--------------------------------------------------------------------------------
REVOLVING CREDIT AGREEMENT
Dated as of July 19, 1995
AMONG
XXXXXXX RESOURCES CORPORATION
AND
TEXAS COMMERCE BANK NATIONAL ASSOCIATION, AS AGENT
AND
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
NATIONSBANK OF TEXAS, N.A.
BANK OF MONTREAL, HOUSTON AGENCY
COLORADO NATIONAL BANK
THE FIRST NATIONAL BANK OF BOSTON
AS BANKS
--------------------------------------------------------------------------------
TABLE OF CONTENTS
-----------------
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS..................... 1
SECTION 1.01. Certain Defined Terms................................... 1
SECTION 1.02. Accounting Terms........................................ 21
SECTION 1.03. Interpretation.......................................... 21
ARTICLE II
LOANS.................................. 22
SECTION 2.01. Revolving Loans......................................... 22
SECTION 2.02. Borrowing Base.......................................... 23
SECTION 2.03. Borrowing Procedure for Loans........................... 24
SECTION 2.04. Minimum Amount and Maximum Number of LIBOR Borrowings... 26
SECTION 2.05. Issuing the Letters of Credit........................... 26
SECTION 2.06. Conversions or Continuation of Borrowings............... 28
SECTION 2.07. Fees.................................................... 29
SECTION 2.08. Notes................................................... 30
SECTION 2.09. Interest on Loans and Payment Dates..................... 30
SECTION 2.10. Interest on Overdue Amounts............................. 31
SECTION 2.11. Voluntary Termination and Reduction of the Total
Commitment.............................................. 31
SECTION 2.12. Voluntary Prepayment of Loans........................... 31
SECTION 2.13. Mandatory Payments on Loans............................. 32
SECTION 2.14. Alternate Rate of Interest.............................. 33
SECTION 2.15. Change in Circumstances................................. 33
SECTION 2.16. Change in Legality...................................... 34
SECTION 2.17. Funding Losses.......................................... 35
SECTION 2.18. Method of Payments Pro Rata Treatment................... 36
SECTION 2.19. Taxes................................................... 36
SECTION 2.20. Sharing of Payments and Setoffs......................... 38
SECTION 2.21. Limitation on Reimbursement; Mitigation................. 38
SECTION 2.22. Replacement of Banks.................................... 38
SECTION 2.23. Use of Proceeds......................................... 39
SECTION 2.24. Extension of Maturity Date.............................. 39
ARTICLE III
CONDITIONS PRECEDENT........................... 40
SECTION 3.01. Conditions Precedent to the Loans....................... 40
SECTION 3.02. Additional Conditions Precedent......................... 42
SECTION 3.03. General................................................. 43
-i-
ARTICLE IV
REPRESENTATIONS AND WARRANTIES...................... 43
SECTION 4.01. Organization; Corporate Powers.......................... 43
SECTION 4.02. Authority............................................... 43
SECTION 4.03. Use of Proceeds......................................... 44
SECTION 4.04. No Conflict............................................. 44
SECTION 4.05. Gas Balancing Agreements and Advance Payment Contracts.. 44
SECTION 4.06. Oil and Gas Interests................................... 44
SECTION 4.07. Ownership of Properties Generally....................... 45
SECTION 4.08. No Defaults............................................. 45
SECTION 4.09. Financial Position; No Material Adverse Change.......... 45
SECTION 4.10. Litigation; Adverse Effects............................. 46
SECTION 4.11. ERISA................................................... 46
SECTION 4.12. Payment of Taxes........................................ 46
SECTION 4.13. Environmental Matters................................... 47
SECTION 4.14. Governmental Regulation................................. 48
SECTION 4.15. Disclosure.............................................. 48
SECTION 4.16. Subsidiaries............................................ 48
SECTION 4.17. Solvency................................................ 48
SECTION 4.18. Business................................................ 48
SECTION 4.19. Material Contracts...................................... 49
SECTION 4.20. Licenses, Permits, Etc.................................. 49
SECTION 4.21. Fiscal Year............................................. 49
SECTION 4.22. Merger.................................................. 49
ARTICLE V
AFFIRMATIVE COVENANTS...................... 49
SECTION 5.01. Information............................................. 49
SECTION 5.02. Business of Borrower.................................... 52
SECTION 5.03. Corporate Existence..................................... 52
SECTION 5.04. Right of Inspection..................................... 52
SECTION 5.05. Maintenance of Insurance................................ 52
SECTION 5.06. Payment of Taxes and Claims............................. 52
SECTION 5.07. Compliance with Laws and Documents...................... 52
SECTION 5.08. Operation of Properties and Equipment................... 53
SECTION 5.09. Environmental Indemnity................................. 53
SECTION 5.10. ERISA Reporting Requirements............................ 53
SECTION 5.11. Subsidiary Guaranty..................................... 54
SECTION 5.12. Additional Documents.................................... 54
ARTICLE VI
NEGATIVE COVENANTS............................ 55
-ii-
SECTION 6.01. Indebtedness and Accommodation Obligations.............. 55
SECTION 6.02. Restrictions on Distributions........................... 55
SECTION 6.03. Negative Pledge......................................... 56
SECTION 6.04. Consolidation, Mergers and Acquisitions; Fundamental
Changes................................................. 56
SECTION 6.05. Investments............................................. 56
SECTION 6.06. Transactions with Affiliates............................ 57
SECTION 6.07. Agreements.............................................. 57
SECTION 6.08. Sales of Assets......................................... 57
SECTION 6.09. ERISA Compliance........................................ 57
SECTION 6.10. Sales and Leasebacks.................................... 58
SECTION 6.11. Margin Regulation....................................... 58
SECTION 6.12. Amendment to Organizational Documents................... 58
SECTION 6.13. Fiscal Year; Fiscal Quarter............................. 58
SECTION 6.14. Hedge Transactions...................................... 58
SECTION 6.15. Financial Covenants..................................... 59
ARTICLE VII
EVENTS OF DEFAULT............................ 59
SECTION 7.01. Events of Default....................................... 59
SECTION 7.02. Remedies................................................ 61
SECTION 7.03. Indemnity............................................... 62
ARTICLE VIII
THE AGENT................................ 62
SECTION 8.01. Authorization and Action................................ 62
SECTION 8.02. Agent's Reliance; Exculpatory Provisions, Etc........... 63
SECTION 8.03. The Agent in its Individual Capacity and Affiliates..... 63
SECTION 8.04. Bank Credit Decision.................................... 64
SECTION 8.05. Indemnification and Reimbursement....................... 64
SECTION 8.06. Successor Agent......................................... 64
SECTION 8.07. Notice of Default....................................... 65
SECTION 8.08. Delegation of Duties.................................... 65
ARTICLE IX
MISCELLANEOUS.............................. 65
SECTION 9.01. Amendments and Waivers.................................. 65
SECTION 9.02. Notices, Etc............................................ 66
SECTION 9.03. No Waiver; Remedies Cumulative.......................... 67
SECTION 9.04. Costs, Expenses and Taxes............................... 67
SECTION 9.05. Right of Setoff......................................... 68
SECTION 9.06. Governing Law........................................... 68
SECTION 9.07. Interest................................................ 69
SECTION 9.08. Survival of Representations and Warranties.............. 69
SECTION 9.09. Binding Effect.......................................... 69
-iii-
SECTION 9.10. Successors and Assigns; Participations.................. 70
SECTION 9.11. Separability............................................ 72
SECTION 9.12. Confidentiality......................................... 73
SECTION 9.13. Marshalling; Recapture.................................. 73
SECTION 9.14. Representation by the Banks............................. 73
SECTION 9.15. No Third Party Beneficiaries............................ 74
SECTION 9.16. Execution in Counterparts............................... 74
SECTION 9.17. Jurisdiction; Consent to Service of Process............. 74
SECTION 9.18. Credit Agreement Governs Conflicts...................... 74
SECTION 9.19. FINAL AGREEMENT OF THE PARTIES.......................... 74
Schedules ************
*
--------- *
*
3.01(f) List of Xxxxx in Descending Order of Value *
Covered by the Initial Reserve Reports *
4.10 Existing Litigation *
4.11 List of Benefit Plans Under ERISA *
4.13 Environmental Matters *
4.16 List of Subsidiaries *
4.19 Material Contracts *
6.01 Existing Indebtedness *
6.05 Existing Investments *
6.06 Transactions with Affiliates * These Schedules
* and Exhibits
* are not
Exhibits * included in
-------- * this 10-K
*
2.03 Form of Borrowing Request *
2.06 Form of Notice of Conversion\Continuation *
2.08 Form of Revolving Note *
3.01(a)(vi)-A Form of Opinion of Counsel to Borrower *
3.01(a)(vi)-B Form of Opinion of Counsel to Plains *
5.11 Form of Subsidiary Guaranty *
9.10-1 Form of Assignment and Acceptance *
9.10-2 Form of Confidentiality Agreement *
**********
-iv-
REVOLVING CREDIT AGREEMENT
REVOLVING CREDIT AGREEMENT dated as of July 19, 1995, among XXXXXXX
RESOURCES CORPORATION, a Delaware corporation ("Borrower"), the Banks (as
--------
hereinafter defined), and TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a national
banking association ("TCB") acting in its capacity as agent for the Banks (in
---
such capacity, the "Agent").
-----
PRELIMINARY STATEMENTS
WHEREAS, Borrower and its Subsidiaries have requested that the Banks
make available to Borrower, on the terms and subject to the conditions stated
herein, a revolving credit facility, the proceeds of which will be used to
refinance existing indebtedness of Borrower and its Subsidiaries and to fund
general business and corporate requirements of Borrower and its Subsidiaries;
WHEREAS, Borrower, Xxxxxxx Energy Inc., a Delaware corporation ("BEI")
and Plains Petroleum Company, a Delaware corporation ("Plains") are parties to
that certain Agreement and Plan of Merger dated as of May 2, 1995, providing for
the Merger, as hereinafter defined;
WHEREAS, upon consummation of the Merger, Borrower will own, directly
or indirectly, one hundred percent (100%) of the issued and outstanding capital
stock of each of its Subsidiaries including, without limitation, Plains.
WHEREAS, the Banks are willing, upon and subject to the terms and
conditions stated herein, to make such revolving credit facility available to
Borrower and its Subsidiaries; and
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Credit Agreement,
---------------------
the following terms shall have the following meanings:
"Accommodation Obligation," as applied to Borrower or any of its
------------------------
Subsidiaries, shall mean any Contractual Obligation, contingent or otherwise, of
Borrower or such Subsidiary of Borrower with respect to any Indebtedness or
other obligation or liability of another, including, without limitation, any
such Indebtedness, obligation or liability directly or indirectly guarantied,
endorsed (otherwise than for collection or deposit in the ordinary course of
business), co-made or discounted or sold with recourse by Borrower or such
Subsidiary of Borrower, or in respect of which Borrower or such Subsidiary of
Borrower is otherwise directly or indirectly liable, including Contractual
Obligations (contingent or otherwise) arising through any agreement to purchase,
repurchase, or otherwise acquire such Indebtedness, obligation or liability or
any security therefor, or to provide funds for the payment or discharge thereof
(whether in the form of loans, advances, stock purchases, capital contributions
or otherwise), or to maintain solvency, assets, level of income, or other
financial condition, or any "keep
well," "take-or-pay," "throughput" or other similar arrangement or to make
payment other than for value received.
"Advance Payment Contract" shall mean any contract (other than a Hedge
------------------------
Transaction) whereby Borrower or any of its Subsidiaries either (a) receives or
becomes entitled to receive (either directly or indirectly) any payment (an
"Advance Payment") to be applied toward payment of the purchase price of
Hydrocarbons produced or to be produced from Oil and Gas Interests owned by
Borrower or any of its Subsidiaries and which Advance Payment is paid or to be
paid in advance of actual delivery of such production to or for the account of
the purchaser regardless of such production, or (b) grants an option or right of
refusal to the purchaser to take delivery of such production in lieu of payment,
and, in either of the foregoing instances, the Advance Payment is, or is to be,
applied as payment in full for such production when sold and delivered or is, or
is to be, applied as payment for a portion only of the purchase price thereof or
of a percentage or share of such production; provided that inclusion of the
-------- ----
standard provisions in any gas sales or purchase contract or any similar
contract shall not, in and of itself, constitute such contract as an Advance
Payment Contract for the purposes hereof.
"Affected Bank" shall have the meaning specified in Section 2.22 hereof.
------------- ------------
"Affiliate" shall mean, when used with respect to any Person, each other
---------
Person that directly or indirectly controls or is controlled by or is under
common control with such Person. As used in this definition, "control" means
the possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise) and shall
include, without limitation, any Person who beneficially owns more than fifty
percent (50%) of the equity of the other Person and, as to any general or
limited partnership, any general partner thereof.
"Agent" shall have the meaning assigned to that term in the introduction to
-----
this Credit Agreement and shall include any successor agent appointed in
accordance with Section 8.06 of this Credit Agreement.
------------
"Alternate Base Borrowing" shall mean a Borrowing comprised of Alternate
------------------------
Base Loans.
"Alternate Base Loan" shall mean any Loan bearing interest at a rate
-------------------
determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
----------
"Alternate Base Rate" shall mean, for any day, a rate per annum (rounded
-------------------
upwards, if necessary, to the next /1/100/ of 1%) equal to the greater of
(a) the Prime Rate in effect on such day and (b) the Federal Funds Effective
Rate in effect on such day plus 1/2 of 1%. For purposes hereof: "Prime Rate"
---- ----------
shall mean, as of a particular date, the prime rate of interest per annum most
recently announced by the Agent and thereafter entered in the minutes of the
Agent's Loan and Discount Committee, automatically fluctuating upward or
downward with and at the time specified in each such announcement without notice
to Borrower or any other Person; each change in the Prime Rate shall be
effective on the date such change is announced; which Prime Rate may not
necessarily represent the Agent's lowest or best rate actually charged to a
customer; "Federal Funds Effective Rate" shall mean, for any day, the weighted
----------------------------
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published by the
Federal Reserve Bank of New York for such day on the next succeeding Business
Day or, if such rate is not so published for any day
-2-
which is a Business Day, the average of the quotations for the day of such
transactions received by the Agent from three federal funds brokers of
recognized standing selected by it. If for any reason the Agent shall have
determined (which determination shall be conclusive absent manifest error) that
it is unable to ascertain the Federal Funds Effective Rate for any reason,
including, without limitation, the inability of the Agent to obtain sufficient
quotations in accordance with the terms hereof, the Alternate Base Rate shall be
determined without regard to clause (b) of the first sentence of this
definition, as appropriate, until the circumstances giving rise to such
inability no longer exist. Any change in the Alternate Base Rate due to a change
in the Prime Rate or the Federal Funds Effective Rate shall be effective on the
effective date of such change in the Prime Rate or the Federal Funds Effective
Rate, respectively.
"Applicable LIBOR Margin" shall mean, with respect to each LIBOR Borrowing:
-----------------------
(a) on each day on which the Utilized Percentage of Borrowing Base is less
than or equal to twenty-five percent (25%), one-half of one percent
(0.50%) per annum;
(b) on each day on which the Utilized Percentage of Borrowing Base is
greater than twenty-five percent (25%) and less than or equal to fifty
percent (50%), five-eighths of one percent (0.625%) per annum;
(c) on each day of which the Utilized Percentage of Borrowing Base is
greater than fifty percent (50%) but less than or equal to seventy-
five percent (75%), three-quarters of one percent (.75%) per annum;
(d) on each day of which the Utilized Percentage of Borrowing Base is
greater than seventy-five percent (75%), one percent (1%) per annum.
"Assignment and Acceptance" shall mean an assignment and acceptance entered
-------------------------
into by a Bank and an Eligible Assignee, and accepted by the Agent,
substantially in the form of Exhibit 9.10-1 attached hereto.
--------------
"Available Commitment" shall mean, at any time, the lesser of (a)
--------------------
$200,000,000 or (b) the Borrowing Base at that time.
"BEI" shall mean Xxxxxxx Energy Inc., a Delaware corporation and a wholly
---
owned Subsidiary of Borrower.
"Bank" shall mean each of the financial institutions whose name appears on
----
the signature pages to this Credit Agreement and the Persons which from time to
time become a party hereto in accordance with Section 9.10.
------------
"Bankruptcy Code" shall mean the Bankruptcy Reform Act of 1978 as codified
---------------
under 11 U.S.C. (S)101, et seq.
"Benefit Plan" shall mean any employee benefit plan subject to Title IV of
------------
ERISA maintained by Borrower or any ERISA Affiliate with respect to which
Borrower or such ERISA Affiliate has a fixed or contingent liability.
-3-
"Board" shall mean the Board of Governors of the Federal Reserve System of
-----
the United States.
"Borrower" shall have the meaning specified in the introduction to this
--------
Credit Agreement.
"Borrowing" shall mean a borrowing comprised of a group of Loans of the
---------
same Type made to Borrower on the same date by the Banks (or resulting from
conversions or continuations on a given date pursuant to Section 2.06), having,
------------
in the case of LIBOR Loans, the same LIBOR Interest Period.
"Borrowing Base" shall mean, at the particular time in question, the amount
--------------
determined by the Agent and the Required Banks in accordance with the provisions
of Section 2.02, provided, however, that in no event shall the Borrowing Base
------------
exceed the Total Commitment.
"Borrowing Base Notice" shall mean a written notice sent to Borrower by the
---------------------
Agent notifying Borrower of the Borrowing Base determined by the Banks for the
upcoming Borrowing Base Period.
"Borrowing Base Period" shall mean (a) initially, the period from the
---------------------
Effective Date through April 30, 1996; and (b) thereafter, each six month period
beginning on November 1 or May 1 of each year.
"Borrowing Base Quarter" shall mean the period from the Effective Date
----------------------
through July 31, 1995, and each subsequent three-month period beginning with the
first day of August, November, February or May during the term of this Credit
Agreement.
"Borrowing Date" shall mean, with respect to each Borrowing, the Business
--------------
Day upon which the proceeds of such Borrowing are made available to Borrower by
the Banks.
"Borrowing Request" shall mean, with respect to each Borrowing, a request
-----------------
made pursuant to Section 2.03 which request shall be in the form of Exhibit
------------ -------
2.03.
"Business Day" shall mean any day (other than a day which is a Saturday,
------------
Sunday or legal holiday in the State of Texas on which banks are open for
business in Houston, Texas; provided, however, that, when used in connection
-------- -------
with a LIBOR Loan, the term "Business Day" shall also exclude any day on which
banks are not open for dealings in dollar deposits in the interbank eurodollar
market.
"Capital Lease" shall mean, when used with respect to any Person, any lease
-------------
in respect of which the obligations of such Person constitute Capitalized Lease
Obligations.
"Capitalized Lease Obligations" shall mean, when used with respect to any
-----------------------------
Person, without duplication, all obligations of such Person to pay rent or other
amounts under any lease of (or other arrangement conveying the right to use)
real or personal property, or a combination thereof, which obligations shall
have been or should be, in accordance with GAAP, capitalized on the books of
such Person.
"Cash Equivalents" shall mean, when used in connection with Borrower or any
----------------
Subsidiary of Borrower, such Borrower's or such Subsidiary's Investments in:
(a) Government Securities due within one year from the date of
acquisition thereof;
-4-
(b) Readily marketable direct obligations of any State of the United
States or any political subdivision of any such State given on
the date of such investment a credit rating of at least A2 by
Xxxxx'x Investors Service, Inc. or A by S&P, in each case due
within one year from the date of acquisition thereof;
(c) Certificates of deposit issued by, money market deposit accounts
with, eurodollar deposits through, bankers' acceptances of, and
repurchase and reverse repurchase agreements covering Government
Securities executed by a Bank or any other bank doing business in
and incorporated under the laws of the United States or any state
thereof whose deposits are insured through the FDIC, or any
successor thereto, and having (either itself or its holding
company) on the date of such Investment combined capital, surplus
and undivided profits of at least $250,000,000, or any offshore
branch of such bank, in each case maturing within one year from
the date of acquisition thereof;
(d) Readily marketable commercial paper of a Bank or such Bank's
holding company or of any other bank or bank holding company
given on the date of such Investment a credit rating of at least
P-1 by Xxxxx'x Investors Service, Inc. or A-1 by S&P, or of
corporations doing business in and incorporated under the laws of
the United States or any state thereof given on the date of such
Investment a credit rating of at least P-1 by Xxxxx'x Investors
Service, Inc. or A-1 by S&P, in each case, maturing within one
year from the date of acquisition thereof; and
(e) "Money-market mutual funds" investing solely in instruments of
the types described in subparagraphs (a) through (d) above.
"CNB" shall have the meaning specified in Section 2.23 hereof.
--- ------------
"Code" shall mean Internal Revenue Code of 1986, as amended from time to
----
time, and the regulations promulgated thereunder.
"Commitment" shall mean, when used with reference to any Bank at the time
----------
any determination thereof is to be made, the amount of such Bank's Commitment
hereunder to extend credit to Borrower by means of Loans, which, subject to
Sections 2.11 and 7.01, shall be an amount equal to the least of (i) the amount
------------- ----
set forth opposite the name of such Bank under the heading "Amount of
Commitment" on the signature pages to this Credit Agreement, (ii) such Bank's
Commitment Percentage of the Borrowing Base at that time or (iii) such Bank's
Commitment Percentage of the Designated Borrowing Base.
"Commitment Fee Rate" shall have the meaning specified in Section 2.07(a)
------------------- ---------------
hereof.
"Commitment Percentage" shall mean, as to any Bank, a fraction (expressed
---------------------
as a percentage), the numerator of which shall be the amount of such Bank's
Commitment set forth on the signature pages hereto, and the denominator of which
shall be the Total Commitment.
"Communications" shall have the meaning specified in Section 9.02.
-------------- ------------
-5-
"Consolidated" shall refer to the consolidation of any Person, in
------------
accordance with GAAP, with its properly Consolidated Affiliates. Reference to a
Person's Consolidated financial statements, financial position, financial
condition, liabilities, etc. refer to the Consolidated financial statements,
financial position, financial condition, liabilities, etc. of such Person and
its properly Consolidated Affiliates.
"Consolidated Assets" shall mean, when used with respect to Borrower, all
-------------------
items which should be classified as assets on the Consolidated financial
statements of Borrower delivered to the Agent pursuant to Section 5.01, all as
------------
determined in conformity with GAAP.
"Consolidated Capitalization" shall mean, when used with respect to
---------------------------
Borrower an amount equal to the sum of (i) Consolidated Equity plus (ii) Funded
----
Debt.
"Consolidated Equity" shall mean, with respect to Borrower, at anytime, the
-------------------
Consolidated Assets of Borrower less the Consolidated Liabilities of Borrower.
----
"Consolidated Liabilities" shall mean, when used with respect to Borrower,
------------------------
all items which should be classified as liabilities on the Consolidated
financial statements of Borrower delivered to the Agent pursuant to Section
-------
5.01, all as determined in conformity with GAAP.
"Consolidated Net Income" shall mean, for any period, the net earnings (or
-----------------------
loss) after taxes of Borrower and its Subsidiaries on a Consolidated basis for
such period determined in conformity with GAAP.
"Consolidated Tangible Net Worth" shall mean, with respect to Borrower, at
-------------------------------
any time, the Consolidated Equity of Borrower, at such time, less the
Consolidated Intangible Assets of Borrower at such time. For purposes of this
definition, "Intangible Assets" shall mean the amount (to the extent reflected
in determining Consolidated Equity) of all unamortized debt discount and
expense, unamortized deferred charges, goodwill, patents, trademarks, service
marks, tradenames, copyrights and organization expenses.
"Contractual Obligation" as applied to any Person, shall mean any provision
----------------------
of any stock or other securities issued by that Person or any indenture,
mortgage, deed of trust, contract, undertaking, document, instrument or other
agreement or instrument to which that Person is a party or by which it or any of
its properties is bound, or to which it or any of its properties is subject
(including, without limitation, any restrictive covenant affecting such Person
or any of its properties).
"Credit Agreement" shall mean this Revolving Credit Agreement dated as of
----------------
July 19, 1995, among Borrower, the Agent and the each of the Banks, as said
agreement may be amended, modified, supplemented, and/or extended from time to
time.
"Credit Exposure" shall have the meaning specified in Section 9.10(b)
--------------- ---------------
hereof.
"Debtor Relief Laws" shall mean the Bankruptcy Code and all other
------------------
applicable dissolution, liquidation, conservatorship, bankruptcy, moratorium,
readjustment of debt, compromise, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief laws from time to time in effect
affecting the rights of creditors generally.
-6-
"Default" shall mean any Event of Default or the occurrence of any event or
-------
condition which would with the giving of any requisite notice and/or the passage
of time or both constitute an Event of Default.
"Default Rate" shall mean the interest rate described in Section 2.10.
------------ ------------
"Designated Borrowing Base" shall mean an amount determined by Borrower for
-------------------------
each Borrowing Base Quarter, of which Borrower gives notice to the Agent within
five (5) Business Days (i) after Borrower's receipt of a Borrowing Base Notice,
or (ii) prior to the beginning of the next subsequent Borrowing Base Quarter
during a Borrowing Base Period; which amount shall be equal to or greater than
the Designated Borrowing Base Floor Amount, but less than 100 percent (100%) of
the Borrowing Base for the then current Borrowing Base Period; provided, that
--------
the Designated Borrowing Base may be adjusted from time to time pursuant to the
terms and provisions of Sections 2.02 and 2.11 of this Credit Agreement, and
----------------------
provided, further that Borrower may decrease the Designated Borrowing Base only
-------- -------
(i) at the beginning of each Borrowing Base Quarter to an amount equal to or
greater than the Designated Borrowing Base Floor Amount or (ii) in accordance
with the provisions of Section 2.11 hereof. The initial Designated Borrowing
------------
Base for the first Borrowing Base Quarter is $80,000,000.
"Designated Borrowing Base Floor Amount" shall mean $75,000,000 or such
--------------------------------------
other amount as is mutually determined by the Agent, the Required Banks and
Borrower pursuant to Section 2.11 hereof.
------------
"Distribution" shall mean any dividend payable in cash or property with
------------
respect to any shares of capital stock of Borrower or any Subsidiary of Borrower
(other than dividends payable in shares of the same class of common, preferred
or other capital stock as the shares upon which the dividend is being paid), any
other distribution made with respect to any shares of capital stock of Borrower
or any Subsidiary of Borrower, or any purchase, redemption or retirement of, or
other payment with respect to, any shares of capital stock of Borrower or and
Subsidiary of Borrower.
"Dollars" and the symbol "$" shall mean the lawful currency of the United
-------
States.
"Effective Date" shall mean the date on which all of the conditions
--------------
precedent to the making of the Loans set forth in Section 3.01 are first
------------
satisfied or waived by the Banks and the initial Loans are made.
"Eligible Assignee" shall mean any of (i) a Bank or any Affiliate of a
-----------------
Bank; (ii) a commercial bank organized under the laws of the United States, or
any state thereof having total assets in excess of $1,000,000,000; (iii) a
commercial bank organized under the laws of any other country which is a member
of the OECD, or a political subdivision of any such country having total assets
in excess of $1,000,000,000, provided that such bank is acting through its main
--------
office or a branch or agency located in the country in which it is organized or
another country which is also a member of the OECD having total assets in excess
of $1,000,000,000; (iv) the central bank of any country which is a member of the
OECD or (v) a finance company, insurance company or other financial institution
or fund having total assets in excess of $1,000,000,000, provided that a holder,
--------
either directly or indirectly, of capital stock or of any right to acquire
capital stock of Borrower or any Affiliate of Borrower shall not be an Eligible
Assignee.
-7-
"Environmental Laws" shall mean any federal, state or local statute, code,
------------------
ordinance, rule, regulation, permit, consent, approval, license, judgment,
order, writ, judicial decision, decree, injunction or other authorization or
requirement whenever promulgated, issued, or modified, including the requirement
to register underground storage tanks, well plugging and abandonment
requirements, and oil and gas waste disposal requirements relating to:
(i) emissions, discharges, spills, migration, movement, releases or
threatened releases of pollutants, contaminants, Hazardous
Substances, or hazardous or toxic materials or wastes into or
onto soil, land, ambient air, surface water, ground water,
watercourses, publicly owned treatment works, drains, sewer
systems, wetlands or septic systems;
(ii) the use, treatment, storage, disposal, handling, manufacturing,
transportation, or shipment of Hazardous Substances or hazardous
and/or toxic wastes, material, products or by-products containing
Hazardous Substances (or of equipment or apparatus containing
Hazardous Substances); or
(iii) otherwise relating to pollution or the protection of human
health or the environment.
"Environmental Liabilities" shall mean, with respect to any Person, any and
-------------------------
all liabilities, responsibilities, losses, sums paid in settlement of claims,
obligations, charges, actions (formal or informal), claims (including, without
limitation, claims for personal injury or for real or personal property damage),
liens, administrative proceedings, damages (including, without limitation, loss
or damage resulting from the occurrence of an Event of Default), punitive
damages, consequential damages, treble damages, penalties, fines, monetary
sanctions, interest, court costs, response and remediation costs, stabilization
costs, encapsulation costs, treatment, storage, or disposal costs, groundwater
monitoring or environmental sampling costs, other causes of action and any other
costs and expenses (including, without limitation, reasonable attorneys',
experts', and consultants' fees, costs of investigation and feasibility studies
and disbursements in connection with any investigative, administrative or
judicial proceeding) , whether direct or indirect, known or unknown, absolute or
contingent, past, present or future arising under, pursuant to or in connection
with any Environmental Law, or any other binding obligation of such Person
requiring abatement of pollution or protection of human health and the
environment.
"Environmental Lien" shall mean a Lien in favor of any Governmental
------------------
Authority for (i) any liability under Environmental Laws or (ii) damages arising
from, or costs incurred by such Governmental Authority in response to, a Release
or threatened Release of a Hazardous Substance into the environment.
"ERISA" shall mean the United States 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" shall mean any (i) corporation which is a member of the
---------------
same controlled group of corporations (within the meaning of Section 414(b) of
the Code) as Borrower, (ii) partnership or other trade or business (whether or
not incorporated) under common control (within the meaning of Section 414(c) of
the Code) with Borrower, (iii) member of the same affiliated service group
(within the
-8-
meaning of Section 414(m) of the Code) as Borrower or (iv) other Person required
to be aggregated with Borrower or an ERISA Affiliate thereof, as defined above,
pursuant to Section 414(o) of the Code.
"Eurocurrency Liabilities" shall have the meaning assigned to that term in
------------------------
Regulation D.
"Event of Default" shall have the meaning specified in Section 7.01.
---------------- ------------
"Existing Bank Debt" shall have the meaning specified in Section 2.23
------------------ ------------
hereof.
"Existing Litigation" shall mean all actions, suits, proceedings,
-------------------
governmental investigations or arbitrations disclosed in Schedule 4.10 hereto.
-------------
"FDIC" shall mean the Federal Deposit Insurance Corporation (or any
----
successor).
"Federal Funds Effective Rate" shall have the meaning specified in the
----------------------------
definition of the term "Alternate Base Rate".
-------------------
"Fiscal Quarter" shall mean a three-month period ending on the last day of
--------------
December, March, June or September of any year.
"Fiscal Year" shall mean a twelve-month period ending on December 31 of any
-----------
year.
"Funded Debt" of any Person shall mean, without duplication, Indebtedness
-----------
in any of the following categories:
(a) Indebtedness for borrowed money, including the Obligations;
(b) Indebtedness constituting an obligation to pay the deferred purchase
price of property;
(c) Indebtedness evidenced by a bond, debenture, note or similar
instrument; and
(d) Indebtedness owing under direct or indirect guaranties of Funded Debt
of any other Person (without duplication if such Person is Borrower or
any Subsidiary of Borrower and such guaranteed Funded Debt is
described in clauses (a), (b) or (c) above) or constituting
obligations to purchase or acquire or to otherwise protect or insure a
creditor against loss in respect of Funded Debt of any other Person
(such as obligations under working capital maintenance agreements,
agreements to keep-well, or agreements to purchase Funded Debt,
assets, goods, securities or services), but excluding (i) endorsements
in the ordinary course of business of negotiable instruments in the
course of collection and (ii) bonds in favor of the United States of
America or any state securing obligations to plug abandoned xxxxx and
to clean up and restore the land on which such xxxxx are located;
provided, however, that the "Funded Debt" of any Person shall not include
-------- -------
Indebtedness that was 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.
-9-
"Funding Banks" shall have the meaning specified in Section 2.03(d)
------------- ---------------
hereof.
"GAAP" shall mean generally accepted accounting principles set forth in the
----
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, which are consistent with those applied in the preparation of the
financial statements of Borrower referred to in Section 4.09(a).
---------------
"Gas Balancing Agreement" shall mean any agreement or arrangement whereby
-----------------------
Borrower or any of its Subsidiaries or any other party having an interest in any
Hydrocarbons to be produced from Oil and Gas Interests in which Borrower or any
of its Subsidiaries have a right to take more than its proportionate share of
production therefrom.
"Government Securities" shall mean readily marketable direct full faith and
---------------------
credit obligations of the United States or obligations unconditionally
guaranteed by the full faith and credit of the United States (or by any agency
thereof to the extent such obligations are backed by the full faith and credit
of the United States).
"Governmental Approval" shall mean any authorization, consent, approval,
---------------------
license, lease, ruling, permit, certification, exemption, filing for, or
registration by or with any Governmental Authority required of or by Borrower or
any Subsidiary of Borrower in connection with (i) the execution, delivery and
performance of the Loan Documents by any of such Persons and the borrowing of
any funds under this Credit Agreement, (ii) the validity or enforceability of
the Loan Documents and the exercise by the Agent or any Bank of its rights and
remedies thereunder, (iii) the acquisition, maintenance, ownership and operation
of the Oil and Gas Interests and (iv) the consummation of the Merger.
"Governmental Authority" shall mean any nation or government, any federal,
----------------------
xxxxx, xxxxxxxx, xxxx, xxxx, xxxxxxxxxxxx, xxxxxx, local or other political
subdivision thereof or thereto and any department, commission, board, bureau,
instrumentality, agency or other entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Hazardous Substances" shall mean (1) hazardous materials, hazardous
--------------------
wastes, and hazardous substances including, but not limited to, those
substances, materials and wastes listed in the United States Department of
Transportation Hazardous Materials Table, 49 C.F.R.. (S)172.101, as amended, or
listed by the federal Environmental Protection Agency as hazardous substances
under or pursuant to 40 C.F.R. Part 302, as amended, or substances, materials,
contaminants or wastes which are or become regulated under any Environmental
Law, including without limitation, those substances, materials, contaminants or
wastes as defined in the following statutes and their implementing regulations:
the Hazardous Materials Transportation Act, 49 U.S.C. (S)1801 et seq., as
amended, the Resource Conservation and Recovery Act, 42 U.S.C. (S)6901 et seq.,
as amended, the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. (S)9601 et seq., as amended; the Toxic Substances Control Act, 15
U.S.C. (S)2601 et seq., as amended; the Clean Air Act, 42 U.S.C. (S)7401 et
seq., as amended, the federal Water Pollution Control Act, 33 U.S.C. (S)1251 et
seq., as amended, the Occupational Safety and Health Act, 2 U.S.C. (S)651 et
seq., as amended, the Safe Drinking Water Act, 42 U.S.C. (S)300f et seq., as
amended and the Natural Gas Pipeline Safety Act of 1968, 49 U.S.C. (S)1671 et
seq., as amended; (2) all substances, materials, contaminants or wastes listed
in all comparable statutes of the States of Texas, Colorado, Kansas, Wyoming,
New Mexico, Oklahoma or Louisiana and in comparable local governmental
regulations in such states; (3) acid gas, sour water streams or sour water vapor
streams
-10-
containing hydrogen sulfide or other forms of sulphur, sodium hydrosulfide and
ammonia; (4) Hydrocarbons; (5) natural gas, synthetic gas, and any mixtures
thereof; (6) asbestos and/or any material which contains 1% or more, by weight,
of any hydrated mineral silicate, including but not limited to chrysotile,
amosite, crocidolite, tremolite, anthophylite and/or actinolite, whether friable
or non-friable; (7) PCB's, or PCB containing materials or fluids; (8) radon; (9)
naturally occurring radioactive material, radioactive substances or waste; (10)
salt water and other oil and gas wastes and (11) any other hazardous or noxious
substance, material, pollutant, emission, or solid, liquid or gaseous waste.
"Hedge Transaction" shall mean a transaction pursuant to which Borrower or
-----------------
any of its Subsidiaries hedge the price to be received by them for future
production of Hydrocarbons, including price swap agreements under which Borrower
or its Subsidiaries agree to pay a price for a specified amount of Hydrocarbons
determined by reference to a recognized market on a specified future date and
the contracting counterparty agrees to pay Borrower or its Subsidiaries a fixed
price for the same or similar amount of Hydrocarbons; provided, that "Hedge
Transaction" shall not include the purchase by Borrower or any of its
Subsidiaries of any "floor" or similar transactions by means of which such
Person protects itself from declining prices for its production without fixing
any ceiling price for such production.
"Highest Lawful Rate" shall mean, as of a particular date and as to any
-------------------
Bank, the maximum nonusurious interest rate that may under applicable law then
be contracted for, charged or received by such Bank in connection with its
Loans.
"Hostile Acquisition" shall mean any transaction in which Borrower or its
-------------------
Subsidiaries, directly or indirectly, purchases or offers to purchase or
acquire, in any transaction or series of transactions, an aggregate of 5% or
more of the equity securities or controlling interest of any Person, for any
type of consideration, without the prior written consent of such Person's
management and Board of Directors or controlling body.
"Hydrocarbons" shall mean oil, gas, casinghead gas, condensate, distillate,
------------
liquid hydrocarbons, gaseous hydrocarbons and all products separated, settled
and dehydrated therefrom and all products refined therefrom, including, without
limitation, kerosene, liquified petroleum gas, refined lubricating oils, diesel
fuel, drip gasoline, natural gasoline, helium, sulphur and all other minerals.
"Immaterial Mineral Interests" shall have the meaning assigned to that term
----------------------------
in Section 4.06 hereof.
------------
"Indebtedness" shall mean as to Borrower or any Subsidiary of Borrower, all
------------
obligations and liabilities of Borrower or such Subsidiary of Borrower to any
other Person including, without limitation, all debts, claims and indebtedness,
heretofore, now and/or from time to time hereafter owing, due or payable,
however evidenced, created, incurred, acquired or owing and however arising,
whether under written or oral agreement, operation of law, or otherwise.
Indebtedness includes, without limiting the foregoing, (i) indebtedness for
borrowed money (including without duplication obligations to reimburse the
issuer of any letter of credit or any guarantor or surety), (ii) indebtedness
for the deferred purchase price of property or services, except trade accounts
payable within 90 days and arising in the ordinary course of business, (iii)
indebtedness evidenced by bonds, debentures, notes or other similar instruments
(but shall not include any Indebtedness guaranteed, or bonds posted to state
and/or federal agencies incurred in the ordinary course of business in
conjunction with Borrower's oil and gas operations but
-11-
shall include Environmental Liabilities or liabilities to the PBGC), (iv)
obligations and liabilities secured by a Lien upon property owned by Borrower or
a Subsidiary of Borrower, whether or not such Borrower or Subsidiary of Borrower
has assumed such obligations and liabilities and the amount of which
Indebtedness shall not exceed the fair market value of the property subject to
such Lien if Borrower or Subsidiary of Borrower has not assumed such obligations
and liabilities, (v) obligations or liabilities created or arising under any
Capital Lease, (vi) all net payments or amounts owing by Borrower or Subsidiary
of Borrower in respect of interest rate protection agreements, foreign currency
exchange agreements, commodity swap agreements or other interest, exchange rate
or commodity hedging arrangements and (vii) liabilities in respect of unfunded
vested benefits under Benefit Plans. The Indebtedness of Borrower or Subsidiary
of Borrower shall include the Indebtedness of any partnership or joint venture
in which Borrower or Subsidiary of Borrower is a general or venture partner. The
Indebtedness of Borrower or any Subsidiary of Borrower shall not include trade
---
payables and expense accruals incurred or assumed in the ordinary course of
Borrower's or such Subsidiary's business (including trade payables and expense
accruals of any partnership or joint venture in which Borrower or any Subsidiary
of Borrower is a general or venture partner), provided, such payables have not
--------
remained unpaid for a period of ninety (90) days after the same became due
unless Borrower or such Subsidiary is diligently contesting same in good faith.
"Initial Reserve Reports" shall mean the reports covering the material Oil
-----------------------
and Gas Interests (i) of Borrower dated March 31,1995, prepared by Borrower and
reviewed by Xxxxx Xxxxx (the "Xxxxxxx Reserve Report"), (ii) of Plains and
Plains Operating prepared as of December 31, 1994 by Netherland, Xxxxxx &
Associates (the "Plains Reserve Report"), and (iii) of Plains and Plains
Operating with respect to Proved Undeveloped Hydrocarbon Reserves as of December
31, 1994 prepared by Plains (the "Plains PUD Report"), true and correct copies
of which have been furnished by Borrower to the Banks.
"Initial Financial Statements" shall mean collectively (i) the audited
----------------------------
annual Consolidated financial statements of Borrower dated as of September 30,
1994, and the quarterly Consolidated financial statements of Borrower dated as
of December 31, 1994 and March 31, 1995, and (ii) the audited annual
Consolidated financial statements of Plains dated as of December 31, 1994, and
the Quarterly Consolidated financial statement of Plains dated as of March 31,
1995, copies of which Initial Financial Statements have heretofore been
delivered by Borrower to the Banks.
"Interest Payment Date" shall mean any date interest is due pursuant to the
---------------------
provisions of Section 2.09(b) hereof.
---------------
"Investment" shall mean, as applied to Borrower or a Subsidiary of
----------
Borrower, any direct or indirect purchase or other acquisition by Borrower or
such Subsidiary of stock, partnership interest or other equity interest, or of a
beneficial interest therein, of any other Person, and any direct or indirect
loan, advance (other than deposits with financial institutions available for
withdrawal on demand, prepaid expenses, advances to employees and similar items
made or incurred in the ordinary course of business), or capital contribution by
Borrower or such Subsidiary to any other Person, including all Indebtedness and
accounts owed by that other Person which are not current assets or did not arise
from sales of goods or services to Borrower or such Subsidiary in the ordinary
course of business. The amount of any Investment shall be determined in
conformity with GAAP.
"IRS" shall mean the Internal Revenue Service or any successor agency.
---
-12-
"Issuing Bank(s)" shall mean any Bank hereunder designated as the Issuing
---------------
Bank(s) by Borrower.
"Lending Office" shall mean, with respect to each Bank, the branch or
--------------
branches (or Affiliate or Affiliates) from which such Bank's LIBOR Loans or
Alternate Base Loans, as the case may be, are made or maintained and for the
account of which payments of principal of, and interest on, such Bank's LIBOR
Loans or Alternate Base Loans are made.
"Letter of Credit Application" shall mean the application to the Issuing
----------------------------
Bank(s) by Borrower for the issuance of a Standby Letter of Credit.
"Letter of Credit" shall mean a Standby Letter of Credit requested to be
----------------
issued under the Commitment.
"Letter of Credit Commitment" shall mean with respect to each Bank, the
---------------------------
lesser of (a) such Bank's Commitment Percentage of $25,000,000 and (b) such
Bank's Commitment.
"LIBOR Borrowing" shall mean a Borrowing comprised of LIBOR Loans.
---------------
"LIBOR Interest Period" shall mean, with respect to each LIBOR Borrowing, a
---------------------
period of one, two, three or six months, as specified in the Borrowing Request
submitted pursuant to Section 2.03 with respect thereto, beginning on and
------------
including the date specified in such Borrowing Request (which must be a Business
Day) and ending on the date which corresponds numerically to such beginning date
one, two, three or six months thereafter (or if such month has no numerically
corresponding date, on the last Business Day of such month); provided that each
LIBOR Interest Period which would otherwise end on a day which is not a Business
Day shall end on the next succeeding Business Day unless such next succeeding
Business Day is the first Business Day of a calendar month, in which case such
LIBOR Interest Period shall end on the Business Day next preceding such
numerically corresponding day. No LIBOR Interest Period may be elected which
would end after the Maturity Date.
"LIBOR Loan" shall mean any Loan bearing interest at a rate determined by
----------
reference to the LIBOR Rate in accordance with the provisions of Article II.
----------
"LIBOR Rate" shall mean, with respect to each LIBOR Borrowing and with
----------
respect to the related LIBOR Interest Period, the rate of interest per annum
(rounded upward to the nearest 1/16 of one percent) determined pursuant to the
following formula:
LIBOR (Unadjusted)
-------------------------------
LIBOR Rate = 1.00 - LIBOR Reserve Percentage
"LIBOR Reserve Percentage" of any Bank with respect to any LIBOR Interest
------------------------
Period for any LIBOR Loan of such Bank shall mean the reserve percentage
(expressed as a decimal) equal to the maximum aggregate reserve requirements
(including all basic, emergency, supplemental, marginal and other reserves and
taking into account any transitional adjustments or other scheduled changes in
reserve requirements) specified under regulations issued from time to time by
the Board of Governors of the Federal Reserve System and then applicable to
assets or liabilities consisting of and including Eurocurrency Liabilities
having a term approximately equal or comparable to such LIBOR Interest Period.
-00-
"XXXXX (Xxxxxxxxxx)" shall mean, with respect to each LIBOR Borrowing and
------------------
the related LIBOR Interest Period, the rate of interest per annum (rounded
upward to the nearest 1/16 of one percent) quoted by the Agent, in accordance
with its customary practices, to be representative of the rates at which
deposits of U.S. dollars are offered to the Agent at or about 11:00 am., London
time, two Business Days prior to the first day of such LIBOR Interest Period (by
prime banks in the London interbank eurocurrency market which have been selected
by the Agent in accordance with its customary practices) for delivery on the
first day of such LIBOR Interest Period in an amount equal or comparable to the
amount of the Agent's Commitment Percentage of such LIBOR Borrowing and for a
period of time equal or comparable to the length of such LIBOR Interest Period.
LIBOR (Unadjusted), as determined by the Agent with respect to a particular
LIBOR Borrowing, shall be fixed at such rate for the duration of the associated
LIBOR Interest Period.
"Lien" shall mean, with respect to any asset, (a) any mortgage, deed of
----
trust, production payment, deposit, lien, charge, pledge, security interest,
claim or encumbrance of any kind (whether voluntary or involuntary, affirmative
or negative, and whether imposed or created by operation of law or otherwise)
upon such asset, (b) the interest of a vendor or a lessor under any conditional
sale agreement, capital lease or other title retention agreement relating to
such asset and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities but excluding any
right of offset which arises without agreement in the ordinary course of
business.
"Loan Documents" shall mean this Credit Agreement, each of the Notes, the
--------------
Subsidiary Guaranty the Letters of Credit, the Letter of Credit Applications and
reimbursement agreements executed in connection therewith, each compliance
certificate, each Notice of Conversion or Continuance, each Borrowing Request,
all Reserve Reports, all legal opinions and when executed and delivered by the
parties thereto, all other agreements, certificates, instruments and documents
executed in connection with the Credit Agreement or any of the other foregoing
documents, as the same may be amended, modified, supplemented or extended from
time to time.
"Loan(s)" shall have the meaning provided in Section 2.01.
------- ------------
"Margin Stock" shall have the meaning given to such term under Regulation
------------
U.
"Material Adverse Effect" shall mean (a) a material adverse effect on the
-----------------------
business, assets, operations or condition (financial or otherwise) or prospects
of Borrower and its Subsidiaries taken as a whole, (b) material impairment of
the ability of Borrower or any of its Subsidiaries to perform timely any of its
respective Obligations under any Loan Document to which it is or will be a
party, or (c) material impairment of the rights of or benefits available to the
Banks under any Loan Document.
"Material Contract" shall mean any contract, agreement or instrument to
-----------------
which Borrower or any of its Subsidiaries is a party (i) which calls for
payments to or from Borrower or any Subsidiary of Borrower of an amount in
excess of $5,000,000 during any twelve month period or (ii) pursuant to which
Borrower or any Subsidiary of Borrower acquires any right to an interest in real
or personal property or a right to obtain services if Borrower or such
Subsidiary's inability to obtain any such right could reasonably be expected to
result in a Material Adverse Effect.
-14-
"Maturity Date" shall mean July 19, 1999 or the earlier date of termination
-------------
in whole of the Commitments or as extended pursuant to the provisions contained
in Section 2.24 hereof.
------------
"Maximum Permissible Rate" shall have the meaning specified in Section 9.07
------------------------ ------------
hereof.
"Merger" shall mean the Merger of BEI into Plains as contemplated by the
------
Merger Agreement.
"Merger Agreement" shall mean that certain Agreement and Plan of Merger
----------------
dated as of May 2, 1995 among Borrower, BEI and Plains, as the same may be
amended on or before the Merger Date.
"Merger Date" shall mean the date on which the Merger shall become
-----------
effective.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
------------------
Section 4001(a)(3) of ERISA to which Borrower or any ERISA Affiliate is making
or accruing an obligation to make contributions, or has within any of the
preceding five (5) plan years made or accrued an obligation to make
contributions.
"NationsBank" shall have the meaning specified in Section 2.23 hereof.
----------- ------------
"Non-Funding Bank" shall have the meaning specified in Section 2.03(d)
---------------- ---------------
hereof.
"Note" shall mean a promissory note of Borrower dated July 19, 1995,
----
substantially in the form of Exhibit 2.08.
------------
"Notice of Conversion or Continuation" shall mean a Notice of Conversion or
------------------------------------
Continuation in the form of Exhibit 2.06 signed by a Responsible Officer of
------------
Borrower.
"Obligations" shall mean all obligations, liabilities and indebtedness of
-----------
every nature of Borrower and its Subsidiaries from time to time owing to any
Bank under any Loan Document to which Borrower or such Subsidiary is a party,
including, without limitation, (a) the due and punctual payment of (x) the
principal of and interest on the Loans, Letters of Credit and reimbursement
obligations under Letter of Credit Applications, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, including, to the extent permitted by applicable law, interest that
accrues after the commencement of any proceeding by or against Borrower or any
of its Subsidiaries under the Bankruptcy Code and all other applicable Debtor
Relief Laws and (y) all other monetary obligations of Borrower and its
Subsidiaries to any Bank under this Credit Agreement and each of the other Loan
Documents to which Borrower or such Subsidiary is a party, including any and all
fees, costs, expenses and indemnities and (b) the due and punctual performance
of all other obligations of Borrower and its Subsidiaries under this Credit
Agreement and each other Loan Document to which Borrower or such Subsidiary is a
party. "Obligation" shall mean any part of the Obligations.
"Oil and Gas Interests" shall mean any and all rights, estates, titles and
---------------------
interests in any oil and gas xxxxx, oil, gas, sulphur and other mineral
leaseholds and fee interests, all overriding royalty interests, mineral
interests, royalty interests, net profits interests, oil payments, production
payments, carried interests and any and all other interests in Hydrocarbons,
whether any of the same be real or personal, now owned or hereafter acquired by
Borrower or its Subsidiaries, directly or indirectly together with rights,
titles and interests created by or arising under the terms of any unitization,
-15-
communitization, and pooling agreements or arrangements, and all properties,
rights and interests covered thereby, whether arising by contract, by order, or
by operation of laws, which now or hereafter include all or any part of the
foregoing.
"Opinion of Borrower's Counsel" shall mean (i) with respect to Borrower and
-----------------------------
its Subsidiaries other than Plains, the written legal opinion of Bearman
Xxxxxxxxx & Xxxxxxx Professional Corporation, legal counsel to Borrower and its
Subsidiaries, dated as of July 19, 1995, substantially in the form attached
hereto as Exhibit 3.01(a)(vi)-A and (ii) with respect to Plains, the written
---------------------
legal opinion of Xxxxxx X. Xxxx, Xx., Esquire, in-house counsel to Plains, dated
as of July 19, 1995 substantially in the form attached hereto as Exhibit
-------
3.01(a)(vi)-B, each to be delivered to the Agent pursuant to Section 3.01(a)(vi)
------------- -------------------
of the Credit Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity
----
succeeding to all or any of its functions under ERISA.
"Permitted Liens" shall mean with respect to Borrower or any Subsidiary of
---------------
Borrower:
(a) Liens (if any) securing the Notes in favor of the Banks;
(b) Inchoate Liens securing obligations for labor, services, materials and
supplies with respect to the Oil and Gas Interests in the ordinary
course of business which are not delinquent or for which adequate
reserves with respect thereto are maintained on its books in accordance
with GAAP and which are being diligently contested in good faith by
appropriate proceedings and have not proceeded to judgment, provided
--------
that, by reason of nonpayment of the obligations secured by such Liens,
no such property is subject to a risk of loss or forfeiture prior to
judgment which could reasonably be expected to result in a Material
Adverse Effect;
(c) Liens for taxes and assessments on real property which are not yet
past due, or Liens for taxes and assessments on real property for
which adequate reserves with respect thereto are maintained on its
books in accordance with GAAP and which taxes and assessments are
being diligently contested in good faith by appropriate proceedings
and have not proceeded to judgment, provided that, by reason of
--------
nonpayment of the obligations secured by such Liens, no such property
is subject to a risk of loss or forfeiture prior to judgment which
could reasonably be expected to result in a Material Adverse Effect;
(d) Imperfections and irregularities in title to any property which in the
aggregate do not materially impair the marketability or use of such
property for the purposes for which it is or may reasonably be
expected to be held;
(e) Easements, exceptions, reservations, or other agreements for the
purpose of pipelines, conduits, cables, wire communication lines,
power lines and substations, streets, trails, walkways, drainage,
irrigation, water, and sewerage purposes, dikes, canals, ditches, the
removal of oil, gas, coal, or other minerals, and other like purposes
affecting real property which in the aggregate do not materially
burden or impair the marketability or use of such real property for
the purposes for which it is or may reasonably be expected to be held;
-16-
(f) Non-consensual Liens imposed by Law, including carrier's, mechanics',
---------
landlord's, warehousemen's or other similar Liens, other than those
----------
described in clauses (b) or (c) above, arising in the ordinary course
of business with respect to obligations which are not delinquent or
are being diligently contested in good faith by appropriate
proceedings, provided that, if delinquent, adequate reserves with
--------
respect thereto are maintained on its books in accordance with GAAP
and, by reason of nonpayment, no property is subject to a material
risk of loss or forfeiture prior to judgment;
(g) Liens consisting of pledges or deposits made in the ordinary course of
business in compliance with workers' compensation, unemployment
insurance and other social security laws or regulations;
(h) Liens consisting of deposits of property to secure the performance of
bids, trade contracts (other than for Indebtedness or Hedge
Transactions), leases (other than Capitalized Lease Obligations),
statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature incurred in the ordinary course of
business;
(i) Lease burdens payable to third parties which are either (i) deducted
in the calculation of discounted present value in the Reserve Reports
including, without limitation, any royalty, overriding royalty, net
profit interests, production payment, carried interest or reversionary
working interest which has been disclosed to the Agent in writing, or
(ii) which burden properties which are not included in the Reserve
Reports;
(j) Dedication of net acreage to satisfy third party contractual
obligations of Borrower or any Subsidiary of Borrower with respect to
the purchase and sale of Hydrocarbons of a scope and nature customary
in the oil and gas industry (excluding production payments unless
permitted pursuant to Section 6.08 hereof and Hedge Transactions).
------------
(k) Liens arising under operating, pooling or unitization agreements of a
scope and nature customary in the oil and gas industry.
(l) Purchase money Liens upon or in any property acquired by Borrower or
any of its Subsidiaries in the ordinary course of business to secure
the deferred portion of the purchase price of such property or any
indebtedness incurred to finance the acquisition of such property
provided, however, that (i) no such Lien shall be extended to cover
-------- -------
property other than the property being acquired (ii) the Indebtedness
secured thereby is permitted pursuant to Section 6.01(g).
---------------
(m) Liens arising under, in connection with or related to farm-out, farm-
in, joint operating or area of mutual interest agreements or other
similar or customary arrangements, agreements or interests, incurred
in the ordinary course of business and to the extent such Liens are
limited in recourse to (x) the properties subject to such interests or
agreements, (y) the Hydrocarbons produced from such properties and (z)
the proceeds of such Hydrocarbons.
-17-
(n) All other non-consensual Liens arising in the ordinary course of
Borrower's or such Subsidiaries' business or incidental to the
ownership of their properties;
provided that no Permitted Lien referred to above shall (i) secure Indebtedness
--------
except for Indebtedness permitted under Section 6.01 (a) or (g) hereof or (ii)
-----------------------
in the aggregate materially detract from the marketability of the material Oil
and Gas Interests covered by the Reserve Reports or materially impair the use
thereof in the operation of the business of Borrower or such Subsidiary.
"Person" shall mean an individual, partnership, corporation (including a
------
business trust), joint stock company, trust, unincorporated association, joint
venture or other entity, or a foreign state or political subdivision thereof or
any agency of such state or subdivision.
"Plains" shall mean Plains Petroleum Company, a Delaware corporation and
------
after the Merger, a wholly-owned subsidiary of Xxxxxxx.
"Plains Operating" shall mean Plains Petroleum Operating Company, a
----------------
Delaware corporation and a wholly owned Subsidiary of Plains.
"Prime Rate" shall have the meaning specified in the definition of the term
----------
"Alternate Base Rate."
"Proved Developed Behind Pipe Hydrocarbon Reserves" shall mean Proved
-------------------------------------------------
Hydrocarbon Reserves which are recoverable from zones behind casing in existing
xxxxx, which will require additional completion work or a future recompletion
prior to the start of production.
"Proved Developed Non-Producing Hydrocarbon Reserves" shall mean the
---------------------------------------------------
summation of Proved Developed Behind Pipe Hydrocarbon Reserves and Proved
Developed Shut-in Hydrocarbon Reserves.
"Proved Developed Producing Hydrocarbon Reserves" shall mean those Proved
-----------------------------------------------
Hydrocarbon Reserves which are recoverable from completion intervals currently
open and producing to market. Improved recovery reserves are considered to be
producing only after an improved recovery project has been installed and is in
operation.
"Proved Developed Shut-in Hydrocarbon Reserves" shall mean Proved
---------------------------------------------
Hydrocarbon Reserves that are recoverable from completion intervals open as of
the date of estimation, but which are not producing as of such date.
"Proved Hydrocarbon Reserves" shall mean those recoverable Hydrocarbons
---------------------------
which have been proved to a high degree of certainty by reason of existing
production, adequate testing, or in certain cases by adequate core data and
other engineering and geologic information on zones which are present in
existing xxxxx or in known reservoirs. Reserves that can be produced
economically through the application of established improved recovery techniques
are included in the proved classification when (a) successful testing by a pilot
project or the operation of any installed program in that reservoir or one in
the immediate area with similar rock and fluid properties provides support for
the engineering analysis on which the project or program was based, and (b) it
is reasonably certain the project will proceed. Reserves to be recovered by
improved recovery techniques that have yet to be established through repeated
economically successful applications are included in the proved category only
after successful
-18-
testing by a pilot project or after the operation of an installed program in the
reservoir provides support for the engineering analysis on which the project or
program was based. Improved recovery includes all methods for supplement natural
reservoir including (1) pressure maintenance, (2) cycling and (3) secondary
recovery in its original sense. Improved recovery also includes the enhanced
recovery methods of thermal, chemical flooding, and the use of miscible and
immiscible displacement fluids.
"Proved Reserves" shall mean the meaning assigned to that term in Section
--------------- -------
2.02.2(a) hereof.
---------
"Proved Undeveloped Hydrocarbon Reserves" shall mean Proved Hydrocarbon
---------------------------------------
Reserves that are recoverable (i) by new xxxxx on undrilled acreage, (ii) by
replacement xxxxx on previously drilled and producing acreage or (iii) from
existing xxxxx where a relatively large expenditure is required for recompletion
and from acreage where the application of an improved recovery technique is
planned and the costs required to place the project in operation are relatively
large. Proved Undeveloped Hydrocarbon Reserves on undrilled acreage shall be
limited to those drilling units offsetting productive units that are reasonably
certain of production when drilled. Proved Hydrocarbon Reserves for other
undrilled units are Proved Undeveloped Hydrocarbon Reserves only where it can be
demonstrated with certainty that there is continuity of production from the
existing productive formation.
"Redetermination Date" shall have the meaning specified in Section
-------------------- -------
2.02.2(b) hereof.
---------
"Register" shall have the meaning specified in Section 9.10(f) hereof.
-------- ---------------
"Regulation D" shall mean Regulation D of the Board (respecting reserve
------------
requirements), as the same is from time to time in effect, and all official
rulings and interpretations thereunder or thereof.
"Regulation G" shall mean Regulation G of the Board (respecting margin
------------
credit extended by Persons other than banks, brokers and dealers), as the same
is from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"Regulation U" shall mean Regulation U of the Board (respecting margin
------------
credit extended by banks), as the same is from time to time in effect, and all
official rulings and interpretations thereunder or thereof.
"Regulation X" shall mean Regulation X of the Board (respecting borrowers
------------
who obtain margin credit), as the same is from time to time in effect, and all
official rulings and interpretations thereunder or thereof.
"Release" shall mean any release, spill, emission, leak, injection,
-------
deposit, disposal, discharge, dispersal, leaching or migration of any Hazardous
Substance into the environment or into or out of any real property of Borrower
or any Subsidiary of Borrower, including the movement of Hazardous Substances
through or in the air, soil, surface water, groundwater and/or land which could
reasonably be expected to form the basis of an Environmental Liability against
Borrower or any Subsidiary of Borrower.
"Remedial Action" shall mean actions to (i) clean up, remove, treat or in
---------------
any other way address Hazardous Substances in the environment, (ii) prevent the
Release or threat of Release or minimize the further Release of Hazardous
Substances so they do not migrate or endanger or threaten to endanger
-19-
public health or welfare or the environment or (iii) perform pre-remedial
studies and investigations and post-remedial monitoring and care.
"Replacement Bank" shall mean, in any circumstance where a Bank is to be
----------------
replaced pursuant to Section 2.22, (i) any other Bank or (ii) any Eligible
------------
Assignee.
"Reportable Event" shall mean any of the events described in Section 4043
----------------
or Section 4068(f) of ERISA for which the thirty (30) day notice requirement of
29 C.F.R. (S) 2615.3 has not been waived.
"Required Banks" shall mean Banks holding more than 66 2/3% of the
--------------
principal amount of all Loans outstanding, or, if no Loans are outstanding, more
than 66 2/3% of the Total Commitment.
"Requirements of Law" shall mean any federal, state or local law, rule or
-------------------
regulation, permit or other binding determination of any Governmental Authority
applicable to Borrower or any of its Subsidiaries or any of their respective
properties or assets.
"Reserve Report" shall have the meaning given to that term in Section
-------------- -------
2.02.2(a).
---------
"Responsible Officer" shall mean, as to any Person, the President, any
-------------------
Executive Vice President, any Senior Vice President or Secretary of such Person.
"Revolving Credit Outstandings" shall mean, at any time, without
-----------------------------
duplication, the sum of (i) the aggregate principal amount then outstanding on
Loans, (ii) the aggregate face amount of Letters of Credit then outstanding and
(iii) the aggregate amount of payments theretofore made by the Issuing Bank(s)
in respect to Letters of Credit and not theretofore reimbursed by Borrower to
the Issuing Bank(s) or deemed a Loan pursuant to Section 2.05(d).
---------------
"S&P" shall mean Standard & Poor's Corporation.
---
"Sharing Percentage" shall mean, as to any Bank, a fraction (expressed as a
------------------
percentage), the numerator of which shall be the sum of such Bank's (i)
aggregate outstanding principal balance of all Loans to Borrower held by such
Bank at such time plus (ii) aggregate participation in the unfunded portion of
----
Letters of Credit then outstanding plus (iii) aggregate participation in
----
payments made by the Issuing Bank(s) in respect of Letters of Credit and not
theretofore reimbursed by Borrower or deemed a Loan pursuant to Section 2.05(d),
---------------
and the denominator of which shall be the Revolving Credit Outstandings.
"Standby Letter of Credit" shall mean a Letter of Credit which represents
------------------------
an obligation to the beneficiary on the part of the Issuing Bank(s) (a) to repay
money borrowed by or advanced to or for the account of Borrower or any of its
Subsidiaries or (b) to make payment on account of any indebtedness undertaken by
Borrower or any of its Subsidiaries or (c) to make payment on account of any
default by Borrower or any of its Subsidiaries in the performance of an
obligation.
"Subsidiary" shall mean as of any date of determination and with respect to
----------
any Person, any corporation, partnership, joint venture or other entity whether
now existing or hereafter organized or acquired of which the securities,
partnership units or other ownership interests having ordinary voting power, in
the absence of contingencies, to elect a majority of the board of directors or
other persons
-20-
performing similar functions are at the time directly or indirectly owned by
such Person and/or one or more Subsidiaries of such Person.
"Subsidiary Guaranty" shall mean the guaranty of the Obligations executed
-------------------
by each Subsidiary of Borrower in favor of the Agent for the benefit of the
Banks to secure the Obligations substantially in the form of Exhibit 5.11,
------------
either as originally executed or as the same may from time to time be
supplemented, modified, amended, renewed, extended or supplanted.
"TCB" shall mean Texas Commerce Bank National Association, a national
---
banking association.
"Termination Event" shall mean (i) a Reportable Event with respect to any
-----------------
Benefit Plan (other than a "reportable event" that is not subject to the
provision for 30 days notice to the PBGC); (ii) the withdrawal of Borrower from
a Benefit Plan during a plan year in which Borrower was a "substantial employer"
as defined in Section 4001(a)(2) of ERISA; (iii) the imposition of an obligation
on Borrower under Section 4041 of ERISA to provide affected parties written
notice of intent to terminate a Benefit Plan in a distress termination described
in Section 4041(c) of ERISA; (iv) the institution by the PBGC of proceedings to
terminate a Benefit Plan; (v) any other event or condition which would
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Benefit Plan; or (vi) the occurrence
of an event described in Section 4068(f) of ERISA with respect to a Benefit
Plan.
"Total Commitment" shall mean $200,000,000 as the same may be reduced from
----------------
time to time pursuant to Section 2.11 or Section 2.22.
------------ ------------
"Type," when used in respect to any Loan or Borrowing, refers to the Rate
----
by reference to which interest on such Loan or on the Loans comprising such
Borrowing is determined. For purposes hereof, "Rate" shall include the LIBOR
Rate and the Alternate Base Rate.
"UCP" shall have the meaning specified in Section 2.05(b) hereof.
--- ---------------
"Unfunded Portion" shall have the meaning specified in Section 2.03(d)
---------------- ---------------
hereof.
"United States" and "U.S." each shall mean United States of America.
------------- ----
"Utilized Percentage of Borrowing Base" shall mean on any date the
-------------------------------------
Revolving Credit Outstandings on such day divided by the Available Commitment on
such day.
"Withholding Taxes" shall have the meaning provided in Section 2.19(a).
----------------- ---------------
SECTION 1.02. Accounting Terms. All terms of an accounting or financial
----------------
nature shall be construed in accordance with GAAP, as in effect from time to
time; provided, however, that, for purposes of determining compliance with any
-------- -------
covenant set forth in Article VI, such terms shall be construed in accordance
----------
with GAAP as in effect on the date of this Credit Agreement, applied on a basis
consistent with the application used in the audited financial statements
referred to in Section 4.09(a).
---------------
SECTION 1.03. Interpretation.
--------------
-21-
(a) In this Credit Agreement, unless a clear contrary intention appears:
(i) the singular number includes the plural number and vice versa;
(ii) reference to any gender includes each other gender;
(iii) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Credit Agreement as a whole and
not to any particular Article, Section or other subdivision;
(iv) reference to any Person includes such Person's successors and
assigns but, if applicable, only if such successors and assigns
are permitted by this Credit Agreement, and reference to a
Person in a particular capacity excludes such Person in any
other capacity or individually, provided that nothing in this
--------
clause (iv) is intended to authorize any assignment not
otherwise permitted by this Credit Agreement;
(v) reference to any agreement, document or instrument means such
agreement, document or instrument as amended, supplemented or
modified and in effect from time to time in accordance with the
terms thereof and, if applicable, the terms hereof, and
reference to any Note includes any Note issued pursuant hereto
in extension or renewal thereof and in substitution or
replacement therefor;
(vi) unless the context indicates otherwise, reference to any
Article, Section, Schedule or Exhibit means such Article or
Section hereof or such Schedule or Exhibit hereto;
(vii) the words "including" (and with correlative meaning "include")
means including, without limiting the generality of any
description preceding such term;
(viii) with respect to the determination of any period of time, the
word "from" means "from and including" and the word "to" means
"to but excluding;" and
(ix) reference to any law means such as amended, modified, codified
or reenacted, in whole or in part, and in effect from time to
time.
(b) The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction of this Credit
Agreement.
(c) No provision of this Credit Agreement shall be interpreted or construed
against any Person solely because that Person or its legal representative
drafted such provision.
ARTICLE II
LOANS
-22-
SECTION 2.01. Revolving Loans.
---------------
(a) Subject to the terms and conditions and relying upon the
representations and warranties set forth herein and in the other Loan Documents,
each Bank agrees, severally and not jointly, to make its Commitment Percentage
of loans (collectively, "Loans") to Borrower, at any time and from time to time
-----
on and after the Effective Date and up to, but excluding, the Maturity Date,
provided, a Bank's Commitment Percentage of the aggregate amount of all
--------
Revolving Credit Outstandings at any one time shall not exceed such Bank's
Commitment and provided further that the sum of the aggregate amount of
Revolving Credit Outstandings shall at no time exceed the Available Commitment.
Except as otherwise provided in this Credit Agreement, Loans shall mature and be
due and payable in full on the Maturity Date. Within the limitation of the
Available Commitment and subject to the other terms and provisions hereof,
Borrower may borrow, repay and reborrow hereunder. Each Borrowing comprised of
Loans shall be made in accordance with the procedures set forth in Section 2.03
------------
and shall be in an aggregate principal amount which is an integral multiple of
$1,000,000 and not less than $1,000,000 (or an aggregate principal amount equal
----
to the amount available under the Available Commitment).
(b) Subject to the terms and conditions and relying upon the
representations and warranties herein set forth, the Issuing Bank(s) agrees to
issue Letters of Credit upon the request of Borrower for the account of Borrower
or any Subsidiary of Borrower at any time and from time to time on and after the
Effective Date and up to, but excluding, the earlier of the Maturity Date and
the termination of the Letter of Credit Commitments in accordance with the terms
hereof. Each Bank (other than the Issuing Bank) severally agrees, on the terms
and conditions hereinafter set forth, to purchase participations in the Letters
of Credit issued by the Issuing Bank pursuant to Section 2.05 in an aggregate
------------
amount not to exceed such Bank's Letter of Credit Commitment. Notwithstanding
the foregoing, the aggregate undrawn face amount of all Letters of Credit at any
time outstanding shall not exceed the aggregate Letter of Credit Commitments,
and no Letter of Credit will be issued if immediately after such issuance the
Revolving Credit Outstandings would exceed the Available Commitment then in
effect. On each day during the period commencing with the issuance by the
Issuing Bank of any Letter of Credit and until such Letter of Credit shall have
expired or been terminated, and, irrespective of whether such Letter of Credit
has expired or terminated, if same has been drawn upon and the amount so drawn
has not been reimbursed to the Issuing Bank, the Commitment of each Bank shall
be deemed to be utilized for all purposes hereof in an amount equal to such
Bank's Commitment Percentage of the undrawn face amount of such Letter of
Credit, plus the aggregate amount of all unreimbursed drawings.
----
SECTION 2.02. Borrowing Base.
--------------
2.02.1 Initial Borrowing Base. During the period from the Effective Date
----------------------
to the first Redetermination Date, the Borrowing Base shall be $160,000,000.
2.02.2 Subsequent Determinations of the Borrowing Base. (a) Prior to
-----------------------------------------------
March 1 and September 1 of each year, commencing September 1, 1995, Borrower
shall furnish to each Bank a report (herein called a "Reserve Report") in form
--------------
and substance reasonably satisfactory to each Bank, which Reserve Report shall
be dated as of the next preceding December 31 or June 30, as the case may be,
and shall review at least 80% of the Proved Reserves attributable to the Oil and
Gas Interests of Borrower and its Subsidiaries, shall set forth the Proved
Developed Producing Hydrocarbon Reserves, Proved Developed Behind Pipe
Hydrocarbon Reserves, Proved Developed Shut-In Hydrocarbon Reserves and Proved
Undeveloped Hydrocarbon Reserves (the "Proved Reserves") attributable to the Oil
---------------
and Gas Interests
-23-
and a projection of the rate of production and net income with respect to the
Proved Reserves as of the date of such Reserve Report, all in accordance with
the guidelines published by the Securities and Exchange Commission. Each Reserve
Report to be submitted prior to March 1 in each such year shall be prepared by
the Company and reviewed by Xxxxx Xxxxx or such other independent petroleum
engineer acceptable to the Required Banks. Each Reserve Report to be submitted
prior to September 1 in each year may be limited to information prepared by
personnel of Borrower which shall provide the current status of the information
set forth in the immediately preceding Reserve Report.
(b) The "Borrowing Base" from time to time in effect hereunder shall be the
--------------
maximum aggregate amount of credit which the Banks have determined to be
available pursuant to the Total Commitment. The determination of such maximum
aggregate amount of credit shall be made in good faith by all the Banks, in the
exercise of their sole discretion and in accordance with their respective
customary practices and standards for oil and gas loans, which may include
varying (from Bank to Bank) (A) assumptions regarding appropriate existing and
projected pricing, (B) assumptions modifying projected rates of future
production and/or quantities of future production, (C) considerations related to
the projected cash requirements of Borrower and its Subsidiaries assumed to be
provided from production of the Oil and Gas Interests including present and
future debt service of Borrower and/or Subsidiaries of Borrower, general and
administrative expenses and distributions in respect of equity, and (D) such
other considerations as each Bank deems appropriate, it being recognized that
the ultimate determination to be reached is more predicated upon the aggregate
amount of credit available hereunder which, at the time of the determination,
each Bank determines should be available as reasonably expected to be repayable
by Borrower, considering all then existing and projected other items which are
expected to be payable or repayable, without undue risk of failure to timely
repay. In connection with the redetermination of the Borrowing Base and upon
receipt of each Reserve Report the Agent shall submit to the Banks in writing on
or before April 5 or October 5, as the case may be, the Agent's recommendation
as to the maximum aggregate amount of credit which the Agent has determined
should be available to Borrower pursuant to the Total Commitment as of the next
succeeding May 1 or November 1, as the case may be (each such date being a
"Redetermination Date"). Each Bank shall submit to the Agent in writing on or
--------------------
before April 15 or October 15, as the case may be, such Bank's approval or
disapproval of the Agent's recommended Borrowing Base and any such disapproval
shall state the maximum Borrowing Base acceptable to such Bank. If the Agent has
not received such notice from a Bank on or before the close of business on April
15 or October 15, as the case may be, such Bank shall be deemed to have approved
the Agent's recommended Borrowing Base. If by any Redetermination Date the Agent
has not received the approval of the Required Banks, then until the next
Redetermination Date, the Borrowing Base shall be the lowest determination
agreed to by the Required Banks. The Agent shall advise Borrower of the
determination of the Borrowing Base by the Banks by providing Borrower a
Borrowing Base Notice by April 25 and October 25 of each year; provided that if,
due to any failure by Borrower to submit in a timely manner any Reserve Report
or other information required to be submitted by Borrower hereunder or, if
requested in writing by the Agent, any additional information or data needed in
connection with a re-determination of the Borrowing Base or due to any other
reason beyond the control of the Agent, the Agent does not provide a Borrowing
Base Notice at the time described above, then, unless the Agent gives notice to
Borrower of a new Borrowing Base, the Borrowing Base from the previous period
shall be carried over into the new period until a Borrowing Base Notice is sent
to Borrower by the Agent; which Borrowing Base Notice shall be sent to Borrower
by the Agent within thirty (30) days after the cessation or cure of the
circumstances causing the Borrowing Base Notice to not be previously delivered
in a timely manner, and the remainder of the procedures described in this
Section 2.02 have been completed. Borrower shall have the right, by giving
------------
notice to the Agent (i) within five Business Days after its receipt of a
Borrowing Base Notice for a
-24-
Borrowing Base Period or (ii) five (5) Business Days prior to the first day of
the second Borrowing Base Quarter during any Borrowing Base Period, to elect to
have a Designated Borrowing Base take effect for such Borrowing Base Quarter;
provided that if Borrower has elected a Designated Borrowing Base for a
Borrowing Base Quarter, Borrower may, at any time prior to the end of such
Borrowing Base Quarter, by giving five Business Days' prior written notice to
the Agent, elect to increase the Designated Borrowing Base for that Borrowing
Base Quarter to an amount not greater than the amount originally included by the
Agent in the Borrowing Base Notice for such Borrowing Base Period; provided
further that if Borrower so elects to increase the Designated Borrowing Base,
then all commitment fees payable pursuant to Section 2.07 below with respect to
------------
the Borrowing Base Quarter in which such increase took place shall be calculated
as if the increased Designated Borrowing Base had been in effect for the entire
Borrowing Base Quarter.
SECTION 2.03. Borrowing Procedure for Loans. (a) In order to effect a
-----------------------------
Borrowing(s), Borrower shall submit a Borrowing Request in writing or by
telecopy (or telephone notice promptly confirmed in writing or by telecopy) to
the Agent, (i) in the case of a LIBOR Borrowing, not later than 11:00 a.m.,
Houston, Texas time, three (3) Business Days before the Borrowing Date specified
in the Borrowing Request for such proposed LIBOR Borrowing(s) and (ii) in the
case of an Alternate Base Borrowing, not later than 12:00 noon, Houston, Texas
time, on the Borrowing Date specified in the Borrowing Request for such proposed
Alternate Base Borrowing. Such Borrowing Request shall be irrevocable and shall
in each case refer to this Credit Agreement and specify (w) whether the
Borrowing(s) then being requested are to be LIBOR Borrowing(s), or Alternate
Base Borrowing(s), or a combination thereof, (x) the Borrowing Date of such
Borrowing(s) (which shall be a Business Day), (y) the aggregate principal amount
of such Borrowing(s) and (z) in the case of LIBOR Borrowings, the LIBOR Interest
Periods with respect thereto. If no LIBOR Interest Period with respect to any
LIBOR Borrowing(s) is specified in any such Borrowing Request, then Borrower
shall be deemed to have selected a LIBOR Interest Period of one (1) month's
duration. The Agent shall promptly advise the Banks of any Borrowing Request
given pursuant to this Section 2.03 and of each Bank's Commitment Percentage of
------------
the requested Borrowing(s) by telecopy (or telephone notice promptly confirmed
in writing or by telecopy).
(b) Each Bank may at its option make any LIBOR Loan by causing any Lending
Office of such Bank to make such LIBOR Loan; provided, however, that any
-------- -------
exercise of such option shall not affect the obligation of Borrower to repay
such LIBOR Loan in accordance with the terms of this Credit Agreement and the
applicable Notes.
(c) No later than 2:00 p.m., Houston, Texas time, on the Borrowing Date
specified in each Borrowing Request, each Bank will make available to the Agent
its Commitment Percentage of the Loans comprising the Borrowing(s) requested to
be made on such date, in Dollars and immediately available funds. Upon
fulfillment of the applicable conditions set forth in Article III, the Agent
-----------
will make the proceeds of each Borrowing so requested available to Borrower by
crediting the amounts so received to a general deposit account maintained by
Borrower with Texas Commerce Bank National Association, on the Borrowing Date
or, if a Borrowing shall not occur on such Borrowing Date because any condition
precedent specified in Article III to this Credit Agreement shall not have been
met, the Agent will return the amounts so received to the respective Banks as
soon as practicable. All Borrowings shall be made by the Banks pro rata in
accordance with such Bank's Commitment Percentage of the Loans comprising such
Borrowing. Unless the Agent shall have received notice from a Bank prior to the
date of any proposed Borrowing Date that such Bank will not make available to
the Agent such Bank's Commitment Percentage of such Borrowing, the Agent may
assume that such Bank
-25-
has made its Commitment Percentage available to the Agent on such Borrowing Date
in accordance with this paragraph (c) and the Agent, in reliance upon such
assumption, may, (but under no circumstances shall the Agent be obligated to)
make available to Borrower on such Borrowing Date a corresponding amount. If and
to the extent that such Bank shall not have made its Commitment Percentage of
such Borrowing available to the Agent, such Bank agrees to repay to the Agent
forthwith on demand such corresponding amount together with interest thereon,
for each day from the date such amount is made available to Borrower until the
date such amount is repaid to the Agent at the Federal Funds Effective Rate.
Upon such Bank's repayment to the Agent of such corresponding amount, such
amount shall constitute such Bank's Commitment Percentage of such Borrowing for
purposes of this Credit Agreement.
(d) If and to the extent that a Bank (the "Non-funding Bank") has not made
----------------
its Commitment Percentage of the Loans comprising a Borrowing (the "Unfunded
--------
Portion") available to the Agent by the close of business on the specified
-------
Borrowing Date (whether or not the Agent has made available to the Borrower on
the specified Borrowing Date a corresponding amount pursuant to Section 2.03 (c)
----------------
above), the Agent shall notify Borrower of such event no later than 10:00 a.m.,
Houston time, the next succeeding Business Day. Provided that each of the Banks
other than the Non-funding Bank (the "Funding Banks") have availability under
-------------
their respective Available Commitments and no Default or Event of Default has
occurred and is continuing, Borrower may submit a Borrowing Request by 12:00
noon, Houston time, to the Agent requesting a same day Borrowing comprised of
Alternate Base Loans in an amount equal to the Unfunded Portion. The Agent shall
promptly notify the Funding Banks of the Borrowing Request. No later than 2:00
p.m., Houston time, each Funding Bank shall make available to the Agent its pro
rata share (expressed as a percentage and determined by dividing the amount of
such Funding Bank's Commitment by an amount equal to the Total Commitment minus
-----
the amount of the Non-funding Bank's Commitment) of the Unfunded Portion, in
Dollars and in immediately available funds. If the Agent did not make available
to the Borrower the Unfunded Portion pursuant to Section 2.03(c), then the Agent
---------------
shall make the proceeds of said Borrowing available to the Borrower by crediting
the amounts so received to a general deposit account maintained by Borrower with
the Agent. If the Agent did make available to Borrower the Unfunded Portion
pursuant to Section 2.03(c), then the Agent shall apply the amounts so received
---------------
to the repayment of the Unfunded Portion advanced by the Agent. The Commitment
Percentages of the Funding Banks with respect to the affected Borrowing and to
the Borrowing requested under this Section 2.03(d) shall be adjusted to reflect
---------------
the amounts so advanced by the Funding Banks. Notwithstanding anything contained
herein, if Borrower requests a funding under this Section 2.03(d), then Borrower
---------------
shall exercise one of the two options given to Borrower in Section 2.22 within
------------
sixty (60) days from the date Borrower requests a funding under this Section
-------
2.03(d); and provided, further, that if the Agent has made available to Borrower
-------
the Unfunded Portion pursuant to Section 2.03(c) and Borrower does not request a
---------------
funding under this Section 2.03(d), then Borrower shall pay forthwith upon
---------------
demand such Unfunded Portion together with interest thereon, for each day from
the date the Unfunded Portion is made available to Borrower until the date such
Unfunded Portion is repaid to the Agent at the interest rate applicable to
funded portion Loans comprising the affected Borrowing.
SECTION 2.04. Minimum Amount and Maximum Number of LIBOR Borrowings. All
-----------------------------------------------------
borrowings, conversions, continuations, payments, prepayments and selections of
LIBOR Interest Periods under this Credit Agreement shall be made or selected so
that, immediately after giving effect thereto, (i) the aggregate principal
amount of all Loans comprising a single LIBOR Borrowing shall not be less than
----
$1,000,000 and (ii) there shall be no more than eight (8) LIBOR Borrowings
outstanding at any time.
-26-
SECTION 2.05. Issuing the Letters of Credit. (a) In order to effect the
-----------------------------
issuance of a Letter of Credit, Borrower shall submit a Borrowing Request and a
Letter of Credit Application in writing by telecopy to the Agent (who shall
promptly notify the Issuing Bank) not later than 12:00 noon, Houston, Texas
time, two (2) Business Days before the date of issuance of such Letter of
Credit. Each such Borrowing Request and Letter of Credit Application shall (i)
be signed by Borrower, (ii) specify the Business Day on which such Letter of
Credit is to be issued, (iii) specify the Issuing Bank, and (iv) specify the
availability for Letters of Credit under the Letter of Credit Commitment and the
Total Commitment as of the date of issuance of such Letter of Credit and the
expiration date thereof which shall not be later than the earlier of (A) twelve
(12) months from the date of issuance of such Letter of Credit and (B) the
Maturity Date; provided, however, that Borrower may request evergreen Letters of
-------- -------
Credit that automatically renew for additional one year periods so long as the
final expiry date thereof is on or before the Maturity Date.
(b) Upon satisfaction of the applicable terms and conditions set forth in
Article III, the Issuing Bank shall issue such Letter of Credit to the specified
-----------
beneficiary not later than the close of business, Houston, Texas time, on the
date so specified. The Agent shall provide Borrower and each Bank with a copy
of each Letter of Credit so issued. Each such Letter of Credit shall (i)
provide for the payment of drafts, presented for honor thereunder by the
beneficiary in accordance with the terms thereon, at sight when accompanied by
the documents described therein and (ii) be subject to the Uniform Customs and
Practice for Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500, (and any subsequent revisions thereof approved by
a Congress of the International Chamber of Commerce) (the "UCP") and shall, as
to matters not governed by the UCP, be governed by, and construed and
interpreted in accordance with, the laws of the State of Texas.
(c) Upon the issuance date of each Letter of Credit, the Issuing Bank shall
be deemed, without further action by any party hereto, to have sold to each
other Bank, and each other Bank shall be deemed, without further action by any
party hereto, to have purchased from the Issuing Bank, a participation, to the
extent of such Bank's Commitment Percentage, in such Letter of Credit, the
obligations thereunder and in the reimbursement obligations of Borrower due in
respect of drawings made under such Letter of Credit. If requested by the
Issuing Bank, the other Banks will execute any other documents reasonably
requested by the Issuing Bank to evidence the purchase of such participation.
(d) Upon the presentment of any draft for honor under any Letter of Credit
by the beneficiary thereof which the Issuing Bank determines is in compliance
with the conditions for payment thereunder, the Issuing Bank shall promptly
notify Borrower, the Agent and each Bank of the intended date of honor of such
draft and Borrower hereby promises and agrees, at Borrower's option, to either
(i) pay to the Agent for the account of the Issuing Bank, by 1:00 p.m., Houston,
Texas time, on the date payment is due as specified in such notice, the full
amount of such draft in immediately available funds or (ii) request a Loan
pursuant to the provisions of Sections 2.01 and 2.03 of this Credit Agreement in
----------------------
the full amount of such draft, which request shall specify that the Borrowing
Date is to be the date payment is due under the Letter of Credit as specified in
the Issuing Bank's notice. If Borrower fails timely to make such payment
because a Loan cannot be made pursuant to Sections 2.01(a) and 3.02, each Bank
-------------------------
shall, notwithstanding any other provision of this Credit Agreement (including
the occurrence and continuance of a Default or an Event of Default), make
available to the Agent for the benefit of the Issuing Bank an amount equal to
its Commitment Percentage of the presented draft on the day the Issuing
-27-
Bank is required to honor such draft. If such amount is not in fact made
available to the Agent by such Bank on such date, such Bank shall pay to the
Agent for the account of the Issuing Bank, on demand made by the Issuing Bank,
in addition to such amount, an amount equal to the product of (i) the average
daily Federal Funds Effective Rate per annum during the period referred to in
clause (iii) of this sentence times (ii) the amount of such Bank's Commitment
Percentage of the presented draft times (iii) the number of days that elapse
from the day the Issuing Bank honors such draft to the date on which the amount
equal to such Bank's Commitment Percentage of the presented draft becomes
immediately available to the Issuing Bank divided (iv) by 360. In the event that
a Loan cannot be made pursuant to the provisions of Sections 2.01(a) or 3.02,
and Borrower fails to pay directly the amount of the draft, then upon receipt by
the Agent from the Banks of the full amount of such draft, notwithstanding any
other provision of this Credit Agreement (including the occurrence and
continuance of a Default or an Event of Default) the full amount of such draft
shall automatically and without any action by Borrower, be deemed to have been
an Alternate Base Borrowing as of the date of payment of such draft. Nothing in
this paragraph (d) or elsewhere in this Credit Agreement shall diminish
Borrower's obligation under this Credit Agreement to provide the funds for the
payment of any draft presented to, and duly honored by, the Issuing Bank under
any Letter of Credit by either obtaining a Loan pursuant to the provisions of
Sections 2.01(a) and 3.02 or paying directly to the Agent for the benefit of the
-------------------------
Issuing Bank and the other Banks the amount of the draft, and the automatic
funding of a Loan as provided in the immediately preceding sentence shall not
constitute a cure or waiver of the Event of Default for failure to timely
provide such funds as in this paragraph agreed.
(e) In order to induce the issuance of Letters of Credit by the Issuing
Bank(s) and the purchase of participations therein by the other Banks, Borrower
agrees with the Agent, the Issuing Bank(s) and the other Banks that neither the
Agent nor any Bank (including the Issuing Bank(s)) shall be responsible or
liable (except as provided in the following sentence) for, and Borrower's
unconditional obligation to reimburse the Issuing Bank(s) through the Agent for
amounts paid by the Issuing Bank(s), as provided in Section 2.05(d), on account
----------------
of drafts so honored under the Revolving Credit Letters of Credit shall not be
affected by, any circumstance, act or omission whatsoever (whether or not known
to the Agent or any Bank (including the Issuing Bank(s)) other than a
circumstance, act or omission resulting from the gross negligence or willful
misconduct of the Agent or any Bank). Borrower agrees that any action taken or
omitted to be taken by the Agent or any Bank (including the Issuing Bank(s))
under or in connection with any Letter of Credit or any related draft, document
or property shall be binding on Borrower and shall not put the Agent or any Bank
(including the Issuing Bank(s)) under any resulting liability to Borrower,
unless such action or omission is the result of the gross negligence or willful
misconduct of the Agent or any such Bank. Borrower hereby waives presentment for
payment (except the presentment required by the terms of any Letter of Credit)
and notice of dishonor, protest and notice of protest with respect to drafts
honored under the Letters of Credit. The Issuing Bank agrees promptly to notify
Borrower whenever a draft is presented under any Letter of Credit, but failure
to so notify Borrower shall not in any way affect Borrower's obligations
hereunder. Subject to Section 2.21 and 2.22, if while any Letter of Credit is
------------ ----
outstanding, any law, executive order or regulation is enforced, adopted or
interpreted by any public body, governmental agency or court of competent
jurisdiction so as to affect any of Borrower's obligations or the compensation
to any Bank in respect of the Letters of Credit or the cost to such Bank of
establishing and/or maintaining the Letters of Credit (or any participation
therein), such Bank shall promptly notify Borrower thereof in writing in
accordance with Section 2.15(c) or 2.19, and within ten (10) Business Days after
--------------- ----
receipt by Borrower of such Bank's request (through the Agent) for reimbursement
or indemnification or within thirty (30) days after receipt of a notice in
respect of Withholding Taxes under Section 2.19 hereof, accompanied by a
------------
certificate from such Bank setting forth the basis for such reimbursement or
indemnification and the calculation thereof in
-28-
accordance with Section 2.15(c) or 2.19, Borrower shall reimburse or indemnify
--------------- ----
such Bank, as the case may be, with respect thereto so that such Bank shall be
in the same position as if there had been no such enforcement, adoption or
interpretation, unless Borrower notifies the Agent of its good faith contest to,
and dispute of, the requested amount and such Bank's basis therefor and/or
calculation thereof. The foregoing agreement of Borrower to reimburse or
indemnify the Banks shall apply in (but shall not be limited to) the following
situations: an imposition of or change in reserve, capital maintenance or other
similar requirements or in excise or similar taxes or monetary restraints,
except a change in franchise taxes imposed on such Bank or in tax on the net
income of such Bank.
(f) In the event that any provision of a Letter of Credit Application is
inconsistent with, or in conflict of, any provision of this Credit Agreement,
including provisions for the rate of interest applicable to drawings thereunder
or rights of setoff or any representations, warranties, covenants or any events
of default set forth therein, the provisions of this Credit Agreement shall
govern.
SECTION 2.06. Conversions or Continuation of Borrowings.(a) Subject to
-----------------------------------------
the other provisions of this Credit Agreement, Borrower may elect from time to
time to convert (i) all or any part of LIBOR Loans which comprise part of the
same LIBOR Borrowing to a Borrowing comprised of Alternate Base Loans and (ii)
all or any part of Alternate Base Loans which comprise part of the same
Borrowing to a Borrowing comprised of LIBOR Loans, provided, however, in each
-------- -------
case that any such conversion of Loans comprising a LIBOR Borrowing shall,
subject to the second following sentence, only be made on the last day of a
LIBOR Interest Period with respect thereto. All or any part of a Borrowing may
be converted as provided herein, provided that no Borrowing may be converted
--------
into a LIBOR Borrowing when any Default or Event of Default has occurred and is
continuing.
(b) Any LIBOR Borrowing may be continued as such effective upon the
expiration of the LIBOR Interest Period with respect thereto; provided, that no
--------
LIBOR Borrowing may be continued as such when any Default or Event of Default
has occurred and is continuing, but in such event shall be automatically
converted to an Alternate Base Borrowing on the last day of the then current
LIBOR Interest Period with respect thereto.
(c) In order to elect to convert or continue a Borrowing, or any portion
thereof, under this Section 2.06, Borrower shall deliver an irrevocable Notice
------------
of Conversion or Continuation to the Agent not later than 1:00 p.m., Houston,
Texas time, (i) at least three (3) Business Days in advance of the proposed
conversion or continuation date in the case of a conversion to, or continuation
of, a LIBOR Borrowing and (ii) at least one (1) Business Day in advance of the
proposed conversion date in the case of a conversion to an Alternate Base
Borrowing. Each such Notice of Conversion or Continuation shall be by telecopy
(confirmed thereafter by a delivery of the original of such Notice of Conversion
or Continuation by United States mail or a reputable courier) and shall specify
(v) the date of the requested conversion or continuation (which shall be a
Business Day), (w) the amount and the Borrowing to be converted or continued,
(y) whether a conversion or continuation is requested, and, if a conversion,
into what Type of Borrowing and (z) in the case of a conversion to, or a
continuation of, an LIBOR Borrowing, the requested LIBOR Interest Period.
Promptly after receipt of a Notice of Conversion or Continuation under this
Section 2.06, the Agent shall provide each Bank with a copy thereof.
------------
(d) No Borrowing, or any portion thereof, may be converted into an LIBOR
Borrowing if, after giving effect to such conversion, there would be more than
eight (8) LIBOR Borrowings outstanding at such time.
-29-
(e) If Borrower shall fail to deliver a timely Notice of Conversion or
Continuation with respect to any LIBOR Borrowing, Borrower shall be deemed to
have elected to convert such LIBOR Borrowing to an Alternate Base Borrowing on
the last day of the LIBOR Interest Period with respect to such LIBOR Borrowing.
(f) For purposes of this Section 2.06, Borrowings having different LIBOR
------------
Interest Periods, regardless of whether they commence on the same date or are of
the same Type shall be considered Borrowings of different Types.
SECTION 2.07. Fees. (a) In consideration of each Bank's commitment to
----
make Loans, Borrower will pay to Agent for the account of each Bank a commitment
fee determined on a daily basis by applying the applicable Commitment Fee Rate
to such Bank's Sharing Percentage of the unused portion of the Borrowing Base,
or Designated Borrowing Base, as the case may be, on each day from the Effective
Date to but excluding the Maturity Date. The commitment fee shall be determined
for each such day by deducting from the amount of the lesser of (i) Borrowing
Base and (ii) the Designated Borrowing Base, as the case may be, at the end of
such day the Revolving Credit Outstandings at the end of such day. This
commitment fee shall be due and payable in arrears on or before the fifteenth
day of the next succeeding Fiscal Quarter, on the date of each reduction in the
Total Commitment and at Maturity (by acceleration or otherwise). The applicable
"Commitment Fee Rate" shall be based on the Utilized Percentage of Borrowing
-------------------
Base in effect on each such day and calculated pursuant to the following table:
Utilized Percentage of Borrowing Base Applicable Commitment Fee Rate
------------------------------------- ------------------------------
Less than or equal to fifty percent (50%) one-fifth of one percent (0.20%)
per annum
Greater than fifty percent (50%), but one-quarter of one percent (0.25%)
less than or equal to seventy-five per annum
percent (75%)
Greater than seventy-five percent (75%) seven-twentieths of one percent
(0.35%) per annum
(b) Borrower agrees to pay (A) to the Agent for the account of the Banks a
Letter of Credit fee for the issuance and maintenance of each Letter of Credit,
in an amount equal to the greater of (i) $500.00 and (ii) five-eighths of one
percent (.625%) per annum of the face amount of each Letter of Credit from the
date of issuance thereof to the date on which such Letter of Credit expires or
is terminated and (B) to the Issuing Bank as a fronting fee for the issuance of
each Letter of Credit, in an amount equal to one-eighth of one percent (.125%)
per annum of the face amount of each Letter of Credit from the date of issuance
thereof to the date on which such Letter of Credit expires or is terminated.
All such Letter of Credit fees shall be payable in full in advance of the
issuance of such Letter of Credit and Borrower shall receive a refund of any
unearned fees resulting from the termination of any Letter of Credit prior to
its stated expiration date, which refund shall be payable to Borrower on or
before thirty (30) days after such earlier termination. The Agent shall pay to
each Bank its Sharing Percentage of such Letter of Credit fee.
(c) Borrower shall pay when due to the Agent such other fees as shall have
been separately agreed by the Agent and Borrower in writing.
-30-
(d) All computations of fees hereunder shall be calculated on the basis of
a year of 360 days and the actual number of days elapsed.
SECTION 2.08. Notes. (a) The Loans made by each Bank shall be evidenced
-----
by a single Note duly executed and delivered by Borrower, dated July 19, 1995,
with the blanks appropriately completed, payable by Borrower to the order of
such Bank in a principal amount equal to such Bank's commitment as set forth in
the signature pages to this Credit Agreement.
(b) Each Bank is hereby authorized by Borrower, at its option, to endorse
on the schedule attached to its Note (or on a continuation of such schedule
attached to its Note and made a part thereof) or in its internal records
relating to its Note an appropriate notation evidencing the date and amount of
each Loan evidenced thereby, the date and amount of each payment of principal or
interest in respect thereof and such other information provided for on such
schedule. The failure of any Bank to make such a notation or any error therein
shall not in any manner affect the obligation of Borrower to repay the Loans
made by such Bank in accordance with the terms of its Note and this Credit
Agreement.
SECTION 2.09. Interest on Loans and Payment Dates. (a) Subject to the
-----------------------------------
provisions of Section 2.10, the Loans shall bear interest as follows:
------------
(i) The Loans comprising each LIBOR Borrowing shall bear interest
(computed on the basis of the actual number of days elapsed over a
year of 360 days) at a rate per annum equal to the lesser of (i) the
Highest Lawful Rate and (ii) the LIBOR Rate for the LIBOR Interest
Period in effect for such Borrowing plus the Applicable LIBOR Margin
----
with respect to such LIBOR Loans.
(ii) The Loans comprising each Alternate Base Borrowing shall bear interest
at a rate per annum equal to the lesser of (i) the Highest Lawful Rate
and (ii) the Alternate Base Rate (if the Alternate Base Rate is based
on the Prime Rate, computed on the basis of the actual number of days
elapsed over a year of 365 or 366 days, as the case may be; if the
Alternate Base Rate is based on the Federal Funds Effective Rate,
computed on the basis of the actual number of days elapsed over a year
of 360 days).
(b) Interest on each Loan shall be payable by Borrower (i) in respect of
each Loan comprising part of an Alternate Base Borrowing, quarterly in arrears
on the last Business Day of each calendar quarter, (ii) in respect of each Loan
comprising part of a LIBOR Borrowing, on the last day of the LIBOR Interest
Period applicable to such LIBOR Borrowing, and, in the case of a LIBOR Interest
Period for LIBOR Borrowings of six (6) months, on the date occurring three (3)
months from the first day of such LIBOR Interest Period and on the last day of
such LIBOR Interest Period, (iii) in respect of each Loan accruing interest at
the Default Rate, on demand and (iv) in respect of all Loans, on any prepayment
or conversion (on the amount prepaid or converted), at maturity (whether by
acceleration or otherwise) and, after maturity, on demand.
(c) Interest in respect of the unpaid principal amount of each Loan shall
accrue from (and including) the date of the making of such Loan to (but not
including) the date on which such Loan shall be paid in full.
-31-
(d) The Agent shall, upon determining a LIBOR Rate for any LIBOR Interest
Period, promptly notify Borrower and the Banks thereof.
SECTION 2.10. Interest on Overdue Amounts. If Borrower shall fail to pay
---------------------------
the principal of or interest on any Loan or any other amount when due hereunder,
Borrower shall on demand from time to time pay interest, to the extent permitted
by law, on such defaulted amount from the date of such Event of Default up to
(but not including) the date of actual payment (after as well as before
judgment) at a rate per annum (the "Default Rate") equal to the lesser of (i)
------------
the Highest Lawful Rate and (ii) the Alternate Base Rate, in the case of
Alternate Base Borrowings, and the applicable LIBOR Rate in the case of LIBOR
Borrowings, plus two percent (2%) per annum computed on the basis of the actual
----
number of days elapsed over a year of 365 or 366 days, as the case may be.
SECTION 2.11. Voluntary Termination and Reduction of the Total Commitment.
------------------------------------------------------------
(a) Subject to Section 2.13, Borrower may permanently terminate, or from time
------------
to time in part permanently reduce, the Total Commitment upon at least five (5)
Business Days' prior irrevocable written or telecopy notice (or telephone notice
promptly confirmed in writing) to the Agent (which notice the Agent shall
promptly transmit to each of the Banks). Such notice shall specify the date and
the amount of the termination or reduction of the Total Commitment. Each partial
reduction of the Total Commitment shall be in a minimum aggregate principal
amount of $5,000,000 and in integral multiples of $1,000,000 (or a lesser amount
equal to the excess of the Total Commitment over the sum of the aggregate
principal amount of all Loans outstanding).
(b) Simultaneously with any termination or reduction of the Total
Commitment pursuant to this Section 2.11, Borrower shall pay to the Agent for
------------
the account of each Bank the commitment fees on the amount of the Total
Commitment so terminated or reduced, accrued through the date of such
termination or reduction. After a reduction of the Total Commitment hereunder,
the commitment fees with respect of the Total Commitment shall thereafter be
calculated on the Total Commitment as so reduced.
(c) At each such time as the Total Commitment is reduced pursuant to this
Section 2.11, the Designated Borrowing Base Floor Amount shall be redetermined
------------
by the Required Banks and Borrower and shall be mutually agreeable to the
Required Banks and the Borrower. If no mutually agreeable Designated Borrowing
Base Floor Amount can be determined, the Designated Borrowing Base Floor Amount
shall remain $75,000,000.
SECTION 2.12. Voluntary Prepayment of Loans. (a) Borrower shall have the
-----------------------------
right at any time and from time to time to prepay the Loans, in whole or in
part, (i) in the case of LIBOR Loans upon at least three (3) Business Days'
prior written or telecopy notice (or telephone notice promptly confirmed in
writing) to the Agent, provided, however, that in the event Borrower prepays
-------- -------
LIBOR Borrowing in whole or in part on a day which is not the last day of the
LIBOR Interest Period applicable thereto, the provisions of Section 2.17 shall
------------
apply or (ii) in the case of an Alternate Base Loan, upon at least one (1)
Business Day's prior written or telecopy notice or telephone notice promptly
confirmed in writing) to the Agent; provided, however, that each such partial
-------- -------
prepayment shall be in a minimum principal amount of $1,000,000 and in integral
multiples of $1,000,000 (or a lesser amount equal to the sum of the aggregate
principal amount of all Loans outstanding).
(b) Each notice of prepayment under subsection (a) above shall (i) specify
the prepayment date, the principal amount of such prepayment, which Loans are to
be prepaid, and in the case of Loans
-32-
comprising LIBOR Borrowings, the specific Borrowing(s) pursuant to which such
Loans were made and the LIBOR Interest Period applicable thereto, (ii) be
irrevocable and (iii) commit Borrower to prepay such Loan(s) by the amount
stated therein on the date stated therein. All prepayments under this Section
-------
2.12 shall be subject to Section 2.17 (as to prepayments of LIBOR Loans), but
---- ------------
otherwise without premium or penalty. All prepayments of LIBOR Loans under this
Section 2.12 shall be accompanied by accrued interest on the principal amount
------------
being prepaid to the date of payment.
SECTION 2.13. Mandatory Payments on Loans. (a) In the event that the
---------------------------
Revolving Credit Outstandings hereunder ever exceeds the Available Commitment as
then in effect, Borrower shall, at its election, either (1) make mandatory
prepayments (commencing no later than sixty (60) days after the applicable
Redetermination Date) of principal on the Loans on a pro rata basis on or before
the last day of each 60 day period, in an amount equal to one-third (_) of such
excess (together with accrued interest on the principal amount of the Loans so
prepaid to the date of prepayment) or (2) prepay (no later than sixty (60) days
after the applicable Redetermination Date) the principal of the Loans on a pro
rata basis in an aggregate amount equal to such excess (together with accrued
interest on the principal amount of the Loans so prepaid to the date of
prepayment), or (3) add to the Oil and Gas Interests covered by the Reserve
Reports, additional Oil and Gas Interests of a value, as reasonably determined
by the Agent, equal to or exceeding such excess, or (4) if such condition
arises, in part or in whole, by reason of a Designated Borrowing Base being in
effect, increase the Designated Borrowing Base by an amount equal to the lesser
of (i) such excess or (ii) the difference between the Borrowing Base and the
Designated Borrowing Base or (5) any combination of (1) through (4) or any other
solution acceptable to Required Banks and Borrower. Borrower shall give prompt
written notice to the Agent of each election made by it pursuant to this Section
-------
2.13(a). If Borrower shall fail to give notice to the Agent as aforesaid,
-------
Borrower shall be deemed to have elected to prepay the Loans in accordance with
clause (1) of the first sentence of Section 2.13(a).
---------------
(b) With respect to each payment of principal required to be made pursuant
to this Section 2.13, Borrower may designate, by written notice to the Agent on
------------
or before the date of such payment, the Types of Loans which are to be paid and,
in the case of LIBOR Loans, the specific LIBOR Borrowing(s) pursuant to which
made and the LIBOR Interest Periods applicable thereto, provided that (i)
--------
payments of LIBOR Loans may only be made on the last day of a LIBOR Interest
Period applicable thereto unless all Alternate Base Loans have been paid in
full; and (ii) if any payment of LIBOR Loans made pursuant to a single LIBOR
Borrowing shall reduce the outstanding Loans made pursuant to such LIBOR
Borrowing to an amount less than $1,000,000, such LIBOR Borrowing shall
immediately be converted into Alternate Base Loans. In the absence of a
designation by Borrower as described in the preceding sentence, the Agent shall
apply the amount of such payment first to the payment of all outstanding
-----
Alternate Base Loans and second to the payment of the outstanding LIBOR Loans.
------
SECTION 2.14. Alternate Rate of Interest. In the event, and on each
--------------------------
occasion, that on the day three (3) Business Days prior to the commencement of
any LIBOR Interest Period for a LIBOR Borrowing, the Agent shall have reasonably
determined (which determination shall be final and binding upon Borrower) that
(i) Dollar deposits in the principal amounts of the relevant LIBOR Loans
comprising such LIBOR Borrowing are not generally available in the London
interbank eurodollar market, or (ii) by reason of any changes arising after the
date of this Credit Agreement affecting the London interbank eurodollar market,
adequate and fair means do not exist for ascertaining such LIBOR Rate on the
basis provided for in the definition of the LIBOR Rate, or (iii) by reason of
any other circumstance affecting a Bank or the London interbank eurodollar
market or the position of such Bank in such market, the LIBOR Rate will not
adequately and fairly reflect the cost to any Bank of making or
-33-
maintaining its LIBOR Loan during such LIBOR Interest Period and such
unreflected cost is not paid by Borrower pursuant to Section 2.15(a), the Agent
---------------
shall, as soon as practicable thereafter, give written notice of such
determination to Borrower and the Banks. In the event of any such determination,
any request by Borrower for a LIBOR Borrowing pursuant to Sections 2.03 or 2.06
------------- ----
shall, until the circumstances giving rise to such notice no longer exist, be
deemed to be a request for a Borrowing comprised of Alternate Base Loans. Upon
making such determination, the Banks shall use their reasonable good faith
efforts to obtain sources of funds from which to make Loans on terms reasonably
similar to those of the LIBOR Loans, such as Dollar deposits in other eurodollar
markets, and will negotiate with Borrower in good faith to provide Loans from
alternate sources.
SECTION 2.15. Change in Circumstances. (a) Notwithstanding any other
-----------------------
provision herein but subject to Section 2.21, if after the Effective Date the
------------
introduction of any applicable law or regulation or any change in applicable law
or regulation or in the interpretation or administration thereof by any
Governmental Authority charged with the interpretation or administration
thereof, or compliance by the Banks with any applicable guideline or request
from any central bank or Governmental Authority (whether or not having the force
of law) (i) shall change the basis of taxation of payments to any Bank of the
principal of or interest on any Loan made by such Bank or shall change the basis
of taxation of any other fees or amounts payable hereunder (other than changes
in the rate of tax imposed on the overall net income of, including penalties and
interest in respect thereof, or franchise taxes based on the net income of, such
Bank or its Lending Office), (ii) shall impose, modify or deem applicable any
reserve, special deposit or similar requirement against assets of, deposits with
or for the account of, or credit extended by, any Bank or (iii) shall impose on
any Bank or the London interbank eurodollar market any other condition affecting
this Credit Agreement or any LIBOR Loan made by such Bank, and the result of any
of the foregoing shall be to increase the cost to such Bank of making,
continuing, converting, or maintaining any LIBOR Loan or to reduce the amount of
any sum received or receivable by such Bank hereunder (whether of principal,
interest or otherwise) in respect thereof by an amount deemed in good faith by
such Bank to be material (provided that the foregoing shall not apply to
increases resulting from general increases in interest rates or general
increases in such Bank's administrative expenses or overhead), then Borrower
shall pay to such Bank such additional amount or amounts as will compensate
such Bank for such additional costs incurred or reductions suffered in
accordance with paragraph (c) below. Notwithstanding the foregoing, in no event
shall any Bank be permitted to receive any compensation hereunder constituting
interest in excess of the Highest Lawful Rate.
(b) If any Bank shall have determined that the applicability of any law,
rule, regulation or guideline adopted pursuant to or arising out of the July
1988 report of the Basle Committee on Banking Regulations and Supervisory
Practices entitled "International Convergence of Capital Measurement and Capital
Standards" or the adoption or effectiveness after the date hereof of any law,
rule, regulation or guideline regarding capital adequacy, or any change in any
of the foregoing, or any change in the interpretation or administration in any
of the foregoing by any Governmental Authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by such Bank (or its Lending Office) or such Bank's holding company with any
request or directive regarding capital adequacy (whether or not having the force
of law) of any such Governmental Authority, central bank or comparable agency,
has or would have the effect of reducing the rate of return on such Bank's
capital or on the capital of such Bank's holding company, as a consequence of
its obligations under this Credit Agreement to a level below that which such
Bank or such Bank's holding company could have achieved but for such adoption,
change or compliance (taking into consideration such Bank's policies and the
policies of such Bank's holding company with respect to capital adequacy) by an
amount deemed in good faith by such Bank to be material, then such Bank shall
promptly notify Borrower in writing of the
-34-
occurrence of any such event, such notice to state in reasonable detail the
reasons therefor and the additional amount required to compensate such Bank for
the reduction in its rate of return and Borrower and such Bank or (as the case
may be) the Agent shall thereafter attempt to negotiate in good faith, within
thirty (30) days of the day on which Borrower receives such notice, an
adjustment payable hereunder that will adequately compensate such Bank or the
Agent in light of these circumstances. If Borrower and such Bank or the Agent
are unable to agree to such adjustment within thirty (30) days of the date on
which Borrower receives such notice, then Borrower shall pay, subject to Section
-------
2.21, to such Bank or the Agent, as the case may be, an amount that will, in
----
such Bank's or the Agent's reasonable determination, provide adequate
compensation to such Bank or such Bank's holding company (or the Agent or the
Agent's holding company, as the case may be) for any such reduction in
accordance with paragraph (c) below. Notwithstanding the foregoing, in no event
shall any Bank be permitted to receive any compensation hereunder constituting
interest in excess of the Highest Lawful Rate.
(c) Any Bank requesting compensation pursuant to Section 2.15(a) or (b)
--------------- ---
hereof shall deliver to Borrower a certificate of such Bank setting forth such
amount or amounts as shall be necessary to compensate such Bank or its holding
company as specified in paragraphs (a) or (b) above, as the case may be, such
certificate to state, in reasonable detail, the reasons therefor, and such
certificate shall, in the absence of manifest error, be conclusive and binding
on Borrower. In preparing such certificate, such Bank may employ such
assumptions and allocations of costs and expenses as it shall in good xxxxx xxxx
reasonable and may be determined by any reasonable averaging and attribution
method. Borrower shall pay to such Bank the amount shown as due on any such
certificate within thirty (30) Business Days after Borrower's receipt of the
same. Any decision by a Bank not to require payment of any interest, cost or
other amount payable under this Section 2.15 or to calculate any amount payable
------------
by a particular method, on one occasion, shall in no way limit or be deemed a
waiver of such Bank's right to require full payment of any interest, cost or
other amount payable hereunder, or to calculate any amount payable by another
method, on any other or subsequent occasion.
SECTION 2.16. Change in Legality. (a) Notwithstanding any other
------------------
provision herein contained to the contrary, if (x) any change in any law or
regulation or in the interpretation thereof by any Governmental Authority
charged with the administration or interpretation thereof shall make it unlawful
for any Bank or its Lending Office to make or maintain its Commitment Percentage
of any LIBOR Borrowing or to give effect to its obligations as contemplated
hereby with respect to its Commitment Percentage of any LIBOR Borrowing or (y)
at any time the Required Banks reasonably determine the making or continuance of
any Bank's Loans comprising a portion of any LIBOR Borrowing has become
impracticable as a result of a contingency occurring after the date hereof which
adversely affects the London interbank eurodollar market, then, and in any such
event, such Bank shall, promptly after making such determination, give written
or telecopy notice (or by telephone promptly confirmed in writing) to Borrower
and the Agent of such determination (which notice the Agent shall promptly
transmit to each of the other Banks); provided, however, that before giving any
-------- -------
such notice, such Bank shall use reasonable good faith efforts to designate a
different Lending Office to make or maintain its LIBOR Loans if such designation
will avoid the need to suspend such Bank's obligations to make or maintain LIBOR
Loans and will not be otherwise disadvantageous to such Bank. Thereafter each
such affected Bank may (i) declare that such affected Bank will no longer make
LIBOR Loans (subject to paragraph (b) below) whereupon any request by Borrower
for a LIBOR Borrowing shall, as to such Bank only, be deemed a request for an
Alternate Base Loan; and (ii) require that all outstanding LIBOR Loans made by
such affected Bank(s) be converted into Alternate Base Loans at the end of the
applicable LIBOR Interest Period or such earlier time as may be required by
applicable Requirements of Law, in each case by giving the Agent written or
telecopy notice (or by telephone promptly confirmed in
-35-
writing) thereof (which notice, in the case of subclause (ii) above shall
specify which affected LIBOR Loans are to be converted); provided, however, that
-------- -------
all Banks whose LIBOR Loans are affected by the circumstances described above
shall be treated in the same manner.
(b) In the event any Bank shall exercise its rights under (a) above, all
payments of principal which would otherwise have been applied to repay the LIBOR
Loans that would have been made, converted or continued by such Bank or the
converted LIBOR Loans of such Bank shall instead be applied to repay the
Alternate Base Loans made by the Bank in lieu of, or resulting from the
conversion of, such affected LIBOR Loans.
SECTION 2.17. Funding Losses. Without duplication of other provisions
--------------
contained herein, Borrower shall indemnify each Bank against any loss or
reasonable expense which such Bank may sustain or incur as a consequence of (i)
any failure by Borrower to fulfill on the Borrowing Date for any Borrowing
hereunder the applicable conditions set forth in Article III, (ii) any failure
-----------
by Borrower to borrow hereunder after a Borrowing Request pursuant to this
Article II has been given, (iii) any failure by Borrower to convert or continue
----------
a Borrowing hereunder after a Notice of Conversion or Continuation pursuant to
this Article II has been given, (iv) any payment, prepayment, continuance or
----------
conversion of a LIBOR Borrowing required or permitted by any other provision of
this Credit Agreement including, without limitation, payments made due to the
acceleration of the maturity of the Notes pursuant to Section 7.01, or otherwise
------------
made on a date other than the last day of the applicable LIBOR Interest Period,
(v) any default in the payment or prepayment of the principal amount of any
LIBOR Borrowing or any part thereof or interest accrued thereon, as and when due
and payable (at the due date thereof, by notice of prepayment or otherwise)
including, but not limited to, any loss or reasonable expense sustained or
incurred or to be sustained or incurred in liquidating or employing deposits
from third parties acquired to effect or maintain such Bank's Commitment
Percentage of any LIBOR Borrowing or any part thereof as a LIBOR Borrowing.
Such loss or reasonable expense shall include, without limitation, an amount
equal to the excess, if any, as reasonably determined by such Bank of (i) its
cost of obtaining the funds for its Commitment Percentage of the LIBOR Borrowing
being paid, prepaid or converted or not borrowed (based on the LIBOR Rate
applicable thereto) for the period from the date of such payment,
prepayment, continuance or conversion or failure to borrow to the last day of
the LIBOR Interest Period for such LIBOR Loan (or, in the case of a failure to
borrow, the LIBOR Interest Period for the LIBOR Loan which would have commenced
on the date of such failure to borrow) over (ii) the amount of interest (as
reasonably determined by such Bank) that would be realized by such Bank in
reemploying the funds so paid, prepaid, continued or converted or not borrowed
for such period or LIBOR Interest Period, as the case may be, provided that such
Bank will use its best efforts to reemploy funds in investments of similar
quality. A certificate of such Bank signed by an officer setting forth in
reasonable detail any amount or amounts which such Bank is entitled to receive
pursuant to this Section 2.17 shall be delivered to Borrower. Borrower shall
------------
pay to such Bank the amount shown as due on any certificate within thirty (30)
Business Days after its receipt of the same. Notwithstanding the foregoing, in
no event shall any Bank be permitted to receive any compensation hereunder
constituting interest in excess of the Highest Lawful Rate. Without prejudice
to the survival of any other obligations of Borrower hereunder, the obligations
of Borrower under this Section 2.17 shall survive the date of termination of
------------
this Credit Agreement and the payment in full of the Obligations for a period of
sixty (60) days.
SECTION 2.18. Method of Payments Pro Rata Treatment. (a) Borrower shall
-------------------------------------
make each payment hereunder and under the Notes delivered hereunder not later
than 1:00 p.m., Houston, Texas time, on the day when due in lawful money of the
United States (in freely transferable Dollars) to the
-36-
Agent for the account of the Banks entitled thereto at the Agent's address
referred to in Section 9.02 in immediately available funds and any funds
------------
received by the Agent after such time shall, for all purposes hereof (including
the following sentence), be deemed to have been paid on the next succeeding
Business Day. Except as otherwise specifically provided herein, the Agent shall
thereafter cause to be distributed on the date of receipt thereof to each Bank
in like funds its Sharing Percentage (or, if the Loan of such Bank with respect
to which such payment is being made is not of the same Type as the Loans of the
other Banks with respect to which such payment is being made, such Bank's
appropriate share) of the payments so received for the account of such Bank's
Lending Office for the Loan in respect of which such payment is made.
(b) Except as otherwise provided herein, (i) each Borrowing hereunder shall
be obtained from the Banks, each payment of fees shall be paid for the account
of the Banks and each partial reduction of the Total Commitment under Section
-------
2.11 shall be applied to the Commitments of the Banks, in each case
----
simultaneously and pro rata in accordance with each Bank's Sharing Percentage,
--- ----
(ii) each conversion of a Borrowing comprised of Loans of a particular type
shall be made pro rata among the Banks according to their respective Sharing
--- -----
Percentage of such Borrowing and (iii) each payment and prepayment of principal
of or interest on any Loans will be made to the Agent for the account of each of
the Banks simultaneously and pro rata in accordance with their respective
--- ----
Sharing Percentage of unpaid principal amounts of such Loans made by the Banks.
(c) Whenever any payment hereunder or under the Notes (including principal
of or interest on any Loan or any fees or other amounts), shall be stated to be
due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest, fee or other amount, as the
case may be; provided, however, if such extension would cause payment of
-------- -------
interest on or principal of a LIBOR Loan to be made in the next following
calendar month, such payment shall be made on the next preceding Business Day.
SECTION 2.19. Taxes. (a) All payments of principal, interest,
-----
expenses, reimbursements, compensation, commitment, arrangement or
administration fees and any other amount from time to time due hereunder, under
the Notes or any other Loan Document made by Borrower shall be made free and
clear of and without deduction for any present or future tax, levy, impost or
any other charge, if any, of any nature whatsoever now or hereafter imposed by
any Governmental Authority, excluding, however, in the case of the Agent and
each Bank, any such taxes, levies, costs or charges imposed on or measured by
the gross receipts, capital or overall net income of the Agent or such Bank or
such Bank's Lending Office by any jurisdiction in which the Agent or such Bank
or such Bank's Lending Office is located (all such non-excluded taxes, levies,
costs, imposts, deductions, charges or withholdings being herein called
"Withholding Taxes"). If any Withholding Taxes are required to be withheld from
-------------------
any amounts payable to the Agent or any Bank hereunder or under the Notes, and
if such withholding does not result from the breach by such Bank of its
agreement set forth in subsection (b) below or would not be required if such
Bank's representation and warranty set forth in subsection (c) below were true,
then to the extent that any such Withholding Taxes are a liability of, or
credited to, the account of Borrower, Borrower shall pay to the Agent or such
Bank, on the date of each such payment, such additional amounts as may be
necessary in order that the net amounts received by the Bank after such
deduction or withholding shall equal the amounts which would have been received
if such deduction or withholding were not required; provided, however, that all
-------- -------
amounts payable under this Section 2.19 which constitute interest under
------------
applicable law shall not exceed an amount which would result in the payment of
interest at a rate in excess of the Highest Lawful Rate. Whenever any
Withholding Taxes
-37-
are withheld by Borrower as aforesaid, as promptly as possible thereafter,
Borrower shall send to the Agent for its own account or for the account of such
Bank, as the case may be, a certified copy of an original official receipt
received by Borrower showing payment thereof. If Borrower fails to pay any
Withholding Taxes so withheld by it when due to the appropriate taxing authority
or fails to remit to the Agent the required receipts or other required
documentary evidence, Borrower shall indemnify the Agent and the Banks for any
incremental taxes, interest or penalties that may become payable by the Agent or
any Bank as a result of any such failure. The agreements in this Section 2.19
------------
shall survive the termination of this Credit Agreement and the payment of the
Notes and all other Obligations for a period of sixty (60) days.
(b) Each Bank that is not incorporated under the laws of the United States
of America or a state thereof (including each Eligible Assignee that becomes a
party to this Credit Agreement pursuant to Section 9.10) that is entitled to
------------
receive payments under this Credit Agreement and the Notes without deduction or
withholding of any United States federal income taxes or is entitled to an
exemption from backup withholding tax agrees that, prior to the first date on
which any payment is due to it hereunder, it will deliver to Borrower and the
Agent, as the case may be, (i) two duly completed copies of United States IRS
Forms 1001 or 4224 or successor applicable form, as the case may be, certifying
in each case that such Bank is entitled to receive payments under this Credit
Agreement and the Notes payable to it, without deduction or withholding of any
United States federal income taxes, and (ii) an IRS Forms W-8 or W-9 or
successor applicable form, as the case may be, to establish an exemption from
United States backup withholding tax. Each Bank which delivers to Borrower and
the Agent a Forms 1001 or 4224 and Forms W-8 or W-9 pursuant to the preceding
sentence further undertakes to deliver to Borrower and the Agent two further
copies of the said Forms 1001 or 4224 and Forms W-8 or W-9, or successor
applicable forms, or other manner of certification, as the case may be, on or
before the date that any such form expires or becomes obsolete or after the
occurrence of any event requiring a change in the most recent form previously
delivered by it to Borrower, and such extensions or renewals thereof as may
reasonably be requested by Borrower, certifying in the case of a Forms 1001 or
4224 that such Bank is entitled to receive payments under this Credit Agreement
without deduction or withholding of any United States federal income taxes,
unless in any such case an event (including, without limitation, any change in
any Requirement of Law) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Bank from duly completing and delivering any such
form with respect to it and such Bank advises Borrower that it is not capable of
receiving payments without any deduction or withholding of United States federal
income tax, and in the case of a Forms W-8 or W-9, establishing an exemption
from United States backup withholding tax.
(c) Each Bank (including each Eligible Assignee that becomes a party to
this Credit Agreement pursuant to Section 9.10) represents and warrants to
------------
Borrower that each Lending Office of such Bank hereunder will be entitled to
receive payments of principal of, and interest on, the Loans made by such Bank
from such Lending Office without withholding or deduction for or on account of
any United States federal income taxes.
SECTION 2.20. Sharing of Payments and Setoffs. Each Bank agrees that if
-------------------------------
it shall, through the exercise of a right of banker's lien, setoff to the extent
not prohibited under Section 9.05, or counterclaim against Borrower, including,
------------
but not limited to, a secured claim under Section 506 of Title 11 of the United
States Code or other security or interest arising from, or in lieu of, such
secured claim, received by such Bank under any applicable bankruptcy, insolvency
or other similar law or otherwise, or by similar means, obtain payment
(voluntary or involuntary) in respect of any Loan or Loans (other than
-38-
pursuant to Sections 2.15, 2.17 or 2.19) as a result of which the unpaid
------------- ---- ----
principal portion of its Loans shall be proportionately less than the unpaid
principal portion of the Loans of any other Bank, it shall simultaneously
purchase from such other Banks at face value a participation in the Loans of
such other Banks, so that the aggregate unpaid principal amount of Loans and
participations in Loans held by each Bank shall be in the same proportion to the
aggregate unpaid principal amount of all Loans then outstanding as the principal
amount of its Loans prior to such exercise of banker's lien, setoff,
counterclaim or other event was to the principal amount of all Loans outstanding
prior to such exercise of banker's lien, setoff pursuant to Section 9.05,
------------
counterclaim or other event; provided, however, that if any such purchase or
-------- -------
purchases or adjustments shall be made pursuant to this Section 2.20 and the
------------
payment giving rise thereto shall thereafter be recovered, such purchase or
purchases or adjustments shall be rescinded to the extent of such recovery and
the purchase price or prices or adjustment restored without interest. Borrower
expressly consents to the foregoing arrangements and agrees that any Bank
holding a participation in a Note deemed to have been so purchased may exercise
any and all rights of banker's lien, setoff or counterclaim with respect to any
and all moneys owing by Borrower to such Bank as fully as if such Bank had made
a Loan directly to such Borrower in the amount of such participation.
SECTION 2.21. Limitation on Reimbursement; Mitigation. (a)
---------------------------------------
Notwithstanding the provisions of Sections 2.15 if any Bank fails to give notice
-------------
to Borrower of any event that would obligate Borrower to pay any amount owing
pursuant to Section 2.15 within thirty (30) days after such Bank obtains
------------
knowledge of such event, and subsequently gives notice to Borrower of such
event, Borrower shall pay only such amounts for costs incurred for the ninety-
day period immediately prior to such notice.
(b) Any Bank claiming any additional amounts payable pursuant to Sections
--------
2.15 or 2.19 or any Bank subject to Sections 2.14 or 2.16 shall use reasonable
---- ---- ------------- ----
efforts (consistent with its internal policy and legal and regulatory
restrictions) to change the jurisdiction of its lending office for the Loans, if
the making of such a change would avoid the need for, or reduce the amount of,
any such additional amounts which may thereafter accrue under Sections 2.15 or
-------------
2.19 or would avoid the unavailability of LIBOR Loans under Sections 2.14 or
---- -------------
2.16 and would not, in any such case, in the judgment of such Bank, be otherwise
----
disadvantageous.
SECTION 2.22. Replacement of Banks. If any Bank (an "Affected Bank")
-------------------- -------------
shall have (i) failed to fund any Loan that such Bank is obligated to fund
hereunder and such failure has not been cured, (ii) requested compensation from
Borrower under Sections 2.15 or 2.19 to recover costs or taxes incurred by such
------------- ----
Bank which are not being incurred generally by the other Banks, (iii) given
notice pursuant to Sections 2.14 or 2.16 that such Bank has suspended Borrower's
------------- ----
right to elect LIBOR Loans from such Bank for reasons not generally applicable
to the other Banks or (iv) failed to approve the recommended Borrowing Base of
the Required Banks, then, in any such case and in addition to any other rights
or remedies available to Borrower, Borrower may give written notice to such
Affected Bank of the occurrence of an event set forth in subsections (i), (ii),
(iii) or (iv) of this Section 2.22, and during the sixty (60) day period
------------
following such notice, Borrower may make written demand on such Affected Bank
(with a copy to Agent and each other Bank), for such Affected Bank to assign to
one or more financial institutions (a "Replacement Bank"), all of such Affected
----------------
Bank's rights and obligations under this Agreement and the other Loan Documents
(including such Affected Bank's Commitment and all Loans owing to such Affected
Bank), provided, such assignment shall be consummated in accordance with and
--------
shall be subject to the terms of Section 9.10). Pursuant to Section 9.10, upon
------------ ------------
any such assignment, such Affected Bank shall cease to be a party hereto,
provided, however, such Affected Bank shall continue to
-39-
be entitled to the benefits of Sections 2.15, 2.17, 2.19 and 7.03 accruing with
----------------------------------
respect to such Affected Bank prior to such assignment, as well as any fees
accrued for its account and not yet paid. If an Eligible Assignee cannot be
obtained within the sixty (60) day period following said notice to the Affected
Bank, to assume the Commitment of such Affected Bank, and provided that no
Default or Event of Default shall have occurred and be continuing, then Borrower
may prepay immediately all Loans of such Affected Bank and terminate such
Affected Bank's entire Commitment hereunder provided, however, that in the event
-------- -------
Borrower makes any prepayment pursuant to this sentence, then on the date of
such prepayment, the Total Commitment of the Banks shall be permanently reduced
by the amount of such Affected Bank's Commitments and the Commitment Percentage
of each other Bank shall be redetermined based upon the amount each such other
Bank's Commitment is of the Total Commitment as so reduced.
SECTION 2.23. Use of Proceeds. (a) The initial Borrowing shall be an
---------------
amount at least equal to the aggregate principal amount of, and accrued interest
on, the existing debt of Borrower and its Subsidiaries owed to Colorado National
Bank, successor-in-interest to Central Bank/Best Western National Association
("CNB") and NationsBank of Texas, N.A. ("NationsBank") and shall be used to
----- -----------
repay said debt (the "Existing Bank Debt") in full. The proceeds of all other
------------------
Loans and Letters of Credit may be used for general business and corporate
requirements of Borrower and its Subsidiaries.
(b) No portion of the proceeds of any Loan under this Credit Agreement
shall be used by Borrower in any manner that might cause the borrowing or the
application of such proceeds to violate Regulation G, Regulation U, Regulation
T, or Regulation X or any other regulation of the Board or to violate the
Securities Exchange Act of 1934, in each case as in effect on the date or dates
of such borrowing and such use of proceeds.
(c) No portion of the proceeds of any Loan under this Credit Agreement
shall be used by Borrower, directly or indirectly, for a Hostile Acquisition.
SECTION 2.24. Extension of Maturity Date. (a) The Total Commitment shall
--------------------------
terminate on the Maturity Date, and any Loans then outstanding (together with
accrued and unpaid interest thereon) shall be due and payable on such date.
(b) At any time after February 1 but on or before April 1 of each calendar
year, commencing with the calendar year 1996, Borrower may request that the
Banks extend the Maturity Date for successive periods of one year. The Banks,
in their sole discretion may agree to extend or decline to extend the Maturity
Date; however, if the Banks have not responded to such request in writing by May
1 of the year of Borrower's request such request shall be deemed to have been
denied. In the event the Banks agree to such request, Borrower, the Agent and
the Banks shall execute a written amendment and extension agreement in form
reasonably acceptable to Borrower, the Agent and the Banks evidencing such
extension and the agreed upon terms and conditions of such extension together
with such other documents as the Agent and the Banks shall reasonably request.
ARTICLE III
CONDITIONS PRECEDENT
-40-
SECTION 3.01. Conditions Precedent to the Loans. The obligation of each
---------------------------------
Bank to make its initial Loan or for the Issuing Bank(s) to issue its initial
Letter of Credit hereunder is subject to the satisfaction of the following
conditions precedent:
(a) The Agent shall have received, duly authorized, executed and
delivered by each Person that is a party thereto, in form and substance
reasonably satisfactory to the Banks, each of the following:
(i) each of the following Loan Documents (together with all exhibits
thereto) dated on or as of the Effective Date:
(aa) this Credit Agreement;
(bb) each of the Notes; and
(cc) the Subsidiary Guaranty;
(ii) a certificate of the Secretary or Assistant Secretary of Borrower,
dated the Effective Date, certifying as to (aa) the adoption and
continuing effect of resolutions of the board of directors of
Borrower authorizing the transactions contemplated hereby and by the
other Loan Documents; (bb) the Certificate of Incorporation of
Borrower, (cc) the Bylaws of Borrower and all amendments thereto,
and (dd) the incumbency of all officers of Borrower who will execute
or have executed any document or instrument required to be delivered
hereunder, containing the signature of same;
(iii) a certificate of the Secretary or Assistant Secretary of each
Subsidiary, dated the Effective Date and certifying as to (aa) the
adoption and continuing effect of resolutions of the board of
directors of such Subsidiary authorizing the transactions
contemplated hereby and by the other Loan Documents; (bb) the
Certificate of Incorporation of such Subsidiary and all amendments
thereto, (cc) the Bylaws of the such Subsidiary and all amendments
thereto, and (dd) the incumbency of all officers of such Subsidiary
who will execute or have executed any document or instrument
required to be delivered hereunder, containing the signature of
same;
(iv) (aa) with respect to Borrower, a certificate of good standing from
the Secretary of State of the State of Delaware dated no more than 5
days prior to the Effective Date and certificates of authorization
to do business and good standing in the States of Colorado, Kansas,
Texas, Oklahoma, Arkansas, Wyoming, and Utah; (bb) with respect to
Plains Operating, certificates of authorization to do business and
good standing in the States of Colorado, Nevada, Kansas, Texas,
Oklahoma, Louisiana, Wyoming, New Mexico, Montana and Utah; (cc)
with respect to Plains, certificates of authorization to do business
and good standing in the States of Colorado, Kansas, Texas, and
Montana; (dd) with respect to Xxxxxxx Fuels Corporation, certificate
of authorization to do business and good standing in the State of
Colorado; (ee) with respect to Xxxxxxx Energy Inc., certificate of
authorization to do business and good standing in the State of
Colorado; (ff) with respect to BGP Inc., certificate of
authorization to do business and good standing in the State of
Colorado and (gg) with respect to Plains Petroleum Gathering
Company, certificate of authorization to do business and good
standing in the State of Colorado.
(v) with respect to each Subsidiary (other than Bargath Inc.), a
certificate of good standing from the Secretary of State of the
State of Delaware dated no more than 5 days prior to the Effective
Date and with respect Bargath Inc., a certificate of existence and
good standing from the Secretary of State of the State of Colorado
dated no more than 5 days prior to the Effective Date;
(vi) the Opinion of Borrower's Counsel;
-41-
(vii) a certificate of insurance coverage evidencing that all insurance
required to be obtained and/or maintained by Borrower and its
Subsidiaries as of the Effective Date pursuant to any of the Loan
Documents is in full force and effect;
(viii) (aa) audited Consolidated financial statements for each of Borrower
and Plains for the most recently completed Fiscal Year of such
Person, (bb) unaudited Consolidated financial statements for each of
Borrower and Plains for the most recently completed fiscal period of
such Person for which such statements are available and (cc) such
other financial information, regarding Borrower, Plains or their
respective Subsidiaries as the Agent or any Bank may reasonably
request. All of such financial statements and financial information
shall be satisfactory to the Banks;
(ix) for its account and for the account of each Bank, as applicable, all
fees and expenses due and payable hereunder on or before the
Effective Date and invoiced to Borrower in writing prior to the
Effective Date;
(x) such other certificates, opinions, documents and instruments
relating to the transactions contemplated hereby as may have been
reasonably requested by the Agent or any Bank.
(b) (i) the representation and warranties of Borrower contained in
Article IV hereof and, in all material respects, in each of the other Loan
----------
Documents to which Borrower is a party shall be true and correct on the
Effective Date both before and after giving effect to the making of the initial
Loans; (ii) the representations and warranties of each Subsidiary contained in
any Loan Document to which such Subsidiary is a party are true and correct in
all material respects on the Effective Date both before and after giving effect
to the initial Loans; (iii) no Default or Event of Default shall have occurred
and be continuing on the Effective Date either before or after giving effect to
the making of the initial Loans and (iv)(aa) no events or state of affairs which
could reasonably be expected to result (or has resulted) in a Material Adverse
Effect on Borrower and its Subsidiaries shall have occurred since September 30,
1994, and (bb) no events or state of affairs which could reasonably be expected
to result (or has resulted) in a Material Adverse Effect on Plains and its
Subsidiaries shall have occurred since December 31,1994;
(c) A search, made no more than 30 days prior to the Effective Date, of
the Uniform Commercial Code filing offices in each relevant jurisdiction shall
have revealed no filings or recordings with respect to the material Oil and Gas
Interests (except Permitted Liens and Liens in favor of CNB securing Existing
Bank Debt) in favor of any Person. The Agent shall have received fully executed
releases effectuating the termination of any and all Liens (other than Permitted
Liens) pertaining to any of the Oil and Gas Interests including the Liens in
favor of CNB;
(d) All necessary consents for the consummation of the Merger and the
execution, delivery and performance of the Loan Documents shall have been
obtained and shall be in full force and effect and final. Borrower shall have
delivered to the Agent a true, correct and complete copy of all necessary
consents.
(e) The transactions contemplated by the Merger Agreement shall have
been consummated pursuant to the terms thereof in a manner reasonably
satisfactory to the Agent, including the prior approval of the Agent to any
waiver of any condition precedent to the closing under the Merger
-42-
Agreement. The conversion of all the Common Stock of Plains (other than Common
Stock owned by Plains or Borrower) into Common Stock of Borrower in accordance
with the terms of the Merger Agreement has taken place and the Merger has become
effective. The representations of each of Borrower and Plains contained in
Articles II and III of the Merger Agreement shall be true, complete and correct
as of the date of the initial Loans hereunder.
(f) Title evidence reasonably satisfactory to the Agent showing acceptable
title in Borrower and its Subsidiaries to at least eighty percent 80% by value
of those Oil and Gas Interests set forth on Schedule 3.01(f) hereto; which title
----------------
evidence shall not reflect that any of the representations and warranties
contained in Sections 4.06 and 4.07 are inaccurate in any respect.
----------------------
(g) A review of prior environmental site assessments for Borrower's Oil
and Gas Interests or such other reviews or further assessments as may be
required by the Agent, in its reasonable discretion, to assess existence of any
Environmental Liabilities which could reasonably be expected to result in a
Material Adverse Effect.
(h) (i) Evidence satisfactory to the Agent that (i) all commitments to
make loans to, or issue letters of credit for the account of, Borrower and its
Subsidiaries pursuant to the Existing Bank Debt have been terminated, (ii)
Borrower has authorized the disbursement of funds under this Credit Agreement to
CNB and NationsBank to repay in full the Existing Bank Debt, and (iii) all liens
and encumbrances securing such indebtedness have been released, and (iv) all
other Liens which are not Permitted Liens, if any, have been released.
(i) The Banks shall have received the Initial Reserve Reports.
(j) Such other conditions precedent which the Agent may reasonably have
requested or required.
SECTION 3.02. Additional Conditions Precedent. No Bank has any obligation
-------------------------------
to make any Loan (including its initial Loan) and the Issuing Bank(s) has no
obligation to issue any Letter of Credit (including the initial Letter of
Credit) unless the following conditions precedent have been satisfied:
(a) The Agent shall have received, in form and substance satisfactory to
the Agent, a certificate of Borrower and of each Subsidiary signed by a
Responsible Officer of Borrower and of each Subsidiary, dated as of the
Borrowing Date, certifying that (aa) the representations and warranties of
Borrower and each Subsidiary contained in Article IV hereof and, in all material
----------
respects, in each of the other Loan Documents to which Borrower or such
Subsidiary is a party, are true and correct (both before and after giving effect
to the making of such Loan or the issuing of such Letter of Credit) on and as of
the Borrowing Date as if made on and as of such date (or, if stated to have been
made solely as of an earlier date, were true and correct as of such earlier
date); (bb) no event or state of affairs which could reasonably be expected to
result in a Material Adverse Effect has occurred since September 30, 1994;
(cc) no Default or Event of Default then exists either before or after giving
effect to the making of such
-43-
Loan or the issuing of such Letter of Credit; and (dd) no new material
litigation (other than Existing Litigation) is pending or, to the best knowledge
of Borrower after due inquiry, threatened against Borrower or any Subsidiary and
no material adverse development has occurred in any Existing Litigation.
(b) Borrower shall have complied with the provisions of Section 2.03
------------
and/or 2.05;
----
(c) The Maturity Date shall not have occurred;
(d) The sum of the amount of the requested Borrowing and/or the face amount
of the requested Letter of Credit plus the Revolving Credit Outstandings shall
not exceed the lesser of (i) the Available Commitment then in effect and (ii)
the Designated Borrowing Base then in effect.
(e) The making of such Loans or the issuance of such Letters of Credit
shall be permitted by Requirements of Law.
SECTION 3.03. General. All of the agreements, instruments, reports,
-------
opinions and other documents and papers referred to in this Article III (except
-----------
for the Notes and the Letters of Credit), unless otherwise expressly specified,
shall be delivered to the Agent in sufficient counterparts for each of the
Banks. As soon as practicable after receipt of such documents the Agent shall
deliver such documents to each of the Banks.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Agent and each Bank to enter into this Credit
Agreement and to make the Loans, Borrower represents and warrants as to itself
and each of its Subsidiaries, to the Agent and each Bank that the following
statements are true, correct and complete.
SECTION 4.01. Organization; Corporate Powers. Each of Borrower and each of
------------------------------
its Subsidiaries (a) is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
organization, (b) is duly qualified to do business as a foreign corporation and
is in good standing in each other jurisdiction in which such qualification and
good standing are necessary in order for it to conduct its business and own its
properties as conducted and owned (except only for jurisdictions in which the
failure to be so qualified or in good standing would not, individually or in the
aggregate, result in a Material Adverse Effect) and (c) has all requisite power
and authority to own its property and assets and to carry on its business as now
conducted and as proposed to be conducted.
SECTION 4.02. Authority. Each of Borrower and each of its Subsidiaries
---------
has the corporate power and authority and legal right to execute, deliver and
perform each of the Loan Documents executed by, or to be executed by, Borrower
or such Subsidiary and each other agreement or instrument contemplated thereby
to which it is or will be a party and, with respect to Borrower, to borrow
hereunder. The execution, delivery and performance of each of the Loan
Documents to which Borrower or any of its Subsidiaries is or will be a party and
the consummation of the transactions contemplated thereby, and, with respect to
Borrower, the borrowing of funds under this Credit Agreement, have been
-44-
duly approved by the board of directors of each such Person and no other
corporate proceedings on the part of such Person are necessary to consummate
such transactions. This Credit Agreement constitutes, and each of the other Loan
Documents to which Borrower or any of its Subsidiaries is a party when executed
and delivered by such Person, will constitute the legal, valid and binding
obligation of such Person, enforceable against such Person in accordance with
its terms, except as enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, fraudulent transfer, moratorium or other similar
laws relating to creditors' rights generally and by general principles of equity
which may limit the right to obtain equitable remedies (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
SECTION 4.03. Use of Proceeds. Borrower's uses of the proceeds of the
---------------
Loans shall be as set forth in Section 2.23.
------------
SECTION 4.04. No Conflict. The execution, delivery and performance by
-----------
Borrower and each Subsidiary of Borrower of the Loan Documents to which Borrower
or such Subsidiary of Borrower is a party, the compliance by Borrower or such
Subsidiary of Borrower with the terms and provisions thereof and the
consummation of each of the transactions contemplated thereby, do not and will
not (i) require any consent or approval of the stockholders of Borrower or any
of its Subsidiaries, or any authorization, consent or approval by any
Governmental Authority or (ii) by the lapse of time, the giving of notice or
otherwise, (a) constitute a violation of any Requirement of Law binding on
Borrower or such Subsidiary of Borrower or a breach of any provision contained
in the articles or certificate of incorporation or bylaws of Borrower or such
Subsidiary of Borrower, (b) constitute a breach of any material provision
contained in any Material Contract to which Borrower or such Subsidiary of
Borrower is a party or by which Borrower or such Subsidiary of Borrower is bound
other than breaches under the Existing Bank Debt with respect to the Merger for
which Borrower has obtained waivers from CNB and NationsBank, or (c) result in
or require the creation or imposition of any Lien whatsoever upon any of the
properties or assets of Borrower or such Subsidiary of Borrower (other than
Permitted Liens and the Liens in favor of CNB which are being released
concurrently with the closing of this Credit Agreement).
SECTION 4.05. Gas Balancing Agreements and Advance Payment Contracts. On
------------------------------------------------------
the date of this Credit Agreement but after giving effect to the Merger, (a) the
net gas imbalance to Borrower and its Subsidiaries (considered in the aggregate)
under all Gas Balancing Agreements to which Borrower or any of its Subsidiaries
is a party or by which any Oil and Gas Interests owned by Borrower or any of its
Subsidiaries is bound, is not in excess of $5,000,000, and (b) the aggregate
amount of all Advanced Payments received by Borrower or any of its Subsidiaries
under Advance Payment Contracts which have not been satisfied by delivery of
production does not exceed $5,000,000.
SECTION 4.06. Oil and Gas Interests. Borrower has good and defensible
---------------------
title to all Oil and Gas Interests described in the Initial Reserve Reports
other than Immaterial Mineral Interests, free and clear of all Liens except
Permitted Liens. With the exception of Immaterial Mineral Interests, all such
Oil and Gas Interests are valid, subsisting, and in full force and effect, and
all rentals, royalties, and other amounts due and payable in respect thereof
have been duly paid. Except with respect to Immaterial Mineral Interests, but
without regard to any consent or non-consent provisions of any joint operating
agreement covering any of the Proved Reserves of Borrower and its Subsidiaries,
Borrower's (and its Subsidiaries') share of (a) the costs for such Proved
Reserves described in Initial Reserve Reports is not greater than the decimal
fraction set forth in the Initial Reserve Reports, before and after payout, as
the case may be, and described therein by the respective designations "working
interests",
-45-
"WI", "gross working interest", "GWI", or similar terms, and (b) production
from, allocated to, or attributed to each such Proved Reserves is not less than
the decimal fraction set forth in the Initial Reserve Reports, before and after
payout, as the case may be, and described therein by the designations net
revenue interest, NRI, or similar terms. Except with respect to Immaterial
Mineral Interests, each well drilled in respect of each Proved Developed
Producing Hydrocarbon Reserves described in the Initial Reserve Reports (y) is
capable of, and is presently, producing Hydrocarbons in commercial quantities,
and Borrower is currently receiving payments for its share of production, with
no funds in respect of any thereof being presently held in suspense, other than
any such funds being held in suspense pending delivery of appropriate division
orders, and (z) has been drilled, bottomed, completed, and operated in
compliance with all applicable Requirements of Law and no such well which is
currently producing Hydrocarbons is subject to any penalty in production by
reason of such well having produced in excess of its allowable production. For
purposes of this Section 4.06, "Immaterial Mineral Interests" means Oil and Gas
------------ ----------------------------
Interests which, in the aggregate, do not represent more than five percent (5%)
of the discounted present value of all Oil and Gas Interests as set forth in the
Initial Reserve Reports.
SECTION 4.07. Ownership of Properties Generally. With respect to all
---------------------------------
other properties and assets of Borrower and its Subsidiaries not covered by
Section 4.06 above, Borrower and each of its Subsidiaries have good and valid
------------
fee simple or leasehold title to all material properties and assets purported to
be owned by them, including, without limitation, all assets reflected in the
balance sheets referred to in Section 4.09 (a) and all assets which are used by
----------------
Borrower and its Subsidiaries in the operation of their respective businesses,
and none of such properties or assets is subject to any Lien other than
Permitted Liens.
SECTION 4.08. No Defaults.
-----------
(a) Neither Borrower nor any Subsidiary of Borrower is a party to any
Contractual Obligation that has resulted or is likely to result in a Material
Adverse Effect.
(b) (i) No Default or Event of Default exists and (ii) neither Borrower
nor any Subsidiary of Borrower is in default with respect to any Material
Contract.
SECTION 4.09. Financial Position; No Material Adverse Change.
----------------------------------------------
(a) (i) Borrower has heretofore furnished to the Agent and the Banks its
Consolidated balance sheet, and the related Consolidated
statements of income, cash flows and stockholders' equity of
Borrower and its Subsidiaries (x) as of and for the fiscal year
ended September 30, 1994, audited by and accompanied by the
opinion of Xxxxxx Xxxxxxxx, L.L.P., independent certified public
accountants, and (y) as of and for the Fiscal Quarters ended
December 31, 1994 and March 31, 1995, certified by a Responsible
Officer of Borrower. Such financial statements present fairly the
financial condition and results of operations of Borrower and its
Subsidiaries as of such dates and for such periods. Such
financial statements were prepared in accordance with GAAP
applied on a consistent basis.
(ii) Borrower has heretofore furnished to the Agent and the Banks the
Consolidated balance sheet, and the related Consolidated
statements of income, cash flows and stockholders' equity of
Plains and its Subsidiaries (x) as of and for the year ended
December 31, 1994, audited by and accompanied by the opinion of
-00-
Xxxxxx Xxxxxxxx, L.L.P., independent certified public
accountants, and (y) as of and for the Fiscal Quarter ended March
31, 1995, certified by a Responsible Officer of Plains. Such
financial statements present fairly the financial condition and
results of operations of Plains as of such dates and for such
periods. Such financial statements were prepared in accordance
with GAAP applied on a consistent basis.
(iii) Neither Borrower nor any Subsidiary of Borrower has any material
contingent liabilities, material liabilities for taxes, unusual
and material forward or long-term commitments or material
unrealized or anticipated losses from any unfavorable
commitments, except as referred to or reflected or provided for
in the Consolidated balance sheets of (i) Borrower or (ii) Plains
or as otherwise disclosed to the Banks in writing.
(b) Borrower has disclosed to the Banks in writing any and all facts (other
than matters concerning the general economy) which, in the reasonable good faith
judgment of Borrower, could result in a Material Adverse Effect.
SECTION 4.10. Litigation; Adverse Effects.
---------------------------
(a) Except as set forth in Schedule 4.10, there are no actions, suits,
-------------
proceedings, governmental investigations or arbitrations, at law or in equity,
before or by any Governmental Authority, pending or, to the best knowledge of
Borrower, probable of assertion against Borrower or any Subsidiary of Borrower
or any property of Borrower or any Subsidiary of Borrower which could reasonably
be expected to result in a Material Adverse Effect.
(b) None of the business, properties, or operations of Borrower or any
Subsidiary of Borrower are 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 reasonably be expected to result in a Material Adverse
Effect.
SECTION 4.11. ERISA. All currently existing Benefit Plans are listed on
-----
Schedule 4.11 hereto. Except as set forth on Schedule 4.11, Borrower and each of
------------- -------------
its Subsidiaries is in compliance in all material respects with the applicable
provisions of ERISA and the regulations and published interpretations thereunder
with respect to each such Benefit Plan. No Reportable Event has occurred as to
which Borrower or any Subsidiary of Borrower was required to file a report with
the PBGC, and the present value of all benefit liabilities under each Benefit
Plan (based on those assumptions used to fund such Benefit Plan) did not, as of
the last annual valuation date applicable thereto, exceed the value of the
assets of such Benefit Plans. Neither Borrower nor any Subsidiary of Borrower
has any ERISA Affiliates (other than Borrower and its Subsidiaries) or
Multiemployer Plans.
SECTION 4.12. Payment of Taxes. Borrower has filed, and has caused each
----------------
of its Subsidiaries to file, all federal, state and local tax returns and other
reports required by Requirements of Law to have been filed by Borrower or such
Subsidiary of Borrower and has paid (prior to delinquency) all taxes and other
similar charges and assessments that are due and payable including extensions,
except taxes, charges and assessments which are being diligently contested in
good faith by appropriate proceedings and any Lien arising thereunder
constitutes a Permitted Lien. No Responsible Officer of Borrower or
-47-
any Subsidiary of Borrower has knowledge of any proposed tax assessment against
Borrower or any Subsidiary of Borrower that is likely to result in a Material
Adverse Effect.
SECTION 4.13. Environmental Matters. Except as disclosed on Schedule 4.13
--------------------- -------------
or as could not reasonably be expected to result in a Material Adverse Effect:
(a) Borrower and each of its Subsidiaries is in compliance with all
applicable Environmental Laws;
(b) Borrower and each of its Subsidiaries has obtained all consents and
permits required under all applicable Environmental Laws to operate its business
as presently conducted or as proposed to be conducted and all such consents and
permits are in full force and effect and Borrower and its Subsidiaries are in
compliance with all terms and conditions of such approvals;
(c) Neither Borrower nor any Subsidiary of Borrower nor any of the present
property or operations or the past property or operations of Borrower or any
Subsidiary of Borrower (including Plains and its Subsidiaries) is subject to any
order from or agreement with any Governmental Authority or private party
respecting (i) failure to comply with any Environmental Law or any Remedial
Action or (ii) any Environmental Liabilities arising from the Release or
threatened Release except those orders and agreements with which Borrower or
such Subsidiary of Borrower has complied;
(d) None of the operations of Borrower or any Subsidiary of Borrower is
subject to any judicial or administrative proceeding alleging a violation of, or
liability under, any Environmental Law;
(e) To the best knowledge and belief of Borrower after due inquiry with
respect thereto, none of the operations of Borrower or any Subsidiary of
Borrower (including Plains and its Subsidiaries) is the subject of any
investigation by any Governmental Authority evaluating whether any Remedial
Action is needed to respond to a Release or threatened Release;
(f) Neither Borrower nor any Subsidiary of Borrower has been required to
file any notice under any Environmental Law indicating past or present
treatment, storage or disposal of a hazardous waste as defined by 40 CFR Part
261 or any state or local equivalent;
(g) Neither Borrower nor any Subsidiary of Borrower has been required to
file any notice under any applicable Environmental Law reporting a Release
(other than minor or de minimis Releases);
-- -------
(h) There is not now, nor, to the best knowledge and belief of Borrower has
there ever been, on or in any property of Borrower or of any Subsidiary of
Borrower:
(i) any unauthorized generation, treatment, recycling, storage or
disposal of any hazardous waste as defined by 40 CFR Part 261 or any
state or local equivalent,
(ii) any underground storage tanks or surface impoundments without proper
permits,
(iii) any asbestos-containing material, or
-48-
(iv) any polychlorinated biphenyls (PCBs) used in hydraulic oils,
electrical transformers or other equipment;
(i) There have been no written commitments or agreements involving
Borrower or any Subsidiary of Borrower from or with any Governmental Authority
or any private entity (including, without limitation, the owner of the property
or any portion thereof) relating to the generation, storage, treatment,
presence, Release, or threatened Release on or into any of the properties of
Borrower or any Subsidiary of Borrower (including Plains and its Subsidiaries)
or the environment (including off-site disposal of Hazardous Substances) or any
Remedial Action with respect thereto;
(j) Neither Borrower nor any Subsidiary of Borrower has received any
written notice or claim to the effect that it is or may be liable to any Person
as a result of the Release or threatened Release;
(k) Neither Borrower nor any Subsidiary of Borrower has any known
liability in connection with any material Release or material threatened
Release; and
(l) After due inquiry, no Environmental Lien has attached to any
properties of Borrower or any Subsidiary of Borrower.
SECTION 4.14. Governmental Regulation. Neither Borrower nor any
-----------------------
Subsidiary of Borrower is subject to regulation under the Interstate Commerce
Act, the Investment Company Act of 1940, the Public Utility Holding Company Act
of 1935, the Federal Power Act or any other Requirements of Law such that its
ability to incur indebtedness is limited or its ability to consummate the
transactions contemplated by this Credit Agreement and the other Loan Documents
or any document executed in connection therewith is impaired.
SECTION 4.15. Disclosure. All information contained in any financial
----------
statements, certificates, exhibits, schedules, operating statements and any
other written statements and written information (excluding estimates and
forecasts) furnished by or on behalf of Borrower or any Subsidiary of Borrower
to the Banks and the Agent, (taken as a whole) in connection with any
transaction contemplated hereby or by any other Loan Document on or prior to the
date this representation is made or deemed made, were, and will be, true and
correct in all material respects and do not, and will not, contain any material
misstatement of fact or omit to state a material fact necessary in order to make
the statements contained therein, in light of the circumstances under which they
were made, not misleading.
SECTION 4.16. Subsidiaries. As of the Effective Date, Schedule 4.16
------------ -------------
contains a complete and accurate (a) list of all Subsidiaries of Borrower, (b)
description of the issued and outstanding capital stock of each Subsidiary of
Borrower and (c) the record owners of such capital stock.
SECTION 4.17. Solvency. Neither Borrower nor any Subsidiary of Borrower
--------
(i) is "insolvent" (within the meaning of Section 101(32) of the Bankruptcy
Code, Section 2 of the Uniform Fraudulent Conveyance Act or Section 2 of the
Uniform Fraudulent Transfer Act) or will become insolvent as a result of the
incurrence of any obligation under any Loan Document to which it is a party;
(ii) has unreasonably small capital (after giving effect to the transactions
contemplated in any Loan Document to which it is a party) for the conduct of its
existing and contemplated business and (iii) is unable to perform its contingent
obligations and other commitments as they mature in the normal course of
business.
-49-
SECTION 4.18. Business. Borrower has not conducted and is not conducting
--------
any business other than business relating to the exploration, development,
financing, acquisition, ownership, operation, maintenance, storage, trading,
transporting and marketing of the Oil and Gas Interests as currently conducted.
SECTION 4.19. Material Contracts. Schedule 4.19 lists all Material
------------------ -------------
Contracts to which Borrower or any of its Subsidiaries is a party or by which it
or its properties is bound (including, without limitation, all amendments,
supplements, waivers and other agreements amending, supplementing or otherwise
modifying or clarifying such agreements) but excluding (a) the Loan Documents,
(b) agreements, documents and instruments giving rise to Oil and Gas Interests
owned by Borrower and its Subsidiaries, (c) farmout agreements and agreements
for the sale, purchase, processing, transportation or marketing of oil, gas or
other minerals entered into in the ordinary course of business, (d) operating
and joint operating agreements related to such Oil and Gas Interests, (e)
agreements and plans relating to employee benefits, and (f) the Merger Agreement
and each Material Contract which is expressly referenced in the Merger Agreement
and the Schedules and Exhibits described thereto. Borrower and each of its
Subsidiaries have complied in all material respects with all obligations
required to be performed by them under all Material Contracts, except to the
extent a failure to comply could not result in a Material Adverse Effect.
Borrower is not aware of any default by any other party to any Material
Contract. True, correct and complete copies of all Material Contracts listed on
Schedule 4.19 have been delivered to the Agent.
-------------
SECTION 4.20. Licenses, Permits, Etc. Borrower and each of its
----------------------
Subsidiaries possess such valid franchises, certificates of convenience and
necessity, operating rights, licenses, permits, consents, authorizations,
exemptions and orders of Governmental Authorities, as are necessary to carry on
their respective businesses as now conducted and as proposed to be conducted,
except to the extent a failure to obtain any such item would not result in a
Material Adverse Effect.
SECTION 4.21. Fiscal Year. Borrower's Fiscal Year is January 1 through
-----------
December 31.
SECTION 4.22. Merger Agreement. Borrower has delivered to the Banks a
----------------
complete and correct copy of the Merger Agreement, and such document has not
been amended, supplemented or modified since the date of execution thereof. The
Merger Agreement has been duly executed and delivered by the parties thereto and
is in full force and effect. The representations and warranties of Plains
contained in Article III of the Merger Agreement and those of Borrower contained
in Article II of the Merger Agreement (in each case, including the schedules
referred to therein) are hereby incorporated by reference into this Credit
Agreement and shall be deemed to have been made jointly and severally by
Borrower to the Agent and the Banks on and as of the date hereof in order to
induce the Banks to enter into this Credit Agreement.
ARTICLE V
AFFIRMATIVE COVENANTS
So long as this Credit Agreement shall remain in effect or the
principal of or interest on any Loan, or any Letter of Credit, or any
reimbursement obligation with respect to any Letter of Credit, or any commitment
or other fee, expense, compensation or any other amount payable under any Loan
-50-
Document shall remain unpaid or outstanding or the Banks shall have any
Commitments hereunder, unless the Required Banks shall otherwise consent in
writing, Borrower covenants and agrees that:
SECTION 5.01. Information. Borrower shall deliver, or cause to be
-----------
delivered, to the Banks at Borrower's sole expense:
(a) As soon as practicable, and in any event within forty-five (45) days
after the end of each Fiscal Quarter (or fifty (50) days after the end of each
Fiscal Quarter upon Borrower's timely filing with the Securities and Exchange
Commission of a Notification of Late Filing on Form 12b-25 with respect to
Borrower's Form 10-Q for that Fiscal Quarter), but within ninety (90) days after
the end of the last Fiscal Quarter (or one hundred five (105) days after the end
of the last Fiscal Quarter upon Borrower's timely filing of a Form 12b-25 with
respect to Borrower's Form 10-K for that Fiscal Year) in each Fiscal Year of
Borrower, the unaudited Consolidated balance sheet of Borrower and its
Subsidiaries as at the end of such quarterly period and year to date period then
ended, and the related unaudited Consolidated statements of income and cash
flows for such quarterly period and for the portion of the Fiscal Year ended
with the last day of such quarterly period, and shareholders' equity for the
Fiscal Year, and in each case setting forth comparative figures for the related
periods in the prior Fiscal Year, all in reasonable detail prepared in a manner
satisfactory to the Agent and the Required Banks, and certified by a Responsible
Officer of Borrower responsible for the administration of the finances and
accounting practices of Borrower that such financial statements fairly present
the Consolidated financial condition and results of operations of, respectively,
Borrower and its Subsidiaries in accordance with GAAP for the fiscal Quarter and
year to date period then ended, subject to changes resulting from normal
year-end audit adjustments.
(b) Within ninety (90) days after the close of each Fiscal Year of
Borrower, the audited Consolidated balance sheet of Borrower as of the end of
such Fiscal Year and the related audited Consolidated statements of income, cash
flows and shareholders' equity of Borrower for such Fiscal Year, setting forth
the comparative figures for the preceding Fiscal Year and audited by Xxxxxx
Xxxxxxxx or other independent certified public accountants of recognized
national standing satisfactory to the Required Banks.
(c) Together with the delivery of statements referred to in paragraphs (a)
and (b) above, a Compliance Certificate, in form and substance satisfactory to
the Agent, signed by a Responsible Officer of Borrower responsible for the
administration of the finances and accounting practices of Borrower, stating
that the signer has reviewed the terms of this Credit Agreement and the other
Loan Documents and that in the course of the performance of his duties, he would
normally have knowledge of any condition or event which would constitute an
Event of Default or Default and stating whether or not he has knowledge of any
such condition or event and, if so, specifying each such condition or event of
which he has knowledge and the nature thereof and any corrective action taken or
proposed to be taken with respect thereto. Such Compliance Certificate shall
set forth the calculations required to establish the Consolidated Tangible Net
Worth, the Funded Debt to Capitalization Ratio of Borrower and its Subsidiaries
on a Consolidated basis for the fiscal period covered by such financial
statements.
(d) Promptly and in any event within three (3) Business Days after any
Responsible Officer of Borrower obtains knowledge thereof, notice of (i) the
institution of or threat in writing of, any action, suit, proceeding,
governmental investigation or arbitration against or affecting Borrower or any
Subsidiary of Borrower not previously disclosed in writing to the Banks or any
material adverse development in any action, suit, proceeding, governmental
investigation or arbitration already disclosed
-51-
to the Banks which could reasonably be expected to result in a Material Adverse
Effect, or (ii) the occurrence of any event which constitutes a Default or Event
of Default, such notice to specify the nature and period of existence of such
Default or Event of Default, and what action Borrower has taken, are taking or
propose to take with respect thereto.
(e) promptly upon the mailing thereof to the stockholders of Borrower
generally, copies of all financial statements, reports and proxy statements so
mailed;
(f) promptly upon the filing thereof, copies of all final registration
statements, post effective amendments thereto and annual, quarterly or special
reports which Borrower shall have filed with the Securities and Exchange
Commission; provided, that Borrower must deliver, or cause to be delivered, any
-------- ----
annual reports which Borrower shall have filed with the Securities and Exchange
Commission, within one hundred five (105) days after the end of each Fiscal Year
of Borrower, and any quarterly reports which Borrower shall have filed with the
Securities and Exchange Commission, within fifty (50) days after the end of each
of the first three (3) quarters of each Fiscal Year of Borrower;
(g) promptly upon request therefor by the Agent, such title opinions and
other information in either Borrower's possession or control regarding title to
the Oil and Gas Interests owned by Borrower or its Subsidiaries as are
appropriate to determine the status thereof;
(h) promptly upon receipt of same, any notice or other information received
by Borrower or any Subsidiary of Borrower indicating any potential, actual or
alleged (i) non-compliance with or violation of the requirements of any
Environmental Law which could result in liability to Borrower or any Subsidiary
for fines, clean up or any other remediation obligations or any other liability
in excess of $5,000,000 in the aggregate; (ii) Release or threatened Release
which Release would impose on Borrower or any Subsidiary of Borrower a duty to
report to a Governmental Authority or to pay cleanup costs or to take Remedial
Action which could result in liability to Borrower or any Subsidiary of Borrower
for fines, clean up and other remediation obligations or any other liability in
excess of $5,000,000 in the aggregate; or (iii) the existence of any Lien
arising under any Environmental Law securing any obligation to pay fines, clean
up or other remediation costs or any other liability in excess of $5,000,000 in
the aggregate. Without limiting the foregoing, Borrower shall provide to Agent,
promptly upon request, copies of all environmental consultants, employees or
engineers reports received by Borrower or any Subsidiary of Borrower which
reflect the existence of any circumstance or condition which would require
delivery of a notice or other information to the Banks pursuant to this
Section 5.01(h).
---------------
(i) In the event any notification is provided by Borrower to any Bank or the
Agent pursuant to Section 5.01(h) hereof or the Agent or any Bank otherwise
---------------
learns of any event or condition under which any such notice would be required,
then, upon request of Required Banks, Borrower shall, within ninety (90) days of
such request, cause to be furnished to each Bank a report by an environmental
consulting firm or employee of Borrower in charge of compliance with
Environmental Laws reasonably acceptable to Agent and Banks, stating that a
review of such event, condition or circumstance has been undertaken (the scope
of which shall be acceptable to Agent and Banks) and detailing the findings,
conclusions, and recommendations of such consultant or employee of Borrower in
charge of compliance with Environmental Laws. Borrower shall bear all expenses
and costs associated with such review and updates thereof, as well as, upon the
reasonable request of the Required Banks, part or all remediation or curative
action recommended by any such environmental consultant or employee;
-52-
(j) Promptly (but in all events within three (3) Domestic Business Days)
after any Responsible Officer becomes aware of the occurrence of any Default, a
certificate of a Responsible Officer setting forth the details thereof and the
action which Borrower is taking or proposes to take with respect thereto;
(k) Promptly notify the Banks of any material adverse change in the
business, financial condition, operations or prospects of Borrower and its
Subsidiaries taken as a whole; and
(l) From time to time such additional information regarding the financial
position or business of Borrower and its Subsidiaries as the Agent, at the
request of any Bank, may reasonably request.
SECTION 5.02. Business of Borrower. The primary business of Borrower and
--------------------
its Subsidiaries on a Consolidated basis is and will continue to be the
acquisition, exploration for, development, production, transportation,
processing, trading, and marketing of Hydrocarbons and accompanying elements.
SECTION 5.03. Corporate Existence. Borrower shall, and shall cause each of
-------------------
its Subsidiaries to, maintain its (i) existence and good standing in the
jurisdiction of its organization or incorporation and (ii) qualification and
good standing in all jurisdictions in which such qualification and good standing
are necessary in order for Borrower or such Subsidiary to conduct its business
and own its property as conducted and owned in such jurisdiction except where
the failure to be so qualified or in good standing would not, individually or in
the aggregate, result in a Material Adverse Effect.
SECTION 5.04. Right of Inspection. Borrower will permit, and will cause
-------------------
each Subsidiary of Borrower to permit, any officer, employee or agent of the
Agent or any of the Banks to visit and inspect any of the assets of Borrower and
its Subsidiaries, examine Borrower's and its Subsidiaries' books of record and
accounts, take copies and extracts therefrom, and discuss the affairs, finances
and accounts of Borrower and its Subsidiaries with Borrower's and its
Subsidiaries' officers, accountants and auditors, all at such reasonable times
and as often as the Agent or any of the Banks reasonably may desire.
SECTION 5.05. Maintenance of Insurance. Borrower will maintain or cause to
------------------------
be maintained, and will cause each Subsidiary of Borrower to maintain or cause
to be maintained (and will use its reasonable best efforts to cause all
operators of Oil and Gas Interests owned by Borrower and any of its Subsidiaries
to maintain or cause to be maintained) at all times, insurance covering such
risks as are customarily carried by businesses similarly situated.
SECTION 5.06. Payment of Taxes and Claims. Borrower will pay, and will
---------------------------
cause each of its Subsidiaries to pay, (a) all taxes imposed upon it or any of
its assets or with respect to any of its franchises, business, income or profits
before any material penalty or interest accrues thereon and (b) all material
claims (including, without limitation, claims for labor, services, materials and
supplies) for sums which have become due and payable and which by law have or
might become a Lien (other than a Permitted Lien) on any of its assets;
provided, however, no payment of taxes or claims shall be required if (i) the
amount, applicability or validity thereof is currently being contested in good
faith by appropriate action promptly initiated and diligently conducted in
accordance with good business practices and any Lien arising thereunder
constitutes a Permitted Lien, (ii) Borrower as and to the extent required in
accordance with GAAP, shall have set aside on its books reserves (segregated to
the extent required by GAAP) deemed by it to be adequate with respect thereto,
and (iii) to the extent the amount of the
-53-
contested taxes or claims are in excess of $5,000,000 (in the aggregate),
Borrower has notified the Agent of such circumstances, in detail satisfactory to
the Agent.
SECTION 5.07. Compliance with Laws and Documents. Borrower will comply,
----------------------------------
and will cause each of its Subsidiaries to comply, with all Requirements of Law,
their respective certificates (or articles) of incorporation, bylaws and similar
charter documents and all Material Contracts to which Borrower or any of its
Subsidiaries is a party, if a violation, alone or when combined with all other
such violations, could result in a Material Adverse Effect.
SECTION 5.08. Operation of Properties and Equipment. (a) Borrower will
-------------------------------------
maintain and operate, and will cause each of its Subsidiaries to maintain and
operate, their respective Oil and Gas Interests in a good and workmanlike
manner, and observe and comply with all of the terms and provisions, express or
implied, of all oil and gas leases relating to such Oil and Gas Interests so
long as such Oil and Gas Interests are capable of producing Hydrocarbons and
accompanying elements in paying quantities.
(b) Borrower will comply, and will cause each of its Subsidiaries to comply,
in all respects with all contracts and agreements applicable to or relating to
their respective Oil and Gas Interests or the production and sale of
Hydrocarbons and accompanying elements therefrom, except to the extent a failure
to so comply could not reasonably be expected to result in a Material Adverse
Effect.
(c) Borrower will maintain, preserve and keep, and will cause each of its
Subsidiaries to maintain, preserve and keep, at all times, all operating
equipment used with respect to their respective Oil and Gas Interests in proper
repair, working order and condition, and make all necessary or appropriate
repairs, renewals, replacements, additions and improvements thereto so that the
efficiency of such operating equipment shall at all times be properly preserved
and maintained; provided that no item of operating equipment need be so
repaired, renewed, replaced, added to or improved, if Borrower shall in good
faith determine that such action is not necessary or desirable for the continued
efficient and profitable operation of the business of Borrower and its
Subsidiaries.
SECTION 5.09. Environmental Indemnity. Except to the extent a failure to
-----------------------
comply would not result in a Material Adverse Effect, Borrower will comply, and
will cause each of its Subsidiaries to comply, with all Environmental Laws,
including, without limitation: (a) all licensing, permitting, notification and
similar requirements of Environmental Laws, and (b) all provisions of all
Environmental Laws regarding generation, storage, discharge, release,
transportation, treatment and disposal of Hazardous Substances. Borrower will
promptly pay and discharge when due, and will cause each of its Subsidiaries to
promptly pay and discharge when due, all debts, claims, liabilities and
obligations with respect to any clean-up or remediation measures necessary to
comply with Environmental Laws. Borrower hereby agrees to indemnify, defend and
hold harmless the Banks, the Agent and their respective agents, affiliates,
officers, directors, and employees from and against any and all claims, losses,
demands, actions, causes of action, and liabilities whatsoever (including
without limitation reasonable attorney's fees and expenses, and costs and
expenses reasonably incurred in investigating, preparing or defending against
any litigation or claim, action, suit, proceeding or demand of any kind or
character) arising out of or resulting from noncompliance with Environmental
Laws or a Release or threatened Release.
SECTION 5.10. ERISA Reporting Requirements. Borrower shall furnish or
----------------------------
cause to be furnished to Agent:
-54-
(a) Promptly and in any event (i) within fifteen (15) days after Borrower or
any ERISA Affiliate knows or has reason to know that any ERISA Event described
in clause (a) of the definition of ERISA Event or any event described in section
4063(a) of ERISA with respect to any Benefit Plan of Borrower or any ERISA
Affiliate has occurred, and (ii) within ten (10) days after Borrower or any
ERISA Affiliate knows or has reason to know that any other ERISA Event with
respect to any Benefit Plan of Borrower or any ERISA Affiliate has occurred or a
request for minimum funding waiver under section 412 of the Code with respect to
any Benefit Plan of Borrower or any ERISA Affiliate has been made, a written
notice describing such event and describing what action is being taken or is
proposed to be taken with respect thereto, together with a copy of any notice of
event that is given to the PBGC;
(b) Promptly and in any event within two (2) Business Days after receipt
thereof by Borrower or any ERISA Affiliate from the PBGC, copies of each notice
received by Borrower or any ERISA Affiliate of the PBGC's intention to terminate
any Plan or to have a trustee appointed to administer any Benefit Plan;
(c) Promptly and in any event within fifteen (15) days after the receipt by
Borrower of a request therefor by a Bank, copies of any annual and other report
(including Schedule B thereto) with respect to a Benefit Plan filed by Borrower
or any ERISA Affiliate with the United States Department of Labor, the IRS or
the PBGC;
(d) Promptly, and in any event within ten (10) Business Days after receipt
thereof, a copy of any correspondence Borrower or any ERISA Affiliate receives
from the Plan Sponsor (as defined by section 4001(a)(10) of ERISA) of any
Benefit Plan asserting withdrawal liability pursuant to section 4219 or 4202 of
ERISA upon Borrower or any ERISA Affiliate, and a statement from a Responsible
Officer of Borrower or such ERISA Affiliate setting forth details as to the
events giving rise to such withdrawal liability and the action which Borrower or
such ERISA Affiliate is taking or proposes to take with respect thereto;
(e) Notification within three (3) Business Days after Borrower or any ERISA
Affiliate knows or has reason to know that Borrower or any such ERISA Affiliate
has or intends to file a notice of intent to terminate any Benefit Plan under a
distress termination within the meaning of section 4041(c) of ERISA and a copy
of such notice; and
(f) Promptly after receipt of written notice of commencement thereof, notice
of all (i) claims made by participants or beneficiaries with respect to any
Benefit Plan and (ii) actions, suits and proceedings before any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, affecting Borrower or any ERISA Affiliate with respect to
any Benefit Plan, except those which, in the aggregate, if adversely determined
could not result in a Material Adverse Effect.
SECTION 5.11. Subsidiary Guaranty. Borrower will cause each of its
-------------------
Subsidiaries hereafter formed or acquired to execute and deliver a joinder of
the Subsidiary Guaranty promptly following such formation or acquisition.
SECTION 5.12. Additional Documents. Borrower will cure promptly, and will
--------------------
cause each of its Subsidiaries to cure promptly, any defects in the creation and
issuance of each Note, and the execution
-55-
and delivery of this Credit Agreement and the other Loan Documents and, at
Borrower's expense, Borrower shall promptly and duly execute and deliver, and
cause each Subsidiary of Borrower to promptly execute and deliver, to each Bank,
upon reasonable request, all such other and further documents, agreements and
instruments in compliance with or accomplishment of the covenants and agreements
of each Borrower and each Subsidiary of Borrower in this Credit Agreement and
the other Loan Documents as may be reasonably necessary or appropriate in
connection therewith.
ARTICLE VI
NEGATIVE COVENANTS
So long as this Credit Agreement shall remain in effect or the principal
of or interest on any Loan, or any Letter of Credit, or any reimbursement
obligation with respect to any Letter of Credit, or any commitment or other fee,
expense, compensation or any other amount payable under any Loan Document shall
remain unpaid or outstanding or the Banks shall have any Commitments hereunder,
unless the Required Banks shall otherwise consent in writing, Borrower covenants
and agrees that:
SECTION 6.01. Indebtedness and Accommodation Obligations. Borrower shall
------------------------------------------
not, and shall not permit any of its Subsidiaries to, create, incur, assume or
otherwise become or remain liable with respect to, any Indebtedness or
Accommodation Obligations, except for:
(a) Indebtedness and Accommodation Obligations arising hereunder and under
the other Loan Documents;
(b) Unsecured Indebtedness and Accommodation Obligations outstanding on the
date hereof described in Schedule 6.01, in each case in a principal amount at
-------------
any one time outstanding not to exceed the amount set forth on Schedule 6.01
-------------
hereof;
(c) Endorsements of negotiable instruments for collection in the ordinary
course of business;
(d) Current liabilities (exclusive of Indebtedness) for accounts payable and
expense accruals incurred or assumed in the ordinary course of business,
provided such accounts payable have not remained unpaid for a period of ninety
--------
(90) days after the same became due unless currently being contested in good
faith or by appropriate proceedings;
(e) Liabilities for taxes, assessments, governmental charges or levies to
the extent such liabilities are permitted pursuant to Section 5.06 hereof; and
------------
(f) Unsecured liabilities incurred under Hedge Transactions permitted
pursuant to Section 6.14 hereof.
------------
(g) Purchase money Indebtedness in respect of property acquired by Borrower
and its Subsidiaries in the ordinary course of business provided, however, that
-------- -------
the aggregate amount of all Indebtedness incurred by Borrower and its
Subsidiaries pursuant to this Section 6.01(g) and Section 6.01(h) shall not
--------------- ---------------
exceed $15,000,000 at any one time outstanding; and
-56-
(h) Additional unsecured Indebtedness not permitted by subclauses (a)
through (f), provided, however, that the aggregate amount of all Indebtedness
-------- -------
incurred by Borrower and its Subsidiaries pursuant to this Section 6.01(h) and
---------------
Section 6.01(g) shall not exceed $15,000,000 at any one time outstanding.
---------------
SECTION 6.02. Restrictions on Distributions. Borrower will not directly or
-----------------------------
indirectly declare or make or incur any liability to make, and Borrower will not
permit any of its Subsidiaries to directly or indirectly declare or make, or
incur any liability to make, Distributions in any Fiscal Quarter in excess
of an amount equal to fifty percent (50%) of an amount equal to (i) the sum of
the Consolidated Net Income for each of the four immediately preceding Fiscal
Quarters divided by (ii) four, determined as of the last day of the immediately
-------
preceding Fiscal Quarter. Notwithstanding the foregoing, any Subsidiary of
Borrower may make Distributions to Borrower, and any wholly owned Subsidiary of
Borrower may make Distributions to any other wholly owned Subsidiary of Borrower
provided such Subsidiary has duly executed and delivered a Subsidiary Guaranty
in favor of the Agent. Borrower will not enter into or become subject to, and
Borrower will not permit any of its Subsidiaries to enter into, or become
subject to, any agreement or order of any Governmental Authority which prohibits
or restricts in any way the right of any of Borrower's Subsidiaries to make
Distributions to Borrower.
SECTION 6.03. Negative Pledge. Borrower will not create, incur, assume or
---------------
suffer to exist, and Borrower will not permit any Subsidiary of Borrower to
create, incur, assume or suffer to exist, any Lien on any asset (other than
Margin Stock) of Borrower or any of its Subsidiaries other than Permitted Liens.
Borrower will not enter into or become subject to, and Borrower will not permit
any Subsidiary of Borrower to enter into or become subject to, any agreement
(other than this Credit Agreement) that prohibits or otherwise restricts the
right of Borrower or any of its Subsidiaries to create, incur, assume or suffer
to exist any Lien in favor of Agent for the benefit of the Banks on any of
Borrower's or any of its Subsidiaries' assets.
SECTION 6.04. Consolidation, Mergers and Acquisitions; Fundamental Changes.
------------------------------------------------------------
Borrower shall not, and shall not permit any of its Subsidiaries to, merge or
consolidate with or acquire substantially all of the outstanding capital stock
or assets of any other Person or liquidate, wind up or dissolve (or suffer any
liquidation or dissolution), or convey, lease, sell, transfer or otherwise
dispose of, in one transaction or series of transactions, all or any substantial
part of its business, property or assets, whether now or hereafter acquired
except for transactions in the nature of a consolidation and/or merger in which
Borrower or a wholly owned Subsidiary is the surviving entity, subject in each
case to the condition that immediately after such merger or consolidation and
after giving effect and pro forma effect thereto for the immediately preceding
--- -----
twelve-month period, no Event of Default or Default shall have occurred, exist
or be continuing. Borrower shall not, and shall not permit any of its
Subsidiaries to purchase, redeem, retire or otherwise acquire for value any of
its capital stock now or hereafter outstandings, except for odd-lot repurchases
of shares, repurchase of shares for use in Borrower's employee benefit plans,
and the acceptance of stock as payment for the exercise of stock options.
SECTION 6.05. Investments. Borrower shall not, and shall not permit any of
-----------
its Subsidiaries to, make, directly or indirectly, any Investments, except:
(a) Investments existing on the date hereof and disclosed on Schedule 6.05;
-------------
(b) Investments consisting of Cash Equivalents;
-57-
(c) Accounts receivable from customers in the ordinary course of business;
(d) Investments by Borrower in wholly owned Subsidiaries provided such
Subsidiaries have executed and delivered a Subsidiary Guaranty in favor of the
Agent;
(e) Margin deposits in connection with any Hedge Transaction permitted
pursuant to Section 6.14;
------------
(f) An Investment in capital stock issued by a United States corporation
provided such Investment is not a Hostile Acquisition and subject in each case
to the condition that immediately after such Investment and after giving effect
and pro forma effect thereto for the next succeeding twelve-month period, no
--- -----
Event of Default or Default shall have occurred, exist or be continuing;
(g) Acquisitions permitted under Section 6.04 hereof;
------------
(h) Investments in connection with or related to farm-out, farm-in, joint
operating, joint venture or area of mutual interest agreements, gathering
systems, pipelines or other similar or customary arrangements entered into in
the ordinary course of business; and
(i) Investments not otherwise permitted hereunder in an aggregate principal
amount not to exceed $10,000,000.
SECTION 6.06. Transactions with Affiliates. Borrower shall not, and shall
----------------------------
not permit any of its Subsidiaries to, enter into, or be a party to any
transaction with any of such Person's Affiliates, officers, directors, partners,
employees or stockholders who have filed a Form 13-D with the Securities and
Exchange Commission, except for (i) the transactions provided for in the Loan
Documents, (ii) transactions disclosed in Schedule 6.06 or (iii) transactions
-------------
entered into in the ordinary course of business and pursuant to the reasonable
requirements of such Person's business and upon such fair and reasonable terms
as could reasonably be obtained in an arm's length transaction with an
unaffiliated Person in accordance with prevailing industry customs and
practices.
SECTION 6.07. Agreements. Borrower shall not, and shall not permit any of
----------
its Subsidiaries to, enter into any contract, agreement or transaction which at
the time such contract, agreement or transaction was entered into materially and
adversely affects (i) the business, property, assets, operations, condition
(financial or otherwise) of Borrower or any Subsidiary of Borrower, (ii) ability
of Borrower or any Subsidiary of Borrower to perform timely its obligations
under this Credit Agreement and the other Loan Documents to which it is a party
or (iii) a Subsidiary's ability to perform timely its material covenants and
obligations under any Subsidiary Guaranty to which it is a party.
SECTION 6.08. Sales of Assets. Borrower shall not, and shall not permit
---------------
any of its Subsidiaries to, sell, assign, transfer, lease, convey or otherwise
dispose of any of its assets or properties, whether now owned or hereafter
acquired, or any income or profits therefrom, or enter into any agreement to do
so, except for (i) sales of inventory in the ordinary course of its business,
(ii) sales or dispositions of worn out or obsolete tools or equipment no longer
used or useful in the business of Borrower or such Subsidiary of Borrower or
(iii) sales of assets for fair market value on an arm's length basis in an
aggregate amount for Borrower and its Subsidiaries not to exceed $5,000,000
during any six month period between Redetermination Dates.
-58-
SECTION 6.09. ERISA Compliance. Borrower shall not, and shall not permit
----------------
any of its Subsidiaries to, engage in a "prohibited transaction", as defined in
Section 406 of ERISA or Section 4975 of the Code, with respect to any Benefit
Plan or knowingly consent to any other "interested party" or any "disqualified
person", as such terms are defined in Section 3(14) of ERISA and Section
4975(e)(2) of the Code, respectively, engaging in any "prohibited transaction",
with respect to any Benefit Plan maintained by Borrower or such Subsidiary of
Borrower, or permit any Benefit Plan maintained by Borrower or such Subsidiary
of Borrower to incur any "accumulated funding deficiency", as defined in Section
302 of ERISA or Section 412 of the Code, unless such incurrence shall have been
waived in advance by the IRS; or terminate any Benefit Plan in a manner which
could result in the imposition of a Lien on any property of Borrower or such
Subsidiary of Borrower pursuant to Section 4068 of ERISA; or breach any
fiduciary responsibility imposed under Title I of ERISA with respect to any
Benefit Plan; engage in any transaction which would result in the incurrence of
a liability under Section 4069 of ERISA; or fail to make contributions to a
Benefit Plan which results in the imposition of a Lien on any property of
Borrower or such Subsidiary of Borrower pursuant to Section 302(f) of ERISA or
Section 412(n) of the Code, if the occurrence of any of the foregoing events
would constitute a Material Adverse Effect. Borrower shall not, and shall not
permit any of its Subsidiaries to (nor will any trade or business, whether or
not incorporated, that is a member of a group of which Borrower or such
Subsidiary of Borrower is a member and which is treated as a single employer
under Section 414 of the Code) sponsor, maintain or contribute to any
Multiemployer Plan(s). Borrower shall not, and shall not permit any of its
Subsidiaries to, become a member of any other group which is treated as a single
employer under Section 414 of the Code.
SECTION 6.10. Sales and Leasebacks. Borrower shall not, and shall not
--------------------
permit any of its Subsidiaries to, become liable, directly or by way of
Accommodation Obligation, with respect to any lease or any property (whether
real or personal or mixed) whether now owned or hereafter acquired, (i) which
Borrower or such Subsidiary of Borrower has sold or transferred or is to sell or
transfer to any other Person or (ii) which Borrower or such Subsidiary of
Borrower intends to use for substantially the same purposes as any other
property which has been or is to be sold or transferred by Borrower or such
Subsidiary of Borrower to any other Person in connection with such lease.
SECTION 6.11. Margin Regulation. Borrower shall not use or permit any
-----------------
other Person to use any portion of the proceeds of any credit extended under
this Credit Agreement in any manner which might cause the extension of credit or
the application of such proceeds to violate the Securities Act of 1933 or
Securities Exchange Act of 1934 (each as amended to the date hereof and from
time to time hereafter, and any successor statute) or to violate Regulation G,
Regulation U, or Regulation X, or any other regulation of the Federal Reserve
Board, in each case as in effect on the date or dates of such extension of
credit and such use of proceeds.
SECTION 6.12. Amendment to Organizational Documents. Borrower will not
-------------------------------------
enter into or permit, and Borrower will not permit any of its Subsidiaries to
enter into or permit, any modification or amendment of, or waive any material
right or obligation of any Person under its certificate or articles of
incorporation, bylaws or other charter documents other than such modifications,
amendments or waivers which would not, singly or in the aggregate, result in a
Material Adverse Effect.
SECTION 6.13. Fiscal Year; Fiscal Quarter. Borrower shall not, and shall
---------------------------
not permit any of its Subsidiaries to, change its Fiscal Year or any of its
Fiscal Quarters.
-59-
SECTION 6.14. Hedge Transactions. Borrower will not enter into, and
------------------
Borrower will not permit any of its Subsidiaries to enter into, any Hedge
Transactions which would cause the amount of Hydrocarbons which are the subject
of Hedge Transactions in existence at such time to exceed (a) in the case of
production from Oil and Gas Interests owned by Borrower or any of its
Subsidiaries (i) one hundred percent (100%) of Borrower's and its Subsidiaries
anticipated production from Proved Developed Producing Hydrocarbon Reserves
during any calendar month, or (ii) eighty percent (80%) of Borrower's and its
Subsidiaries anticipated production from Proved Developed Producing Hydrocarbon
Reserves during any Fiscal Year and, (b) in the case of trading activities of
production from properties not owned by Borrower or any of its Subsidiaries one
hundred percent (100%) of the Hydrocarbons purchased or sold pursuant to third
party contracts concerning the purchase and sale of Hydrocarbons by Borrower and
its Subsidiaries.
SECTION 6.15. Financial Covenants. From and after the Effective Date,
-------------------
Borrower on a Consolidated basis shall not:
(a) Permit its Consolidated Tangible Net Worth at any time to be less than
----
the sum of (i) $160,000,000 plus, if positive (i) fifty percent (50%) of
----
Consolidated Net Income for the period from the Effective Date plus, if any,
----
(ii) seventy-five percent (75%) of the net proceeds from the sale of equity
securities of Borrower and its Subsidiaries for the period from the Effective
Date, on a Consolidated basis; or
(b) Permit its Funded Debt to exceed fifty percent (50%) of its
Consolidated Capitalization at any time.
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.01. Events of Default. Each of the following events, acts,
-----------------
occurrences or conditions constitutes an "Event of Default" under this Credit
----------------
Agreement:
(a) Borrower shall fail to pay when due any payment of any principal of
the Loans; or
(b) (i) Borrower shall fail to pay when due the payment of any accrued
interest on the Loans and such failure shall continue for five (5) Business
Days; or (ii) Borrower shall fail to pay when due the payment of any fee,
expense, compensation, reimbursement or other amount when due under this Credit
Agreement, the Notes or any other Loan Document or other agreement or document
contemplated by or delivered pursuant to or in connection with this Credit
Agreement or such Loan Document or any material document executed in connection
therewith and, in any event, such failure shall continue for five (5) Business
Days after the earlier of (x) notice thereof from the Agent or any Bank to
Borrower and (y) discovery thereof by Borrower; or
(c) Borrower or any Subsidiary of Borrower shall fail to perform or
observe any term, covenant or agreement contained in Sections 5.01(d)(ii),
---------------------
6.01(a) through (e), 6.02, 6.03, 6.04, 6.06, 6.08, 6.09, 6.10, 6.11, 6.12, and
------------------------------------------------------------------------------
6.15 of this Credit Agreement; or
----
-60-
(d) Borrower or any Subsidiary of Borrower shall fail to perform or
observe any term, covenant or agreement contained in Sections 5.01(c), 5.11,
-----------------------
6.01(f), (g), or (h), 6.05, 6.07, 6.13, and 6.14 of this Credit Agreement and
------------------------------------------------
such failure shall not have been remedied within five (5) calendar days after
the earlier of (i) notice thereof from the Agent to Borrower and (ii) discovery
thereof by a Responsible Officer of Borrower or such Subsidiary of Borrower; or
(e) Borrower or any Subsidiary of Borrower shall fail to perform any term,
covenant or agreement contained in this Credit Agreement other than those
referenced in subsections (a), (b) or (c) of this Section 7.01 or in any other
------------
Loan Document to which it is a party and, in the case of any such failure that
is capable of being remedied, such failure shall not have been remedied within
thirty (30) days after the earlier of (i) notice thereof from the Agent to
Borrower and (ii) discovery thereof by a Responsible Officer of Borrower or such
Subsidiary of Borrower; or
(f) Any Subsidiary shall fail to perform any term, covenant or agreement
contained in the Subsidiary Guaranty and, in the case of any such failure that
is capable of being remedied, such failure shall not have been remedied within
thirty (30) days after the earlier of (i) notice thereof from the Agent to such
Subsidiary and (ii) discovery thereof by a Responsible Officer of such
Subsidiary; or
(g) Any Termination Event occurs which would subject Borrower or any
Subsidiary of Borrower, to a liability in excess of $5,000,000, or the plan
administrator of any Benefit Plan applies under Section 412(d) of the Code for
a waiver of the minimum funding standards of Section 412(a) of the Code which
would subject Borrower or any Subsidiary of Borrower, to a liability in excess
of $5,000,000; or
(h) Any representation or warranty made or incorporated by Borrower or any
Subsidiary of Borrower in any Loan Document to which such Person is a party or
in any certificate, agreement or instrument delivered in connection with, any
Loan Document shall prove to have been incorrect or misleading in any material
respect when made or deemed made; or
(i) Borrower or any Subsidiary of Borrower, shall (i) fail to pay any
Indebtedness having a principal amount in excess of $15,000,000 (other than the
amounts referred to in subsections (a) and (b) of this Section 7.01) owing by
------------
such Person, or any interest or premium thereon, when due (or, if permitted by
the terms of the relevant document, within any applicable grace period), whether
such Indebtedness shall become due by scheduled maturity, by required
prepayment, by acceleration, by demand or otherwise unless effectively waived or
consented to in accordance with the documents evidencing such Indebtedness or
(ii) fail to observe or perform any material term, covenant or condition on its
respective part to be performed under any agreement or instrument evidencing,
securing or relating to any such Indebtedness, when required to be performed,
and such failure shall continue after the applicable grace period, if any,
specified in such agreement or instrument if the effect of any failure is to
cause, or to permit the holder or holders of such Indebtedness or a trustee on
its or their behalf (with or without the giving of notice, the lapse of time, or
both), to cause such Indebtedness to become due prior to its stated maturity; or
(j) Any Loan Document shall, at any time after its execution and delivery
and for any reason, cease to be in full force and effect or shall be declared to
be null and void, or the validity or enforceability thereof shall be contested
by any Person party thereto (other than the Agent or any Bank)
-61-
or any such Person party thereto (other than the Agent or any Bank) shall deny
that it has any or further liability or obligation thereunder, or the
Obligations shall be subordinated for any reason; or
(k) Borrower or any Subsidiary of Borrower shall be adjudicated insolvent,
or shall generally not pay, or admit in writing its inability to pay, its debts
as they mature, or make a general assignment for the benefit of creditors, or
any proceeding shall be instituted by any such Person seeking to adjudicate it
insolvent, seeking liquidation, dissolution, winding-up, reorganization,
arrangement, adjustment, protection, relief or composition of it or its debts
under any Debtor Relief Law, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, or other similar official for it or for
any substantial part of its property, or any such Person shall take any
corporate action in furtherance of any of the actions set forth above in this
Section 7.01(k); or
---------------
(l) Any proceeding of the type referred to in Section 7.01(k) is filed, or
---------------
any such proceeding is commenced against Borrower or any Subsidiary of Borrower
and such proceeding remains in effect for sixty (60) days, or any such Person by
any act indicates its approval thereof, consent thereto or acquiescence therein,
or an order for relief is entered in an involuntary case under the bankruptcy
law of the United States, or an order, judgment or decree is entered appointing
a trustee, receiver, custodian, liquidator or similar official or adjudicating
any such Person insolvent, or approving the petition in any such proceedings,
and such order, judgment or decree remains in effect for sixty (60) days; or
(m) A final judgment or order for the payment of money in excess of
$15,000,000 and not covered by insurance shall be rendered against Borrower or
any Subsidiary of Borrower and the same shall not be discharged (or provision
shall not be made for such discharge), or a stay of execution thereof shall not
be procured, within thirty (30) days from the date of entry thereof, or Borrower
or any Subsidiary of Borrower shall not, within said period of thirty (30) days
or such longer period during which execution of the same shall have been stayed,
appeal therefrom and cause the execution thereof to be stayed during such
appeal; or
(n) (i) Any Environmental Liability shall have been asserted against
Borrower or any Subsidiary of Borrower which could reasonably be expected to
have a Material Adverse Effect or (ii) any Release shall have occurred, and such
event could form the basis of an Environmental Liability against Borrower or any
Subsidiary of Borrower which could reasonably be expected to result in a
Material Adverse Effect.
THEN, (x) upon the occurrence of any Event of Default described in
Section 7.01(k) or Section 7.01(l) with respect to Borrower or any Subsidiary of
--------------- ---------------
Borrower (i) all of the Commitments shall automatically terminate, and Borrower
shall deposit with the Agent cash equal to the aggregate face amount of all
outstanding Letters of Credit issued hereunder and (ii) the entire unpaid amount
of all Obligations shall automatically become immediately due and payable,
without presentment for payment, demand, protest, notice of intent to
accelerate, notice of acceleration or further notice of any kind, all of which
are hereby expressly waived by Borrower and each of its Subsidiaries and the
obligation of each Bank to make any Loan, and of the Issuing Bank(s) to issue
any Letters of Credit, hereunder shall thereupon terminate and (y) upon the
occurrence of any other Event of Default, the Agent shall at the request, or may
with the consent, of the Required Banks, (i) by written notice to Borrower
declare all of the Commitments to be terminated, whereupon all of the
Commitments and the obligations of each Bank to make any Loan hereunder, and of
the Issuing Bank(s) to issue any Letter of Credit, shall forthwith terminate,
and Borrower shall deposit with the Agent cash equal to the aggregate face
amount of all outstanding Letters
-62-
of Credit issued hereunder and (ii) by written notice to Borrower declare the
entire unpaid amount of all Obligations to be forthwith due and payable,
whereupon all Obligations shall become and be forthwith due and payable, without
presentment for payment, demand, protest, notice of intent to accelerate, notice
of acceleration or further notice of any kind, all of which are hereby expressly
waived by Borrower and each Subsidiary of Borrower. Borrower hereby grants to
the Agent for the ratable benefit of the Banks a security interest in, and Lien
on, any Dollars delivered to the Agent pursuant to this Section 7.01, as
------------
security for the Obligations.
SECTION 7.02. Remedies. If any Default or Event of Default shall occur and
--------
be continuing, the obligations of the Banks to make Loans, and of the Issuing
Bank(s) to issue Letters of Credit, under this Credit Agreement shall terminate
immediately. If any Event of Default shall occur, the Agent for the ratable
benefit of the Banks, may (and upon the request of the Required Banks shall)
protect and enforce the Banks' rights and remedies under the Loan Documents by
any appropriate proceedings, including proceedings for specific performance of
any covenant or agreement contained in any Loan Document, and the Banks may
enforce the payment of any Obligations due or enforce any other legal or
equitable right. All rights and remedies and powers conferred upon the Agent
and/or the Banks 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.
SECTION 7.03. Indemnity. Borrower shall indemnify the Agent and each Bank
---------
and each Affiliate thereof and their respective directors, officers, employees,
shareholders and agents (each an "Indemnitee") from, and hold each of them
----------
harmless against, any and all losses, liabilities, claims, damages, expenses,
penalties, actions, judgments, suits, costs or disbursements of any kind or
nature whatsoever that are asserted against an Indemnitee by any Person if such
losses, liabilities, claims, damages, expenses, penalties, actions, judgments,
suits, costs or disbursements arise out of or result from (i) any use by
Borrower of the proceeds of any extension of credit by the Banks hereunder or
(ii) any investigation, litigation or other proceeding (including any threatened
investigation or proceeding) relating to the foregoing or arising out of or
based upon any Loan Document or any of the transactions contemplated by any Loan
Document, and Borrower shall reimburse such Indemnitee, within ten (10) Business
Days after receipt of a composite statement of account for any reasonable
expenses (including reasonable legal fees) incurred in connection with any such
investigation or proceeding; but excluding any such losses, liabilities, claims,
damages, expenses, penalties, actions, judgments, suits, costs or disbursements
which are proximately caused by such Indemnitee. Without prejudice to the
survival of any other Obligations of Borrower hereunder and the other Loan
Documents, the Obligations of Borrower under this Section 7.03 shall survive the
------------
termination of this Credit Agreement, the payment in full of the Obligations
and/or assignment of the Notes.
ARTICLE VIII
THE AGENT
SECTION 8.01. Authorization and Action. (a) The general administration of
------------------------
the Loan Documents and any other documents contemplated by this Credit Agreement
shall be by the Agent or its designees. Each of the Banks authorizes the Agent
to take such actions on its behalf and to exercise such powers and to perform
such duties as are expressly delegated to the Agent by the terms of this Credit
Agreement and the other Loan Documents, together with such powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Credit Agreement, the Agent
-63-
shall not have any duties or responsibilities, except those expressly set forth
herein, or any fiduciary relationship with any Bank, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities on the part of
the Agent shall be read into this Credit Agreement or otherwise exist against
the Agent.
(b) Except with respect to the Borrower pursuant to Section 8.06, the
------------
provisions of this Article VIII are solely for the benefit of the Agent and the
------------
Banks, and neither Borrower nor any Subsidiary of Borrower shall have any rights
as a third party beneficiary or otherwise under, or be bound by, the provisions
of this Article VIII.
(c) In performing its functions and duties hereunder and under the other
Loan Documents, the Agent shall act solely as the agent of the Banks and the
Agent does not assume nor shall it be deemed to have assumed any obligation or
relationship of trust or agency with or for Borrower, any Subsidiary of Borrower
or any of their respective successors and assigns.
SECTION 8.02. Agent's Reliance; Exculpatory Provisions, Etc. (a) Neither
---------------------------------------------
the Agent nor any of its directors, officers, agents or employees shall be
liable to any Bank for any action taken or omitted to be taken by it or them
under or in connection with this Credit Agreement or the other Loan Documents
(i) with the consent or at the request of the Required Banks or if required
under Section 9.01, all of the Banks or (ii) in the absence of its or their
------------
own gross negligence or willful misconduct (it being the express intention of
the Agent and the Banks that the Agent and its directors, officers, agents and
employees shall have no liability for actions and omissions under this
Section 8.02 resulting from their sole ordinary or contributory negligence).
------------
Without limitation of the generality of the foregoing, the Agent: (i) may treat
the payee of each Note as the holder thereof until the Agent receives an
Assignment and Acceptance from such payee in accordance with the terms of
Section 9.10; (ii) may consult with legal counsel (including counsel to
------------
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;
(iii) makes no warranty or representation to any Bank and shall not be
responsible to any Bank for any statements, warranties or representations made
in or in connection with this Credit Agreement or the other Loan Documents;
(iv) except as otherwise expressly provided herein, 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 this Credit Agreement or the other Loan Documents or
to inspect the property (including the books and records) of Borrower or its
Subsidiaries; (v) shall not be responsible to any Bank for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Credit Agreement or the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto; (vi) shall incur no liability under or in
respect of this Credit Agreement or the other Loan Documents by acting upon any
notice, consent, certificate or other instrument or writing (which may be by
telegram, telecopier, cable or telex) reasonably believed by it to be genuine
and signed or sent by the proper party or parties, (vii) shall incur no
liability to any Bank or the Issuing Bank(s) as a result of any act or failure
to act in respect of a Letter of Credit that would not form the basis for
liability against the Agent acting either as the Agent or the Issuing Bank(s)
with respect to such Letter of Credit, in an action between the Agent, in either
such capacity, and either the customer arranging for such Letter of Credit, the
beneficiary thereof or the holder of the draft drawn thereunder and (viii) the
provisions of this Section 8.02 shall survive the termination of this Credit
------------
Agreement and/or the payment or assignment of any of the Obligations. The Agent
shall be fully justified in failing or refusing to take any action under this
Credit Agreement or any other Loan Document unless it shall first receive such
advice or concurrence of the Required Banks (or if required under Section 9.01,
------------
all of the Banks) as it deems appropriate or it shall first be indemnified to
-64-
its satisfaction by the Banks against any and all liability and expense (other
than that resulting from its own gross negligence or willful misconduct) which
may be incurred by it by reason of taking or continuing to take any such action.
The Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Credit Agreement and the other Loan Documents in accordance
with a request of the Required Banks or all of the Banks, as the case may be,
and such request and any action taken or failure to act pursuant thereto shall
be binding upon all of the Banks and all future holders of the Notes.
(b) Neither the Agent nor any of its directors, officers, employees, or
agents shall have any responsibility to the Banks on account of the failure or
delay in performance or breach by any of the other Banks or Borrower or any
Subsidiary of Borrower or any of their respective Obligations under this Credit
Agreement, the Notes, the Loan Documents or any related agreement or document or
in connection herewith or therewith.
SECTION 8.03. The Agent in its Individual Capacity and Affiliates. With
---------------------------------------------------
respect to its Commitment, any of the Loans made by it and/or the Note issued to
it as a Bank, TCB shall have the same rights and powers under this Credit
Agreement or the other Loan Documents as any other Bank and may exercise the
same as though it were not the Agent. The terms "Bank" or "Banks" shall, unless
---- -----
otherwise expressly indicated, include the Agent in its individual capacity. TCB
and its Affiliates may accept deposits from, lend money, act as trustee under
indentures of, and generally engage in any kind of business with, Borrower, its
Subsidiaries and/or any Person who may do business with or own securities of
Borrower or any Subsidiary of Borrower, all as if it were not the Agent and
without any duty to account therefor to the other Banks.
SECTION 8.04. Bank Credit Decision. Each Bank acknowledges and agrees that
--------------------
it has, independently and without reliance upon the Agent or any other Bank and
based on the financial statements referred to in Section 4.09 and such other
------------
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Credit Agreement. Each Bank also
acknowledges and agrees that it will, independently and without reliance upon
the Agent or any other Bank and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Credit Agreement and the other Loan
Documents.
SECTION 8.05. Indemnification and Reimbursement. The Agent shall not be
---------------------------------
required to take any action hereunder or to prosecute or defend any suit in
respect of this Credit Agreement or the other Loan Documents unless indemnified
to the Agent's satisfaction by the Banks against loss, cost, liability and
expense. If any indemnity furnished to the Agent shall become impaired, it may
call for additional indemnity and cease to do the acts indemnified against until
such additional indemnity is given. In addition, the Banks agree to indemnify
the Agent (to the extent not reimbursed by Borrower), ratably according to the
respective principal amounts of the Notes then held by each of them (or if no
Notes are at the time outstanding, ratably according to either (i) the
respective amounts of their Commitments, or if no Commitments are outstanding,
the respective amounts of the Commitments immediately prior to the time the
Commitments ceased to be outstanding), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against the Agent in any way relating to or arising
out of this Credit Agreement or any action taken or omitted by the Agent under
this Credit Agreement or the other Loan Documents (including, without
limitation, any action taken or omitted under Article II of this Credit
----------
Agreement); provided, that no Bank shall be liable for any portion
--------
-65-
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent's
gross negligence or willful misconduct. Each Bank agrees, however, that it
expressly intends, under this Section 8.05, to indemnify the Agent ratably as
------------
aforesaid for all such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses and disbursements arising out of or
resulting from the Agent's ordinary or contributory negligence. Without
limitation of the foregoing, each Bank agrees to reimburse the Agent promptly
upon demand for its ratable share of any out-of-pocket expenses (including
reasonable counsel fees) incurred by the Agent in connection with the
preparation, execution, administration, or enforcement of, or legal advice in
respect of rights or responsibilities under, this Credit Agreement and the other
Loan Documents to the extent that the Agent is not reimbursed for such expenses
by Borrower. The provisions of this Section 8.05 shall survive the termination
------------
of Credit Agreement and/or the payment or assignment of any of the Obligations.
SECTION 8.06. Successor Agent. The Agent may resign at any time by giving
---------------
written notice thereof to the Banks and Borrower and may be removed as Agent at
any time for cause by (i) the Required Banks or (ii) at the request of Borrower
with the concurrence of the Required Banks. Upon any such resignation or
removal, the Required Banks shall have the right to appoint from among the Banks
a successor Agent (with the consent of Borrower which shall not be unreasonably
withheld or delayed, provided that if an Event of Default shall have occurred
and be continuing the consent of Borrower need not be obtained). If no successor
Agent shall have been so appointed by the Required Banks, and shall have
accepted such appointment, within 30 calendar days after the retiring Agent's
giving of notice of resignation or the Required Banks' removal of the retiring
Agent, then the retiring Agent may, on behalf of the Banks and with the
concurrence of Borrower, appoint a successor Agent, which shall be an Eligible
Assignee. Upon the acceptance of any appointment as Agent hereunder and under
the other Loan Documents by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations as Agent under this Credit Agreement and the
other Loan Documents. After any retiring Agent's resignation or removal as Agent
hereunder and under the other Loan Documents, the provisions of this
Article VIII shall inure to its benefit as to any actions taken or omitted to be
------------
taken by it while it was Agent under this Credit Agreement and the other Loan
Documents.
SECTION 8.07. Notice of Default. The Agent shall not be deemed to have
-----------------
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent shall have received notice from a Bank or Borrower
referring to this Credit Agreement, describing such Default or Event of Default
and stating that such notice is a "notice of default." If the Agent receives
such a notice, the Agent shall promptly give notice thereof to the Banks;
provided, however, if such notice is received from a Bank, the Agent also shall
-------- -------
give notice thereof to Borrower. The Agent shall be entitled to take action or
refrain from taking action with respect to such Default or Event of Default as
provided in Section 8.01 and Section 8.02.
------------ ------------
SECTION 8.08. Delegation of Duties. The Agent may execute any of its
--------------------
duties under this Loan Agreement or the other Operative Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible to the Banks for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
-66-
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendments and Waivers. Neither this Credit Agreement or any
----------------------
other Loan Document to which Borrower or any Subsidiary is a party nor any terms
hereof or thereof may be amended, supplemented, waived or otherwise modified
except in accordance with the provisions of this subsection. Any provision of
this Credit Agreement or any other Loan Document may be amended, supplemented,
waived, or otherwise modified if and only if such amendment, supplement, waiver
or other modification (x) is in writing, (y) is signed by each other party
thereto except that in the case of a waiver, the party whose performance is
being waived need not be a signatory, and (z) with respect to the Banks, is
signed by the Required Banks (if the Banks are a party thereto) or by the Agent
with the consent of the Required Banks (if the Agent is a party thereto and the
Banks are not); provided no such amendment, supplement, waiver or other
--------
modification shall do any of the following unless signed by all of the Banks (if
the Banks are a party thereto) and by the Agent with the consent of all of the
Banks (if the Agent is a party thereto and the Banks are not):
(i) extend the Maturity Date, the date of payment of any principal,
interest or fees, or the date of payment of any required principal
prepayment;
(ii) reduce the amount of any principal, interest or fees, the rate of
interest paid with respect to any unpaid principal, interest or fees,
or the amount of any fee payable to the Banks hereunder;
(iii) change the amount of any Commitment of any Bank;
(iv) amend, modify, or waive any of the conditions set forth in Article III
-----------
(other than any condition which refers therein to the Required Banks);
(v) amend, modify or waive any provision which calls for the consent of,
the approval of, or direction from all of the Banks;
(vi) amend, modify or waive any provision of this Section 9.01 or the
------------
definition of Required Banks;
(vii) consent to or permit the assignment or transfer by Borrower of any of
its rights and obligations under this Credit Agreement or any other
Loan Document; or
(viii) release any Subsidiary Guarantor from its obligations under the
Subsidiary Guaranty;
and provided, further, without the prior written consent of the Agent, no such
-------- -------
amendment, supplement, waiver or modification shall amend, supplement, waive or
otherwise modify any provision of Article VIII or any other provision of any
------------
Loan Document if the effect thereof is to affect the rights or duties of the
Agent; and provided, further, that no amendment, waiver or consent shall, unless
-------- -------
in writing and signed by the Issuing Bank(s) in addition to the Banks required
above to take such action, affect the rights and duties of the Issuing Bank(s)
with respect to the Letters of Credit and the Letter of Credit
-67-
Applications, if any, outstanding under this Credit Agreement. Any such
amendment, supplement, modification or waiver shall apply to each of the Banks
equally and shall be binding upon the Banks, the Agent, all future holders of
the Notes and Obligations, and all parties to the Loan Document so amended,
supplemented, waived or otherwise modified.
SECTION 9.02. Notices, Etc. Notices, consents, requests, approvals,
------------
demands and other communications (collectively "Communications") provided for
--------------
herein shall be in writing (including telecopy, telegraphic, telex or cable
communications) and mailed, telecopied, telegraphed, telexed, cabled or
delivered:
If to Borrower or any of its Subsidiaries, to it at:
Xxxxxxx Resources Corporation
0000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Telephone Number: (000) 000-0000
Telecopy Number: (000) 000-0000
Attention: Xx. X. X. Xxxxxx
-68-
If to the Agent, to it at:
Texas Commerce Banks National Association
000 Xxxx Xxxxxx, 0 XXX X
Xxxxxxx, Xxxxx 00000
Telephone Number: (000) 000-0000
Telecopy Number: (000) 000-0000
Attention: Xxxx X. Xxxxxxx,
Energy Group, Vice President
If to any Bank, as specified on the signature pages hereto or in the
appropriate Assignment and Acceptance pursuant to Section 9.10.
------------
All Communications, except as otherwise expressly provided in the Loan
Documents, must be in writing and must be mailed, telecopied or delivered, to
the appropriate party at the address set forth herein or other applicable Loan
Document or, as to any party to any Loan Document, at any other address as may
be designated by it in a written notice sent to all other parties to such Loan
Document in accordance with this Section 9.02 and (b) any notice, request,
------------
demand, direction, or other communication given by telecopier must be confirmed
within 48 hours by letter mailed or delivered to the appropriate party at
its respective address. Except as otherwise expressly provided in any
Loan Document, any notice, request, demand, direction, or other communication
required or permitted by any Loan Document given in compliance with this
Section 9.02 shall be effective when received or delivered. When used in any
------------
Loan Document, the term "telecopy" or "telecopied" shall include a transmission
by electronic mail or facsimile machine.
SECTION 9.03. No Waiver; Remedies Cumulative. No failure on the part of
------------------------------
the Agent or any Bank or any holder of a Note to exercise, and no delay in
exercising, any right, power or privilege hereunder or under any other Loan
Document and no course of dealing between Borrower, its Subsidiaries, or any of
them and the Agent or any Bank or any holder of any Note shall operate as a
waiver thereof; nor shall any single or partial exercise of any such right,
power or privilege, or any abandonment or discontinuance of any steps to enforce
such right, power or privilege, preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. No notice to or demand
on Borrower in any case shall entitle Borrower to any other or further notice or
demand in similar or other circumstances. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
SECTION 9.04. Costs, Expenses and Taxes. (a) Borrower agrees to pay within
-------------------------
ten (10) Business Days after presentation of a composite statement of account:
all reasonable out-of-pocket costs and expenses of the Agent in connection with
(i) the negotiation, preparation, distribution, execution and delivery of this
Credit Agreement, the Notes and the other Loan Documents and the documents and
instruments referred to therein, (ii) the syndication, management and agenting
of the Loans, (iii) the Agent's review and due diligence (including, without
limitation, the review of the material Oil and Gas Interests) and (iv) the
negotiation, preparation, distribution, execution and delivery of any amendment,
supplement, modification, waiver or consent relating to any of the Loan
Documents to which Borrower or any Subsidiary of Borrower is a party (including,
without limitation, as to each of the foregoing, the reasonable fees and
disbursements of legal counsel).
(b) Borrower shall pay all reasonable out-of-pocket costs and expenses of
the Agent and each Bank in connection with (i) the preservation of their rights
under, and enforcement of, the Loan
-69-
Documents to which Borrower or any Subsidiary of Borrower is a party and the
documents and instruments referred to therein (including, without limitation,
the reasonable fees and disbursements of legal counsel), and (ii) any workout,
restructuring or rescheduling of the Obligations or any proceeding under any
Debtor Relief Law with respect to Borrower or any Subsidiary of Borrower
(including, without limitation, the reasonable fees and disbursements of counsel
for the Agent and the Banks and allocated costs of internal counsel).
(c) Borrower shall pay, and hold the Agent and each of the Banks harmless
from and against, any and all present and future stamp, excise, and other
similar taxes and fees with respect to the foregoing matters and hold the Agent
and each Bank harmless from and against any and all liabilities with respect to
or resulting from any delay or omission (other than to the extent attributable
to the Agent or such Bank) to pay such taxes.
(d) Without prejudice to the survival of any other obligations of Borrower
hereunder, under the other Loan Documents, the obligations of Borrower under
this Section 9.04 shall survive the termination of this Credit Agreement and the
------------
payment in full of the Obligations for a period of six (6) months.
SECTION 9.05. Right of Setoff. In addition to any rights now or hereafter
---------------
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence and during the continuance of any Event of
Default, each Bank is hereby authorized at any time or from time to time, to the
fullest extent permitted by law and without presentment, demand, protest or
other notice of any kind to Borrower or to any other Person, any such notice
being hereby expressly waived, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held, and
other Indebtedness at any time owing, by such Bank (including, without
limitation, by Affiliates, branches or agencies of such Bank wherever located)
to or for the credit or the account of Borrower against any of and all the
Obligations, including, without limitation, all interests in Obligations
purchased by such Bank pursuant to Section 2.20, and all other claims of any
------------
nature or description arising out of or in connection with this Credit Agreement
or any other Loan Document, irrespective of whether or not such Bank shall have
made any demand under this Credit Agreement or the Notes or other Loan Documents
and although such Obligations, liabilities or claims, or any of them, shall be
contingent or unmatured. Such Bank agrees promptly to notify Borrower after any
such setoff and application made by such Bank, but the failure to give such
notice shall not affect the validity of such setoff and application. The rights
of the Banks under this Section 9.05 are in addition to other rights and
------------
remedies (including, without limitation, other rights of setoff) which the Banks
may have. Notwithstanding any other provisions of this Credit Agreement, the
provisions of this Section 9.05 (except for the provisions of this sentence)
------------
will not apply to any amounts held by Borrower or any Subsidiary of Borrower for
the benefit of working interest owners and/or royalty owners for the purpose of
paying ad valorem taxes, development costs and/or operating costs or for the
purpose of making distributions to the revenue interest owners of revenues from
various Oil and Gas Interests.
SECTION 9.06. Governing Law. This Credit Agreement, the Notes and, unless
-------------
otherwise specified therein, all other Loan Documents and all other documents
executed in connection herewith or therewith, shall be deemed to be contracts
and agreements executed by Borrower, the Agent and the Banks under the laws of
the State of Texas and of the United States and for all purposes shall be
construed in accordance with, and governed by, the laws of said State and of the
United States. Without limitation of the foregoing, nothing in this Credit
Agreement, the Notes or any other Loan Document shall be deemed to constitute a
waiver of any rights which any Bank may have under applicable federal
legislation relating to the amount of interest which such Bank may contract for,
take, receive or charge
-70-
in respect of any Loans, including any right to take, receive, reserve and
charge interest at the rate allowed by the law of the state where such Bank is
located. The Agent, the Banks and Borrower further agree that insofar as the
provisions of Article 1.04, Subtitle 1, Title 79, of the Revised Civil Statutes
of Texas, 1925, as amended, are applicable to the determination of the Highest
Lawful Rate with respect to the Notes, the indicated rate ceiling computed from
time to time pursuant to Section (a) of such Article shall apply to the Notes;
provided, however, that to the extent permitted by such Article, the Agent may
-------- -------
from time to time by notice from the Agent to Borrower revise the election of
such interest rate ceiling as such ceiling affects the then current or future
balances of the Loans outstanding under the Notes. The provisions of Chapter 15
of Subtitle 3 of the said Title 79 do not apply to this Credit Agreement or the
Notes issued hereunder.
SECTION 9.07. Interest. Each provision in this Credit Agreement and each
--------
other Loan Document is expressly limited so that in no event whatsoever shall
the amount paid, or otherwise agreed to be paid, to the Agent or any Bank for
the use, forbearance or detention of the money to be loaned under this Credit
Agreement or any Loan Document or otherwise (including any sums paid as required
by any covenant or obligation contained herein or in any other Loan Document
which is for the use, forbearance or detention of such money), exceed that
amount of money which would cause the effective rate of interest to exceed the
Highest Lawful Rate, and all amounts owed under this Credit Agreement and each
other Loan Document shall be held to be subject to reduction to the effect that
such amounts so paid or agreed to be paid which are for the use, forbearance or
detention of money under this Credit Agreement or such Loan Document shall in no
event exceed that amount of money which would cause the effective rate of
interest to exceed the Highest Lawful Rate. Anything in this Credit Agreement,
any Note or any other Loan Document to the contrary notwithstanding, with
respect to each Note Borrower shall never be required to pay unearned interest
on such Note or ever be required to pay interest on such Note at a rate in
excess of the Highest Lawful Rate, and if the effective rate of interest which
would otherwise be payable with respect to such Note would exceed the Highest
Lawful Rate, or if the holder of such Note shall receive any unearned interest
or shall receive monies that are deemed to constitute interest which would
increase the effective rate of interest payable by Borrower with respect to such
Note to a rate in excess of the Highest Lawful Rate, then (i) the amount of
interest which would otherwise be payable by Borrower with respect to such Note
shall be reduced to the amount allowed under applicable law and (ii) any
unearned interest paid by Borrower or any interest paid by Borrower in excess of
the Highest Lawful Rate shall be in the first instance credited on the principal
of such Notes with the excess thereof, if any, refunded to Borrower. It is
further agreed that, without limitation of the foregoing, all calculations of
the rate of interest contracted for, charged or received by any Bank under the
Note held by it, or under this Credit Agreement or the other Loan Documents,
are made for the purpose of determining whether such rate exceeds the Highest
Lawful Rate applicable to such Bank (such Highest Lawful Rate being the Bank's
"Maximum Permissible Rate"), shall be made, to the extent permitted by usury
--------------------------
laws applicable to such Bank (now or hereafter enacted), by (a) characterizing
any non-principal payment as an expense, fee or premium rather than as interest
and (b) amortizing, prorating and spreading in equal parts during the period of
the full stated term of the Loans evidenced by said Note all interest at any
time contracted for, charged or received by such Bank in connection therewith.
SECTION 9.08. Survival of Representations and Warranties. All
------------------------------------------
representations, warranties and covenants contained or incorporated herein or
made in writing by Borrower or any Subsidiary of Borrower in connection herewith
shall survive the execution and delivery of this Credit Agreement, the Notes and
the other Loan Documents.
-71-
SECTION 9.09. Binding Effect. This Credit Agreement shall become effective
--------------
when it shall have been executed by Borrower, the Agent and each of the Banks
and shall be binding upon and inure to the benefit of Borrower and the Banks and
their respective successors and assigns, whether so expressed or not, provided,
--------
that the undertaking of the Banks to make Loans to Borrower shall not inure to
the benefit of any successor or assign of Borrower.
SECTION 9.10. Successors and Assigns; Participations. (a) Whenever in this
--------------------------------------
Credit Agreement any of the parties hereto is referred to, such reference shall
be deemed to include the successors and permitted assigns of such party; and all
covenants, promises and agreements by or on behalf of Borrower, the Agent or the
Banks that are contained in this Credit Agreement shall bind and inure to the
benefit of their respective successors and permitted assigns. Borrower may not
assign or transfer any of its rights or obligations hereunder without the
written consent of all of the Banks.
(b) Each of the Banks may, without the consent of Borrower or the Agent,
sell participation to one or more banks or other financial institutions in all
or a portion of its rights and obligations under this Credit Agreement and the
other Loan Documents, including, without limitation, all or a portion of its
Commitment, the Loans owing to it, and the Note held by it (in respect of any
such Bank, the "Credit Exposure"); provided, however, that (i) such Bank's
--------------- -------- -------
obligations under this Credit Agreement and the other Loan Documents shall
remain unchanged, (ii) such Bank shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) Borrower, the
Agent and the other Banks shall continue to deal solely and directly with such
Bank in connection with such Bank's rights and obligations under this Credit
Agreement and the other Loan Documents; provided, however, that such Bank shall
-------- -------
retain the sole right and responsibility to enforce the obligations of Borrower
relating to the Loans including, without limitation, the right to approve any
amendment, modification or waiver of any provision of this Credit Agreement or
any other Loan Document; and provided, further, such Bank may grant participant
-------- -------
rights, as between such Bank and its participant(s), with respect to amendments,
modifications or waivers with respect of any fees payable hereunder (including,
without limitation, the amount and the dates fixed for the payment of any such
fees) or the amount of principal, or the rate of interest payable on, or the
dates fixed for any payment of principal of or interest on the Loans or the
release of any Subsidiary under the Subsidiary Guaranty and (iv) such Bank shall
disclose in writing to the Agent the number of participating banks or other
entities and the dollar amount of each such participation. Each Bank also
agrees that it shall retain the right (but shall have no obligation) to buy back
any participating interest sold by it from the holder thereof if such holder
refuses to consent to any proposed amendment, modification, supplement or waiver
of this Credit Agreement or any other Loan Document.
(c) With the prior written consent of the Agent and Borrower, which consents
shall not be unreasonably withheld, each of the Banks may assign to one or more
Eligible Assignees, and without the consent of the Agent and Borrower, each of
the Banks may assign to a Bank, all or a portion of its Credit Exposure;
provided, however, that (i) each such assignment shall be of a constant, and not
-------- -------
a varying, percentage of the assigning Bank's Credit Exposure, i.e., any such
assignment shall include a constant percentage of, inter alia the rights and
----- ----
obligations of such assigning Bank with respect to the Commitment, the Loans,
(ii) the parties to each such assignment shall execute and deliver to the Agent
for its acceptance and recording in the Register, an Assignment and Acceptance,
together with the Note subject to such assignment, (iii) the amount of each such
assignment (determined as of the date the Assignment and Acceptance with respect
to such assignment is delivered to the Agent) shall be in a minimum principal
amount of $10,000,000 and (iv) if the assigning Bank has retained any Commitment
hereunder, such assigning Bank's remaining Commitment shall be at least
$10,000,000 after giving
-72-
effect to such assignment. Upon (i) the execution and delivery to the Agent of
such Assignment and Acceptance by the assigning Bank, the purchasing bank or
other entity and Borrower, (ii) the payment by the assigning Bank or the
purchasing bank or other entity of a processing and recordation fee of $2,500
and (iii) the acceptance and recording of such Assignment and Acceptance in the
Register by the Agent, from and after the effective date specified in each
Assignment and Acceptance, which effective date shall be (unless otherwise
agreed among the Agent, the assigning Bank and the purchasing Bank or entity) at
least five Business Days after the date of acceptance and recording by the
Agent, (x) the Eligible Assignee thereunder shall be a party hereto and, to the
extent provided in such Assignment and Acceptance have the rights and
obligations of a Bank hereunder and (y) the assigning Bank thereunder shall, to
the extent provided in such Assignment and Acceptance, be released from its
obligations under this Credit Agreement and the other Loan Documents (and, in
the case of an assignment covering all of the remaining portion of an assigning
Bank's rights and obligations under this Credit Agreement and the other Loan
Documents, such assigning Bank shall cease to be a party hereto).
(d) Any Bank may, in the ordinary course of its business and in accordance
with applicable law, at any time assign to any Bank or any Affiliate (provided
that such Affiliate meets the definition of Eligible Assignee) thereof, all or
any part of its Credit Exposure. Borrower, the Agent and the Banks agree that
to the extent of any assignment the assignee Bank shall be deemed to have the
same rights and benefits under the Loan Documents and the same rights of setoff
and obligation to share pursuant to Section 2.20 as it would have had if it were
------------
a Bank hereunder; provided that Borrower and the Agent shall be entitled to
--------
continue to deal solely and directly with the assignor Bank in connection with
the interests so assigned to the assignee Bank unless and until such assignee
Bank becomes a purchasing Bank pursuant to clause (c) above.
(e) By executing and delivering an Assignment and Acceptance, the
assigning Bank thereunder and the Eligible Assignee thereunder shall be deemed
to confirm to and agree with each other and the other parties hereto as follows:
(i) other than the representation and warranty that it is the legal and
beneficial owner of the interest being assigned thereby free and clear of any
adverse claim known to such assigning Bank, such assigning Bank makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Credit Agreement and the other Loan Documents of the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Credit
Agreement or any other instrument or document furnished pursuant hereto or
thereto; (ii) such assigning Bank makes no representation or warranty and
assumes no responsibility with respect to the financial condition of Borrower or
any Subsidiary of Borrower, the performance or observance of their respective
obligations under this Credit Agreement, any Loan Document, any other instrument
or document furnished pursuant hereto or thereto; (iii) such Eligible Assignee
confirms that it has received a copy of this Credit Agreement together with
copies of the most recent financial statements delivered pursuant to Section
-------
4.09 or Section 5.01 and such other documents and information as it has deemed
---- ------------
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such Eligible Assignee will, independently and
without reliance upon the Agent, such assigning Bank or any other Bank and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Credit Agreement and the other Loan Documents; (v) such Eligible Assignee
appoints and authorizes the Agent to take such action on behalf of such Eligible
Assignee and to exercise such powers under this Credit Agreement and the other
Loan Documents as are delegated to the Agent by the terms hereof, together with
such powers as are reasonably incidental thereto; (vi) such Eligible Assignee
agrees that it will perform in accordance with their terms all of the
obligations which
-73-
by the terms of this Credit Agreement and the other Loan Documents are required
to be performed by it as a Bank and (vii) such Eligible Assignee confirms that
it is an Eligible Assignee as defined herein.
(f) The Agent shall maintain at its office a copy of each Assignment and
Acceptance delivered to it and a register for the recordation of the names and
addresses of the Banks and the Commitments of, and principal amount of the Loans
owing to, each Bank pursuant to the terms hereof from time to time (the
"Register"). The entries in the Register shall be conclusive, in the absence of
---------
manifest error, and Borrower, the Agent and the Banks may treat each Person
whose name is recorded in the Register as a Bank hereunder for all purposes of
this Credit Agreement. The Register shall be available for inspection by
Borrower or any Bank at any reasonable time and from time to time upon
reasonable prior notice.
(g) Upon its receipt of an Assignment and Acceptance executed by an
assigning Bank and an Eligible Assignee together with any Note subject to such
Assignment and Acceptance, the Agent shall (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Banks and Borrower. Within five (5)
Business Days after receipt of such notice, Borrower, the Assigning Bank and the
Agent shall make the appropriate arrangements for the execution and delivery by
Borrower to the Agent in exchange for the surrendered Note, a replacement Note
payable to the order of such Eligible Assignee in an aggregate amount equal to
the Commitment assumed by it pursuant to such Assignment and Acceptance and, if
the assigning Bank has retained any of its Commitment hereunder, a replacement
Note payable to the order of the assigning Bank in an aggregate amount equal to
the Commitment retained by it. Such replacement Note shall be in an aggregate
principal amount equal to the aggregate principal amount of such surrendered
Note and shall be dated the date of the surrendered Note which they replace and
shall otherwise be in substantially the form of Exhibit 2.08 hereto, as
------------
appropriate and shall contain specific language stating that such replacement
Note is given in exchange for and substitution of the surrendered Note and that
the Indebtedness evidenced by the surrendered Note constitutes the same
indebtedness evidenced by the replacement Note. Canceled Notes shall be
returned as soon as practical to Borrower marked "Replaced."
(h) Notwithstanding any other language in this Credit Agreement, any Bank
may at any time assign all or any portion of its rights under this Credit
Agreement and the Notes to a Federal Reserve Bank as collateral in accordance
with Regulation A and the applicable operating circular of such Federal Reserve
Bank.
(i) Notwithstanding any other provision herein, any Bank may, in connection
with any assignment or participation or proposed assignment or participation
pursuant to this Section 9.10 disclose to the assignee or participant or
------------
proposed assignee or participant, any information relating to Borrower or any
Subsidiary of Borrower furnished to such Bank by or on behalf of Borrower or by
or on behalf of Borrower or any Subsidiary of Borrower; provided, that prior to
--------
any such disclosure, each such assignee or participant or proposed assignee or
participant shall agree to preserve the confidentiality of any confidential
information relating to Borrower or any Subsidiary of Borrower received from
such Bank and shall execute and deliver a Confidentiality Agreement
substantially in the form of Exhibit 9.10-2 attached hereto.
--------------
SECTION 9.11. Separability. Should any clause, sentence, paragraph or
------------
section of this Credit Agreement or any other Loan Document be judicially
declared to be invalid, unenforceable or void, such decision will not have the
effect of invalidating or voiding the remainder of this Credit Agreement or
-74-
such other Loan Document, as the case may be, and the parties hereto agree that
the part or parts of this Credit Agreement or such Loan Document so held to be
invalid, unenforceable or void will be deemed to have been stricken here from or
therefrom and the remainder will have the same force and effectiveness as if
such part or parts had never been included herein or therein.
SECTION 9.12. Confidentiality. Each Bank and the Agent acknowledge that
---------------
any information furnished to it directly by Borrower is and shall be
confidential unless designated otherwise by Borrower (however, such Bank or the
Agent may disclose or furnish any or all of such information to its employees,
officers, board members, auditors, counsel, agents and Affiliates after
informing them of the confidential nature of such information), and each Bank
and the Agent agrees that (i) it will maintain, and direct its employees,
officers, board members, auditors, counsel, agents and Affiliates to maintain,
the confidentiality of such information, (ii) it will not disclose, and will
direct its employees, officers, board members, auditors, counsel, agents and
Affiliates not to disclose, in any event such information to any third party
(except as herein set forth) and (iii) it will not use, and will direct its
employees, officers, board members, auditors, counsel, agents or Affiliates not
to use such information for any purposes other than as contemplated by this
Credit Agreement; provided, however, that such Bank or the Agent or its
-------- -------
employees, officers, board members, auditors, counsel, agents or Affiliates may
disclose any such information that is (i) in the public domain or that becomes
part of the public domain after the execution hereof, as a result of filing or
recording with any Governmental Authority or for any other reason other than as
a result of any action of a Bank or the Agent or their respective employees,
officers, board members, auditors, counsel, agents or Affiliates, (ii) in the
possession of such Bank or the Agent as a result of disclosure by a third party,
except to the extent that the Person making such disclosure is aware that such
third party is bound by a confidentiality obligation to Borrower, (iii) required
in such Bank's or the Agent's good faith judgment to be disclosed in order to
comply with any applicable Requirement of Law, in order to comply with legal
process, or in order to comply with the request of any Governmental Authority
having authority or purported authority to regulate the Agent or such Bank, (iv)
permitted to be disclosed to an Eligible Assignee or prospective Eligible
Assignee pursuant to Section 9.10(i) or (v) disclosed in connection with any
---------------
suit or other proceeding brought by the Agent or such Bank against Borrower or
any Subsidiary of Borrower or by Borrower or any Subsidiary of Borrower against
the Agent or such Bank. Each Bank and the Agent agrees that if it is required
pursuant to this Section 9.12(iii) to disclose any confidential information,
-----------------
such Bank or the Agent will notify Borrower of the applicable Requirement of Law
and the date on which a response to the same is due from it, as soon as
practical upon the Agent's becoming aware that disclosure of previously
confidential information is a significant possibility, provided that this
--------
sentence shall not apply to any disclosure the Agent or any Bank is required by
applicable Requirements of Law to make to any Governmental Authority having
authority to regulate the Agent or such Bank.
SECTION 9.13. Marshalling; Recapture. Neither the Agent nor any Bank shall
----------------------
be under any obligation to marshal any assets in favor of Borrower or any other
Person or against or in payment of any or all of the Obligations. To the extent
any Bank receives any payment by or on behalf of Borrower, which payment or any
part thereof is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to Borrower or its estate,
trustee, receiver, custodian or any other party under any Debtor Relief Law,
state or federal law, common law or equitable cause, then to the extent of such
payment or repayment, the obligation or part thereof which has been paid,
reduced or satisfied by the amount so repaid shall be reinstated by the amount
so repaid and shall be included within the liabilities of Borrower to such Bank
as of the date such initial payment, reduction or satisfaction occurred.
-75-
SECTION 9.14. Representation by the Banks. Each of the Banks represents
---------------------------
that it is the present intention of such Bank to acquire its Note for its own
account or for the account of its Affiliates and not with a view to the
distribution or sale thereof, subject, nevertheless to the necessity that such
Bank remain in control at all times of the disposition of property held by it
for its own account; it being understood that the foregoing representations
shall not affect the characterization of the Loans as commercial lending
transactions.
SECTION 9.15. No Third Party Beneficiaries. The agreement of each Bank to
----------------------------
make its Loans on the terms and conditions set forth in this Credit Agreement,
is solely for the benefit of Borrower and its Subsidiaries, and no other Person
(including any obligor, contractor, subcontractor, supplier or materialman
furnishing supplies, goods or services to or for the benefit of Borrower) shall
have any rights hereunder, as against the Agent or any Bank, under any other
Loan Document, or with respect to the Loans or the proceeds thereof.
SECTION 9.16. Execution in Counterparts. This Credit Agreement may be
-------------------------
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
SECTION 9.17. Jurisdiction; Consent to Service of Process. (a) Borrower
-------------------------------------------
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any Texas State court or Federal court of the
United States of America sitting in Xxxxxx County, Texas, in any action or
proceeding arising out of or relating to this Credit Agreement or the Loan
Documents, or for recognition or enforcement of any order or judgment, and each
of the parties hereto hereby irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be heard and determined
in such Texas State court, or to the extent permitted by law, in such Federal
court in Xxxxxx County, Texas. Each party to this Credit Agreement irrevocably
consents to the service of process out of any Texas State court or Federal court
of the United States of America sitting in Xxxxxx County, Texas in any such
action or proceeding by the mailing of copies thereof by registered or certified
mail, postage prepaid, to such party at its address referred to in Section 9.02.
------------
Borrower agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law subject to applicable appeal rights.
Nothing in this Credit Agreement shall affect any right that the Agent or any
Bank may otherwise have to bring any action or proceeding relating to this
Credit Agreement or the Loan Documents against Borrower or any Subsidiary of
Borrower or its respective properties in the courts of any other jurisdiction.
(b) Borrower hereby irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection which it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Credit Agreement or the Loan Documents in any Texas
State or Federal court sitting in Xxxxxx County, Texas. Borrower hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.
SECTION 9.18. Credit Agreement Governs Conflicts. To the fullest extent
----------------------------------
possible, the terms and provisions of the Loan Documents shall be read together
with the terms and provisions of this Credit Agreement so that the terms and
provisions thereof do not conflict with the terms and provisions of this Credit
Agreement; provided, however, notwithstanding the foregoing, in the event that
-----------------
any of the terms of provisions of the Loan Documents conflict with any terms or
provisions of this Credit Agreement, the
-76-
terms or provisions of this Credit Agreement shall govern and control for all
purposes, provided that the inclusion of additional terms and provisions,
supplemental rights or remedies in favor of the Agent in any Loan Document shall
not be deemed to be a conflict with this Credit Agreement.
SECTION 9.19. FINAL AGREEMENT OF THE PARTIES. THIS CREDIT AGREEMENT
------------------------------
(INCLUDING THE EXHIBITS HERETO), THE NOTES AND THE OTHER LOAN DOCUMENTS TO WHICH
BORROWER OR ANY OF ITS SUBSIDIARIES IS A PARTY CONSTITUTE A "LOAN AGREEMENT" AS
DEFINED IN SECTION 26.02(A) OF THE TEXAS BUSINESS AND COMMERCE CODE, AND
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 ORAL AGREEMENTS BETWEEN THE PARTIES.
-77-
IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement
to be executed by their respective officers thereunto duly authorized, as of the
date first above written.
BORROWER
XXXXXXX RESOURCES CORPORATION
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Executive Vice President
AGENT
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION,
In its capacity as Agent for the Banks
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Vice President
COMMITMENTS BANKS
$50,000,000 TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Vice President
$45,000,000 NATIONSBANK OF TEXAS, N.A.
By: /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Vice President
-78-
$45,000,000 BANK OF MONTREAL, HOUSTON AGENCY
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Director, U.S. Corporate Banking
$30,000,000 THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Managing Director
$30,000,000 COLORADO NATIONAL BANK
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
-79-