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EXHIBIT 10.1
SECOND AMENDED AND RESTATED
LOAN AGREEMENT
among
PETROGLYPH ENERGY, INC.,
as Borrower,
THE CHASE MANHATTAN BANK,
as Administrative Agent
and
The Financial Institutions Listed on Schedule 1.1 Hereto,
as Banks
$50,000,000
dated effective as of
September 30, 1998
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TABLE OF CONTENTS
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ARTICLE I TERMS DEFINED.............................................................................2
SECTION 1.1. Definitions...........................................................2
SECTION 1.2. Accounting Terms and Determinations..................................22
SECTION 1.3. Petroleum Terms......................................................22
SECTION 1.4. Money................................................................22
ARTICLE II THE CREDIT..............................................................................22
SECTION 2.1. Commitments..........................................................22
SECTION 2.2. Notes................................................................27
SECTION 2.3. Interest Rates; Payments.............................................27
SECTION 2.4. Borrowing Base Deficiency............................................28
SECTION 2.5. Mandatory Repayments.................................................29
SECTION 2.6. Voluntary Prepayments................................................29
SECTION 2.7. Voluntary Reduction of Commitments...................................29
SECTION 2.8. Mandatory Reduction of Commitments...................................29
SECTION 2.9. Termination of Commitments; Final Maturity...........................30
SECTION 2.10. Unused Commitment Fee................................................30
SECTION 2.11. Borrowing Base Increase Fee..........................................30
SECTION 2.12. Agency and other Fees................................................30
ARTICLE III GENERAL PROVISIONS.....................................................................30
SECTION 3.1. Delivery and Endorsement of Notes....................................30
SECTION 3.2. General Provisions as to Payments....................................30
ARTICLE IV CHANGE IN CIRCUMSTANCES.................................................................31
SECTION 4.1. Increased Cost and Reduced Return....................................31
SECTION 4.2. Limitation on Eurodollar Loans.......................................33
SECTION 4.3. Illegality...........................................................33
SECTION 4.4. Treatment of Affected Loans..........................................33
SECTION 4.5. Compensation.........................................................34
SECTION 4.6. Taxes................................................................34
SECTION 4.7. Discretion of Banks as to Manner of Funding..........................36
ARTICLE V BORROWING BASE...........................................................................36
SECTION 5.2. Scheduled Redeterminations of Borrowing Base.........................37
SECTION 5.3. Special Redeterminations of Maximum Borrowing Base...................37
SECTION 5.4. Disposition Redetermination..........................................37
SECTION 5.5. Standards for Redetermination........................................38
SECTION 5.6. Voluntary Designation of Borrowing Base..............................38
SECTION 5.7. Borrowing Base Deficiency............................................38
SECTION 5.8. Initial Borrowing Base...............................................38
ARTICLE VI COLLATERAL AND GUARANTEES...............................................................39
SECTION 6.1. Security.............................................................39
SECTION 6.2. Title Opinions.......................................................39
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ARTICLE VII CONDITIONS PRECEDENT...................................................................40
SECTION 7.1. Restatement of Existing Credit Agreement; Conditions to Initial
Borrowing and Participation in Letter of Credit Exposure..........40
SECTION 7.2. Conditions to Each Borrowing and each Letter of Credit...............43
ARTICLE VIII REPRESENTATIONS AND WARRANTIES........................................................43
SECTION 8.1. Organization and Powers..............................................43
SECTION 8.2. Validity and Binding Nature..........................................43
SECTION 8.3. Compliance with Laws and Documents...................................43
SECTION 8.4. Prior Names..........................................................44
SECTION 8.5. Relationship with Banks..............................................44
SECTION 8.6. Financial............................................................44
SECTION 8.7. Litigation...........................................................44
SECTION 8.8. Taxes and Claims.....................................................45
SECTION 8.9 Government Regulation................................................45
SECTION 8.10. Employee Benefit Plans...............................................45
SECTION 8.11. Existing Loan; Purpose of Loan.......................................46
SECTION 8.12. Properties; Liens; Debt..............................................46
SECTION 8.13. Material Contracts...................................................46
SECTION 8.14. No Consents..........................................................46
SECTION 8.15. Environmental Laws; Hazardous Materials..............................47
SECTION 8.16. Capitalization and Control...........................................47
SECTION 8.17. General..............................................................48
SECTION 8.18. Mortgaged Properties Same as Properties Engineered...................48
SECTION 8.19. Title to Properties..................................................48
SECTION 8.20. Operation of Business...............................................48
SECTION 8.21. Operator of Working Interest.........................................48
SECTION 8.22. Year 2000 Matters....................................................48
SECTION 8.23. Merger Documents.....................................................49
ARTICLE IX AFFIRMATIVE COVENANTS...................................................................49
SECTION 9.1. Reporting Requirements...............................................49
SECTION 9.2. Compliance with Law; Maintenance of Properties.......................50
SECTION 9.3. Insurance............................................................50
SECTION 9.4. Use of Proceeds......................................................51
SECTION 9.5. Inspection...........................................................51
SECTION 9.6. Further Assurances...................................................51
SECTION 9.7. INDEMNITY............................................................51
SECTION 9.8. Books and Records....................................................52
SECTION 9.9. Taxes................................................................52
SECTION 9.10. Payment of Obligations...............................................52
SECTION 9.11. Environmental Laws...................................................53
SECTION 9.12. Supplemented Schedules...............................................53
SECTION 9.13. ERISA Reporting Requirements.........................................53
SECTION 9.14. Title Data...........................................................54
SECTION 9.15. Year 2000 Compatability..............................................54
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ARTICLE X NEGATIVE COVENANTS.......................................................................54
SECTION 10.1. Debt.................................................................54
SECTION 10.2. Liens................................................................54
SECTION 10.3. Acquisitions and Dissolutions........................................55
SECTION 10.4. Loans, Advances and Investments......................................55
SECTION 10.5. Employee Benefit Plans...............................................55
SECTION 10.6. Distributions........................................................55
SECTION 10.7. Capital Expenditures; Exploration Expenses...........................56
SECTION 10.8 Issuance of Equity Interests.........................................56
SECTION 10.9. Transactions with Affiliates.........................................56
SECTION 10.10. Sale of Assets.......................................................56
SECTION 10.11. Hazardous Materials..................................................57
SECTION 10.12. Change of Control....................................................57
SECTION 10.13. Compliance with Laws and Documents...................................57
SECTION 10.14. New Businesses.......................................................57
SECTION 10.15. Fiscal Year and Accounting Methods...................................57
SECTION 10.16. Hydrocarbon Hedges...................................................57
ARTICLE XI FINANCIAL COVENANTS.....................................................................57
SECTION 11.1. Fixed Charge Coverage Ratio..........................................58
SECTION 11.2 Minimum Tangible Net Worth...........................................58
SECTION 11.3. Current Ratio........................................................58
ARTICLE XII DEFAULTS...............................................................................58
SECTION 12.1. Events of Default....................................................58
ARTICLE XIII RIGHTS AND REMEDIES...................................................................60
SECTION 13.1. Remedies.............................................................60
SECTION 13.2. Performance by Administrative Agent and Banks........................60
SECTION 13.3. Delegation of Duties and Rights......................................60
SECTION 13.4. Expenditures by Administrative Agent and Banks.......................60
ARTICLE XIV ADMINISTRATIVE AGENT...................................................................61
SECTION 14.1. Appointment, Powers, and Immunities..................................61
SECTION 14.2. Reliance by Administrative Agent.....................................61
SECTION 14.3. Defaults.............................................................62
SECTION 14.4. Rights as Bank.......................................................62
SECTION 14.5. Indemnification......................................................62
SECTION 14.6. Non-Reliance on Administrative Agent and Other Banks.................62
SECTION 14.7. Resignation of Administrative Agent..................................63
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ARTICLE XV MISCELLANEOUS...........................................................................63
SECTION 15.1. Notices..............................................................63
SECTION 15.2. No Waivers...........................................................64
SECTION 15.3. Expenses.............................................................64
SECTION 15.4. Right of Set-off; Adjustments........................................64
SECTION 15.5. Amendments and Waivers...............................................65
SECTION 15.6. Survival.............................................................65
SECTION 15.7. Limitation on Interest...............................................65
SECTION 15.8. Invalid Provisions...................................................66
SECTION 15.9. Waiver of Consumer Credit Laws.......................................66
SECTION 15.10. Assignments and Participations.......................................66
SECTION 15.11. NEW YORK LAW.........................................................68
SECTION 15.12. VENUE; SERVICE OF PROCESS............................................68
SECTION 15.13. WAIVER OF JURY TRIAL, PUNITIVE DAMAGES, ETC..........................68
SECTION 15.14. Counterparts; Effectiveness..........................................69
SECTION 15.15. No Third Party Beneficiaries.........................................69
SECTION 15.16. COMPLETE AGREEMENT...................................................69
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EXHIBITS
EXHIBIT A FORM OF AMENDED AND RESTATED PLEDGE AGREEMENT
EXHIBIT B FORM OF ASSIGNMENT AND AMENDMENT TO MORTGAGES
EXHIBIT C FORM OF FINANCIAL REPORT CERTIFICATE
EXHIBIT D LIST OF MORTGAGED PROPERTIES (INTENTIONALLY OMITTED)
EXHIBIT E FORM OF NOTE
EXHIBIT F FORM OF REQUEST FOR BORROWING
EXHIBIT G FORM OF REQUEST FOR LETTER OF CREDIT
EXHIBIT H FORM OF NOTICE OF CONTINUATION OR CONVERSION
EXHIBIT I FORM OF CERTIFICATE OF OWNERSHIP INTERESTS
EXHIBIT J FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
SCHEDULES
SCHEDULE 1.1 FINANCIAL INSTITUTIONS
SCHEDULE 8.7 LITIGATION
SCHEDULE 8.10 EMPLOYMENT MATTERS
SCHEDULE 8.12 EXISTING DEBT
SCHEDULE 8.15 ENVIRONMENTAL DISCLOSURE
SCHEDULE 8.16 ORGANIZATIONAL STRUCTURE
<PAGE> 7
SECOND AMENDED AND RESTATED LOAN AGREEMENT
THIS SECOND AMENDED AND RESTATED LOAN AGREEMENT (this "Agreement") is
entered into as of the 15th day of October, 1998, to be effective as of
September 30, 1998, among PETROGLYPH ENERGY, INC., a Delaware corporation
("Borrower"), THE CHASE MANHATTAN BANK, a New York state banking corporation, as
Administrative Agent ("Administrative Agent"), and the financial institutions
listed on Schedule 1.1 hereto as Banks (individually a "Bank" and collectively
"Banks").
W I T N E S S E T H:
WHEREAS, PGP II, L.P., a Delaware limited partnership ("PGP II"),
Petroglyph Gas Partners, L.P., a Delaware limited partnership ("PGP," and
together with PGP II collectively referred to herein as the "Initial
Borrowers"), Borrower (as Guarantor thereunder) and The Chase Manhattan Bank, a
New York state banking corporation ("Existing Bank") entered into that certain
Amended and Restated Loan Agreement, dated as of September 15, 1997, as amended
by that certain First Amendment to Amended and Restated Loan Agreement and First
Amendment to Amended and Restated Converting Promissory Note, dated as of June
1, 1998, by and among the Initial Borrowers, Borrower (as Guarantor thereunder)
and Existing Bank (as amended, the "Existing Credit Agreement"), pursuant to
which Existing Bank advanced credit to the Initial Borrowers, which credit
remains outstanding; and
WHEREAS, pursuant to the Merger Documents (as hereinafter defined),
each of the Initial Borrowers and Petroglyph Energy, Inc., a Kansas corporation
("PEI") have merged with and into Borrower with Borrower being the surviving
entity; and
WHEREAS, subject to the conditions precedent set forth herein,
Borrower, Banks (including Existing Bank) and Administrative Agent desire to
amend and restate the Existing Credit Agreement in its entirety in order to,
among other things, (a) evidence the Merger and the survival of Borrower as the
borrower hereunder, (b) appoint Administrative Agent the administrative agent
hereunder, (c) increase the Tranche A Commitment (as defined in the Existing
Agreement and defined herein as the "Commitment") to $50,000,000, (d) eliminate
the Tranche B Commitment (as defined in the Existing Agreement), and (e) modify
certain other provisions of the Existing Credit Agreement; and
WHEREAS, pursuant to Article XIV of this Agreement, The Chase Manhattan
Bank has been appointed Administrative Agent for Banks hereunder.
NOW, THEREFORE, in consideration of the premises, the representations,
warranties, covenants and agreements contained herein, and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Borrower, Administrative Agent and Banks hereby agree that the
Existing Credit Agreement is hereby amended and restated in its entirety on the
terms and conditions set forth herein. It is the intention of Borrower,
Administrative Agent and Banks that this Agreement supersede and replace the
Existing Credit Agreement in its entirety; provided, that (a) such amendment and
restatement shall operate to renew, amend and modify the rights and obligations
of the parties under the Existing Credit Agreement as provided herein, but shall
not effect a novation thereof, and (b) except for such Liens securing the
Obligations under and as defined in
1
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the Existing Credit Agreement which are no longer required (if any) pursuant to
the terms of this Agreement (and which, if any, are being terminated and
released pursuant to express written instruments to such effect duly filed and
recorded in the appropriate jurisdictions), the Liens securing the Obligations
under and as defined in the Existing Credit Agreement shall not be extinguished,
but shall be carried forward and shall secure such Obligations as renewed,
amended, restated and modified hereby. Borrower, Administrative Agent and Banks
hereby further agree as follows:
ARTICLE I
TERMS DEFINED
SECTION 1.1. Definitions. The following terms, as used herein, have the
following meanings:
"Act" means the Securities Act of 1933, as amended.
"Adjusted Eurodollar Rate" means, for any Eurodollar Loan for any
Interest Period therefor, the rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) determined by Administrative Agent to be equal to the
quotient obtained by dividing (a) the Eurodollar Rate for such Eurodollar Loan
for such Interest Period by (b) 1 minus the Reserve Requirement for such
Eurodollar Loan for such Interest Period.
"Affiliate" means any Person who (a) would be an "affiliate" of
Borrower within the meaning of the regulations promulgated pursuant to the Act,
as such regulations and such Act are amended and in effect on the date in
question, if such Person were subject to such Act and regulations, or (b) owns
any legal or beneficial interest in such Person (except holders of publicly
traded shares of Borrower), is a director or officer of any Credit Party, or is
a relative of any of the Persons described in this clause (b).
"Administrative Agent" means The Chase Manhattan Bank in its capacity
as administrative agent for Banks hereunder or any successor thereto.
"Agreement" means this Second Amended and Restated Credit Agreement as
the same may hereafter be modified, amended or supplemented from time to time.
"Amended and Restated Pledge Agreement" means that certain Amended and
Restated Pledge Agreement in the form of Exhibit A hereto, to be executed and
delivered by Borrower to Administrative Agent for the ratable benefit of each
Bank, pursuant to which the Existing Pledge Agreement is amended and restated as
set forth therein to evidence the pledge by Borrower of all of its ownership
interests in Spanish Peaks to Administrative Agent to secure the Obligations.
"Antelope Creek Gathering Assets" means the natural gas gathering
system owned by Borrower on the date hereof located in the Uinta Basin of Utah,
including, without limitation, (a) all easements, rights of way, licenses,
permits, fee interests, leases, and other rights in and to, or the rights to
use, real property for the purposes of construction, maintenance or operation of
such gathering systems, (b) all pipe, pipelines, compressors, meters, valves,
separators, interconnects, and other machinery, equipment, fixtures or fixed
assets of any nature comprising a part of or used in
2
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connection with the ownership or operation of such gathering system, and (c) all
contracts (including, without limitation, gathering agreements, processing
agreements and similar agreements), licences and permits entered into or held by
Borrower in connection with the ownership or operation of such gathering system.
"Apex Borrowing Base" means, on any date of determination, the highest
Borrowing Base which has been in effect under this Agreement at any time from
and after the Closing Date to such date without giving effect to any increase in
the Borrowing Base which is effective on such date.
"Applicable Environmental Law" means any Law, statute, ordinance, rule,
regulation, order or determination of any Governmental Authority or any board of
fire underwriters (or other body exercising similar functions), affecting any
real or personal property owned, operated or leased by any Credit Party or any
other operation of any Credit Party in any way pertaining to health, safety or
the environment, including, without limitation, all applicable zoning ordinances
and building codes, flood disaster Laws and health, safety and environmental
Laws and regulations, and further including, without limitation, (a) the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended by the Superfund Amendments and Reauthorization Act of 1986 (as
amended from time to time, herein referred to as "CERCLA"), (b) the Resource
Conservation and Recovery Act of 1976, as amended by the Used Oil Recycling Act
of 1980, the Solid Waste Recovery Act of 1976, as amended by the Solid Waste
Disposal Act of 1980, and the Hazardous and Solid Waste Amendments of 1984 (as
amended from time to time, herein referred to as "RCRA"), (c) the Safe Drinking
Water Act, as amended, (d) the Toxic Substances Control Act, as amended, (e) the
Clean Air Act, as amended, (f) the Occupational Safety and Health Act of 1970,
as amended, (g) the Laws, rules and regulations of any state having jurisdiction
over any real or personal property owned, operated or leased by any Credit Party
or any other operation of any Credit Party which relates to health, safety or
the environment, as each may be amended from time to time, and (h) any federal,
state or municipal Laws, ordinances or regulations which may now or hereafter
require removal of asbestos or other hazardous wastes or impose any liability
related to asbestos or other hazardous wastes. The terms "hazardous substance,"
"petroleum," "release" and "threatened release" have the meanings specified in
CERCLA, and the terms "solid waste" and "disposal" (or "disposed") have the
meanings specified in RCRA; provided, however, in the event either CERCLA or
RCRA is amended so as to broaden the meaning of any term defined thereby, such
broader meaning shall apply subsequent to the effective date of such amendment
with respect to all provisions of this Agreement; and provided further that, to
the extent the Laws of the state in which any real or personal property owned,
operated or leased by any Credit Party is located establish a meaning for
"hazardous substance," "petroleum," "release," "solid waste" or "disposal" which
is broader than that specified in either CERCLA or RCRA, such broader meaning
shall apply in so far as such broader meaning is applicable to the real or
personal property owned, operated or leased by any Credit Party and located in
such state.
"Applicable Lending Office" means, for each Bank and for each Type of
Loan, the "Lending Office" of such Bank (or of an affiliate of such Bank)
designated for such Type of Loan on the signature pages hereof or such other
office of such Bank (or an affiliate of such Bank) as such Bank may from time to
time specify to Administrative Agent and Borrower by written notice in
accordance with the terms hereof as the office by which Loans of such Type are
to be made and maintained.
3
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"Applicable Revolver Margin" means, at any time, the Applicable
Revolver Margin in effect at such time pursuant to the Pricing Grid.
"Applicable Term Margin" means, at any time, the Applicable Term Margin
in effect at such time pursuant to the Pricing Grid.
"Approved Petroleum Engineer" means Lee Keeling and Associates, Inc.,
or such other reputable firm of independent petroleum engineers as shall be
selected by Borrower and approved by Administrative Agent, such approval not to
be unreasonably withheld.
"Assignment and Acceptance Agreement" has the meaning given such term
in Section 15.10(a).
"Assignment and Amendment to Mortgages" means an Assignment of Notes
and Liens and Amendment to Mortgages to be entered into among Borrower,
Administrative Agent and Existing Bank, substantially in the form of Exhibit B
hereto, pursuant to which the Existing Mortgages shall be amended and assigned
to Administrative Agent for the ratable benefit of each Bank to secure the
Obligations.
"Authorized Officer" means, as to any Person, its Chief Executive
Officer, its President, its Chief Financial Officer, any of its Vice Presidents,
its Treasurer or its corporate Secretary.
"Availability" means, as of any date, the remainder of (a) the
Borrowing Base in effect on such date, minus (b) the Outstanding Credit on such
date.
"Bank" means any financial institution reflected on Schedule 1.1 hereto
as having a Commitment and its successors and permitted assignees, and "Banks"
shall mean all Banks.
"Base Rate" means, for any day, the rate per annum equal to the higher
of (a) the Federal Funds Rate for such day plus one-half of one percent (.5%)
and (b) the Prime Rate for such day.
"Base Rate Loan" means the portion of the principal of the Loan bearing
interest with reference to the Base Rate.
"Borrower" means Petroglyph Energy, Inc., a Delaware corporation.
"Borrowing" means any disbursement to Borrower under, or to satisfy the
obligations of any Credit Party under, any of the Loan Documents. Any Borrowing
which will constitute a part of the Base Rate Loan is referred to herein as a
"Base Rate Borrowing," and any Borrowing which will constitute a Eurodollar Loan
is referred to herein as a "Eurodollar Borrowing."
"Borrowing Base" means the loan value attributable to certain of
Borrower's Mineral Interests as determined in accordance with Article V hereof.
"Borrowing Base Deficiency" means, as of any date, the amount, if any,
by which the Outstanding Credit on such date exceeds the Borrowing Base in
effect on such date; provided that
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for purposes of determining the existence and amount of any Borrowing Base
Deficiency, Letter of Credit Exposure will not be deemed to be outstanding to
the extent it is secured by cash in the manner contemplated by Section 2.2(b).
"Borrowing Base Properties" means all Mineral Interests evaluated by
Banks for purposes of establishing the Borrowing Base. The Borrowing Base
Properties on the date hereof constitute all of the Mineral Interests described
in the Current Reserve Report.
"Borrowing Date" means the Eurodollar Business Day or the Domestic
Business Day, as the case may be, upon which the proceeds of any Borrowing are
made available to Borrower or to satisfy any obligation of any Credit Party.
"Capital Stock" means common stock, preferred stock, membership
interests, partnership interests, beneficial interests in any trust and any
other interest in the equity, ownership, assets, revenues or profits of any
Person and any option, warrant, subscription right or other right to acquire any
of the foregoing or any security convertible into any of the foregoing.
"Change of Control" means any event or occurrence whereby any group
(other than the Management Group and NGP) becomes the beneficial owner, directly
or indirectly, of voting stock of Borrower which has aggregate voting power that
at the time in question both (a) exceeds the aggregate voting power of all stock
of Borrower then owned by the Management Group and NGP on a combined basis, and
(b) exceeds thirty percent (30%) of the total voting power of all then
outstanding voting stock of Borrower. As used in this definition, "group" has
the meaning applied to such term in Rule 13d-5 under the Act, and "beneficial
owner" has the meaning applied to such term in Rule 13d-3 under the Act, in each
case as the Act and the aforementioned Rules thereunder are in effect.
"Closing Date" means September 30, 1998.
"Code" means the Internal Revenue Code of 1986, as amended, and all
regulations promulgated and rulings issued thereunder.
"Collateral" means all present and future tangible or intangible
property and rights of any kind in which Administrative Agent (for the ratable
benefit of Banks) is granted a Lien pursuant to the Security Documents (whether
or not perfected).
"Commitment" means, with respect to any Bank, the commitment of such
Bank to lend its Commitment Percentage of the Total Commitment to Borrower
pursuant to Section 2.1 hereof, as such Commitment may be terminated and reduced
from time to time in accordance with the provisions hereof. On the Closing Date,
the amount of each Bank's Commitment is the amount set forth opposite such
Bank's name on Schedule 1.1 hereto; provided that after giving effect to any
Assignment and Acceptance Agreement, the Commitment of each Bank shall be the
amount set forth in the Register maintained by Administrative Agent pursuant to
Section 15.10(b).
"Commitment Fee Percentage" means, at any time, the Commitment Fee
Percentage in effect at such time pursuant to the Pricing Grid.
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"Commitment Percentage" means, with respect to each Bank, the
Commitment Percentage for such Bank set forth on Schedule 1.1 hereto; provided
that after giving effect to any Assignment and Acceptance Agreement, the
Commitment Percentage of each Bank shall be the amount set forth in the Register
maintained by Administrative Agent pursuant to Section 15.10(b).
"Consolidated Subsidiary" or "Consolidated Subsidiaries" means, for any
Person, any Subsidiary or other entity the accounts of which would be
consolidated with those of such Person in its consolidated Financial Statements.
"Consolidated Total Debt" means, with respect to Borrower, all Debt of
Borrower and its Consolidated Subsidiaries.
"Continue," "Continuation," and "Continued" shall refer to the
continuation pursuant to Section 2.3 hereof of a Eurodollar Loan from one
Interest Period to the next Interest Period.
"Convert," "Conversion," and "Converted" shall refer to a conversion
pursuant to Section 2.3 hereof of all or a portion of one Type of Loan into
another Type of Loan.
"Credit Parties" means, collectively, Borrower and each Subsidiary of
Borrower, and "Credit Party" means any of the foregoing.
"Current Financials" means the consolidated and consolidating balance
sheets of Borrower and its Consolidated Subsidiaries as of June 30, 1998, and
the related consolidated and consolidating statements of operations and cash
flow for the Fiscal Year then ended, copies of which have been provided to
Banks.
"Current Maturities of Long Term Debt" means, as of any applicable date
of determination, that portion of Long Term Debt that should be classified as
current in accordance with GAAP.
"Current Reserve Report" means that certain internal reserve report
prepared as of June 30, 1998 by Borrower's in-house engineering staff, setting
forth an analysis of certain Mineral Interests owned by Borrower (after giving
effect to the Merger) as of June 30, 1998.
"Debt" of any Person includes, without duplication, (i) all
obligations, contingent or otherwise, which in accordance with GAAP should be
classified upon such Person's balance sheet as liabilities, (ii) all obligations
of such Person for borrowed money, (iii) all obligations of such Person
evidenced by bonds, debentures, notes and other similar instruments, (iv) all
obligations of such Person upon which interest charges are customarily paid, (v)
all obligations created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (vi)
all obligations of such Person issued or assumed as the deferred purchase price
of property or services (other than accounts payable to suppliers incurred in
the ordinary course of business and paid, in each case, within forty- five (45)
days of the date when each such account is payable), (vii) all obligations under
leases which shall have been or should be, in accordance with GAAP, recorded as
capitalized leases in
6
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respect of which such Person is liable as lessee, (viii) all indebtedness,
liabilities and obligations of such Person in connection with any Oil and Gas
Hedge Transaction, (ix) all reimbursement obligations, contingent or otherwise,
in respect of letters of credit, surety and appeal bonds and performance bonds
or similar instruments assuring any other Person of the performance of any act
or acts or the payment of any obligation, and (x) all Debt of the types referred
to in clauses (i) through (ix) above directly or indirectly guaranteed by such
Person.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice, lapse of time or both would, unless
cured or waived, become an Event of Default.
"Default Rate" means a rate of interest per annum equal to the lesser
of (i) the Maximum Lawful Rate, or (ii) the sum of (a) three percent (3%), plus
(b) the Base Rate in effect from day to day.
"Disposition Redetermination" means a Redetermination of the Borrowing
Base pursuant to Section 5.4.
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which national banks in New York, New York, or Dallas, Texas are
authorized by Law to close.
"Domestic Lending Office" means, as to each Bank, its office located at
its address identified (a) on Schedule 1.1 hereto as its Domestic Lending
Office, (b) on the Register (as defined in Section 15.10(b)) as its Domestic
Lending Office, or (c) such other office as such Bank may hereafter designate as
its Domestic Lending Office by notice to Borrower and Administrative Agent.
"Eligible Assignee" means (i) a Bank, (ii) an Affiliate of a Bank, and
(iii) any other Person approved by Administrative Agent and, unless an Event of
Default has occurred and is continuing at the time any assignment is effected in
accordance with Section 15.10, Borrower, such approval not to be unreasonably
withheld or delayed by Borrower and such approval to be deemed given by Borrower
if no objection is received by the assigning Bank and Administrative Agent from
Borrower within two (2) Domestic Business Days after notice of such proposed
assignment has been provided by the assigning Bank to Borrower; provided,
however, that neither Borrower nor an Affiliate of Borrower shall qualify as an
Eligible Assignee.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations promulgated and rulings issued thereunder.
"ERISA Affiliate" means any Person who is a member of Borrower's
controlled group, or under common control with Borrower, within the meaning of
Section 414 of the Code and the regulations promulgated and rulings issued
thereunder.
"ERISA Event" shall mean, with respect to Borrower and an ERISA
Affiliate (a) a "reportable event" as defined in section 4043 of ERISA (other
than a reportable event not subject to the provisions for 30-day notice to the
PBGC under regulations issued under section 4043 of ERISA), (b) the withdrawal
of Borrower or an ERISA Affiliate from a Plan subject to Title IV of
7
<PAGE> 14
ERISA during a plan year in which it was a "substantial employer" as defined in
section 4001(a)(2) of ERISA, (c) the filing of a notice of intent to terminate
under section 4041(c) of ERISA, (d) the institution of proceeding to terminate a
Plan by the PBGC, (e) the failure to make required contributions which could
result in the imposition of a lien under section 412 of the Code or section 302
of ERISA, or (f) any other event or condition which might reasonably be expected
to constitute grounds under section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan or the imposition of any
liability under Title IV of ERISA other than PBGC premiums due but not
delinquent under section 4007 of ERISA.
"Eurodollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in the applicable eurodollar interbank market.
"Eurodollar Lending Office" means, as to each Bank (a) its office,
branch or affiliate located at its address identified on Schedule 1.1 hereto as
its Eurodollar Lending Office, (b) it office, branch or affiliate located at its
address identified on the Register (as defined in Section 15.10(b)) as its
Eurodollar Lending Office, or (c) such other office, branch or affiliate of such
Bank as it may hereafter designate as its Eurodollar Lending Office by notice to
Borrower and Administrative Agent.
"Eurodollar Loans" means Loans that bear interest at rates based upon
the Adjusted Eurodollar Rate.
"Eurodollar Rate" means, for any Eurodollar Loan for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as
the London interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two (2) Eurodollar Business Days prior to the first day of
such Interest Period for a term comparable to such Interest Period. If for any
reason such rate is not available, the term "Eurodollar Rate" shall mean, for
any Eurodollar Loan for any Interest Period therefor, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters
Screen LIBO Page as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two (2) Eurodollar Business Days prior to
the first day of such Interest Period for a term comparable to such Interest
Period; provided, however, if more than one rate is specified on Reuters Screen
LIBO Page, the applicable rate shall be the arithmetic mean of all such rates
(rounded upwards, if necessary, to the nearest 1/100 of 1%).
"Event of Default" has the meaning set forth in Section 12.1.
"Exhibit" refers to an exhibit attached to this Agreement and
incorporated herein by reference, unless specifically provided otherwise.
"Existing Bank" means The Chase Manhattan Bank as the sole bank under
the Existing Credit Agreement.
"Existing Burdens" means royalty interests, overriding royalty
interests, net profits interests, production payments or other payments out of
or with respect to the production of Hydrocarbons,
8
<PAGE> 15
and which are (a) in existence on the Closing Date and have been taken into
account in the ownership interests of Borrower in and to the Mortgaged Property
as set forth in Exhibit A to the Mortgages executed by Borrower, (b) reserved by
the grantor in an assignment of an Oil and Gas Lease to Borrower after the
Closing Date, or reserved by a lessor in any Oil and Gas Lease entered into with
Borrower after the Closing Date, (c) assigned or transferred by Borrower in the
ordinary course of business after the Closing Date, with respect to Mineral
Interests that are not Borrowing Base Properties, or (d) permitted by Banks in
writing after the Closing Date.
"Existing Credit Agreement" means that certain Amended and Restated
Loan Agreement dated as of September 15, 1997, by and among the Initial
Borrowers, Borrower (as Guarantor thereunder) and Existing Bank, as amended by
that certain First Amendment to Amended and Restated Loan Agreement and First
Amendment to Amended and Restated Converting Promissory Note dated as of June 1,
1998, by and among the Initial Borrowers, Borrower (as Guarantor thereunder) and
Existing Bank, as further amended through the date hereof.
"Existing Mortgages" means the mortgages, deeds of trust, security
agreements, assignments, pledges and other documents, instruments and agreement
which establish Liens on Mineral Interests owned by the Initial Borrowers to
secure certain obligations under the Existing Credit Agreement.
"Existing Loan" means the Tranche A Loan made by Existing Bank to PGP
and PGPII under the Existing Credit Agreement and assumed by Borrower pursuant
to the Merger.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Domestic Business Day next
succeeding such day, provided that (a) if the day for which such rate is to be
determined is not a Domestic Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Domestic Business
Day as so published on the next succeeding Domestic Business Day, and (b) if
such rate is not so published on such next succeeding Domestic Business Day, the
Federal Funds Rate for any day shall be the average rate charged to
Administrative Agent on such day on such transactions as determined by
Administrative Agent.
"Financial Report Certificate" means a certificate substantially in the
form of Exhibit C and containing such other certifications, statements,
calculations, explanations, and conclusions as Banks may request concerning
compliance with the Loan Documents.
"Financial Statements" means balance sheets, profit and loss
statements, statements of cash flows prepared in comparative form with respect
to the corresponding period of the preceding Fiscal Year and prepared in
accordance with GAAP.
"Fiscal Quarter" means the three (3) month periods ending on March 31,
June 30, September 30 and December 31 of each Fiscal Year.
"Fiscal Year" means a twelve (12) month period ending December 31.
9
<PAGE> 16
"GAAP" means generally accepted accounting principles, applied on a
consistent basis, set forth in Opinions of the Accounting Principles Board of
the American Institute of Certified Public Accountants and/or in statements of
the Financial Accounting Standards Board and/or their successors which are
applicable in the circumstances as of the date in question; and the requirement
that such principles be applied on a consistent basis means that the accounting
principles observed in a current period are comparable in all material respects
to those applied in a preceding period.
"Gas" means natural gas, coal seam gas, gas well gas and casinghead
gas, and the residue therefrom.
"Governmental Authority" means any nation or government, any state,
county, or city and any political subdivision of any of the foregoing and any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (a) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions, by "comfort letter" or other similar undertaking of support or
otherwise), or (b) entered into for the purpose of assuring in any other manner
the obligee of such Debt or other obligation of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in part);
provided that the term Guarantee shall not include endorsements for collection
or deposit in the ordinary course of business.
"Hazardous Material" means any hazardous substance, solid waste, and
any other compound, hazardous, toxic or dangerous waste, substance or material
defined as such in or for purposes of any Applicable Environmental Law or any
other similar Law.
"Hydrocarbon Hedge" means a swap, collar, floor, cap, option or other
contract (including sales contracts with known prices) which is intended to
reduce or eliminate the risk of fluctuations in the price of Hydrocarbons.
"Hydrocarbons" means oil, Gas, drop gasoline, natural gasoline,
condensate, distillate and all other liquid and gaseous hydrocarbons produced or
to be produced in conjunction therewith from a wellbore and all products,
by-products and other substances derived therefrom or from the processing
thereof, and all other minerals and substances produced in conjunction with such
substances, including, but not limited to, sulfur, geothermal steam, water,
carbon dioxide, helium and any and all minerals, ores or substances of value and
the products and proceeds therefrom.
"Initial Borrowers" means the Borrowers under and as defined in the
Existing Credit Agreement.
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<PAGE> 17
"Initial Borrowing Base" means a Borrowing Base in the amount of
$15,000,000, which shall be in effect during the period commencing on the
Closing Date and continuing until the first Redetermination after the Closing
Date.
"Interest Period" means, with respect to each Eurodollar Borrowing and
each Continuation of Eurodollar Loans and each Conversion of all or part of the
Base Rate Loan to Eurodollar Loans, the period commencing on the date of such
Borrowing, Continuation or Conversion and ending one (1), two (2), three (3) or
six (6) months thereafter, as Borrower may elect in the applicable Request for
Borrowing or Notice of Continuation or Conversion; provided that:
(a) any Interest Period which would otherwise end on a day
which is not a Eurodollar Business Day shall be extended to
the next succeeding Eurodollar Business Day unless such
Eurodollar Business Day falls in another calendar month, in
which case such Interest Period shall end on the next
preceding Eurodollar Business Day;
(b) any Interest Period which begins on the last Eurodollar
Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at
the end of such Interest Period) shall, subject to clause (c)
below, end on the last Eurodollar Business Day of a calendar
month;
(c) if any Interest Period includes a date on which any
payment of principal of the Eurodollar Loans which are the
subject of such Borrowing, Continuation or Conversion is
required to be made hereunder, but does not end on such date,
then (i) the principal amount of such Eurodollar Loans
required to be repaid on such date shall have an Interest
Period ending on such date, and (ii) the remainder of each
such Eurodollar Loans shall have an Interest Period determined
as set forth above; and
(d) no Interest Period shall extend past the Revolver
Conversion Date.
"Investment" means, with respect to any Person, any loan, advance,
extension of credit, capital contribution to, investment in or purchase of the
stock or other securities of, or interests in, any other Person; provided that
"Investment" shall not include current customer and trade accounts which are
payable in accordance with customary trade terms.
"Laws" means all applicable statutes, laws, ordinances, regulations,
orders, writs, injunctions, or decrees of any Governmental Authority.
"Lending Office" means, as to any Bank, its Domestic Lending Office or
its Eurodollar Lending Office, as the context may require.
"Letter of Credit Exposure" of any Bank means such Bank's aggregate
participation in the unfunded portion and the funded but unreimbursed portion of
Letters of Credit outstanding at any time.
11
<PAGE> 18
"Letter of Credit Fee" means, with respect to any Letter of Credit
issued hereunder, a fee payable by Borrower to Administrative Agent for the
ratable benefit of each Bank in connection with and at the time of issuance of
each Letter of Credit pursuant to Section 2.1(b). The Letter of Credit Fee
payable upon issuance of each Letter of Credit shall be paid at a per annum rate
equal to the Letter of Credit Fee Percentage in effect on the date of issuance
of such Letter of Credit and computed on the basis of the actual number of days
in the stated term of such Letter of Credit and assuming a calender year of 365
days, and shall be in an amount equal to the applicable Letter of Credit Fee
Percentage of the stated amount of such Letter of Credit.
"Letter of Credit Fee Percentage" means, at any time, the Letter of
Credit Fee Percentage in effect at such time pursuant to the Pricing Grid.
"Letter of Credit Fronting Fee" means, with respect to any Letter of
Credit issued hereunder, a fee equal to one hundred twenty five one thousandths
of one percent (.125%) of the stated amount of such Letter of Credit.
"Letters of Credit" means letters of credit issued for the account of
Borrower pursuant to Section 2.1(b).
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien, charge or deposit arrangement or other arrangement having the practical
effect of the foregoing and shall include the interest of a vendor or lessor
under any conditional sale agreement, capitalized lease or other title retention
agreement.
"Litigation" means any proceeding, claim, lawsuit or investigation
conducted or threatened by or before any Governmental Authority.
"Loan" means the revolving credit/term loan in an amount outstanding at
any time not to exceed the amount of the Total Commitment then in effect less
the amount of the Letter of Credit Exposure then outstanding to be made
severally by Banks in accordance with their Commitment Percentages to Borrower
in accordance with Section 2.1 hereof. The Loan may be comprised of the Base
Rate Loan and one (1) or more Eurodollar Loans as Borrower may select in a
Request for Borrowing or a Notice of Continuation or Conversion.
"Loan Documents" means this Agreement, the Notes, the Assignments and
Amendments to Mortgages, all Mortgages now or at any time hereafter delivered
pursuant to Section 6.1, the Amended and Restated Pledge Agreement, the Security
Documents, and all other certificates, documents or instruments delivered in
connection with this Agreement, as the foregoing may be amended from time to
time.
"Long Term Debt" means, as of any applicable date of determination, all
Debt of any Credit Party (other than the outstanding principal balance of all
Loans) which should be classified as "funded indebtedness" or "long-term
indebtedness" on Financial Statements of the Credit Parties prepared as of such
date in accordance with GAAP.
12
<PAGE> 19
"Management Group" means Robert C. Murdock, S. Kennard Smith and Robert
A. Christensen.
"Margin Regulations" means Regulations T, U and X of the Board of
Governors of the Federal Reserve System, as in effect from time to time.
"Margin Stock" means "margin stock" as defined in Regulation U.
"Material Adverse Change" means any circumstance or event that has had
or would reasonably be expected to have a Material Adverse Effect.
"Material Adverse Effect" means any set of circumstances or events
which would reasonably be expected to (a) have any material adverse effect upon
the validity or enforceability of any Loan Document, (b) be material and adverse
to the financial condition or business operations of any Credit Party, as
represented to Banks in the Current Financials, or to the prospects of any
Credit Party, (c) materially impair any Credit Party's ability to fulfill its
obligations under the terms and conditions of the Loan Documents, or (d) cause a
Default or an Event of Default.
"Material Contract" means, as to any Person, any supply, purchase,
service, employment, tax, indemnity, operating, pooling order, unitization,
communitization, partnership, joint venture or other agreement or order of such
Person or any of its Subsidiaries or by which such Person or any of its
Subsidiaries or any of their respective properties are otherwise bound, which is
material to the business, operations or properties of such Person, as the same
shall be amended, modified and supplemented and in effect from time to time.
"Maximum Borrowing Base" means, as of the date of determination, an
amount determined by Banks in accordance with the terms of Section 5.1 or 5.3.
"Maximum Lawful Rate" means, for each Bank, the maximum rate (or, if
the context so permits or requires, an amount calculated at such rate) of
interest which, at the time in question would not cause the interest charged on
the portion of the Loan owed to such Bank at such time to exceed the maximum
amount which such Bank would be allowed to contract for, charge, take, reserve,
or receive under applicable Laws after taking into account, to the extent
required by applicable Laws, any and all relevant payments or charges under the
Loan Documents.
"Merger" means the merger of PGP, PGP II and PEI with and into Borrower
pursuant to, and in accordance with, the Merger Agreement and the Merger
Certificate, with Borrower being the surviving entity.
"Merger Agreement" means that certain Agreement and Plan of Merger
dated as of June 1, 1998, by and among Borrower, PGP, PGP II and PEI.
"Merger Certificate" means, collectively, that certain (a) Certificate
of Merger (Delaware), executed by Robert C. Murdock, President of Borrower, and
filed on June 29, 1998 with the Secretary of State of Delaware, with an
effective date of July 1, 1998, and (b) Certificate of Merger
13
<PAGE> 20
(Kansas), executed by Robert C. Murdock, President of Borrower, and filed on
June 30, 1998 with the Secretary of State of Kansas, with an effective date of
July 1, 1998.
"Merger Documents" means (a) the Merger Agreement, (b) the Merger
Certificate, and (c) all other material documents, instruments and agreements
executed or delivered by any Credit Party pursuant to the Merger Agreement, the
Merger Certificate or the Merger.
"Mineral Interests" means all present and future rights, remedies,
powers, privileges, estates, titles and interests in and to (a) all Oil and Gas
Leases and all mineral interests, royalty and overriding royalty interests,
production payment and net profits interests (and similar interests in oil or
gas in place, or as produced, or the proceeds or value thereof), mineral fee
interests and rights therein, including, without limitation, any reversionary or
carried interests relating thereto, (b) all rights, titles and interests created
by or arising under the terms of all present and future unitization,
communitization, and pooling arrangements (and all properties covered and units
created thereby) whether arising by contract or operation of law which now or
hereafter include all or any part of the foregoing, (c) all rights, remedies,
powers and privileges with respect to all of the foregoing, and (d) all lands
now or hereafter subject to any of the foregoing.
"Mortgaged Properties" means all Mineral Interests of any nature
whatsoever, in which Borrower or any Subsidiary of Borrower may now have or
hereafter acquire any interest and with respect to which Borrower has previously
granted to, or hereafter grants or purports to grant to Administrative Agent
(for the ratable benefit of Banks), a mortgage Lien, including all real and
personal property mortgaged to Administrative Agent (for the ratable benefit of
Banks) pursuant to and described in each Mortgage, and further including, the
Antelope Creek Gathering Assets; provided, that, "Mortgaged Properties" shall
not include any Mineral Interests or other assets which have been expressly
released from the Mortgages pursuant to a written instrument executed by
Administrative Agent on behalf of Banks.
"Mortgages" means all mortgages, deeds of trust, security agreements,
pledge agreements, collateral mortgages, collateral chattel mortgages,
collateral assignments, financing statements, financing statement amendments and
assignments and other documents, instruments and agreements evidencing,
creating, perfecting or otherwise establishing the Liens required by Section 6.1
hereof. All Mortgages shall be in form and substance satisfactory to
Administrative Agent in its sole discretion. The term "Mortgages" shall include
the Existing Mortgages as assigned and amended pursuant to Assignments and
Amendments to Mortgages.
"Multiemployer Plan" means a multiemployer plan as defined in Sections
3(37) or 4001(a) (3) of ERISA or Section 414 of the Code.
"Net Proceeds" means, in respect of any issuance by Borrower of debt or
equity securities, the gross proceeds from the issuance and sale of such debt or
equity securities less underwriters discounts and commissions, commitment and
closing fees, legal fees and expenses, and other out of pocket costs and
expenses actually incurred and paid in cash by Borrower in connection with the
closing and funding of such issue.
14
<PAGE> 21
"NGP" means collectively, Natural Gas Partners, L.P., Natural Gas
Partners II, L.P. and Natural Gas Partners III, L.P.
"Note" means a promissory note of Borrower payable to the order of a
Bank, in substantially the form of Exhibit E hereto, in the amount of such
Bank's Commitment, evidencing the obligation of Borrower to repay to such Bank
its Commitment Percentage of the Loan, together with all modifications,
extensions, renewals, and rearrangements thereof and "Notes" means all of such
Notes collectively.
"Notice of Continuation or Conversion" has the meaning set forth in
Section 2.3(c).
"Obligations" means (i) the obligation of Borrower for the due and
punctual payment of principal of and interest on the Notes when due, whether at
maturity, by acceleration, by notice of voluntary prepayment or otherwise, (ii)
all other obligations and all out-of-pocket expenses and indemnities now or
hereafter existing of any Credit Party to Administrative Agent or any Bank under
this Agreement or any other Loan Document, and (iii) all out-of-pocket costs and
expenses, now or hereafter existing, that may be incurred by Administrative
Agent or any Bank in connection with the administration and enforcement of the
Loan Documents or the realization on the security provided for by the Loan
Documents.
"Oil & Gas Hedge Transaction" means any swap, cap, collar, forward
contract or other transaction of any type pursuant to which a Person hedges the
price to be received by it for future production of Hydrocarbons.
"Oil and Gas Leases" means oil, gas, casinghead gas or other mineral
(or any combination thereof) leases, and subleases and assignments thereof
and/or of operating rights and all instruments executed in amendment,
correction, modification, confirmation, renewal, extension, ratification and/or
sublease thereof or thereunder under and pursuant to which Borrower has or
obtains the right to enter upon lands and explore for, drill, develop and
exploit such lands for the production of Hydrocarbons.
"Outstanding Credit" means, on any date, the sum of (a) the aggregate
outstanding Letter of Credit Exposure on such date, including the Letter of
Credit Exposure attributable to Letters of Credit to be issued on such date,
plus (b) the aggregate outstanding principal balance of the Loan on such date,
including the amount of any Borrowing to be made on such date.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"PEI" means Petroglyph Energy, Inc., a Kansas corporation which,
pursuant to, and upon the effective date of, the Merger, was merged with and
into Borrower with Borrower being the surviving entity.
"Permitted Encumbrances" means with respect to any asset:
15
<PAGE> 22
(a) pledges or deposits made to secure payment of worker's
compensation, or to participate in any fund in connection with worker's
compensation, unemployment insurance, pensions, or other social security
programs, provided that such Liens may not attach or relate to any Mineral
Interest;
(b) encumbrances consisting of zoning restrictions, easements,
or other restrictions on the use of real property, none of which impair the use
of such property by the Person in question in the operation of its business, and
none of which is violated by existing or proposed structures or land use;
(c) the following to the extent no Lien has been filed in any
jurisdiction or agreed to: Liens for Taxes not yet due and payable; mechanics'
materialmen warehousemen, carriers, operators, or other like Liens incident to
the exploration, development, operation and maintenance of the Oil and Gas
Leases, for services or materials for which payment is not yet due and payable;
and landlord's Liens for rental not yet due and payable and which, to the extent
the same encumbers any of the Collateral, is subordinate to Liens in favor of
Administrative Agent for the benefit of Banks;
(d) Existing Burdens;
(e) Permitted Purchase Money Liens;
(f) in respect of the Mineral Interests:
(i) minor defects in title which do not affect the
marketability thereof or restrict the full use and other
benefits of ownership by Borrower or the ability of Borrower
to receive a share of production or proceeds from, allocated
to, or attributable to such Mineral Interests equal to the net
revenue interest of Borrower therein as represented herein or
in the other Loan Documents, and which are customarily waived
by reasonable and prudent operators; and
(ii) Liens under operating agreements, pooling
orders, communitization and unitization agreements, subject to
the provisions of Section 8.8; and
(g) agreements shown on Exhibit A to the Mortgages.
"Permitted Purchase Money Debt" means Debt (i) in an aggregate amount
outstanding at any time not to exceed $300,000, (ii) incurred to finance the
purchase of machinery, equipment, vehicles or other capital assets (but
expressly excluding Mineral Interests), (iii) in a principal amount not
exceeding one hundred percent (100%) of the purchase price of the assets
purchased with the proceeds of such Debt, and (iv) incurred substantially
simultaneously with the purchase of such asset.
"Permitted Purchase Money Liens" means Liens encumbering machinery,
equipment, vehicles or other capital assets (but expressly excluding Mineral
Interests) securing Permitted Purchase Money Debt, the proceeds of which are
used to finance the purchase of such assets;
16
<PAGE> 23
provided, that, such Liens shall not attach to or encumber any other assets, and
such Liens shall be granted substantially simultaneously with the purchase of
such assets.
"Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, institution, entity, party, or Governmental Authority.
"PGP" means Petroglyph Gas Partners, L.P., a Delaware limited
partnership which, pursuant to, and upon the effective date of, the Merger, was
merged with and into Borrower with Borrower being the surviving entity.
"PGP II" means PGP II, L.P., a Delaware limited partnership which,
pursuant to, and upon the effective date of, the Merger, was merged with and
into Borrower with Borrower being the surviving entity.
"Plan" means any employee benefit plan within the meaning of Section
3(3) of ERISA and any other program, policy and agreement providing bonus or
other incentive compensation, deferred compensation, change-in-control, leave of
absence, relocation, salary continuation, severance, sickness or other
disability, stock purchase, stock option or award, vacation, or holiday
benefits, which covers any employee or former employee of Borrower or any ERISA
Affiliate or any beneficiary or dependent of such employee or former employee,
whether or not written, and whether covering one person or more than one person,
and which are sponsored or maintained by Borrower or any ERISA Affiliate or to
which Borrower or any ERISA Affiliate contributes or is obligated to contribute.
Without limiting the generality of the foregoing, the term "Plan" includes any
employee welfare benefit plan within the meaning of Section 3(1) of ERISA and
any employee pension benefit plan within the meaning of Section 3(2) of ERISA.
"POC" means Petroglyph Operating Company, Inc., a Kansas corporation.
"Pricing Grid" means the following table which specifies the Applicable
Revolver Margin, the Applicable Term Margin, the Commitment Fee Percentage and
the Letter of Credit Fee Percentage in effect under this Agreement. The
Applicable Revolver Margin, the Applicable Term Margin, the Commitment Fee
Percentage and the Letter of Credit Fee Percentage in effect under this
Agreement on any date (the "Determination Date") shall be the amount determined
from the Pricing Grid based on Borrower's Ratio of Consolidated Measured Debt to
the Borrowing Base on such day.
<TABLE>
<CAPTION>
Applicable
Ratio of Measured Revolver Margin Applicable Term Margin Commitment
Debt to Borrowing ---------------------- ---------------------- Fee Letter of Credit
Base Base Rate Eurodollar Base Rate Eurodollar Percentage Fee Percentage
----------------------------- --------- ---------- --------- ---------- ---------- ----------------
<S> <C> <C> <C> <C> <C> <C>
< or = to .60 to 1 .375% 1.75% .75% 2.50% .375% .75%
> .60 to 1 < or = to .75 to 1 .375% 2.00% .75% 2.50% .375% 1.25%
> .75 to 1 .375% 2.50% .75% 2.50% .375% 1.25%
</TABLE>
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<PAGE> 24
For purposes of this definition, Debt will be deemed to be outstanding on any
date on which it is borrowed, but will not be deemed to be outstanding on the
date repaid.
"Prime Rate" means the per annum rate of interest established from time
to time by Administrative Agent as its prime rate, which rate may not be the
lowest rate of interest charged by Administrative Agent to its customers.
"Proven Reserves" means, at any particular time, the estimated
quantities of Hydrocarbons which geological and engineering data demonstrate
with reasonable certainty to be recoverable in future years from known
reservoirs attributable to Mineral Interests included or to be included in the
Reserve Report under existing economic and operating conditions. The prices used
may include consideration of changes in existing prices provided by contractual
arrangements (reasonably decreased where market conditions dictate).
"Quarterly Date" means the last day of each March, June, September and
December.
"Ratio of Consolidated Measured Debt to Borrowing Base" means, with
respect to Borrower as of the date of determination, the ratio of (a) the sum of
(i) the Outstanding Credit on such date, plus (ii) all Subordinated Debt of
Borrower and its Subsidiaries on such date to (b) the Borrowing Base in effect
on such date.
"Recognized Value" means, with respect to oil and gas properties, the
pre-tax value of such properties determined in accordance with Financial
Accounting Standards Board Statement 69, generally known as the "standardized
measure of discounted cash flow".
"Redetermination" means (i) any Scheduled Redetermination, (ii) any
Special Redetermination, and (iii) any Disposition Redetermination.
"Redetermination Date" means (a) with respect to any Scheduled
Redetermination, each March 31, June 30, September 30 and December 31 commencing
March 31, 1999, (b) with respect to any Special Redetermination, the first day
of the first month which is not less than twenty (20) Domestic Business Days
following the date of a request for a Special Redetermination, and (c) with
respect to any Disposition Redetermination, the date specified in the notice
delivered by Administrative Agent to Borrower and each Bank pursuant to Section
5.4 hereof.
"Registration Rights Agreement" means that certain Registration Rights
Agreement dated as of September 15, 1997, between Borrower and Existing Bank.
The Registration Rights Agreement was executed in connection with the Existing
Credit Agreement and for the sole benefit of Existing Bank, and no Bank (other
than Existing Bank) shall have any interest therein or with respect thereto.
"Regulation A" means Regulation A of the Board of Governors of the
Federal Reserve System, 12 C.F.R. Part 221, as in effect from time to time.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System, 12 C.F.R. Part 221, as in effect from time to time.
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"Request for Borrowing" has the meaning set forth in Section 2.1(d).
"Request for Letter of Credit" has the meaning set forth in Section
2.1(e).
"Required Banks" means Banks holding at least sixty-six and two-thirds
percent (66 2/3%) of the Total Commitment.
"Required Reserve Value" means Proven Reserves that have a Recognized
Value of not less than eighty percent (80%) of the Recognized Value of all
Proven Reserves held by Borrower and its Subsidiaries.
"Reserve Report" means an unsuperseded engineering analysis of the
Mineral Interests owned by Borrower, in form and substance reasonably acceptable
to Required Banks, prepared in accordance with customary and prudent practices
in the petroleum engineering industry and Financial Accounting Standards Board
Statement 69. Each Reserve Report required to be delivered on or before February
15 of each year pursuant to Section 5.1 hereof shall be prepared by the Approved
Petroleum Engineer and each Reserve Report required to be delivered on or before
August 15 of each year shall be prepared by Borrower's in-house engineering
staff, but shall be audited by the Approved Petroleum Engineer (and when
delivered shall be accompanied by the audit report of the Approved Petroleum
Engineer). Notwithstanding the foregoing, in connection with any Special
Redetermination requested by Borrower, the Reserve Report shall be in form and
scope mutually acceptable to Borrower and Required Banks. Until superseded, the
Current Reserve Report shall constitute the Reserve Report.
"Reserve Requirement" means, at any time, the maximum rate at which
reserves (including, without limitation, any marginal, special, supplemental, or
emergency reserves) are required to be maintained under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor) by member banks of the Federal Reserve System against, in the case of
Eurodollar Loans, "Eurocurrency liabilities" (as such term is used in Regulation
D). Without limiting the effect of the foregoing, the Reserve Requirement shall
reflect any other reserves required to be maintained by such member banks with
respect to (i) any category of liabilities which includes deposits by reference
to which the Adjusted Eurodollar Rate is to be determined, or (ii) any category
of extensions of credit or other assets which include Eurodollar Loans. The
Adjusted Eurodollar Rate shall be adjusted automatically on and as of the
effective date of any change in the Reserve Requirement.
"Reserve Update" means a report to be delivered by Borrower to each
Bank pursuant to Section 5.1 hereof which shall be prepared by Borrower's
in-house engineering staff and which shall set forth in reasonable detail any
material changes to the reserve information set forth in the Reserve Report most
recently delivered to Banks pursuant to Section 5.1 hereof, including (a) the
results of Borrower's drilling activity, and (b) any material deviation in
actual results from the information projected in such Reserve Report with
respect to production volumes, product prices and operating costs. Additionally,
such Reserve Update shall include an exploration expenditure summary showing the
exploration expenses incurred by Borrower for each three (3) month period ending
on March 31 and September 30, respectively.
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"Revolver Conversion Date" means September 30, 2000.
"Rights" means rights, remedies, powers, privileges and benefits.
"Schedule" means a "schedule" attached to this Agreement and
incorporated herein by reference, unless specifically indicated otherwise.
"Scheduled Redetermination" means a Redetermination of the Borrowing
Base pursuant to Section 5.2.
"Section" refers to a "section" or "subsection" of this Agreement
unless specifically indicated otherwise.
"Security Documents" shall mean the Mortgages, the Amended and Restated
Pledge Agreement, the Assignments and Amendments to Mortgages, and all other
Mortgages, security agreements, financing statements, guarantees and other
documents, certificates and instruments from time to time securing or
guaranteeing the Obligations (including, without limitation, those delivered in
connection with the Existing Credit Agreement), in each case as the same may be
amended, modified, restated, supplemented, increased, renewed, extended,
substituted for or replaced from time to time.
"Sego Farmout" means that certain Joint Participation and Development
Agreement dated August 31, 1997, by and between PGP and Sego Resources Corp.,
which Joint Participation and Development Agreement, and all rights and
obligations of PGP thereunder, were assumed by Borrower pursuant to, and upon
the effective date of, the Merger.
"Spanish Peaks" means Spanish Peaks Gathering, L.L.C., a Colorado
limited liability company, eighty percent (80%) of the outstanding membership
interests of which are held by Borrower and whose principal asset consists of
the Spanish Peaks Gathering Assets.
"Spanish Peaks Gathering Assets" means the natural gas gathering system
owned by Spanish Peaks and located in the Raton Basin of Colorado, including,
without limitation (a) all easements, rights of way, licenses, permits, fee
interests, leases and other rights in and to, or the rights to use, real
property for the purposes of construction, maintenance or operation of such
gathering system, (b) all pipe, pipelines, compressors, meters, valves,
separators, interconnects, and other machinery, equipment, fixtures or fixed
assets of any nature comprising a part of or used in connection with the
ownership or operation of such gathering system, and (c) all contracts
(including, without limitation, gathering agreements, processing agreements and
similar agreements) licenses, permits entered into or held by Spanish Peaks in
connection with the ownership or operation of such gathering system.
"Special Redetermination" means a Redetermination of the Borrowing Base
pursuant to Section 5.3.
"Subordinated Debt" means all present and future indebtedness,
obligations and liabilities and all renewals, extensions and modifications
thereof, now or hereafter owed to any Person by Borrower, arising from, by
virtue of, or pursuant to any loan document, or otherwise, together with
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all interest accruing thereon and costs, expenses and attorneys' fees incurred
in the enforcement or collection thereof, which have been subordinated to
repayment of the Obligations by a written subordination agreement, the terms and
conditions of which are acceptable to Required Banks and their legal counsel, in
their sole discretion.
"Subsidiary" of a Person means every firm, corporation, association,
partnership, joint venture, trust, or other entity of which an aggregate of
fifty percent (50%) or more of the equity interests or the issued and
outstanding stock having ordinary voting power (except directors' qualifying
shares) is, at the time the determination is being made, owned, either directly
or indirectly, or controlled by such Person or one or more of such Person's
Subsidiaries.
"Tangible Net Worth" means, with respect to any Person at any time, the
shareholder's equity of such Person at such time less the Intangible Assets of
such Person at such time. For purposes of this definition, "Intangible Assets"
means the amount (to the extent reflected in determining such shareholder's
equity) of all unamortized debt discount and expense, unamortized deferred
charges, goodwill, patents, trademarks, service marks, trade names, copyrights,
organization expenses and other intangible items.
"Taxes" means all taxes, assessments, fees, levies, imposts, duties,
deductions, withholdings, or other charges of any nature whatsoever from time to
time or at any time imposed by any Law or Governmental Authority.
"Termination Date" means September 30, 2003.
"Total Commitment" means the Commitments of all Banks in an initial
aggregate amount of $50,000,000 as such amount shall be reduced from time to
time pursuant to Section 2.8 and as otherwise provided herein.
"Type" means with reference to a Loan, the characterization of such
Loan as the Base Rate Loan or a Eurodollar Loan based on the method by which the
accrual of interest on such Loan is calculated.
"UCC" means the Uniform Commercial Code as enacted in the State of New
York or other applicable jurisdiction, as amended.
"Warrant Agreement" means that certain Warrant Agreement dated as of
September 15, 1997 among Borrower, PGP and Existing Bank. The Warrant Agreement
was executed in connection with the Existing Credit Agreement and for the sole
benefit of Existing Bank, and no Bank (other than Existing Bank) shall have any
interest therein or with respect thereto.
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"Warrant Certificate" means that certain Warrant Certificate issued by
Borrower to evidence the Warrants. The Warrant Certificate was executed in
connection with the Existing Credit Agreement and for the sole benefit of
Existing Bank, and no Bank (other than Existing Bank) shall have any interest
therein or with respect thereto.
"Warrant Related Documents" means the Warrant Agreement, the Warrant
Certificate, the Registration Rights Agreement and all other certificates,
documents or instruments delivered in connection with the Warrant Agreement, as
the foregoing may be amended from time to time.
"Warrants" mean those certain Warrants issued by Borrower to Existing
Bank pursuant to the Warrant Agreement. The Warrants were issued in connection
with the Existing Credit Agreement and for the sole benefit of Existing Bank,
and no Bank (other than Existing Bank) shall have any right, title or interest
therein or with respect thereto.
"Well Certificates" has the meaning set forth in Section 7.1(a)(xiv).
SECTION 1.2. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all Financial Statements
required to be delivered hereunder shall be prepared in accordance with GAAP,
applied on a basis consistent with the most recent audited consolidated
Financial Statements of Borrower and its Consolidated Subsidiaries delivered to
Banks prior to the date hereof except for changes concurred in by Borrower's
independent certified public accountants and which are disclosed to
Administrative Agent on the next date on which Financial Statements are required
to be delivered to Banks pursuant to Section 9.1; provided that unless Required
Banks shall otherwise agree in writing, no such change shall modify or affect
the manner in which compliance with the covenants contained in Article XI are
computed such that all such computations shall be conducted utilizing financial
information presented consistently with prior periods.
SECTION 1.3. Petroleum Terms. As used herein, the terms "proved
reserves," "proved developed reserves," "proved developed producing reserves,"
"proved developed nonproducing reserves," and "proved undeveloped reserves" have
the meaning given such terms from time to time and at the time in question by
the Society of Petroleum Engineers of the American Institute of Mining
Engineers.
SECTION 1.4. Money. Unless expressly stipulated otherwise, all
references herein to "dollars," "money," "funds," "payments," "prepayments" or
other similar financial or monetary terms, are references to currency of the
United States of America.
ARTICLE II
THE CREDIT
SECTION 2.1. Commitments. (a) Each Bank severally agrees, subject to
Sections 2.1(c), 7.1 and 7.2 and the other terms and conditions set forth in
this Agreement, to lend to Borrower from time to time prior to the Revolver
Conversion Date, amounts not to exceed in the aggregate at any one time
outstanding, the amount of such Bank's Commitment reduced by an amount equal to
such Bank's Letter of Credit Exposure. Each Borrowing shall be in an aggregate
principal amount of $200,000 or any larger integral multiple of $500,000 (except
that any Base Rate Borrowing may be in an amount equal to the Availability at
such time), and (ii) shall be made from
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such Banks ratably in accordance with their respective Commitment Percentages.
Subject to the foregoing limitations and the other provisions of this Agreement,
prior to the Revolver Conversion Date, Borrower may borrow under this Section
2.1(a), repay amounts borrowed and request new Borrowings to be made under this
Section 2.1(a).
(b) Administrative Agent will, from time to time prior to the
Revolver Conversion Date, upon request by Borrower, issue Letters of Credit for
the account of Borrower, so long as (i) the sum of (A) the total Letter of
Credit Exposure then existing, and (B) the amount of the requested Letter of
Credit does not exceed twenty percent (20%) of the Borrowing Base, and (ii)
Borrower would be entitled to a Borrowing under Sections 2.1(a) and 2.1(c) in
the amount of the requested Letter of Credit. Not less than three (3) Domestic
Business Days prior to the requested date of issuance of any such Letter of
Credit, Borrower shall execute and deliver to Administrative Agent,
Administrative Agent's customary letter of credit application. Each Letter of
Credit shall be in the minimum amount of $10,000 and shall be in form and
substance acceptable to Administrative Agent. No Letter of Credit shall have an
expiration date later than thirty (30) days prior to the Revolver Conversion
Date. Upon the date of issuance of a Letter of Credit, Administrative Agent
shall be deemed to have sold to each other Bank, and each other Bank shall be
deemed to have unconditionally and irrevocably purchased from Administrative
Agent, a non-recourse participation in the related Letter of Credit and Letter
of Credit Exposure equal to such Bank's Commitment Percentage of such Letter of
Credit and Letter of Credit Exposure. Upon request of any Bank, but not less
often than quarterly, Administrative Agent shall provide notice to each Bank by
telephone, teletransmission or telex setting forth each Letter of Credit issued
and outstanding pursuant to the terms hereof and specifying the beneficiary and
expiration date of each such Letter of Credit, each Bank's percentage of each
such Letter of Credit and the actual dollar amount of each Bank's participation
held by Administrative Agent for such Bank's account and risk. At the time of
issuance of each Letter of Credit, Borrower shall pay to Administrative Agent in
respect of such Letter of Credit (a) the applicable Letter of Credit Fee, and
(b) the applicable Letter of Credit Fronting Fee. Administrative Agent shall
distribute the Letter of Credit Fee payable upon the issuance of each Letter of
Credit to Banks in accordance with their respective Commitment Percentages, and
Administrative Agent shall retain the Letter of Credit Fronting Fee for its own
account. Any amendment, modification, renewal or extension of any Letter of
Credit shall be deemed to be the issuance of a new Letter of Credit for purposes
of this Section 2.1(b).
Immediately upon the occurrence of an Event of Default, Borrower shall
deposit with Administrative Agent cash in such amounts as Administrative Agent
may request, up to a maximum amount equal to the aggregate existing Letter of
Credit Exposure of all Banks. Any amounts so deposited shall be held by
Administrative Agent for the ratable benefit of all Banks as security for the
outstanding Letter of Credit Exposure and the other Obligations, and Borrower
will, in connection therewith, execute and deliver such security agreements in
form and substance satisfactory to Administrative Agent which it may, in its
discretion, require. As drafts or demands for payment are presented under any
Letter of Credit, Administrative Agent shall apply such cash to satisfy such
drafts or demands. When all Letters of Credit have expired and the Obligations
have been repaid in full (and no Bank has any obligation to lend or issue
Letters of Credit hereunder) or such Event of Default has been cured to the
satisfaction of Required Banks, Administrative Agent shall release to Borrower
any remaining cash deposited under this Section 2.1(b). Whenever Borrower is
required to make deposits under this Section 2.1(b) and fails to do so on the
day such
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deposit is due, Administrative Agent or any Bank may, without notice to
Borrower, make such deposit (whether by application of proceeds of any
collateral for the Obligations, by transfers from other accounts maintained with
any Bank or otherwise) using any funds then available to any Bank of any Credit
Party or any other party liable for repayment of the Obligations.
Notwithstanding anything to the contrary contained herein, Borrower
hereby agrees to reimburse Administrative Agent immediately upon demand by
Administrative Agent, and in immediately available funds, for any payment or
disbursement made by Administrative Agent under any Letter of Credit issued by
it. Payment shall be made by Borrower with interest on the amount so paid or
disbursed by Administrative Agent from and including the date payment is made
under any Letter of Credit to and including the date of payment, at the Default
Rate. The obligations of Borrower under this Section 2.1(b) will continue until
all Letters of Credit have expired and all reimbursement obligations with
respect thereto have been paid in full by Borrower and until all other
Obligations shall have been paid in full.
The reimbursement obligations of Borrower under this Section 2.1(b)
shall be absolute, unconditional and irrevocable, and shall be performed
strictly in accordance with the terms of the Loan Documents (including any
letter of credit application or agreement executed pursuant to this Section
2.1(b)) under all circumstances whatsoever and Borrower hereby waives any
defense to the payment of such reimbursement obligations based on any
circumstance whatsoever, including without limitation, in any case, the
following circumstances: (i) any lack of validity or enforceability of any
Letter of Credit; (ii) the existence of any claim, set-off, counterclaim,
defense or other Rights which Borrower or any other Person may have at any time
against any beneficiary of any Letter of Credit, Administrative Agent, any Bank
or any other Person, whether in connection with any Letter of Credit or any
unrelated transaction; (iii) any statement, draft or other documentation
presented under any Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect whatsoever; (iv) payment by Administrative Agent under
any Letter of Credit against presentation of a draft or other document that does
not comply with the terms of such Letter of Credit; or (v) any other
circumstance whatsoever, whether or not similar to any of the foregoing.
As among Borrower, on the one hand, and Administrative Agent and each
Bank, on the other hand, Borrower assumes all risks of the acts and omissions
of, or misuse of any Letter of Credit by, the beneficiary of such Letters of
Credit. In furtherance and not in limitation of the foregoing, neither
Administrative Agent nor any Bank shall be responsible for:
(i) the form, validity, sufficiency, accuracy, genuineness or
legal effect of any document submitted by any Person in connection with
the application for, issuance of, and presentation of drafts with
respect to, any Letter of Credit, even if it should prove to be in any
or all respects invalid, insufficient, inaccurate, fraudulent or
forged;
(ii) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any
Letter of Credit or the Rights or benefits thereunder or proceeds
thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason;
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(iii) the failure of the beneficiary of any Letter of Credit
to comply duly with conditions required in order to draw upon any such
Letter of Credit;
(iv) errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher;
(v) errors in interpretation of technical terms;
(vi) any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under any Letter of Credit
or of the proceeds thereof;
(vii) the misapplication by the beneficiary of any Letter of
Credit of the proceeds of any drawing under any such Letter of Credit;
or
(viii) any consequences arising from causes beyond the control
of Administrative Agent or any Bank.
Borrower shall be obligated to reimburse Administrative Agent upon
demand for all amounts paid under any Letter of Credit as set forth in the
immediately preceding paragraph hereof; provided however if Borrower for any
reason fails to reimburse Administrative Agent in full upon demand, Banks shall
reimburse Administrative Agent in accordance with each Banks' Commitment
Percentage for amounts due and unpaid from Borrower as set forth hereinbelow;
provided however that no such reimbursement made by Banks shall discharge
Borrower's obligations to reimburse Administrative Agent. All reimbursement
amounts payable by any Bank under this Section 2.1(b) shall include interest
thereon at the Federal Funds Rate from the date of the payment of such amounts
by Administrative Agent to the date of reimbursement by such Bank. No Bank shall
be liable for the performance or nonperformance of the obligations of any other
Bank under this Section 2.1(b). The reimbursement obligations of Banks under
this Section 2.1(b) shall continue after the Termination Date and shall survive
termination of this Agreement and the other Loan Documents.
(c) No Bank will be obligated to lend to Borrower hereunder or
incur Letter of Credit Exposure, and Borrower shall not be entitled to borrow
hereunder or obtain Letters of Credit hereunder in an amount which would cause
the Outstanding Credit to exceed the Borrowing Base then in effect. No Bank
shall be obligated to fund Borrowings hereunder and Borrower shall not be
entitled to Borrowings hereunder during the existence of a Borrowing Base
Deficiency.
(d) In order to request any Borrowing under this Section 2.1,
Borrower shall hand deliver, telex or telecopy to Administrative Agent a duly
completed Request for Borrowing (herein so called) prior to 11:00 a.m. (New
York, New York time), (i) at least one (1) Domestic Business Day before the
specified Borrowing Date of a proposed Base Rate Borrowing, and (ii) at least
three (3) Eurodollar Business Days before the specified Borrowing Date of a
proposed Eurodollar Borrowing. Each such Request for Borrowing shall be
substantially in the form of Exhibit F hereto, and shall specify:
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(i) the Borrowing Date of such Borrowing, which shall be a
Domestic Business Day in the case of a Base Rate Borrowing or a
Eurodollar Business Day in the case of a Eurodollar Borrowing;
(ii) the aggregate amount of such Borrowing;
(iii) whether such Borrowing is to be a Base Rate Borrowing or
a Eurodollar Borrowing; and
(iv) in the case of a Eurodollar Borrowing, the duration of
the Interest Period applicable thereto, subject to the provisions of
the definition of Interest Period.
Upon receipt of a Request for Borrowing, Administrative Agent shall promptly
notify each Bank of the contents thereof and the amount of the Borrowing to be
loaned by such Bank pursuant thereto, and such Request for Borrowing shall not
thereafter be revocable by Borrower. Not later than 11:00 a.m. (New York, New
York time) on the date of each Borrowing, each Bank shall make available its
Commitment Percentage of such Borrowing, in Federal or other funds immediately
available in New York, New York to Administrative Agent at its address set forth
on Schedule 1.1 hereto. Notwithstanding the foregoing, if Borrower delivers to
Administrative Agent a Request for Borrowing prior to 10:00 a.m. (New York, New
York time) on a Domestic Business Day requesting a Base Rate Borrowing on such
day, each Bank shall use its best efforts to make available to Administrative
Agent its Commitment Percentage of such Borrowing by 1:00 p.m. (New York, New
York time) on the same day. Unless Administrative Agent determines that any
applicable condition specified in Section 7.2 has not been satisfied,
Administrative Agent will make the funds so received from Banks available to
Borrower at Administrative Agent's aforesaid address.
(e) In order to request any Letter of Credit hereunder,
Borrower shall hand deliver, telex or telecopy to Administrative Agent a duly
completed Request for Letter of Credit (herein so called) prior to 11:00 a.m.
(New York, New York time) at least three (3) Domestic Business Days before the
date specified for issuance of such Letter of Credit. Each Request for Letter of
Credit shall be substantially in the form of Exhibit G hereto, shall be
accompanied by Administrative Agent's duly completed and executed letter of
credit application and agreement and shall specify:
(i) the requested date for issuance of such Letter of Credit;
(ii) the terms of such requested Letter of Credit, including
the name and address of the beneficiary, the stated amount, the
expiration date and the conditions under which drafts under such Letter
of Credit are to be available; and
(iii) the purpose of such Letter of Credit.
Upon receipt of a Request for Letter of Credit, Administrative Agent shall
promptly notify each Bank of the contents thereof, including the amount of the
requested Letter of Credit, and such Request for Letter of Credit shall not
thereafter be revocable by Borrower. Not later than 11:00 a.m. (New York, New
York time) on the date each Letter of Credit is requested, unless Administrative
Agent
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determines that any applicable condition precedent set forth in Section 7.2
hereof has not been satisfied, Administrative Agent will issue and deliver such
Letter of Credit pursuant to the instructions of Borrower.
SECTION 2.2. Notes. Each Bank's Commitment Percentage of the Loan shall
be evidenced by a single Note payable to the order of such Bank in an amount
equal to such Bank's Commitment.
SECTION 2.3. Interest Rates; Payments. (a) The principal amount of the
Base Rate Loan shall bear interest at a rate per annum equal to (i) prior to the
Revolver Conversion Date, the sum of the Applicable Revolver Margin plus the
Base Rate in effect from day to day, and (ii) from and after the Revolver
Conversion Date, the sum of the Applicable Term Margin plus the Base Rate in
effect from day to day; provided that in no event shall the rate charged
hereunder or under the Notes exceed the Maximum Lawful Rate. Interest on the
Base Rate Loan shall be payable as it accrues on the last day of each Fiscal
Quarter, on the Revolver Conversion Date, and on the Termination Date.
(b) The principal amount of each Eurodollar Loan shall bear
interest for the Interest Period applicable thereto at a rate per annum equal to
(i) prior to the Revolver Conversion Date, the sum of the Applicable Revolver
Margin plus the applicable Adjusted Eurodollar Rate, and (ii) from and after the
Revolver Conversion Date, the sum of the Applicable Term Margin plus the
applicable Adjusted Eurodollar Rate; provided that in no event shall the rate
charged hereunder or under the Notes exceed the Maximum Lawful Rate. Interest on
any Eurodollar Loan with an interest period of three (3) months or less shall be
payable on the last day of the Interest Period applicable thereto. Interest on
any Eurodollar Loan with an Interest Period greater than three (3) months shall
be payable as it accrues at three month intervals commencing with the expiration
of three months following the commencement of such Interest Period.
(c) So long as no Default or Event of Default shall be
continuing, subject to the provisions of this Section 2.3, Borrower shall have
the option of having all or any portion of the principal outstanding under the
Loan be a Base Rate Loan or one (1) or more Eurodollar Loans, which shall bear
interest at rates determined by reference to the Base Rate and the Adjusted
Eurodollar Rate, respectively; provided that each Eurodollar Loan shall be in a
minimum amount of $200,000 and shall be in an amount which is an integral
multiple of $50,000. Prior to the termination of each Interest Period with
respect to each Eurodollar Loan, Borrower shall give written notice (a "Notice
of Continuation or Conversion") in the form of Exhibit H attached hereto to
Administrative Agent of the Type of Loan which shall be applicable to the
principal of such Eurodollar Loan upon the expiration of such Interest Period.
Such Notice of Continuation or Conversion shall be given to Administrative Agent
at least one (1) Domestic Business Day, in the case of a Base Rate Loan
selection, and three (3) Eurodollar Business Days, in the case of a Eurodollar
Loan selection, prior to the termination of the Interest Period then expiring.
If Borrower shall specify a Eurodollar Loan, such Notice of Continuation or
Conversion shall also specify the length of the succeeding Interest Period
(subject to the definition of such term) selected by Borrower. Each Notice of
Continuation or Conversion shall be irrevocable and effective upon notification
thereof to Administrative Agent. If the required Notice of Continuation or
Conversion shall not have been timely received by Administrative Agent, Borrower
shall be deemed to have elected that the
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principal of the Eurodollar Loan subject to the Interest Period then expiring be
a part of the Base Rate Loan upon the expiration of such Interest Period and
Borrower will be deemed to have given Administrative Agent notice of such
election. Subject to the limitations set forth in this Section 2.3(c) on the
amount and number of Eurodollar Loans, Borrower shall have the right to convert
(a "Conversion") all or any part of the Base Rate Loan to a Eurodollar Loan by
giving Administrative Agent a Notice of Continuation or Conversion of such
election at least three (3) Eurodollar Business Days prior to the date on which
Borrower elects to make such conversion (a "Conversion Date"). The Conversion
Date selected by Borrower shall be a Eurodollar Business Day. Notwithstanding
anything in this Section 2.3 to the contrary, no portion of the principal of the
Base Rate Loan may be Converted to a Eurodollar Loan and no Eurodollar Loan may
be Continued as such when any Default or Event of Default has occurred and is
continuing, but each such Eurodollar Loan shall be automatically Converted to
the Base Rate Loan on the last day of each applicable Interest Period. Borrower
shall not be permitted to have more than three (3) Eurodollar Loans in effect at
any time.
(d) Notwithstanding anything to the contrary set forth in
Section 2.3(a) or (b) above, all overdue principal of and, to the extent
permitted by Law, overdue interest, shall bear interest from the date due,
payable on demand, for each day until paid at the Default Rate.
(e) Administrative Agent shall determine each interest rate
applicable to the Loan in accordance with the terms hereof. Administrative Agent
shall promptly notify Borrower and Banks by telex, teletransmission or cable of
each rate of interest so determined, and its determination thereof shall be
conclusive in the absence of manifest error.
(f) Notwithstanding the foregoing, if at any time the rate of
interest calculated with reference to the Base Rate or the Eurodollar Rate
hereunder (the "contract rate") is limited to the Maximum Lawful Rate, any
subsequent reductions in the contract rate shall not reduce the rate of interest
on the Loan below the Maximum Lawful Rate until the total amount of interest
accrued equals the amount of interest which would have accrued if the contract
rate had at all times been in effect. In the event that at maturity (stated or
by acceleration), or at final payment of any Note, the total amount of interest
paid or accrued on such Note is less than the amount of interest which would
have accrued if the contract rate had at all times been in effect with respect
thereto, then at such time, to the extent permitted by Law, Borrower shall pay
to the holder of such Note an amount equal to the difference between (i) the
lesser of (a) the amount of interest which would have accrued if the contract
rate had at all times been in effect, and (b) the amount of interest which would
have accrued if the Maximum Lawful Rate had at all times been in effect, and
(ii) the amount of interest actually paid on such Note.
(g) Interest payable hereunder on each Eurodollar Loan shall
be computed based on the number of actual days elapsed assuming that each
calendar year consisted of 360 days. Interest payable hereunder on the Base Rate
Loan shall be computed based on the actual number of days elapsed assuming that
each calendar year consisted of 365 days.
SECTION 2.4. Borrowing Base Deficiency. If, at any time, a Borrowing
Base Deficiency shall occur, then, Borrower shall (i) within ninety (90) days
after the date such Borrowing Base Deficiency first occurs, either (A) provide
additional collateral acceptable to Agent and
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Required Banks as security for the Obligations, with a value as determined by
Required Banks in their sole discretion, at least equal to the amount of such
Borrowing Base Deficiency, or (B) prepay, without premium or penalty (except as
provided in Section 4.5), the Loan, in an amount to at least equal to the amount
of such Borrowing Base Deficiency.
SECTION 2.5. Mandatory Repayments. If, on any date, the aggregate
outstanding principal balance of the Loan on such date shall exceed the Total
Commitment, then, Borrower shall immediately repay, without premium or penalty,
the principal of the Loan in an amount equal to such excess, along with accrued
unpaid interest on the amount so repaid to the date of such repayment. On each
Quarterly Date after the Revolver Conversion Date (commencing on December 31,
2000), Borrower shall make a mandatory prepayment of the principal of the Loan
then outstanding in an amount equal to one-twelfth (1/12th) of the aggregate
principal balance of the Loan outstanding on the Revolver Conversion Date.
SECTION 2.6. Voluntary Prepayments. Borrower may, subject to Section
4.5 and the other provisions of this Agreement, upon (A) one (1) Domestic
Business Day's advance notice to Administrative Agent with respect to Base Rate
Borrowings, and (B) five (5) Domestic Business Days advance notice to
Administrative Agent with respect to Eurodollar Borrowings, prepay the principal
of the Loan in whole or in part. Any partial prepayment shall be in a minimum
amount of $200,000 and shall be in an integral multiple of $50,000, and (i) to
the extent made after the Revolver Conversion Date (a) may not be reborrowed
hereunder, and (b) shall be applied to the mandatory prepayments required by
Section 2.5 hereof in the inverse order of maturity, and (ii) to the extent made
with respect to any Eurodollar Loan, may be made only on the last day of the
Interest Period applicable thereto.
SECTION 2.7. Voluntary Reduction of Commitments. Borrower may, by
notice to Administrative Agent five (5) Domestic Business Days prior to the
effective date of any such reduction, reduce the Total Commitment (and thereby
reduce the Commitment of each Bank ratably) in amounts not less than $5,000,000
and in an amount which is an integral multiple of $1,000,000. On the effective
date of any such reduction, Borrower shall, to the extent required as a result
of such reduction, make a principal payment on the Loan in an amount sufficient
to cause the Outstanding Credit to be equal to or less than the Total Commitment
as thereby reduced. Notwithstanding the foregoing, Borrower shall not be
permitted to voluntarily reduce the Total Commitment to an amount less than the
aggregate Letter of Credit Exposure of all Banks.
SECTION 2.8. Mandatory Reduction of Commitments. The Total Commitment
shall reduce (and the Commitments of each Bank shall reduce ratably) on the
Revolver Conversion Date to an amount equal to the principal balance of the Loan
outstanding on the Revolver Conversion Date. The Total Commitment shall reduce
after the Revolver Conversion Date (and the Commitments of each Bank shall
reduce ratably) (a) on each Quarterly Date in an amount equal to the mandatory
prepayment required to be made on such date pursuant to Section 2.5, (b) on the
date of each prepayment made pursuant to Section 2.4 by the amount of such
prepayment, (c) on the date of each voluntary prepayment made pursuant to
Section 2.6 by the amount of such voluntary prepayment, and (d) on the date of
each voluntary prepayment made pursuant to Section 2.7 by the amount of such
voluntary prepayment.
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SECTION 2.9. Termination of Commitments; Final Maturity of Loan. The
Total Commitment (and the Commitment of each Bank) shall terminate, and the
entire outstanding principal balance of the Loan, all interest accrued thereon,
all accrued but unpaid fees hereunder and all other outstanding Obligations
shall be due and payable in full on the Termination Date.
SECTION 2.10. Unused Commitment Fee. On the Revolver Conversion Date,
on each Quarterly Date prior to the Revolver Conversion Date, and, in the event
the Commitments are terminated in their entirety prior to the Revolver
Conversion Date, on the date of such termination, Borrower shall pay to
Administrative Agent, for the ratable benefit of each Bank based on each Bank's
Commitment Percentage, a commitment fee equal to the Commitment Fee Percentage
in effect from day to day (applied on a per annum basis and computed on the
basis of actual days elapsed and as if each calendar year consisted of 365 days)
of the average daily Availability for the Fiscal Quarter (or portion thereof)
ending on the date such payment is due.
SECTION 2.11. Borrowing Base Increase Fee. On the date of any increase
in the Borrowing Base which results in an increase in the Borrowing Base beyond
the existing Apex Borrowing Base, Borrower shall pay to Administrative Agent for
the ratable benefit of each Bank, a borrowing base increase fee equal to
one-half of one percent (.50%) on the difference between (i) the existing Apex
Borrowing Base, and (ii) the Borrowing Base on the day of such increase of the
Borrowing Base after giving effect to such increase.
SECTION 2.12. Agency and other Fees. Borrower shall pay to
Administrative Agent and its Affiliates such other fees and amounts as Borrower
shall be required to pay to Administrative Agent and its Affiliates from time to
time pursuant to any separate agreement between Borrower and Administrative
Agent or such Affiliates. Such fees and other amounts shall be retained by
Administrative Agent and its Affiliates, and no Bank (other than Administrative
Agent) shall have any interest therein.
ARTICLE III
GENERAL PROVISIONS
SECTION 3.1. Delivery and Endorsement of Notes. Simultaneously with the
execution of this Agreement, Administrative Agent shall deliver to each Bank the
Notes payable to such Bank. Each Bank may endorse (and prior to any transfer of
its Notes shall endorse) on the schedules attached and forming a part thereof
appropriate notations to evidence the date and amount of its Commitment
Percentage of each Borrowing, the Interest Period applicable thereto, and the
date and amount of each payment of principal made by Borrower with respect
thereto; provided that the failure by any Bank to so endorse its Notes shall not
affect the liability of Borrower for the repayment of all amounts outstanding
under such Notes together with interest thereon. Each Bank is hereby irrevocably
authorized by Borrower to endorse its Notes and to attach to and make a part of
any Notes a continuation of any such schedule as required.
SECTION 3.2. General Provisions as to Payments. (a) Borrower shall make
each payment of principal of, and interest on, the Loan and all fees payable
hereunder shall be paid not
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later than 11:00 a.m. (New York, New York time) on the date when due, in Federal
or other funds immediately available in New York, New York, to Administrative
Agent at its address set forth on Schedule 1.1 hereto. Administrative Agent will
promptly (and if such payment is received by Administrative Agent by 10:00 a.m.
(New York, New York time), and otherwise if reasonably possible, on the same
Domestic Business Day) distribute to each Bank its Commitment Percentage of each
such payment received by Administrative Agent for the account of Banks. Whenever
any payment of principal of, or interest on, any portion of the Base Rate Loan
or of fees shall be due on a day which is not a Domestic Business Day, the date
for payment thereof shall be extended to the next succeeding Domestic Business
Day (subject to the definition of Interest Period). Whenever any payment of
principal of, or interest on, any portion of any Eurodollar Loan shall be due on
a day which is not a Eurodollar Business Day, the date for payment thereof shall
be extended to the next succeeding Eurodollar Business Day (subject to the
definition of Interest Period). If the date for any payment of principal is
extended by operation of Law or otherwise, interest thereon shall be payable for
such extended time. Borrower hereby authorizes Administrative Agent to charge
from time to time against Borrower's accounts with Administrative Agent any
amount then due.
(b) Prior to the occurrence of an Event of Default, all
principal payments received by Banks with respect to the Loan shall be applied
first to Eurodollar Loans outstanding with Interest Periods ending on the date
of such payment, then to the Base Rate Loan, and then to Eurodollar Loans next
maturing until such principal payment is fully applied.
(c) After the occurrence of an Event of Default, all amounts
collected or received by Administrative Agent or any Bank shall be applied first
to the payment of all proper costs incurred by Administrative Agent in
connection with the collection thereof (including reasonable expenses and
disbursements of Administrative Agent), second to the payment of all proper
costs incurred by Banks in connection with the collection thereof (including
reasonable expenses and disbursements of Banks), third to the reimbursement of
any advances made by Banks to effect performance of any unperformed covenants of
any Credit Party under any of the Loan Documents, fourth to the payment of any
unpaid fees required pursuant to Section 2.13, fifth to the payment of any
unpaid fees required pursuant to Sections 2.1(b), 2.10, 2.11, and 2.12 sixth to
payment to each Bank of its Commitment Percentage of the outstanding principal
of the Loan and accrued but unpaid interest thereon, and seventh to establish
the deposits required pursuant to Section 2.1(b). All payments received by a
Bank after the occurrence of an Event of Default for application to the
principal of the Loan shall be applied by such Bank in the manner provided in
Section 3.2(b).
ARTICLE IV
CHANGE IN CIRCUMSTANCES
SECTION 4.1. Increased Cost and Reduced Return.
(a) If, after the date hereof, the adoption of any applicable
Law, rule, or regulation, or any change in any applicable Law, rule, or
regulation, or any change in the interpretation or administration thereof by any
Governmental Authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or its
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Applicable Lending Office) with any request or directive (whether or not having
the force of law) of any such Governmental Authority, central bank, or
comparable agency:
(i) shall subject such Bank (or its Applicable Lending Office)
to any Tax, duty, or other charge with respect to any Eurodollar Loans,
its Note, or its obligation to make Eurodollar Loans, or change the
basis of taxation of any amounts payable to such Bank (or its
Applicable Lending Office) under this Agreement or its Note in respect
of any Eurodollar Loans (other than Taxes imposed on the overall net
income of such Bank by the jurisdiction in which such Bank has its
principal office or such Applicable Lending Office);
(ii) shall impose, modify, or deem applicable any reserve,
special deposit, assessment, compulsory loan, or similar requirement
(other than the Reserve Requirement utilized in the determination of
the Adjusted Eurodollar Rate) relating to any extensions of credit or
other assets of, or any deposits with or other liabilities or
commitments of, such Bank (or its Applicable Lending Office), including
the Commitment of such Bank hereunder; or
(iii) shall impose on such Bank (or its Applicable Lending
Office) or on the London interbank market any other condition affecting
this Agreement or its Note or any of such extensions of credit or
liabilities or commitments; and
(iv) the result of any of the foregoing is to increase the
cost to such Bank (or its Applicable Lending Office) of making,
Converting into, Continuing, or maintaining any Eurodollar Loans or to
reduce any sum received or receivable by such Bank (or its Applicable
Lending Office) under this Agreement or its Note with respect to any
Eurodollar Loans, then Borrower shall pay to such Bank on demand such
amount or amounts as will compensate such Bank for such increased cost
or reduction. If any Bank requests compensation by Borrower under this
Section 4.1(a), Borrower may, by notice to such Bank (with a copy to
Administrative Agent), suspend the obligation of such Bank to make or
Continue Eurodollar Loans or to Convert all or part of the Base Rate
Loan owing to such Bank into Eurodollar Loans, until the event or
condition giving rise to such request ceases to be in effect (in which
case the provisions of Section 4.4 shall be applicable); provided that
such suspension shall not affect the right of such Bank to receive the
compensation so requested.
(b) If, after the date hereof, any Bank shall have determined
that the adoption of any applicable Law, rule, or regulation regarding capital
adequacy or any change therein or in the interpretation or administration
thereof by any Governmental Authority, central bank, or comparable agency
charged with the interpretation or administration thereof, or 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 the capital of such Bank
or any corporation controlling such Bank as a consequence of such Bank's
obligations hereunder to a level below that which such Bank or such corporation
could have achieved but for such adoption, change, request, or directive (taking
into consideration its policies with respect to capital adequacy), then from
time to time upon demand Borrower shall pay to such Bank such additional amount
or amounts as will compensate such Bank for such reduction.
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(c) Each Bank shall promptly notify Borrower and
Administrative Agent of any event of which it has knowledge, occurring after the
date hereof, which will entitle such Bank to compensation pursuant to this
Section 4.1 and will designate a different Applicable Lending Office if such
designation will avoid the need for, or reduce the amount of, such compensation
and will not, in the judgment of such Bank, be otherwise disadvantageous to it.
Any Bank claiming compensation under this Section 4.1 shall furnish to Borrower
and Administrative Agent a statement setting forth the additional amount or
amounts to be paid to it hereunder which shall be conclusive in the absence of
manifest error. In determining such amount, such Bank may use any reasonable
averaging and attribution methods.
SECTION 4.2. Limitation on Eurodollar Loans. If on or prior to the
first day of any Interest Period for any Eurodollar Loan:
(a) Administrative Agent determines (which determination shall
be conclusive) that by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the Eurodollar Rate
for such Interest Period; or
(b) Required Banks determine (which determination shall be
conclusive) and notify Administrative Agent that the Adjusted Eurodollar Rate
will not adequately and fairly reflect the cost to Banks of funding Eurodollar
Loans for such Interest Period;
then Administrative Agent shall give Borrower prompt notice thereof and the
relevant amounts or periods, and so long as such condition remains in effect,
Banks shall be under no obligation to make additional Eurodollar Loans, Continue
Eurodollar Loans, or to Convert all or any part of the Base Rate Loan into
Eurodollar Loans and Borrower shall, on the last day(s) of the then current
Interest Period(s) for the outstanding Eurodollar Loans, either prepay such
Eurodollar Loans or Convert such Eurodollar Loans into the Base Rate Loan in
accordance with the terms of this Agreement.
SECTION 4.3. Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Bank or its Applicable
Lending Office to make, maintain, or fund Eurodollar Loans hereunder, then such
Bank shall promptly notify Borrower thereof and such Bank's obligation to make
or Continue Eurodollar Loans and to Convert all or any part of the Base Rate
Loan into Eurodollar Loans shall be suspended until such time as such Bank may
again make, maintain, and fund Eurodollar Loans (in which case the provisions of
Section 4.4 shall be applicable).
SECTION 4.4. Treatment of Affected Loans. If the obligation of any Bank
to make particular Eurodollar Loans or to Continue Eurodollar Loans, or to
Convert all or any part of the Base Rate Loan into Eurodollar Loans shall be
suspended pursuant to Section 4.1 or 4.3 hereof, such Bank's Eurodollar Loans
shall be automatically Converted into the Base Rate Loan on the last day(s) of
the then current Interest Period(s) for Eurodollar Loans (or, in the case of a
Conversion required by Section 4.3 hereof, on such earlier date as such Bank may
specify to Borrower with a copy to Administrative Agent) and, unless and until
such Bank gives notice as provided below that the circumstances specified in
Section 4.1 or 4.3 hereof that gave rise to such Conversion no longer exist:
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(a) to the extent that such Bank's Eurodollar Loans have been
so Converted, all payments and prepayments of principal that would otherwise be
applied to such Bank's Eurodollar Loans shall be applied instead to the Base
Rate Loan; and
(b) all Loans that would otherwise be made or Continued by
such Bank as Eurodollar Loans shall be made or Continued instead as part of the
Base Rate Loan, and all or any part of the Base Rate Loan that would otherwise
be Converted into Eurodollar Loans shall remain as part of the Base Rate Loan.
If such Bank gives notice to Borrower (with a copy to Administrative Agent) that
the circumstances specified in Section 4.1 or 4.3 hereof that gave rise to the
Conversion of such Bank's Eurodollar Loans pursuant to this Section 4.4 no
longer exist (which such Bank agrees to do promptly upon such circumstances
ceasing to exist) at a time when Eurodollar Loans made by other Banks are
outstanding, such Bank's portion of the Base Rate Loan shall be automatically
Converted, on the first day(s) of the next succeeding Interest Period(s) for
such outstanding Eurodollar Loans, to the extent necessary so that, after giving
effect thereto, all Loans held by Banks holding Eurodollar Loans are held pro
rata (as to principal amounts, and Interest Periods) in accordance with their
respective Commitments.
SECTION 4.5. Compensation. Upon the request of any Bank, Borrower shall
pay to such Bank such amount or amounts as shall be sufficient (in the
reasonable opinion of such Bank) to compensate it for any loss, cost, or expense
(including loss of anticipated profits) incurred by it as a result of:
(a) any payment, prepayment, or Conversion of a Eurodollar
Loan for any reason (including, without limitation, the acceleration of the
Loan) on a date other than the last day of the Interest Period for such Loan; or
(b) any failure by Borrower for any reason (including, without
limitation, the failure of any condition precedent specified in Article VII to
be satisfied) to borrow, Convert, Continue, or prepay a Eurodollar Loan on the
date for such Borrowing, Conversion, Continuation, or prepayment specified in
the relevant notice of Borrowing, prepayment, Continuation, or Conversion under
this Agreement.
SECTION 4.6. Taxes. (a) Any and all payments by Borrower to or for the
account of any Bank or Administrative Agent hereunder or under any other Loan
Document shall be made free and clear of and without deduction for any and all
present or future Taxes, duties, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding, in the case
of each Bank and Administrative Agent, Taxes imposed on its income, and
franchise Taxes imposed on it, by the jurisdiction under the Laws of which such
Bank (or its Applicable Lending Office) or Administrative Agent (as the case may
be) is organized or any political subdivision thereof (all such non-excluded
Taxes, duties, levies, imposts, deductions, charges, withholdings, and
liabilities being hereinafter referred to as "Non-Excluded Taxes"). If Borrower
shall be required by Law to deduct any Non-Excluded Taxes from or in respect of
any sum payable under this Agreement or any other Loan Document to any Bank or
Administrative Agent, (i) the sum payable shall be increased as necessary so
that after making all required deductions (including deductions applicable
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to additional sums payable under this Section 4.6) such Bank or Administrative
Agent receives an amount equal to the sum it would have received had no such
deductions been made, (ii) Borrower shall make such deductions, (iii) Borrower
shall pay the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable Law, and (iv) Borrower shall furnish to
Administrative Agent, at its address referred to in Section 14.1, the original
or a certified copy of a receipt evidencing payment thereof.
(b) In addition, Borrower agrees to pay any and all present or
future stamp or documentary Taxes and any other excise or property Taxes or
charges or similar levies which arise from any payment made under this Agreement
or any other Loan Document or from the execution or delivery of, or otherwise
with respect to, this Agreement or any other Loan Document (hereinafter referred
to as "Other Taxes").
(c) Borrower agrees to indemnify each Bank and Administrative
Agent for the full amount of Non-Excluded Taxes and Other Taxes (including,
without limitation, any Non- Excluded Taxes or Other Taxes imposed or asserted
by any jurisdiction on amounts payable under this Section 4.6) paid by such Bank
or Administrative Agent (as the case may be) and any liability (including
penalties, interest, and expenses) arising therefrom or with respect thereto.
(d) Each Bank organized under the Laws of a jurisdiction
outside the United States, on or prior to the date of its execution and delivery
of this Agreement in the case of each Bank listed on the signature pages hereof
and on or prior to the date on which it becomes a Bank in the case of each other
Bank, and from time to time thereafter if requested in writing by Borrower or
Administrative Agent (but only so long as such Bank remains lawfully able to do
so), shall provide Borrower and Administrative Agent with (i) Internal Revenue
Service Form 1001 or 4224, as appropriate, or any successor form prescribed by
the Internal Revenue Service, certifying that such Bank is entitled to benefits
under an income tax treaty to which the United States is a party which reduces
the rate of withholding tax on payments of interest or certifying that the
income receivable pursuant to this Agreement is effectively connected with the
conduct of a trade or business in the United States, (ii) Internal Revenue
Service Form W-8 or W-9, as appropriate, or any successor form prescribed by the
Internal Revenue Service, and (iii) any other form or certificate required by
any taxing authority (including any certificate required by Sections 871(h) and
881(c) of the Code), certifying that such Bank is entitled to an exemption from
or a reduced rate of tax on payments pursuant to this Agreement or any of the
other Loan Documents.
(e) For any period with respect to which a Bank has failed to
provide Borrower and Administrative Agent with the appropriate form pursuant to
Section 4.6(d) (unless such failure is due to a change in treaty, Law, or
regulation occurring subsequent to the date on which a form originally was
required to be provided), such Bank shall not be entitled to indemnification
under Section 4.6(a) or 4.6(b) with respect to Non-Excluded Taxes imposed by the
United States; provided, however, that should a Bank, which is otherwise exempt
from or subject to a reduced rate of withholding tax, become subject to
Non-Excluded Taxes because of its failure to deliver a form required hereunder,
Borrower shall take such steps as such Bank shall reasonably request to assist
such Bank to recover such Non-Excluded Taxes.
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(f) If Borrower is required to pay additional amounts to or
for the account of any Bank pursuant to this Section 4.6, then such Bank will
agree to use reasonable efforts to change the jurisdiction of its Applicable
Lending Office so as to eliminate or reduce any such additional payment which
may thereafter accrue if such change, in the judgment of such Bank, is not
otherwise disadvantageous to such Bank.
(g) Within thirty (30) days after the date of any payment of
Non-Excluded Taxes, Borrower shall furnish to Administrative Agent the original
or a certified copy of a receipt evidencing such payment.
(h) Without prejudice to the survival of any other agreement
of Borrower hereunder, the agreements and obligations of Borrower contained in
this Section 4.6 shall survive the termination of the Commitments and the
payment in full of the Notes.
SECTION 4.7. Discretion of Banks as to Manner of Funding.
Notwithstanding any provisions of this Agreement to the contrary, each Bank
shall be entitled to fund and maintain its funding of all or any part of its
Commitment in any manner it sees fit, it being understood, however, that for the
purposes of this Agreement all determinations hereunder shall be made as if such
Bank had actually funded and maintained each Eurodollar Loan during the Interest
Period for such Eurodollar Loan through the purchase of deposits having a
maturity corresponding to the last day of such Interest Period and bearing an
interest rate equal to the Adjusted Eurodollar Rate for such Interest Period.
ARTICLE V
BORROWING BASE
SECTION 5.1. Delivery of Reserve Reports. (a) As soon as available and
in any event by February 15 and August 15 of each year commencing February 15,
1999, Borrower shall deliver to each Bank, at Borrower's expense, a Reserve
Report prepared as of the immediately preceding December 31 and June 30,
respectively. In addition to the foregoing, as soon as available and in any
event by May 15 and November 15 of each year commencing May 15, 1999, Borrower
shall deliver to each Bank a Reserve Update prepared as of the immediately
preceding March 31 and September 30, respectively, which shall set forth the
information described in the definition of such term contained in Section 1.1
hereof. As soon as practical after each Bank's receipt of the Reserve Report and
the Reserve Update, as applicable, but in no event later than the applicable
Redetermination Date, as the case may be, Banks shall redetermine the Maximum
Borrowing Base in accordance with Section 5.5 and Administrative Agent shall
promptly notify Borrower of the amount of the Maximum Borrowing Base as so
determined.
(b) In the event that Borrower does not furnish to Banks the
Reserve Report and Reserve Update (as applicable) or any other information
specified in clause (a) above by the date specified therein, Banks may
nonetheless redetermine the Maximum Borrowing Base and redesignate the Maximum
Borrowing Base from time to time thereafter at their discretion until Banks
receive the relevant Reserve Report or Reserve Update (as applicable) or other
information,
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whereupon Banks shall redetermine the Maximum Borrowing Base as otherwise
specified in this Article V.
(c) Each delivery of a Reserve Report and Reserve Update by
Borrower to Banks shall constitute a representation and warranty by Borrower to
Administrative Agent and each Bank that, unless otherwise disclosed to
Administrative Agent and each Bank in writing on or prior to the date of such
delivery, (i) Borrower owns the Mineral Interests described in the Reserve
Report (or Reserve Update, as applicable) free and clear of any Liens (except
Permitted Encumbrances), and (ii) Mineral Interests representing not less than
the Required Reserve Value of the Proven Reserves reflected in such Reserve
Report (or Reserve Update, as applicable) constitute Mortgaged Property.
SECTION 5.2. Selection of Borrowing Base. Upon notification by
Administrative Agent to Borrower of the amount of the Maximum Borrowing Base,
Borrower shall notify Administrative Agent and each Bank of the amount of the
Borrowing Base requested by Borrower which shall not exceed the amount of the
Maximum Borrowing Base. The Borrowing Base selected by Borrower shall be the
Borrowing Base which shall remain in effect until the next Redetermination Date,
provided that the Borrowing Base may be redetermined between Redetermination
Dates in accordance with Section 5.3 hereof. If Borrower fails to notify
Administrative Agent and each Bank of the amount of the requested Borrowing Base
within ten (10) days after Borrower is notified of the amount of the Maximum
Borrowing Base, Borrower will be deemed to have selected the Maximum Borrowing
Base.
SECTION 5.3. Special Redeterminations of Maximum Borrowing Base.
Special Redeterminations of the Maximum Borrowing Base may be requested by
Borrower or Required Banks at any time during the term hereof; provided,
however, that there shall be no more than an aggregate of two (2) Special
Redeterminations in any calendar year. If any Special Redetermination is
requested by Borrower, it shall be accompanied by such information regarding
Borrower's business (including the Mineral Interests and the Proven Reserves and
production relating thereto) as Banks may reasonably request, including without
limitation a Reserve Report to be delivered at least fifteen (15) days prior to
the requested date of Redetermination. If any Special Redetermination is
requested by Required Banks, Borrower shall provide Administrative Agent and
each Bank with a Reserve Report as soon as possible following the request;
provided, however, such Special Redetermination shall not be counted as a
Special Redetermination for purposes of the first sentence of this Section 5.3.
The determination whether to increase or decrease the Maximum Borrowing Base
shall then be made by all Banks (in the case of an increase) or Required Banks
(in the case of a decrease or reaffirmation) in their sole discretion in
accordance with the standards set forth in Article V hereof. Promptly following
any Special Redetermination pursuant to this Section 5.3, Administrative Agent
shall notify Borrower of the amount of the Maximum Borrowing Base as so
redetermined. In the event of any Special Redetermination of the Maximum
Borrowing Base pursuant to this Section 5.3, Required Banks in the exercise of
their discretion may suspend the next regularly Scheduled Redetermination of the
Maximum Borrowing Base.
SECTION 5.4. Disposition Redetermination. In addition to Scheduled
Redeterminations and Special Redeterminations, in the event during any period
between Redeterminations of the Borrowing Base, Borrower sells Proven Reserves
pursuant to, and in accordance with, Section 10.10 hereof, the Borrowing Base
shall be automatically reduced by the
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amounts, and in the manner, provided in such Section 10.10. Promptly following
any reduction in the Borrowing Base pursuant to this Section 5.4 and Section
10.10, Administrative Agent shall notify Borrower and each Bank of the amount of
the Borrowing Base so reduced, which Borrowing Base shall be effective as of the
date specified in such notice, and shall remain in effect for all purposes of
this Agreement until the next Redetermination.
SECTION 5.5. Standards for Redetermination. Each Redetermination of the
Maximum Borrowing Base by Banks made pursuant to this Article V shall be made
(i) in the sole discretion of Banks, (ii) generally in accordance with each such
Bank's then current practices, customary internal standards and procedures used
by each such Bank for its petroleum industry customers for valuing and
redetermining the value of oil and gas properties in connection with reserve
based on oil and gas loan transactions, (iii) in conjunction with the most
recent Reserve Report, Reserve Update or other information received by
Administrative Agent and each Bank and deemed reliable by Administrative Agent
and each Bank (in their sole discretion) relating to the Proven Reserves of
Borrower in the Mineral Interests of Borrower, which secure the Loan (to the
extent required by Section 6.1 hereof), and (iv) based upon the estimated value
of the Proven Reserves owned by Borrower in the Mineral Interests of Borrower
which secure the Loan (to the extent required by Section 6.1 hereof) as
determined by Required Banks; provided, however, no Proven Reserves shall be
included or considered for inclusion in the Maximum Borrowing Base unless (A)
such Proven Reserves are (or will become simultaneously with a Borrowing
hereunder) Collateral (to the extent required by Section 6.1 hereof), and (B)
Administrative Agent and each Bank shall have received, at Borrower's expense,
evidence of title satisfactory in form and substance to Required Banks that
Administrative Agent (for the ratable benefit of Banks) has a perfected, first
priority Lien (except for Permitted Encumbrances) on such Proven Reserves to the
extent required by Section 6.1. At all times after Administrative Agent has
given Borrower notification of a Redetermination of the Maximum Borrowing Base
under this Article V, the Maximum Borrowing Base shall be equal to the
redetermined amount until the Maximum Borrowing Base is subsequently
redetermined in accordance with this Article V subject, however, to reduction
pursuant to Section 10.10(ii).
SECTION 5.6. Voluntary Designation of Borrowing Base. Borrower may from
time to time and at any time prior to the Revolver Conversion Date, upon two (2)
Domestic Business Days' prior written notice to Administrative Agent and each
Bank, decrease the Borrowing Base, by designating a Borrowing Base which is
lower than the Borrowing Base then in effect. Any such designation shall be
effective as of the date of the notice.
SECTION 5.7. Borrowing Base Deficiency. If a Borrowing Base Deficiency
exists after giving effect to any Redetermination, Borrower shall be obligated
to eliminate such Borrowing Base Deficiency in the manner required by Section
2.4.
SECTION 5.8. Initial Borrowing Base. Notwithstanding anything to the
contrary contained herein, the Borrowing Base in effect during the period
commencing on the Closing Date and ending on the effective date of the first
Redetermination after the Closing Date shall be the Initial Borrowing Base.
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ARTICLE VI
COLLATERAL AND GUARANTEES
SECTION 6.1. Security. (a) The Obligations shall be secured by first
and prior Liens (subject only to Permitted Encumbrances) covering and
encumbering (i) the Mineral Interests owned by Borrower specified by
Administrative Agent or Required Banks which shall in all events include not
less than the Required Reserve Value of all Proven Reserves owned by Borrower on
and after the Closing Date, and (ii) one hundred percent (100%) of the
outstanding membership interests of Spanish Peaks owned by Borrower. On the
Closing Date, Borrower shall deliver to Administrative Agent, for the ratable
benefit of each Bank (A) the Assignments and Amendments to Mortgages in form and
substance acceptable to Administrative Agent and duly executed and delivered by
Borrower and Existing Bank, together with such other assignments, conveyances,
amendments, agreements and other writings, including, without limitation, UCC-3
amendments and assignments (each duly authorized and executed) as Administrative
Agent shall deem necessary or appropriate to assign and convey the Existing
Mortgages to Administrative Agent for the ratable benefit of each Bank, and to
confirm, evidence and perfect the Liens created by the Existing Mortgages in
favor of Administrative Agent for the ratable benefit of each Bank, (B)
Mortgages in form and substance acceptable to Administrative Agent and duly
executed and delivered by Borrower, together with such other assignments,
conveyances, amendments, agreements and other writings, including, without
limitation, UCC-1 financing statements (each duly authorized and executed) as
Administrative Agent shall deem necessary or appropriate to grant, evidence and
perfect the Liens required by this Section 6.1(a) on Mineral Interests which are
not subject to the Existing Mortgages, (C) the Amended and Restated Pledge
Agreement duly executed and delivered by Borrower, (D) such UCC-1 financing
statements and UCC-3 amendments and assignments as Administrative Agent shall
require to fully evidence and perfect the Liens created by the Amended and
Restated Pledge Agreement, and (E) certificates of interests evidencing all of
the outstanding membership interests of Spanish Peaks owned by Borrower, duly
endorsed for transfer to Administrative Agent.
(b) On the Closing Date and on or before each Redetermination
Date after the Closing Date and at such other times as Administrative Agent or
Required Banks shall request, Borrower shall deliver to Administrative Agent,
for the ratable benefit of each Bank, Mortgages in form and substance acceptable
to Administrative Agent and duly executed by Borrower, together with such other
assignments, conveyances, amendments, agreements and other writings, including,
without limitation, UCC-1 financing statements (each duly authorized and
executed) as Administrative Agent shall deem necessary or appropriate to grant,
evidence and perfect the Liens required by Section 6.1(a) preceding with respect
to Mineral Interests then held by Borrower which are not the subject of existing
first and prior, perfected Liens securing the Obligations as required by Section
6.1(a) preceding.
SECTION 6.2. Title Opinions. At any time Borrower or any of its
Subsidiaries are required to execute and deliver Mortgages to Administrative
Agent pursuant to Section 6.1, Borrower shall also deliver to Administrative
Agent such opinions of counsel (including, if so requested, title opinions, and
in each case addressed to Administrative Agent) and other evidence of title as
Administrative Agent shall deem necessary or appropriate to verify (a)
Borrower's title to
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the Required Reserve Value of the Proven Reserves which are subject to such
Mortgages, and (b) the validity, perfection and priority of the Liens created by
such Mortgages.
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.1. Restatement of Existing Credit Agreement; Conditions to
Initial Borrowing and Participation in Letter of Credit Exposure. Borrower
hereby acknowledges that Administrative Agent and each Bank have relied on the
documents, instruments, agreements and actions referred to in this Article VII
in amending and restating the Existing Credit Agreement on the terms set forth
herein, and but for Borrower's execution and/or delivery and/or performance (as
applicable) of the documents, instruments, agreements, conditions and
obligations referred to in this Article VII, Banks and Administrative Agent
would not have amended and restated the Existing Credit Agreement on the terms
set forth herein.
(a) Closing Deliveries. Administrative Agent received each of
the following documents, instruments and agreements, in such counterparts as are
acceptable to Administrative Agent and each Bank and each of which is, unless
otherwise indicated, dated the Closing Date:
(i) a Note payable to the order of each Bank, each in the
amount of such Bank's Commitment, duly executed by Borrower;
(ii) the Amended and Restated Pledge Agreement duly executed
and delivered by Borrower together with (A) certificates of interests
evidencing all of the outstanding membership interests of Spanish Peaks
owned by Borrower, duly endorsed for transfer to Administrative Agent,
or such other duly executed assignments of such membership interests as
are acceptable to Administrative Agent, Banks or their counsel, and (B)
such UCC-1 financing statements and UCC-3 amendments and assignments
executed by Borrower and Existing Bank, as Administrative Agent shall
request to confirm, evidence and perfect the Liens granted pursuant to
such Amended and Restated Pledge Agreement;
(iii) the Assignments and Amendments to Mortgages duly
executed and delivered by Borrower and Existing Bank together with such
other assignments, conveyances, amendments, agreements and other
writings, including, without limitation, UCC-3 amendments and
assignments, in form and substance satisfactory to Administrative
Agent, to properly assign and convey to Administrative Agent the
Existing Mortgages;
(iv) the Mortgages to be executed on the Closing Date pursuant
to Section 6.1, duly executed and delivered by Borrower, together with
such other assignments, conveyances, amendments, agreements and other
writings, including, without limitation, UCC-1 financing statements in
form and substance satisfactory to Administrative Agent;
(v) a Certificate of Ownership Interests substantially in the
form of Exhibit I, duly executed and delivered by an Authorized Officer
of Borrower;
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(vi) an opinion of Morris, Laing, Evans, Brock & Kennedy,
counsel for Borrower, in form and substance satisfactory to
Administrative Agent;
(vii) an opinion of Thompson & Knight, P.C., special Delaware
corporate counsel for Borrower, in form and substance satisfactory to
Administrative Agent;
(viii) an opinion of Pruitt, Gushee & Bachtell, special Utah
counsel for Borrower, favorably opining as to the enforceability of the
Mortgages in Utah and otherwise in form and substance satisfactory to
Administrative Agent;
(ix) an opinion of Bjork, Lindley & Danielson, P.C., special
Colorado counsel for Borrower, favorably opining as to the
enforceability of the Mortgages in Colorado and otherwise in form and
substance satisfactory to Administrative Agent;
(x) a certificate signed by an Authorized Officer of Borrower
stating that (a) the representations and warranties contained in this
Agreement and the other Loan Documents are true and correct in all
respects, and (b) no Default or Event of Default has occurred and is
continuing, and (c) all conditions set forth in this Section 7.1 and
Section 7.2 have been satisfied;
(xi) a copy of each Merger Document, together with a
certificate executed by an Authorized Officer of Borrower certifying
that such copies are accurate and complete and represent the complete
understanding and agreement of the parties with respect to the subject
matter thereof;
(xii) copies of the Merger Certificate filed with the Kansas
and Delaware Secretaries of State (as applicable), together with such
certificates, affidavits or other instruments suitable for recording
same in the applicable counties and offices in Colorado, Kansas, Texas
and Utah, certifying or otherwise evidencing that such copies are
accurate and complete copies of the Merger Certificate as so filed;
(xiii) certificates from Borrower's insurance broker setting
forth the insurance maintained by Borrower, stating that such insurance
is in full force and effect, that all premiums due have been paid and
stating that such insurance is adequate and complies with the
requirements of Section 9.3;
(xiv) a copy of the articles or certificate of incorporation
or comparable charter documents, and all amendments thereto, of
Borrower and each other Credit Party accompanied by a certificate that
such copy is true, correct and complete, and dated within ten (10) days
of the Closing Date, issued by the appropriate Governmental Authority
of the jurisdiction of incorporation or organization of Borrower and
any such other Credit Party, and accompanied by a certificate of the
Secretary or comparable Authorized Officer of Borrower that such copy
is true, correct and complete on the Closing Date;
(xv) a copy of the bylaws or comparable charter documents, and
all amendments thereto, of Borrower and each other Credit Party
accompanied by a certificate of the
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Secretary or comparable Authorized Officer of Borrower that such copy
is true, correct and complete as of the date hereof;
(xvi) certain certificates and other documents issued by the
appropriate Governmental Authorities of such jurisdictions as
Administrative Agent has requested relating to the existence of
Borrower and each other Credit Party and to the effect that Borrower
and such other Credit Parties are in good standing with respect to the
payment of franchise and similar Taxes and are duly qualified to
transact business in such jurisdictions;
(xvii) a certificate of incumbency of all officers of Borrower
and each other Credit Party (to the extent a party to any Loan
Document) who will be authorized to execute or attest to any Loan
Document, dated the date hereof, executed by the Secretary or
comparable Authorized Officer of Borrower and any such other Credit
Party (as applicable); and
(xviii) copies of resolutions or comparable authorizations
approving the Loan Documents and authorizing the transactions
contemplated by this Agreement and the other Loan Documents, duly
adopted by the Board of Directors, partners or comparable authority of
Borrower and each other Credit Party a party to any Loan Document,
accompanied by certificates of the Secretary or comparable officer of
Borrower and any such other Credit Party (as applicable) that such
copies are true and correct copies of resolutions duly adopted at a
meeting of or (if permitted by applicable Law and, if required by such
Law, by the Bylaws, or other charter documents of Borrower or such
other Credit Party, as applicable) by the unanimous written consent of
the Board of Directors of Borrower or such other Credit Party, as
applicable, and that such resolutions constitute all the resolutions
adopted with respect to such transactions, have not been amended,
modified, or revoked in any respect, and are in full force and effect
as of the date hereof.
(b) Closing Fees. Borrower has paid to Administrative Agent
the fees payable to Administrative Agent and the Affiliates of Administrative
Agent pursuant to Section 2.12.
SECTION 7.2. Conditions to Each Borrowing and each Letter of Credit.
The obligation of each Bank to loan its Commitment Percentage of each Borrowing
and the obligation of Administrative Agent to issue a Letter of Credit on the
date such Letter of Credit is to be issued is subject to the further
satisfaction of the following conditions:
(a) timely receipt by Administrative Agent of a Request for
Borrowing or a Request for Letter of Credit (as applicable);
(b) immediately before and after giving effect to such
Borrowing or issuance of such Letter of Credit, no Default or Event of Default
shall have occurred and be continuing and the funding of such Borrowing or the
issuance of the requested Letter of Credit (as applicable) shall not cause a
Default or Event of Default;
(c) the representations and warranties of each Credit Party
contained in this Agreement and the other Loan Documents shall be true and
correct on and as of the date of such Borrowing or issuance of such Letter of
Credit (as applicable);
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(d) the funding of such Borrowing or the issuance of such
Letter of Credit (as applicable) and all other Borrowings to be made and/or
Letter(s) of Credit to be issued (as applicable) on the same day under this
Agreement, shall not cause a Borrowing Base Deficiency;
(e) no Material Adverse Change shall have occurred; and
(f) the funding of such Borrowing or the issuance of such
Letter of Credit (as applicable) shall be permitted by applicable Law.
The funding of each Borrowing and the issuance of each Letter of Credit
hereunder shall be deemed to be a representation and warranty by Borrower on the
date of such Borrowing and the date of issuance of each Letter of Credit as to
the facts specified in Sections 7.2(b) through (e).
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Administrative Agent and each Bank
that each of the following statements is true and correct after giving effect to
the Merger, is true and correct on the date hereof and will be true and correct
on the occasion of each Borrowing and the issuance of each Letter of Credit:
SECTION 8.1. Organization and Powers. Each Credit Party (i) is duly
organized, validly existing and in good standing under the Laws of the state of
its organization or incorporation, (ii) has all requisite corporate, limited
liability company or partnership power and authority to own its property and
assets and to carry on its business as now conducted and as proposed to be
conducted, except that under Colorado law, Spanish Peaks may be required to
convert to a corporate form or form a corporate subsidiary in order to obtain
eminent domain powers which will allow it to obtain certain rights of way for
its proposed gas gathering pipeline, (iii) is qualified to do business in every
jurisdiction where such qualification is necessary, (iv) has the corporate,
limited liability company or partnership power and authority to execute, deliver
and perform each Loan Document to which it is or will be a party, and (v) has
taken all corporate, limited liability company or partnership action necessary
to authorize the execution, delivery and performance of the Loan Documents to
which it is or will be a party.
SECTION 8.2. Validity and Binding Nature. This Agreement has been duly
executed and delivered by Borrower and each other Loan Document when executed
and delivered by each Credit Party will be, a legal, valid and binding
obligation of such Credit Party enforceable against it in accordance with its
terms (except as enforcement thereof may be limited by bankruptcy,
reorganization, insolvency, moratorium or other Laws affecting the enforcement
of creditors' rights generally).
SECTION 8.3. Compliance with Laws and Documents. No Credit Party is,
nor will the execution, delivery and the performance of and compliance with the
terms of the Loan Documents cause any Credit Party to be, in violation of (a)
any Laws, or (b) its certificate or articles
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of incorporation, bylaws, agreement of limited partnership or other
organizational documents (as amended). The execution, delivery and the
performance of and compliance with the terms of the Loan Documents are not
inconsistent with, and will not conflict with or result in any breach of, or
constitute a default under, or result in the creation or imposition of any Lien
(except pursuant to the Loan Documents) upon any of the property, assets or
revenues of any Credit Party pursuant to the terms of, any indenture, mortgage,
lease, deed of trust, agreement, contract, instrument or Law to which any Credit
Party is a party or by which any Credit Party or any Credit Party's property,
assets or revenue is bound or to which it is subject.
SECTION 8.4. Prior Names. In the last five (5) years, no Credit Party
has transacted business under any other corporate, partnership or trade name,
been a party to any merger (other than the Merger), combination, or
consolidation or acquired all or substantially all of the assets of any Person.
SECTION 8.5. Relationship with Banks. No Person who may be deemed to
have "control" of any Credit Party is an "executive officer," "director," or
"principal shareholder" of any Bank or any correspondent of any Bank, as such
quoted terms are defined in Section 215.2 of Regulation O of the Board of
Governors of the Federal Reserve System, as amended.
SECTION 8.6. Financial.
(a) The most recent annual audited consolidated and
consolidating balance sheets of Borrower and its Consolidated Subsidiaries and
the related consolidated and consolidating statements of operations and cash
flows for the Fiscal Year then ended, copies of which have been delivered to
each Bank, fairly present, in conformity with GAAP, the consolidated and
consolidating financial position of Borrower and its Consolidated Subsidiaries
as of the end of such Fiscal Year and its consolidated results of operations and
cash flows for such Fiscal Year.
(b) The most recent quarterly unaudited consolidated and
consolidating balance sheets of Borrower and its Consolidated Subsidiaries
delivered to Banks, and the related unaudited consolidated and consolidating
statements of operations and cash flows for the portion of Borrower's Fiscal
Year then ended, fairly present, in conformity with GAAP applied on a basis
consistent with the financial statements referred to in Section 8.6(a), the
consolidated and consolidating financial position of Borrower and its
Consolidated Subsidiaries as of such date and its consolidated and consolidating
results of operations and cash flows for such portion of Borrower's Fiscal Year.
(c) Since the date of Borrower's most recent annual audited
consolidated and consolidating balance sheets and consolidated and consolidating
statements of operations and cash flow referenced in Sections 9.1(a), no
Material Adverse Change has occurred.
SECTION 8.7. Litigation. Except as described on Schedule 8.7 attached
hereto, no Credit Party is involved in, nor is any Credit Party aware of, any
Litigation affecting any Credit Party, nor are there any outstanding or unpaid
judgments against any Credit Party. None of the Litigation described on Schedule
8.7 attached hereto could, collectively or individually, result in a Material
Adverse Change if determined adversely against any Credit Party.
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SECTION 8.8. Taxes and Claims. All Tax returns and reports of each
Credit Party required to be filed have been filed. All lawful claims under
operating agreements, pooling orders and unitization agreements, and for labor,
material and supplies, which, if unpaid, might become a Lien upon any of its
property, and all Taxes and claims imposed upon each Credit Party which are due
and payable have been paid.
SECTION 8.9 Government Regulation. No Credit Party nor any transaction
contemplated hereunder is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Investment Company Act of 1940,
the Interstate Commerce Act (as any of the preceding acts have been amended),
any regulations promulgated by the Office of Foreign Assets Control as codified
in Chapter V of 31 C.F.R., or any other Law (other than Regulation T, U or X of
the Board of Governors of the Federal Reserve System) which regulates the
incurrence of Debt.
SECTION 8.10. Employee Benefit Plans.
(a) Except as set forth on Schedule 8.10, neither Borrower nor
any ERISA Affiliate currently sponsors or contributes to, nor has any contract
or other obligation to contribute to (nor has Borrower or any ERISA Affiliate in
the preceding sixty (60) calendar months sponsored or contributed to, or
contracted to or become otherwise obligated to contribute to) any Plan or any
Multiemployer Plan.
(b) Each Plan is in compliance with all applicable provisions
of ERISA, the Code and all other Laws, except for any failures to be in
compliance therewith which in the aggregate would not result in a Material
Adverse Change. With respect to each Plan (other than a "Multiemployer Plan"),
all reports required under ERISA or other applicable Law to be filed with any
Governmental Authority, the failure of which to file could reasonably result in
a Material Adverse Change, have been timely filed.
(c) No "accumulated funding deficiency" (as defined in section
412(a) of the Code) with respect to any Plan has been incurred (without regard
to any waiver granted under section 412 of the Code), nor has any funding waiver
from the Internal Revenue Service been received or requested. Each Plan that is
intended to be "qualified" within the meaning of section 401(a) of the Code has
received all necessary governmental approvals, including a favorable
determination as to the qualification under the Code of each such Plan and each
amendment thereto, have been timely obtained and, to the knowledge of Borrower
and each ERISA Affiliate, there are no existing circumstances nor any events
that have occurred that would adversely affect the qualified status of any such
Plan or the tax exempt status of its related trust.
(d) Borrower and each ERISA Affiliate have complied in all
material respects with all requirements of ERISA sections 601 through 608 and
Code section 4980B. Neither Borrower nor any ERISA Affiliate has made any
promises of retirement or other benefits to employees, except as set forth in
the Plans, and neither Borrower nor any ERISA Affiliate maintains or has
established any Plan which is a "welfare benefit plan" within the meaning of
section 3(1) of ERISA which provides for continuing benefits or coverage for any
participant or any beneficiary of a participant after such participant's
termination of employment except as may be required by
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sections 601 through 608 of ERISA and section 4980B of the Code, and at the
expense of the participant or the beneficiary of the participant, or retiree
medical liabilities. Neither Borrower nor any ERISA Affiliate maintains, has
established or has ever participated in a multiple employer welfare benefit
arrangement as described in section 3(40)(A) of ERISA.
(e) Neither Borrower nor any ERISA Affiliate has incurred any
material liability to the PBGC in connection with any Plan. The assets of each
Plan that is subject to Title IV of ERISA are sufficient to provide the benefits
under such Plan, the payment of which the PBGC would guarantee if such Plan were
terminated, and such assets are also sufficient to provide all other "benefit
liabilities" (as defined in ERISA section 4001(a)(16)) due under the Plan upon
termination. No ERISA Event has occurred and is continuing with respect to any
Plan.
(f) There are no pending, or to the knowledge of Borrower and
each ERISA Affiliate, threatened claims, lawsuits or actions (other than routine
claims for benefits in the ordinary course) asserted or instituted against, and
neither Borrower nor any ERISA Affiliate has knowledge of any threatened
litigation or claims against, the assets of any Plan or its related trust or
against any fiduciary of a Plan with respect to the operation of such Plan.
Neither Borrower nor any ERISA Affiliate has engaged in any prohibited
transaction, within the meaning of section 406 of ERISA or section 4975 of the
Code, in connection with any Plan.
SECTION 8.11. Existing Loan; Purpose of Loan. The principal balance of
all indebtedness outstanding under the Existing Loan Agreement is carried
forward and deemed to be the principal balance of the Loan hereunder. Proceeds
of the Existing Loan were used solely for, and proceeds of the Loan and all
Letters of Credit issued hereunder will be used solely for, general working
capital and corporate purposes. None of the proceeds of the Existing Loan were
used for, and no proceeds of the Loan and no Letter of Credit issued hereunder
will be used (i) to purchase or carry any "Margin Stock" (within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System), or (ii)
for any purpose in violation of Regulations T, U or X of said Board of
Governors.
SECTION 8.12. Properties; Liens; Debt. Borrower has fee simple legal
title to or valid leasehold interest in, and Borrower is the beneficial owner
of, all the Mineral Interests reflected in the Reserve Report. Except for
Permitted Encumbrances and Liens in favor of Administrative Agent (for the
ratable benefit of Banks), there is no Lien on any of the Mineral Interests
reflected in the Reserve Report. Borrower has no Debt other than that listed on
Schedule 8.12 attached hereto.
SECTION 8.13. Material Contracts. No Credit Party is, nor will the
execution, delivery and performance of and compliance with the terms of the Loan
Documents cause any Credit Party to be, in default (nor has any potential
default occurred) under any Material Contract or any other material agreement,
document or instrument other than such defaults or potential defaults which
could not, individually or collectively, cause a Material Adverse Effect.
SECTION 8.14. No Consents. No order, consent, approval, license,
permit, waiver, exemption, authorization of or validation of, or filing,
recording or registration with (except as heretofore have been obtained or
made), or exemption by, any Person is required to authorize, or is
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required in connection with, the execution, delivery, performance, legality,
validity, binding effect, or enforceability of the Loan Documents.
SECTION 8.15. Environmental Laws; Hazardous Materials. Except as set
forth on Schedule 8.15 attached hereto:
(a) To the best knowledge of each Credit Party, neither any
property of any Credit Party nor the operations conducted thereon violates any
Applicable Environmental Laws or order of any court or Governmental Authority
with respect to Applicable Environmental Laws;
(b) Without limitation of clause (a) above, no property of any
Credit Party and no operations currently conducted thereon or, to the best
knowledge of each Credit Party, by any prior owner or operator of such property
or operation, are in violation of or subject to any existing, pending or, to the
best knowledge of each Credit Party, threatened action, suit, investigation,
inquiry or proceeding by or before any court or Governmental Authority with
respect to Applicable Environmental Laws or to any remedial obligations under
Applicable Environmental Laws;
(c) To the best knowledge of each Credit Party, all notices,
permits, licenses or similar authorizations, if any, required to be obtained or
filed in connection with the operation or use of any and all property of each
Credit Party, including, without limitation, past or present treatment, storage,
disposal or release of a Hazardous Material into the environment, have been duly
obtained or filed;
(d) To the best knowledge of each Credit Party, all Hazardous
Material generated at any and all property of any Credit Party have in the past
been transported, treated and disposed of only by carriers maintaining valid
permits under RCRA and any other Applicable Environmental Law and only at
treatment, storage and disposal facilities maintaining valid permits under RCRA
and any other Applicable Environmental Law, which carriers and facilities have
been and are operating in compliance with such permits;
(e) Each Credit Party has taken all steps necessary and
reasonable to determine and has determined that no Hazardous Material has been
disposed of or otherwise released that has had or could reasonably be expected
to have a Material Adverse Effect and, to the best knowledge of any Credit
Party, that there has been no threatened release of any Hazardous Material on or
to any property of any Credit Party except in compliance with Applicable
Environmental Laws; and
(f) To the best knowledge of each Credit Party, no Credit
Party has any contingent liability in connection with any release, or threatened
release, of any Hazardous Material into the environment.
SECTION 8.16. Capitalization and Control. Schedule 8.16 attached hereto
accurately sets forth the authorized, issued and outstanding Capital Stock of
every class of each Credit Party, including, with respect to each Credit Party,
the name of each record and beneficial owner of outstanding Capital Stock of
such Credit Party and the number of shares held by each; provided that such
schedule is not required to reflect the name of each shareholder of Borrower
which acquired Capital Stock of Borrower in Borrower's initial public offering
or in market transactions subsequent
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thereto unless such shareholder is NGP, a member of the Management Group or one
of their Affiliates. Except as reflected on Schedule 8.16 (a) no Credit Party
has issued, and there are not presently outstanding, any warrants, options,
subscription rights or other rights to acquire Capital Stock or other equity
interests in any Credit Party or securities convertible into Capital Stock or
other equity securities of any Credit Party, (b) no Credit Party is under any
obligation, written or otherwise, to register any Capital Stock or other equity
securities under the Act or any state securities Laws, and (c) there are no
shareholders agreements, voting agreements, contractual restrictions on transfer
or other similar agreements or arrangements affecting the outstanding Capital
Stock, or other equity securities of any Credit Party.
SECTION 8.17. General. There are no material facts or conditions known
to any Credit Party relating to the Loan Documents, any of the their properties
or assets or the financial condition and business of any Credit Party which
could, individually or collectively, result in a Material Adverse Change and
which have not been related in writing to each Bank. All writings heretofore or
hereafter exhibited or delivered to Banks by or on behalf of any Credit Party
are and will be genuine and in all respects what they purport and appear to be.
No information furnished to Banks by or on behalf of any Credit Party contains
any material misstatement of fact or, to any Credit Party's knowledge, omits to
state any fact necessary to make the statements contained herein or therein in
light of the circumstances in which they were made not materially misleading.
SECTION 8.18. Mortgaged Properties Same as Properties Engineered. The
Borrowing Base Properties described in the Reserve Report are part of the
Mortgaged Properties as described and defined in the Mortgages and represent not
less than the Required Reserve Value of all Proven Reserves which are the
subject of such Mortgages.
SECTION 8.19. Title to Properties. Borrower and each of the other
Credit Parties has good and valid title to all material properties and assets
purported to be owned by it, including, without limitation, all assets reflected
on the balance sheets referred to in Section 8.6(a) and (b), and all assets
which are used by the Credit Parties in the operation of their respective
businesses, and none of such properties or assets is subject to any Lien other
than Permitted Encumbrances.
SECTION 8.20. Operation of Business. Each Credit Party possesses all
licenses, permits, franchises, patents, operating rights, copyrights, trademarks
and trade names, or rights thereto, reasonably necessary to conduct its business
substantially as now conducted and as presently proposed to be conducted except
for such matters which, individually, or in the aggregate, will not result in a
Material Adverse Change. No Credit Party is in violation of any valid Rights of
others with respect to any of the foregoing except for such matters which,
individually, or in the aggregate, will not result in a Material Adverse Change.
SECTION 8.21. [Intentionally deleted]
SECTION 8.22. Year 2000 Matters. Any reprogramming required to permit
the proper functioning (but only to the extent that such proper functioning
would otherwise be impaired by the occurrence of the year 2000) in and following
the year 2000 of computer systems and other equipment containing embedded
microchips, in either case owned or operated by Borrower or any other Credit
Party or used or relied upon in the conduct of their business (including any
such systems
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and other equipment supplied by others or with which the computer systems of
Borrower or any other Credit Party interface), and the testing of all such
systems and other equipment as so reprogrammed, will be completed by June 1,
1999. The costs to Borrower and any other Credit Party that have not been
incurred as of the date hereof for such reprogramming and testing and for the
other reasonably foreseeable consequences to them of any improper functioning of
other computer systems and equipment containing embedded microchips due to the
occurrence of the year 2000 could not reasonably be expected to result in a
Default or Event of Default or to cause a Material Adverse Change. Except for
any reprogramming referred to above, the computer systems of Borrower and each
other Credit Party are and, with ordinary course upgrading and maintenance, will
continue for the term of this Agreement to be sufficient for the conduct of
their business as currently conducted.
SECTION 8.23. Merger Documents. Borrower has provided Administrative
Agent with a true and correct copy of each Merger Document. No Rights or
obligations of any party to any of the Merger Documents have been waived in any
material respect, and no party to any of the Merger Documents is in default of
its obligations thereunder. Each of the Merger Documents is a valid, binding and
enforceable obligation of the parties thereto in accordance with its terms and
is in full force and effect and the Merger has occurred under and pursuant to
the terms of the Merger Documents.
ARTICLE IX
AFFIRMATIVE COVENANTS.
Borrower covenants and agrees with Administrative Agent and each Bank
that, so long as this Agreement shall remain in effect, and any Bank has any
commitment to lend or participate in Letter of Credit Exposure hereunder, or any
principal of or interest on any Note, or any of the other Obligations, shall be
unpaid, or any Letter of Credit remains outstanding, that it will, and will
cause each other Credit Party to, comply with the following:
SECTION 9.1. Reporting Requirements. Borrower shall cause the following
to be furnished to each Bank:
(a) As soon as available, but no later than ninety (90) days
after the last day of each Fiscal Year of Borrower, audited consolidated
Financial Statements and unaudited consolidating Financial Statements showing
the financial condition and results of operations of Borrower and its
Consolidated Subsidiaries as of, and for the year ended on, such last day,
accompanied by (i) the opinion, without material qualification, of Arthur
Andersen or another firm of independent certified public accountants reasonably
acceptable to Banks, based on an audit using generally accepted auditing
standards, that such Financial Statements were prepared in accordance with GAAP
and present fairly the financial condition and results of operations of Borrower
and its Consolidated Subsidiaries, and (ii) a Financial Report Certificate with
respect to such Financial Statements.
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(b) As soon as available, but no later than forty-five (45)
days after the last day of each Fiscal Quarter (i) consolidated and
consolidating Financial Statements showing the financial condition and results
of operations of Borrower as of, and for the period from the beginning of the
current Fiscal Year, to such last day, and (ii) a Financial Report Certificate
with respect to such Financial Statements.
(c) The Reserve Reports and Reserve Updates described in
Section 5.1 at the times prescribed therein.
(d) Notice, promptly after any Credit Party knows or has good
faith reason to believe, of (i) the existence and status of any Litigation with
respect to any Credit Party which could have a Material Adverse Effect, (ii) any
change in any material fact or circumstance represented or warranted in any Loan
Document, or (iii) the occurrence of a Default or Event of Default, specifying
the nature thereof and what action any Credit Party has taken, is taking, or
proposes to take with respect thereto.
(e) Promptly upon request therefor by any Bank, such
information (not otherwise required to be furnished under the Loan Documents)
respecting the business affairs, assets and liabilities of any Credit Party or
any Person guaranteeing or providing Collateral to secure all or any part of the
Obligations and such opinions, certifications and documents, in addition to
those mentioned in this Agreement, as any Bank may reasonably request.
SECTION 9.2. Compliance with Law; Maintenance of Properties. Each
Credit Party will do or cause to be done all things necessary (a) to preserve
and keep in full force and effect at all times its corporate, limited liability
company or partnership (as applicable) existence and its Rights, licenses and
franchises, (b) to continue to conduct its business substantially as now
proposed to be conducted, (c) to comply with all applicable Laws including,
without limitation, ERISA, and (d) to preserve all property in use or useful in
the conduct of its business and keep the same in good repair, working order and
condition and from time to time make, or cause to be made, all needful and
proper repairs, renewals and replacements, betterments and improvements thereto
so its business carried on in connection therewith may be properly and
advantageously conducted at all times.
SECTION 9.3. Insurance. Each Credit Party shall (a) keep its properties
of an insurable nature insured at all times against such risks and to the extent
that like properties are customarily insured by other companies engaged in the
same or similar businesses similarly situated, and (b) use its best efforts to
cause the operator of each Mineral Interest in which such Credit Party owns a
non-operating working interest to do the following:
(i) maintain for the benefit of all working interest owners
insurance of the types and in the coverage amounts and with reasonable
deductibles as is usual and customary including the following: (A) workman's
compensation or similar insurance as may be required by applicable Law, (B)
commercial or comprehensive general liability and public liability insurance
against claims for personal injury, death or property damage suffered upon, in
or about any premises or occurring as a result of the ownership, maintenance or
operation of any automobile, truck or other vehicle or as the result of the use
of products manufactured, constructed or sold, or services rendered and property
damage by blowout and cratering, completed operations and broad form contractual
liability
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as respects any contract in which the operator may enter into under the terms of
its joint operating agreement, (C) fire insurance with a Broad Form Extended
Coverage on all property owned or hereafter acquired on a full repair and
replacement cost basis, (D) business interruption insurance covering risk of
loss as a result of the cessation for all or any part of one year of any
substantial part of any business conducted, and (E) operator's extra expense
insurance covering the costs of controlling a blowout, the expenses involved in
re-drilling or restoring the well, certain other related costs and seepage and
pollution liability (the limits of this insurance may vary according to the
depth and location of the well, all as is usual and customary in the oil and gas
exploration and production industry), all such insurance to be maintained with
financially sound and reputable insurance companies, against such casualties,
risks and contingencies, and in such types and amounts, as are consistent with
customary practices and standards of companies engaged in similar business;
(ii) name the non-operating working interest owners, including
the Credit Party, as an additional insured on the liability policies (if
permitted by the applicable insurer); and
(iii) obtain the agreement of each insurance company that its
policy may not be canceled, altered or amended without thirty (30) days prior
written notice to the operator and all non-operating working interest owners.
Borrower shall deliver to Administrative Agent a certificate of insurance for
each policy of insurance which shall contain an endorsement showing
Administrative Agent for the ratable benefit of Banks as a loss payee and as an
additional insured, as applicable. Such endorsement shall provide for at least
thirty (30) days' prior notice to Administrative Agent of any proposed
termination or cancellation of such policy, whether on account of default or
otherwise. Borrower shall use its best efforts to obtain from its operators
certificates of insurance coverage for each Mortgaged Property as and when
requested by Administrative Agent.
SECTION 9.4. Use of Proceeds. The proceeds of the Loan will be used by
Borrower solely as provided herein.
SECTION 9.5. Inspection. Each Credit Party will permit any
representative of Administrative Agent or any Bank to visit and inspect any of
its property, to examine its books and records and to make copies and take
extracts therefrom, and to discuss its affairs, finances and accounts with its
officers, all at such reasonable times during normal business hours and as often
as Administrative Agent or any Bank may reasonably request.
SECTION 9.6. Further Assurances. Each Credit Party shall execute any
and all further documents and take all further actions which may be required
under applicable law, or which Administrative Agent or any Bank may reasonably
request, to grant, preserve, protect and perfect the first priority Lien on the
Collateral created by the Security Documents (subject only to Liens permitted by
the Loan Documents).
SECTION 9.7. INDEMNITY. EACH CREDIT PARTY, JOINTLY AND SEVERALLY, SHALL
INDEMNIFY ADMINISTRATIVE AGENT AND EACH BANK AND ITS OFFICERS, DIRECTORS,
EMPLOYEES, REPRESENTATIVES, AGENTS, ATTORNEYS AND AFFILIATES (EACH, AN
"INDEMNIFIED PARTY") FROM, HOLD EACH OF THEM HARMLESS AGAINST, PROMPTLY UPON
DEMAND PAY OR REIMBURSE EACH OF THEM WITH RESPECT TO, AND REFRAIN FROM CREATING
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OR ASSERTING AGAINST ANY OF THEM, ANY AND ALL ACTIONS, SUITS, PROCEEDINGS
(INCLUDING ANY INVESTIGATIONS, LITIGATION OR INQUIRIES), CLAIMS, DEMANDS, CAUSES
OF ACTION, COSTS, LOSSES, LIABILITIES, DAMAGES OR EXPENSES OF ANY KIND OR NATURE
WHATSOEVER INCLUDING, WITHOUT LIMITATION, THOSE BASED UPON NEGLIGENCE (BUT
EXCLUDING THOSE BASED UPON GROSS NEGLIGENCE OR WILLFUL MISCONDUCT)
(COLLECTIVELY, THE "INDEMNITY MATTERS") WHICH MAY BE INCURRED BY OR ASSERTED
AGAINST OR INVOLVE ANY OF THEM (WHETHER OR NOT ANY OF THEM IS DESIGNATED A PARTY
THERETO) AS A RESULT OF, ARISING OUT OF OR IN ANY WAY RELATED TO (A) ANY ACTUAL
OR PROPOSED USE BY ANY CREDIT PARTY OF THE PROCEEDS OF ANY LOAN, (B) THE BREACH
OF ANY REPRESENTATION OR WARRANTY SET FORTH IN ANY LOAN DOCUMENT INCLUDING,
WITHOUT LIMITATION, THOSE REGARDING APPLICABLE ENVIRONMENTAL LAWS, (C) THE
FAILURE OF ANY CREDIT PARTY TO PERFORM ANY OBLIGATION REQUIRED BY APPLICABLE
ENVIRONMENTAL LAWS OR BY ANY LOAN DOCUMENTS IN CONNECTION WITH APPLICABLE
ENVIRONMENTAL LAWS, OR (D) ANY OTHER ASPECT OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS, INCLUDING, WITHOUT LIMITATION, THE REASONABLE FEES AND DISBURSEMENTS
OF COUNSEL (INCLUDING ALLOCATED COSTS OF INTERNAL COUNSEL), ALL FORESEEABLE
CONSEQUENTIAL DAMAGES OF ANY USE, GENERATION, MANUFACTURE, PRODUCTION, STORAGE,
RELEASE, THREATENED RELEASE, DISCHARGE, DISPOSAL, OR PRESENCE OF A HAZARDOUS
MATERIAL, THE COSTS OF ANY REQUIRED OR NECESSARY ENVIRONMENTAL INVESTIGATION OR
MONITORING ANY REPAIR, CLEANUP OR DETOXIFICATION OF ITS REAL PROPERTY AND THE
PREPARATION AND IMPLEMENTATION OF ANY CLOSURE, REMEDIAL OR OTHER PLANS, AND ALL
OTHER EXPENSES INCURRED IN CONNECTION WITH INVESTIGATING, DEFENDING OR PREPARING
TO DEFEND ANY SUCH INDEMNITY MATTER. EACH CREDIT PARTY SHALL BE OBLIGATED TO PAY
OR REIMBURSE EACH INDEMNIFIED PARTY FOR ALL OUT-OF-POCKET COSTS AND EXPENSES
(INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS' FEES AND EXPENSES)
INCURRED BY SUCH INDEMNIFIED PARTY IN CONNECTION WITH ANY INDEMNITY MATTER AT
THE TIME SUCH COSTS AND EXPENSES ARE INCURRED AND SUCH INDEMNIFIED PARTY HAS
GIVEN BORROWER WRITTEN NOTICE THEREOF. EACH CREDIT PARTY'S OBLIGATIONS UNDER
THIS SECTION ARE SUBJECT TO SECTION 15.6 HEREOF.
SECTION 9.8. Books and Records. Each Credit Party (i) shall keep, in
accordance with GAAP, proper and complete books, records and accounts and (ii)
shall permit Administrative Agent or any Bank to inspect the same and make and
take away copies thereof.
SECTION 9.9. Taxes. Each Credit Party shall promptly pay when due any
and all Taxes due, except Taxes for which the criteria for Permitted
Encumbrances have been satisfied.
SECTION 9.10. Payment of Obligations. Each Credit Party shall promptly
pay all of its Debt as it becomes due except to the extent that any such Debt is
being contested in good faith and by appropriate and lawful proceedings
diligently conducted and for which reserves or other provisions (if any)
required by GAAP shall have been made; provided, that no Credit Party shall,
directly or indirectly, make any prepayment of principal of or interest on any
Subordinated Debt at any time that any part of the Obligations is outstanding or
any Bank has any commitment to make Loans hereunder.
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SECTION 9.11. Environmental Laws. Each Credit Party shall conduct its
business so as to comply in all respects with all Applicable Environmental Laws
except where the failure to so comply will not have a Material Adverse Effect.
SECTION 9.12. Supplemented Schedules. Borrower shall supplement in
writing and deliver to Administrative Agent and each Bank revisions of the
Schedules annexed to this Agreement to the extent necessary to disclose new or
changed facts or circumstances after the Closing Date so as to cause the
representations and warranties set forth herein to remain accurate and not
misleading; provided, that, subsequent disclosures shall not constitute a cure
or waiver of any Default or Event of Default resulting from the matters
disclosed.
SECTION 9.13. ERISA Reporting Requirements. Borrower or an ERISA
Affiliate, as applicable, shall furnish or cause to be furnished to
Administrative Agent:
(a) Promptly and in any event (i) within thirty (30) days
after Borrower or any such ERISA Affiliate knows or has reason to know that any
ERISA Event described in clause (a) of the definition of ERISA Event with
respect to any Plan has occurred and (ii) within 10 days after Borrower or any
such ERISA Affiliate knows or has reason to know that any other ERISA Event with
respect to any Plan has occurred, 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 or event that is given to the PBGC;
(b) Promptly and in any event within ten (10) Domestic
Business Days after receipt thereof by Borrower or any ERISA Affiliate from the
PBGC, copies of each notice received by Borrower or any such ERISA Affiliate of
the PBGC's intention to terminate any Plan or to have a trustee appointed to
administer any Plan;
(c) Promptly and in any event within thirty (30) days after
receipt thereof, a copy of any notice, determination letter, ruling or opinion
that Borrower or any ERISA Affiliate receives from the PBGC, the United States
Department of Labor or the Internal Revenue Service with respect to any Plan;
(d) Promptly, and in any event within ten (10) Domestic
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 Plan concerning potential withdrawal liability
pursuant to section 4219 or 4202 of ERISA, and a statement from the chief
financial officer of Borrower or such ERISA Affiliate setting forth details as
to the events giving rise to such potential withdrawal liability and the action
which Borrower or such ERISA Affiliate is taking or proposes to take with
respect thereto;
(e) Notification promptly and in any event within thirty (30)
days of any material increases in the benefits of any existing Plan which is not
a Multiemployer Plan, or the establishment of any new Plan, or the commencement
of contributions to any Plan to which Borrower or any ERISA Affiliate was not
previously contributing;
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(f) Notification within ten (10) Domestic 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
Plan under a distress termination within the meaning of section 4041(c) of ERISA
and a copy of such notice; and
(g) Promptly after receipt of written notice of commencement
thereof, notice of all (i) claims made by participants or beneficiaries with
respect to any 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 Plan, except those which, in the aggregate, if adversely determined could
not have a Material Adverse Effect.
SECTION 9.14. Title Data. Borrower shall, upon the request of Required
Banks, cause to be delivered to Administrative Agent such title opinions and
other information regarding title to Mineral Interests owned by Borrower and its
Subsidiaries as are appropriate to determine the status thereof.
SECTION 9.15. Year 2000 Compatability. Borrower will, and will cause
each other Credit Party to, take all actions reasonably necessary to assume that
Borrower's and each other Credit Party's computer based systems are able to
operate and effectively process data which includes dates on and after January
1, 2000. At the request of Administrative Agent, Borrower will, and will cause
each other Credit Party to, provide reasonable assurances satisfactory to
Administrative Agent of Borrower's and each other Credit Party's year 2000
compatability.
ARTICLE X
NEGATIVE COVENANTS
Borrower covenants and agrees with Administrative Agent and each Bank
that, so long as this Agreement shall remain in effect, and any Bank has any
commitment to lend or participate in Letter of Credit Exposure hereunder, or any
principal of or interest on any Note, or any of the other Obligations, shall be
unpaid, or any Letter of Credit remains outstanding, that it will, and will
cause each other Credit Party to, comply with the following:
SECTION 10.1. Debt. No Credit Party will, directly or indirectly,
create, incur or suffer to exist any direct, indirect, fixed or contingent
liability for any Debt, other than (i) the Obligations, (ii) the Debt described
on Schedule 8.12, if any, (iii) obligations to pay Taxes, (iv) accounts payable
in the ordinary course of business, (v) Permitted Purchase Money Debt, (vi)
salaries and wages, (vii) accrued expenses, deferred credits and loss
contingencies which are properly classified as liabilities or indebtedness under
GAAP, (viii) Subordinated Debt, and (ix) Hydrocarbon Hedges permitted pursuant
to Section 10.1(p).
SECTION 10.2. Liens. No Credit Party will, directly or indirectly, (i)
create, incur or suffer or permit to be created or incurred or to exist any Lien
upon any of its assets except (A) the Liens in favor of Administrative Agent for
the ratable benefit of each Bank, and (B) Permitted
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Encumbrances, or (ii) enter into or permit to exist any arrangement or
agreement, other than the Loan Documents, which directly or indirectly prohibits
any Credit Party from creating or incurring any Lien on any of its assets. Banks
hereby agree with Borrower that, provided no Default or Event of Default has
occurred which is continuing, upon the incurrence by any Credit Party of
Permitted Purchase Money Debt, if requested by the lender of such Permitted
Purchase Money Debt, Banks will, or will cause Administrative Agent to,
subordinate the Liens created and evidenced by the Security Documents to the
Permitted Purchase Money Liens securing such Permitted Purchase Money Debt with
respect to the asset acquired with the proceeds of such Debt.
SECTION 10.3. Acquisitions and Dissolutions. Borrower will not,
directly or indirectly (i) acquire all or any substantial portion of the assets
or stock of, or interest in, any Person, except in connection with the
acquisition of Mineral Interests in the ordinary course of business, or (ii)
liquidate, wind up, or dissolve itself (or suffer any liquidation or
dissolution).
SECTION 10.4. Loans, Advances and Investments. Except as permitted by
Section 10.3, no Credit Party will directly or indirectly, make any loan,
advance or extension of credit, or capital contribution to, make any investments
in, or purchase or commit to purchase any stock or other securities or evidences
of contractual obligations of, or interests in, any Person, other than (i)
investments in obligations of the United States of America and agencies thereof
and obligations guaranteed by the United States of America maturing within one
year from the date of acquisition, (ii) certificates of deposit issued by
commercial banks organized under the Laws of the United States of America or any
state thereof and having a combined capital, surplus and undivided profits of
not less than $250,000,000, or completely insured by the Federal Deposit
Insurance Corporation, (iii) current trade and customer accounts receivable
which are for goods furnished or services rendered in the ordinary course of
business and are payable in accordance with customary trade terms, (iv) loans by
Borrower to POC up to $500,000 in the aggregate outstanding from time to time,
(v) loans by Borrower to Spanish Peaks up to $500,000 in the aggregate
outstanding from time to time, or (vi) investments in debt securities of a
domestic issuer if such securities are rated BBB+ or higher by Standard & Poor's
Rating Service, or of a comparable quality of any other rating agency acceptable
to Administrative Agent.
SECTION 10.5. Employee Benefit Plans. Borrower shall not, and shall not
permit any ERISA Affiliate to, directly or indirectly, (i) terminate any Plan,
(ii) permit to exist any ERISA Event, or any other event or condition with
respect to a Plan, (iii) make a complete or partial withdrawal (within the
meaning of section 4201 of ERISA) from any Multiemployer Plan, (iv) enter into
any new Plan or modify any existing Plan so as to increase its obligations
thereunder except in the ordinary course of business consistent with past
practice, or (v) permit the present value of all benefit liabilities, as defined
in Title IV of ERISA, under each Plan (using the actuarial assumptions utilized
by the PBGC upon termination of a plan) to (in the opinion of Administrative
Agent) exceed the fair market value of Plan assets allocable to such benefits
all determined as of the most recent valuation date for each such Plan;
provided, that, any action described in clauses (i) through (v) above
individually, and/or in the aggregate, could reasonably be expected to result in
a Material Adverse Effect.
SECTION 10.6. Distributions. No Credit Party will, directly or
indirectly, without the prior written consent of Required Banks, (i) retire,
redeem, purchase or otherwise acquire for value
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any Capital Stock or other equity interest of such Credit Party, or (ii)
declare, make or pay any dividend or distribution on or with respect to any such
Capital Stock or interest; provided, that, any Subsidiary of Borrower may
declare, make or pay any dividend or distribution to Borrower.
SECTION 10.7. Capital Expenditures; Exploration Expenses. No Credit
Party will, directly or indirectly, make capital expenditures other than such
expenditures which are for or related to assets or leaseholds used or useful in
the normal business operations of Borrower.
SECTION 10.8 Issuance of Equity Interests. No Credit Party will,
directly or indirectly, issue, sell or otherwise dispose of (i) any equity
interest in it or any equity interest held by it in any other Credit Party, (ii)
any securities convertible into or exchangeable for any such interest, or (iii)
any carrying Rights, warrants, options, or other rights to subscribe for or
purchase any such interest; provided, that, nothing in this Section 10.8 shall
be deemed to prohibit (A) any Credit Party from issuing additional equity
securities to the Persons which hold its equity securities on the date hereof or
(B) Borrower from issuing shares of its common stock or preferred stock in any
transaction which does not result in a Change of Control.
SECTION 10.9. Transactions with Affiliates. No Credit Party will,
directly or indirectly, enter into any transaction (including, but not limited
to, the sale or exchange of property or the rendering of service) with any of
its Affiliates, other than (i) in the ordinary course of business of such Credit
Party and upon fair and reasonable terms no less favorable to such Credit Party
than such Credit Party could obtain or could become entitled to in an
arm's-length transaction with a Person which was not an Affiliate, and (ii) as
provided in Section 10.4.
SECTION 10.10. Sale of Assets. Without the prior written consent of
Required Banks, no Credit Party will, directly or indirectly, sell, lease or
otherwise dispose of all or any substantial part of its assets, other than (i)
sales of inventory (including Hydrocarbon production) in the ordinary course of
business, (ii) sales by Borrower of Proven Reserves which do not exceed $500,000
in the aggregate during any six (6) month period, provided, that, upon prior
written consent of Required Banks, Borrower may sell Proven Reserves with an
aggregate sales price in excess of $500,000 during such period, and provided
further that (x) to the extent the aggregate amount of proceeds from such sales
do not exceed $500,000 during any applicable period of determination, the
Borrowing Base shall be reduced by the amount of such proceeds, and (y) to the
extent the aggregate amount of proceeds from such sales exceed $500,000 during
any applicable period of determination, the Borrowing Base shall be reduced by
the lesser of (A) the amount of such proceeds or (B) such amount as such Proven
Reserves comprise of the Borrowing Base determined by Required Banks in their
sole discretion, and (iii) Borrower may transfer interests in and to certain of
its Uinta Basin properties only to the extent of depths lying below the Green
River formation pursuant to the Sego Farmout and at the time of such transfer,
Banks will, or will cause Administrative Agent to, release such properties from
the Liens of the Mortgages. Notwithstanding the foregoing, Banks agree that they
will not unreasonably withhold their consent to the transfer by Borrower of the
Antelope Creek Gathering Assets to a Person in exchange for an equity interest
in such Person; provided, that, (a) prior to making such transfer Borrower and
such Person enter into a gathering agreement on customary and reasonable terms
pursuant to which such Person agrees to gather gas produced from Borrower's
properties serviced by the Antelope Creek Gathering Assets, (b) Borrower grants
to Administrative Agent (for the ratable benefit of each Bank) a first and prior
security interest in and
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to its equity interest in such Person pursuant to a pledge agreement in form and
substance acceptable to Administrative Agent, and (c) no Event of Default has
occurred which is continuing. Promptly after granting their consent pursuant to
this Section 10.10, Banks will, or will cause Administrative Agent to, at
Borrower's expense, release the Antelope Creek Gathering Assets from the Liens
created by the Mortgages.
SECTION 10.11. Hazardous Materials. No Credit Party shall permit the
manufacture, storage, transmission, presence, release, discharge or disposal of
any Hazardous Materials over, upon or under any of the real property except as
permitted by Law.
SECTION 10.12. Change of Control. No Credit Party shall permit a Change
of Control.
SECTION 10.13. Compliance with Laws and Documents. No Credit Party
will, directly or indirectly, violate the provisions of any Laws, its
certificate or articles of incorporation, bylaws, agreement of limited
partnership, regulations or any material agreements if such violation alone, or
when aggregated with all other such violations, could cause a Material Adverse
Effect.
SECTION 10.14. New Businesses. No Credit Party will, directly or
indirectly, engage in any business other than the ownership of equity interests
in the other Credit Parties owned by it on the date hereof, and the exploration,
development, production and sale of its Mineral Interests and related businesses
in which it is presently engaged.
SECTION 10.15. Fiscal Year and Accounting Methods. No Credit Party will
change its Fiscal Year (which currently is December 31) or method of accounting
(other than immaterial changes in methods).
SECTION 10.16. Hydrocarbon Hedges. No Credit Party will enter into any
Hydrocarbon Hedge (a "Subject Hedge"), if after giving effect thereto, the
aggregate volume of Hydrocarbons which are the subject of the Subject Hedge and
all other Hydrocarbon Hedges to which any Credit Party is a party exceeds eighty
percent (80%) of Borrower's production (calculated based on current rates of
production as of the date such Subject Hedge is entered into) during the term
such Hydrocarbon Hedges are in effect from Mineral Interests which constitute
proved, developed producing reserves on the date the Subject Hedge is entered
into.
ARTICLE XI
FINANCIAL COVENANTS
Borrower covenants and agrees with Administrative Agent and each Bank
that, so long as this Agreement shall remain in effect, and any Bank has any
commitment to lend or participate in Letter of Credit Exposure hereunder, or any
principal of or interest on any Note, or any of the other Obligations, shall be
unpaid, or any Letter of Credit remains outstanding, that it will comply with
the following:
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SECTION 11.1. Fixed Charge Coverage Ratio. Borrower will not permit its
ratio determined on a consolidated basis for any period of four (4) consecutive
Fiscal Quarters of (i) net income, plus (to the extent deducted therefrom in
arriving at net income) depreciation, depletion and amortization, interest
expense, and income taxes actually paid to (ii) the sum of (x) Current
Maturities of Long Term Debt, and (y) interest expense paid, to be less than
1.25 to 1.0.
SECTION 11.2 Minimum Tangible Net Worth. Borrower will not permit its
Tangible Net Worth, determined on a consolidated basis, at any time to be less
than the sum of (i) $31,000,000, plus (ii) seventy percent (70%) of the Net
Proceeds from the issuance of equity securities of Borrower after the Closing
Date.
SECTION 11.3. Current Ratio. Borrower will not permit its ratio,
determined on a consolidated basis, at any time of (i) current assets to (ii)
current liabilities to be less than 1.0 to 1.0. For purposes hereof, current
assets shall include, until the Revolver Conversion Date, an amount equal to the
Availability.
ARTICLE XII
DEFAULTS
SECTION 12.1. Events of Default. The term "Event of Default" means the
occurrence of any one or more of the following events:
(a) Payment of Obligations. The failure or refusal of Borrower
to pay any portion of the Obligations as the same becomes due in accordance with
the terms of the Loan Documents.
(b) Certain Covenants. The failure or refusal of Borrower to
punctually and properly perform, observe and comply with any covenant, agreement
or condition contained in Sections 9.6, 9.8, 9.12, and 9.13 and such failure or
refusal continues for a period of fifteen (15) days after Borrower has, or, with
the exercise of reasonable investigation, should have, notice thereof.
(c) Other Covenants. The failure or refusal of Borrower to
punctually and properly perform, observe and comply with any covenant, agreement
or condition contained in this Agreement (other than the Sections listed in
Section 12.1(b) above).
(d) Loan Documents and Security Documents. An Event of Default
shall occur and be continuing under any Security Document or other Loan
Document.
(e) Bankruptcy. (i) Any Credit Party shall commence a
voluntary case concerning itself under Title 11 of the United States Code
entitled "Bankruptcy" as now or hereafter in effect, or any successor thereto,
(ii) an involuntary case is commenced against any Credit Party and the petition
is not controverted within thirty (30) days, or is not dismissed within sixty
(60) days, after commencement of the case, (iii) a custodian is appointed for,
or takes charge of, all or any substantial part of the property of any Credit
Party, (iv) any Credit Party commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to any Credit
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Party or there is commenced against any Credit Party any such proceeding which
remains undismissed for a period of sixty (60) days, (v) any Credit Party is
adjudicated insolvent or bankrupt, (vi) any Credit Party makes a general
assignment for the benefit of creditors, (vii) any Credit Party shall fail to
pay, or shall state that it is unable to pay, or shall be unable to pay, its
debts generally as they become due, (viii) any Credit Party shall call a meeting
of its creditors with a view to arranging a composition or adjustment of its
debts, or (ix) any Credit Party shall by any act or failure to act indicate its
consent to, approval of or acquiescence in any of the foregoing.
(f) Attachment. The failure to have discharged within a period
of thirty (30) days after the commencement thereof any attachment, sequestration
or similar proceeding against any assets of any Credit Party, which assets have
a value, individually or collectively, in excess of $250,000.
(g) Payment of Judgments. Any Credit Party shall fail to pay
any money judgment in excess of $250,000 against it or its assets at least ten
days prior to the date on which any Credit Party's assets may be sold lawfully
to satisfy such judgment.
(h) Default Under Other Debt. Any Credit Party shall default
in the due and punctual payment of the principal of or the interest on any Debt
in excess of $250,000 in the aggregate principal amount, secured or unsecured,
or in the due performance or observance of any covenant or condition of any
indenture or other agreement executed in connection therewith, and such default
shall have continued beyond any period of grace provided with respect thereto.
(i) Material Adverse Effect. The occurrence of any event or
events which shall have or cause a Material Adverse Effect.
(j) Impairment of Collateral or Ability to Pay. The discovery
by Administrative Agent or any Bank of reliable and accurate information that
the prospect of payment or performance of the Obligations (or any part thereof)
is reasonably likely to be materially impaired, or that the value of the
Collateral has or will be materially decreased and the situation giving rise
thereto is not corrected to the reasonable satisfaction of Banks within twenty
(20) days after notice thereof from Administrative Agent or any Bank to
Borrower.
(k) Misrepresentation. Any statement, representation, or
warranty in the Loan Documents or in any writing ever delivered by any Credit
Party or on behalf of any Credit Party to Administrative Agent or any Bank
pursuant to the Loan Documents is false, misleading or erroneous in any material
respect when made or deemed to be repeated.
(l) Change of Control. A Change of Control shall occur.
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ARTICLE XIII
RIGHTS AND REMEDIES.
SECTION 13.1. Remedies. Upon and after the occurrence of an Event of
Default, Administrative Agent may, at the request of Required Banks, do any one
or more of the following without notice of any kind, including, without
limitation, notice of acceleration or of intention to accelerate, presentment
and demand or protest, all of which are hereby expressly waived by Borrower: (a)
declare the entire unpaid balance of the Obligations, or any part thereof,
immediately due and payable, whereupon it shall be due and payable (provided
that, upon the occurrence of an Event of Default under Sections 12.1(e)(i)-(vi)
inclusive, the entire Obligations shall automatically become due and payable
without notice or other action of any kind whatsoever); (b) terminate each
Bank's Commitment hereunder; (c) reduce any claim to judgment; (d) exercise the
Rights of offset or banker's lien against the interest of Borrower in and to
every account and other property of Borrower which is in the possession of any
Bank to the extent of the full amount of the Obligations; (e) foreclose any or
all Liens held by Administrative Agent for the ratable benefit of each Bank or
otherwise realize upon any and all of the Rights Administrative Agent or any
Bank may have in and to the Collateral, or any part thereof; and (f) exercise
any and all other legal or equitable Rights afforded by the Loan Documents, the
Laws of the State of New York or any other jurisdiction as any Bank shall deem
appropriate.
SECTION 13.2. Performance by Administrative Agent and Banks. If any
covenant, duty or agreement of any Credit Party is not performed in accordance
with the terms of the Loan Documents, Administrative Agent or any Bank may, at
its option, perform or attempt to perform, such covenant, duty or agreement on
behalf of such Credit Party. In such event, any amount expended by
Administrative Agent or any such Bank in such performance or attempted
performance shall be payable by Borrower to Administrative Agent or such Bank
(as applicable) on demand, shall become part of the Obligations and shall bear
interest at the Default Rate from the date of such expenditure by Administrative
Agent or such Bank until paid. Notwithstanding the foregoing, it is expressly
understood that neither Administrative Agent nor any Bank assumes and neither
Administrative Agent nor any Bank shall ever have, except by express written
consent of Administrative Agent or any such Bank, any liability or
responsibility for the performance of any covenant, duty or agreement of any
Credit Party.
SECTION 13.3. Delegation of Duties and Rights. Administrative Agent or
any Bank may perform any of its duties or exercise any of its Rights under the
Loan Documents by or through its officers, directors, employees, attorneys,
agents or other representatives.
SECTION 13.4. Expenditures by Administrative Agent and Banks. All court
costs, reasonable attorneys' fees, other costs of collection and other sums
spent by Administrative Agent or any Bank pursuant to the exercise of any Right
(including, without limitation, any effort to collect or enforce the Notes)
provided herein shall be payable to Administrative Agent or any such Bank (as
applicable) on demand, shall become part of the Obligations and shall bear
interest at the Default Rate from the date spent until the date repaid.
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ARTICLE XIV
ADMINISTRATIVE AGENT
SECTION 14.1. Appointment, Powers, and Immunities. Each Bank hereby
irrevocably appoints and authorizes Administrative Agent to act as its agent
under this Agreement and the other Loan Documents with such powers and
discretion as are specifically delegated to Administrative Agent by the terms of
this Agreement and the other Loan Documents, together with such other powers as
are reasonably incidental thereto. Administrative Agent (which term as used in
this sentence and in Section 14.5 and the first sentence of Section 14.6 hereof
shall include its Affiliates and its own and its Affiliates' officers,
directors, employees, and agents) (a) shall not have any duties or
responsibilities except those expressly set forth in this Agreement and shall
not be a trustee or fiduciary for any Bank; (b) shall not be responsible to
Banks for any recital, statement, representation, or warranty (whether written
or oral) made in or in connection with any Loan Document or any certificate or
other document referred to or provided for in, or received by any of them under,
any Loan Document, or for the value, validity, effectiveness, genuineness,
enforceability, or sufficiency of any Loan Document, or any other document
referred to or provided for therein or for any failure by any Credit Party or
any other Person to perform any of its obligations thereunder; (c) shall not be
responsible for or have any duty to ascertain, inquire into, or verify the
performance or observance of any covenants or agreements by any Credit Party or
the satisfaction of any condition or to inspect the property (including the
books and records) of any Credit Party or their Affiliates; (d) shall not be
required to initiate or conduct any litigation or collection proceedings under
any Loan Document; and (e) shall not be responsible for any action taken or
omitted to be taken by it under or in connection with any Loan Document, except
for its own gross negligence or willful misconduct. Administrative Agent may
employ agents and attorneys-in-fact and shall not be responsible for the
negligence or misconduct of any such agents or attorneys-in-fact selected by it
with reasonable care.
SECTION 14.2. Reliance by Administrative Agent. Administrative Agent
shall be entitled to rely upon any certification, notice, instrument, writing,
or other communication (including, without limitation, any thereof by telephone
or telecopy) believed by it to be genuine and correct and to have been signed,
sent or made by or on behalf of the proper Person or Persons, and upon advice
and statements of legal counsel (including counsel for Borrower), independent
accountants, and other experts selected by Administrative Agent. Administrative
Agent may deem and treat the payee of any Note as the holder thereof for all
purposes hereof unless and until Administrative Agent receives and accepts an
Assignment and Acceptance Agreement executed in accordance with Section 15.10
hereof. As to any matters not expressly provided for by this Agreement,
Administrative Agent shall not be required to exercise any discretion or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
Required Banks, and such instructions shall be binding on Banks; provided,
however, that Administrative Agent shall not be required to take any action that
exposes Administrative Agent to personal liability or that is contrary to any
Loan Document or applicable Law unless it shall first be indemnified to its
satisfaction by Banks against any and all liability and expense which may be
incurred by it by reason of taking any such action.
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SECTION 14.3. Defaults. Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of a Default or Event of Default
unless Administrative Agent has received written notice from a Bank or Borrower
specifying such Default or Event of Default and stating that such notice is a
"Notice of Default". In the event that Administrative Agent receives such a
notice of the occurrence of a Default or Event of Default, Administrative Agent
shall give prompt notice thereof to Banks. Administrative Agent shall (subject
to Section 14.2 hereof) take such action with respect to such Default or Event
of Default as shall reasonably be directed by Required Banks; provided that,
unless and until Administrative Agent shall have received such directions,
Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interest of Banks.
SECTION 14.4. Rights as Bank. With respect to its Commitment and the
Loans made by it, The Chase Manhattan Bank (and any successor acting as
Administrative Agent) in its capacity as a Bank hereunder shall have the same
Rights and powers hereunder as any other Bank and may exercise the same as
though it were not acting as Administrative Agent, and the term "Bank" or
"Banks" shall, unless the context otherwise indicates, include Administrative
Agent in its individual capacity. The Chase Manhattan Bank (and any successor
acting as Administrative Agent) and its Affiliates may (without having to
account therefor to any Bank) accept deposits from, lend money to, make
investments in, provide services to, and generally engage in any kind of
lending, trust, or other business with any Credit Party or any of their
Affiliates as if it were not acting as Administrative Agent, and The Chase
Manhattan Bank (and any successor acting as Administrative Agent) and its
Affiliates may accept fees and other consideration from any Credit Party or any
of their Affiliates for services in connection with this Agreement or otherwise
without having to account for the same to Banks.
SECTION 14.5. Indemnification. Banks agree to indemnify Administrative
Agent (to the extent not reimbursed by Borrower or any other Credit Party, but
without limiting the obligations of Borrower or any other Credit Party to so
reimburse) ratably in accordance with their respective Commitments, for any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses (including attorneys' fees), or disbursements of any kind
and nature whatsoever that may be imposed on, incurred by or asserted against
Administrative Agent (including by any Bank) in any way relating to or arising
out of any Loan Document or the transactions contemplated thereby or any action
taken or omitted by Administrative Agent under any Loan Document (INCLUDING ANY
OF THE FOREGOING ARISING FROM THE NEGLIGENCE OF ADMINISTRATIVE AGENT); provided
that no Bank shall be liable for any of the foregoing to the extent they arise
from the gross negligence or willful misconduct of the Person to be indemnified.
Without limitation of the foregoing, each Bank agrees to reimburse
Administrative Agent promptly upon demand for its ratable share of any costs or
expenses payable by Borrower hereunder, to the extent that Administrative Agent
is not promptly reimbursed for such costs and expenses by Borrower. The
agreements contained in this Section 14.5 shall survive payment and performance
in full of the Obligations and all other amounts payable under this Agreement.
SECTION 14.6. Non-Reliance on Administrative Agent and Other Banks.
Each Bank agrees that it has, independently and without reliance on
Administrative Agent or any other Bank, and based on such documents and
information as it has deemed appropriate, made its own credit
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analysis of each Credit Party and has made its own decision to enter into this
Agreement and that it will, independently and without reliance upon
Administrative 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
analysis and decisions in taking or not taking action under the Loan Documents.
Except for notices, reports, and other documents and information expressly
required to be furnished to Banks by Administrative Agent hereunder,
Administrative Agent shall not have any duty or responsibility to provide any
Bank with any credit or other information concerning the affairs, financial
condition, or business of any Credit Party or any of their Affiliates that may
come into the possession of Administrative Agent or any of its Affiliates.
SECTION 14.7. Resignation of Administrative Agent. Administrative Agent
may resign at any time by giving notice thereof to Banks and Borrower. Upon any
such resignation, Required Banks shall have the right to appoint a successor
Administrative Agent. If no successor Administrative Agent shall have been so
appointed by Required Banks and shall have accepted such appointment within
thirty (30) days after the retiring Administrative Agent's giving of notice of
resignation, then the retiring Administrative Agent may, on behalf of Banks,
appoint a successor Administrative Agent which shall be a commercial bank
organized under the Laws of the United States of America having combined capital
and surplus of at least $100,000,000. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor, such successor shall thereupon
succeed to and become vested with all the Rights, powers, discretion,
privileges, and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. After any retiring Administrative Agent's resignation hereunder as
Administrative Agent, the provisions of this Article XIV shall continue in
effect for its benefit in respect of any actions taken or omitted to be taken by
it while it was acting as Administrative Agent.
SECTION 14.8. Warrant Related Documents. Each Bank acknowledges that
the Warrant Related Documents were each executed and delivered in connection
with the Existing Credit Agreement and for the sole and exclusive benefit of The
Chase Manhattan Bank, for itself and not as a Bank or as Administrative Agent
hereunder, and each Bank acknowledges and agrees that such Bank (other than
Existing Bank) shall not have any right, title or interest in, or with respect
to, such Warrant Related Documents.
ARTICLE XV
MISCELLANEOUS
SECTION 15.1. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including bank wire, telecopy or
similar writing) and shall be given, if to Administrative Agent or any Bank, at
its address or telecopier number set forth on Schedule 1.1 hereto, and if given
to Borrower, at its address or telecopy number set forth on the signature pages
hereof (or in either case, at such other address or telecopy number as such
party may hereafter specify for the purpose by notice to the other parties
hereto). Each such notice, request or other communication shall be effective (a)
if given by telecopy, when such telecopy is transmitted to the telecopy number
specified in this Section 15.1 and the appropriate answerback is received or
receipt is otherwise confirmed, (b) if given by mail, three (3) Domestic
Business Days after deposit in the
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mails with first class postage prepaid, addressed as aforesaid, or (c) if given
by any other means, when delivered at the address specified in this Section
15.1; provided that notices to Administrative Agent under Article II shall not
be effective until received.
SECTION 15.2. No Waivers. No failure or delay by Administrative Agent
or any Bank in exercising any Right, power or privilege hereunder or under any
Note or other Loan Document shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other Right, power or privilege. The Rights and
remedies herein provided shall be cumulative and not exclusive of any Rights or
remedies provided by Law or in any of the other Loan Documents.
SECTION 15.3. Expenses. Borrower agrees to pay on demand all reasonable
costs and expenses of Administrative Agent in connection with the syndication,
preparation, execution, delivery, modification, restatement and amendment of
this Agreement, the other Loan Documents, and the other documents to be
delivered hereunder, including, without limitation, the reasonable fees and
expenses of counsel for Administrative Agent (including the cost of internal
counsel) with respect thereto and with respect to advising Administrative Agent
as to its Rights and responsibilities under the Loan Documents. Borrower further
agrees to pay on demand all reasonable costs and expenses of Administrative
Agent and Banks, if any (including, without limitation, reasonable attorneys'
fees and expenses and the cost of internal counsel), in connection with the
enforcement (whether through negotiations, legal proceedings, or otherwise) of
the Loan Documents and the other documents to be delivered hereunder.
SECTION 15.4. Right of Set-off; Adjustments. (a) Upon the occurrence
and during the continuance of any Event of Default, each Bank (and each of its
Affiliates) is hereby authorized at any time and from time to time, to the
fullest extent permitted by Law, 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 (or any of its Affiliates) to
or for the credit or the account of Borrower against any and all of the
Obligations, irrespective of whether such Bank shall have made any demand under
this Agreement or under any Note held by such Bank and although such obligations
may be unmatured. Each Bank agrees promptly to notify Borrower after any such
set-off and application made by such Bank; provided, however, that the failure
to give such notice shall not affect the validity of such set-off and
application. The Rights of each Bank under this Section 15.4 are in addition to
any other Rights and remedies (including, without limitation, other Rights of
set-off) that such Bank may have.
(b) If any Bank (a "benefitted Bank") shall at any time
receive any payment of all or part of the Loans owing to it, or interest
thereon, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, or otherwise), in a greater proportion than any such
payment to or collateral received by any other Bank, if any, in respect of such
other Bank's Loans owing to it, or interest thereon, such benefitted Bank shall
purchase for cash from any such other Bank a participating interest in such
portion of each such other Bank's Loans owing to it, or shall provide such other
Banks with the benefits of any such collateral, or the proceeds thereof, as
shall be necessary to cause such benefitted Bank to share the excess payment or
benefits of such collateral or proceeds ratably with each other Bank; provided,
however, that if all or any portion of such excess payment or benefits is
thereafter recovered from such benefitted Bank, such purchase shall be
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rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. Borrower agrees that any Bank so purchasing a
participation from a Bank pursuant to this Section 15.4 may, to the fullest
extent permitted by Law, exercise all of its Rights of payment (including the
Right of set-off) with respect to such participation as fully as if such Person
were the direct creditor of Borrower in the amount of such participation.
SECTION 15.5. Amendments and Waivers. Any provision of this Agreement
or any other Loan Document may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by Borrower and Required Banks
(and, if Article XIV or the Rights or duties of Administrative Agent are
affected thereby, by Administrative Agent); provided that no such amendment or
waiver shall, unless signed by each Bank directly affected thereby, (a) increase
the Commitment of any Bank, (b) reduce the principal of or rate of interest on
any Loan or any fees or other amounts payable hereunder, (c) postpone the
Termination Date, the Revolver Conversion Date or any date fixed for the payment
of any scheduled installment of principal of or interest on any Loan or any fees
or other amounts payable hereunder or for the termination of any Commitment, (d)
change the percentage of the Commitments or of the unpaid principal amount of
the Notes, or the number of Banks which shall be required for Banks or any of
them to take any action under this Section 15.5, or any other provision of this
Agreement, or (e) release any guarantor of the Obligations or all or
substantially all of the collateral securing the Obligations.
SECTION 15.6. Survival. All representations, warranties and covenants
made by any Credit Party herein or in any certificate or other instrument
delivered by it or in its behalf under the Loan Documents shall be considered to
have been relied upon by Banks and shall survive the delivery to Banks of such
Loan Documents or the extension of the Loan (or any part thereof), regardless of
any investigation made by or on behalf of Banks. The indemnity provided in
Section 9.7 herein shall survive the repayment of all credit advances hereunder
and/or the discharge or release of any Lien granted hereunder or in any other
Loan Document, contract or agreement between Borrower or any other Credit Party
and Administrative Agent or any Bank.
SECTION 15.7. Limitation on Interest. Regardless of any provision
contained in the Loan Documents, Banks shall never be entitled to receive,
collect, or apply, as interest on the Loan, any amount in excess of the Maximum
Lawful Rate, and in the event any Bank ever receives, collects or applies as
interest any such excess, such amount which would be deemed excessive interest
shall be deemed a partial prepayment of principal and treated hereunder as such;
and if the Loan is paid in full, any remaining excess shall promptly be paid to
Borrower. In determining whether or not the interest paid or payable under any
specific contingency exceeds the Maximum Lawful Rate, Borrower and Banks shall,
to the extent permitted under applicable Law, (a) characterize any nonprincipal
payment as an expense, fee or premium rather than as interest, (b) exclude
voluntary prepayments and the effects thereof, and (c) amortize, prorate,
allocate and spread, in equal parts, the total amount of the interest throughout
the entire contemplated term of the Notes, so that the interest rate is the
Maximum Lawful Rate throughout the entire term of the Notes; provided, however,
that if the unpaid principal balance thereof is paid and performed in full prior
to the end of the full contemplated term thereof, and if the interest received
for the actual period of existence thereof exceeds the Maximum Lawful Rate,
Banks shall refund to Borrower the amount of such excess and, in such event,
Banks shall not be subject to any penalties provided by any Laws
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for contracting for, charging, taking, reserving or receiving interest in excess
of the Maximum Lawful Rate.
SECTION 15.8. Invalid Provisions. If any provision of the Loan
Documents is held to be illegal, invalid, or unenforceable under present or
future Laws effective during the term thereof, such provision shall be fully
severable, the Loan Documents shall be construed and enforced as if such
illegal, invalid, or unenforceable provision had never comprised a part thereof,
and the remaining provisions thereof shall remain in full force and effect and
shall not be affected by the illegal, invalid, or unenforceable provision or by
its severance therefrom. Furthermore, in lieu of such illegal, invalid, or
unenforceable provision there shall be added automatically as a part of the Loan
Documents a provision as similar in terms to such illegal, invalid, or
unenforceable provision as may be possible and be legal, valid and enforceable.
SECTION 15.9. Waiver of Consumer Credit Laws. Pursuant to Chapter 346
of the Texas Finance Code, as amended, Borrower agrees that such Chapter shall
not govern or in any manner apply to the Loan.
SECTION 15.10. Assignments and Participations. (a) Each Bank may assign
to one or more Eligible Assignees all or a portion of its Rights and obligations
under this Agreement (including, without limitation, all or a portion of its
interest in the Loan, its Note, and its Commitment); provided, however, that
(i) each such assignment shall be to an Eligible Assignee;
(ii) except in the case of an assignment to another Bank or an
assignment of all of a Bank's Rights and obligations under this
Agreement, any such partial assignment shall be in an amount at least
equal to $5,000,000 or an integral multiple of $100,000 in excess
thereof;
(iii) each such assignment by a Bank shall be of a constant,
and not varying, percentage of all of its Rights and obligations under
this Agreement and its Notes; and
(iv) the parties to such assignment shall execute and deliver
to Administrative Agent for its acceptance an Assignment and Acceptance
Agreement (herein so called) in the form of Exhibit J hereto, together
with any Notes subject to such assignment and a processing fee of
$3,500.
Upon execution, delivery, and acceptance of such Assignment and Acceptance
Agreement, the assignee thereunder shall be a party hereto and, to the extent of
such assignment, have the obligations, Rights, and benefits of a Bank hereunder
and the assigning Bank shall, to the extent of such assignment, relinquish its
Rights and be released from its obligations under this Agreement. Upon the
consummation of any assignment pursuant to this Section 15.10(a), the assignor,
Administrative Agent and Borrower shall make appropriate arrangements so that,
if required, new Notes are issued to the assignor and the assignee. If the
assignee is not incorporated under the Laws of the United States of America or a
state thereof, it shall deliver to Borrower and Administrative
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Agent certification as to exemption from deduction or withholding of Taxes in
accordance with Section 4.6.
(b) Administrative Agent shall maintain at its address set
forth on Schedule 1.1 hereto, a copy of each Assignment and Acceptance Agreement
delivered to and accepted by it and a register for the recordation of the names
and addresses of Banks and the Commitment of, and principal amount of the Loan
owing to, each Bank and the Commitment Percentage of each Bank from time to time
(the "Register"). The entries in the Register shall be conclusive and binding
for all purposes, absent manifest error, and Borrower, Administrative Agent and
Banks may treat each Person whose name is recorded in the Register as a Bank
hereunder for all purposes of this 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.
(c) Upon its receipt of an Assignment and Acceptance Agreement
executed by the parties thereto, together with any Notes subject to such
assignment and payment of the processing fee, Administrative Agent shall, if
such Assignment and Acceptance Agreement has been completed and is in
substantially the form of Exhibit J hereto, (i) accept such Assignment and
Acceptance Agreement, (ii) record the information contained therein in the
Register, and (iii) give prompt notice thereof to the parties thereto.
(d) Each Bank may sell participations to one or more Persons
in all or a portion of its Rights and obligations under this Agreement
(including all or a portion of its Commitment and its interest in the Loan);
provided, however, that (i) such Bank's obligations under this Agreement shall
remain unchanged, (ii) such Bank shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) the participant
shall be entitled to the benefit of the yield protection provisions contained in
Article IV and the Right of set-off contained in Section 15.4, and (iv) Borrower
shall continue to deal solely and directly with such Bank in connection with
such Bank's Rights and obligations under this Agreement, and such Bank shall
retain the sole Right to enforce the obligations of Borrower relating to its
interest in the Loan and its Notes and to approve any amendment, modification,
or waiver of any provision of this Agreement (other than amendments,
modifications, or waivers decreasing the amount of principal of, or the rate at
which interest is payable on, the Loan or Notes, extending any scheduled
principal payment date or date fixed for the payment of interest on the Loan or
Notes, or extending its Commitment).
(e) Notwithstanding any other provision set forth in this
Agreement, any Bank may at any time assign and pledge all or any portion of its
interest in the Loan and its Notes to any Federal Reserve Bank as collateral
security pursuant to Regulation A and any Operating Circular issued by such
Federal Reserve Bank. No such assignment shall release the assigning Bank from
its obligations hereunder.
(f) Any Bank may furnish any information concerning Borrower
or any of its Subsidiaries in the possession of such Bank from time to time to
assignees and participants (including prospective assignees and participants).
(g) Borrower shall not assign or transfer any Rights or
obligations under any Loan Document or permit any Credit Party to assign or
transfer any Rights or obligations under any Loan
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Document without first obtaining all Banks' consent, and any purported
assignment or transfer without all Banks' consent is void.
SECTION 15.11. NEW YORK LAW. PURSUANT TO NEW YORK GENERAL OBLIGATIONS
LAW SECTION 5-1401, THIS AGREEMENT, EACH NOTE AND THE OTHER LOAN DOCUMENTS SHALL
BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK AND THE LAWS OF THE UNITED STATES OF AMERICA, EXCEPT TO THE EXTENT THAT THE
LAWS OF ANY STATE IN WHICH ANY PROPERTY INTENDED AS SECURITY FOR THE OBLIGATIONS
IS LOCATED NECESSARILY GOVERN (A) THE PERFECTION AND PRIORITY OF THE LIENS IN
FAVOR OF ADMINISTRATIVE AGENT AND BANKS WITH RESPECT TO SUCH PROPERTY, AND (B)
THE EXERCISE OF ANY REMEDIES (INCLUDING FORECLOSURE) WITH RESPECT TO SUCH
PROPERTY.
SECTION 15.12. VENUE; SERVICE OF PROCESS. EACH CREDIT PARTY FOR ITSELF,
ITS SUCCESSORS AND ASSIGNS, HEREBY (A) IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS OF THE STATE OF TEXAS AND AGREES
AND CONSENTS THAT SERVICE OF PROCESS MAY BE MADE UPON IT IN ANY LEGAL PROCEEDING
ARISING OUT OF OR IN CONNECTION WITH THE LOAN DOCUMENTS AND THE OBLIGATIONS BY
SERVICE OF PROCESS AS PROVIDED BY TEXAS LAW, (B) IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY LITIGATION ARISING OUT OF OR IN CONNECTION
WITH THE LOAN DOCUMENTS AND THE OBLIGATIONS BROUGHT IN THE COURTS OF DALLAS
COUNTY, TEXAS, OR IN THE UNTIED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT
OF TEXAS, (C) IRREVOCABLY WAIVES ANY CLAIMS THAT ANY LITIGATION BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM, (D) AGREES TO DESIGNATE
AND MAINTAIN AN AGENT FOR SERVICE OF PROCESS IN DALLAS COUNTY, TEXAS, IN
CONNECTION WITH ANY SUCH LITIGATION AND TO DELIVER TO ADMINISTRATIVE AGENT
EVIDENCE THEREOF, (E) IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY
OF THE AFOREMENTIONED COURTS IN ANY SUCH LITIGATION BY THE MAILING OF COPIES
THEREOF BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, POSTAGE PREPAID, TO
BORROWER AT ITS ADDRESS SET FORTH HEREIN, AND (F) IRREVOCABLY AGREES THAT ANY
LEGAL PROCEEDING AGAINST ADMINISTRATIVE AGENT OR ANY BANK ARISING OUT OF OR IN
CONNECTION WITH THE LOAN DOCUMENTS OR THE OBLIGATIONS SHALL BE BROUGHT IN THE
COURTS OF DALLAS COUNTY, TEXAS, OR IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF TEXAS. NOTHING HEREIN SHALL AFFECT THE RIGHT OF
ADMINISTRATIVE AGENT OR ANY BANK TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST BORROWER OR ANY OTHER CREDIT PARTY IN ANY JURISDICTION OR TO
SERVE PROCESS IN ANY MANNER PERMITTED BY APPLICABLE LAW.
SECTION 15.13. WAIVER OF JURY TRIAL, PUNITIVE DAMAGES, ETC. EACH CREDIT
PARTY, ADMINISTRATIVE AGENT AND EACH BANK HEREBY (A) KNOWINGLY, VOLUNTARILY,
INTENTIONALLY, AND IRREVOCABLY WAIVE, TO THE MAXIMUM EXTENT NOT PROHIBITED BY
LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
HEREIN, OR DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT OF, UNDER OR IN
CONNECTION WITH THE LOAN DOCUMENTS OR ANY TRANSACTION CONTEMPLATED THEREBY OR
ASSOCIATED THEREWITH, BEFORE OR AFTER MATURITY; (B) IRREVOCABLY WAIVE, TO THE
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MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER
IN ANY SUCH LITIGATION ANY "SPECIAL DAMAGES," AS DEFINED BELOW; (C) CERTIFY THAT
NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OR COUNSEL FOR ANY PARTY HERETO
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (D)
ACKNOWLEDGE THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE OTHER
LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY, BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION.
AS USED IN THIS SECTION, "SPECIAL DAMAGES" INCLUDES ALL SPECIAL, CONSEQUENTIAL,
EXEMPLARY, OR PUNITIVE DAMAGES (REGARDLESS OF HOW NAMED), BUT DOES NOT INCLUDE
ANY PAYMENT OR FUNDS WHICH ANY PARTY HERETO HAS EXPRESSLY PROMISED TO PAY OR
DELIVER TO ANY OTHER PARTY HERETO.
SECTION 15.14. Counterparts; Effectiveness. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when Administrative Agent
shall have received counterparts hereof signed by all of the parties hereto or,
in the case of any Bank as to which an executed counterpart shall not have been
received, Administrative Agent shall have received telegraphic or other written
confirmation from such Bank of execution of a counterpart hereof by such Bank.
SECTION 15.15. No Third Party Beneficiaries. It is expressly intended
that there shall be no third party beneficiaries of the covenants, agreements,
representations or warranties herein contained other than third party
beneficiaries permitted pursuant to Section 15.10.
SECTION 15.16. COMPLETE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS COLLECTIVELY REPRESENT THE FINAL AGREEMENT BY AND AMONG BANKS,
ADMINISTRATIVE AGENT AND THE CREDIT PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF BANKS,
ADMINISTRATIVE AGENT AND THE CREDIT PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG BANKS, ADMINISTRATIVE AGENT AND THE CREDIT PARTIES.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective Authorized Officers on the day and year first
above written.
BORROWER:
PETROGLYPH ENERGY, INC.,
a Delaware corporation
By: /s/ ROBERT C. MURDOCK
---------------------
Robert C. Murdock,
President
6209 North Highway 61
Hutchinson, Kansas 67502
Attn: Robert C. Murdock
Telecopy No. 316-665-8500
BANKS:
THE CHASE MANHATTAN BANK
By: /s/ MARY JO WOODFORD
----------------------
Name: Mary Jo Woodford
--------------------
Title: Vice President
-------------------
ADMINISTRATIVE AGENT:
THE CHASE MANHATTAN BANK
By: /s/ MARY JO WOODFORD
----------------------
Name: Mary Jo Woodford
--------------------
Title: Vice President
-------------------
