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EXHIBIT 10.12
CREDIT AGREEMENT
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FORCENERGY INC,
as Borrower
and
ING (U.S.) CAPITAL LLC,
as Agent
and CERTAIN FINANCIAL INSTITUTIONS
as Lenders
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$250,000,000 Revolving Credit Facility
$70,000,000 Term Loans
February 15, 2000
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TABLE OF CONTENTS
Page
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CREDIT AGREEMENT..................................................................................................1
RECITALS:.........................................................................................................1
ARTICLE I - Definitions and References............................................................................1
Section 1.1. Defined Terms..........................................................................1
Section 1.2. Exhibits and Schedules; Additional Definitions........................................18
Section 1.3. Amendment of Defined Instruments......................................................18
Section 1.4. References and Titles.................................................................18
Section 1.5. Calculations and Determinations.......................................................19
ARTICLE II - The Loans...........................................................................................19
Section 2.1. Revolving Credit Loans................................................................19
Section 2.2. Term Loans............................................................................19
Section 2.3. Requests for Revolving Credit Loans...................................................20
Section 2.4. Continuations and Conversions of Existing Loans.......................................21
Section 2.5. Use of Proceeds.......................................................................22
Section 2.6. Interest Rates and Fees...............................................................23
Section 2.7. Optional Prepayments and Commitment Reductions........................................24
Section 2.8. Mandatory Prepayments.................................................................25
Section 2.9. Initial Borrowing Base................................................................26
Section 2.10. Subsequent Determinations of Borrowing Base and Conforming
Borrowing Base........................................................................26
Section 2.11. Borrowing Base Reductions.............................................................28
Section 2.12. Letters of Credit.....................................................................29
Section 2.13. Requesting Letters of Credit..........................................................29
Section 2.14. Reimbursement and Participations......................................................30
Section 2.15. Letter of Credit Fees.................................................................31
Section 2.16. No Duty to Inquire....................................................................31
Section 2.17. LC Collateral.........................................................................32
Section 2.18. Reorganization Plan...................................................................33
Section 2.19. Required LC...........................................................................34
ARTICLE III - Payments to Lenders................................................................................34
Section 3.1. General Procedures....................................................................34
Section 3.2. Capital Reimbursement.................................................................35
Section 3.3. Increased Cost of Eurodollar Loans or Letters of Credit...............................36
Section 3.4. Availability..........................................................................36
Section 3.5. Funding Losses........................................................................37
Section 3.6. Reimbursable Taxes....................................................................37
Section 3.7. Change of Applicable Lending Office...................................................38
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Section 3.8. Replacement of Lenders................................................................39
ARTICLE IV - Conditions Precedent to Lending.....................................................................39
Section 4.1. Documents to be Delivered.............................................................39
Section 4.2. Approval and Closing of Reorganization and Additional Conditions
Precedent to Effectiveness............................................................41
Section 4.3. Additional Conditions Precedent.......................................................41
ARTICLE V - Representations and Warranties.......................................................................42
Section 5.1. No Default............................................................................42
Section 5.2. Organization and Good Standing........................................................42
Section 5.3. Authorization.........................................................................43
Section 5.4. No Conflicts or Consents..............................................................43
Section 5.5. Enforceable Obligations...............................................................43
Section 5.6. Initial Financial Statements..........................................................43
Section 5.7. Other Obligations and Restrictions....................................................43
Section 5.8. Full Disclosure.......................................................................44
Section 5.9. Litigation............................................................................44
Section 5.10. Labor Disputes and Acts of God........................................................44
Section 5.11. ERISA Plans and Liabilities...........................................................44
Section 5.12. Environmental and Other Laws..........................................................45
Section 5.13. Names and Places of Business..........................................................47
Section 5.14. Borrower's Subsidiaries...............................................................47
Section 5.15. Title to Properties, Licenses.........................................................47
Section 5.16. Government Regulation.................................................................48
Section 5.17. Insider...............................................................................48
Section 5.18. Solvency..............................................................................48
Section 5.19. Officers, Directors and Shareholders..................................................48
Section 5.20. Immaterial Subsidiaries...............................................................48
ARTICLE VI - Affirmative Covenants of Borrower...................................................................49
Section 6.1. Payment and Performance...............................................................49
Section 6.2. Books, Financial Statements and Reports...............................................49
Section 6.3. Other Information and Inspections.....................................................52
Section 6.4. Notice of Material Events and Change of Address.......................................52
Section 6.5. Maintenance of Properties.............................................................53
Section 6.6. Maintenance of Existence and Qualifications...........................................53
Section 6.7. Payment of Trade Liabilities, Taxes, etc..............................................53
Section 6.8. Insurance.............................................................................54
Section 6.9. Performance on Borrower's Behalf......................................................54
Section 6.10. Interest..............................................................................54
Section 6.11. Compliance with Agreements and Law....................................................54
Section 6.12. Environmental Matters; Environmental Reviews..........................................55
Section 6.13. Evidence of Compliance................................................................55
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Section 6.14. Agreement to Deliver Security Documents...............................................56
Section 6.15. Perfection and Protection of Security Interests and Liens.............................56
Section 6.16. Bank Accounts; Offset.................................................................57
Section 6.17. Guaranties of Borrower's Subsidiaries.................................................57
Section 6.18. Production Proceeds...................................................................57
ARTICLE VII - Negative Covenants of Borrower.....................................................................58
Section 7.1. Indebtedness..........................................................................58
Section 7.2. Limitation on Liens...................................................................58
Section 7.3. Hedging Contracts.....................................................................58
Section 7.4. Limitation on Mergers, Issuances of Securities........................................59
Section 7.5. Limitation on Sales of Property.......................................................60
Section 7.6. Limitation on Dividends and Redemptions and Debt......................................60
Section 7.7. Limitation on Investments and New Businesses..........................................60
Section 7.8. Limitation on Credit Extensions.......................................................61
Section 7.9. Transactions with Affiliates..........................................................61
Section 7.10. Prohibited Contracts..................................................................61
Section 7.11. Current Ratio.........................................................................61
Section 7.12. Fixed Charge Coverage Ratio...........................................................61
Section 7.13. Interest Coverage.....................................................................61
Section 7.14. Tangible Net Worth....................................................................61
Section 7.15. Capital Expenditures..................................................................62
Section 7.16. Immaterial Subsidiaries...............................................................63
ARTICLE VIII - Events of Default and Remedies....................................................................63
Section 8.1. Events of Default.....................................................................63
Section 8.2. Remedies..............................................................................65
ARTICLE IX - Agent...............................................................................................66
Section 9.1. Appointment and Authority.............................................................66
Section 9.2. Exculpation, Agent's Reliance, Etc....................................................66
Section 9.3. Credit Decisions......................................................................67
Section 9.4. Indemnification.......................................................................67
Section 9.5. Rights as Lender......................................................................67
Section 9.6. Sharing of Set-Offs and Other Payments................................................68
Section 9.7. Investments...........................................................................68
Section 9.8. Benefit of Article IX.................................................................68
Section 9.9. Resignation...........................................................................69
ARTICLE X - Miscellaneous........................................................................................69
Section 10.1. Waivers and Amendments; Acknowledgments...............................................69
Section 10.2. Survival of Agreements; Cumulative Nature.............................................71
Section 10.3. Notices...............................................................................71
Section 10.4. Payment of Expenses; Indemnity........................................................72
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Section 10.5. Joint and Several Liability; Parties in Interest; Assignments.........................73
Section 10.6. Confidentiality.......................................................................75
Section 10.7. Governing Law; Submission to Process..................................................75
Section 10.8. Limitation on Interest................................................................76
Section 10.9. Termination; Limited Survival.........................................................76
Section 10.10. Severability..........................................................................77
Section 10.11. Counterparts; Fax.....................................................................77
Section 10.12. Waiver of Jury Trial, Punitive Damages, etc...........................................77
Schedules and Exhibits:
Schedule 1 - Lender Schedule
Schedule 2 - Disclosure Schedule
Schedule 3 - Security Schedule
Schedule 4 - Insurance Schedule
Schedule 5 - Reorganization Documents
Schedule 6 - Approved Debt
Schedule 7 - Post Closing Title Opinions
Exhibit A-1 - Revolving Credit Promissory Note
Exhibit A-2 - Term Note
Exhibit B - Borrowing Notice
Exhibit C - Continuation/Conversion Notice
Exhibit D - Certificate Accompanying Financial Statements
Exhibit E - Opinion of Counsel for Restricted Persons
Exhibit F - Assignment and Assumption Agreement
Exhibit G - Environmental Compliance Certificate
Exhibit H - Required XX
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT is made as of February 15, 2000, by and among
Forcenergy Inc, a Delaware corporation (herein called "Borrower"), ING (U.S.)
Capital LLC, individually and as agent (herein called "Agent"), and the Lenders
referred to below. In consideration of the mutual covenants and agreements
contained herein the parties hereto agree as follows:
RECITALS:
WHEREAS, on March 21, 1999 , Borrower filed a voluntary petition for
relief commencing a reorganization case under Chapter 11 of the United States
Bankruptcy Code with the United States Bankruptcy Court for the Eastern District
of Louisiana (the "Bankruptcy Court") under Case No. 99-11391"A" and Forcenergy
Resources Inc., a Texas corporation, as debtor and debtor-in-possession ("FRI"),
filed a voluntary petition for relief commencing a reorganization case under
Chapter 11 of the Bankruptcy Code with the Bankruptcy Court under Case No.
99-11393 "A"; such cases are now being jointly administered under Case No.
99-11391"A";
WHEREAS, Borrower and FRI have continued to operate their businesses
and manage their respective properties as debtors and debtors-in-possession
under Sections 1107 and 1108 of the Bankruptcy Code;
WHEREAS, by orders dated January 19, 2000 and February 3, 2000,
respectively, (collectively, the "Confirmation Order"), the First Amended Joint
Plan of Reorganization of Borrower and FRI dated October 26, 1999, as modified
(the "Reorganization Plan") was confirmed, and Borrower has been authorized to
enter into this Agreement as the New Senior Credit Facility referred to in the
Reorganization Plan;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, the parties agree as follows:
ARTICLE I - Definitions and References
Section 1.1. Defined Terms. As used in this Agreement, each of the
following terms has the meaning given to such term in this Section 1.1 or in the
sections and subsections referred to below:
"Adjusted Base Rate" means the sum of the Base Rate plus the Applicable
Base Rate Margin, provided that the Adjusted Base Rate charged by any Person
shall never exceed the Highest Lawful Rate.
"Adjusted Eurodollar Rate" means, for any Eurodollar Loan for any
Interest Period therefor, the per annum rate equal to the sum of (a) the
Applicable Eurodollar Margin plus (b) the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) determined
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by Agent to be equal to the quotient obtained by dividing (i) the Eurodollar
Rate for such Eurodollar Loan for such Interest Period by (ii) 1 minus the
Reserve Requirement for such Eurodollar Loan for such Interest Period. The
Adjusted Eurodollar Rate for any Eurodollar Loan shall change whenever the
Applicable Eurodollar Margin or the Reserve Requirement changes. No Adjusted
Eurodollar Rate charged by any Person shall ever exceed the Highest Lawful Rate.
"Affiliate" means, as to any Person, each other Person that directly or
indirectly (through one or more intermediaries or otherwise) controls, is
controlled by, or is under common control with, such Person. A Person shall be
deemed to be "controlled by" any other Person if such other Person possesses,
directly or indirectly, power:
(a) to vote 20% or more of the securities (on a fully diluted basis)
having ordinary voting power for the election of directors or managing general
partners; or
(b) to direct or cause the direction of the management and policies of
such Person whether by contract or otherwise.
"Agent" means ING (U.S.) Capital LLC, as Agent hereunder, and its
successors in such capacity.
"Agreement" means this Credit Agreement.
"Applicable Base Rate Margin" means, on each day, (i) one percent
(1.0%) per annum in respect of Revolving Credit Loans and (ii) two and one-half
percent (2.5%) per annum in respect of Term Loans.
"Applicable Eurodollar Margin" means, on each day, (i) two percent
(2.0%) per annum in respect of Revolving Credit Loans and (ii) three and
one-half percent (3.5%) per annum in respect of Term Loans.
"Applicable Lending Office" means, with respect to each Lender, such
Lender's Domestic Lending Office in the case of Base Rate Loans and such
Lender's Eurodollar Lending Office in the case of Eurodollar Loans.
"Approved Debt" means the Indebtedness listed on Schedule 6.
"Base Rate" means the higher of (a) the Reference Rate and (b) the
Federal Funds Rate plus one-half percent (0.5%) per annum. For purposes of this
definition, "Reference Rate" means the arithmetic average of the rates of
interest publicly announced by The Chase Manhattan Bank, Citibank, N.A. and
Xxxxxx Guaranty Trust Company of New York (or their respective successors) as
their respective prime commercial lending rates (or, as to any such bank that
does not announce such a rate, such bank's 'base' or other rate determined by
Agent to be the equivalent rate announced by such bank), except that, if any
such bank shall, for any period, cease to announce publicly its prime commercial
lending (or equivalent) rate, Agent
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shall, during such period, determine the "Reference Rate" based upon the prime
commercial lending (or equivalent) rates announced publicly by the other such
banks.
"Base Rate Loan" means a Loan which does not bear interest at the
Eurodollar Rate.
"Borrower" means Forcenergy Inc, a Delaware corporation.
"Borrowing" means a borrowing of new Revolving Credit Loans of a single
Type pursuant to Section 2.3 or a Continuation or Conversion of existing Loans
into a single Type (and, in the case of Eurodollar Loans, with the same Interest
Period) pursuant to Section 2.4.
"Borrowing Base" means, at the particular time in question, either the
amount as provided for in Section 2.9 or the amount determined by Lenders in
accordance with the provisions of Section 2.10 as reduced from time to time
pursuant to the other provisions of this Agreement; provided, however, that the
Borrowing Base shall never exceed the Revolving Credit Commitment.
"Borrowing Base Deficiency" has the meaning given to such term in
Section 2.11.
"Borrowing Notice" means a written notice, or telephonic request, or a
written confirmation made by Borrower which meets the requirements of Section
2.3.
"Business Day" means a day, other than a Saturday or Sunday, on which
commercial banks are open for business with the public in New York, New York.
Any Business Day in any way relating to Eurodollar Loans (such as the day on
which an Interest Period begins or ends) must also be a day on which, in the
judgment of Agent, significant transactions in dollars are carried out in the
interbank eurocurrency market.
"Cash Equivalents" means Investments in:
(a) marketable obligations, maturing within twelve months after
acquisition thereof, issued or unconditionally guaranteed by the United States
of America or an instrumentality or agency thereof and entitled to the full
faith and credit of the United States of America;
(b) demand deposits, and time deposits (including certificates of
deposit) maturing within twelve months from the date of deposit thereof, with
any office of any Lender or with a domestic office of any national or state bank
or trust company which is organized under the Laws of the United States of
America or any state therein, which has capital, surplus and undivided profits
of at least $500,000,000, and whose long term certificates of deposit are rated
at least Aa2 by Xxxxx'x or AA by S&P;
(c) open market commercial paper, maturing within 270 days after
acquisition thereof, which are rated at least P-1 by Xxxxx'x or A-1 by S&P; and
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(d) money market or other mutual funds substantially all of whose
assets comprise securities of the types described in subsections (a) through (c)
above.
"Change of Control" means the occurrence of any of the following
events: (a) any Person or two or more Persons acting as a group (other than
Xxxxxxx Investment Company, Oaktree Capital Management, LLC, Xxxxxx Brothers or
Xxxxx Capital or any partnership or other fund entity for which any of them has
exclusive authority over investment decisions whether as manager, general
partner or otherwise (the "Initial Major Shareholders")) shall acquire
beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Securities Act of 1934, as amended, and including
holding proxies to vote for the election of directors other than proxies held by
Borrower's management or their designees to be voted in favor of Persons
nominated by Borrower's Board of Directors) of 35% or more of the outstanding
voting securities of Borrower, measured by voting power (including both common
stock and any preferred stock or other equity securities entitling the holders
thereof to vote with the holders of common stock in elections for directors of
Borrower) (b) one-third or more of the directors of Borrower shall consist of
Persons not nominated by Borrower's Board of Directors (not including as Board
nominees any directors which the Board is obligated to nominate pursuant to
shareholders agreements, voting trust arrangements or similar arrangements), or
(c) a majority of the directors of Borrower shall consist of Persons not
nominated by one or more of the Initial Major Shareholders.
"Collateral" means all property of any kind which is subject to a Lien
in favor of Lenders (or in favor of Agent for the benefit of Lenders) or which,
under the terms of any Security Document, is purported to be subject to such a
Lien.
"Commitment Agreement" has the meaning given such term in the
Reorganization Plan.
"Conforming Borrowing Base" has the meaning given to such term in
Section 2.10.
"Consolidated" refers to the consolidation of any Person, in accordance
with GAAP, with its properly consolidated subsidiaries. References herein to a
Person's Consolidated financial statements, financial position, financial
condition, liabilities, etc. refer to the consolidated financial statements,
financial position, financial condition, net income, liabilities, etc. of such
Person and its properly consolidated subsidiaries.
"Consolidated Cash Flow" means for any Fiscal Quarter, the sum of
Consolidated Net Income of Borrower for such Fiscal Quarter calculated in
accordance with GAAP plus depreciation, depletion, amortization and interest
expense deducted in determining such Consolidated Net Income.
"Consolidated Fixed Charges" means for any Fiscal Quarter the sum of
(i) lease payments pursuant to leases which are capitalized in accordance with
GAAP, plus (ii) the aggregate principal payments made with respect to Funded
Debt of Borrower and its Subsidiaries (other than voluntary prepayments) or due
and payable during such Fiscal Quarter,
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plus (iii) Interest Expense of Borrower and its Subsidiaries during such Fiscal
Quarter.
"Consolidated Net Income" means net profit (or loss) after taxes of the
Borrower and its Subsidiaries, on a consolidated basis, determined in accordance
with GAAP.
"Consolidated Tangible Net Worth" means, as of any date of
determination, the remainder of (i) all Consolidated assets of Borrower, other
than intangible assets (including, without limitation, as intangible assets such
assets as patents, copyrights, licenses, franchises, goodwill, trade names,
trade secrets, and leases other than oil, gas or mineral leases or leases
required to be capitalized under GAAP), minus (ii) all Indebtedness of Borrower
and its Subsidiaries outstanding on such date, after eliminating all offsetting
debits and credits between Borrower and its Subsidiaries and all other items
required to be eliminated in the course of preparation of Consolidated financial
statements of Borrower in accordance with GAAP.
"Continuation" shall refer to the continuation pursuant to Section 2.4
hereof of a Eurodollar Loan as a Eurodollar Loan from one Interest Period to the
next Interest Period.
"Continuation/Conversion Notice" means a written request made by
Borrower which meets the requirements of Section 2.4, substantially in the form
attached hereto as Exhibit C.
"Conversion" shall refer to a conversion pursuant to Section 2.4 or
Article III of one Type of Loan into another Type of Loan.
"Current Assets" means the sum of (i) current assets of Borrower and
its Subsidiaries on a Consolidated basis determined in accordance with GAAP plus
(ii) the excess, if any, of the Borrowing Base over the Facility Usage.
"Current Liabilities" means the current liabilities of Borrower and its
Subsidiaries on a Consolidated basis determined in accordance with GAAP.
"Default" means any Event of Default and any default, event or
condition which would, with the giving of any requisite notices and the passage
of any requisite periods of time, constitute an Event of Default.
"Default Rate" means, at the time in question (a) with respect to any
Base Rate Loan, the rate two percent (2%) above the Adjusted Base Rate then in
effect and (b) with respect to any Eurodollar Loan, the rate two percent (2%)
above the Adjusted Eurodollar Rate then in effect for such Loan. No Default Rate
charged by any Person shall ever exceed the Highest Lawful Rate.
"Determination Date" has the meaning given to such term in Section
2.10.
"Disclosure Report" means a notice given by Borrower under Section 6.4.
"Disclosure Schedule" means Schedule 2 hereto.
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"Domestic Lending Office" means, with respect to any Lender, the office
of such Lender specified as its "Domestic Lending Office" on the Lender Schedule
hereto, or such other office as such Lender may from time to time specify to
Borrower and Agent; with respect to LC Issuer, the office, branch, or agency
through which it issues Letters of Credit; and, with respect to Agent, the
office, branch, or agency through which it administers this Agreement.
"Eligible Transferee" means a Person which either (a) is a Lender or an
Affiliate of a Lender, or (b) is consented to as an Eligible Transferee by Agent
and, so long as no Default or Event of Default is continuing, by Borrower, which
consents in each case will not be unreasonably withheld.
"Effective Date" means the "effective date" under the Reorganization
Plan.
"Engineering Report" means the Initial Engineering Report and each
engineering report delivered pursuant to Section 6.2.
"Environmental Laws" means any and all Laws relating to the environment
or to emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes
into the environment including ambient air, surface water, ground water, or
land, or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations promulgated
with respect thereto.
"ERISA Affiliate" means Borrower and all members of a controlled group
of corporations and all trades or businesses (whether or not incorporated) under
common control that, together with Borrower, are treated as a single employer
under Section 414 of the Internal Revenue Code.
"ERISA Plan" means any employee benefit plan as defined in Section 3(3)
of ERISA with respect to which any Restricted Person or ERISA Affiliate is, or
within the immediately preceding six years was, an "employer" as defined in
Section 3(5) of ERISA.
"Eurodollar Lending Office" means, with respect to any Lender, the
office of such Lender specified as its "Eurodollar Lending Office" on the Lender
Schedule hereto (or, if no such office is specified, its Domestic Lending
Office), or such other office of such Lender as such Lender may from time to
time specify to Borrower and Agent.
"Eurodollar Loan" means a Loan that bears interest at the Adjusted
Eurodollar Rate.
"Eurodollar Rate" means, with respect to each particular Eurodollar
Loan and the related Interest Period, the rate per annum (rounded upwards, if
necessary, to the nearest 1/16 of 1%)
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reported, on the date two Business Days prior to the first day of such Interest
Period, on Telerate Access Service Page 3750 (British Bankers Association
Settlement Rate) as the London Interbank Offered Rate for dollar deposits having
a term comparable to such Interest Period and in an amount of $1,000,000 or more
(or, if such Page shall cease to be publicly available or if the information
contained on such Page, in Agent's sole judgment, shall cease to accurately
reflect such London Interbank Offered Rate, as reported by any publicly
available source of similar market data selected by Agent that, in Agent's sole
judgment, accurately reflects such London Interbank Offered Rate).
"Evaluation Date" means each of the following which shall be limited to
three (3) dates in any 12-month period:
(a) March 1 and September 1 of each year, beginning March 1, 2001; and
(b) Each other date which Majority Lenders or Agent at the instruction
of Majority Lenders specify, by notice to Borrower as a date on which the
information is to be delivered to Lenders for purposes of redetermining the
Borrowing Base; provided that each such date must be the first or last date of a
calendar month not sooner than 60 days after such notice and that no such
Evaluation Date under this clause (b) may be prior to March 1, 2001.
"Event of Default" has the meaning given to such term in Section 8.1,
provided that the requirement, if any, for the giving of notice, the lapse of
time, or both, has been satisfied.
"Existing Agreement" means that certain Fifth Restatement of Credit
Agreement dated as of April 13, 1998 among Borrower, Agent and Lenders, together
with the promissory notes made by Borrower thereunder.
"Existing Obligations" means the obligations of Borrower under the
Existing Agreement.
"Facility Usage" means, at the time in question, the aggregate amount
of outstanding Revolving Credit Loans and existing LC Obligations at such time.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100th of one percent) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (a) if the day for which such rate is to
be determined is not a Business Day, the Federal Funds Rate for such day shall
be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (b) if such rate is not so
published for any day, the Federal Funds Rate for such day shall be the average
rate quoted to Agent on such day on such transactions as determined by Agent.
"Final Disclosure Statement" means the First Amended Joint Disclosure
Statement with
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respect to the Reorganization Plan dated October 26, 1999, as modified, as
approved by the Bankruptcy Court.
"Fiscal Quarter" means a three-month period ending on March 31, June
30, September 30 or December 31 of any year.
"Fiscal Year" means a twelve-month period ending on December 31 of any
year.
"Funded Debt" means, as to any Person, at any date, without
duplication, (a) all Liabilities of such Person for borrowed money, (b) all
Liabilities of such Person evidenced by bonds, debentures, notes or similar
instruments, (c) all Liabilities of such Person to pay the deferred purchase
price of property or services, except trade accounts payable arising in the
ordinary course of business and payable on ordinary trade terms (d) all
Liabilities of such Person under leases capitalized in accordance with GAAP, and
(e) Liabilities owing under direct or indirect guaranties of Liabilities of any
other Person of the type listed in any of the foregoing clauses (a) through (d).
"GAAP" means those generally accepted accounting principles and
practices which are recognized as such by the Financial Accounting Standards
Board (or any generally recognized successor) and which, in the case of Borrower
and its Consolidated Subsidiaries, are applied for all periods after the date
hereof in a manner consistent with the manner in which such principles and
practices were applied to the audited Initial Financial Statements. If any
change in any accounting principle or practice is required by the Financial
Accounting Standards Board (or any such successor) in order for such principle
or practice to continue as a generally accepted accounting principle or
practice, all reports and financial statements required hereunder with respect
to Borrower or with respect to Borrower and its Consolidated Subsidiaries may be
prepared in accordance with such change. All calculations and determinations to
be made hereunder which are affected in any material respect by such change may
be made in accordance with such change only after notice of such change is given
to each Lender and Majority Lenders agree to such change insofar as it affects
such calculations and determinations.
"Guarantor" means each Subsidiary of Borrower which now or hereafter
executes and delivers a guaranty to Agent pursuant to Section 6.17.
"Hazardous Materials" means any substances regulated under any
Environmental Law, whether as pollutants, contaminants, or chemicals, or as
industrial, toxic or hazardous substances or wastes, or otherwise.
"Hedging Contract" means (a) any agreement providing for options,
swaps, floors, caps, collars, forward sales or forward purchases involving
interest rates, commodities or commodity prices, equities, currencies, bonds, or
indexes based on any of the foregoing, (b) any option, futures or forward
contract traded on an exchange, and (c) any other derivative agreement or other
similar agreement or arrangement.
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"Highest Lawful Rate" means, with respect to each Lender Party to whom
Obligations are owed, the maximum nonusurious rate of interest that such Lender
Party is permitted under applicable Law to contract for, take, charge, or
receive with respect to such Obligations. All determinations herein of the
Highest Lawful Rate, or of any interest rate determined by reference to the
Highest Lawful Rate, shall be made separately for each Lender Party as
appropriate to assure that the Loan Documents are not construed to obligate any
Person to pay interest to any Lender Party at a rate in excess of the Highest
Lawful Rate applicable to such Lender Party.
"Immaterial Subsidiary" means each of the following Subsidiaries of
Borrower: Forcenergy Ltd, Forcenergy Drilling Inc., Forcenergy GOM Inc.,
Forecenergy Invest AB, FAB Holding LLC, Mint Holding Co., Edisto Energy Inc.,
and Edisto Canada Inc.
"Indebtedness" of any Person means Liabilities in any of the following
categories:
(a) Liabilities for borrowed money,
(b) Liabilities constituting an obligation to pay the deferred purchase
price of property or services,
(c) Liabilities evidenced by a bond (other than bonds securing
contingent plugging and abandonment obligations), debenture, note or similar
instrument,
(d) Liabilities which (i) would under GAAP be shown on such Person's
balance sheet as a liability, and (ii) are payable more than one year from the
date of creation thereof (other than reserves for taxes and reserves for
contingent obligations),
(e) Liabilities arising under Hedging Contracts,
(f) Liabilities constituting principal under leases capitalized in
accordance with GAAP,
(g) Liabilities arising under conditional sales or other title
retention agreements,
(h) Liabilities owing under direct or indirect guaranties of
Liabilities of any other Person or otherwise constituting obligations to
purchase or acquire or to otherwise protect or insure a creditor against loss in
respect of Liabilities of any other Person (such as obligations under working
capital maintenance agreements, agreements to keep-well, or agreements to
purchase Liabilities, assets, goods, securities or services), but excluding
endorsements in the ordinary course of business of negotiable instruments in the
course of collection,
(i) Liabilities (for example, repurchase agreements, mandatorily
redeemable preferred stock and sale/leaseback agreements) consisting of an
obligation to purchase or redeem securities or other property, if such
Liabilities arises out of or in connection with the sale or issuance of the same
or similar securities or property,
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(j) Liabilities with respect to letters of credit or applications or
reimbursement agreements therefor,
(k) Liabilities with respect to payments received in consideration of
oil, gas, or other minerals yet to be acquired or produced at the time of
payment (including obligations under "take-or-pay" contracts to deliver gas in
return for payments already received and the undischarged balance of any
production payment created by such Person or for the creation of which such
Person directly or indirectly received payment), or
(l) Liabilities with respect to other obligations to deliver goods or
services in consideration of advance payments therefor;
provided, however, that the "Indebtedness" of any Person shall not include
Liabilities that were incurred by such Person on ordinary trade terms to
vendors, suppliers, or other Persons providing goods and services for use by
such Person in the ordinary course of its business, unless and until such
Liabilities are outstanding more than 120 days after the incurrence thereof.
"Independent Petroleum Engineers" means Netherland, Xxxxxx &
Associates, Inc. and Collarini Incorporated, or other independent petroleum
engineers chosen by Borrower and acceptable to Majority Lenders.
"Initial Engineering Report" means the engineering reports concerning
oil and gas properties of Restricted Persons dated September 1, 1999, prepared
by the Borrower and audited by the Independent Petroleum Engineers as of
September 1, 1999.
"Initial Financial Statements" means the proforma Consolidated
financial statements of Borrower as of the Effective Date (incorporating actual
results of operations, balance sheet and statement of cash flows as reflected on
the internal financial statements of Debtor for the eleven (11) month period
ending November 30, 1999) reflecting the estimated effect of the Reorganization
and the effect of fresh start accounting rules as of February 1, 2000, i.e. the
updated Reorganization Model, as such financial statements were presented and
approved by Lenders prior to the date hereof, with such adjustments made after
the Effective Date to reflect actual condition and results of operation on such
date to the extent such adjustments are not material.
"Insurance Schedule" means Schedule 3 attached hereto.
"Interest Expense" means for any Fiscal Quarter the sum of (i) interest
payable on the Obligations for such Fiscal Quarter, (ii) plus interest payable
(excluding any accrued but unpaid interest) on any other Funded Debt for such
Fiscal Quarter, (iii) plus amounts payable for such Fiscal Quarter or minus
amounts receivable for such Fiscal Quarter, in either case as a periodic payment
under Hedging Contracts relating to interest rates.
"Interest Payment Date" means (a) with respect to each Base Rate Loan,
the last Business
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Day of each calendar month and (b) with respect to each Eurodollar Loan the last
Business Day of each calendar month and the last day of the Interest Period that
is applicable thereto.
"Interest Period" means, with respect to each particular Eurodollar
Loan in a Borrowing, the period specified in the Borrowing Notice or
Continuation/Conversion Notice applicable thereto, beginning on and including
the date specified in such Borrowing Notice or Continuation/Conversion Notice
(which must be a Business Day), and ending one, two or three months thereafter,
as Borrower may elect in such notice; provided that: (a) any Interest Period
which would otherwise end on a day which is not a Business Day shall be extended
to the next succeeding Business Day unless such Business Day falls in another
calendar month, in which case such Interest Period shall end on the next
preceding Business Day; and (b) any Interest Period which begins on the last
Business Day in a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Business Day in a calendar month; and (c) notwithstanding
the foregoing, any Interest Period which would otherwise end after the Maturity
Date shall end on the last day of the Revolving Credit Commitment Period (or, if
the Maturity Date is not a Business Day, on the next preceding Business Day).
"Internal Revenue Code" means the United States Internal Revenue Code
of 1986, as amended from time to time and any successor statute or statutes.
"Investment" means any investment made directly or indirectly, in any
Person, whether by acquisition of shares of capital stock, indebtedness or other
obligations or securities or by loan, advance, capital contribution or otherwise
and whether made in cash, by the transfer of property, or by any other means.
"Law" means any statute, law, regulation, ordinance, rule, treaty,
judgment, order, decree, permit, concession, franchise, license, agreement or
other governmental restriction of the United States or any state or political
subdivision thereof or of any foreign country or any department, province or
other political subdivision thereof.
"LC Application" means any application for a Letter of Credit hereafter
made by Borrower to LC Issuer.
"LC Collateral" has the meaning given to such term in Section 2.17(a).
"LC Issuer" means ING (U.S.) Capital LLC in its capacity as the issuer
of Letters of Credit hereunder, and its successors in such capacity. Agent may,
with the consent of Borrower and the Lender in question, appoint any Lender
hereunder as an LC Issuer in place of or in addition to ING (U.S.) Capital LLC.
"LC Obligations" means, at the time in question, the sum of all Matured
LC Obligations plus the maximum amounts which LC Issuer might then or thereafter
be called upon to advance under all Letters of Credit then outstanding.
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"Lender Parties" means Agent, LC Issuer, and all Lenders.
"Lender Schedule" means Schedule 1 attached hereto.
"Lenders" means each signatory hereto (other than Borrower and any
Restricted Person that is a party hereto), including LC Issuer, ING (U.S.)
Capital LLC in its capacity as a Lender hereunder rather than as Agent or LC
Issuer, and the successors of each such party as holder of a Note.
"Lenders' Independent Engineer" means a firm of independent petroleum
engineers chosen by Majority Lenders.
"Letter of Credit" means any letter of credit issued by LC Issuer
hereunder at the application of Borrower.
"Liabilities" means, as to any Person, all indebtedness, liabilities
and obligations of such Person, whether matured or unmatured, liquidated or
unliquidated, primary or secondary, direct or indirect, absolute, fixed or
contingent, and whether or not required to be considered pursuant to GAAP.
"Lien" means, with respect to any property or assets, any right or
interest therein of a creditor to secure Liabilities owed to it or any other
arrangement with such creditor which provides for the payment of such
Liabilities out of such property or assets or which allows such creditor to have
such Liabilities satisfied out of such property or assets prior to the general
creditors of any owner thereof, including any lien, mortgage, security interest,
pledge, deposit, production payment, rights of a vendor under any title
retention or conditional sale agreement or lease substantially equivalent
thereto, tax lien, mechanic's or materialman's lien, or any other charge or
encumbrance for security purposes, whether arising by Law or agreement or
otherwise, but excluding any right of offset which arises without agreement in
the ordinary course of business. "Lien" also means any filed financing statement
(other than protective filings for operating leases), any registration of a
pledge (such as with an issuer of uncertificated securities), or any other
arrangement or action which would serve to perfect a Lien described in the
preceding sentence, regardless of whether such financing statement is filed,
such registration is made, or such arrangement or action is undertaken before or
after such Lien exists.
"Loan Documents" means this Agreement, the Notes, the Security
Documents, the Letters of Credit, the LC Applications, and all other agreements,
certificates, documents, instruments and writings at any time delivered in
connection herewith or therewith (exclusive of term sheets and commitment
letters).
"Loans" means the Revolving Credit Loans and the Term Loans,
collectively.
"Majority Lenders" means Lenders whose aggregate Percentage Shares
equal or exceed sixty-six and two-thirds percent (66 2/3%).
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"Material Adverse Change" means a material and adverse change, from the
state of affairs presented in the Initial Financial Statements or as represented
or warranted in any Loan Document, to (a) Borrower's Consolidated financial
condition, (b) Borrower's Consolidated operations, properties or prospects,
considered as a whole, (c) Borrower's ability to timely pay the Obligations, or
(d) the enforceability of the material terms of any Loan Documents.
"Matured LC Obligations" means all amounts paid by LC Issuer on drafts
or demands for payment drawn or made under or purported to be under any Letter
of Credit and all other amounts due and owing to LC Issuer under any LC
Application for any Letter of Credit, to the extent the same have not been
repaid to LC Issuer (with the proceeds of Loans or otherwise).
"Maturity Date" means August 15, 2003.
"Maximum Credit Amount" means the amount of $320,000,000.
"Maximum Term Loan Amount" means $70,000,000. Each Term Lender's
Maximum Term Loan Amount shall be the amount as set forth opposite such Term
Lender's name on the Lender Schedule.
"Moody's" means Xxxxx'x Investor Service, Inc., or its successor.
"Notes" means the Revolving Credit Notes and the Term Notes,
collectively.
"Obligations" means all Liabilities from time to time owing by any
Restricted Person to any Lender Party under or pursuant to any of the Loan
Documents, including all LC Obligations. "Obligation" means any part of the
Obligations.
"Percentage Share" means, with respect to any Lender, the percentage
obtained by dividing (i) the sum of the unpaid principal balance of such
Lender's Term Loans at the time in question plus such Lender's Revolving Credit
Commitment, by (ii) the sum of the aggregate unpaid principal balance of all
Term Loans at such time plus the total Revolving Credit Commitment.
"Permitted Investments" means (a) Cash Equivalents, (b) Investments
existing on the date of this Agreement by a Restricted Person in a wholly owned
Subsidiary of such Restricted Person as reflected on the Disclosure Schedule,
(c) Investments in the form of loans made by Borrower or any Restricted Person
to Borrower or to any of its direct or indirect wholly owned domestic
Subsidiaries which is a Guarantor, (d) any Investment in the form of loans made
by a Restricted Person to any direct or indirect wholly owned Subsidiary of
Borrower that is a Guarantor but that is not a domestic Subsidiary not to exceed
$10,000,000 in the aggregate during any Fiscal Year and (e) Hedging Contracts
permitted under Section 7.3.
"Permitted Liens" means
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(a) statutory Liens for taxes, assessments or other
governmental charges or levies which are not yet delinquent or which
are being contested in good faith in compliance with Section 6.7;
(b) landlords', operators', carriers', warehousemen's,
repairmen's, mechanics', materialmen's, or other like Liens which do
not secure Indebtedness, in each case only to the extent arising in the
ordinary course of business and only to the extent securing obligations
which are not delinquent or which are being contested in good faith in
compliance with Section 6.7;
(c) zoning restrictions, easements, rights-of-way,
restrictions on use, minor defects and irregularities in title to any
property, so long as matters neither secure Indebtedness nor materially
impair the value of such property or the use of such property for the
purposes for which such property is held;
(d) deposits of cash or securities to secure the performance
of Hedging Contracts (to the extent permitted by Section 7.3), bids,
trade contracts, leases, statutory obligations and other obligations of
a like nature (excluding appeal bonds and deposits for borrowed money)
incurred in the ordinary course of business;
(e) Liens created pursuant to the Existing Agreement;
(f) Liens set forth in the Disclosure Schedule;
(g) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security
legislation and deposits securing liability to insurance carriers under
insurance or self-insurance arrangements;
(h) Liens which arise pursuant to the specific terms of any
license, joint operating agreement, unitization agreement or other
similar agreement evidencing the interest of the relevant Person in any
oil and gas producing property, provided that such Lien is not securing
any Indebtedness other than Indebtedness incurred in connection with
the specific terms of any such license, joint operating agreement,
unitization agreement or other similar agreement; and
(i) Liens which arise pursuant to leases of equipment entered
into in the ordinary course of business, provided that such Lien is not
securing any Indebtedness other than Indebtedness incurred in
connection with the specific terms of such equipment lease.
"Permitted Stock Acquisitions" means the acquisition by Borrower of
equity of a Person, provided that: (i) such acquisition constitutes 100% of the
outstanding equity of such Person (including the purchase or the termination of
any outstanding warrants or similar rights with respect to the equity of such
Person), (ii) such Person's business, operation and type of assets are
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the same as that of the Borrower, (iii) immediately prior to such acquisition,
each Restricted Person is, and immediately after giving effect to such
acquisition, each Restricted Person, including such Person being acquired, will
be, in compliance with each of the covenants under the Loan Documents, and each
of the representations and warranties are and will be true as if made
immediately prior to and immediately following consummation of such acquisition,
(iv) the acquisition shall have been approved by a resolution of the Board of
Directors with the finding that the acquisition is on fair market terms to the
Borrower and will not result in a Material Adverse Effect on Borrower nor
interfere with Borrower's proposed business plan as theretofore submitted to the
Lenders, (v) contemporaneously with the consummation of such acquisition, such
Person shall have the power to comply with, and shall have provided a guarantee
and Security Documents on its properties in the manner contemplated by, the
provisions of Section 6.14, 6.15 and 6.17 hereof, (vi) no Default or Event of
Default shall exist immediately prior to and after giving effect to such
acquisition and (vii) the Borrower shall have submitted a certificate of its
president and chief financial officer to the effect that each of the foregoing
conditions has been satisfied contemporaneously with the consummation of such
acquisition.
"Permitted Subordinated Indebtedness" means Indebtedness of Borrower,
provided that: (i) such Indebtedness is subordinated to the Obligations on terms
reasonably satisfactory to Agent, (ii) such Indebtedness matures no sooner than
one year following the Maturity Date as in effect at the time of incurrence of
such subordinated Indebtedness, (iii) such Indebtedness is not secured by a Lien
on any revenues, assets or property of Borrower or any other Restricted Person,
(iv) such Indebtedness, in the aggregate with all other such subordinated
Indebtedness incurred from and after the date of this Agreement, does not exceed
$150,000,000, (v) at the time of incurrence of such Indebtedness, no Default or
Event of Default shall have occurred nor would result after giving effect the
incurrence of such subordinated Indebtedness, (vi) the incurrence of such
Indebtedness has been approved by resolutions of the Board of Directors of
Borrower, provided that such resolutions shall have a finding that the interest
rate and terms are no less than favorable than the rates and terms generally
available in the market for placement of high yield subordinated notes with
institutional investors, (vii) after giving effect to the incurrence of such
Indebtedness, for each of the four Fiscal Quarters which has most recently ended
prior to the date on which such subordinated Indebtedness is incurred, the ratio
of Borrower's Consolidated Cash Flow to Borrower's Consolidated Fixed Charges
would not have been less than 1.5 to 1, and the ratio of Borrower's Consolidated
Cash Flow to Borrower's Consolidated Interest Expense would not have been less
than 2.5 to 1, in each case computed on a pro forma basis by adjusting
"Consolidated Interest Expense" to reflect the interest expense which would have
been incurred if, on the first day of the first of such four Fiscal Quarters,
such subordinated Indebtedness had been incurred and 100% of the net proceeds
thereof had been applied on such date to reduce the Loans in the manner provided
in this Agreement; provided, however, to the extent up to (but not more than)
50% of such proceeds are to be applied to make an acquisition contemporaneously
with the incurrence of such subordinated Indebtedness, such pro forma
adjustments shall instead properly reflect, on a pro forma basis, such
acquisition to the extent funded with such proceeds as if acquired and paid for
on the first day of the first of such four Fiscal Quarters, (viii) the covenants
benefitting such subordinated Indebtedness shall at no
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time require the maintaining of any balance sheet or income statement ratios
other than ratios used solely for the purpose of limiting the incurrence of
additional Indebtedness or additional Liens; provided any such limitation on the
incurrence of additional Indebtedness and Liens shall provide for the incurrence
of the Obligations and the granting of Liens to secure the Obligations on terms
satisfactory to Agent, (ix) any guaranty of subsidiaries for such subordinated
Indebtedness shall contain terms, and be subordinate to the Obligations on terms
reasonably satisfactory to Agent, (x) contemporaneously with the incurrence of
such Indebtedness, Borrower shall make the prepayments of 50% net cash proceeds
as required under Section 2.8(a), (xi) no Default or Event of Default shall
exist immediately prior to and after giving effect to the incurrence of such
Indebtedness, and (xii) one Business Day prior to the incurrence of such
Indebtedness, Borrower shall have submitted a certificate of its president and
chief financial officer to the effect that each of the foregoing conditions has
been or will be satisfied contemporaneously with the incurrence of such
subordinated Indebtedness.
"Person" means an individual, corporation, partnership, limited
liability company, association, joint stock company, trust or trustee thereof,
estate or executor thereof, unincorporated organization or joint venture,
Tribunal, or any other legally recognizable entity.
"Preferred Stock" means capital stock of Borrower other than common
stock.
"Rating Agency" means either S & P or Moody's, or their respective
successors.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect.
"Reorganization" means the consummation of all of the transactions
contemplated by the Reorganization Documents, including but not limited to the
transactions listed on Schedule 5A.
"Reorganization Documents" means the Reorganization Plan, the
Confirmation Order, and those documents listed on Schedule 5 and all documents
and agreements entered into between the parties to such documents in connection
with such documents.
"Reorganization Plan" means the Joint Plan of Reorganization of
Forcenergy Inc and Forcenergy Resources Inc. as confirmed in the Confirmation
Order.
"Required LC" has the meaning given such term in Section 4.2(b) hereof.
"Required LC Period" has the meaning given such term in Section 4.2(b)
hereof.
"Required Preferred Stock Issuance" means the issuance by Borrower of
Preferred Stock as contemplated by the Reorganization Plan, the Commitment
Agreement and/or that certain Agreement dated as of February 15, 2000 among
Borrower and the Standby Purchasers named therein, which results in the receipt
of net cash proceeds by Borrower and/or by Agent for the benefit of Borrower in
an aggregate amount of at least $40,000,000 minus the commitment fee
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provided for under the Commitment Agreement.
"Reserve Requirement" means, at any time, the maximum rate at which
reserves (including any marginal, special, supplemental, or emergency reserves)
are required to be maintained under regulations issued from time to time by the
Board of Governors of the Federal Reserve System (or any successor) by member
banks of the Federal Reserve System against "Eurocurrency liabilities" (as such
term is used in Regulation D). Without limiting the effect of the foregoing, the
Reserve Requirement shall reflect any other reserves required to be maintained
by such member banks with respect to (a) any category of liabilities which
includes deposits by reference to which the Adjusted Eurodollar Rate is to be
determined, or (b) any category of extensions of credit or other assets which
include Eurodollar Loans.
"Restricted Person" means any of Borrower and each Subsidiary of
Borrower.
"Revolving Credit Commitment" means initially $250,000,000 as such
amount is permanently reduced from time to time in accordance with the
provisions of this Agreement. Each Revolving Credit Lender's Revolving Credit
Commitment shall be the amount obtained by multiplying (i) the total Revolving
Credit Commitment by (ii) the such Revolving Credit Lender's Revolving Credit
Percentage Share.
"Revolving Credit Commitment Period" means the period from and
including the Effective Date until and including Maturity Date (or, if earlier,
the day on which the Revolving Credit Notes first become due and payable in
full).
"Revolving Credit Lender" means each holder of a Revolving Credit Note.
"Revolving Credit Loan" and "Revolving Credit Note" have the meanings
given in Section 2.1.
"Revolving Credit Percentage Share" means, with respect to any
Revolving Credit Lender, the Revolving Credit Percentage Share set forth on the
Lender Schedule as modified from time to time as a result of assignments
pursuant to Section 10.5.
"S & P" means Standard & Poor's Ratings Services (a division of McGraw
Hill Companies, Inc.), or its successor.
"Security Documents" means the instruments listed in the Security
Schedule and all other security agreements, deeds of trust, mortgages, chattel
mortgages, pledges, guaranties, financing statements, continuation statements,
extension agreements and other agreements or instruments now, heretofore, or
hereafter delivered by any Restricted Person to Agent in connection with this
Agreement or any transaction contemplated hereby to secure or guarantee the
payment of any part of the Obligations or the performance of any Restricted
Person's other duties and obligations under the Loan Documents.
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"Security Schedule" means Schedule 3 hereto.
"Subsidiary" means, with respect to any Person, any corporation,
association, partnership, limited liability company, joint venture, or other
business or corporate entity, enterprise or organization which is directly or
indirectly (through one or more intermediaries) controlled by or owned fifty
percent or more by such Person, provided that associations, joint ventures or
other relationships (a) which are established pursuant to a standard form
operating agreement or similar agreement or which are partnerships for purposes
of federal income taxation only, (b) which are not corporations or partnerships
(or subject to the Uniform Partnership Act) under applicable state Law, and (c)
whose businesses are limited to the exploration, development and operation of
oil, gas or mineral properties and interests owned directly by the parties in
such associations, joint ventures or relationships, shall not be deemed to be
"Subsidiaries" of such Person.
"Termination Event" means (a) the occurrence with respect to any ERISA
Plan of (i) a reportable event described in Sections 4043(b)(5) or (6) of ERISA
or (ii) any other reportable event described in Section 4043(b) of ERISA other
than a reportable event not subject to the provision for 30-day notice to the
Pension Benefit Guaranty Corporation pursuant to a waiver by such corporation
under Section 4043(a) of ERISA, or (b) the withdrawal of any ERISA Affiliate
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.
"Term Lender" means a holder of a Term Note.
"Term Loan" has the meaning given in Section 2.2.
"Term Note" has the meaning given in Section 2.2.
"Tribunal" means any government, any arbitration panel, any court or
any governmental department, commission, board, bureau, agency or
instrumentality of the United States of America or any state, province,
commonwealth, nation, territory, possession, county, parish, town, township,
village or municipality, whether now or hereafter constituted or existing.
"Type" means, with respect to any Loans, the characterization of such
Loans as either Base Rate Loans or Eurodollar Loans.
Section 1.2. Exhibits and Schedules; Additional Definitions. All
Exhibits and Schedules attached to this Agreement are a part hereof for all
purposes. Reference is hereby made to the Security Schedule for the meaning of
certain terms defined therein and used but not
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defined herein, which definitions are incorporated herein by reference.
Section 1.3. Amendment of Defined Instruments. Unless the context
otherwise requires or unless otherwise provided herein the terms defined in this
Agreement which refer to a particular agreement, instrument or document also
refer to and include all renewals, extensions, modifications, amendments and
restatements of such agreement, instrument or document, provided that nothing
contained in this section shall be construed to authorize any such renewal,
extension, modification, amendment or restatement.
Section 1.4. References and Titles. All references in this Agreement to
Exhibits, Schedules, articles, sections, subsections and other subdivisions
refer to the Exhibits, Schedules, articles, sections, subsections and other
subdivisions of this Agreement unless expressly provided otherwise. Titles
appearing at the beginning of any subdivisions are for convenience only and do
not constitute any part of such subdivisions and shall be disregarded in
construing the language contained in such subdivisions. The words "this
Agreement", "this instrument", "herein", "hereof", "hereby", "hereunder" and
words of similar import refer to this Agreement as a whole and not to any
particular subdivision unless expressly so limited. The phrases "this section"
and "this subsection" and similar phrases refer only to the sections or
subsections hereof in which such phrases occur. The word "or" is not exclusive,
and the word "including" (in its various forms) means "including without
limitation". Pronouns in masculine, feminine and neuter genders shall be
construed to include any other gender, and words in the singular form shall be
construed to include the plural and vice versa, unless the context otherwise
requires.
Section 1.5. Calculations and Determinations. All calculations under
the Loan Documents shall be made on the basis of actual days elapsed (including
the first day but excluding the last) and a year of 360 days. Each determination
by a Lender Party of amounts to be paid under Article III or any other matters
which are to be determined hereunder by a Lender Party (such as any Eurodollar
Rate, Adjusted Eurodollar Rate, Business Day, Interest Period, or Reserve
Requirement) shall, in the absence of manifest error, be conclusive and binding.
Unless otherwise expressly provided herein or unless Majority Lenders otherwise
consent all financial statements and reports furnished to any Lender Party
hereunder shall be prepared and all financial computations and determinations
pursuant hereto shall be made in accordance with GAAP.
ARTICLE II - The Loans and Letters of Credit
Section 2.1. Revolving Credit Loans. Subject to the terms and
conditions hereof, each Revolving Credit Lender agrees to make loans to Borrower
(herein called such Revolving Credit Lender's "Revolving Credit Loans") upon
Borrower's request from time to time during the Revolving Credit Commitment
Period, provided that (a) subject to Sections 3.3, 3.4 and 3.6, all Revolving
Credit Lenders are requested to make Revolving Credit Loans of the same Type in
accordance with their respective Revolving Credit Percentage Shares and as part
of the same Borrowing, and (b) after giving effect to such Revolving Credit
Loans, (i) the Facility Usage
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does not exceed the Borrowing Base determined as of the date on which the
requested Revolving Credit Loans are to be made, and (ii) the sum of the
Revolving Credit Loans of each Revolving Credit Lender plus the existing LC
Obligations of such Revolving Credit Lender does not exceed such Revolving
Credit Lender's Revolving Credit Commitment. The aggregate amount of all Loans
in any Borrowing must be greater than or equal to $1,000,000 or higher integral
multiple of $100,000 or must equal the remaining availability under the
Revolving Credit Commitment. Portions of each Revolving Credit Lender's
Revolving Credit Loans may be from time to time designated as Base Rate Loans or
Eurodollar Loans as provided herein. Borrower may have no more than five
Borrowings of Eurodollar Loans outstanding at any time. The obligation of
Borrower to repay to each Revolving Credit Lender the aggregate amount of all
Revolving Credit Loans made by such Revolving Credit Lender, together with
interest accruing in connection therewith, shall be evidenced by a single
promissory note (herein called such Revolving Credit Lender's "Revolving Credit
Note") made by Borrower payable to the order of such Revolving Credit Lender in
the form of Exhibit A-1 with appropriate insertions. The amount of principal
owing on any Revolving Credit Lender's Revolving Credit Note at any given time
shall be the aggregate amount of all Revolving Credit Loans theretofore made by
such Revolving Credit Lender minus all payments of principal theretofore
received by such Revolving Credit Lender on such Revolving Credit Note. Interest
on each Revolving Credit Note shall accrue and be due and payable as provided
herein and therein. Each Revolving Credit Note shall be due and payable as
provided herein and therein, and shall be due and payable in full on the
Maturity Date. Subject to the terms and conditions hereof, Borrower may borrow,
repay, and reborrow Revolving Credit Loans hereunder.
Section 2.2. Term Loans. Subject to the terms and conditions hereof,
each Term Lender agrees to make a single loan to Borrower on the date hereof,
provided that (a) such Term Lender's Term Loan (herein called such Term Lender's
"Term Loan") shall equal such Term Lender's Maximum Term Loan Amount and (b) the
aggregate amount of all Term Loans does not exceed the total Maximum Term Loan
Amount. Portions of each Term Lender's Term Loan may from time to time be
designated as a Base Rate Loan or Eurodollar Loan as provided herein. Borrower's
obligation to repay to each Term Lender the amount of such Term Loan made by
such Term Lender, together with interest accruing in connection therewith, shall
be evidenced by a single promissory note (herein called such Term Lender's "Term
Note") made by Borrower payable to the order of such Term Lender in the form of
Exhibit A-2 with appropriate insertions. The amount of principal owing on any
Term Lender's Term Note shall be the amount of such Term Lender's Term Loan
minus all payments of principal theretofore received by such Term Lender on such
Term Note. Interest on each Term Note shall accrue and be due and payable as
provided herein and therein. Each Term Note shall be due and payable as provided
herein and therein, and shall be due and payable in full on the Maturity Date.
No portion of any Term Loan which has been repaid may be reborrowed.
Borrower will, in addition to paying any interest then due on the Term
Loans, make principal payments, with each such payment applied ratably to each
Term Note, in accordance with the following schedule:
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Payment Date Amount of Payment
------------ -----------------
March 31, 2001 $2,500,000
June 30, 2001 $2,500,000
September 30, 2001 $2,500,000
December 31, 2001 $2,500,000
March 31, 2002 $2,500,000
June 30, 2002 $2,500,000
September 30, 2002 $2,500,000
December 31, 2002 $2,500,000
March 31, 2003 $2,500,000
June 30, 2003 $2,500,000
August 15, 2003 $45,000,000
Section 2.3. Requests for Revolving Credit Loans. Borrower must give to
Agent a written notice (or telephonic notice promptly confirmed in writing) of
any requested Borrowing of new Revolving Credit Loans to be advanced by
Revolving Credit Lenders. Each such notice must:
(a) specify (i) the aggregate amount of the Revolving Credit Loans and
the date on which the Revolving Credit Loans are to be advanced and (ii) the
applicable Interest Period for any Revolving Credit Loans which are Eurodollar
Loans; and
(b) be received by Agent not later than (i) 10:00 a.m., New York, New
York time, on the day on which the Revolving Credit Loans which are Base Rate
Loans are to be made, or (ii) 1:00 p.m., New York, New York time on the third
Business Day preceding the day on which any Revolving Credit Loans which are
Eurodollar Loans are to be made.
Each such Borrowing Notice must be made in the form and substance form attached
hereto as Exhibit B, duly completed. Each such telephonic request shall be
deemed a representation, warranty, acknowledgment and agreement by Borrower as
to the matters which are required to be set out in such written confirmation.
Upon receipt of any such Borrowing Notice, Agent shall give each Revolving
Credit Lender prompt notice of the terms thereof. If all conditions precedent to
such new Revolving Credit Loans have been met, each Revolving Credit Lender will
on the date requested promptly remit to Agent at Agent's office in New York, New
York the amount of such Revolving Credit Lender's new Revolving Credit Loan in
immediately available funds, and upon receipt of such funds, unless to its
actual knowledge any conditions precedent to
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such Revolving Credit Loans have been neither met nor waived as provided herein,
Agent shall promptly make such Revolving Credit Loans available to Borrower.
Unless Agent shall have received prompt notice from a Revolving Credit Lender
that such Revolving Credit Lender will not make available to Agent such
Revolving Credit Lender's new Revolving Credit Loan, Agent may in its discretion
assume that such Revolving Credit Lender has made such Revolving Credit Loan
available to Agent in accordance with this section and Agent may if it chooses,
in reliance upon such assumption, make such Revolving Credit Loan available to
Borrower. If and to the extent such Revolving Credit Lender shall not so make
its new Revolving Credit Loan available to Agent, such Revolving Credit Lender
and Borrower severally agree to pay or repay to Agent within three days after
demand the amount of such Revolving Credit Loan together with interest thereon,
for each day from the date such amount was made available to Borrower until the
date such amount is paid or repaid to Agent, with interest at (i) the Federal
Funds Rate, if such Revolving Credit Lender is making such payment and (ii) the
interest rate applicable at the time to the other new Revolving Credit Loans
made on such date, if Borrower is making such repayment. If neither such
Revolving Credit Lender nor Borrower pays or repays to Agent such amount within
such three-day period, Agent shall in addition to such amount be entitled to
recover from such Revolving Credit Lender and from Borrower, on demand, interest
thereon at the Default Rate, calculated from the date such amount was made
available to Borrower. The failure of any Revolving Credit Lender to make any
new Revolving Credit Loan to be made by it hereunder shall not relieve any other
Revolving Credit Lender of its obligation hereunder, if any, to make its new
Revolving Credit Loan, but no Revolving Credit Lender shall be responsible for
the failure of any other Revolving Credit Lender to make any new Revolving
Credit Loan to be made by such other Revolving Credit Lender.
Section 2.4. Continuations and Conversions of Existing Loans. Borrower
may make the following elections with respect to Revolving Credit Loans or Term
Loans already outstanding: to convert Base Rate Loans to Eurodollar Loans, to
convert Eurodollar Loans to Base Rate Loans on the last day of the Interest
Period applicable thereto, and to continue Eurodollar Loans beyond the
expiration of such Interest Period by designating a new Interest Period to take
effect at the time of such expiration. In making such elections, Borrower may
combine existing Loans made pursuant to separate Borrowings into one new
Borrowing or divide existing Loans made pursuant to one Borrowing into separate
new Borrowings, provided that (i) Borrower may have no more than five Borrowings
of Eurodollar Loans outstanding at any time and (ii) no combinations may be made
between Borrowings constituting Revolving Credit Loans on the one hand and
Borrowings constituting Term Loans on the other hand. To make any such election,
Borrower must give to Agent a Continuation/Conversion Notice with respect to any
such Conversion or Continuation of existing Loans, with a separate
Continuation/Conversion Notice given for each new Borrowing. Each such
Conversion Notice must:
(a) specify the existing Loans which are to be Continued or Converted;
(b) specify (i) the aggregate amount of any Borrowing of Base Rate
Loans into which such existing Loans are to be continued or converted and the
date on which such Continuation or
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Conversion is to occur, or (ii) the aggregate amount of any Borrowing of
Eurodollar Loans into which such existing Loans are to be continued or
converted, the date on which such Continuation or Conversion is to occur (which
shall be the first day of the Interest Period which is to apply to such
Eurodollar Loans), and the length of the applicable Interest Period; and
(c) be received by Agent not later than (i) 10:00 a.m., New York, New
York time, on the day on which any such Continuation or Conversion to Base Rate
Loans is to occur, or (ii) 1:00 p.m., New York, New York time on the third
Business Day preceding the day on which any such Continuation or Conversion to
Eurodollar Loans is to occur.
Each such Continuation/Conversion Notice must be made in the form and substance
of the form attached hereto as Exhibit C, duly completed. Upon receipt of any
such Continuation/Con version Notice, Agent shall give each Lender prompt notice
of the terms thereof. Each Continuation/Conversion Notice shall be irrevocable
and binding on Borrower. During the continuance of any Default, Borrower may not
make any election to convert existing Loans into Eurodollar Loans or continue
existing Loans as Eurodollar Loans. If (due to the existence of a Default or for
any other reason) Borrower fails to timely and properly give any
Continuation/Conversion Notice with respect to a Borrowing of existing
Eurodollar Loans at least three days prior to the end of the Interest Period
applicable thereto, such Eurodollar Loans shall automatically be converted into
Base Rate Loans at the end of such Interest Period. No new funds shall be repaid
by Borrower or advanced by any Lender in connection with any Continuation or
Conversion of existing Loans pursuant to this section, and no such Continuation
or Conversion shall be deemed to be a new advance of funds for any purpose; such
Continuations and Conversions merely constitute a change in the interest rate
applicable to already outstanding Loans.
Section 2.5. Use of Proceeds. Borrower shall use the initial Loans to
refinance Existing Obligations. Borrower shall use Loans (other than the initial
Loans) to refinance Matured LC Obligations and fund oil and gas property (and
related assets) acquisitions, exploration, development and production activities
of Borrower and to provide working capital for its operations. Borrower shall
use all Letters of Credit for the purpose of securing bonding obligations,
workmen's compensation obligations, plugging and abandonment liabilities and for
other general business purposes. In no event shall the funds from any Loan or
any Letter of Credit be used directly or indirectly by any Person for personal,
family, household or agricultural purposes or for the purpose, whether
immediate, incidental or ultimate, of purchasing, acquiring or carrying any
"margin stock" (as such term is defined in Regulation U 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. Borrower represents and warrants that Borrower is not engaged
principally, or as one of Borrower's important activities, in the business of
extending credit to others for the purpose of purchasing or carrying such margin
stock.
Section 2.6. Interest Rates and Fees.
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(a) Interest Rates. Each Base Rate Loan shall bear interest on each day
outstanding at the Adjusted Base Rate in effect on such day. Each Eurodollar
Loan shall bear interest on each day during the related Interest Period at the
related Adjusted Eurodollar Rate in effect on such day. Anything to the contrary
herein notwithstanding, if an Event of Default has occurred and is continuing,
all Loans shall bear interest on each day outstanding at the applicable Default
Rate.
(b) Commitment Fees. In consideration of each Revolving Credit Lender's
commitment to make Revolving Credit Loans, Borrower will pay to Agent for the
account of each Revolving Credit Lender a commitment fee determined on a daily
basis by applying a rate of one-half percent (0.5%) per annum to such Revolving
Credit Lender's Percentage Share of the unused portion of the Borrowing Base on
each day during the Revolving Credit Commitment Period, determined for each such
day by deducting from the amount of the Borrowing Base at the end of such day
the Facility Usage. In addition, Borrower will pay to Agent for the account of
each Revolving Credit Lender an excess commitment fee determined on a daily
basis by applying a rate of three-eighths of one percent (0.375%) per annum to
such Revolving Credit Lender's Percentage Share of the excess, if any, of the
Revolving Credit Commitment over the Borrowing Base on each day during the
Revolving Credit Commitment Period determined for each such day by deducting
from the Revolving Credit Commitment the Borrowing Base in effect at the end of
such day. Such commitment fee and excess commitment fee shall be due and payable
in arrears on the last day of each Fiscal Quarter and at the end of the
Revolving Credit Commitment Period.
(c) Facility Fees. In consideration of each Revolving Credit Lender's
commitment to make Revolving Credit Loans and each Term Lender's commitment to
make Term Loans, Borrower will pay to Agent for the account of each Revolving
Credit Lender and each Term Lender a facility fee in the amount of one-quarter
of one percent (.25%) of such Revolving Credit Lender's Revolving Credit
Commitment and one-quarter of one percent (.25%) of such Term Lender's Maximum
Term Loan Amount, respectively, due and payable on the date hereof.
(d) Agent's Fees. In addition to all other amounts due to Agent under
the Loan Documents, Borrower will pay fees to Agent as described in a letter
agreement of even date herewith between Agent and Borrower.
(e) Excess Borrowing Base Fees. On each day in which the Facility Usage
exceeds the Conforming Borrowing Base, a fee shall accrue calculated at two
percent (2.0%) per annum multiplied by the amount of such excess, which fee
shall be due and payable by Borrower on the next Interest Payment Date and shall
be paid to Agent to be paid ratably to each Revolving Credit Lender based upon a
fraction the numerator of which is such Lender's weighted average outstanding
Revolving Credit Loans and LC Obligations, and the denominator of which is the
weighted average total Facility Usage for such period.
Section 2.7. Optional Prepayments and Commitment Reductions.
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(a) Borrower may, upon two Business Days' notice to Agent (and Agent
will promptly give notice to the other Lenders) from time to time and without
premium or penalty prepay the Revolving Credit Loans, in whole or in part, so
long as the aggregate amounts of all partial prepayments of principal on the
Revolving Credit Loans equals $500,000 or any higher integral multiple of
$100,000, and so long as Borrower does not make any prepayments which would
reduce the unpaid principal balance of the Revolving Credit Loans to less than
$100,000 without first either (i) terminating this Agreement or (ii) providing
assurance satisfactory to Agent in its discretion that Revolving Credit Lenders'
legal rights under the Loan Documents are in no way affected by such reduction.
Upon receipt of any such notice, Agent shall give each Revolving Credit Lender
prompt notice of the terms thereof.
(b) Borrower may, upon two Business Days' notice to each Term Lender
from time to time and without premium or penalty prepay the Term Loans, in whole
or in part, so long as the aggregate of amounts of all partial prepayments of
principal on the Term Loans equals $500,000 or any higher integral multiple of
$100,000.
(c) Each prepayment of principal under this Section shall be
accompanied by all interest then accrued and unpaid on the principal so prepaid.
Any principal or interest prepaid pursuant to this Section shall be in addition
to, and not in lieu of, all payments otherwise required to be paid under the
Loan Documents at the time of such prepayment.
(d) Borrower may, upon two Business Days notice to Agent (and Agent
will promptly give notice to the other Lenders) from time to time permanently
reduce the Revolving Credit Commitment in whole or in part so long as the
aggregate amount of such reduction equals $500,000 or any higher integral
multiple of $100,000, and if the Revolving Credit Commitment after such
reduction is less than the Facility Usage, Borrower shall immediately prepay the
Revolving Credit Loans in the amount of such excess.
(e) Each prepayment of a Term Loan pursuant to this Section shall be
made pro-rata with respect to all Term Loans.
Section 2.8. Mandatory Prepayments.
(a) Upon the incurrence or creation of any Indebtedness for borrowed
money (to the extent permitted in this Agreement), an amount equal to 50% of the
net cash proceeds received by Borrower in connection with such issuance shall be
applied as follows (and the other 50% may be retained by the Borrower) (i) first
as a mandatory prepayment of the outstanding principal balance of the Term Loans
until the Term Loans have been paid in full, and (ii) then as a permanent
reduction in the Revolving Credit Commitments in the amount of such prepayment
(and a mandatory prepayment of the outstanding Revolving Credit Loans in the
amount, if any, that the Facility Usage exceeds the Revolving Credit Commitment
after such reduction).
(b) Upon the issuance of any common stock, preferred stock or other
equity of the Borrower or Restricted Person (to the extent permitted in this
Agreement other than the Required
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Preferred Stock Issuance), an amount equal to 50% of the net cash proceeds
received by Borrower in connection with such issuance shall be applied as
follows (and the other 50% may be retained by the Borrower) (i) first as a
mandatory prepayment of the outstanding principal balance of the Term Loans
until the Term Loans have been paid in full, and (ii) then as a permanent
reduction in the Revolving Credit Commitments in the amount of such prepayment
(and a mandatory prepayment of the outstanding Revolving Credit Loans in the
amount, if any, that the Facility Usage exceeds the Revolving Credit Commitment
after such reduction).
(c) Upon the sale, transfer, conveyance or assignments of any assets
(to the extent permitted in this Agreement) of Borrower or Restricted Person
(excluding however, the sale of properties to Hilcorp Energy I, L.P., covering
the same properties as were presented in the motion to the Bankruptcy Court
dated on or about September 13, 1999 or the sale of such properties to another
buyer approved by the Bankruptcy Court), an amount equal to 100% of the net cash
proceeds received by Borrower in connection with such sale, transfer, conveyance
or assignments shall be applied as follows: (i) one-third as a mandatory
prepayment of the outstanding principal balance of the Term Loans and (ii)
two-thirds as a mandatory prepayment of the Revolving Credit Loans (and a
permanent reduction in the Revolving Credit Commitments and a reduction in the
Borrowing Base and Conforming Borrowing Base in the amount of such prepayment);
provided, however, if the Term Loans have been paid in full (A) provided no
Default shall have occurred which is continuing, no mandatory prepayment of the
Revolving Credit Loans shall be required in respect of any proceeds of a sale
pursuant to Section 7.5(d) and (B) in the case of any other proceeds, such
proceeds shall be applied to the Revolving Credit Loans, Revolving Credit
Commitments, Borrowing Base, and Conforming Borrowing Base (as provided above in
this subsection (c)) in an amount which shall be the greater of (i) two-thirds
(2/3) of the net cash proceeds so received by Borrower or (ii) the amount which
was attributable to such sold properties in connection with the most recent
Borrowing Base.
(d) Each prepayment of principal under this section shall be
accompanied by all interest then accrued and unpaid on the principal so prepaid.
Any principal or interest prepaid pursuant to this section shall be in addition
to, and not in lieu of, all payments otherwise required to be paid under the
Loan Documents at the time of such prepayment. Each prepayment of the Term Loans
shall be applied to the principal installments thereof in inverse order of
maturity. Each permanent reduction of the Revolving Credit Commitments shall be
applied ratably to such Revolving Credit Commitments of each Revolving Credit
Lender based upon the fraction, the numerator of which is the Revolving Credit
Commitment of such Revolving Credit Lender and the denominator of which is the
sum of the total Revolving Credit Commitments.
Section 2.9. Initial Borrowing Base. During the period from the date
hereof to the first Determination Date, the Borrowing Base and Conforming
Borrowing Base shall be $250,000,000.
Section 2.10. Subsequent Determinations of Borrowing Base and
Conforming Borrowing Base. On or before each Evaluation Date, Borrower shall
furnish to each Lender all information, reports and data which Agent has then
requested concerning Restricted Persons'
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businesses and properties (including their oil and gas properties and interests
and the reserves and production relating thereto), together with the Engineering
Report described in Section 6.2(h) or (i), as applicable. Within 60 days after
receiving such information, reports and data, or as promptly after receiving
such information, reports and data as practicable, Majority Lenders shall
determine an amount for the Borrowing Base and Conforming Borrowing Base and
Agent shall by notice to Borrower designate such amount as the new Borrowing
Base and Conforming Borrowing Base available to Borrower hereunder, which
designation shall take effect immediately on the date such notice is sent
(herein called a "Determination Date") and shall remain in effect until but not
including the next date as of which the Borrowing Base and Conforming Borrowing
Base are redetermined. If Borrower does not furnish all such information,
reports and data by the date specified in the first sentence of this section,
Agent may nonetheless designate the Borrowing Base and Conforming Borrowing Base
at any amount which Majority Lenders determine and may redesignate the Borrowing
Base and Conforming Borrowing Base from time to time thereafter until each
Lender receives all such information, reports and data, whereupon Majority
Lenders shall designate a new Borrowing Base and new Conforming Borrowing Base
as described above. Majority Lenders shall determine the amount of the Borrowing
Base and Conforming Borrowing Base as follows:
(a) Projected future production volumes, lease operating
expenses and capital costs for Borrower's interest in oil and gas
properties located in or offshore the United States which have
attributable to them proved oil or gas reserves ("Borrower's Oil and
Gas Properties") shall be based upon the amounts reflected in the
Engineering Report prepared for the most recent Evaluation Date (or
most recently delivered in the event such report is not timely
delivered by such Evaluation Date, adjusted to reflect production since
the date of such report); provided, that production volumes and lease
operating expenses shall be adjusted by (i) multiplying such production
volumes by the Applicable Volume Risk Percentage (as defined herein)
and (ii) multiplying such lease operating expenses by the Applicable
XXX Risk Percentage (as defined herein). Capital costs shall be
included at 100% of such capital costs reflected in such Engineering
Report. For purposes of this Section 2.10, the term "Applicable Volume
Risk Percentage" shall mean that percentage determined by the Lenders'
Independent Engineer in the exercise of its good faith discretion for
the Borrower's Oil and Gas Properties (which may be different
percentages for properties of the same developed, developed
non-producing or undeveloped category); provided that such percentage
determined by the Lenders' Independent Engineer shall be:
(A) not less than 90% nor greater than 100% of the
production volumes, in the case of reserves which are proved
developed producing reserves on the Evaluation Date,
(B) not less than 70% nor greater than 90% of the
production volumes, in the case of reserves which are proved
developed non-producing reserves on the Evaluation Date, and
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(C) not less than 50% nor greater than 65% of the
production volumes, in the case of reserves which are proved
undeveloped reserves on the Evaluation Date.
For purposes of this Section 2.10, the term "Applicable XXX Risk
Percentage" shall mean that percentage determined by the Lenders'
Independent Engineer in its discretion; provided that such percentage
determined shall be not less than 100% nor greater than 110% of the
Applicable Volume Risk Percentage for the corresponding production
volumes.
(b) Projected production volumes and cash flow for the first
three months following the date specified in the Engineering Report
(the "as of" date used for evaluation) shall be excluded in determining
the Borrowing Base or the Conforming Borrowing Base.
(c) The assumptions regarding future prices of production
shall be (i) the price assumptions as published in the most recent
Madison Energy Advisors survey of price assumptions of major energy
lenders adjusted by the differential for each of Borrower's major
geographic operating regions between (A) the New York Mercantile
Exchange weighted average spot price for oil and natural gas over the
four Fiscal Quarters then most recently ended and (B) the weighted
average market price for oil and natural gas received by Borrower in
each of Borrower's major geographic operating regions for the same
period or (ii) if such survey is no longer published by Madison Energy
Advisors or a corporate successor, the amount determined by the
Lenders' Independent Engineer or the Agent as the arithmetic average of
the price assumptions and price escalation assumptions generally used
by each of the Lenders in their oil and gas reserve based loans,
adjusted for the location and quality of the production and, in the
case of clause (i) or (ii), adjusted for Borrower's oil and gas price
hedging contracts in a manner acceptable to Majority Lenders. Future
lease operating expenses and capital costs shall be escalated by the
same factors as are utilized in future price escalations.
(d) The net present value of the projected future net revenues
attributable to production from Borrower's Oil and Gas Properties
("NPV") shall be determined after deducting all projected future
royalties and other burdens on production, taxes (other than income
taxes), lease operating expenses (including without limitation field
level general and administrative expenses customarily included in lease
operating expenses) and capital costs and utilizing a 10% discount
factor to determine present value.
(e) The Borrowing Base and Conforming Borrowing Base shall
exclude the NPV of Borrower's Oil and Gas Properties which are not
subject to a perfected first priority Lien securing the Obligations
(unless such Oil and Gas Properties are available for such a perfected
first priority Lien (and remain unencumbered) and Majority Lenders have
elected not to take such a Lien) or for which Borrower does not have a
record title or for which title is subject to defects or limitations
which are not acceptable to Majority
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Lenders.
(f) The "Borrowing Base" shall equal 60% of such NPV;
provided, however, that the percentage of the Borrowing Base that is
derived from proved developed non- producing reserves and proved
undeveloped reserves shall not exceed (i) 45% in respect to a Borrowing
Base in respect of an Evaluation Date on or prior to September 1, 2001
or (ii) 40% in respect to a Borrowing Base thereafter. The "Conforming
Borrowing Base" shall equal 60% of such NPV; provided, however, that
the percentage of the Conforming Borrowing Base that is derived from
proved developed non-producing reserves and proved undeveloped reserves
shall not exceed (i) 40% in respect to a Conforming Borrowing Base in
respect of an Evaluation Date on or prior to September 1, 2001 or (ii)
35% in respect to a Conforming Borrowing Base thereafter.
(g) On or within 15 days after each Evaluation Date, on a date
set by Agent and Borrower, Borrower shall cause its internal engineers
and representatives of the Independent Petroleum Engineers to meet with
representatives of Lenders' Independent Engineer and other petroleum
engineers for any Lender and provide information and review the
Engineering Report and data supporting the Engineering Report for such
Evaluation Date.
(h) The audit by the Independent Petroleum Engineer must
include an evaluation of not less than 80% of reserves (by value) using
the same procedures and criteria that the Independent Petroleum
Engineer would apply had it independently prepared the report and an
examination of the remaining 20% of reserves (by value) for accuracy.
As used above, proved reserves, proved developed producing reserves, proved
developed non-producing reserves and proved undeveloped reserves shall be
determined in accordance with the standards established by the Society of
Petroleum Engineers.
Section 2.11. Borrowing Base Reductions. If the Facility Usage exceeds
the Borrowing Base (such excess being called a "Borrowing Base Deficiency") the
Borrower shall, within 60 days after notice of the Borrowing Base Deficiency has
been given to Borrower, prepay the Revolving Credit Loans or reduce the LC
Obligations in the amount of the Borrowing Base Deficiency. Each prepayment of
principal under this Section shall be accompanied by all interest then accrued
and unpaid on the principal so prepaid. Any principal or interest prepaid
pursuant to this Section shall be in addition to, and not in lieu of, all
payments otherwise required to be paid under the Loan Documents at the time of
such prepayment.
Section 2.12. Letters of Credit. Subject to the terms and conditions
hereof, Borrower may during the Revolving Credit Commitment Period request LC
Issuer to issue one or more Letters of Credit, provided that, after taking such
Letter of Credit into account:
(a) the Facility Usage does not exceed the Revolving Credit
Commitment at
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such time; and
(b) the amount of each Letter of Credit shall not exceed
$5,000,000 (unless consented to by Majority Lenders) with the exception
of a single Letter of Credit in favor of Bank of America, N.A. relating
to the Xxxx Inlet Pipeline which shall not exceed $6,000,000 (the "B of
A Letter of Credit"), and the aggregate amount of all LC Obligations at
any time does not exceed $20,000,000; and
(c) the expiration date of such Letter of Credit is prior to
the Maturity Date;
and further provided that:
(d) such Letter of Credit is to be used for the purposes set
forth in Section 2.5;
(e) with the exception of the B of A Letter of Credit, such
Letter of Credit is not directly or indirectly used to assure payment
of or otherwise support any Funded Debt of any Person;
(f) the issuance of such Letter of Credit will be in
compliance with all applicable governmental restrictions, policies, and
guidelines and will not subject LC Issuer to any cost which is not
reimbursable under Article III;
(g) the form and terms of such Letter of Credit are acceptable
to LC Issuer in its sole and absolute discretion; and
(h) all other conditions in this Agreement to the issuance of
such Letter of Credit have been satisfied.
LC Issuer will honor any such request if the foregoing conditions (a) through
(h) (in the following Section 2.13 called the "LC Conditions") have been met as
of the date of issuance of such Letter of Credit.
Section 2.13. Requesting Letters of Credit. Borrower must make written
application for any Letter of Credit not later than 10:00 a.m. New York, New
York time at least two Business Days before the date on which Borrower desires
for LC Issuer to issue such Letter of Credit. By making any such written
application Borrower shall be deemed to have represented and warranted that the
LC Conditions described in Section 2.12 will be met as of the date of issuance
of such Letter of Credit. Each such written application for a Letter of Credit
must be made in writing in the form as may mutually be agreed upon by LC Issuer
and Borrower. Two Business Days after the LC Conditions for a Letter of Credit
have been met as described in Section 2.12, LC Issuer will issue such Letter of
Credit at LC Issuer's office in New York, New York. If any provisions of any LC
Application conflict with any provisions of this Agreement, the provisions of
this Agreement shall govern and control.
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Section 2.14. Reimbursement and Participations.
(a) Reimbursement by Borrower. Borrower promises to pay to LC Issuer,
the full amount of each Matured LC Obligation on the date that LC Issuer honors
any draft or other demand for payment under or purported to be under any Letter
of Credit. Interest shall accrue on each Matured LC Obligation at the Default
Rate from and after the date each Matured LC Obligation becomes due and payable
until such Matured LC Obligation is paid in full.
(b) Letter of Credit Advances. If the beneficiary of any Letter of
Credit makes a draft or other demand for payment thereunder then Borrower may,
during the interval between the making thereof and the honoring thereof by LC
Issuer, request Lenders to make Loans to Borrower in the amount of such draft or
demand, which Loans shall be made concurrently with LC Issuer's payment of such
draft or demand and shall be immediately used by LC Issuer to repay the amount
of the resulting Matured LC Obligation. Such a request by Borrower shall be made
in compliance with all of the provisions hereof, provided that for the purposes
of the first sentence of Section 2.1, the amount of such Loans shall be
considered, but the amount of the Matured LC Obligation to be concurrently paid
by such Loans shall not be considered.
(c) Participation by Lenders. LC Issuer irrevocably agrees to grant and
hereby grants to each Lender, and -- to induce LC Issuer to issue Letters of
Credit hereunder -- each Lender irrevocably agrees to accept and purchase and
hereby accepts and purchases from LC Issuer, on the terms and conditions
hereinafter stated and for such Lender's own account and risk, an undivided
interest equal to such Lender's Revolving Credit Percentage Share of LC Issuer's
obligations and rights under each Letter of Credit issued hereunder and the
amount of each Matured LC Obligation paid by LC Issuer thereunder. Each Lender
unconditionally and irrevocably agrees with LC Issuer that, if a Matured LC
Obligation is paid under any Letter of Credit for which LC Issuer is not
reimbursed in full by Borrower in accordance with the terms of this Agreement
and the related LC Application (including any reimbursement by means of
concurrent Loans or by the application of LC Collateral), such Lender shall (in
all circumstances and without set-off or counterclaim) pay to LC Issuer on
demand, in immediately available funds at LC Issuer's address for notices
hereunder, such Lender's Revolving Credit Percentage Share of such Matured LC
Obligation (or any portion thereof which has not been reimbursed by Borrower).
Each Lender's obligation to pay LC Issuer pursuant to the terms of this
subsection is irrevocable and unconditional. If any amount required to be paid
by any Lender to LC Issuer pursuant to this subsection is paid by such Lender to
LC Issuer within three Business Days after the date such payment is due, LC
Issuer shall in addition to such amount be entitled to recover from such Lender,
on demand, interest thereon calculated from such due date at the Federal Funds
Rate. If any amount required to be paid by any Lender to LC Issuer pursuant to
this subsection is not paid by such Lender to LC Issuer within three Business
Days after the date such payment is due, LC Issuer shall in addition to such
amount be entitled to recover from such Lender, on demand, interest thereon
calculated from such due date at the Default Rate.
(d) Distributions to Participants. Whenever LC Issuer has in accordance
with this section received from any Lender payment of such Lender's Revolving
Credit Percentage Share
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of any Matured LC Obligation, if LC Issuer thereafter receives any payment of
such Matured LC Obligation or any payment of interest thereon (whether directly
from Borrower or by application of LC Collateral or otherwise, and excluding
only interest for any period prior to LC Issuer's demand that such Lender make
such payment of its Revolving Credit Percentage Share), LC Issuer will
distribute to such Lender its Revolving Credit Percentage Share of the amounts
so received by LC Issuer; provided, however, that if any such payment received
by LC Issuer must thereafter be returned by LC Issuer, such Lender shall return
to LC Issuer the portion thereof which LC Issuer has previously distributed to
it.
(e) Calculations. A written advice setting forth in reasonable detail
the amounts owing under this section, submitted by LC Issuer to Borrower or any
Lender from time to time, shall be conclusive, absent manifest error, as to the
amounts thereof.
Section 2.15. Letter of Credit Fees. In consideration of LC Issuer's
issuance of any Letter of Credit, Borrower agrees to pay (a) to Agent, for the
account of all Lenders in accordance with their respective Revolving Credit
Percentage Shares, a letter of credit issuance fee at a rate equal to two
percent (2.0%) per annum, and (b) to such LC Issuer for its own account, a
letter of credit fronting fee at a rate equal to one-quarter of one percent
(.25%) per annum. Each such fee will be calculated based on the face amount of
all Letters of Credit outstanding on each day at the above applicable rate and
will be payable quarterly in arrears. In addition, Borrower will pay to LC
Issuer administrative, issuance, amendment or extension fees for each Letter of
Credit and an administrative drawing fee upon any drawing under a Letter of
Credit in accordance with such LC Issuer's standard schedule of fees in effect
from time to time.
Section 2.16. No Duty to Inquire.
(a) Drafts and Demands. LC Issuer is authorized and instructed to
accept and pay drafts and demands for payment under any Letter of Credit without
requiring, and without responsibility for, any determination as to the existence
of any event giving rise to said draft, either at the time of acceptance or
payment or thereafter. LC Issuer is under no duty to determine the proper
identity of anyone presenting such a draft or making such a demand (whether by
tested telex or otherwise) as the officer, representative or agent of any
beneficiary under any Letter of Credit, and payment by LC Issuer to any such
beneficiary when requested by any such purported officer, representative or
agent is hereby authorized and approved. Borrower releases each Lender Party
from, and agrees to hold each Lender Party harmless and indemnified against, any
liability or claim in connection with or arising out of the subject matter of
this section, WHICH INDEMNITY SHALL APPLY WHETHER OR NOT ANY SUCH LIABILITY OR
CLAIM IS IN ANY WAY OR TO ANY EXTENT CAUSED, IN WHOLE OR IN PART, BY ANY
NEGLIGENT ACT OR OMISSION OF ANY KIND BY ANY LENDER PARTY, provided only that no
Lender Party shall be entitled to indemnification for that portion, if any, of
any liability or claim which is proximately caused by its own individual gross
negligence or willful misconduct, as determined in a final judgment.
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(b) Extension of Maturity. If the maturity of any Letter of Credit is
extended by its terms or by Law or governmental action, if any extension of the
maturity or time for presentation of drafts or any other modification of the
terms of any Letter of Credit is made at the request of any Restricted Person,
or if the amount of any Letter of Credit is increased at the request of any
Restricted Person, this Agreement shall be binding upon all Restricted Persons
with respect to such Letter of Credit as so extended, increased or otherwise
modified, with respect to drafts and property covered thereby, and with respect
to any action taken by LC Issuer, LC Issuer's correspondents, or any Lender
Party in accordance with such extension, increase or other modification.
(c) Transferees of Letters of Credit. If any Letter of Credit provides
that it is transferable, LC Issuer shall have no duty to determine the proper
identity of anyone appearing as transferee of such Letter of Credit, nor shall
LC Issuer be charged with responsibility of any nature or character for the
validity or correctness of any transfer or successive transfers, and payment by
LC Issuer to any purported transferee or transferees as determined by LC Issuer
is hereby authorized and approved, and Borrower releases each Lender Party from,
and agrees to hold each Lender Party harmless and indemnified against, any
liability or claim in connection with or arising out of the foregoing, WHICH
INDEMNITY SHALL APPLY WHETHER OR NOT ANY SUCH LIABILITY OR CLAIM IS IN ANY WAY
OR TO ANY EXTENT CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR OMISSION
OF ANY KIND BY ANY LENDER PARTY, provided only that no Lender Party shall be
entitled to indemnification for that portion, if any, of any liability or claim
which is proximately caused by its own individual gross negligence or willful
misconduct, as determined in a final judgment.
Section 2.17. LC Collateral.
(a) LC Obligations in Excess of Borrowing Base. If, after the making of
all mandatory prepayments required under Section 2.8 or 2.11, the outstanding LC
Obligations will exceed the Borrowing Base, then in addition to prepayment of
the entire principal balance of the Loans Borrower will immediately pay to LC
Issuer an amount equal to such excess. LC Issuer will hold such amount as
security for the remaining LC Obligations (all such amounts held as security for
LC Obligations being herein collectively called "LC Collateral") and the other
Obligations, and such collateral may be applied from time to time to any Matured
LC Obligations or other Obligations which are due and payable. Neither this
subsection nor the following subsection shall, however, limit or impair any
rights which LC Issuer may have under any other document or agreement relating
to any Letter of Credit, LC Collateral or LC Obligation, including any LC
Application, or any rights which any Lender Party may have to otherwise apply
any payments by Borrower and any LC Collateral under Section 3.1.
(b) Acceleration of LC Obligations. If the Obligations or any part
thereof become immediately due and payable pursuant to Section 8.1 then, unless
Majority Lenders otherwise specifically elect to the contrary (which election
may thereafter be retracted by Majority Lenders
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at any time), all LC Obligations shall become immediately due and payable
without regard to whether or not actual drawings or payments on the Letters of
Credit have occurred, and Borrower shall be obligated to pay to LC Issuer
immediately an amount equal to the aggregate LC Obligations which are then
outstanding.
(c) Investment of LC Collateral. Pending application thereof, all LC
Collateral shall be invested by LC Issuer in such Cash Equivalents as LC Issuer
may choose in its sole discretion. All interest on (and other proceeds of) such
Investments shall be reinvested or applied to Matured LC Obligations or other
Obligations which are due and payable. When all Obligations have been satisfied
in full, including all LC Obligations, all Letters of Credit have expired or
been terminated, and all of Borrower's reimbursement obligations in connection
therewith have been satisfied in full, LC Issuer shall release any remaining LC
Collateral. Borrower hereby assigns and grants to LC Issuer a continuing
security interest in all LC Collateral paid by it to LC Issuer, all Investments
purchased with such LC Collateral, and all proceeds thereof to secure its
Matured LC Obligations and its Obligations under this Agreement, each Note, and
the other Loan Documents, and Borrower agrees that such LC Collateral,
Investments and proceeds shall be subject to all of the terms and conditions of
the Security Documents. Borrower further agrees that LC Issuer shall have all of
the rights and remedies of a secured party under the Uniform Commercial Code as
adopted in the State of New York with respect to such security interest and that
an Event of Default under this Agreement shall constitute a default for purposes
of such security interest.
(d) Payment of LC Collateral. When Borrower is required to provide LC
Collateral for any reason and fails to do so on the day when required, LC Issuer
may without notice to Borrower or any other Restricted Person provide such LC
Collateral (whether by application of proceeds of other Collateral, by transfers
from other accounts maintained with LC Issuer, or otherwise) using any available
funds of Borrower or any other Person also liable to make such payments. Any
such amounts which are required to be provided as LC Collateral and which are
not provided on the date required shall, for purposes of each Security Document,
be considered past due Obligations owing hereunder, and LC Issuer is hereby
authorized to exercise its respective rights under each Security Document to
obtain such amounts.
Section 2.18. Reorganization Plan.
(a) Capitalized terms used in this Section and not otherwise defined in
this Agreement shall have the meanings given them in the Reorganization Plan. In
order to provide for an Effective Date prior to the consummation of the Required
Preferred Stock Issuance, but without waiving provisions of Section 8.1(m):
(i) Pursuant to Section 1.117 of the Reorganization Plan, each
Lender hereby consents to a Subscription Rights Election Deadline of
March 10, 2000, or such later date designated by Borrower which is on
or prior to May 2, 2000.
(ii) Pursuant to Sections 8.2 and 9.1 of the Reorganization
Plan, each Lender
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hereby consents to the issuance of the Subscription Rights to Persons
entitled thereto on or as soon as practicable after the Effective Date.
(iii) Pursuant to Section 9.1 of the Reorganization Plan, each
Lender hereby consents to the entering into of the Subscription Warrant
Agreement with the Warrant Agent named therein on the date of the
closing of the Rights Offering or the Commitment Agreement, which is
the earliest practicable date after the Effective Date.
(b) As of the Effective Date, Borrower and Lenders hereby agree that
(i) the principal amount of Existing Obligations shall be deemed the Term Loans
to the extent of the principal amount of $70,000,000 and shall be the initial
Revolving Credit Loans hereunder in the principal amount of the balance thereof
after giving effect to the payments thereon made on the Effective Date, and (ii)
all existing letters of credit issued and outstanding by the LC Issuer for the
account of Borrower shall be outstanding under and payable pursuant to this
Agreement.
Section 2.19. Required LC.
(a) To the extent that a drawing is permitted under the terms of the
Required LC, unless such drawing is waived by all Lenders Agent shall give such
notice and submit such drawing as is contemplated by the Required LC in
accordance with and in the amount contemplated by the terms thereof prior to the
expiration of the Required LC Period. The proceeds of any drawing upon the
Required LC shall be applied as a voluntary prepayment of the Revolving Credit
Loans, without reducing the Revolving Credit Commitment.
(b) Upon the consummation of the Required Preferred Stock Issuance
(other than as a result of a drawing on the Required LC), and delivery to the
Agent of the evidence of "Offering Proceeds Received" set forth in Annex 2 to
the Required LC in the amount of $40,000,000, Agent shall return the Required LC
to the account party named therein for cancellation.
ARTICLE III - Payments to Lenders
Section 3.1. General Procedures. Borrower will make each payment which
it owes under the Loan Documents to Agent for the account of the Lender Party to
whom such payment is owed, in lawful money of the United States of America,
without set-off, deduction or counterclaim, and in immediately available funds.
Each such payment must be received by Agent not later than 12:00 noon, New York,
New York time, on the date such payment becomes due and payable. Any payment
received by Agent after such time will be deemed to have been made on the next
following Business Day. Should any such payment become due and payable on a day
other than a Business Day, the maturity of such payment shall be extended to the
next succeeding Business Day, and, in the case of a payment of principal or past
due interest, interest shall accrue and be payable thereon for the period of
such extension as provided in the Loan Document under which such payment is due.
Each payment under a Loan Document shall be due and payable at the place
provided therein and, if no specific place of payment is provided,
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shall be due and payable at the place of payment of Agent's Note. When Agent
collects or receives money on account of the Obligations, Agent shall distribute
all money so collected or received, and each Lender Party shall apply all such
money so distributed, as follows:
(a) first, for the payment of all Obligations which are then due (and
if such money is insufficient to pay all such Obligations, first to any
reimbursements due Agent under Section 6.9 or 10.4 and then to the partial
payment of all other Obligations then due in proportion to the amounts thereof,
or as Lender Parties shall otherwise agree);
(b) then for the prepayment of amounts owing under the Loan Documents
(other than principal on the Notes) if so specified by Borrower;
(c) then for the prepayment of principal on the Notes, together with
accrued and unpaid interest on the principal so prepaid; and
(d) last, for the payment or prepayment of any other Obligations.
All payments applied to principal and interest on any Note shall be applied
first to fees and expenses then due and payable, then to any interest then due
and payable, then to principal then due and payable, and last to any prepayment
of principal and interest in compliance with Sections 2.7 and 2.8. All
distributions of amounts described in any of subsections (b), (c) or (d) above
shall be made by Agent pro rata to each Lender Party then owed Obligations
described in such subsection in proportion to all amounts owed to all Lender
Parties which are described in such subsection; provided that if any Lender then
owes payments to LC Issuer for the purchase of a participation under Section
2.14(c) or to Agent under Section 9.9, any amounts otherwise distributable under
this section to such Lender shall be deemed to belong to LC Issuer, or Agent,
respectively, to the extent of such unpaid payments, and Agent shall apply such
amounts to make such unpaid payments rather than distribute such amounts to such
Lender.
Section 3.2. Capital Reimbursement. If either (a) the introduction or
implementation of or the compliance with or any change in or in the
interpretation of any Law, or (b) the introduction or implementation of or the
compliance with any request, directive or guideline from any central bank or
other governmental authority (whether or not having the force of Law) affects or
would affect the amount of capital required or expected to be maintained by any
Lender Party or any corporation controlling any Lender Party, then, upon demand
by such Lender Party, Borrower will pay to Agent for the benefit of such Lender
Party, from time to time as specified by such Lender Party, such additional
amount or amounts which such Lender Party shall determine to be appropriate to
compensate such Lender Party or any corporation controlling such Lender Party in
light of such circumstances, to the extent that such Lender Party reasonably
determines that the amount of any such capital would be increased or the rate of
return on any such capital would be reduced by or in whole or in part based on
the existence of the face amount of such Lender Party's Loans, Letters of
Credit, participations in Letters of Credit or commitments under this Agreement.
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Section 3.3. Increased Cost of Eurodollar Loans or Letters of Credit.
If any applicable Law (whether now in effect or hereinafter enacted or
promulgated, including Regulation D) or any interpretation or administration
thereof by any governmental authority charged with the interpretation or
administration thereof (whether or not having the force of Law):
(a) shall change the basis of taxation of payments to any Lender Party
of any principal, interest, or other amounts attributable to any Eurodollar Loan
or Letter of Credit or otherwise due under this Agreement in respect of any
Eurodollar Loan or Letter of Credit (other than taxes imposed on the overall net
income of such Lender Party or any Applicable Lending Office of such Lender
Party by any jurisdiction in which such Lender Party or any such Applicable
Lending Office is located); or
(b) shall change, impose, modify, apply or deem applicable any reserve,
special deposit or similar requirements in respect of any Eurodollar Loan or any
Letter of Credit (excluding those for which such Lender Party is fully
compensated pursuant to adjustments made in the definition of Eurodollar Rate)
or against assets of, deposits with or for the account of, or credit extended
by, such Lender Party; or
(c) shall impose on any Lender Party or the interbank eurocurrency
deposit market any other condition affecting any Eurodollar Loan or Letter of
Credit, the result of which is to increase the cost to any Lender Party of
funding or maintaining any Eurodollar Loan or of issuing any Letter of Credit or
to reduce the amount of any sum receivable by any Lender Party in respect of any
Eurodollar Loan or Letter of Credit by an amount deemed by such Lender Party to
be material,
then such Lender Party shall promptly notify Agent and Borrower in writing of
the happening of such event and of the amount required to compensate such Lender
Party for such event (on an after-tax basis, taking into account any taxes on
such compensation), whereupon (i) Borrower shall pay such amount to Agent for
the account of such Lender Party and (ii) Borrower may elect, by giving to Agent
and such Lender Party not less than three Business Days' notice, to convert all
(but not less than all) of any such Eurodollar Loans into Base Rate Loans.
Section 3.4. Availability. If (a) any change in applicable Laws, or in
the interpretation or administration thereof of or in any jurisdiction
whatsoever, domestic or foreign, shall make it unlawful or impracticable for any
Lender Party to fund or maintain Eurodollar Loans or to issue or participate in
Letters of Credit, or shall materially restrict the authority of any Lender
Party to purchase or take offshore deposits of dollars (i.e., "eurodollars"), or
(b) any Lender Party determines that matching deposits appropriate to fund or
maintain any Eurodollar Loan are not available to it, or (c) any Lender Party
determines that the formula for calculating the Eurodollar Rate does not fairly
reflect the cost to such Lender Party of making or maintaining loans based on
such rate, then, upon notice by such Lender Party to Borrower and Agent,
Borrower's right to elect Eurodollar Loans from such Lender Party (or, if
applicable, to obtain Letters of Credit) shall be suspended to the extent and
for the duration of such illegality, impracticability or restriction and all
Eurodollar Loans of such Lender Party which are then outstanding or are then
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the subject of any Borrowing Notice and which cannot lawfully or practicably be
maintained or funded shall immediately become or remain, or shall be funded as,
Base Rate Loans of such Lender Party. Borrower agrees to indemnify each Lender
Party and hold it harmless against all costs, expenses, claims, penalties,
liabilities and damages which may result from any such change in Law,
interpretation or administration.
Section 3.5. Funding Losses. In addition to its other obligations
hereunder, Borrower will indemnify each Lender Party against, and reimburse each
Lender Party on demand for, any loss or expense incurred or sustained by such
Lender Party (including any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by a Lender
Party to fund or maintain Eurodollar Loans), as a result of (a) any payment or
prepayment (whether authorized or required hereunder or otherwise) of all or a
portion of a Eurodollar Loan on a day other than the day on which the applicable
Interest Period ends, (b) any payment or prepayment, whether required hereunder
or otherwise, of a Loan made after the delivery, but before the effective date,
of a Continuation/Conversion Notice, if such payment or prepayment prevents such
Continuation/Conversion Notice from becoming fully effective, (c) the failure of
any Loan to be made or of any Continuation/Conversion Notice to become effective
due to any condition precedent not being satisfied or due to any other action or
inaction of any Restricted Person, or (d) any Conversion (whether authorized or
required hereunder or otherwise) of all or any portion of any Eurodollar Loan
into a Base Rate Loan or into a different Eurodollar Loan on a day other than
the day on which the applicable Interest Period ends including, but not limited
to Conversion pursuant to Section 2.4.
Section 3.6. Reimbursable Taxes. Borrower covenants and agrees that:
(a) Borrower will indemnify each Lender Party against and reimburse
each Lender Party for all present and future income, stamp and other taxes,
levies, costs and charges whatsoever imposed, assessed, levied or collected on
or in respect of this Agreement or any Eurodollar Loans or Letters of Credit
(whether or not legally or correctly imposed, assessed, levied or collected),
excluding, however, any taxes imposed on or measured by the overall net income
of Agent or such Lender Party or any Applicable Lending Office of such Lender
Party by any jurisdiction in which such Lender Party or any such Applicable
Lending Office is located (all such non-excluded taxes, levies, costs and
charges being collectively called "Reimbursable Taxes" in this section). Such
indemnification shall be on an after-tax basis, taking into account any
additional such Reimbursable Taxes imposed on the amounts paid as indemnity.
(b) All payments on account of the principal of, and interest on, each
Lender Party's Loans and Note, and all other amounts payable by Borrower to any
Lender Party hereunder, shall be made in full without set-off or counterclaim
and shall be made free and clear of and without deductions or withholdings of
any nature by reason of any Reimbursable Taxes, all of which will be for the
account of Borrower. In the event of Borrower being compelled by Law to make any
such deduction or withholding from any payment to any Lender Party, Borrower
shall pay on the due date of such payment, by way of additional interest, such
additional amounts as are needed to cause the amount receivable by such Lender
Party after such deduction or
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withholding to equal the amount which would have been receivable in the absence
of such deduction or withholding. If Borrower should make any deduction or
withholding as aforesaid, Borrower shall within 60 days thereafter forward to
such Lender Party an official receipt or other official document evidencing
payment of such deduction or withholding.
(c) If Borrower is ever required to pay any Reimbursable Tax with
respect to any Eurodollar Loan, Borrower may elect, by giving to Agent and such
Lender Party not less than three Business Days' notice, to convert all (but not
less than all) of any such Eurodollar Loan into a Base Rate Loan, but such
election shall not diminish Borrower's obligation to pay all Reimbursable Taxes.
(d) Notwithstanding the foregoing provisions of this section, Borrower
shall be entitled, to the extent it is required to do so by Law, to deduct or
withhold (and not to make any indemnification or reimbursement for) income or
other similar taxes imposed by the United States of America (other than any
portion thereof attributable to a change in federal income tax Laws effected
after the date hereof) from interest, fees or other amounts payable hereunder
for the account of any Lender Party, other than a Lender Party (i) who is a U.S.
person for Federal income tax purposes or (ii) who has the Prescribed Forms on
file with Agent (with copies provided to Borrower) for the applicable year to
the extent deduction or withholding of such taxes is not required as a result of
the filing of such Prescribed Forms, provided that if Borrower shall so deduct
or withhold any such taxes, it shall provide a statement to Agent and such
Lender Party, setting forth the amount of such taxes so deducted or withheld,
the applicable rate and any other information or documentation which such Lender
Party may reasonably request for assisting such Lender Party to obtain any
allowable credits or deductions for the taxes so deducted or withheld in the
jurisdiction or jurisdictions in which such Lender Party is subject to tax. As
used in this section, "Prescribed Forms" means such duly executed forms or
statements, and in such number of copies, which may, from time to time, be
prescribed by Law and which, pursuant to applicable provisions of (x) an income
tax treaty between the United States and the country of residence of the Lender
Party providing the forms or statements, (y) the Internal Revenue Code, or (z)
any applicable rules or regulations thereunder, permit Borrower to make payments
hereunder for the account of such Lender Party free of such deduction or
withholding of income or similar taxes.
Section 3.7. Change of Applicable Lending Office. Each Lender Party
agrees that, upon the occurrence of any event giving rise to the operation of
Sections 3.2 through 3.6 with respect to such Lender Party, it will, if
requested by Borrower, use reasonable efforts (subject to overall policy
considerations of such Lender Party) to designate another Applicable Lending
Office, provided that such designation is made on such terms that such Lender
Party and its Applicable Lending Office suffer no economic, legal or regulatory
disadvantage, with the object of avoiding the consequence of the event giving
rise to the operation of any such section. Nothing in this section shall affect
or postpone any of the obligations of Borrower or the rights of any Lender Party
provided in Sections 3.2 through 3.6.
Section 3.8. Replacement of Lenders. If any Lender Party seeks
reimbursement for
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increased costs under Sections 3.2 through 3.6, then within ninety days
thereafter -- provided no Event of Default then exists -- Borrower shall have
the right (unless such Lender Party withdraws its request for additional
compensation) to replace such Lender Party by requiring such Lender Party to
assign its Loans and Notes and its commitments hereunder to an Eligible
Transferee reasonably acceptable to Agent and to Borrower, provided that: (a)
all Obligations of Borrower owing to such Lender Party being replaced (including
such increased costs, but excluding principal and accrued interest on the Notes
being assigned) shall be paid in full to such Lender Party concurrently with
such assignment, and (b) the replacement Eligible Transferee shall purchase the
Note being assigned by paying to such Lender Party at a price equal to the
principal amount thereof plus accrued and unpaid interest thereon. In connection
with any such assignment Borrower, Agent, such Lender Party and the replacement
Eligible Transferee shall otherwise comply with Section 10.5. Notwithstanding
the foregoing rights of Borrower under this section, however, Borrower may not
replace any Lender Party which seeks reimbursement for increased costs under
Section 3.2 through 3.6 unless Borrower is at the same time replacing all Lender
Parties which are then seeking such compensation.
ARTICLE IV - Conditions Precedent to Lending
Section 4.1. Documents to be Delivered. No Lender has any obligation to
make its first Loan, and LC Issuer has no obligation to issue the first Letter
of Credit, unless Agent shall have received all of the following, at Agent's
office in New York, New York, duly executed and delivered and in form, substance
and date satisfactory to Agent:
(a) This Agreement and any other documents that Lenders are to execute
in connection herewith.
(b) Each Note.
(c) Each Security Document listed in the Security Schedule or required
by Agent pursuant to 6.14.
(d) Certain certificates of Borrower including:
(i) An "Omnibus Certificate" of the Secretary and of the
Chairman of the Board or President of Borrower, which shall contain the
names and signatures of the officers of Borrower authorized to execute
Loan Documents and which shall certify to the truth, correctness and
completeness of the following exhibits attached thereto: (1) a copy of
resolutions duly adopted by the Board of Directors of Borrower and in
full force and effect at the time this Agreement is entered into,
authorizing the execution of this Agreement and the other Loan
Documents delivered or to be delivered in connection herewith and the
consummation of the transactions contemplated herein and therein, (2) a
copy of the charter documents of Borrower and all amendments thereto,
certified by the appropriate official of Borrower's state of
organization, and (3) a copy of any bylaws of
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Borrower; and
(ii) A "Compliance Certificate" of the Chairman of the Board
or President and of the chief financial officer of Borrower, of even
date with such Loan or such Letter of Credit, in which such officers
certify to the satisfaction of the conditions set out in Subsections
(a), (b), (c) and (d) of Section 4.3.
(e) certificate (or certificates) of the due formation, valid existence
and good standing of Borrower in its state of organization, issued by the
appropriate authorities of such jurisdiction, and certificates of Borrower's
good standing and due qualification to do business, issued by appropriate
officials in any states in which Borrower owns property subject to Security
Documents.
(f) Documents similar to those specified in subsections (d)(i) and (e)
of this section with respect to each Guarantor and the execution by it of its
guaranty of Borrower's Obligations.
(g) A favorable opinion of Xxxxxxx & Xxxxx, L.L.P., counsel for
Restricted Persons, substantially in the form set forth in Exhibit E, a
favorable opinion of Opinion of Liskow & Xxxxx, special Louisiana counsel for
Lenders, a favorable opinion of Xxxxx, Drew, Massey, & Xxxxxxxx, special Wyoming
counsel for Lenders, a favorable opinion of Xxxxxxx, Parr, Waddoups, Xxxxx &
Xxx, special Utah counsel for Lenders, a favorable opinion of Hinkle, Cox,
Xxxxx, Xxxxxxxx & Xxxxxxx, special New Mexico counsel for Lenders, and a
favorable opinion of Guess & Xxxx, special Alaskan counsel for Restricted
Persons.
(h) The Initial Financial Statements.
(i) Certificates or binders evidencing Restricted Persons' insurance in
effect on the date hereof.
(j) Initial Engineering Reports.
(k) Evidence of the commitment, facility, agency and other fees
required to be paid to any Lender pursuant to any Loan Documents or any
commitment agreement heretofore entered into.
(l) Revolving Credit Lenders shall have received their pro-rata share
of a cash payment in the aggregate amount of $40,000,000 in partial payment of
the Existing Obligations.
(m) The Lenders shall have received (a) interest (at the non-default
rate) and fees which are due and owing to them, including, without limitation,
interest and fees which have accrued since the date of filing of the bankruptcy
petition by the Borrower and (b) payment of all costs, expenses, or
disbursements incurred by each Lender since such date in connection with the
outstanding Existing Obligations, the bankruptcy of Borrower, and the
Reorganization Plan, including, without limitation, reasonable fees of
attorneys, accountants, experts and advisors.
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(n) Evidence showing that the use of the proceeds is as described under
Section 2.5, which evidence shall be in form and substance satisfactory to the
Lenders.
Section 4.2. Approval and Closing of Reorganization and Additional
Conditions Precedent to Effectiveness. This Agreement shall not become effective
until:
(a) Borrower shall have consummated each transaction contemplated as a
condition to effectiveness of the Reorganization Plan, in form and substance
satisfactory to Agent and each Reorganization Document has been approved by
Agent.
(b) A single letter of credit shall have been issued in favor of Agent,
substantially in the form attached hereto as Exhibit H and by Bank of Tokyo
Mitsubishi Trust Company, for the account of one or more of the Initial
Purchasers party to the Commitment Agreement in the face amount of $40,000,000
(the "Required LC"), providing for an unconditional right to draw upon such
letter of credit at any time during the period from and after the Effective Date
until and including June 2, 2000 (such period is herein referred to as the
"Required LC Period") in the event that the Required Preferred Stock Issuance
does not occur before May 2, 2000.
Borrower, for itself and on behalf of any other Restricted Person, hereby
acknowledges and agrees that (i) the consummation of the transactions
contemplated under this Agreement and the Reorganization Documents are intended
to be simultaneous for all intents and purposes, and (ii) each Restricted Person
shall be deemed to have executed and delivered each Loan Document as set forth
in Section 4.1 above, including without limitation each Security Document,
immediately prior to or simultaneously with the making of the Loans hereunder.
Section 4.3. Additional Conditions Precedent. No Lender has any
obligation to make any Loan (including its first), and LC Issuer has no
obligation to issue any Letter of Credit (including its first), unless the
following conditions precedent have been satisfied unless waived by each
Revolving Credit Lender (or all Lenders in the case of the first Loan):
(a) All representations and warranties made by any Restricted Person in
any Loan Document shall be true on and as of the date of such Loan or the date
of issuance of such Letter of Credit (except to the extent that the facts upon
which such representations are based have been changed by the extension of
credit hereunder) as if such representations and warranties had been made as of
the date of such Loan or the date of issuance of such Letter of Credit.
(b) No Default shall exist at the date of such Loan or the date of
issuance of such Letter of Credit.
(c) No Material Adverse Change shall have occurred since the date of
the Initial Financial Statements.
(d) Each Restricted Person shall have performed and complied with all
agreements and conditions required in the Loan Documents to be performed or
complied with by it on or
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prior to the date of such Loan or the date of issuance of such Letter of Credit.
(e) The making of such Loan or the issuance of such Letter of Credit
shall not be prohibited by any Law and shall not subject any Lender or any LC
Issuer to any penalty or other onerous condition under or pursuant to any such
Law.
(f) Agent shall have received all documents and instruments which Agent
has then reasonably requested, in addition to those described in Section 4.1
(including opinions of legal counsel for Restricted Persons and Agent; corporate
documents and records; documents evidencing governmental authorizations,
consents, approvals, licenses and exemptions; and certificates of public
officials and of officers and representatives of Borrower and other Persons), as
to (i) the accuracy and validity of or compliance with all representations,
warranties and covenants made by any Restricted Person in this Agreement and the
other Loan Documents, (ii) the satisfaction of all conditions contained herein
or therein, and (iii) all other matters pertaining hereto and thereto. All such
additional documents and instruments shall be reasonably satisfactory to Agent
in form, substance and date.
(g) In the case of any Loan advanced in connection with any acquisition
involving an amount in excess of $10,000,000, Borrower shall have complied with
the provisions of Section 6.14 with respect to such acquisition
contemporaneously with the funding of such Loan.
ARTICLE V - Representations and Warranties
To confirm each Lender's understanding concerning Restricted Persons
and Restricted Persons' businesses, properties and obligations and to induce
each Lender to enter into this Agreement and to extend credit hereunder,
Borrower represents and warrants to each Lender that:
Section 5.1. No Default. No event has occurred and is continuing which
constitutes a Default.
Section 5.2. Organization and Good Standing. Each Restricted Person is
duly organized, validly existing and in good standing under the Laws of its
jurisdiction of organization, having all powers required to carry on its
business and enter into and carry out the transactions contemplated hereby. Each
Restricted Person is duly qualified, in good standing, and authorized to do
business in all other jurisdictions within the United States wherein the
character of the properties owned or held by it or the nature of the business
transacted by it makes such qualification necessary, except where the failure to
do so could not cause a Material Adverse Change. Each Restricted Person has
taken all actions and procedures customarily taken in order to enter, for the
purpose of conducting business or owning property, each jurisdiction outside the
United States wherein the character of the properties owned or held by it or the
nature of the business transacted by it makes such actions and procedures
desirable, except where the failure to do so could not cause a Material Adverse
Change.
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Section 5.3. Authorization. Each Restricted Person has duly taken all
action necessary to authorize the execution and delivery by it of the Loan
Documents to which it is a party and to authorize the consummation of the
transactions contemplated thereby and the performance of its obligations
thereunder. Borrower is duly authorized to borrow funds hereunder.
Section 5.4. No Conflicts or Consents. The execution and delivery by
the various Restricted Persons of the Loan Documents to which each is a party,
the performance by each of its obligations under such Loan Documents, and the
consummation of the transactions contemplated by the various Loan Documents, do
not and will not (a) conflict with any provision of (i) any Law, (ii) the
organizational documents of any Restricted Person, or (iii) any agreement,
judgment, license, order or permit applicable to or binding upon any Restricted
Person, (b) result in the acceleration of any Indebtedness owed by any
Restricted Person, or (c) result in or require the creation of any Lien upon any
assets or properties of any Restricted Person except as expressly contemplated
or permitted in the Loan Documents. Except as expressly contemplated in the Loan
Documents no consent, approval, authorization or order of, and no notice to or
filing with, any Tribunal or third party is required in connection with the
execution, delivery or performance by any Restricted Person of any Loan Document
or to consummate any transactions contemplated by the Loan Documents.
Section 5.5. Enforceable Obligations. This Agreement is, and the other
Loan Documents when duly executed and delivered will be, legal, valid and
binding obligations of each Restricted Person which is a party hereto or
thereto, enforceable in accordance with their terms except as such enforcement
may be limited by bankruptcy, insolvency or similar Laws of general application
relating to the enforcement of creditors' rights.
Section 5.6. Initial Financial Statements. Borrower has heretofore
delivered to Agent for distribution to each Lender true, correct and complete
copies of the Initial Financial Statements. The Initial Financial Statements
fairly present Borrower's Consolidated financial position at the respective
dates thereof and the Consolidated results of Borrower's operations and
Borrower's Consolidated cash flows for the respective periods thereof after
giving effect to the Reorganization and the other adjustments which are fully
reflected in the footnotes to the Initial Financial Statements. Since the date
of the annual Initial Financial Statements no Material Adverse Change has
occurred, except as reflected in the Disclosure Schedule. All Initial Financial
Statements were prepared in accordance with GAAP (except to the extent that such
matters not properly contained in footnotes to the Initial Financial Statements
are adequately disclosed in the Disclosure Schedule or otherwise disclosed in
writing to Lenders).
Section 5.7. Other Obligations and Restrictions. No Restricted Person
has any outstanding Liabilities of any kind (including contingent obligations,
tax assessments, and unusual forward or long-term commitments) which are, in the
aggregate, material to Borrower or material with respect to Borrower's
Consolidated financial condition and not shown in the Initial Financial
Statements or disclosed in the Disclosure Schedule or a Disclosure Report.
Except as shown in the Initial Financial Statements or disclosed in the
Disclosure Schedule or a Disclosure Report, no Restricted Person is subject to
or restricted by any franchise, contract, deed, charter
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restriction, or other instrument or restriction which could cause a Material
Adverse Change.
Section 5.8. Full Disclosure. No certificate, statement or other
information delivered herewith or heretofore by any Restricted Person to any
Lender in connection with the negotiation of this Agreement or in connection
with any transaction contemplated hereby contains any untrue statement of a
material fact or omits to state any material fact known to any Restricted Person
(other than industry-wide risks normally associated with the types of businesses
conducted by Restricted Persons) necessary to make the statements contained
herein or therein not misleading as of the date made or deemed made. There is no
material fact known to any Restricted Person (other than industry-wide risks
normally associated with the types of businesses conducted by Restricted
Persons) that has not been disclosed in the Final Disclosure Statement which
could cause a Material Adverse Change. There are no statements or conclusions in
any Engineering Report which are based upon or include misleading materially
information or fail to take into account material information regarding the
matters reported therein, it being understood that each Engineering Report is
necessarily based upon professional opinions, estimates and projections and that
Borrower does not warrant that such opinions, estimates and projections will
ultimately prove to have been accurate. Borrower has heretofore delivered to
Agent for distribution to each Lender true, correct and complete copies of the
Initial Engineering Report.
Section 5.9. Litigation. Except as disclosed in the Initial Financial
Statements or in the Disclosure Schedule or a Disclosure Report: (a) there are
no actions, suits or legal, equitable, arbitrative or administrative proceedings
pending, or to the knowledge of any Restricted Person threatened, against any
Restricted Person before any Tribunal which could cause a Material Adverse
Change, and (b) there are no outstanding judgments, injunctions, writs, rulings
or orders by any such Tribunal against any Restricted Person or any Restricted
Person's stockholders, partners, directors or officers which could cause a
Material Adverse Change.
Section 5.10. Labor Disputes and Acts of God. Except as disclosed in
the Disclosure Schedule or a Disclosure Report, neither the business nor the
properties of any Restricted Person has been affected by any fire, explosion,
accident, strike, lockout or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance), which could cause a Material Adverse
Change.
Section 5.11. ERISA Plans and Liabilities. All currently existing ERISA
Plans are listed in the Disclosure Schedule or a Disclosure Report. Except as
disclosed in the Initial Financial Statements or in the Disclosure Schedule or a
Disclosure Report, no Termination Event has occurred with respect to any ERISA
Plan and all ERISA Affiliates are in compliance with ERISA in all material
respects. No ERISA Affiliate is required to contribute to, or has any other
absolute or contingent liability in respect of, any "multiemployer plan" as
defined in Section 4001 of ERISA. Except as set forth in the Disclosure Schedule
or a Disclosure Report: (a) no "accumulated funding deficiency" (as defined in
Section 412(a) of the Internal Revenue Code) exists with respect to any ERISA
Plan, whether or not waived by the Secretary of the Treasury or his delegate,
and (b) the current value of each ERISA Plan's benefits does not exceed the
current
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value of such ERISA Plan's assets available for the payment of such benefits by
more than $500,000.
Section 5.12. Environmental and Other Laws. As used in this section:
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, "CERCLIS" means the Comprehensive
Environmental Response, Compensation and Liability Information System List of
the Environmental Protection Agency, and "Release" has the meaning given such
term in 42 U.S.C.ss.9601(22). Except as set forth in the Disclosure Schedule or
a Disclosure Report:
(a) Restricted Persons are conducting their businesses in compliance
with all applicable Laws, including Environmental Laws, and have all permits,
licenses and authorizations required in connection with the conduct of their
businesses, except to the extent failure to have any such permit, license or
authorization could not cause a Material Adverse Change. Each Restricted Person
is in compliance in all material respects with the terms and conditions of all
such permits, licenses and authorizations, and is also in compliance in all
material respects with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in any applicable Environmental Law or in any regulation, code, plan,
order, decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, except to the extent failure to comply could
not cause a Material Adverse Change.
(b) No notice, notification, demand, request for information, citation,
summons or order has been issued, no complaint has been filed, no penalty has
been assessed, and to the best of Borrower's knowledge no investigation or
review is pending or threatened by any Tribunal or any other Person with respect
to (i) any alleged material generation, treatment, storage, recycling,
transportation, disposal, or Release of any Hazardous Materials, either by any
Restricted Person or on any property owned by any Restricted Person, (ii) any
material remedial action which might be needed to respond to any such alleged
generation, treatment, storage, recycling, transportation, disposal, or Release,
or (iii) any alleged material failure by any Restricted Person to have any
permit, license or authorization required in connection with the conduct of its
business or with respect to any such generation, treatment, storage, recycling,
transportation, disposal, or Release.
(c) No Restricted Person otherwise has any known material contingent
liability in connection with any alleged generation, treatment, storage,
recycling, transportation, disposal, or Release of any Hazardous Materials.
(d) To the best of Restricted Persons' knowledge after reasonably
prudent inquiry, no Restricted Person has handled any Hazardous Materials, other
than as a generator, on any properties now or previously owned or leased by any
Restricted Person to an extent that such handling has caused, or could cause, a
Material Adverse Change; and to the best of Restricted Persons' knowledge after
reasonably prudent inquiry:
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(i) no PCBs are or have been present at any properties now or
previously owned or leased by any Restricted Person to an extent that
such presence has caused, or could cause, a Material Adverse Change;
(ii) no asbestos is or has been present at any properties now
or previously owned or leased by any Restricted Person to an extent
that such presence has caused, or could cause, a Material Adverse
Change;
(iii) there are no underground storage tanks for Hazardous
Materials, active or abandoned, at any properties now or previously
owned or leased by any Restricted Person;
(iv) no Hazardous Materials have been Released, in a
reportable quantity, where such a quantity has been established by
statute, ordinance, rule, regulation or order, at, on or under any
properties now or previously owned or leased by any Restricted Person
to an extent that such presence has caused, or could cause, a Material
Adverse Change;
(v) no Hazardous Materials have been otherwise Released at, on
or under any properties now or previously owned or leased by any
Restricted Person to an extent that such release has caused, or could
cause, a Material Adverse Change.
(e) No Restricted Person has transported or arranged for the
transportation of any Hazardous Material to any location which is listed on the
National Priorities List under CERCLA, listed for possible inclusion on the
National Priorities List by the Environmental Protection Agency in CERCLIS, or
listed on any similar state list or which is the subject of federal, state or
local enforcement actions or other investigations which may lead to claims
against any Restricted Person for clean-up costs, remedial work, damages to
natural resources or for personal injury claims, including, but not limited to,
claims under CERCLA to an extent that such transportation or arrangement has
caused, or could cause, a Material Adverse Change.
(f) No Hazardous Material generated by any Restricted Person has been
recycled, treated, stored, disposed of or released by any Restricted Person at
any location other than those listed in Disclosure Schedule to an extent that
such recycling treatment, storage, disposal or release has caused, or could
cause, a Material Adverse Change.
(g) No oral or written notification of a Release of a Hazardous
Material has been filed by or on behalf of any Restricted Person (and to the
best knowledge of Borrower, no such notification has been filed with respect to
any Restricted Person by any other Person), and no property now or previously
owned or leased by any Restricted Person is listed or proposed for listing on
the National Priority list promulgated pursuant to CERCLA, in CERCLIS, or on any
similar state list of sites requiring investigation or clean-up to an extent
that such filing or listing has caused, or could cause, a Material Adverse
Change.
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(h) There are no Liens arising under or pursuant to any Environmental
Laws on any of the real properties or properties owned or leased by any
Restricted Person, and no government actions have been taken or are in process
which could subject any of such properties to such Liens; nor would any
Restricted Person be required to place any notice or restriction relating to the
presence of Hazardous Materials at any properties owned by it in any deed to
such properties to an extent that such Liens, actions, notices, or restrictions
have caused, or could cause, a Material Adverse Change.
(i) There have been no environmental investigations, studies, audits,
tests, reviews or other analyses conducted by or which are in the possession of
any Restricted Person in relation to any properties or facility now or
previously owned or leased by any Restricted Person which have not been made
available to Agent to an extent that such investigations, studies, audits,
tests, reviews or other analyses have caused, or could cause, a Material Adverse
Change.
Section 5.13. Names and Places of Business. No Restricted Person has,
during the preceding five years, had, been known by, or used any other trade or
fictitious name, except as disclosed in the Disclosure Schedule. Except as
otherwise indicated in the Disclosure Schedule or a Disclosure Report, the chief
executive office and principal place of business of each Restricted Person are
(and for the preceding five years have been) located at the address of Borrower
set out on the signature pages hereto. Except as indicated in the Disclosure
Schedule or a Disclosure Report, no Restricted Person has any other office or
place of business.
Section 5.14. Borrower's Subsidiaries. Borrower does not presently have
any Subsidiary or own any stock in any other corporation or association except
those listed in the Disclosure Schedule or a Disclosure Report. Neither Borrower
nor any Restricted Person is a member of any general or limited partnership,
joint venture or association of any type whatsoever except those listed in the
Disclosure Schedule or a Disclosure Report and associations, joint ventures or
other relationships (a) which are established pursuant to a standard form
operating agreement or similar agreement or which are partnerships for purposes
of federal income taxation only, (b) which are not corporations or partnerships
(or subject to the Uniform Partnership Act) under applicable state Law, and (c)
whose businesses are limited to the exploration, development and operation of
oil, gas or mineral properties and interests owned directly by the parties in
such associations, joint ventures or relationships. Except as otherwise revealed
in a Disclosure Report, Borrower owns, directly or indirectly, the equity
interest in each of its Subsidiaries which is indicated in the Disclosure
Schedule.
Section 5.15. Title to Properties, Licenses. Each Restricted Person has
good and defensible title to all of its material properties and assets, free and
clear of all Liens other than Permitted Liens and of all impediments to the use
of such properties and assets in such Restricted Person's business, except that
no representation or warranty is made with respect to any oil, gas or mineral
property or interest to which no proved oil or gas reserves are properly
attributed. Other than Permitted Liens, each Restricted Person will respectively
own in the aggregate, in all material respects, the net interests in production
attributable to the xxxxx and units evaluated in the Initial Reserve Reports.
The ownership of such Properties shall not in the
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aggregate in any material respect obligate such Restricted Person to bear the
costs and expenses relating to the maintenance, development and operations of
such Properties in an amount materially in excess of the working interest of
such Properties set forth in the Initial Engineering Reports. Each Restricted
Person has paid all royalties payable under the oil and gas leases to which it
is operator, except those contested in accordance with the terms of the
applicable joint operating agreement or otherwise contested in good faith by
appropriate proceedings. Upon delivery of each Engineering Report furnished to
Lenders pursuant to Section 6.2(h), the statements made in the preceding
sentences of this section shall be true with respect to such Engineering
Reports. All information contained in the Initial Engineering Reports is true
and correct in all material respects as of the date thereof and as of the date
of the first Loan hereunder. Each Restricted Person possesses all licenses,
permits, franchises, patents, copyrights, trademarks and trade names, and other
intellectual property (or otherwise possesses the right to use such intellectual
property without violation of the rights of any other Person) which are
necessary to carry out its business as presently conducted and as presently
proposed to be conducted hereafter, and no Restricted Person is in violation in
any material respect of the terms under which it possesses such intellectual
property or the right to use such intellectual property, except where the
failure to do so would not cause a Material Adverse Change.
Section 5.16. Government Regulation. Neither Borrower nor any other
Restricted Person owing Obligations is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, the Investment
Company Act of 1940 (as any of the preceding acts have been amended) or any
other Law which regulates the incurring by such Person of Indebtedness,
including Laws relating to common contract carriers or the sale of electricity,
gas, steam, water or other public utility services.
Section 5.17. Insider. No Restricted Person, nor, to its knowledge, any
Person having "control" (as that term is defined in 12 U.S.C. ss. 375b(9) or in
regulations promulgated pursuant thereto) of any Restricted Person, is a
"director" or an "executive officer" or "principal shareholder" (as those terms
are defined in 12 U.S.C. ss. 375b(8) or (9) or in regulations promulgated
pursuant thereto) of any Lender, of a bank holding company of which any Lender
is a Subsidiary or of any Subsidiary of a bank holding company of which any
Lender is a Subsidiary.
Section 5.18. Solvency. Upon giving effect to the issuance of the
Notes, the execution of the Loan Documents by Borrower and the consummation of
the transactions contemplated hereby, and the Reorganization Plan becoming
effective, Borrower will be solvent (as such term is used in applicable
bankruptcy, liquidation, receivership, insolvency or similar Laws).
Section 5.19. Officers, Directors and Shareholders. The officers and
directors of Borrower are those persons disclosed in the Final Disclosure
Statement.
Section 5.20. Immaterial Subsidiaries. No Immaterial Subsidiary has any
assets, other than assets which do not exceed $50,000 in the aggregate with
respect to any single Immaterial Subsidiary (other than the tax refund claim of
Edisto Canada Inc. in the amount of approximately
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$150,000). No Immaterial Subsidiary has had revenues or conducted operations in
any calendar month from and after December 31, 1999. From and after December 31,
1999, Borrower has not permitted any Restricted Person to engage in any
transaction with, transfer any asset to, or otherwise conduct any business with,
any Immaterial Subsidiary.
ARTICLE VI - Affirmative Covenants of Borrower
To conform with the terms and conditions under which each Lender is
willing to have credit outstanding to Borrower, and to induce each Lender to
enter into this Agreement and extend credit hereunder, Borrower warrants,
covenants and agrees that until the full and final payment of the Obligations
and the termination of this Agreement, unless Majority Lenders have previously
agreed otherwise:
Section 6.1. Payment and Performance. Borrower will pay all amounts due
under the Loan Documents in accordance with the terms thereof and will observe,
perform and comply with every covenant, term and condition expressed or implied
in the Loan Documents. Borrower will cause each other Restricted Person to
observe, perform and comply with every such term, covenant and condition in any
Loan Document.
Section 6.2. Books, Financial Statements and Reports. Each Restricted
Person will at all times maintain full and accurate books of account and
records. Borrower will maintain and will cause its Subsidiaries to maintain a
standard system of accounting, will maintain its Fiscal Year, and will furnish
the following statements and reports to each Lender Party at Borrower's expense:
(a) As soon as available, and in any event within ninety (90) days
after the end of each Fiscal Year, complete Consolidated and consolidating
financial statements of Borrower together with all notes thereto, prepared in
reasonable detail in accordance with GAAP, together with an unqualified opinion,
based on an audit using generally accepted auditing standards, by independent
certified public accountants selected by Borrower and reasonably acceptable to
Majority Lenders, stating that such Consolidated financial statements have been
so prepared. These financial statements shall contain a Consolidated and
consolidating balance sheet as of the end of such Fiscal Year and Consolidated
and consolidating statements of earnings, of cash flows, and of changes in
owners' equity for such Fiscal Year, each setting forth in comparative form the
corresponding figures for the preceding Fiscal Year. In addition, within ninety
(90) days after the end of each Fiscal Year Borrower will furnish a report
signed by such accountants (i) stating that they have read this Agreement, (ii)
containing calculations showing compliance (or non-compliance) at the end of
such Fiscal Year with the requirements of Sections 7.11 through 7.14, and (iii)
further stating that in making their examination and reporting on the
Consolidated financial statements described above they did not conclude that any
Default existed at the end of such Fiscal Year or at the time of their report,
or, if they did conclude that a Default existed, specifying its nature and
period of existence.
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(b) As soon as available, and in any event within forty-five (45) days
after the end of each of the first three Fiscal Quarters of each Fiscal Year,
Borrower's Consolidated and consolidating balance sheet as of the end of such
Fiscal Quarter and Consolidated and consolidating statements of Borrower's
earnings and cash flows for the period from the beginning of the then current
Fiscal Year to the end of such Fiscal Quarter, all in reasonable detail and
prepared in accordance with GAAP, subject to changes resulting from normal
year-end adjustments. In addition Borrower will, together with each such set of
financial statements and each set of financial statements furnished under
subsection (a) of this section, furnish a certificate in the form of Exhibit D
signed by the chief financial officer of Borrower stating that such financial
statements are accurate and complete (subject to normal year-end adjustments),
stating that he has reviewed the Loan Documents, containing calculations showing
compliance (or non-compliance) at the end of such Fiscal Quarter with the
requirements of Sections 7.11 through 7.14 and stating that no Default exists at
the end of such Fiscal Quarter or at the time of such certificate or specifying
the nature and period of existence of any such Default.
(c) As soon as available, and in any event within forty-five (45) days
after the end of each calendar month, Borrower's Consolidated and consolidating
balance sheet as of the end of such calendar month and Consolidated and
consolidating statements of Borrower's earnings and cash flows for the period
from the beginning of the then current Fiscal Year to the end of such calendar
month, all in reasonable detail and prepared in accordance with GAAP, subject to
changes resulting from normal year-end adjustments with management discussion
and analysis. Borrower will furnish a monthly reconciliation of actual drilling
costs and results compared against projected drilling costs and results and a
year-to-date reconciliation of actual drilling costs and results compared
against projected drilling costs and results with the financial statements
furnished under this section. Borrower will also furnish a monthly
reconciliation of the information contained in the financial statements
furnished under this section compared against the monthly projections and
budgets furnished pursuant to Section 6.2(e) and a year-to- date reconciliation
of information contained in the financial statements furnished under this
section compared against year-to-date projections and budgets furnished pursuant
to Section 6.2(e). In addition, Borrower will, together with each such set of
financial statements and each set of financial statements furnished under
subsection (a) of this section, furnish a certificate in the form of Exhibit D
signed by the chief financial officer of Borrower stating that such financial
statements are accurate and complete (subject to normal quarter-end and year-end
adjustments), stating that he has reviewed the Loan Documents, containing
calculations showing compliance (or non-compliance) at the end of such calendar
month with the requirements of Sections 7.11 through 7.14 and stating that no
Default exists at the end of such calendar month or at the time of such
certificate or specifying the nature and period of existence of any such
Default. All of the foregoing information shall be in form and scope reasonably
satisfactory to Majority Lenders.
(d) Promptly upon their becoming available, copies of all financial
statements, reports, notices and proxy statements sent by any Restricted Person
to its stockholders and all registration statements, periodic reports and other
statements and schedules filed by any Restricted Person with any securities
exchange, the Securities and Exchange Commission or any
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similar governmental authority.
(e) As soon as available, and in any event within sixty (60) days after
the end of each Fiscal Year, a business and financial plan for Borrower (in form
reasonably satisfactory to Agent), prepared by a senior financial officer
thereof, setting forth for the next fiscal year, monthly financial projections
and budgets for Borrower, and thereafter annual financial projections and
budgets during the Revolving Credit Commitment Period. In addition Borrower
will, together with such business and financial plan furnish a drilling program
plan setting forth for the next Fiscal Year monthly drilling projections, in
form, scope and detail satisfactory to Agent.
(f) As soon as available, and in any event within thirty (30) days
after the end of each Fiscal Year, Borrower shall deliver to Agent an
environmental compliance certificate signed by the president or chief executive
officer of Borrower in the form attached hereto as Exhibit G. Further, if
requested by Agent, Borrower shall permit and cooperate with an environmental
and safety review made in connection with the operations of Borrower's oil and
gas properties one time during each Fiscal Year beginning with the Fiscal Year
1999, by Pilko & Associates, Inc. or other consultants selected by Agent which
review shall, if requested by Agent, be arranged and supervised by advisors to
Agent, all at Borrower's cost and expense. The consultant shall render a verbal
or written report, as specified by Agent, based upon such review at Borrower's
cost and expense with such report rendered by September 30, 2000.
(g) Concurrently with the annual renewal of Borrower's insurance
policies, Borrower shall, if requested by Agent in writing, cause a certificate
or report to be issued by Agent's professional insurance consultants or other
insurance consultants satisfactory to Agent certifying that Borrower's insurance
for the next succeeding year after such renewal (or for such longer period for
which such insurance is in effect) complies with the provisions of this
Agreement and the Security Documents.
(h) By each Evaluation Date (other than the regular September 1
Evaluation Date) an Engineering Report prepared by petroleum engineers who are
employees of Borrower and audited by the Independent Petroleum Engineers,
concerning all oil and gas properties and interests owned by any Restricted
Person which are located in or offshore of the United States and which have
attributable to them proved oil or gas reserves. This report shall reflect
reserve information as of a date no earlier than 60 days prior to the date of
such report. This report shall be satisfactory to Agent, shall contain
sufficient information to enable Borrower to meet the reporting requirements
concerning oil and gas reserves contained in Regulations S-K and S-X promulgated
by the Securities and Exchange Commission, shall take into account any
"over-produced" status under gas balancing arrangements, and shall contain
information and analysis comparable in scope to that contained in the Initial
Engineering Report. This report shall distinguish (or shall be delivered
together with a certificate from an appropriate officer of Borrower which
distinguishes) those properties treated in the report which are Collateral from
those properties treated in the report which are not Collateral.
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(i) By the September 1 Evaluation Date, an Engineering Report prepared
as of the preceding July 1 by petroleum engineers who are employees of Borrower
together with an accompanying report on property sales, property purchases and
changes in categories, both in the same form and scope as the reports in (h)
above.
(j) By January 15 and July 15 of each year, all production data, well
logs, core samples and other data that the Lenders' Independent Engineer may
request regarding any oil and gas property which will be evaluated in the
Engineering Report for the next Evaluation Date but which was not evaluated in
the Engineering Report for the immediately preceding Evaluation Date.
(k) As soon as available, and in any event within thirty (30) days
after the end of each month, a report describing by region the gross volume of
production and sales attributable to production during such month from the
properties described in subsections (h) and (i) above and describing the related
severance taxes, other taxes, and leasehold operating expenses and capital costs
attributable thereto and incurred during such month.
(l) As soon as available, and in any event within forty-five days after
the end of each June and December, a list, by name and address, of those Persons
who have purchased production during such 6-month period from the Mortgaged
Properties, giving each such purchaser's owner number for Borrower and each
other grantor of a Lien on Mortgaged Properties and each such purchaser's
property number for each such Mortgaged Property.
(m) Within 30 days after the Effective Date and thereafter within 5
days after any request by Agent, a report in form and detail satisfactory to
Agent with respect to all claims payable under the Reorganization Plan setting
forth (i) all payments made on such claims, (ii) all releases of Liens received
with respect to such claims, and (iii) the status of each unpaid claim
(including, without limitation, whether any such claim is stipulated or
contested and whether any such claim will be paid in a lump sum or in
installments).
Section 6.3. Other Information and Inspections. Each Restricted Person
will furnish to each Lender any information which Agent may from time to time
reasonably request in writing concerning any covenant, provision or condition of
the Loan Documents or any matter in connection with Restricted Persons'
businesses and operations. Each Restricted Person will permit representatives
appointed by Agent (including independent accountants, auditors, agents,
attorneys, appraisers and any other Persons) to visit and inspect during normal
business hours any of such Restricted Person's property, including its books of
account, other books and records, and any facilities or other business assets,
and to make extra copies therefrom and photocopies and photographs thereof, and
to write down and record any information such representatives obtain, and each
Restricted Person shall permit Agent or its representatives to investigate and
verify the accuracy of the information furnished to Agent or any Lender in
connection with the Loan Documents and to discuss all such matters with its
officers, employees and representatives.
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Section 6.4. Notice of Material Events and Change of Address. Borrower
will promptly notify each Lender in writing, stating that such notice is being
given pursuant to this Agreement, of:
(a) occurrence of any Material Adverse Change,
(b) the occurrence of any Default of which Borrower has knowledge,
(c) the acceleration of the maturity of any Indebtedness owed by any
Restricted Person or of any default by any Restricted Person under any
indenture, mortgage, agreement, contract or other instrument to which any of
them is a party or by which any of them or any of their properties is bound, if
such acceleration or default could cause a Material Adverse Change,
(d) the occurrence of any Termination Event,
(e) any claim of $1,000,000 or more (in the aggregate with other claims
pending), any notice of potential liability under any Environmental Laws which
might exceed such amount, or any other claim of $1,000,000 or more (in the
aggregate with other such liabilities and claims pending) asserted against any
Restricted Person or with respect to any Restricted Person's properties, and
(f) the filing of any suit or proceeding against any Restricted Person
in which an adverse decision could cause a Material Adverse Change.
Upon the occurrence of any of the foregoing Restricted Persons will take all
necessary or appropriate steps to remedy promptly any such Material Adverse
Change, Default, acceleration, default or Termination Event, to protect against
any such adverse claim, to defend any such suit or proceeding, and to resolve
all controversies on account of any of the foregoing. Borrower will also notify
Agent and Agent's counsel in writing at least twenty Business Days prior to the
date that any Restricted Person changes its name or the location of its chief
executive office or principal place of business or the place where it keeps its
books and records concerning the Collateral, furnishing with such notice any
necessary financing statement amendments or requesting Agent and its counsel to
prepare the same.
Section 6.5. Maintenance of Properties. Each Restricted Person will
maintain, preserve, protect, and keep all Collateral and all other property used
or useful in the conduct of its business in good condition and in compliance in
all material respects with all applicable Laws, and will from time to time make
all repairs, renewals and replacements needed to enable the business and
operations carried on in connection therewith to be promptly and advantageously
conducted at all times.
Section 6.6. Maintenance of Existence and Qualifications. Each
Restricted Person (other than an Immaterial Subsidiary) will maintain and
preserve its existence and its rights and franchises in full force and effect
and will qualify to do business in all states or jurisdictions
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where required by applicable Law, except where the failure so to qualify will
not cause a Material Adverse Change.
Section 6.7. Payment of Trade Liabilities, Taxes, etc. Each Restricted
Person will (a) timely file all required tax returns; (b) timely pay all taxes,
assessments, and other governmental charges or levies imposed upon it or upon
its income, profits or property; (c) within one hundred twenty (120) days after
the incurrence thereof same becomes due pay all Liabilities owed by it on
ordinary trade terms to vendors, suppliers and other Persons providing goods and
services used by it in the ordinary course of its business; (d) pay and
discharge when due all other Liabilities now or hereafter owed by it; and (e)
maintain appropriate accruals and reserves for all of the foregoing in
accordance with GAAP. Each Restricted Person may, however, delay paying or
discharging any of the foregoing so long as it is in good faith contesting the
validity thereof by appropriate proceedings, provided that such contest does not
induce any danger of sale, forfeiture, or loss, and has set aside on its books
adequate reserves in accordance with GAAP.
Section 6.8. Insurance. Each Restricted Person shall at all times
maintain insurance for its property in accordance with the Insurance Schedule,
which insurance shall be by financially sound and reputable insurers. Borrower
will maintain the additional insurance coverage as described in the respective
Security Documents. Upon demand by Agent any insurance policies covering
Collateral shall be endorsed (a) to provide for payment of losses to Agent as
its interests may appear, (b) to provide that such policies may not be canceled
or reduced or affected in any material manner for any reason without 30 days
prior notice to Agent, (c) to provide for any other matters specified in any
applicable Security Document or which Agent may reasonably require; and (d) to
provide for insurance against fire, casualty and any other hazards normally
insured against, in the amount of the full value (less a reasonable deductible
not to exceed amounts customary in the industry for similarly situated
businesses and properties) of the property insured. Each Restricted Person shall
at all times maintain insurance against its liability for injury to persons or
property in accordance with the Insurance Schedule, which insurance shall be by
financially sound and reputable insurers. Without limiting the foregoing, each
Restricted Person shall at all time maintain liability insurance in accordance
with Insurance Schedule.
Section 6.9. Performance on Borrower's Behalf. If any Restricted Person
fails to pay any taxes, insurance premiums, expenses, attorneys' fees or other
amounts it is required to pay under any Loan Document, Agent may upon five (5)
days prior written notice to Borrower pay the same; provided, however, that if
Borrower is contesting any such amount in accordance with the terms of the Loan
Documents and gives Agent written notice thereof at least one (1) day prior to
the date contained in Agent's notice to Borrower on which Agent intends to pay
such amount, Agent will refrain from making such payment for so long as Borrower
is contesting such amount in accordance with the terms of the Loan Documents. If
any Restricted Person fails to pay any insurance premiums it is required to pay
under any Loan Document, Agent may pay the same. Notwithstanding the foregoing,
Agent may pay any taxes, expenses, attorneys' fees, premiums or other amounts
required to be paid by any Restricted Person under any Loan
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Document to prevent the attachment of any lien on any of such Restricted
Person's assets. Borrower shall immediately reimburse Agent for any such
payments and each amount paid by Agent shall constitute an Obligation owed
hereunder which is due and payable on the date such amount is paid by Agent.
Section 6.10. Interest. Borrower hereby promises to each Lender Party
to pay interest at the Default Rate on all Obligations (including Obligations to
pay fees or to reimburse or indemnify any Lender) which Borrower has in this
Agreement promised to pay to such Lender Party and which are not paid when due
or within the applicable period of grace, if any. Such interest shall accrue
from the date such Obligations become due until they are paid.
Section 6.11. Compliance with Agreements and Law. Each Restricted
Person will perform all material obligations it is required to perform under the
terms of each indenture, mortgage, deed of trust, security agreement, lease,
franchise, agreement, contract or other instrument or obligation to which it is
a party or by which it or any of its properties is bound. Each Restricted Person
will conduct its business and affairs in compliance in all material respects
with all Laws applicable thereto. Borrower will timely pay all claims provided
to be paid under the Reorganization Documents in accordance with the
Reorganization Documents. With respect to all claims set forth in the
Reorganization Plan that are secured by a Lien (other than Liens in respect of
assumed executory contracts and unexpired leases as those terms are defined in
the Bankruptcy Code), Borrower shall obtain a valid release of each such Lien
with respect to each such claim in a form approved by Agent contemporaneously
with any payment of each such claim; provided, however, that with respect to
claims for which the claimant thereof has elected to receive payments in
installments pursuant to the Reorganization Plan, Borrower shall obtain such
release contemporaneously with the payment of the final installment with respect
to such claim. Borrower shall promptly record all such Lien releases received
and provide evidence to Agent with respect to the recordation thereof. Borrower
will, and will cause each Restricted Person to, comply with all provisions of
each Reorganization Document.
Section 6.12. Environmental Matters; Environmental Reviews.
(a) Each Restricted Person will comply in all material respects with
all Environmental Laws now or hereafter applicable to such Restricted Person, as
well as all contractual obligations and agreements with respect to environmental
remediation or other environmental matters, and shall obtain, at or prior to the
time required by applicable Environmental Laws, all environmental, health and
safety permits, licenses and other authorizations necessary for its operations
and will maintain such authorizations in full force and effect except to an
extent that the failure to do so would not cause a Material Adverse Change.
(b) will promptly furnish to Agent all written notices of violation,
orders, claims, citations, complaints, penalty assessments, suits or other
proceedings received by Borrower, or of which it has notice which involve or
could reasonably be expected to involve asserted damages in excess of $1,000,000
(in the aggregate with other such notices regarding matters pending), pending or
threatened against Borrower, by any governmental authority with respect to
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any alleged violation of or non-compliance with any Environmental Laws or any
permits, licenses or authorizations in connection with its ownership or use of
its properties or the operation of its business.
(c) Borrower will promptly furnish to Agent all requests for
information, notices of claim, demand letters, and other notifications, received
by Borrower in connection with its ownership or use of its properties or the
conduct of its business, relating to potential responsibility with respect to
any investigation or clean-up of Hazardous Material at any location.
(d) Borrower will comply with any recommendations made to Borrower
pursuant to the report rendered pursuant to Section 6.2(f) in a manner
consistent with a reasonable and prudent operator.
Section 6.13. Evidence of Compliance. Each Restricted Person will
furnish to each Lender at such Restricted Person's or Borrower's expense all
evidence which Agent from time to time reasonably requests in writing as to the
accuracy and validity of or compliance with all representations, warranties and
covenants made by any Restricted Person in the Loan Documents, the satisfaction
of all conditions contained therein, and all other matters pertaining thereto.
Section 6.14. Agreement to Deliver Security Documents. Borrower agrees
to deliver and to cause each other Restricted Person to deliver, to further
secure the Obligations whenever requested by Agent in its sole and absolute
discretion, deeds of trust, mortgages, chattel mortgages, security agreements,
financing statements and other Security Documents in form and substance
satisfactory to Agent for the purpose of granting, confirming, and perfecting
first and prior liens or security interests in any real or personal property now
owned or hereafter acquired by any Restricted Person. Without limiting the
foregoing, each Restricted Person shall deliver such Security Documents (i)
immediately upon consummation of an acquisition of assets involving an amount in
excess of $10,000,000 by such Restricted Person, covering such assets, (ii)
within 30 days after consummation of any other acquisition of assets by such
Restricted Person, covering such assets and (iii) within 30 days after the end
of any Fiscal Quarter in which such Restricted Person has completed any xxxxx,
covering the properties related thereto (to the extent not theretofore covered
by Security Documents). Borrower also agrees to deliver, upon the request by
Agent, whenever Agent reasonably determines that a question exists with respect
to the ownership of or title to such properties or interests favorable title
opinions from legal counsel acceptable to Agent with respect to any Restricted
Person's properties and interests designated by Agent, based upon abstract or
record examinations to dates acceptable to Agent and (a) stating that such
Restricted Person has good and defensible title to such properties and
interests, free and clear of all Liens other than Permitted Liens, (b)
confirming that such properties and interests are subject to Security Documents
securing the Obligations that constitute and create legal, valid and duly
perfected first deed of trust or mortgage liens in such properties and interests
and first priority assignments of and security interests in the oil and gas
attributable to such properties and interests and the proceeds thereof, and (c)
covering such other
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matters as Agent may request. Without limiting the foregoing, Borrower further
agrees to deliver to Agent within 30 days after the Effective Date, title
opinions complying with the foregoing requirements and in form, substance, and
authorship acceptable to Agent with respect to the oil and gas properties
referred to on Schedule 7. Agent is hereby authorized to release any and all
Liens pursuant to the Security Documents upon an asset which is sold by Borrower
as permitted under Section 7.5 or otherwise consented to by Majority Lenders;
provided, that Borrower shall have made any required payments pursuant to
Section 2.8 of this Agreement.
Section 6.15. Perfection and Protection of Security Interests and
Liens. Within 30 days of a written request by Agent, Borrower will from time to
time deliver, and will cause each other Restricted Person from time to time to
deliver, to Agent any financing statements, continuation statements, extension
agreements and other documents, properly completed and executed (and
acknowledged when required) by Restricted Persons in form and substance
satisfactory to Agent, which Agent requests for the purpose of perfecting,
confirming, or protecting any Liens or other rights in Collateral securing any
Obligations.
Section 6.16. Bank Accounts; Offset. To secure the repayment of the
Obligations Borrower hereby grants to each Lender a security interest, a lien,
and a right of offset, each of which shall be in addition to all other
interests, liens, and rights of any Lender at common Law, under the Loan
Documents, or otherwise, and each of which shall be upon and against (a) any and
all moneys, securities or other property (and the proceeds therefrom) of
Borrower now or hereafter held or received by or in transit to any Lender from
or for the account of Borrower, whether for safekeeping, custody, pledge,
transmission, collection or otherwise, (b) any and all deposits (general or
special, time or demand, provisional or final) of Borrower whether or not with
any Lender, and (c) any other credits and claims of Borrower at any time
existing against any Lender, including claims under certificates of deposit. At
any time and from time to time after the occurrence of any Default, each Lender
is hereby authorized to foreclose upon, or to offset against the Obligations
then due and payable (in either case without notice to Borrower), any and all
items hereinabove referred to. The remedies of foreclosure and offset are
separate and cumulative, and either may be exercised independently of the other
without regard to procedures or restrictions applicable to the other.
Section 6.17. Guaranties of Borrower's Subsidiaries. Each Subsidiary of
Borrower (other than an Immaterial Subsidiary) now existing or created, acquired
or coming into existence after the date hereof shall, promptly upon request by
Agent, execute and deliver to Agent an absolute and unconditional guaranty of
the timely repayment of the Obligations and the due and punctual performance of
the obligations of Borrower hereunder, which guaranty shall be satisfactory to
Agent in form and substance. Each Subsidiary of Borrower existing on the date
hereof (other than an Immaterial Subsidiary) shall duly execute and deliver such
a guaranty prior to the making of any Loan hereunder. Borrower will cause each
of such Subsidiaries to deliver to Agent, simultaneously with its delivery of
such a guaranty, written evidence satisfactory to Agent and its counsel that
such Subsidiary has taken all corporate or partnership action necessary to duly
approve and authorize its execution, delivery and performance of such guaranty
and any other documents which it is required to execute.
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Section 6.18. Production Proceeds. Notwithstanding that, by the terms
of the various Security Documents, Restricted Persons are and will be assigning
to Agent and Lenders all of the "Production Proceeds" (as defined therein)
accruing to the property covered thereby, so long as no Event of Default has
occurred Restricted Persons may continue to receive from the purchasers of
production all such Production Proceeds, subject, however, to the Liens created
under the Security Documents, which Liens are hereby affirmed and ratified. Upon
the occurrence of an Event of Default, Agent and Lenders may exercise all rights
and remedies granted under the Security Documents, including the right to obtain
possession of all Production Proceeds then held by Restricted Persons or to
receive directly from the purchasers of production all other Production
Proceeds. In no case shall any failure, whether purposed or inadvertent, by
Agent or Lenders to collect directly any such Production Proceeds constitute in
any way a waiver, remission or release of any of their rights under the Security
Documents, nor shall any release of any Production Proceeds by Agent or Lenders
to Restricted Persons constitute a waiver, remission, or release of any other
Production Proceeds or of any rights of Agent or Lenders to collect other
Production Proceeds thereafter.
ARTICLE VII - Negative Covenants of Borrower
To conform with the terms and conditions under which each Lender is
willing to have credit outstanding to Borrower, and to induce each Lender to
enter into this Agreement and make the Loans, Borrower warrants, covenants and
agrees that until the full and final payment of the Obligations and the
termination of this Agreement, unless Majority Lenders have previously agreed
otherwise:
Section 7.1. Indebtedness. No Restricted Person will in any manner owe
or be liable for Indebtedness except:
(a) the Obligations;
(b) any guaranty by a Restricted Person of Indebtedness of Borrower or
Indebtedness on which Borrower is the primary obligor;
(c) obligations under operating leases entered into in the ordinary
course of such Restricted Person's business in arm's length transactions at
competitive market rates under competitive terms and conditions in all respects;
(d) unsecured Indebtedness among Borrower and the Guarantors arising in
the ordinary course of business;
(e) Indebtedness arising under Hedging Contracts permitted under 7.3;
(f) Approved Debt (excluding any renewals or extensions thereof); and
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(g) Permitted Subordinated Indebtedness.
Section 7.2. Limitation on Liens. Except for Permitted Liens, no
Restricted Person will create, assume or permit to exist any Lien upon any of
the properties or assets which it now owns or hereafter acquires.
Section 7.3. Hedging Contracts. No Restricted Person will be a party to
or in any manner be liable on any Hedging Contract, except:
(a) contracts entered into with the purpose and effect of fixing prices
on oil or gas expected to be produced by Restricted Persons, provided that at
all times: (i) no such contract fixes a price for a term of more than
twenty-four (24) months; (ii) the aggregate monthly production covered by all
such contracts (determined, in the case of contracts that are not settled on a
monthly basis, by a monthly proration acceptable to Agent) for any single month
does not in the aggregate exceed seventy-five percent (75%) of Restricted
Persons' aggregate Projected Oil and Gas Production anticipated to be sold in
the ordinary course of Restricted Persons' businesses for such month, (iii) no
such contract requires any Restricted Person to put up money, assets, letters of
credit or other security against the event of its nonperformance prior to actual
default by such Restricted Person in performing its obligations thereunder other
than deposits made by Borrower to satisfy minimum margin requirements in an
aggregate amount not to exceed $15,000,000 outstanding at any time, and (iv)
each such contract is with a counterparty or has a guarantor of the obligation
of the counterparty who (unless such counterparty is a Lender or one of its
Affiliates) at the time the contract is made has long-term obligations rated AA
or Aa2 or better, respectively, by either Rating Agency, and (v) promptly after
entering into such contract, if requested by Agent, but in any event on a
monthly basis, Borrower gives notice of such fact to Agent and all Lenders. As
used in this subsection, the term "Projected Oil and Gas Production" means the
projected production of oil or gas (measured by volume unit or BTU equivalent,
not sales price) for the term of the contracts or a particular month, as
applicable, from properties and interests owned by any Restricted Person which
are located in or offshore of the United States and which have attributable to
them proved oil or gas reserves, as such production is projected in the most
recent report delivered pursuant to Section 6.2(h) or (i), after deducting
projected production from any properties or interests sold or under contract for
sale that had been included in such report and after adding projected production
from any properties or interests that had not been reflected in such report but
that are reflected in a separate or supplemental reports meeting the
requirements of such Section 6.2(h) or (i) above and otherwise are satisfactory
to Agent. Notwithstanding the foregoing, in the event that the aggregate monthly
production covered by all contracts entered into with the purpose and effect of
fixing prices on oil and/or gas expected to be produced by Restricted Persons
(determined, in the case of contracts that are not settled on a monthly basis,
by a monthly proration acceptable to Agent) for a period of six consecutive
months equals, in the aggregate for such six month period, seventy-five percent
(75%) of the Restricted Persons' aggregate Projected Oil and Gas Production
anticipated to be sold in the ordinary course of Restricted Persons' businesses
during such six month period, Borrower will notify agent and each Lender in
writing of such fact at least fifteen (15) days prior to the beginning of such
six month period; and
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(b) upon prior written notice to Agent and Lenders, contracts entered
into by a Restricted Person with the purpose and effect of fixing interest rates
on a principal amount of Indebtedness of such Restricted Person that is accruing
interest at a variable rate, provided that (i) the aggregate notional amount of
such contracts never exceeds seventy-five percent (75%) of the anticipated
outstanding principal balance of the Indebtedness to be hedged by such contracts
or an average of such principal balances calculated using a generally accepted
method of matching interest swap contracts to declining principal balances, (ii)
the floating rate index of each such contract generally matches the index used
to determine the floating rates of interest on the corresponding Indebtedness to
be hedged by such contract and (iii) each such contract is with a counterparty
or has a guarantor of the obligation of the counterparty who (unless such
counterparty is a Lender or one of its Affiliates) at the time the contract is
made has long-term obligations rated AA or Aa2 or better, respectively, by
either Rating Agency.
Section 7.4. Limitation on Mergers, Issuances of Securities. No
Restricted Person will merge or consolidate with or into any other Person except
that (a) any Immaterial Subsidiary may be merged or consolidated with any other
Immaterial Subsidiary and (b) any Subsidiary of Borrower may be merged into or
consolidated with (i) another Subsidiary of Borrower, so long as a Guarantor is
the surviving business entity, or (ii) Borrower, so long as Borrower is the
surviving business entity. No Restricted Person will issue any additional shares
of its capital stock or other securities or any options, warrants or other
rights to acquire such additional shares or other securities other than common
stock of Borrower or Preferred Stock. Such Preferred Stock will pay no dividends
in cash or property and not be subject to redemption under any event or
circumstance, in either event for a period extending 6 months following the
Maturity Date. No Subsidiary of Borrower which is a partnership will allow any
diminution of Borrower's interest (direct or indirect) therein.
Section 7.5. Limitation on Sales of Property. No Restricted Person will
sell, transfer, lease, exchange, alienate or dispose of any of its material
assets or properties or any material interest therein, or discount, sell, pledge
or assign any notes payable to it, accounts receivable or future income, except:
(a) equipment which is worthless or obsolete or which is replaced by
equipment of equal suitability and value;
(b) inventory (including oil and gas sold as produced and seismic data)
which is sold in the ordinary course of business on ordinary trade terms;
(c) capital stock of any of Borrower's Subsidiaries which is
transferred to Borrower; and
(d) oil and gas properties which are sold for cash for fair
consideration during the term of this Agreement not in excess of $3,000,000 in
the case of any individual sale nor in excess of $15,000,000 in the aggregate
with respect to all such sales after Effective Date.
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Section 7.6. Limitation on Dividends and Redemptions and Debt. No
Restricted Person will declare or pay any dividends on, or make any other
distribution in respect of, any class of its capital stock or any partnership or
other interest in it, nor will any Restricted Person directly or indirectly make
any capital contribution to or purchase, redeem, acquire or retire any shares of
the capital stock of or partnership interests in any Restricted Person (whether
such interests are now or hereafter issued, outstanding or created), or cause or
permit any reduction or retirement of the capital stock of any Restricted
Person, except that Restricted Persons may make dividends in the form of
Preferred Stock. In no event shall a Restricted Person make a cash dividend
payment in respect of the Preferred Stock. Such dividends, distributions,
contributions, purchases, redemptions, acquisitions, retirements or reductions
may be made by a Restricted Person (a) without limitation to Borrower; and (b)
to Guarantors which are Subsidiaries of Borrower, to the extent permitted under
the investment restrictions of Section 7.7. No Restricted Person shall make a
prepayment of any Indebtedness except for prepayments of Approved Debt.
Section 7.7. Limitation on Investments and New Businesses. No
Restricted Person will (a) make any expenditure or commitment or incur any
obligation or enter into or engage in any transaction except in the ordinary
course of business, (b) engage directly or indirectly in any business or conduct
any operations except in connection with or incidental to its present businesses
and operations, (c) make any acquisitions of or capital contributions to or
other Investments in any Person, other than Permitted Investments or Permitted
Stock Acquisitions, or (d) make any significant acquisitions or Investments in
any properties other than oil and gas properties.
Section 7.8. Limitation on Credit Extensions. Except for Permitted
Investments, no Restricted Person will extend credit, make advances or make
loans other than (a) normal and prudent extensions of credit to customers buying
goods and services in the ordinary course of business, which extensions shall
not be for longer periods than those extended by similar businesses operated in
a normal and prudent manner, and (b) loans to Borrower or to any Guarantor.
Section 7.9. Transactions with Affiliates. Neither Borrower nor any of
its Subsidiaries nor any Guarantor will engage in any material transaction with
any of its Affiliates on terms which are less favorable to it than those which
would have been obtainable at the time in arm's length dealings with Persons
other than such Affiliates except for material transactions among Restricted
Persons.
Section 7.10. Prohibited Contracts. Except as expressly provided for in
the Loan Documents, no Restricted Person will, directly or indirectly, enter
into, create, or otherwise allow to exist any contract or other consensual
restriction on the ability of any Subsidiary of Borrower to: (a) pay dividends
or make other distributions to Borrower, (b) to redeem equity interests held in
it by Borrower, (c) to repay loans and other indebtedness owing by it to
Borrower, or (d) to transfer any of its assets to Borrower. No Restricted Person
will enter into any "take-or-pay" contract or other contract or arrangement for
the purchase of goods or services which obligates it to pay for such goods or
service regardless of whether they are delivered or
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furnished to it. No Restricted Person will amend or permit any amendment to any
contract or lease which releases, qualifies, limits, makes contingent or
otherwise detrimentally affects the rights and benefits of Agent or any Lender
under or acquired pursuant to any Security Documents. No ERISA Affiliate will
incur any obligation to contribute to any "multiemployer plan" as defined in
Section 4001 of ERISA. No Restricted Person will create or allow to exist any
ERISA Plan other than those existing on the date hereof.
Section 7.11. Current Ratio. The ratio of Borrower's Consolidated
Current Assets to Borrower's Consolidated Current Liabilities will never be less
than 1.0 to 1.0.
Section 7.12. Fixed Charge Coverage Ratio. The ratio of Borrower's
Consolidated Cash Flow for any Fiscal Quarter to Borrower's Consolidated Fixed
Charges for such Fiscal Quarter will never be less than 1.5 to 1.0.
Section 7.13. Interest Coverage. The ratio of Borrower's Consolidated
Cash Flow for any Fiscal Quarter to Borrower's Consolidated Interest Expense for
such Fiscal Quarter will never be less than 2.5 to 1.0.
Section 7.14. Tangible Net Worth. The sum of (a) Borrower's
Consolidated Tangible Net Worth plus (b) all non-cash charges attributable to
any full cost accounting writedown of assets from and after the date of the
Initial Financial Statements will never be less than the sum of (i) 90% of
Consolidated Tangible Net Worth as reflected in the Initial Financial Statements
plus (ii) 50% of Consolidated Net Income (if positive) for each Fiscal Quarter
since the date of the Initial Financial Statements plus (iii) an amount equal to
50% of the net worth of any Person that becomes a Subsidiary of the Borrower or
is merged into or consolidated with the Borrower or any Subsidiary of Borrower
or substantially all of the assets of which are acquired by the Borrower or any
Subsidiary of the Borrower to the extent the purchase price paid therefor is
paid in equity securities of the Borrower or any Subsidiary of the Borrower plus
(iv) 50% of the net cash proceeds (but without duplication) of any offerings of
capital stock or other equity interests of the Borrower or any of its
Subsidiaries or pursuant to the conversion or exchange of any redeemable
Preferred Stock into capital stock or other equity interests of the Borrower or
any of its Subsidiaries since the date of the Initial Financial Statements.
Section 7.15. Capital Expenditures. Borrower shall not, and shall not
permit any Restricted Person to incur any Capital Expenditures in any of the six
month periods beginning with March 1 or September 1 of each year (an "Incurrence
Period") in excess of the Capital Expenditure Limit for the Applicable
Measurement Period. The "Applicable Measurement Period" means the six month
period beginning January 1 or July 1 immediately prior to the Incurrence Period.
"Capital Expenditure Limit" means the sum of (but without duplication), with
respect to a period, (i) eighty percent (80%) of Projected Excess Cash Flow for
the Applicable Measurement Period, plus (ii) the amount by which Current Assets
exceed Current Liabilities (or minus the amount by which Current Liabilities
exceed Current Assets) on the first day of the Applicable Measurement Period,
plus (iii) the 50% of the net cash proceeds received from the incurrence of
Indebtedness or issuance of equity after the first day of such Applicable
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Measurement Period which is not required to be applied to the Loans pursuant to
Section 2.8(a) or (b), plus (iv) the net cash proceeds from the sale, transfer,
conveyance or assignment of properties that, pursuant to Section 7.5(d) and
Section 2.8(c), are not required to be applied to the Loans minus (v) any
uninvoiced Capital Expenditures incurred prior to the first day of the
Applicable Measurement Period (to the extent not reflected in Current
Liabilities). "Projected Excess Cash Flow" means for the Applicable Measurement
Period, projected Consolidated Cash Flow minus projected Fixed Charges for such
period, with such projections for revenue, taxes, lease operating expenses and
other burdens to be based on the amounts reflected in the Engineering Report
prepared as of the January 1 or July 1 on which such Applicable Measurement
Period begins in respect of properties which are shown as proved developed
producing properties in such report. Notwithstanding the foregoing, the Capital
Expenditure Limit for the first Incurrence Period after the Effective Date will
be established in a manner reasonably acceptable to Agent and Borrower,
including, without limitation (i) using a different starting date for the
Applicable Measurement Period to fall after the Effective Date, if appropriate,
(ii) taking into account the sources and uses of cash and the payments of claims
in connection with the Reorganization, and (iii) not treating payments of claims
which arose prior to the Effective Date (whether arising as operating expenses
or as capital expenditures) as capital expenditures, whether paid on the
Effective Date or from time to time thereafter; provided, however if such claims
are to be paid from time to time after the Effective Date, such payments shall
be treated as projected Fixed Charges in the period payable.
Section 7.16. Immaterial Subsidiaries. No Restricted Person shall
transfer any assets to, make any loan or commitment to, extend credit to, enter
into any business or transaction with, incur any material obligation to, or make
any investment in, any Immaterial Subsidiary. Borrower shall promptly dissolve
each Immaterial Subsidiary, except (a) any Immaterial Subsidiary which has or
may have Liabilities or (b) where the continued existence of such Immaterial
Subsidiary is necessary for the recovery of a tax refund claim or other asset or
for another reasonable business purpose.
ARTICLE VIII - Events of Default and Remedies
Section 8.1. Events of Default. Each of the following events
constitutes an Event of Default under this Agreement:
(a) Any Restricted Person fails to pay any principal component of any
Obligation when due and payable, whether at a date for the payment of a fixed
installment or as a contingent or other payment becomes due and payable or as a
result of acceleration or otherwise;
(b) Any Restricted Person fails to pay any Obligation (other than the
Obligations in subsection (a) above) when due and payable, whether at a date for
the payment of a fixed installment or as a contingent or other payment becomes
due and payable or as a result of acceleration or otherwise, within three
Business Days after the same becomes due;
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(c) Any "default" or "event of default" occurs under any Loan Document
which defines either such term, and the same is not remedied within the
applicable period of grace (if any) provided in such Loan Document;
(d) Any Restricted Person fails to duly observe, perform or comply with
any covenant, agreement or provision of Article VI, and such failure is neither
remedied by such Restricted Person nor waived by Majority Lenders within 15 days
after its occurrence or within such longer period which Majority Lenders may in
their sole and absolute discretion provide to such Restricted Person;
(e) Any Restricted Person fails (other than as referred to in
subsections (a), (b), (c) or (d) above) to duly observe, perform or comply with
any covenant, agreement, condition or provision of any Loan Document and such
failure is not remedied within the applicable grace period, if any;
(f) Any representation or warranty previously, presently or hereafter
made in writing by or on behalf of any Restricted Person in connection with any
Loan Document shall prove to have been false or incorrect in any material
respect on any date on or as of which made, or any Loan Document at any time
ceases to be valid, binding and enforceable as warranted in Section 5.5 for any
reason other than its release or subordination by Agent;
(g) Any Restricted Person fails to duly observe, perform or comply with
any agreement with any Person or any term or condition of any instrument, if
such agreement or instrument is materially significant to Borrower or to
Borrower and its Subsidiaries on a Consolidated basis or materially significant
to any Guarantor, and such failure is not remedied within the applicable period
of grace (if any) provided in such agreement or instrument;
(h) Any Restricted Person (i) fails to pay any portion, when such
portion is due, of any of its Indebtedness in excess of $500,000, or (ii)
breaches or defaults in the performance of any agreement or instrument by which
any such Indebtedness is issued, evidenced, governed, or secured, and any such
failure, breach or default continues beyond any applicable period of grace
provided therefor;
(i) Either (i) any "accumulated funding deficiency" (as defined in
Section 412(a) of the Internal Revenue Code) in excess of $100,000 exists with
respect to any ERISA Plan, whether or not waived by the Secretary of the
Treasury or his delegate, or (ii) any Termination Event occurs with respect to
any ERISA Plan and the then current value of such ERISA Plan's benefit
liabilities exceeds the then current value of such ERISA Plan's assets available
for the payment of such benefit liabilities by more than $100,000 (or in the
case of a Termination Event involving the withdrawal of a substantial employer,
the withdrawing employer's proportionate share of such excess exceeds such
amount);
(j) Any Restricted Person:
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(i) suffers the entry against it of a judgment, decree or
order for relief by a Tribunal of competent jurisdiction in an
involuntary proceeding commenced under any applicable bankruptcy,
insolvency or other similar Law of any jurisdiction now or hereafter in
effect, including the federal Bankruptcy Code, as from time to time
amended, or has any such proceeding commenced against it which remains
undismissed for a period of sixty days; or
(ii) commences a voluntary case under any applicable
bankruptcy, insolvency or similar Law now or hereafter in effect,
including the federal Bankruptcy Code, as from time to time amended; or
applies for or consents to the entry of an order for relief in an
involuntary case under any such Law; or makes a general assignment for
the benefit of creditors; or fails generally to pay (or admits in
writing its inability to pay) its debts as such debts become due; or
takes corporate or other action to authorize any of the foregoing; or
(iii) suffers the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of all or a substantial part of its assets or of any
part of the Collateral in a proceeding brought against or initiated by
it, and such appointment or taking possession is neither made
ineffective nor discharged within thirty days after the making thereof,
or such appointment or taking possession is at any time consented to,
requested by, or acquiesced to by it; or
(iv) suffers the entry against it of a final judgment for the
payment of money in excess of $500,000 (not covered by insurance
satisfactory to Agent in its discretion), unless the same is discharged
within thirty days after the date of entry thereof or an appeal or
appropriate proceeding for review thereof is taken within such period
and a stay of execution pending such appeal is obtained; or
(v) suffers a writ or warrant of attachment or any similar
process to be issued by any Tribunal against all or any substantial
part of its assets or any part of the Collateral, and such writ or
warrant of attachment or any similar process is not stayed or released
within sixty days after the entry or levy thereof or after any stay is
vacated or set aside;
(k) Any Change of Control occurs;
(l) Any Material Adverse Change occurs; and
(m) The Required Preferred Stock Issuance does not occur on or
before June 2, 2000.
Upon the occurrence of an Event of Default described in subsection (j)(i),
(j)(ii) or (j)(iii) of this section with respect to Borrower, all of the
Obligations shall thereupon be immediately due and payable, without demand,
presentment, notice of demand or of dishonor and nonpayment, protest, notice of
protest, notice of intention to accelerate, declaration or notice of
acceleration,
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or any other notice or declaration of any kind, all of which are hereby
expressly waived by Borrower and each Restricted Person who at any time ratifies
or approves this Agreement. Upon any such acceleration, any obligation of any
Lender and any obligation of LC Issuer to issue Letters of Credit hereunder to
make any further Loans shall be permanently terminated. During the continuance
of any other Event of Default, Agent at any time and from time to time may (and
upon written instructions from Majority Lenders, Agent shall), without notice to
Borrower or any other Restricted Person, do either or both of the following: (1)
terminate any obligation of Lenders to make Loans hereunder, and any obligation
of LC Issuer to issue Letters of Credit hereunder, and (2) declare any or all of
the Obligations immediately due and payable, and all such Obligations shall
thereupon be immediately due and payable, without demand, presentment, notice of
demand or of dishonor and nonpayment, protest, notice of protest, notice of
intention to accelerate, declaration or notice of acceleration, or any other
notice or declaration of any kind, all of which are hereby expressly waived by
Borrower and each Restricted Person who at any time ratifies or approves this
Agreement.
Section 8.2. Remedies. If any Default shall occur and be continuing,
each Lender Party may protect and enforce its rights under the Loan Documents by
any appropriate proceedings, including proceedings for specific performance of
any covenant or agreement contained in any Loan Document, and each Lender Party
may enforce the payment of any Obligations due it or enforce any other legal or
equitable right which it may have. All rights, remedies and powers conferred
upon Lender Parties under the Loan Documents shall be deemed cumulative and not
exclusive of any other rights, remedies or powers available under the Loan
Documents or at Law or in equity.
ARTICLE IX - Agent
Section 9.1. Appointment and Authority. Each Lender Party hereby
irrevocably authorizes Agent, and Agent hereby undertakes, to receive payments
of principal, interest and other amounts due hereunder as specified herein and
to take all other actions and to exercise such powers under the Loan Documents
as are specifically delegated to Agent by the terms hereof or thereof, together
with all other powers reasonably incidental thereto. The relationship of Agent
to the other Lender Parties is only that of one commercial lender acting as
administrative agent for others, and nothing in the Loan Documents shall be
construed to constitute Agent a trustee or other fiduciary for any Lender Party
or any holder of any participation in a Note nor to impose on Agent duties and
obligations other than those expressly provided for in the Loan Documents. With
respect to any matters not expressly provided for in the Loan Documents and any
matters which the Loan Documents place within the discretion of Agent, Agent
shall not be required to exercise any discretion or take any action, and it may
request instructions from Lenders with respect to any such matter, in which case
it shall be required to act or to refrain from acting (and shall be fully
protected and free from liability to all Lender Parties in so acting or
refraining from acting) upon the instructions of Majority Lenders (including
itself), provided, however, that Agent shall not be required to take any action
which exposes it to a risk of personal liability that it considers unreasonable
or which is contrary to the Loan Documents or to applicable Law.
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Upon receipt by Agent from Borrower of any communication calling for action on
the part of Lenders or upon notice from any other Lender to Agent of any Default
or Event of Default, Agent shall promptly notify each other Lender thereof.
Section 9.2. Exculpation, Agent's Reliance, Etc. Neither Agent nor any
of its directors, officers, agents, attorneys, or employees shall be liable for
any action taken or omitted to be taken by any of them under or in connection
with the Loan Documents, INCLUDING THEIR NEGLIGENCE OF ANY KIND, except that
each shall be liable for its own gross negligence or willful misconduct. Without
limiting the generality of the foregoing, Agent (a) may treat the payee of any
Note as the holder thereof until Agent receives written notice of the assignment
or transfer thereof in accordance with this Agreement, signed by such payee and
in form satisfactory to Agent; (b) may consult with legal counsel (including
counsel for Borrower), independent public accountants and other experts selected
by it and shall not be liable for any action taken or omitted to be taken in
good faith by it in accordance with the advice of such counsel, accountants or
experts; (c) makes no warranty or representation to any other Lender and shall
not be responsible to any other Lender Party for any statements, warranties or
representations made in or in connection with the Loan Documents; (d) shall not
have any duty to ascertain or to inquire as to the performance or observance of
any of the terms, covenants or conditions of the Loan Documents on the part of
any Restricted Person or to inspect the property (including the books and
records) of any Restricted Person; (e) shall not be responsible to any other
Lender for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of any Loan Document or any instrument or document
furnished in connection therewith; (f) may rely upon the representations and
warranties of each Restricted Person or Lender Party in exercising its powers
hereunder; and (g) shall incur no liability under or in respect of the Loan
Documents by acting upon any notice, consent, certificate or other instrument or
writing (including any facsimile, telegram, cable or telex) believed by it to be
genuine and signed or sent by the proper Person or Persons.
Section 9.3. Credit Decisions. Each Lender Party acknowledges that it
has, independently and without reliance upon any other Lender Party, made its
own analysis of Borrower and the transactions contemplated hereby and its own
independent decision to enter into this Agreement and the other Loan Documents.
Each Lender Party also acknowledges that it will, independently and without
reliance upon any other Lender Party and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Loan Documents.
SECTION 9.4. INDEMNIFICATION. EACH LENDER AGREES TO INDEMNIFY AGENT (TO
THE EXTENT NOT REIMBURSED BY BORROWER WITHIN TEN (10) DAYS AFTER DEMAND) FROM
AND AGAINST SUCH LENDER'S PERCENTAGE SHARE OF ANY AND ALL LIABILITIES,
OBLIGATIONS, CLAIMS, LOSSES, DAMAGES, PENALTIES, FINES, ACTIONS, JUDGMENTS,
SUITS, SETTLEMENTS, COSTS, EXPENSES OR DISBURSEMENTS (INCLUDING REASONABLE FEES
OF ATTORNEYS, ACCOUNTANTS, EXPERTS AND ADVISORS) OF ANY KIND OR NATURE
WHATSOEVER (IN THIS SECTION COLLECTIVELY CALLED "LIABILITIES AND COSTS") WHICH
TO ANY EXTENT (IN WHOLE OR IN PART) MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED
AGAINST AGENT GROWING OUT OF, RESULTING FROM OR IN ANY OTHER WAY ASSOCIATED WITH
ANY OF THE
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COLLATERAL, THE LOAN DOCUMENTS AND THE TRANSACTIONS AND EVENTS (INCLUDING THE
ENFORCEMENT THEREOF) AT ANY TIME ASSOCIATED THEREWITH OR CONTEMPLATED THEREIN
(WHETHER ARISING IN CONTRACT OR IN TORT AND OTHERWISE AND INCLUDING ANY
VIOLATION OR NONCOMPLIANCE WITH ANY ENVIRONMENTAL LAWS BY ANY PERSON OR ANY
LIABILITIES OR DUTIES OF ANY PERSON WITH RESPECT TO HAZARDOUS MATERIALS FOUND IN
OR RELEASED INTO THE ENVIRONMENT).
THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND
COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM
OR THEORY OF STRICT LIABILITY, OR ARE CAUSED, IN WHOLE OR IN PART, BY ANY
NEGLIGENT ACT OR OMISSION OF ANY KIND BY AGENT,
provided only that no Lender shall be obligated under this section to indemnify
Agent for that portion, if any, of any liabilities and costs which is
proximately caused by Agent's own individual gross negligence or willful
misconduct, as determined in a final judgment. Cumulative of the foregoing, each
Lender agrees to reimburse Agent promptly upon demand for such Lender's
Percentage Share of any costs and expenses to be paid to Agent by Borrower under
Section 10.4(a) to the extent that Agent is not timely reimbursed for such
expenses by Borrower as provided in such section. As used in this section the
term "Agent" shall refer not only to the Person designated as such in Section
1.1 but also to each director, officer, agent, attorney, employee,
representative and Affiliate of such Person.
Section 9.5. Rights as Lender. In its capacity as a Lender, Agent shall
have the same rights and obligations as any Lender and may exercise such rights
as though it were not Agent. Agent may accept deposits from, lend money to, act
as trustee under indentures of, and generally engage in any kind of business
with any Restricted Person or their Affiliates, all as if it were not Agent
hereunder and without any duty to account therefor to any other Lender.
Section 9.6. Sharing of Set-Offs and Other Payments. Each Lender Party
agrees that if it shall, whether through the exercise of rights under Security
Documents or rights of banker's lien, set off, or counterclaim against Borrower
or otherwise, obtain payment of a portion of the aggregate Obligations owed to
it which, taking into account all distributions made by Agent under Section 3.1,
causes such Lender Party to have received more than it would have received had
such payment been received by Agent and distributed pursuant to Section 3.1,
then (a) it shall be deemed to have simultaneously purchased and shall be
obligated to purchase interests in the Obligations as necessary to cause all
Lender Parties to share all payments as provided for in Section 3.1, and (b)
such other adjustments shall be made from time to time as shall be equitable to
ensure that Agent and all Lender Parties share all payments of Obligations as
provided in Section 3.1; provided, however, that nothing herein contained shall
in any way affect the right of any Lender Party to obtain payment (whether by
exercise of rights of banker's lien, set-off or counterclaim or otherwise) of
indebtedness other than the Obligations. Borrower expressly consents to the
foregoing arrangements and agrees that any holder of any such interest or other
participation in the Obligations, whether or not acquired pursuant to the
foregoing arrangements,
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may to the fullest extent permitted by Law exercise any and all rights of
banker's lien, set-off, or counterclaim as fully as if such holder were a holder
of the Obligations in the amount of such interest or other participation. If all
or any part of any funds transferred pursuant to this section is thereafter
recovered from the seller under this section which received the same, the
purchase provided for in this section shall be deemed to have been rescinded to
the extent of such recovery, together with interest, if any, if interest is
required pursuant to the order of a Tribunal order to be paid on account of the
possession of such funds prior to such recovery.
Section 9.7. Investments. Whenever Agent in good faith determines that
it is uncertain about how to distribute to Lender Parties any funds which it has
received, or whenever Agent in good faith determines that there is any dispute
among Lender Parties about how such funds should be distributed, Agent may
choose to defer distribution of the funds which are the subject of such
uncertainty or dispute. If Agent in good faith believes that the uncertainty or
dispute will not be promptly resolved, or if Agent is otherwise required to
invest funds pending distribution to Lender Parties, Agent shall invest such
funds pending distribution; all interest on any such Investment shall be
distributed upon the distribution of such Investment and in the same proportion
and to the same Persons as such Investment. All moneys received by Agent for
distribution to Lender Parties (other than to the Person who is Agent in its
separate capacity as a Lender Party) shall be held by Agent pending such
distribution solely as Agent for such Lender Parties, and Agent shall have no
equitable title to any portion thereof.
Section 9.8. Benefit of Article IX. The provisions of this Article
(other than the following Section 9.9) are intended solely for the benefit of
Lender Parties, and no Restricted Person shall be entitled to rely on any such
provision or assert any such provision in a claim or defense against any Lender.
Lender Parties may waive or amend such provisions as they desire without any
notice to or consent of Borrower or any Restricted Person.
Section 9.9. Resignation. Agent may resign at any time by giving 30
days prior written notice thereof to Lenders and Borrower. Each such notice
shall set forth the date of such resignation. Upon any such resignation,
Majority Lenders shall have the right to appoint a successor Agent subject, so
long as no Default shall have occurred and be continuing, to the approval of
Borrower, which approval shall not be unreasonably withheld or delayed. A
successor must be appointed for any retiring Agent, and such Agent's resignation
shall only become effective when such successor accepts such appointment. If,
within thirty days after the date of the retiring Agent's resignation, no
successor Agent has been appointed and has accepted such appointment, then the
retiring Agent may appoint a successor Agent, which shall be a financial
institution organized or licensed to conduct a lending or trust business under
the Laws of the United States of America or of any state thereof. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, the
retiring Agent shall be discharged from its duties and obligations under this
Agreement and the other Loan Documents. After any retiring Agent's resignation
hereunder the provisions of this Article IX shall continue to inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under the Loan Documents.
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ARTICLE X - Miscellaneous
Section 10.1. Waivers and Amendments; Acknowledgments.
(a) Waivers and Amendments. No failure or delay (whether by course of
conduct or otherwise) by any Lender in exercising any right, power or remedy
which such Lender Party may have under any of the Loan Documents shall operate
as a waiver thereof or of any other right, power or remedy, nor shall any single
or partial exercise by any Lender Party of any such right, power or remedy
preclude any other or further exercise thereof or of any other right, power or
remedy. No waiver of any provision of any Loan Document and no consent to any
departure therefrom shall ever be effective unless it is in writing and signed
as provided below in this section, and then such waiver or consent shall be
effective only in the specific instances and for the purposes for which given
and to the extent specified in such writing. No notice to or demand on any
Restricted Person shall in any case of itself entitle any Restricted Person to
any other or further notice or demand in similar or other circumstances. This
Agreement and the other Loan Documents set forth the entire understanding
between the parties hereto with respect to the transactions contemplated herein
and therein and supersede all prior discussions and understandings with respect
to the subject matter hereof and thereof, and no waiver, consent, release,
modification or amendment of or supplement to this Agreement or the other Loan
Documents shall be valid or effective against any party hereto unless the same
is in writing and signed by (i) if such party is Borrower, by Borrower, (ii) if
such party is Agent or LC Issuer, by such party, and (iii) if such party is a
Lender, by such Lender or by Agent on behalf of Lenders with the written consent
of Majority Lenders (which consent has already been given as to the termination
of the Loan Documents as provided in Section 10.9). Notwithstanding the
foregoing or anything to the contrary herein, Agent shall not, without the prior
consent of each individual Lender, execute and deliver on behalf of such Lender
any waiver or amendment which would: (1) waive any of the conditions specified
in Article IV (provided that Agent may in its discretion withdraw any request it
has made under Section 4.3(f)) in connection with initial Loans, (2) increase
the maximum amount which such Lender is committed hereunder to lend, (3) reduce
any fees payable to such Lender hereunder, or the principal of, or interest on,
such Lender's Note, (4) postpone any date fixed for any payment of any such
fees, principal or interest (including mandatory prepayments pursuant to Section
2.8), (5) amend the definition herein of "Majority Lenders" or otherwise change
the aggregate amount of Percentage Shares which is required for Agent, Lenders
or any of them to take any particular action under the Loan Documents, (6)
release Borrower from its obligation to pay such Lender's Note or any Guarantor
from its guaranty of such payment, (7) release all or substantially all of the
Collateral, (8) amend or waive any of the provisions of Section 2.19(a)
(provided that the Required LC Period may be extended to a date which is not
later than 150 days after the Effective Date with only the consent of the
Majority Lenders), or (9) amend this Section 10.1(a). Notwithstanding the
foregoing, Agent, in such capacity, may execute and deliver (i) any waiver or
amendment waiving any of the conditions specified in Article IV subsequent to
the initial Loans having been made only upon the prior consent of each Revolving
Credit Lender and (ii) a release of Liens upon the sale of assets as provided in
Section 6.14 without the consent of any of the Lenders.
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(b) Acknowledgments and Admissions. Borrower hereby represents,
warrants, acknowledges and admits that (i) it has been advised by counsel in the
negotiation, execution and delivery of the Loan Documents to which it is a
party, (ii) it has made an independent decision to enter into this Agreement and
the other Loan Documents to which it is a party, without reliance on any
representation, warranty, covenant or undertaking by Agent or any Lender,
whether written, oral or implicit, other than as expressly set out in this
Agreement or in another Loan Document delivered on or after the date hereof,
(iii) there are no representations, warranties, covenants, undertakings or
agreements by any Lender as to the Loan Documents except as expressly set out in
this Agreement or in another Loan Document delivered on or after the date
hereof, (iv) no Lender has any fiduciary obligation toward Borrower with respect
to any Loan Document or the transactions contemplated thereby, (v) the
relationship pursuant to the Loan Documents between Borrower and the other
Restricted Persons, on one hand, and each Lender, on the other hand, is and
shall be solely that of debtor and creditor, respectively, (vi) no partnership
or joint venture exists with respect to the Loan Documents between any
Restricted Person and any Lender, (vii) Agent is not Borrower's Agent, but Agent
for Lenders, (viii) should an Event of Default or Default occur or exist, each
Lender will determine in its sole discretion and for its own reasons what
remedies and actions it will or will not exercise or take at that time, (ix)
without limiting any of the foregoing, Borrower is not relying upon any
representation or covenant by any Lender, or any representative thereof, and no
such representation or covenant has been made, that any Lender will, at the time
of an Event of Default or Default, or at any other time, waive, negotiate,
discuss, or take or refrain from taking any action permitted under the Loan
Documents with respect to any such Event of Default or Default or any other
provision of the Loan Documents, all Lender Parties have relied upon the
truthfulness of the acknowledgments in this section in deciding to execute and
deliver this Agreement and to become obligated hereunder.
(c) Joint Acknowledgment. THIS WRITTEN AGREEMENT AND THE OTHER
LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Section 10.2. Survival of Agreements; Cumulative Nature. All of
Restricted Persons' various representations, warranties, covenants and
agreements in the Loan Documents shall survive the execution and delivery of
this Agreement and the other Loan Documents and the performance hereof and
thereof, including the making or granting of the Loans and the delivery of the
Notes and the other Loan Documents, and shall further survive until all of the
Obligations are paid in full to each Lender Party and all of Lender Parties'
obligations to Borrower are terminated. All statements and agreements contained
in any certificate or other instrument delivered by any Restricted Person to any
Lender Party under any Loan Document shall be
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deemed representations and warranties by Borrower or agreements and covenants of
Borrower under this Agreement. The representations, warranties, indemnities, and
covenants made by Restricted Persons in the Loan Documents, and the rights,
powers, and privileges granted to Lender Parties in the Loan Documents, are
cumulative, and, except for expressly specified waivers and consents, no Loan
Document shall be construed in the context of another to diminish, nullify, or
otherwise reduce the benefit to any Lender Party of any such representation,
warranty, indemnity, covenant, right, power or privilege. In particular and
without limitation, no exception set out in this Agreement to any
representation, warranty, indemnity, or covenant herein contained shall apply to
any similar representation, warranty, indemnity, or covenant contained in any
other Loan Document, and each such similar representation, warranty, indemnity,
or covenant shall be subject only to those exceptions which are expressly made
applicable to it by the terms of the various Loan Documents.
Section 10.3. Notices. All notices, requests, consents, demands and
other communications required or permitted under any Loan Document shall be in
writing, unless otherwise specifically provided in such Loan Document (provided
that Agent may give telephonic notices to the other Lender Parties), and shall
be deemed sufficiently given or furnished if delivered by personal delivery, by
facsimile or other electronic transmission, by delivery service with proof of
delivery, or by registered or certified United States mail, postage prepaid, to
Borrower and Restricted Persons at the address of Borrower specified on the
signature pages hereto and to each Lender Party at its address specified on the
Lender Schedule (unless changed by similar notice in writing given by the
particular Person whose address is to be changed). Any such notice or
communication shall be deemed to have been given (a) in the case of personal
delivery or delivery service, as of the date of first attempted delivery during
normal business hours at the address provided herein, (b) in the case of
facsimile or other electronic transmission, upon receipt, or (c) in the case of
registered or certified United States mail, three days after deposit in the
mail; provided, however, that no Borrowing Notice shall become effective until
actually received by Agent.
Section 10.4. Payment of Expenses; Indemnity.
(a) Payment of Expenses. Whether or not the transactions
contemplated by this Agreement are consummated, Borrower will promptly (and in
any event, within 30 days after any invoice or other statement or notice) pay:
(i) all transfer, stamp, mortgage, documentary or other similar taxes,
assessments or charges levied by any governmental or revenue authority in
respect of this Agreement or any of the other Loan Documents or any other
document referred to herein or therein, (ii) all reasonable costs and expenses
incurred by or on behalf of any Lender Party (including without limitation
reasonable attorneys' fees, consultants' fees, engineering fees, accounting
fees, travel costs and miscellaneous expenses) in connection with (1) the
negotiation, preparation, execution and delivery of the Loan Documents or (2)
the defense or enforcement of any of the Loan Documents (including this Section)
or the defense of such Lender Party's exercise of its rights thereunder and
(iii) all reasonable costs and expenses incurred by or on behalf of Agent, in
such capacity, (including without limitation reasonable attorneys' fees,
consultants' fees, engineering fees, accounting fees, travel costs and
miscellaneous expenses) in
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connection with (1) the negotiation, preparation, execution and delivery of any
and all consents, waivers or other documents or instruments relating to the Loan
Documents, (2) the filing, recording, refiling and re-recording of any Loan
Documents and any other documents or instruments or further assurances required
to be filed or recorded or refiled or re-recorded by the terms of any Loan
Document, (3) the borrowings hereunder and other action reasonably required in
the course of administration hereof, (4) the monitoring or confirming (or
preparation or negotiation of any document related to) Borrower's compliance
with any covenants or conditions contained in this Agreement or in any Loan
Document or (5) the defense of the amount, extent, validity or priority of the
Liens benefitting or securing the Existing Agreement and the obligations
thereunder or of the Liens securing the Obligations. In addition to the
foregoing, until all Obligations have been paid in full, Borrower will also pay
or reimburse Agent for all reasonable out-of-pocket costs and expenses of Agent
or its agents or employees in connection with the continuing administration of
the Loans and the related due diligence of Agent, including travel and
miscellaneous expenses and fees and expenses of Agent's outside counsel, reserve
engineers and consultants engaged in connection with the Loan Documents.
(b) INDEMNITY. BORROWER AGREES TO INDEMNIFY EACH LENDER PARTY , UPON
DEMAND, FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, CLAIMS, LOSSES,
DAMAGES, PENALTIES, FINES, ACTIONS, JUDGMENTS, SUITS, SETTLEMENTS, COSTS,
EXPENSES OR DISBURSEMENTS (INCLUDING REASONABLE FEES OF ATTORNEYS, ACCOUNTANTS,
EXPERTS AND ADVISORS) OF ANY KIND OR NATURE WHATSOEVER (IN THIS SECTION
COLLECTIVELY CALLED "LIABILITIES AND COSTS") WHICH TO ANY EXTENT (IN WHOLE OR IN
PART) MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST SUCH LENDER PARTY
GROWING OUT OF, RESULTING FROM OR IN ANY OTHER WAY ASSOCIATED WITH ANY OF THE
COLLATERAL, THE LOAN DOCUMENTS AND THE TRANSACTIONS AND EVENTS (INCLUDING THE
ENFORCEMENT OR DEFENSE THEREOF) AT ANY TIME ASSOCIATED THEREWITH OR CONTEMPLATED
THEREIN (WHETHER ARISING IN CONTRACT OR IN TORT OR OTHERWISE AND INCLUDING ANY
VIOLATION OR NONCOMPLIANCE WITH ANY ENVIRONMENTAL LAWS BY ANY LENDER PARTY OR
ANY OTHER PERSON OR ANY LIABILITIES OR DUTIES OF ANY LENDER PARTY OR ANY OTHER
PERSON WITH RESPECT TO HAZARDOUS MATERIALS FOUND IN OR RELEASED INTO THE
ENVIRONMENT).
THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND
COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM
OR THEORY OF STRICT LIABILITY OR CAUSED, IN WHOLE OR IN PART BY ANY NEGLIGENT
ACT OR OMISSION OF ANY KIND BY ANY LENDER PARTY,
provided only that no Lender Party shall be entitled under this section to
receive indemnification for that portion, if any, of any liabilities and costs
which is proximately caused by its own individual gross negligence or willful
misconduct, as determined in a final judgment. If any Person (including Borrower
or any of its Affiliates) ever alleges such gross negligence or willful
misconduct by any Lender Party, the indemnification provided for in this section
shall nonetheless be paid upon demand, subject to later adjustment or
reimbursement, until such time as a court of competent jurisdiction enters a
final judgment as to the extent and effect of the
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alleged gross negligence or willful misconduct. As used in this section the term
"Lender Party" shall refer not only to each Person designated as such in Section
1.1 but also to each director, officer, agent, attorney, employee,
representative and Affiliate of such Person.
Section 10.5. Joint and Several Liability; Parties in Interest;
Assignments.
(a) All Obligations which are incurred by two or more Restricted
Persons shall be their joint and several obligations and liabilities. All
grants, covenants and agreements contained in the Loan Documents shall bind and
inure to the benefit of the parties thereto and their respective successors and
assigns; provided, however, that no Restricted Person may assign or transfer any
of its rights or delegate any of its duties or obligations under any Loan
Document without the prior consent of Majority Lenders. Neither Borrower nor any
Affiliates of Borrower shall directly or indirectly purchase or otherwise retire
any Obligations owed to any Lender nor will any Lender accept any offer to do
so, unless each Lender shall have received substantially the same offer with
respect to the same Percentage Share of the Obligations owed to it. If Borrower
or any Affiliate of Borrower at any time purchases some but less than all of the
Obligations owed to Lender Parties, such purchaser shall not be entitled to any
rights of any Lender under the Loan Documents unless and until Borrower or its
Affiliates have purchased all of the Obligations.
(b) No Lender shall sell any participation interest in its commitment
hereunder or any of its rights under its Loans or under the Loan Documents to
any Person unless the agreement between such Lender and such participant at all
times provides: (i) that such participation exists only as a result of the
agreement between such participant and such Lender and that such transfer does
not give such participant any right to vote as a Lender or any other direct
claims or rights against any Person other than such Lender, (ii) that such
participant is not entitled to payment from any Restricted Person under Sections
3.2 through 3.6 of amounts in excess of those payable to such Lender under such
sections (determined without regard to the sale of such participation), and
(iii) unless such participant is an Affiliate of such Lender, that such
participant shall not be entitled to require such Lender to take any action
under any Loan Document or to obtain the consent of such participant prior to
taking any action under any Loan Document, except for actions which would
require the consent of all Lenders under subsection (a) of Section 10.1(a). No
Lender selling such a participation shall, as between the other parties hereto
and such Lender, be relieved of any of its obligations hereunder as a result of
the sale of such participation. Each Lender which sells any such participation
to any Person (other than an Affiliate of such Lender) shall give prompt notice
thereof to Agent and Borrower.
(c) Except for sales of participations under the immediately preceding
subsection, no Lender shall make any assignment or transfer of any kind of its
commitments or any of its rights under its Loans or under the Loan Documents,
except for assignments to a Person that is a Lender or an Affiliate of a Lender
or that has consented to by Agent, which consent will not be unreasonably
withheld, and then only if such assignment is made in accordance with the
following requirements:
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(i) Each such assignment shall apply to all Obligations owing
to the assignor Lender hereunder and to the unused portion of the
assignor Lender's commitments, so that after such assignment is made
the assignor Lender shall have a fixed (and not a varying) Percentage
Share in its Loans and Notes and be committed to make that Percentage
Share of all future Loans, the assignee Lender shall have a fixed
Percentage Share in such Loans and Notes and be committed to make that
Percentage Share of all future Loans, and the Maximum Credit Amount
multiplied by the Percentage Share of each of the assignor Lender and
assignee Lender shall equal or exceed $5,000,000.
(ii) The parties to each such assignment shall execute and
deliver to Agent, for its acceptance and recording in the "Register"
(as defined below in this section), an Assignment and Acceptance
Agreement in the form of Exhibit F, appropriately completed, together
with the Note subject to such assignment and a processing fee payable
to Agent of $5,000. Upon such execution, delivery, and payment and upon
the satisfaction of the conditions set out in such Assignment and
Acceptance, then (1) Borrower shall issue new Notes to such assignor
and assignee upon return of the old Notes to Borrower, and (2) as of
the "Settlement Date" specified in such Assignment and Acceptance the
assignee thereunder shall be a party hereto and a Lender hereunder and
Agent shall thereupon deliver to Borrower and each Lender a schedule
showing the revised Percentage Shares of such assignor Lender and such
assignee Lender and the Percentage Shares of all other Lenders.
(iii) Each assignee Lender which is not a United States person
(as such term is defined in Section 7701(a)(30) of the Internal Revenue
Code) for Federal income tax purposes, shall (to the extent it has not
already done so) provide Agent and Borrower with the "Prescribed Forms"
referred to in Section 3.6(d).
(iv) Any Lender who determines to sell any Loan must sell such
Lender's Revolving Credit Loan and such Lender's Term Loan in equal
proportions.
(v) No such assignee shall be an oil and gas industry
competitor or a Person buying directly for the account of an oil and
gas industry competitor.
(d) Nothing contained in this section shall prevent or prohibit any
Lender from assigning or pledging all or any portion of its Loans and Note to
any Federal Reserve Bank as collateral security pursuant to Regulation A of the
Board of Governors of the Federal Reserve System and any Operating Circular
issued by such Federal Reserve Bank; provided that no such assignment or pledge
shall relieve such Lender from its obligations hereunder.
(e) By executing and delivering an Assignment and Acceptance, each
assignee Lender thereunder will be confirming to and agreeing with Borrower,
Agent and each other Lender Party that such assignee understands and agrees to
the terms hereof, including Article IX hereof.
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(f) Agent shall maintain a copy of each Assignment and Acceptance and a
register for the recordation of the names and addresses of Lenders and the
Percentage Shares of, and principal amount of the Loans owing to, each Lender
from time to time (in this section called the "Register"). The entries in the
Register shall be conclusive, in the absence of manifest error, and Borrower and
each Lender Party may treat each Person whose name is recorded in the Register
as a Lender hereunder for all purposes. The Register shall be available for
inspection by Borrower or any Lender Party at any reasonable time and from time
to time upon reasonable prior notice.
Section 10.6. Confidentiality. Each Lender Party agrees that it will
take all reasonable steps to keep confidential any proprietary information given
to it by any Restricted Person, provided, however, that this restriction shall
not apply to information which (a) has at the time in question entered the
public domain, (b) is required to be disclosed by Law (whether valid or invalid)
of any Tribunal, (c) is disclosed to any Lender Party's Affiliates, auditors,
attorneys, or agents, (d) is furnished to any other Lender Party or to any
purchaser or prospective purchaser of participations or other interests in any
Loan or Loan Document (provided each such purchaser or prospective purchaser
first agrees to hold such information in confidence on the terms provided in
this section), or (e) is disclosed in the course of enforcing its rights and
remedies during the existence of an Event of Default.
Section 10.7. Governing Law; Submission to Process. EXCEPT TO THE
EXTENT THAT THE LAW OF ANOTHER JURISDICTION IS EXPRESSLY ELECTED IN A LOAN
DOCUMENT, THE LOAN DOCUMENTS SHALL BE DEEMED CONTRACTS AND INSTRUMENTS MADE
UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND THE LAWS
OF THE UNITED STATES OF AMERICA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW. BORROWER HEREBY AGREES THAT ANY LEGAL ACTION OR PROCEEDING AGAINST BORROWER
WITH RESPECT TO THIS AGREEMENT, THE NOTES OR ANY OF THE LOAN DOCUMENTS MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK AS LENDER PARTIES MAY ELECT, AND,
BY EXECUTION AND DELIVERY HEREOF, BORROWER ACCEPTS AND CONSENTS FOR ITSELF AND
IN RESPECT TO ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF
THE AFORESAID COURTS, AND FURTHER AGREES TO A TRANSFER OF ANY SUCH PROCEEDING TO
A FEDERAL COURT SITTING IN THE STATE OF NEW YORK TO THE EXTENT THAT IT HAS
SUBJECT MATTER JURISDICTION, AND OTHERWISE TO A STATE COURT IN NEW YORK, NEW
YORK, AND AGREES THAT SUCH JURISDICTION SHALL BE EXCLUSIVE, UNLESS WAIVED BY
MAJORITY LENDERS IN WRITING, WITH RESPECT TO ANY ACTION OR PROCEEDING BROUGHT BY
IT AGAINST LENDER PARTIES AND ANY QUESTIONS RELATING TO USURY. BORROWER AGREES
THAT SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF
NEW YORK SHALL APPLY TO THE LOAN DOCUMENTS AND WAIVES ANY RIGHT TO STAY OR TO
DISMISS ANY ACTION OR PROCEEDING BROUGHT BEFORE SAID COURTS ON THE BASIS OF
FORUM NON CONVENIENS. IN FURTHERANCE OF THE FOREGOING, BORROWER HEREBY
IRREVOCABLY DESIGNATES AND APPOINTS CT CORPORATION SYSTEM, 0000 XXXXXXXX, XXX
XXXX, XXX XXXX, 00000 AS AGENT OF BORROWER TO RECEIVE SERVICE OF ALL PROCESS
BROUGHT AGAINST BORROWER WITH RESPECT TO ANY SUCH PROCEEDING IN ANY SUCH COURT
IN NEW YORK, SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY BORROWER TO BE EFFECTIVE
AND BINDING SERVICE IN EVERY RESPECT. COPIES OF ANY SUCH PROCESS SO SERVED SHALL
ALSO, IF
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PERMITTED BY LAW, BE SENT BY REGISTERED MAIL TO BORROWER AT ITS ADDRESS SET
FORTH BELOW, BUT THE FAILURE OF BORROWER TO RECEIVE SUCH COPIES SHALL NOT AFFECT
IN ANY WAY THE SERVICE OF SUCH PROCESS AS AFORESAID. BORROWER SHALL FURNISH TO
LENDER PARTIES A CONSENT OF CT CORPORATION SYSTEM AGREEING TO ACT HEREUNDER
PRIOR TO THE EFFECTIVE DATE OF THIS AGREEMENT. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF LENDER PARTIES TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
SHALL LIMIT THE RIGHT OF LENDER PARTIES TO BRING PROCEEDINGS AGAINST BORROWER IN
THE COURTS OF ANY OTHER JURISDICTION. IF FOR ANY REASON CT CORPORATION SYSTEM
SHALL RESIGN OR OTHERWISE CEASE TO ACT AS BORROWER'S AGENT, BORROWER HEREBY
IRREVOCABLY AGREES TO (A) IMMEDIATELY DESIGNATE AND APPOINT A NEW AGENT
ACCEPTABLE TO AGENT TO SERVE IN SUCH CAPACITY AND, IN SUCH EVENT, SUCH NEW AGENT
SHALL BE DEEMED TO BE SUBSTITUTED FOR CT CORPORATION SYSTEM FOR ALL PURPOSES
HEREOF AND (B) PROMPTLY DELIVER TO AGENT THE WRITTEN CONSENT (IN FORM AND
SUBSTANCE SATISFACTORY TO AGENT) OF SUCH NEW AGENT AGREEING TO SERVE IN SUCH
CAPACITY.
Section 10.8. Limitation on Interest. Lender Parties, Restricted
Persons and the other parties to the Loan Documents intend to contract in strict
compliance with applicable usury Law from time to time in effect. In furtherance
thereof such persons stipulate and agree that none of the terms and provisions
contained in the Loan Documents shall ever be construed to provide for interest
in excess of the maximum amount of interest permitted to be charged by
applicable Law from time to time in effect. Neither any Restricted Person nor
any present or future guarantors, endorsers, or other Persons hereafter becoming
liable for payment of any Obligation shall ever be liable for unearned interest
thereon or shall ever be required to pay interest thereon in excess of the
maximum amount that may be lawfully charged under applicable Law from time to
time in effect, and the provisions of this section shall control over all other
provisions of the Loan Documents which may be in conflict or apparent conflict
herewith.
Section 10.9. Termination; Limited Survival. In its sole and absolute
discretion Borrower may at any time that no Obligations are owing elect in a
written notice delivered to Agent to terminate this Agreement. Upon receipt by
Agent of such a notice, if no Obligations are then owing this Agreement and all
other Loan Documents shall thereupon be terminated and the parties thereto
released from all prospective obligations thereunder. Notwithstanding the
foregoing or anything herein to the contrary, any waivers or admissions made by
any Restricted Person in any Loan Document, any Obligations under Sections 3.2
through 3.6, and any obligations which any Person may have to indemnify or
compensate any Lender Party shall survive any termination of this Agreement or
any other Loan Document. At the request and expense of Borrower, Agent shall
prepare and execute all necessary instruments to reflect and effect such
termination of the Loan Documents. Agent is hereby authorized to execute all
such instruments on behalf of all Lenders, without the joinder of or further
action by any Lender.
Section 10.10. Severability. If any term or provision of any Loan
Document shall be determined to be illegal or unenforceable all other terms and
provisions of the Loan Documents shall nevertheless remain effective and shall
be enforced to the fullest extent permitted by applicable Law.
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Section 10.11. Counterparts; Fax. This Agreement may be separately
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to
constitute one and the same Agreement. This Agreement and the Loan Documents may
be validly executed and delivered by facsimile or other electronic transmission.
Section 10.12. Waiver of Jury Trial, Punitive Damages, etc. TO THE
EXTENT PERMITTED BY LAW, LENDER PARTIES AND BORROWER HEREBY KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN)
OR ACTIONS OF SUCH PERSONS OR BORROWER. THIS PROVISION IS A MATERIAL INDUCEMENT
FOR LENDER PARTIES' ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
BORROWER AND EACH LENDER PARTY HEREBY FURTHER (A) IRREVOCABLY WAIVES, TO THE
MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER
IN ANY SUCH LITIGATION ANY "SPECIAL DAMAGES", AS DEFINED BELOW, (B) CERTIFIES
THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OR COUNSEL FOR ANY PARTY
HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (C)
ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE OTHER
LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION.
AS USED IN THIS SECTION, "SPECIAL DAMAGES" INCLUDES ALL SPECIAL, CONSEQUENTIAL,
EXEMPLARY, OR PUNITIVE DAMAGES (REGARDLESS OF HOW NAMED), BUT DOES NOT INCLUDE
ANY PAYMENTS OR FUNDS WHICH ANY PARTY HERETO HAS EXPRESSLY PROMISED TO PAY OR
DELIVER TO ANY OTHER PARTY HERETO.
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IN WITNESS WHEREOF, this Agreement is executed as of the date first
written above.
FORCENERGY INC, as Borrower
By:/s/ XXXX XXXXXXXXXXX
--------------------
Xxxx Xxxxxxxxxxx
President
Address:
0000 X.X. 0xx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000-0000
Attention: President
Telephone: (000) 000-0000
Fax: (000) 000-0000
86
ING (U.S.) CAPITAL LLC,
Agent, LC Issuer and Lender
By:/s/ XXXXX X. XXXXXXX
------------------------
Xxxxx X. Xxxxxxx
Senior Vice President
87
DEN NORSKE BANK ASA
By: /s/ J. XXXXXX XXXXXX
-------------------------
J. Xxxxxx Xxxxxx
First Vice President
By: /s/ NILS FYSKE
---------------------------
Xxxx Xxxxx
First Vice President
88
MEESPIERSON CAPITAL CORP.
By: /s/ XXXXX XXXXXX
--------------------------------
Name: Xxxxx Xxxxxx
Title: Managing Director
By: /s/ XXXXXXX X. XXXXXX
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Managing Director
89
BANK OF SCOTLAND
By: /s/ XXXXX XXXXX
----------------------------
Name: Xxxxx Xxxxx
Title: Senior Vice President
90
CREDIT AGRICOLE INDOSUEZ
By: /s/ XXXXXXX XXXXX
---------------------------------
Name: Xxxxxxx Xxxxx
Title: First Vice President
By: /s/ XXXXXXX X. XXXXXXXX
---------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President
91
NATEXIS BANQUE BFCE
By: /s/ XXXXXXX X. XXXXXXX
----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President and
Group Manager
By: /s/ N. XXXX XXXXXX
----------------------------------
Name: N. Xxxx Xxxxxx
Title: Vice President
92
SOCIETE GENERALE, SOUTHWEST
AGENCY
By: /s/ XXXX X. XXX
-------------------------
Name: Xxxx X. Xxx
Title: Director
93
GENERAL ELECTRIC CAPITAL CORP.
By: /s/ XXXX X. XXXXXXXX
----------------------------
Name: Xxxx X. Xxxxxxxx
Title: Manager - Operations
00
XXXX XX XXXXXXX, N.A.
By: /s/ XXXXXX XXXXXX
-------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President
95
AVENUE SPECIAL SITUATIONS FUND, L.P.
By: Avenue Capital Partners, LLC, General
Partner
By: GLR Partners, LLC, Managing
Member of General Partner
By: /s/ XXXX XXXXX
------------------------------
Name: Xxxx Xxxxx
Title: Member
96
XXXXXXX XXXXX XXXXXX, XXXXXX &
XXXXX INCORPORATED
By: /s/ XXXXXX XXXXXXXXX
-------------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Director
97
FARALLON ENERGY INVESTORS, LLC
By: Farallon Capital Management, LLC
By: /s/ XXXXXXX XXXXX
----------------------------------
Name: Xxxxxxx Xxxxx
Title: Managing Partner
