding exceeds the
Borrowing Base at any time, the first such payment pursuant to CLAUSE
(ii) above shall be due within 90 days after the
9
commencement date of a Deficiency Period, and the remaining payments
shall be due on the numerically corresponding day of each of the
subsequent months. If a subsequent month does not contain a numerically
corresponding day, the Borrower shall make such payment on the last
Business Day of such month, or if the numerically corresponding day is
not a Business Day, such payment will be due on the preceding Business
Day. Mandatory prepayments pursuant to this SECTION 3.1.3 shall be in
addition to and not in lieu of payments required pursuant to SECTION
3.1.1. Mandatory prepayments pursuant to this SECTION 3.1.3 shall be
applied to the next scheduled repayment or repayments required pursuant
to SECTION 3.1.1 if, as of such repayment date, after giving effect to
such scheduled repayment, the aggregate principal amount of all Senior
Debt outstanding does not exceed the Borrowing Base then in effect,
however, the repayments pursuant to SECTION 3.1.1 shall always be
required."
(n) SECTION 3.3.1 of the Credit Agreement is amended hereby in its
entirety to the following:
" SECTION 3.3.1 RATES. Pursuant to an appropriately delivered
Borrowing Request or Continuation/Conversion Notice, the Borrower may
elect that Loans comprising a Borrowing accrue interest at a rate per
annum:
(1) on that portion maintained from time to time as a Prime
Rate Loan with respect to Tranche A, equal to the sum of the Prime
Rate from time to time in effect PLUS the Applicable Margin
applicable to Tranche A from time to time in effect;
(2) on that portion maintained from time to time as a Prime
Rate Loan with respect to Tranche B, equal to the sum of the Prime
Rate from time to time in effect PLUS the Applicable Margin
applicable to Tranche B from time to time in effect;
(3) on that portion maintained as a LIBO Rate Loan with
respect to Tranche A, during each Interest Period applicable
thereto, equal to the sum of the LIBO Rate for such Interest Period
PLUS the Applicable Margin applicable to Tranche A; and
(4) on that portion maintained as a LIBO Rate Loan with
respect to Tranche B, during each Interest Period applicable
thereto, equal to the sum of the LIBO Rate for such Interest Period
PLUS the Applicable Margin applicable to Tranche B.
The LIBO Rate for any Interest Period for LIBO Rate Loans will be
determined by the Agent on the basis of the applicable rates furnished
to and received by the Agent from the Reference Banks, two Business Days
before the first day of such Interest
10
Period. All Fixed Rate Loans shall bear interest from and including the
first day of the applicable Interest Period to (but not including) the
last day of such Interest Period at the interest rate determined as
applicable to such Fixed Rate Loan."
(o) SECTION 3.4.1 of the Credit Agreement is amended hereby in its
entirety to the following:
" SECTION 3.4.1 COMMITMENT FEE. The Borrower agrees to pay to the
Agent for the account of each Lender, for the period (including any
portion thereof when any of Commitments are suspended by reason of the
Borrower's inability to satisfy any condition of ARTICLE V) commencing
on the Effective Date and continuing through the Revolving Loan
Commitment Termination Date, commitment fees (collectively, the
"COMMITMENT FEES") at a rate per annum for each day of such period equal
to the percentage set forth under the "Unused Fee" column of the
Applicable Margin times such Lender's respective Percentage of the sum
of the average daily unused portion of Tranche A. Fees payable pursuant
to this SECTION 3.4.1 shall be payable by the Borrower in arrears on
each Quarterly Payment Date, commencing with the first such day
following the Effective Date, and on the Revolving Loan Commitment
Termination Date."
(p) SUBSECTION 5.2.1(d) of the Credit Agreement is amended hereby in
its entirety to the following:
" (d) the Senior Debt outstanding does not exceed the Senior Debt
Capacity and the Borrower is in compliance with the Current Ratio and
Fixed Charge Coverage Ratio as required by SECTIONS 8.4(c) and 8.4(d),
respectively, and, immediately after giving effect to the proposed
Borrowing, Senior Debt shall not exceed the Senior Debt Capacity then in
effect and the Indebtedness of the Borrower shall not exceed the amount
permitted under CLAUSE (a) of SECTION 8.4."
(q) SUBSECTION 6.2(c) of the Credit Agreement is amended hereby in its
entirety to the following:
" (c) result in, or require the creation or imposition of, any Lien
on any properties of the Borrower or its Subsidiaries except as Liens
will be imposed, created, or required upon execution and delivery of the
Security Documents pursuant to SECTION 7.11."
(r) ARTICLE VI of the Credit Agreement is amended hereby by inserting
the following SECTION 6.18 following SECTION 6.17 thereof:
" SECTION 6.18 YEAR 2000 MATTERS. Any reprogramming required to
permit the proper functioning in all respects (but only to the extent
that such proper
11
functioning would otherwise be impaired by the occurrence of the year
2000) in and following the year 2000, of material computer systems and
other material equipment containing embedded microchips, in either case
owned or operated by Borrower or any Subsidiary, and the testing of all
such systems and other equipment as so reprogrammed, will be completed
by December 31, 1999. Prior to December 31, 1999, the Borrower shall
have made reasonable inquiry of parties whose operations are material to
the Borrower's and its Subsidiaries' business, taken as a whole, and who
have computer systems and other equipment containing embedded
microchips, as to such parties' preparedness for any impairments to such
systems resulting from the occurrence of the year 2000. The costs to
the Borrower and its Subsidiaries that have not been incurred as of the
date hereof for such reprogramming and testing and for the other
reasonably foreseeable consequences to them of any improper functioning
of other computer systems and equipment containing embedded microchips
owned or operated by Borrower or any Subsidiary due to the occurrence of
the year 2000 could not reasonably be expected to result in a Default or
Event of Default."
(s) SUBSECTION 7.2(c)(i)(B) of the Credit Agreement is amended hereby
in its entirety to the following:
"(B) the Borrower has fulfilled all its obligations under this
Agreement, the Notes and the other Loan Documents".
(t) SUBSECTION 7.2(e) of the Credit Agreement is amended hereby in its
entirety to the following:
" (e) (i) as soon as available, but in no event later than 90 days
after the close of each Fiscal Year of the Borrower, commencing with the
Fiscal Year ended December 31, 1998, Reserve Reports prepared by Ryder
Scott Company Petroleum Engineers or another independent engineering
firm acceptable to the Agent and the Required Lenders as of January 1 of
the next succeeding year, and (ii) as soon as available, but in no event
later than 45 days after each June 30, commencing June 30, 1999,
Alternate Reserve Reports dated as of July 1;".
(u) SUBSECTION 7.2(m) of the Credit Agreement is amended hereby in its
entirety to the following:
" (m) as soon as reasonably possible and in any event within ten
(10) Business Days if the principal of the Senior Debt outstanding
(including the Loans) shall exceed the Senior Debt Capacity then in
effect, notice of such excess."
(v) ARTICLE VII of the Credit Agreement is amended hereby by inserting
the following SECTION 7.11 following SECTION 7.10 thereof:
12
" SECTION 7.11 SECURITY DOCUMENTS. If the Borrower fails to issue
the New Subordinated Capital prior to February 28, 1999, then, without
affecting in any way any other rights of the Lenders hereunder, the
Borrower shall:
(i) duly execute and deliver to the Collateral Agent and
cause each such Security Document to be filed, registered and
recorded, as the law may require or the Agent may request, in each
jurisdiction where so required or requested, and deliver to the
Collateral Agent an acknowledgment copy, or other evidence
satisfactory to it, of each such filing, registration and
recordation, in order to mortgage, assign, grant a security
interest in and pledge to the Collateral Agent, acting on behalf of
the Lenders, right, title and interest (and, with respect to any
Qualified Partnership Properties, the Borrower's PRO RATA share of
the right, title and interest of any partnership Subsidiary) in and
to the Borrowing Base Properties located in the United States, and
the proceeds thereof, having a Discounted Present Value, as of the
date of the most recent Reserve Report, of 80% of the Discounted
Present Value of such Borrowing Base Properties (the "COLLATERAL")
in such request, and to perfect and evidence the first priority of
all such Security Documents (subject to liens and encumbrances
permitted by the terms of such instruments); PROVIDED that the
Borrower shall not, and shall not permit any of its Subsidiaries
to, on or after the Effective Date enter into any amendment of any
such contract or agreement, or enter into any other contract or
agreement, that in either case would result in any additional such
material consent, authorization or approval requirement; and
(ii) deliver to the Agent, prior to March 31, 1999,
evidence acceptable to the Agent, in its reasonable discretion,
indicating that a Security Document covering 80% of the Discounted
Present Value of the Borrowing Base Properties located in the
United States have been filed, registered and recorded, as the law
may require or the Agent may request, in each jurisdiction where so
required or requested.
The Borrower further agrees to execute, or cause its Subsidiaries to
execute, any and all further documents, financing statements, agreements
and instruments, and take all further actions (including filing Uniform
Commercial Code financing statements), which may be required under
applicable law, or which the Agent may reasonably request, in order to
effectuate the transactions contemplated by this Agreement and in order
to grant, preserve, protect and perfect the validity and first priority
of any security interests created pursuant to CLAUSE (i) above. The
Borrower will also provide and cause its Subsidiaries to provide at
their own expense to the Agent such title opinions, operating agreements
and other instruments and documents relating to the Collateral then in
the possession of the Borrower or any Subsidiary as the Agent may
reasonably request."
13
(w) SECTION 8.2 of the Credit Agreement is amended hereby by (i)
deleting "or;" at the end of SUBSECTION (a) thereof, (ii) replacing "."
following SUBSECTION (b) thereof with "; or", and (iii) inserting the
following SUBSECTION (c) following SUBSECTION (b) thereof:
" (c) create, incur, assume or suffer to exist or otherwise become
or be liable in respect of any subordinated Indebtedness except as
specifically permitted by the definition of "Subordinated Indebtedness"."
(x) SECTION 8.3 of the Credit Agreement is amended hereby by (i)
deleting "and" at the end of SUBSECTION (l) thereof, (ii) replacing "."
following SUBSECTION (m) thereof with "; and", and (iii) inserting the
following SUBSECTION (n) following SUBSECTION (m) thereof:
" (n) Liens securing payment of the Senior Debt, granted pursuant to
any Security Document executed by the Borrower pursuant to SECTION 7.11."
(y) SUBSECTION 8.6(b)(i) of the Credit Agreement is amended hereby by
replacing "August 1, 2000" with "July 1, 2000".
(z) SECTION 10.3 of the Credit Agreement is amended hereby in its
entirety to the following:
" SECTION 10.3 EXCULPATION. Neither the Agent, the Co-Agent nor any
of their directors, officers, employees or agents shall be liable to any
Lender for any action taken or omitted to be taken by it under this
Agreement or any other Loan Document, or in connection herewith or
therewith, except for their own wilful misconduct or gross negligence,
nor responsible for any recitals or warranties herein or therein, nor
for the effectiveness, enforceability, validity or due execution of this
Agreement or any other Loan Document, nor for the creation, perfection
or priority of any Liens which may be created in the future by any of
the Security Documents, or the validity, genuineness, enforceability,
existence, value or sufficiency of any Collateral nor to make any
inquiry respecting the performance by the Borrower of its obligations
hereunder or under any other Loan Document. The Agent and the Co-Agent
shall each be entitled to rely upon advice of counsel concerning legal
matters and upon any notice, consent, certificate, statement or writing
which the Agent or the Co-Agent believes to be genuine and to have been
presented by a proper Person."
(aa) SUBSECTION 11.1(b) of the Credit Agreement is amended hereby in its
entirety to the following:
" (b) modify this SECTION 11.1, change the definition of "REQUIRED
LENDERS", increase any Commitment Amount or the Percentage of any
Lender, change the definition of "PRIME RATE" or "LIBO RATE" to reduce
interest payable or the Applicable Margin by the Borrower, reduce any
fees described in ARTICLE III, release
14
any Collateral, or extend any Revolving Loan Commitment Termination Date
or Term Loan Commitment Termination Date, without the consent of each
Lender and each holder of a Note;".
(bb) SECTION 11.3 of the Credit Agreement is amended hereby by (i)
deleting "and" at the end of SUBSECTION (a), (ii) relettering SUBSECTION (b)
thereof as SUBSECTION (c), and (iii) inserting the following SUBSECTION (b)
following SUBSECTION (a) thereof:
" (b) any costs incurred pursuant to obtaining a security interest
in the Borrower's property, including fees and disbursements to special
counsel to Lenders and expenses of any filing, recording, refiling or
rerecording of the Security Documents and/or any Uniform Commercial Code
financing statements relating thereto and all amendments, supplements
and modifications to any thereof and any and all other documents or
instruments of further assurance which may be required to be filed or
recorded or refiled or rerecorded pursuant to the terms of SECTION 7.11
or relating to any Lien for benefit of the Lenders, and".
(cc) SECTION 11.4 of the Credit Agreement is amended hereby by replacing
"the Co-Agents and each Agent" with "the Agent, the Collateral Agent and the
Co-Agent".
(dd) ARTICLE XI of the Credit Agreement is amended hereby by inserting
the following SECTION 11.14 following SECTION 11.13 thereof:
" SECTION 11.14 COLLATERAL AGENT. Each Lender and BMO Financial,
Inc. hereby agree that, upon the execution and delivery of any Security
Document pursuant to SECTION 7.11, BMO Financial, Inc. shall serve as
Collateral Agent and each Lender hereby appoints BMO Financial, Inc. as
its Collateral Agent under and for purposes of the Security Documents.
Each Lender and the Borrower also agree that, upon the execution and
delivery of any Security Document pursuant to SECTION 7.11, all benefits
of ARTICLE X shall inure to the benefit of BMO Financial, Inc., as if it
were Agent, as to any actions taken or omitted to be taken while it acts
as Collateral Agent and BMO Financial, Inc., in its capacity as
Collateral Agent shall, in addition, become vested with all rights,
privileges and protections afforded to the Agent pursuant to SECTION
11.1(d) and 11.3. Nothing contained herein or in the Exhibits hereto
shall require BMO Financial, Inc. to act as Collateral Agent under the
Security Documents unless it receives such indemnifications and other
assurances as it deems appropriate in its sole discretion and in the
event that BMO Financial, Inc. does not act as Collateral Agent, the
Required Lenders may designate another Collateral Agent."
(ee) The second paragraph of EXHIBIT B - BORROWING REQUEST to the Credit
Agreement is amended hereby by deleting the second and third sentences of
such paragraph in their entirety.
15
(ff) The Credit Agreement is hereby amended by inserting EXHIBIT G to
this Amendment as EXHIBIT G to the Credit Agreement following EXHIBIT F to
the Credit Agreement.
3. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lenders and the Agents to enter into this
Amendment, the Borrower hereby reaffirms, as of the date hereof, its
representations and warranties contained in ARTICLE VI of the Credit
Agreement (except to the extent any such representation and warranty relates
solely to an earlier date) and additionally represents and warrants as
follows:
3.1 ORGANIZATION. The Borrower and each of its corporate Subsidiaries
is a corporation validly organized and existing and in good standing under
the laws of the state, or country, of its incorporation, and is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction where the nature of its business requires such
qualification, except where failure to qualify would not have a material
adverse effect on the business or financial condition of the Borrower and its
Subsidiaries taken as a whole or the Borrower's ability to perform the Loan
Documents, as such may be amended hereby, or this Amendment. Each of the
Borrower's Subsidiaries which is organized as a partnership is validly
organized and existing and in good standing under the laws of the state of
its formation, and is duly qualified to do business and is in good standing
as a foreign partnership where the nature of its business requires such
qualification, except where failure to qualify would not have a material
adverse effect on the business or financial condition of the Borrower, or the
Borrower and its Subsidiaries taken as a whole or the Borrower's ability to
perform under the Loan Documents, as such may be amended hereby, or this
Amendment. The Borrower and each of its Subsidiaries has full power and
authority and holds all requisite governmental licenses, permits and other
approvals to enter into and perform its Obligations under the Credit
Agreement, as amended hereby, each other Loan Document and this Amendment and
to own and hold under lease its property and to conduct its business
substantially as currently conducted by it.
3.2 DUE AUTHORIZATION, NON-CONTRAVENTION. The execution, delivery and
performance by the Borrower of this Amendment and the consummation of the
transactions contemplated hereby and by the Credit Agreement as so amended,
are within the Borrower's corporate powers, have been duly authorized by all
necessary corporate action, and do not
(a) contravene the Borrower's Organic Documents;
(b) contravene any contractual restriction, law or
governmental regulation or court decree or order binding on or affecting
the Borrower or any Subsidiary; or
(c) result in, or require the creation or imposition of, any
Lien on any properties of the Borrower or its Subsidiaries except as
Liens will be imposed, created, or required upon execution and delivery
of the Security Documents pursuant to SECTION 7.11 of the Credit
Agreement.
16
3.3 GOVERNMENTAL APPROVAL. No authorization or approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery or performance by
the Borrower of this Amendment.
3.4 VALIDITY, ETC. This Amendment and the Credit Agreement as amended
hereby constitute the legal, valid and binding obligations of the Borrower,
enforceable in accordance with their respective terms except as such
enforceability is subject to the effect of (i) any applicable bankruptcy,
insolvency, reorganization or similar law relating to or affecting creditors'
rights generally and (ii) general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law),
including concepts of materiality, reasonableness, good faith and fair
dealing.
4. COVENANT.
The Borrower agrees that, at the request of the Agent, Borrower will
enter into a restated Credit Agreement with the Agent, the Co-Agent and the
Lenders in substantially the form of the Credit Agreement as amended by this
Amendment.
5. EFFECT OF AMENDMENT.
This Amendment shall be deemed to be an amendment to the Credit
Agreement, and the Credit Agreement, as amended hereby, is hereby ratified,
approved and confirmed in each and every respect. All references to the
Credit Agreement in any other document, instrument, agreement or writing
shall hereafter be deemed to refer to the Credit Agreement as amended hereby.
6. GOVERNING LAW, SEVERABILITY, ETC.
THIS AMENDMENT SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF ILLINOIS. Whenever possible each provision of
this Amendment shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Amendment shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Amendment.
THIS WRITTEN AMENDMENT AND THE CREDIT AGREEMENT AS AMENDED BY THIS
AMENDMENT REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE
CONTRADICTED BY PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
7. MISCELLANEOUS.
7.1 SUCCESSORS AND ASSIGNS. This Amendment shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and assigns.
17
7.2 COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
7.3 EFFECTIVENESS. This Amendment shall become effective when (i)
counterparts hereof executed on behalf of the Borrower and each Lender (or
notice thereof satisfactory to the Agent) shall have been received by the
Agent, (ii) Agent has received, for the account of each Lender, the amendment
fee described in that certain fee letter agreement dated of even date with
this Amendment, between the Borrower and the Agent, (iii) when the Agent and
the Co-Agent shall have received the fees described in those certain fee
letter agreements dated of even date with this Amendment, between the
Borrower and the Agent and the Co-Agent, respectively, and (iv) notice
thereof shall have been given by the Agent to the Borrower and each Lender.
18
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized as of the day
and year first written above.
POGO PRODUCING COMPANY
By: /s/ JOHN W. ELSENHHANS
----------------------
Name: John W. Elsenhans
Title: Vice President and Chief Financial Officer
S - 1
BANK OF MONTREAL, acting through its U.S. branches
and agencies, including initially its Chicago
Illinois branch, as Agent
By: /s/ ROBERT L. ROBERTS
---------------------
Name: Robert L. Roberts
Title: Director, U.S. Corporate Banking
S - 2
PARIBAS, formerly known as Banque Paribas,
as Co-Agent
By: /s/ BARTON P. SCHOUEST
----------------------
Name: Barton P. Schouest
Title: Managing Director
By: /s/ DOUGLAS R. LIFTMAN
----------------------
Name: Douglas R. Liftman
Title: Vice President
S - 3
BANK OF MONTREAL, as a Lender
By: /s/ ROBERT L. ROBERTS
---------------------
Name: Robert L. Roberts
Title: Director, U.S. Corporate Banking
S - 4
PARIBAS, formerly known as Banque Paribas,
as a Lender
By: /s/ BARTON P. SCHOUEST
----------------------
Name: Barton P. Schouest
Title: Managing Director
By:/s/ DOUGLAS R. LIFTMAN
----------------------
Name: Douglas R. Liftman
Title: Vice President
S - 5
BANKBOSTON, N.A., as a Lender
By: /s/ TERRENCE RONEN
------------------
Name: Terrence Ronen
Title: Director
S - 6
NATIONSBANK, N.A., as a Lender
By: /s/ PAUL A. SQUIRES
--------------------
Name: Paul A. Squires
Title: Senior Vice President
S - 7
THE CHASE MANHATTAN BANK, N.A., as a Lender
By: /s/ STEVEN WOOD
---------------
Name: Steven Wood
Title: Vice President
S - 8
SOCIETE GENERALE, as a Lender
By: /s/ PAUL E. CORNELL
-------------------
Name: Paul E. Cornell
Title: Managing Director
S - 9
TORONTO DOMINION (TEXAS), INC., as a Lender
By: /s/ CAROL BRANDT
----------------
Name: Carol Brandt
Title: Vice President
S - 10
THE SANWA BANK LIMITED, NEW YORK BRANCH, as a
Lender
By: /s/ MR. TAKURO OJIMA
--------------------
Name: Mr. Takuro Ojima
Title: Assistant Vice President
S - 11