FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-8094
Seagull Energy Corporation
(Exact name of registrant as specified in its charter)
Texas 74-1764876
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1001 Fannin, Suite 1700, Houston, Texas 77002-6714
(Address of principal executive offices) (Zip code)
(713) 951-4700
(Registrant's telephone number, including area code)
None
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X . No .
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
CLASS OUTSTANDING AT AUGUST 5, 1994
Common Stock, $.10 par value 36,093,389
SEAGULL ENERGY CORPORATION AND SUBSIDIARIES
INDEX
PAGE
Part I. Financial Information NUMBER
Presentation of Financial Information............................. 3
Consolidated Statements of Earnings - Three Months
Ended June 30, 1994 and 1993 (Unaudited)........................ 4
Consolidated Statements of Earnings - Six Months
Ended June 30, 1994 and 1993 (Unaudited)........................ 5
Consolidated Balance Sheets - June 30, 1994
and December 31, 1993 (Unaudited)............................... 6
Consolidated Statements of Cash Flows - Six Months
Ended June 30, 1994 and 1993 (Unaudited)........................ 7
Notes to Consolidated Financial Statements (Unaudited)............ 8
Management's Discussion and Analysis of Financial Condition
and Results of Operations (Unaudited).......................... 11
Part II. Other Information......................................... 20
Signatures.......................................................... 22
PART I. FINANCIAL INFORMATION
Item 1. PRESENTATION OF FINANCIAL INFORMATION
In the opinion of management, the following unaudited consolidated
financial statements contain all adjustments necessary to present fairly
the financial position of Seagull Energy Corporation and Subsidiaries (the
"Company" or "Seagull") as of June 30, 1994, and the results of its
operations for the three and six months ended June 30, 1994 and 1993, and
cash flows for the six month periods then ended. All such adjustments made
are of a normal, recurring nature. The results of operations for the three
and six months ended June 30, 1994 are not necessarily indicative of the
results to be expected for the full year.
The financial information presented herein should be read in
conjunction with the consolidated financial statements and notes included
in the Company's Annual Report on Form 10-K for the year ended December 31,
1993.
<TABLE>
ITEM 1. FINANCIAL STATEMENTS
SEAGULL ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars in Thousands Except Per Share Amounts)
(Unaudited)
<CAPTION>
Three Months Ended
June 30,
1994 1993
Revenues:
<S> <C> <C>
Exploration and production.................. $ 69,700 $ 57,124
Pipeline and marketing...................... 10,776 10,924
Alaska transmission and distribution........ 19,083 18,925
99,559 86,973
Costs of Operations:
Alaska transmission and distribution cost
of gas sold............................... 9,598 10,478
Operations and maintenance.................. 29,744 27,616
Exploration charges......................... 6,035 4,813
Depreciation, depletion and amortization.... 36,936 28,865
82,313 71,772
Operating Profit.............................. 17,246 15,201
Other (Income) Expense:
General and administrative.................. 4,054 3,257
Interest expense............................ 12,002 7,820
Interest income and other................... (166) (180)
15,890 10,897
Earnings Before Income Taxes ................. 1,356 4,304
Income Tax Expense (Benefit).................. (1,225) 680
Net Earnings.................................. $ 2,581 $ 3,624
Earnings Per Share............................ $ 0.07 $ 0.10
Weighted Average Number of
Common Shares Outstanding................... 36,966,038 36,848,327
<FN>
See Accompanying Notes to Unaudited Consolidated Financial Statements.
</TABLE>
<TABLE>
SEAGULL ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars in Thousands Except Per Share Amounts)
(Unaudited)
<CAPTION>
Six Months Ended
June 30,
1994 1993
Revenues:
<S> <C> <C>
Exploration and production.................. $ 151,118 $ 109,704
Pipeline and marketing...................... 20,155 22,344
Alaska transmission and distribution........ 55,349 58,117
226,622 190,165
Costs of Operations:
Alaska transmission and distribution cost
of gas sold............................... 28,848 33,006
Operations and maintenance.................. 59,525 55,235
Exploration charges......................... 10,218 10,352
Depreciation, depletion and amortization.... 75,956 56,950
174,547 155,543
Operating Profit.............................. 52,075 34,622
Other (Income) Expense:
General and administrative.................. 7,045 6,755
Interest expense............................ 23,547 18,355
Interest income and other................... (273) (685)
30,319 24,425
Earnings Before Income Taxes.................. 21,756 10,197
Income Taxes.................................. 6,260 2,720
Net Earnings.................................. $ 15,496 $ 7,477
Earnings Per Share............................ $ 0.42 $ 0.22
Weighted Average Number of
Common Shares Outstanding................... 36,942,368 34,754,499
<FN>
See Accompanying Notes to Unaudited Consolidated Financial Statements.
</TABLE>
<TABLE>
SEAGULL ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)
<CAPTION>
June 30, December 31,
1994 1993
ASSETS
Current Assets:
<S> <C> <C>
Cash and cash equivalents................. $ 5,806 $ 5,572
Accounts receivable, net.................. 95,104 98,734
Inventories............................... 5,171 4,382
Prepaid expenses and other................ 4,787 6,520
Total Current Assets.................... 110,868 115,208
Property, Plant and Equipment - at cost
(successful efforts method for gas and
oil properties)............................ 1,537,589 1,278,701
Accumulated Depreciation, Depletion
and Amortization........................... 422,091 345,512
1,115,498 933,189
Other Assets................................ 63,464 69,854
Total Assets................................ $1,289,830 $1,118,251
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable.......................... $ 73,509 $ 84,904
Accrued expenses.......................... 28,694 30,134
Prepaid gas and oil sales................. 6,064 7,590
Current maturities of long-term debt...... 566 1,538
Total Current Liabilities............... 108,833 124,166
Long-Term Debt.............................. 613,581 459,787
Other Noncurrent Liabilities................ 62,220 66,785
Deferred Income Taxes....................... 52,278 28,134
Shareholders' Equity:
Common Stock, $.10 par value; authorized
100,000,000 shares; issued
36,405,341 shares (1994) and
36,378,659 shares (1993)................. 3,641 3,638
Additional paid-in capital................ 324,460 324,192
Retained earnings......................... 136,209 120,713
Foreign currency translation adjustment... (2,228) -
Less - note receivable from employee
stock ownership plan..................... (6,029) (6,029)
Less - 326,812 shares of Common Stock
held in Treasury, at cost.............. (3,135) (3,135)
Total Shareholders' Equity............. 452,918 439,379
Commitments and Contingencies...............
Total Liabilities and Shareholders' Equity.. $1,289,830 $1,118,251
<FN>
See Accompanying Notes to Unaudited Consolidated Financial Statements.
</TABLE>
<TABLE>
SEAGULL ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
<CAPTION>
Six Months Ended
June 30,
1994 1993
Operating Activities:
<S> <C> <C>
Net earnings................................ $ 15,496 $ 7,477
Adjustments to reconcile net earnings
to net cash provided by
operating activities:
Depreciation, depletion
and amortization...................... 77,380 58,443
Amortization of loan acquisition costs.. 2,075 2,277
Deferred income taxes................... 3,104 747
Dry hole expense........................ 4,784 7,931
Distributions in excess of earnings
from partnerships..................... 797 702
Other................................... 55 13
103,691 77,590
Changes in operating assets and
liabilities, net of acquisitions:
Decrease in accounts receivable........ 15,634 8,394
Increase in inventories, prepaid
expenses and other.................... (847) (5,508)
Decrease in accounts payable........... (18,367) (18,909)
Decrease in prepaid gas and oil sales.. (4,259) (16,124)
Increase (Decrease) in accrued
expenses and other.................... (3,064) 5,729
Net Cash Provided By
Operating Activities................ 92,788 51,172
Investing Activities:
Capital expenditures........................ (57,265) (50,221)
Acquisitions, net of cash acquired.......... (195,782) 1,196
Proceeds from sales of property, plant
and equipment............................ 459 99
Net Cash Used In Investing
Activities.......................... (252,588) (48,926)
Financing Activities:
Proceeds from revolving lines of credit
and other borrowings...................... 548,796 85,211
Principal payments on revolving lines of
credit and other borrowings............... (388,885) (245,857)
Fees paid to acquire bank financing......... (13) (717)
Proceeds from sales of common stock......... 215 164,496
Other....................................... (222) (258)
Net Cash Provided By
Financing Activities................ 159,891 2,875
Effect of exchange rate changes on cash..... 143 -
Increase In Cash And
Cash Equivalents.................... 234 5,121
Cash And Cash Equivalents At Beginning
Of Period................................... 5,572 3,882
Cash And Cash Equivalents At End Of Period.... $ 5,806 $ 9,003
<FN>
See Accompanying Notes to Unaudited Consolidated Financial Statements.
</TABLE>
SEAGULL ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
<TABLE>
Supplemental Disclosures of Cash Flow Information.
(Dollars in Thousands)
<CAPTION>
Six Months Ended June 30,
<S> <C> <C>
Cash paid during the period for: 1994 1993
Interest, net of amount capitalized . . $23,341 $11,389
Income taxes . . . . . . . . . . . . . $ 719 $ 4,969
</TABLE>
Foreign Currency Translation.
The functional currency for the Company's foreign operations is the
applicable local currency. Translation from applicable foreign currencies
to U. S. dollars is performed for balance sheet accounts using current
exchange rates in effect at the balance sheet date and for revenue and
expense accounts using primarily a weighted average exchange rate during
the period. Adjustments resulting from such translation are included as a
separate component of shareholders' equity. Deferred income taxes have not
been provided on translation adjustments because the unremitted earnings
from Seagull's foreign operations are considered to be permanently
invested.
Earnings Per Share.
The weighted average number of common shares outstanding used in the
computation of earnings per share for all periods gives effect to the
assumed exercise of dilutive stock options as of the beginning of each
respective period.
NOTE 2. ACQUISITION
On January 4, 1994, Seagull acquired all of the outstanding shares of
stock of Novalta Resources Inc. ("Novalta") for a purchase price of
approximately $202 million in cash (the "Seagull Canada Acquisition"). The
economic effective date of the Seagull Canada Acquisition was December 31,
1993. Effective as of the January 4, 1994 closing date, Novalta was
amalgamated with Seagull Energy Canada Ltd. ("Seagull Canada"), the
indirect subsidiary of Seagull that acquired Novalta.
The Seagull Canada Acquisition was financed primarily with a new $175
million reducing revolving credit facility (the "Canadian Credit
Agreement"), as well as borrowings under Seagull's amended and restated
$475 million revolving credit facility (the "Revolver"). For additional
information, see Notes 2 and 6 to the Consolidated Financial Statements
included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1993.
Actual results of Seagull Canada's operations for the three and six
month periods ended June 30, 1994 are reflected in Seagull's accompanying
unaudited consolidated financial statements.
NOTE 3. DEBT
In May 1994, the Company amended the Revolver to, among other things
(i) increase the maximum commitment from $475 million to $725 million, (ii)
extend the maturity date to December 31, 2000, (iii) adjust certain
financial covenants relating to dividend limitations and permitted leverage
ratios and (iv) to adjust the pricing features of the credit facility.
The provisions of the Revolver limit the total amount of senior
indebtedness available to the Company (the "Borrowing Base"). In May 1994,
the Borrowing Base was redetermined and the total amount of senior
indebtedness available to the Company was increased from $610 million to
$625 million. The available commitment under the Revolver, up to the
maximum of $725 million, is subject to the Borrowing Base and is determined
after consideration of outstanding borrowings under Seagull's other
senior debt facilities.
In May 1994, the Company also amended the Canadian Credit Agreement
for items similar to amendments (ii), (iii) and (iv) to the Revolver noted
above.
NOTE 4. ENSTAR ALASKA STOCK PROPOSAL
On June 1, 1994, shareholders approved a plan (the "ENSTAR Alaska
Stock Proposal") to create and issue a new class of common stock of the
Company intended to reflect separately the performance of the Company's
Alaska transmission and distribution segment ("ENSTAR Alaska") (the "ENSTAR
Alaska Stock"). Subject to prevailing market and other conditions, the
Company is authorized to proceed at any time with an underwritten public
offering (the "ENSTAR Alaska Stock Offering") for cash of shares of ENSTAR
Alaska Stock. The Company will not, however, proceed with the ENSTAR
Alaska Stock Offering until such conditions improve from where they are at
present. As part of the ENSTAR Alaska Stock Proposal, and following the
issuance of the ENSTAR Alaska Stock, Seagull's currently outstanding common
stock (the "Seagull Common Stock") would reflect separately the performance
of the Company's exploration and production and pipeline and marketing
segments. In addition, certain terms of the Seagull Common Stock would be
amended to allow for the creation and issuance of the ENSTAR Alaska Stock.
Net proceeds from the ENSTAR Alaska Stock Offering would be used to
repay amounts borrowed under the Revolver, none of which is attributable to
ENSTAR Alaska.
NOTE 5. COMMITMENTS AND CONTINGENCIES
The Company is a party to ongoing litigation in the normal course of
business. Management regularly analyzes current information and, as
necessary, provides accruals for probable liabilities on the eventual
disposition of these matters. While the outcome of lawsuits or other
proceedings against the Company cannot be predicted with certainty,
management believes that the effect on its financial condition and results
of operations, if any, will not be material.
Item 2. SEAGULL ENERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Unaudited)
The following discussion is intended to assist in an understanding of
the Company's financial position and results of operations for each of the
periods indicated. The Company's accompanying unaudited financial
statements and the notes thereto contain detailed information that should
be referred to in conjunction with the following discussion.
RESULTS OF OPERATIONS
<TABLE>
CONSOLIDATED HIGHLIGHTS
(Dollars in Thousands Except Per Share Amounts)
<CAPTION>
Three Months Ended
June 30, Percent
1994 1993 Change
Revenues:
<S> <C> <C> <C>
Exploration and production . . . . . $ 69,700 $ 57,124 +22
Pipeline and marketing . . . . . . . 10,776 10,924 - 1
Alaska transmission and
distribution . . . . . . . . . . . 19,083 18,925 + 1
$ 99,559 $ 86,973 +14
Operating Profit:
Exploration and production . . . . . $ 11,456 $ 10,276 +11
Pipeline and marketing . . . . . . . 3,656 3,565 + 3
Alaska transmission and
distribution . . . . . . . . . . . 2,134 1,360 +57
$ 17,246 $ 15,201 +13
Net Earnings . . . . . . . . . . . . . $ 2,581 $ 3,624 -29
Earnings Per Share . . . . . . . . . . $ 0.07 $ 0.10 -30
Net Cash Provided by Operating
Activities Before Changes in
Operating Assets and
Liabilities . . . . . . . . . . . . $ 42,506 $ 38,457 +11
Net Cash Provided by
Operating Activities . . . . . . . . $ 50,571 $ 28,534 +77
Weighted Average Number of Common
Shares Outstanding (in thousands) . . 36,966 36,848 -
</TABLE>
<TABLE>
CONSOLIDATED HIGHLIGHTS
(Dollars in Thousands Except Per Share Amounts)
<CAPTION>
Six Months Ended
June 30, Percent
1994 1993 Change
Revenues:
<S> <C> <C> <C>
Exploration and production . . . . . $151,118 $ 109,704 + 38
Pipeline and marketing . . . . . . . 20,155 22,344 - 10
Alaska transmission and
distribution . . . . . . . . . . . 55,349 58,117 - 5
$226,622 $ 190,165 + 19
Operating Profit:
Exploration and production . . . . . $ 33,631 $ 16,695 +101
Pipeline and marketing . . . . . . . 6,863 7,468 - 8
Alaska transmission and
distribution . . . . . . . . . . . 11,581 10,459 + 11
$ 52,075 $ 34,622 + 50
Net Earnings . . . . . . . . . . . . . $ 15,496 $ 7,477 +107
Earnings Per Share . . . . . . . . . . $ 0.42 $ 0.22 + 91
Net Cash Provided by
Operating Activities Before
Changes in Operating Assets
and Liabilities . . . . . . . . . . $103,691 $ 77,590 + 34
Net Cash Provided by
Operating Activities . . . . . . . . $ 92,788 $ 51,172 + 81
Weighted Average Number of
Common Shares Outstanding
(in thousands) . . . . . . . . . . . 36,942 34,754 + 6
</TABLE>
Revenues and operating profit are discussed in the respective segment
sections.
The increase in net earnings for the six months ended June 30, 1994
versus the prior year period was due to an increase in operating profit,
which was partially offset by increases in interest expense and income
taxes. The decline in net earnings for the 1994 second quarter was due to
an increase in interest expense which more than offset an increase in
operating profit for the period. In addition, the 1994 quarter included an
income tax benefit. (See "Other (Income) Expense" and "Income Taxes"
sections below).
Net cash provided by operating activities before and after changes in
operating assets and liabilities increased in the three and six month
periods of 1994 versus the 1993 periods primarily due to 34% and 37%
increases, respectively, in natural gas production. The increases in
natural gas production were primarily due to production contributed from
properties acquired in connection with the Company's acquisition of Novalta
Resources Inc. ("Novalta") (the "Seagull Canada Acquisition") on January 4,
1994, and to production flowing for the first time beginning in late 1993
and early 1994 from certain of the Company's discoveries and three newly
installed Company operated production facilities offshore Texas and
Louisiana.
<TABLE>
EXPLORATION AND PRODUCTION
(Dollars in Thousands Except Per Unit Amounts)
<CAPTION>
Three Months Ended
June 30, Percent
1994 1993 Change
Revenues:
<S> <C> <C> <C>
Natural Gas . . . . . . . . . . . . $62,952 $50,247 +25
Oil and Condensate . . . . . . . . 6,333 6,902 - 8
Natural Gas Liquids . . . . . . . . 695 862 -19
Other . . . . . . . . . . . . . . . (280) (887) +68
69,700 57,124 +22
Lifting Costs . . . . . . . . . . . . 15,400 13,774 +12
General Operating Expense . . . . . . 3,050 2,727 +12
Exploration Charges . . . . . . . . . 6,035 4,813 +25
Depreciation, Depletion
and Amortization . . . . . . . . . 33,759 25,534 +32
Operating Profit . . . . . . . . . . $11,456 $10,276 +11
OPERATING DATA (1):
Net Daily Production (2):
Natural Gas (MMcf) . . . . . . . . 363.6 270.8 +34
Oil and Condensate (Bbl) . . . . . 4,470 4,333 + 3
Natural Gas Liquids (Bbl) . . . . . 813 757 + 7
Combined (MMcfe) (3) . . . . . . . 395.3 301.4 +31
Average Sales Prices:
Natural Gas ($ per Mcf) . . . . . . 1.90 2.04 - 7
Oil and Condensate ($ per Bbl) . . 15.57 17.50 -11
Natural Gas Liquids ($ per Bbl) . . 9.40 12.50 -25
Combined ($ per Mcfe) (3) . . . . . 1.94 2.08 - 7
Lifting Costs ($ per Mcfe) (3):
Lease Operating . . . . . . . . . . 0.24 0.27 -11
Workovers . . . . . . . . . . . . . 0.01 0.04 -75
Production Taxes . . . . . . . . . 0.07 0.09 -22
Transportation . . . . . . . . . . 0.08 0.07 +14
Ad Valorem Taxes . . . . . . . . . 0.03 0.03 -
Total . . . . . . . . . . . . . . . 0.43 0.50 -14
DD&A Rate ($ per Mcfe) (3) . . . . . 0.94 0.93 + 1
<FN>
(1) Domestic and Canadian operations combined.
(2) Natural gas stated in million cubic feet ("MMcf") or thousand cubic
feet ("Mcf"); oil and condensate and natural gas liquids stated in
barrels ("Bbl").
(3) MMcfe and Mcfe represent the equivalent of one million and one
thousand cubic feet of natural gas, respectively. Oil and condensate
and natural gas liquids are converted to gas at a ratio of one barrel
of liquids per six Mcf of gas, based on relative energy content.
</TABLE>
<TABLE>
EXPLORATION AND PRODUCTION
(Dollars in Thousands Except Per Unit Amounts)
<CAPTION>
Six Months Ended
June 30, Percent
1994 1993 Change
Revenues:
<S> <C> <C> <C>
Natural Gas . . . . . . . . . . . . . $138,023 $ 96,025 + 44
Oil and Condensate . . . . . . . . . 11,837 13,396 - 12
Natural Gas Liquids . . . . . . . . . 1,307 1,625 - 20
Other . . . . . . . . . . . . . . . . (49) (1,342) + 96
151,118 109,704 + 38
Lifting Costs . . . . . . . . . . . . . 31,621 26,661 + 19
General Operating Expense . . . . . . . 6,040 5,562 + 9
Exploration Charges . . . . . . . . . . 10,218 10,352 - 1
Depreciation, Depletion
and Amortization . . . . . . . . . . 69,608 50,434 + 38
Operating Profit . . . . . . . . . . . $ 33,631 $ 16,695 +101
OPERATING DATA (1):
Net Daily Production (2):
Natural Gas (MMcf) . . . . . . . . . 375.3 273.6 + 37
Oil and Condensate (Bbl) . . . . . . 4,466 4,221 + 6
Natural Gas Liquids (Bbl) . . . . . . 853 728 + 17
Combined (MMcfe) (3) . . . . . . . . 407.2 303.3 + 34
Average Sales Prices:
Natural Gas ($ per Mcf) . . . . . . . 2.03 1.94 + 5
Oil and Condensate ($ per Bbl) . . . 14.64 17.54 - 17
Natural Gas Liquids ($ per Bbl) . . . 8.47 12.33 - 31
Combined ($ per Mcfe) (3) . . . . . . 2.05 2.00 + 2
Lifting Costs ($ per Mcfe) (3):
Lease Operating . . . . . . . . . . . 0.24 0.27 - 11
Workovers . . . . . . . . . . . . . . 0.02 0.03 - 33
Production Taxes . . . . . . . . . . 0.07 0.08 - 12
Transportation . . . . . . . . . . . 0.08 0.07 + 14
Ad Valorem Taxes . . . . . . . . . . 0.02 0.03 - 33
Total . . . . . . . . . . . . . . . . 0.43 0.49 - 12
DD&A Rate ($ per Mcfe) (3) . . . . . . 0.94 0.92 + 2
<FN>
(1) Domestic and Canadian operations combined.
(2) Natural gas stated in million cubic feet ("MMcf") or thousand cubic
feet ("Mcf"); oil and condensate and natural gas liquids stated in
barrels ("Bbl").
(3) MMcfe and Mcfe represent the equivalent of one million and one
thousand cubic feet of natural gas, respectively. Oil and condensate
and natural gas liquids are converted to gas at a ratio of one barrel
of liquids per six Mcf of gas, based on relative energy content.
</TABLE>
The increase in operating profit of the E&P segment for the three and
six month periods ended June 30, 1994 as compared to the 1993 periods was
due to increases in revenues as a result of significant increases in
natural gas production, which were partially offset by increased
depreciation, depletion and amortization ("DD&A") expense and lifting
costs.
The increases in natural gas production were primarily due to
production contributed from properties acquired in connection with the
Seagull Canada Acquisition on January 4, 1994, which averaged 52.4 and 51.1
MMcf per day for the 1994 quarter and six month period, respectively, and
to production flowing for the first time in late 1993 and early 1994 from
certain of the Company's discoveries and three newly installed Company
operated production facilities offshore Texas and Louisiana. The increases
in production would have been somewhat higher but for voluntary
curtailments in the first half of June 1994 due to inferior natural gas
prices.
DD&A expense and lifting costs increased for the three and six month
periods ended June 30, 1994 as a result of the significant increases in
production, although lifting costs per equivalent unit of production
declined 14% and 12%, respectively, for the 1994 periods.
Exploration charges declined for the six months ended June 30, 1994
due to significant declines in dry hole costs as a result of Seagull's less
active exploratory program in comparison to the 1993 period. Two of six
wells drilled were successful, two wells were drilling, and another two
wells were being evaluated as of late July 1994 in comparison to six
successes out of 20 wells drilled for the 1993 period. However,
exploration charges increased for the 1994 second quarter due primarily to
the completion of 3-D seismic evaluations of many of Seagull's offshore
prospect inventory and to dry hole costs of approximately $1.8 million
relating to an exploratory well in which the Company participated in the
South China Sea which was not successful. Evaluations of the over one
million acre block in the South China Sea will be ongoing, although the
Company does not anticipate further drilling in this venture until sometime
in 1995. Seagull still plans to drill approximately 30 exploratory wells
in 1994, including five or six to be drilled in Canada and two in United
Kingdom waters.
Seagull's exploitative program continues to be very active in 1994.
Through late July 1994, 68 of 76 development wells drilled, all onshore,
were successful including 14 successes out of 14 wells drilled in Canada.
The Company plans to continue its exploitation activities at a comparable
pace throughout the year, focusing its efforts primarily onshore in the
Mid-Continent and Mid-South areas, as well as in Canada.
As a result of its active exploration and exploitative programs,
Seagull expects to maintain its current level of deliverability throughout
1994 with increases expected in late 1994 and early 1995 from several of
its new discoveries and from continued exploitation, especially in Canada.
However, as a result of recent fluctuations in the market price of natural
gas, the Company expects, as in the past, to curtail gas production
whenever prices are deemed to be below acceptable levels.
<TABLE>
PIPELINE AND MARKETING
(Dollars in Thousands)
<CAPTION>
Three Months Ended
June 30, Percent
1994 1993 Change
OPERATING PROFIT:
<S> <C> <C> <C>
Pipelines . . . . . . . . . . . . . $1,788 $2,142 - 17
Marketing and Supply . . . . . . . 1,597 776 +106
Gas Processing . . . . . . . . . . 134 332 - 60
Operating and Construction
Services . . . . . . . . . . . . 137 315 - 57
$3,656 $3,565 + 3
OPERATING DATA:
Average Daily Volumes (MMcf):
Gas Gathering . . . . . . . . . . . 289 321 - 10
Partnership Systems (net) . . . . . 111 105 + 6
Marketing and Supply . . . . . . . 554 444 + 25
Gas Processing:
Average Daily Inlet Volumes
(MMcf) . . . . . . . . . . . . . 278 268 + 4
Average Daily Net Production
(Bbl) . . . . . . . . . . . . . . 4,538 3,351 + 35
</TABLE>
<TABLE>
PIPELINE AND MARKETING
(Dollars in Thousands)
<CAPTION>
Six Months Ended
June 30, Percent
1994 1993 Change
OPERATING PROFIT:
<S> <C> <C> <C>
Pipelines . . . . . . . . . . . . . . $3,371 $4,857 - 31
Marketing and Supply . . . . . . . . 2,949 1,337 +121
Gas Processing . . . . . . . . . . . (222) 847 -126
Operating and Construction
Services . . . . . . . . . . . . . 765 427 + 79
$6,863 $ 7,468 - 8
OPERATING DATA:
Average Daily Volumes (MMcf):
Gas Gathering . . . . . . . . . . . . 284 332 - 14
Partnership Systems (net) . . . . . . 111 124 - 10
Marketing and Supply . . . . . . . . 580 440 + 32
Gas Processing:
Average Daily Inlet Volumes
(MMcf) . . . . . . . . . . . . . . 282 277 + 2
Average Daily Net Production
(Bbl) . . . . . . . . . . . . . . . 3,478 3,637 - 4
</TABLE>
In the pipeline and marketing segment, operating profit declined for
the six months ended June 30, 1994 over the 1993 period due primarily to
declines in the pipelines and gas processing areas which more than offset
improvements in the marketing and supply and operating and construction
services areas. Operating profit for the second quarter of 1994 improved
slightly from the 1993 period due to improvements in the marketing and
supply area which more than offset declines in all other areas of this
segment.
Operating profit in the pipelines area, which includes the Company's
gas gathering and product pipelines systems, as well as the Company's
interest in two partnership systems, declined primarily due to reduced
volumes delivered for the periods. Gas processing operating profit
declined in 1994 due primarily to significant declines in prices received
for extracted products.
In the marketing and supply area, operating profit improved in the
1994 quarter and six month period due to 25% and 32% increases,
respectively, in sales volumes due partially to increases in the E&P
segment's domestic natural gas production and 25% and 24% increases,
respectively, in margins.
For the six months ended June 30, 1994, Seagull recognized additional
profit on a construction project the Company began in mid-1993 -- an 8.7
mile, 16 inch gas pipeline that Seagull constructed for an international
exploration company from a platform to a gathering pipeline offshore
Louisiana. The project was completed early in the first quarter of 1994.
<TABLE>
ALASKA TRANSMISSION AND DISTRIBUTION
(Dollars in Thousands)
<CAPTION>
Three Months Ended
June 30, Percent
1994 1993 Change
<S> <C> <C> <C>
Revenues . . . . . . . . . . . . . $19,083 $18,925 + 1
Cost of Gas Sold . . . . . . . . . 9,598 10,478 - 8
Operations and Maintenance Expense 5,401 5,221 + 3
Depreciation, Depletion and
Amortization . . . . . . . . . . 1,950 1,866 + 4
Operating Profit . . . . . . . . . $ 2,134 $ 1,360 +57
OPERATING DATA:
Degree Days (*) . . . . . . . . . . 1,575 1,420 +11
Volumes (Bcf):
Gas Sold . . . . . . . . . . . . 5.5 5.0 +10
Gas Transported . . . . . . . . . 3.0 2.2 +36
Combined . . . . . . . . . . . . 8.5 7.2 +18
Margins ($ per Mcf):
Gas Sold . . . . . . . . . . . . 1.53 1.51 + 1
Gas Transported . . . . . . . . . 0.35 0.40 -12
Combined . . . . . . . . . . . . 1.12 1.18 - 5
Customers (end of period) . . . . . 88,754 86,842 + 2
<FN>
(*) A measure of weather severity calculated by subtracting the mean
temperature for each day from 65 degrees Fahrenheit. More degree days
equate to colder weather.
</TABLE>
<TABLE>
ALASKA TRANSMISSION AND DISTRIBUTION
(Dollars in Thousands)
<CAPTION>
Six Months Ended
June 30, Percent
1994 1993 Change
<S> <C> <C> <C>
Revenues . . . . . . . . . . . . . . . . $55,349 $58,117 - 5
Cost of Gas Sold . . . . . . . . . . . . 28,848 33,006 -13
Operations and Maintenance Expense . . . 11,021 10,930 + 1
Depreciation, Depletion and
Amortization . . . . . . . . . . . . . 3,899 3,722 + 5
Operating Profit . . . . . . . . . . . . $11,581 $10,459 +11
OPERATING DATA:
Degree Days (*) . . . . . . . . . . . . . 5,462 5,328 + 3
Volumes (Bcf):
Gas Sold . . . . . . . . . . . . . . . 16.6 15.8 + 5
Gas Transported . . . . . . . . . . . . 5.4 4.9 +10
Combined . . . . . . . . . . . . . . . 22.0 20.7 + 6
Margins ($ per Mcf):
Gas Sold . . . . . . . . . . . . . . . 1.48 1.47 + 1
Gas Transported . . . . . . . . . . . . 0.37 0.39 - 5
Combined . . . . . . . . . . . . . . . 1.21 1.21 -
Customers (end of period) . . . . . . . . 88,754 86,842 + 2
<FN>
(*) A measure of weather severity calculated by subtracting the mean
temperature for each day from 65 degrees Fahrenheit. More degree days
equate to colder weather.
</TABLE>
Operating profit of the Alaska transmission and distribution segment
(ENSTAR Natural Gas Company, a division of the Company, and Alaska Pipeline
Company, a wholly owned subsidiary, (collectively referred to herein as
"ENSTAR Alaska")) for the three and six month periods ended June 30, 1994
improved from the 1993 periods primarily as a result of higher non-power
customer demand due to an increase in customers for the periods and colder
temperatures during the 1994 second quarter.
Margins ($ per Mcf) on volumes transported declined 12% and 5%,
respectively, for the three and six month periods ended June 30, 1994 due
to the addition of a large transport customer during the second quarter of
1994 at a transportation fee approximately 53% lower than the average fee
received for all ENSTAR Alaska's other transport customers. However,
increases in volumes transported due to the addition of this customer,
representing approximately 40% of ENSTAR Alaska's transport volumes for the
1994 quarter, more than offset declines in revenues resulting from declines
in average margins realized.
This segment's business is seasonal with approximately 65% of its
sales made in the first and fourth quarters of each year.
<TABLE>
OTHER (INCOME) EXPENSE
(Dollars in Thousands)
<CAPTION>
Three Months Ended
June 30, Percent
1994 1993 Change
<S> <C> <C> <C>
General and Administrative . . $ 4,054 $ 3,257 +24
Interest Expense . . . . . . . 12,002 7,820 +53
Interest Income and Other . . . (166) (180) - 8
$15,890 $10,897 +46
</TABLE>
<TABLE>
OTHER (INCOME) EXPENSE
(Dollars in Thousands)
<CAPTION>
Six Months Ended
June 30, Percent
1994 1993 Change
<S> <C> <C> <C>
General and Administrative . . . . . $ 7,045 $ 6,755 + 4
Interest Expense . . . . . . . . . . 23,547 18,355 +28
Interest Income and Other . . . . . . (273) (685) -60
$30,319 $24,425 +24
</TABLE>
General and administrative expenses increased for the second quarter
of 1994 in comparison to 1993 primarily due to charges for costs relating
to potential acquisitions which were not consummated.
General and administrative expenses increased for the six months ended
June 30, 1994 due to increases in payroll related expenses and costs
related to potential acquisitions which were not consummated, substantially
offset by a decline in costs associated with three compensation plans, one
for outside directors, one for key managers, and the other for all Seagull
employees, that are tied directly to the price of Seagull Common Stock.
The closing price of Seagull Common Stock increased 2% during the 1994 six
month period compared to a 73% increase in the 1993 period.
Increases in interest expense for the 1994 periods were a result of an
increase in the level of debt outstanding due primarily to new debt
incurred to finance the Seagull Canada Acquisition. Seagull expects its
interest costs will continue to rise throughout the remainder of 1994 due
to the increased level of debt previously mentioned as well as anticipated
increases in overall market rates of interest projected for the latter part
of 1994.
INCOME TAXES
The increase in income taxes for the six months ended June 30, 1994
was primarily a result of an increase in earnings before income taxes for
the period.
The decline in income taxes for the 1994 quarter was primarily due to
a significant reduction in Seagull's projected annual effective income tax
rate for 1994 which resulted in an income tax benefit for the second
quarter.
LIQUIDITY AND CAPITAL RESOURCES
Capital expenditures for the 1994 periods were higher than those for
1993 due in part to increases in Seagull's exploitative activities,
primarily resulting from the large number of prospects in the Mid-South
area as well as prospects acquired in connection with the Seagull Canada
Acquisition, which more than offset declines in the Company's exploratory
activities for the periods. However, as discussed earlier, the Company has
very active exploitation and exploration programs planned for the second
half of 1994.
<TABLE>
Capital expenditures for the 1994 and 1993 periods were as follows:
(Dollars in Thousands)
<CAPTION>
Three Months Ended
June 30, Percent
1994 1993 Change
Exploration and Production:
<S> <C> <C> <C>
Lease acquisitions . . . . . . . . . $ 5,512 $ 956 +477
Exploration costs . . . . . . . . . . 4,648 6,297 - 26
Development costs . . . . . . . . . . 19,222 16,699 + 15
29,382 23,952 + 23
Pipeline and Marketing . . . . . . . . 197 73 +170
Alaska Transmission and Distribution . 1,779 2,563 - 31
Corporate . . . . . . . . . . . . . . . 2,359 685 +244
$33,717 $27,273 + 24
</TABLE>
<TABLE>
(Dollars in Thousands)
<CAPTION>
Six Months Ended
June 30, Percent
1994 1993 Change
Exploration and Production:
<S> <C> <C> <C>
Lease acquisitions . . . . . . . . . . $ 7,396 $ 1,994 +271
Exploration costs . . . . . . . . . . . 7,820 15,492 - 50
Development costs . . . . . . . . . . . 35,460 26,962 + 32
50,676 44,448 + 14
Pipeline and Marketing . . . . . . . . . 588 651 - 10
Alaska Transmission and Distribution . . 3,164 3,903 - 19
Corporate . . . . . . . . . . . . . . . . 2,837 1,219 +133
$57,265 $50,221 + 14
</TABLE>
Current plans for 1994 call for capital expenditures of slightly more
than $170 million, including about $160 million in exploration and
production. Of the $160 million, Seagull anticipates spending
approximately $100 million for development activities.
In May 1994, Seagull amended its existing revolving credit facility
(the "Revolver") with a group of major U. S. and international banks. The
facility was amended to, among other things, (i) increase the maximum
commitment from $475 million to $725 million, (ii) extend the maturity date
to December 31, 2000, (iii) adjust certain financial covenants relating to
dividend limitations and permitted leverage ratios and (iv) to adjust the
pricing features of the credit facility.
The provisions of the Revolver limit the total amount of senior
indebtedness available to the Company (the "Borrowing Base"). The
Borrowing Base is based upon the value of the proved reserves of the
Company's exploration and production segment and the financial performance
of the Company's other business segments as provided for under the
Revolver. In May 1994, the Borrowing Base was redetermined and the total
amount of senior indebtedness available to the Company was increased from
$610 million to $625 million. The available commitment under the Revolver,
up to the maximum of $725 million, is subject to the Borrowing Base and is
determined after consideration of outstanding borrowings under Seagull's
other senior debt facilities. As of August 5, 1994, borrowings outstanding
under the Revolver were $155 million, leaving immediately available unused
commitments of approximately $204.1 million, net of outstanding letters of
credit of $2.2 million, $100 million of borrowings outstanding under the
Company's senior notes, the nominated maximum borrowing availability of
$160 million under the Canadian Credit Agreement discussed below, and $3.7
million of borrowings outstanding under Seagull's money market facilities.
In connection with the Seagull Canada Acquisition, Seagull Energy
Canada Ltd. ("Seagull Canada"), the indirect wholly owned subsidiary of
Seagull which acquired Novalta, entered into a new $175 million reducing
revolving credit facility (the "Canadian Credit Agreement") with a group of
10 Canadian affiliates of major U. S. and international banks. The
Canadian Credit Agreement provides for dual currency borrowings in U. S.
and Canadian dollars with a nominated maximum borrowing availability of
$160 million, which may be increased or decreased by the Company at any
time pursuant to provisions of the Canadian Credit Agreement, up to a
maximum commitment of $175 million. The Canadian Credit Agreement was also
amended by the Company in May 1994 for items similar to amendments (ii),
(iii) and (iv) to the Revolver noted above.
In addition to the facilities discussed above, Seagull has money
market facilities with two major U. S. banks with a combined maximum
commitment of $70 million. These lines of credit bear interest at rates
made available by the banks at their discretion and may be canceled at
either Seagull's or the banks' discretion. The lines are subject to annual
renewal.
Management believes that the Company's capital resources will be
sufficient to finance current and forecasted operations. However, the
Company continues to actively pursue potential acquisitions and, depending
upon the size and terms of any such acquisition, additional financing may
be required.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
At the Annual Meeting of Shareholders of the Company held on June 1,
1994, the shareholders voted to authorize certain amendments to the
Company's Articles of Incorporation that would, among other things, (i)
authorize 25,000,000 shares of a new class of common stock of the Company,
the Seagull Energy Corporation - ENSTAR Alaska Group Common Stock, par
value $0.10 per share (the "ENSTAR Alaska Stock") and (ii) amend the terms
of the existing capital stock of the Company to allow for the issuance of
the ENSTAR Alaska Stock. In addition, shareholders voted to ratify the
selection of KPMG Peat Marwick as independent auditors of the Company for
the fiscal year ended December 31, 1994. Votes cast for each matter were
as follows:
<TABLE>
<CAPTION>
Broker
For Against Abstained Non-Votes
<S> <C> <C> <C> <C>
Approval of Amendments to the
Company's Articles of
Incorporation . . . . . . . 28,204,651 922,668 688,347 1,535,172
Ratification of Selection of
KPMG Peat Marwick as
Independent Auditors for
1994 . . . . . . . . . . . 31,142,073 31,922 176,843 -
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
* 4.1 Credit Agreement, $725 million Reducing Revolving Credit and
Competitive Bid Facility, dated May 24, 1994 by and among
Seagull, each of the banks signatory thereto and Texas
Commerce Bank National Association and Chemical Bank, as
co-agents (without exhibits and schedules).
* 4.2 Form of Committed Note executed in connection with the
Credit Agreement included as Exhibit 4.1 hereto.
* 4.3 Form of Competitive Note executed in connection with the
Credit Agreement included as Exhibit 4.1 hereto.
* 4.4 Form of Assignment and Acceptance executed in connection
with the Credit Agreement included as Exhibit 4.1 hereto.
* 4.5 First Amendment to Credit Agreement, U. S. $175 million
Reducing Revolving Credit Facility by and among Seagull
Energy Canada Ltd., each of the banks signatory thereto, and
Chemical Bank of Canada, The Bank of Nova Scotia and
Canadian Imperial Bank of Commerce, as co-agents, dated
May 24, 1994 (without exhibits).
* 4.6 Form of Note (U. S. Dollars) executed in connection with the
First Amendment to Credit Agreement included as Exhibit 4.5
hereto.
* 4.7 Form of Note (Canadian Dollars) executed in connection with
the First Amendment to Credit Agreement included as Exhibit
4.5 hereto.
* 4.8 First Amendment to Intercreditor Agreement executed in
connection with the First Amendment to Credit Agreement
included as Exhibit 4.5 hereto.
(b) Reports on Form 8-K:
On May 2, 1994, the Company filed an amendment on Form 8-K/A amending
its Current Report on Form 8-K dated January 4, 1994 with respect to
Item 7(b), Pro Forma Financial Information. The following financial
statements were amended with this filing:
Item 7.(b)(ii) Pro forma financial information:
The unaudited pro forma condensed financial statements
of the Company giving effect to the Seagull Canada
Acquisition.
*Filed herewith
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
SEAGULL ENERGY CORPORATION
By: /s/ Robert W. Shower
Robert W. Shower, Executive Vice
President and Chief Financial
Officer (Principal Financial
Officer)
Date: August 11, 1994
By: /s/ Rodney W. Bridges
Rodney W. Bridges, Vice
President and Controller
(Principal Accounting Officer)
Date: August 11, 1994
EXHIBIT INDEX
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
Exhibits:
* 4.1 Credit Agreement, $725 million Reducing
Revolving Credit and Competitive Bid
Facility, dated May 24, 1994 by and among
Seagull, each of the banks signatory thereto
and Texas Commerce Bank National Association
and Chemical Bank, as co-agents (without
exhibits and schedules).
* 4.2 Form of Committed Note executed in connection
with the Credit Agreement included as Exhibit
4.1 hereto.
* 4.3 Form of Competitive Note executed in
connection with the Credit Agreement included
as Exhibit 4.1 hereto.
* 4.4 Form of Assignment and Acceptance executed in
connection with the Credit Agreement included
as Exhibit 4.1 hereto.
* 4.5 First Amendment to Credit Agreement, U. S.
$175 million Reducing Revolving Credit
Facility by and among Seagull Energy Canada
Ltd., each of the banks signatory thereto,
and Chemical Bank of Canada, The Bank of Nova
Scotia and Canadian Imperial Bank of
Commerce, as co-agents, dated May 24, 1994
(without exhibits).
* 4.6 Form of Note (U. S. Dollars) executed in
connection with the First Amendment to Credit
Agreement included as Exhibit 4.5 hereto.
* 4.7 Form of Note (Canadian Dollars) executed in
connection with the First Amendment to Credit
Agreement included as Exhibit 4.5 hereto.
* 4.8 First Amendment to Intercreditor Agreement
executed in connection with the First
Amendment to Credit Agreement included as
Exhibit 4.5 hereto.
*Filed herewith
EXHIBIT 4.1
CREDIT AGREEMENT
$725,000,000 REDUCING REVOLVING CREDIT
AND COMPETITIVE BID FACILITY
AMONG
SEAGULL ENERGY CORPORATION,
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
Individually and as Administrative Agent,
CHEMICAL BANK,
as Auction Agent
AND
THE OTHER BANKS SIGNATORY HERETO
TABLE OF CONTENTS
Section 1. Definitions and Accounting Matters. . . . . . . . . . . . 1
1.1. Certain Defined Terms . . . . . . . . . . . . . . . . . . 1
1.2. Accounting Terms and Determinations . . . . . . . . . . . 26
1.3. Types of Loans . . . . . . . . . . . . . . . . . . . . . . 26
1.4. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 26
Section 2. Commitments; Borrowing Base Determinations; Competitive
Bid Facility. . . . . . . . . . . . . . . . . . . . . . . 26
2.1. Committed Loans . . . . . . . . . . . . . . . . . . . . . 26
2.2. Letters of Credit . . . . . . . . . . . . . . . . . . . . 27
2.3. Reductions and Changes of Commitments . . . . . . . . . . 30
2.4. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.5. Affiliates; Lending Offices . . . . . . . . . . . . . . . 32
2.6. Several Obligations . . . . . . . . . . . . . . . . . . . 32
2.7. Notes . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.8. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . 32
2.9. Borrowing Base Determinations . . . . . . . . . . . . . . 32
2.10. Competitive Bid Procedure . . . . . . . . . . . . . . . . 33
Section 3. Borrowings, Prepayments and Selection of Interest Rates. . 35
3.1. Borrowings . . . . . . . . . . . . . . . . . . . . . . . . 35
3.2. Prepayments . . . . . . . . . . . . . . . . . . . . . . . 36
3.3. Selection of Interest Rates . . . . . . . . . . . . . . . 38
Section 4. Payments of Principal and Interest. . . . . . . . . . . . 38
4.1. Repayment of Loans and Reimbursement Obligations . . . . . 38
4.2. Interest . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 5. Payments; Pro Rata Treatment; Computations, Etc. . . . . . 39
5.1. Payments . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.2. Pro Rata Treatment . . . . . . . . . . . . . . . . . . . . 40
5.3. Computations . . . . . . . . . . . . . . . . . . . . . . . 40
5.4. Minimum and Maximum Amounts . . . . . . . . . . . . . . . 40
5.5. Certain Actions, Notices, Etc . . . . . . . . . . . . . . 41
5.6. Non-Receipt of Funds by the Administrative Agent . . . . . 42
5.7. Sharing of Payments, Etc . . . . . . . . . . . . . . . . . 42
Section 6. Yield Protection and Illegality. . . . . . . . . . . . . . 43
6.1. Additional Costs . . . . . . . . . . . . . . . . . . . . . 43
6.2. Limitation on Types of Loans . . . . . . . . . . . . . . . 44
6.3. Illegality . . . . . . . . . . . . . . . . . . . . . . . . 45
6.4. Substitute Alternate Base Rate Loans . . . . . . . . . . . 45
6.5. Compensation . . . . . . . . . . . . . . . . . . . . . . . 46
(1)
6.6. Additional Costs in Respect of Letters of Credit . . . . . 46
6.7. Capital Adequacy . . . . . . . . . . . . . . . . . . . . . 47
6.8 Limitation on Additional Charges; Substitute Banks; Non-
Discrimination . . . . . . . . . . . . . . . . . . . . . . 47
Section 7. Conditions Precedent. . . . . . . . . . . . . . . . . . . 48
7.1. Initial Loans . . . . . . . . . . . . . . . . . . . . . . 48
7.2. Initial and Subsequent Loans . . . . . . . . . . . . . . . 50
Section 8. Representations and Warranties. . . . . . . . . . . . . . 51
8.1. Corporate Existence . . . . . . . . . . . . . . . . . . . 51
8.2. Corporate Power and Authorization . . . . . . . . . . . . 51
8.3. Binding Obligations . . . . . . . . . . . . . . . . . . . 51
8.4. No Legal Bar or Resultant Lien . . . . . . . . . . . . . . 51
8.5. No Consent . . . . . . . . . . . . . . . . . . . . . . . . 51
8.6. Financial Condition . . . . . . . . . . . . . . . . . . . 52
8.7. Investments and Guaranties . . . . . . . . . . . . . . . . 52
8.8. Liabilities and Litigation . . . . . . . . . . . . . . . . 52
8.9. Taxes and Governmental Charges . . . . . . . . . . . . . . 53
8.10. Title to Properties . . . . . . . . . . . . . . . . . . . 53
8.11. Defaults . . . . . . . . . . . . . . . . . . . . . . . . . 53
8.12. Location of Businesses and Offices . . . . . . . . . . . . 53
8.13. Compliance with Law . . . . . . . . . . . . . . . . . . . 53
8.14. Margin Stock . . . . . . . . . . . . . . . . . . . . . . . 54
8.15. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 54
8.16. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . 54
8.17. Investment Company Act . . . . . . . . . . . . . . . . . . 54
8.18. Public Utility Holding Company Act . . . . . . . . . . . . 54
8.19. Environmental Matters . . . . . . . . . . . . . . . . . . 55
8.20. Claims and Liabilities . . . . . . . . . . . . . . . . . . 56
8.21. Solvency . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 9. Affirmative Covenants. . . . . . . . . . . . . . . . . . . 56
9.1. Financial Statements and Reports . . . . . . . . . . . . . 56
9.2. Officers' Certificates . . . . . . . . . . . . . . . . . . 59
9.3. Taxes and Other Liens . . . . . . . . . . . . . . . . . . 59
9.4. Maintenance . . . . . . . . . . . . . . . . . . . . . . . 60
9.5. Further Assurances . . . . . . . . . . . . . . . . . . . . 60
9.6. Performance of Obligations . . . . . . . . . . . . . . . . 60
9.7. Reimbursement of Expenses . . . . . . . . . . . . . . . . 60
9.8. Insurance . . . . . . . . . . . . . . . . . . . . . . . . 61
9.9. Accounts and Records . . . . . . . . . . . . . . . . . . . 62
9.10. Rights of Inspection . . . . . . . . . . . . . . . . . . . 62
9.11. Notice of Certain Events . . . . . . . . . . . . . . . . . 62
9.12. ERISA Information and Compliance . . . . . . . . . . . . . 64
9.13. Minimum APC Dividends and/or ENSTAR Alaska Advances . . . 64
9.14. Minimum ENSTAR Alaska Management Fees . . . . . . . . . . 65
9.15. Minimum ENSTAR Alaska Tax Payments . . . . . . . . . . . . 65
(2)
Section 10. Negative Covenants. . . . . . . . . . . . . . . . . . . . 65
10.1. Debts, Guaranties and Other Obligations . . . . . . . . . 65
10.2. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . 67
10.3. Investments, Loans and Advances . . . . . . . . . . . . . 70
10.4. Dividend Payment Restrictions . . . . . . . . . . . . . . 72
10.5. Mergers and Sales of Assets . . . . . . . . . . . . . . . 73
10.6. Proceeds of Notes . . . . . . . . . . . . . . . . . . . . 73
10.7. ERISA Compliance . . . . . . . . . . . . . . . . . . . . . 73
10.8. Amendment of Certain Documents . . . . . . . . . . . . . . 74
10.9. Tangible Net Worth . . . . . . . . . . . . . . . . . . . . 74
10.10. ENSTAR Alaska Financial Ratios . . . . . . . . . . . . . . 74
10.11. Company Debt/Capitalization Ratio . . . . . . . . . . . . 74
10.12. EBITDA/Interest Ratio . . . . . . . . . . . . . . . . . . 75
10.13. Nature of Business . . . . . . . . . . . . . . . . . . . . 75
10.14. Futures Contracts . . . . . . . . . . . . . . . . . . . . 75
10.15. Covenants in Other Agreements . . . . . . . . . . . . . . 75
Section 11. Defaults. . . . . . . . . . . . . . . . . . . . . . . . . 76
11.1. Events of Default . . . . . . . . . . . . . . . . . . . . 76
11.2. Collateral Account . . . . . . . . . . . . . . . . . . . . 78
11.3. Preservation of Security for Unmatured Reimbursement
Obligations . . . . . . . . . . . . . . . . . . . . . . . 78
11.4. Right of Setoff . . . . . . . . . . . . . . . . . . . . . 79
Section 12. The Agents. . . . . . . . . . . . . . . . . . . . . . . . 80
12.1. Appointment, Powers and Immunities . . . . . . . . . . . . 80
12.2. Reliance by Agents . . . . . . . . . . . . . . . . . . . . 81
12.3. Defaults . . . . . . . . . . . . . . . . . . . . . . . . . 81
12.4. Rights as a Bank . . . . . . . . . . . . . . . . . . . . . 81
12.5. Indemnification . . . . . . . . . . . . . . . . . . . . . 81
12.6. Non-Reliance on Agents and Other Banks . . . . . . . . . . 82
12.7. Failure to Act . . . . . . . . . . . . . . . . . . . . . . 82
12.8. Resignation or Removal of Agents . . . . . . . . . . . . . 82
Section 13. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . 83
13.1. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . 83
13.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 83
13.3. Indemnification . . . . . . . . . . . . . . . . . . . . . 84
13.4. Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . 84
13.5. Successors and Assigns . . . . . . . . . . . . . . . . . . 85
13.6. Limitation of Interest . . . . . . . . . . . . . . . . . . 88
13.7. Survival . . . . . . . . . . . . . . . . . . . . . . . . . 89
13.8. Captions . . . . . . . . . . . . . . . . . . . . . . . . . 89
13.9. Counterparts . . . . . . . . . . . . . . . . . . . . . . . 89
13.10. Governing Law . . . . . . . . . . . . . . . . . . . . . . 89
13.11. Severability . . . . . . . . . . . . . . . . . . . . . . . 90
13.12. Chapter 15 Not Applicable . . . . . . . . . . . . . . . . 90
(3)
13.13. Confidential Information . . . . . . . . . . . . . . . . . 90
13.14. Tax Forms . . . . . . . . . . . . . . . . . . . . . . . . 91
13.15. Amendment and Restatement . . . . . . . . . . . . . . . . 91
13.16. Intercreditor Agreement . . . . . . . . . . . . . . . . . 91
EXHIBITS:
Exhibit A Oil and Gas Subsidiaries
Exhibit B Form of Borrowing Base Certificate
Exhibit C Form of Request for Extension of Credit
Exhibit D Mortgages, Acts of Collateral Mortgage, Collateral Mortgage
Notes and Collateral Pledge Agreements
Exhibit E Form of Committed Note
Exhibit F Subsidiaries (with Addresses)
Exhibit G Form of Compliance Certificate
Exhibit H Assignment and Acceptance
Exhibit I Form of Engineering Report Certificate
Exhibit J Parameters Interest Rate Protection and Commodities Futures
Programs
Exhibit K Form of Competitive Bid Request
Exhibit L Form of Notice to Banks of Competitive Bid Request
Exhibit M Form of Competitive Bid
Exhibit N Form of Competitive Bid Administrative Questionnaire
Exhibit O Form of Competitive Note
Exhibit P Articles of Amendment
Exhibit Q Existing Competitive Loans
Exhibit R Form of Amendment to Intercreditor Agreement
Exhibit S Form of Amendment to Canadian Facility
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CREDIT AGREEMENT
This CREDIT AGREEMENT, dated as of May 24, 1994 (the "Effective
Date"), is by and among SEAGULL ENERGY CORPORATION (the "Company"), a
corporation duly organized and validly existing under the laws of the State
of Texas; each of the banks which is or which may from time to time become
a signatory hereto (individually, a "Bank" and, collectively, the "Banks");
TEXAS COMMERCE BANK NATIONAL ASSOCIATION ("TCB"), a national banking
association, as agent for the Banks (in such capacity, together with its
successors in such capacity, the "Administrative Agent"); and CHEMICAL BANK
("Chemical"), a New York banking corporation, as auction agent (in such
capacity, together with its successors in such capacity, the "Auction
Agent").
The parties hereto agree as follows:
Section 1. Definitions and Accounting Matters.
1.1. Certain Defined Terms. As used herein, the following terms
shall have the following meanings (all terms defined in this Section 1.1 or
in other provisions of this Agreement in the singular to have the same
meanings when used in the plural and vice versa):
"Acts of Collateral Mortgage" shall mean, collectively, the collateral
mortgages, pledges, assignments of production and security agreements
described or referenced on Exhibit D hereto each in form and substance
satisfactory to the Administrative Agent, executed by the indicated
Persons, with which the applicable Collateral Mortgage Note executed by
such Person has been or is to be paraphed for identification, together with
additional or supplemental collateral mortgages, pledges, assignments of
production and security agreements required to be executed pursuant to any
of the terms of this Agreement or any of the other Loan Documents, as any
of the same may be amended, modified, restated or supplemented from time to
time. The parties recognize and acknowledge that the Acts of Collateral
Mortgage described or referenced on Exhibit D hereto have each been
released or redelivered to the Company and are no longer in effect, and
that the inclusion of such Acts of Collateral Mortgage in this definition
is solely for the purpose of those provisions of this Agreement that
continue to refer to the Mortgages even following their release or
redelivery.
"Additional Costs" shall have the meaning ascribed to such term in
Section 6.1 hereof.
"Adjustable Alaskan Gas Debt" shall mean Alaskan Gas Debt minus the
highest amount of Short Term Borrowings outstanding during the Short Term
Borrowings Measuring Period.
"Affiliate" shall mean, as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
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controlled by, such Person and, if such Person is an individual, any member
of the immediate family (including parents, siblings, spouse, children,
stepchildren, grandchildren, nephews and nieces) of such individual and any
trust whose principal beneficiary is such individual or one or more members
of such immediate family and any Person who is controlled by any such
member or trust. As used in this definition, "control" (including, with
correlative meanings, "controlled by" and "under common control with")
shall mean possession, directly or indirectly, of power to direct or cause
the direction of management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise).
"Agents" shall mean the Administrative Agent and the Auction Agent.
"Agreement" shall mean this Credit Agreement, as the same may be
amended, modified, restated or supplemented from time to time.
"Alaskan Gas Component Value" shall mean (A) prior to the initial
Borrowing Base Determination, $43,000,000 and (B) thereafter, the amount by
which (i) the product of 5-1/2 times an amount equal to (I) the average
annual EBITDA of ENSTAR Alaska on a consolidated basis for the three year
period ended on the most recent December 31st plus (II) 70% of the average
annual management fees paid to the Company by ENSTAR Alaska during such
three year period minus (III) average annual Capital Expenditures
attributable to ENSTAR Alaska in accordance with GAAP and on a consolidated
basis during such three year period exceeds (ii) the Alaskan Gas Debt
determined as of (x) the preceding January 1 (in the case of a Scheduled
Redetermination) or (y) the last day of the second month prior to the month
in which the effective date of the Borrowing Base Determination occurs (in
the case of a Requested Redetermination).
"Alaskan Gas Debt" shall mean the sum of (i) Funded Indebtedness of
ENSTAR Alaska plus (ii) Current Maturities of ENSTAR Alaska plus
(iii) Redemption Obligations of ENSTAR Alaska plus (iv) the highest amount
of Short Term Borrowings outstanding during the Short Term Borrowings
Measuring Period.
"Alternate Base Rate" shall mean, for any day, a rate per annum equal
to the higher of (a) the Prime Rate in effect on such day or (b) 1/2 of 1%
plus the Federal Funds Rate in effect for such day (rounded upwards, if
necessary, to the nearest 1/16th of 1%). For purposes hereof, "Federal
Funds Rate" shall mean, for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day
(or, if such day is not a Business Day, for the next preceding Business
Day) by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by the Administrative
Agent from three Federal funds brokers of recognized standing selected by
it. For purposes of this Agreement, any change in the Alternate Base Rate
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due to a change in the Federal Funds Rate shall be effective on the
effective date of such change in the Federal Funds Rate. If for any reason
the Administrative Agent shall have determined (which determination shall
be conclusive and binding, absent manifest error) that it is unable to
ascertain the Federal Funds Rate for any reason, including, without
limitation, the inability or failure of the Administrative Agent to obtain
sufficient bids or publications in accordance with the terms hereof, the
Alternate Base Rate shall be the Prime Rate until the circumstances giving
rise to such inability no longer exist. For the purposes hereof, "Prime
Rate" shall mean the prime rate as announced from time to time by the
Administrative Agent, and thereafter entered in the minutes of the
Administrative Agent's Loan and Discount Committee. Without notice to the
Company or any other Person, the Prime Rate shall change automatically from
time to time as and in the amount by which said prime rate shall fluctuate.
The Prime Rate is a reference rate and does not necessarily represent the
lowest or best rate actually charged to any customer. The Administrative
Agent may make commercial loans or other loans at rates of interest at,
above or below the Prime Rate. For purposes of this Agreement any change
in the Alternate Base Rate due to a change in the Prime Rate shall be
effective on the date such change in the Prime Rate is announced.
"Alternate Base Rate Loans" shall mean Loans which bear interest at a
rate based upon the Alternate Base Rate.
"APC" shall mean Alaska Pipeline Company, an Alaska corporation, a
Subsidiary of the Company.
"APC Long Term Financing Documents" shall mean that certain Inducement
Agreement and that certain Note Agreement (together with the Notes, as
defined therein), each dated as of May 14, 1992, by and among the Company,
Aid Association for Lutherans, The Equitable Life Assurance Society of the
United States, Equitable Variable Life Insurance Company, Provident Life
and Accident Insurance Company and Teachers Insurance & Annuity Association
of America, any documentation executed in connection with any renewal,
extension or rearrangement of the Indebtedness that is the subject of the
foregoing documents, the Gas Sales Contract, the Intercompany Mortgage, as
defined in the above-mentioned Note Agreement, and any documents executed
in replacement of any of the foregoing documents, if any, and only if the
Administrative Agent has received notice thereof pursuant to Section 10.8.
"Applicable Lending Office" shall mean, for each Bank and for each
Type of Loan, such office of such Bank (or of an affiliate of such Bank) as
such Bank may from time to time specify to the Administrative Agent and the
Company as the office by which its Loans of such Type are to be made and/or
issued and maintained.
"Applicable Margin" shall mean, on any day and with respect to any
Loan, the applicable per annum percentage set forth at the appropriate
intersection in the table shown below, based on the Debt/Capitalization
Ratio as of the last day of the most recently ending fiscal quarter of the
Company and its Subsidiaries with respect to which the Administrative Agent
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shall have received the financial statements and other information (the
"Current Information") required to be delivered to the Administrative Agent
pursuant to Section 9.1 hereof (said calculation to be made by the
Administrative Agent as soon as practicable after receipt by the
Administrative Agent of all required Current Information):
Eurodollar
Alternate Base Rate Loan
Loan Applicable Applicable
Debt/Capitalization Ratio Margin Margin
Greater than or equal to 60% 0.50 1.50
Greater than or equal to 55%
but less than 60% 0.25 1.25
Greater than or equal to 50%
but less than 55% 0.00 1.00
Greater than or equal to 45%
but less than 50% 0.00 0.75
Less than 45% 0.00 0.625
Notwithstanding the foregoing, at all times that a Borrowing Base
Deficiency shall exist and is continuing for more than 30 days, the
Applicable Margins provided for in this definition shall each be increased
by adding 1.00%. Each change in the Applicable Margin based on a change in
the Current Information shall be effective as of the fifteenth day of the
month during which the Current Information used to calculate the new
Applicable Margin was delivered to the Administrative Agent.
"Applications" shall mean all applications and agreements for Letters
of Credit, or similar instruments or agreements, now or hereafter executed
by any Person in connection with any Letter of Credit now or hereafter
issued or to be issued.
"Articles of Amendment" shall mean the proposed Articles of Amendment
attached hereto as Exhibit P.
"Bankruptcy Code" shall mean the United States Bankruptcy Code, as
amended, and any successor statute.
"Beluga Financing Documents" shall mean that certain Inducement
Agreement and that certain Note Agreement (together with the Notes, as
defined therein), each dated June 17, 1985, and amended as of June 15,
1990, by and among the Company and The Equitable Life Assurance Society of
the United States and the Travelers Insurance Company, any documentation
executed in connection with any renewal, extension or rearrangement of the
Indebtedness that is the subject of the foregoing documents, the Gas Sales
Contract, the Intercompany Mortgage, as defined in the above-mentioned Note
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Agreement, and any documents executed in replacement of any of the
foregoing documents, if and only if the Administrative Agent has received
notice thereof pursuant to Section 10.8.
"Borrowing Base" shall mean, as at any date, the sum of
(i) the Oil and Gas Reserves Component Value plus
(ii) the Alaskan Gas Component Value plus
(iii) the Pipeline Component Value.
If the Company fails to provide a current Borrowing Base Certificate as
required by Section 9.2(c), two (2) Business Days after notice to the
Company the Majority Banks may determine the Borrowing Base from time to
time in their reasonable discretion, taking into account all information
reasonably available to them, and the Borrowing Base from time to time so
determined shall be the Borrowing Base for all purposes of this Agreement
until a current Borrowing Base Certificate is furnished.
"Borrowing Base Certificate" shall mean a certificate with respect to
the Alaskan Gas Component Value and the Pipeline Component Value, duly
executed by the chief executive officer, chief financial officer, treasurer
or controller of the Company, appropriately completed and in substantially
the form of Exhibit B hereto.
"Borrowing Base Debt" shall mean, without duplication, the sum of (i)
borrowed money Indebtedness that is not Funded Indebtedness plus (ii)
Senior Debt plus (iii) the "Maximum Outstanding Amount" in effect from time
to time under the Canadian Facility plus (iv) Redemption Obligations
payable within five (5) years after any applicable determination date,
together with obligations (excluding volumetric obligations with respect to
pre-sales of Hydrocarbon production which have already been accounted for
in the calculation of the Borrowing Base) payable out of Hydrocarbon
production (except such obligations payable solely by recourse to
properties not included in the Borrowing Base and Indebtedness permitted by
Section 10.1(l)) to the extent such obligations have not already been
deducted in the calculation of the Borrowing Base; provided, however, that
Borrowing Base Debt shall not include the Loans or any Subordinated Debt.
"Borrowing Base Deficiency" shall mean the amount by which (a) the sum
of (i) the aggregate outstanding amount of all Revolving Credit Obligations
plus (ii) the aggregate outstanding amount of all other Borrowing Base Debt
of the Company and its Subsidiaries (other than ENSTAR Alaska) exceeds (b)
the then current Borrowing Base.
"Borrowing Base Deficiency Notification Date" shall mean the date on
which any notice of a Borrowing Base Deficiency is received by the Company.
"Borrowing Base Determination" shall mean a Scheduled Redetermination
or a Requested Redetermination.
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"Business Day" shall mean any day other than a day on which commercial
banks are authorized or required to close in Houston, Texas or New York,
New York, and where such term is used in the definition of "Quarterly Date"
in this Section 1.1 or if such day relates to a borrowing of, a payment or
prepayment of principal of or interest on, or an Interest Period for, a
Eurodollar Loan or a notice by the Company with respect to any such
borrowing, payment, prepayment or Interest Period, a day which is also a
day on which dealings in Dollar deposits are carried out in the relevant
interbank market.
"Canadian Facility" shall mean that certain Credit Agreement dated
December 30, 1993 executed by and among Seagull Energy Canada Ltd.,
Chemical Bank of Canada, as Arranger and as Administrative Agent, The Bank
of Nova Scotia, as Paying Agent and as Co-Agent, Canadian Imperial Bank of
Commerce, as Co-Agent, and certain banks therein named, as amended by that
certain First Amendment to Credit Agreement in the form of Exhibit S hereto
dated concurrently herewith executed by and among Seagull Energy Canada
Ltd., Chemical Bank of Canada, as Arranger and as Administrative Agent, The
Bank of Nova Scotia, as Paying Agent and as Co-Agent, Canadian Imperial
Bank of Commerce, as Co-Agent, and certain banks therein named, and as
amended by the Intercreditor Agreement, and as the same may be further
amended or modified from time to time.
"Capital Expenditures" shall mean expenditures in respect of fixed or
capital assets (calculated in accordance with GAAP) excluding expenditures
for the restoration, repair or replacement of any fixed or capital asset
which was destroyed or damaged, in whole or in part, to the extent financed
by the proceeds of an insurance policy. Expenditures in respect of
replacements and maintenance consistent with the business practices of the
Company and its Subsidiaries in respect of plant facilities, machinery,
fixtures and other like capital assets utilized in the ordinary course of
business are not Capital Expenditures to the extent such expenditures are
not capitalized in preparing a balance sheet of the Company in accordance
with GAAP.
"Capital Lease Obligations" shall mean, as to any Person, the
obligations of such Person to pay rent or other amounts under a lease of
(or other agreement conveying the right to use) real and/or personal
property which obligations are required to be classified and accounted for
as a capital lease on a balance sheet of such Person under GAAP and, for
purposes of this Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP.
"Capitalization" shall mean an amount equal to the sum of (a) Funded
Indebtedness of the Company and its Subsidiaries on a consolidated basis
plus (b) Current Maturities of the Company and its Subsidiaries on a
consolidated basis plus (c) borrowed money Indebtedness of the Company and
its Subsidiaries on a consolidated basis that is not Funded Indebtedness
plus (d) Indebtedness of the Company and its Subsidiaries on a consolidated
basis constituting obligations payable out of Hydrocarbons (except such
obligations payable solely by recourse to properties not included in the
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Borrowing Base) plus (e) Tangible Net Worth of the Company and its
Subsidiaries on a consolidated basis.
"Change of Control" shall mean a change resulting when any Unrelated
Person or any Unrelated Persons acting together which would constitute a
Group together with any Affiliates or Related Persons thereof (in each case
also constituting Unrelated Persons) shall at any time either (i)
Beneficially Own more than 50% of the aggregate voting power of all classes
of Voting Stock of the Company or (ii) succeed in having sufficient of its
or their nominees elected to the Board of Directors of the Company such
that such nominees, when added to any existing director remaining on the
Board of Directors of the Company after such election who is an Affiliate
or Related Person of such Person or Group, shall constitute a majority of
the Board of Directors of the Company. As used herein (a) "Beneficially
Own" means "beneficially own" as defined in Rule 13d-3 of the Securities
Exchange Act of 1934, as amended, or any successor provision thereto;
provided, however, that, for purposes of this definition, a Person shall
not be deemed to Beneficially Own securities tendered pursuant to a tender
or exchange offer made by or on behalf of such Person or any of such
Person's Affiliates until such tendered securities are accepted for
purchase or exchange; (b) "Group" means a "group" for purposes of Section
13(d) of the Securities Exchange Act of 1934, as amended; (c) "Unrelated
Person" means at any time any Person other than the Company or any
Subsidiary and other than any trust for any employee benefit plan of the
Company or any Subsidiary of the Company; (d) "Related Person" of any
Person shall mean any other Person owning (1) 5% or more of the outstanding
common stock of such Person or (2) 5% or more of the Voting Stock of such
Person; and (e) "Voting Stock" of any Person shall mean capital stock of
such Person which ordinarily has voting power for the election of directors
(or persons performing similar functions) of such Person, whether at all
times or only so long as no senior class of securities has such voting
power by reason of any contingency.
"Chapter One" shall mean Chapter One of the Texas Credit Code, as in
effect on the date the document using such term was executed.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or
any successor statute, together with all regulations, rulings and
interpretations thereof or thereunder by the Internal Revenue Service.
"Collateral Mortgage Notes" shall mean, collectively, any collateral
mortgage notes now or hereafter executed in connection with the
Obligations, each in form and substance satisfactory to the Administrative
Agent, payable to the order of bearer, together with additional or
supplemental collateral mortgage notes hereafter required to be executed
pursuant to any of the terms of this Agreement or any of the other Loan
Documents, as any of the same may be amended, modified, restated or
supplemented from time to time.
"Collateral Pledge Agreements" shall mean, collectively, any
assignments of production, security agreements and financing statements now
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or hereafter executed in favor of the Administrative Agent in connection
with the Obligations, each in form and substance satisfactory to the
Administrative Agent, together with additional or supplemental assignments
of production, security agreements and financing statements hereafter
required to be executed in favor of the Administrative Agent pursuant to
any of the terms of this Agreement or any of the other Loan Documents, as
any of the same may be amended, modified, restated or supplemented from
time to time.
"Commitment Percentage" shall mean, as to any Bank, the percentage
equivalent of a fraction the numerator of which is the amount of such
Bank's Commitment and the denominator of which is the aggregate amount of
the Commitments of all Banks.
"Commitments" shall mean, as to any Bank, the obligation, if any, of
such Bank to make Committed Loans and incur Letter of Credit Liabilities in
an aggregate principal amount at any one time outstanding up to but not
exceeding the amount, if any, set forth opposite such Bank's name on the
signature pages hereof under the caption "Commitment" (as the same may be
reduced from time to time pursuant to Section 2.3).
"Committed Loans" shall mean the loans provided for in Section 2.1
hereof.
"Committed Notes" shall mean the promissory notes of the Company
evidencing the Committed Loans, in the form of Exhibit E hereto, together
with all renewals, extensions, modifications and replacements thereof and
substitutions therefor.
"Company Report" shall mean one or more reports, in form satisfactory
to the Administrative Agent and the Majority Banks, prepared by petroleum
engineers employed by the Company or its Subsidiaries, which shall evaluate
(i) at least 85% of the present value of the producing and non-producing
proved oil and gas reserves of the Company and its Oil and Gas Subsidiaries
evaluated in the most recent Engineering Report delivered pursuant hereto
and (ii) any other properties as to which the Company has conducted
successful exploration activities subsequent to the most recent Engineering
Report, in each case effective as of the immediately preceding July 1.
Each Company Report shall set forth production, drilling and acquisition
information and other information requested by the Administrative Agent and
shall be based upon updated economic assumptions acceptable to the
Administrative Agent and approved by the Majority Banks at the beginning of
the applicable year.
"Competitive Bid" shall mean an offer by a Bank to make a Competitive
Loan pursuant to Section 2.10 hereof.
"Competitive Bid Administrative Questionnaire" shall mean a
questionnaire substantially in the form of Exhibit N hereto.
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"Competitive Bid Rate" shall mean, as to any Competitive Bid made by a
Bank pursuant to Section 2.10 hereof, the fixed rate of interest, in each
case, offered by the Bank making such Competitive Bid.
"Competitive Bid Request" shall have the meaning ascribed to such term
in Section 2.10 hereof.
"Competitive Loans" shall mean the Existing Competitive Loans and
loans provided for in Section 2.10 hereof.
"Competitive Notes" shall mean the promissory notes of the Company
evidencing the Competitive Loans, in the form of Exhibit O hereto, together
with all renewals, extensions, modifications and replacements thereof and
substitutions therefor.
"Cover" for Letter of Credit Liabilities shall be effected by paying
to the Administrative Agent immediately available funds, to be held by the
Administrative Agent in a collateral account maintained by Administrative
Agent at its Principal Office and collaterally assigned as security for the
financial accommodations extended pursuant to this Agreement using
documentation satisfactory to the Administrative Agent, in an amount equal
to any required prepayment. Such amount shall be retained by the
Administrative Agent in such collateral account until such time as (x) in
the case of Cover being provided pursuant to Section 2.2(a), the applicable
Letter of Credit shall have expired and Reimbursement Obligations, if any,
with respect thereto shall have been fully satisfied or (y) in the case of
Cover being provided pursuant to Section 3.2(b)(1), the outstanding
principal amount of all Revolving Credit Obligations is not greater than
the aggregate amount of the Commitments.
"Current Maturities" shall mean, on any day on which Current
Maturities are calculated, the sum of (a) scheduled principal payments on
Funded Indebtedness which are payable within one (1) year after such day
plus (b) the principal component of payments required to be made with
respect to Capital Lease Obligations within one (1) year of said date plus
(c), to the extent not included above, all items which in accordance with
GAAP would be classified as current maturities of long term debt.
"Debt/Capitalization Ratio" shall mean the ratio of (a) the sum of
Funded Indebtedness of the Company and its Subsidiaries on a consolidated
basis plus Current Maturities of the Company and its Subsidiaries on a
consolidated basis plus borrowed money Indebtedness of the Company and its
Subsidiaries on a consolidated basis that is not Funded Indebtedness plus
Indebtedness of the Company and its Subsidiaries on a consolidated basis
constituting obligations payable out of Hydrocarbons (except such
obligations payable solely by recourse to properties not included in the
Borrowing Base) to (b) Capitalization.
"Default" shall mean an Event of Default or an event which with notice
or lapse of time or both would, unless cured or waived, become an Event of
Default.
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"Disclosure Statement" shall mean the Disclosure Statement dated
December 31, 1992 delivered to the Administrative Agent by the Company.
"Dividend Payment" shall mean, with respect to any Person, dividends
(in cash, property or obligations) on, or other payments or distributions
on account of, or the redemption of, or the setting apart of money for a
sinking or other analogous fund for the purchase, redemption, retirement or
other acquisition of, any shares of any class of capital stock of such
Person, or the exchange or conversion of any shares of any class of capital
stock of such Person for or into any obligations of or shares of any other
class of capital stock of such Person or any other property, but excluding
dividends to the extent payable in, or exchanges or conversions for or
into, shares of common stock of the Company or options or warrants to
purchase common stock of the Company.
"Dollars" and "$" shall mean lawful money of the United States of
America.
"EBITDA" shall mean net earnings (excluding gains and losses on sales
and retirement of assets, non-cash write downs and charges resulting from
accounting convention changes) before deduction for federal and state
taxes, interest expense (including capitalized interest), operating lease
rentals or depreciation, depletion and amortization expense, all determined
in accordance with GAAP.
"EBITDA/Interest Ratio" shall mean the ratio of (a) EBITDA of the
Company and its Subsidiaries on a consolidated basis to (b) operating lease
rentals and interest expense (including capitalized interest) on all
Indebtedness of the Company and its Subsidiaries on a consolidated basis
for any twelve-month period ending on the last day of every calendar
quarter during the period with respect to which the EBITDA/Interest Ratio
is to be calculated.
"Engineering Report" shall mean one or more reports, in form
satisfactory to the Administrative Agent and the Majority Banks, prepared
by one or more independent consulting firms acceptable to the
Administrative Agent and the Majority Banks in their reasonable business
judgment, which shall evaluate at least 85% of the present value of the
producing and non-producing proved oil and gas reserves of the Company and
its Oil and Gas Subsidiaries as of the immediately preceding January 1.
Each Engineering Report shall set forth a projection of the future rate of
production, Net Proceeds of Production and present value of the Net
Proceeds of Production, in each case based upon economic assumptions
acceptable to the Administrative Agent and approved by the Majority Banks.
"ENSTAR Alaska" shall collectively mean (i) the gas distribution
system in south-central Alaska known as ENSTAR Natural Gas Company, a
division of the Company, and (ii) APC.
"ENSTAR Alaska Group" shall have the meaning assigned to such term in
the Articles of Amendment.
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"ENSTAR Alaska Stock" shall have the meaning assigned to such term in
the Articles of Amendment.
"Environmental Claim" means any third party (including Governmental
Authorities and employees) action, lawsuit, claim or proceeding (including
claims or proceedings at common law or under the Occupational Safety and
Health Act or similar laws relating to safety of employees) which seeks to
impose liability for (i) noise; (ii) pollution or contamination of the air,
surface water, ground water or land or the clean-up of such pollution or
contamination; (iii) solid, gaseous or liquid waste generation, handling,
treatment, storage, disposal or transportation; (iv) exposure to Hazardous
Substances; (v) the safety or health of employees or (vi) the manufacture,
processing, distribution in commerce or use of Hazardous Substances. An
"Environmental Claim" includes, but is not limited to, a common law action,
as well as a proceeding to issue, modify or terminate an Environmental
Permit, or to adopt or amend a regulation to the extent that such a
proceeding attempts to redress violations of an applicable permit, license,
or regulation as alleged by any Governmental Authority.
"Environmental Liabilities" includes all liabilities arising from any
Environmental Claim, Environmental Permit or Requirement of Environmental
Law under any theory of recovery, at law or in equity, and whether based on
negligence, strict liability or otherwise, including but not limited to:
remedial, removal, response, abatement, investigative, monitoring, personal
injury and damage to property or injuries to persons, and any other related
costs, expenses, losses, damages, penalties, fines, liabilities and
obligations, and all costs and expenses necessary to cause the issuance,
reissuance or renewal of any Environmental Permit including reasonable
attorneys' fees and court costs.
"Environmental Permit" means any permit, license, approval or other
authorization under any applicable Legal Requirement relating to pollution
or protection of health or the environment, including laws, regulations or
other requirements relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants or hazardous substances or
toxic materials or wastes into ambient air, surface water, ground water or
land, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling of pollutants,
contaminants or Hazardous Substances.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and all rules, regulations and
interpretations by the Internal Revenue Service or the Department of Labor
thereunder.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) which is a member of a group of which the Company is a member
and which is under common control within the meaning of the regulations
under Section 414 of the Code.
-11-
"Eurodollar Base Rate" shall mean, with respect to any Interest Period
for any Eurodollar Loan, the lesser of (A) the rate per annum (rounded
upwards, if necessary, to the nearest 1/16th of 1%) equal to the average of
the offered quotations appearing on Telerate Page 3750 (or if such Telerate
Page shall not be available, any successor or similar service as may be
selected by the Administrative Agent and the Company) as of 11:00 a.m.,
Houston, Texas time (or as soon thereafter as practicable) on the day two
Business Days prior to the first day of such Interest Period for Dollar
deposits having a term comparable to such Interest Period and in an amount
comparable to the principal amount of the Eurodollar Loan to which such
Interest Period relates or (B) the Highest Lawful Rate. If none of such
Telerate Page 3750 nor any successor or similar service is available, then
the "Eurodollar Base Rate" shall mean, with respect to any Interest Period
for any applicable Eurodollar Loan, the lesser of (A) the rate per annum
(rounded upwards, if necessary, to the nearest 1/16th of 1%) determined by
the Administrative Agent to be the average of the rates quoted by the
Reference Banks at approximately 11:00 a.m., Houston, Texas time (or as
soon thereafter as practicable) on the day two Business Days prior to the
first day of such Interest Period for the offering by such Reference Banks
to leading banks in the interbank market of Dollar deposits having a term
comparable to such Interest Period and in an amount comparable to the
principal amount of the Eurodollar Loan to which such Interest Period
relates or (B) the Highest Lawful Rate. If any Reference Bank does not
furnish a timely quotation, the Administrative Agent shall determine the
relevant interest rate on the basis of the quotation or quotations
furnished by the remaining Reference Bank or Banks; if none of such
quotations is available on a timely basis, the provisions of Section 6.2
shall apply. Each determination of the Eurodollar Base Rate shall be
conclusive and binding, absent manifest error, and may be computed using
any reasonable averaging and attribution method.
"Eurodollar Loans" shall mean Loans the interest on which is
determined on the basis of rates referred to in the definition of
"Eurodollar Base Rate" in this Section 1.1.
"Eurodollar Rate" shall mean, for any Interest Period for any
Eurodollar Loan, a rate per annum determined by the Administrative Agent to
be equal to the Eurodollar Base Rate for such Loan for such Interest
Period.
"Event of Default" shall have the meaning assigned to such term in
Section 11 hereof.
"Existing Competitive Loans" shall mean the Competitive Loans
described on Exhibit Q hereto.
"Facility Fee Percentage" shall mean 0.1875%; provided, however, that
at all times that the Company shall have received an investment grade
senior debt rating from two nationally known agencies (one of which must be
either Standard & Poor's Ratings Group or Moody's Investors Service, Inc.)
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of BBB-/Baa3 (or the equivalent), the Facility Fee Percentage shall be
reduced to 0.125%.
"Financial Statements" shall mean the financial statement or
statements, together with the notes and schedules thereto, described or
referred to in Sections 8.6 and 9.1.
"Funded Indebtedness" shall mean all Indebtedness which by its terms
matures more than one (1) year from the date as of which any calculation of
Funded Indebtedness is made, and any Indebtedness maturing within one (1)
year from such date which is renewable at the option of the obligor to a
date beyond one (1) year from such date.
"GAAP" shall mean as to a particular Person, such accounting practice
as, in the opinion of KPMG Peat Marwick or other independent accountants of
recognized national standing retained by such Person and acceptable to the
Majority Banks, conforms at the time to generally accepted accounting
principles, consistently applied. Generally accepted accounting principles
means those principles and practices (a) which are recognized as such by
the Financial Accounting Standards Board, (b) which are applied for all
periods after the date hereof in a manner consistent with the manner in
which such principles and practices were applied to the most recent audited
financial statements of the relevant Person furnished to the Banks, except
only for such changes in principles and practices with which the applicable
independent public accountants concur and which are disclosed to the Banks
in writing, and (c) which are consistently applied for all periods after
the date hereof so as to reflect properly the financial condition and
results of operations of such Person.
"Gas and Liquids Pipeline Subsidiaries" shall mean each company (which
may include the Company) engaged in the Pipeline Operations.
"Gas Sale Contract" shall mean that certain Gas Sale Contract dated
January 1, 1984, between APC, as Seller, and ENSTAR Natural Gas Company, as
Purchaser, as amended on June 17, 1985, and from time to time thereafter,
if and only if the Administrative Agent has received notice thereof
pursuant to Section 10.8.
"Governmental Authority" shall mean any sovereign governmental
authority, the United States of America, any State of the United States and
any political subdivision of any of the foregoing, and any central bank,
agency, instrumentality, department, commission, board, bureau, authority,
court or other tribunal or quasi-governmental authority in each case
whether executive, legislative, judicial, regulatory or administrative,
having jurisdiction over the Company, any of its Subsidiaries, any of their
respective property, either of the Agents or any Bank.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of any such Person directly or indirectly guaranteeing any
Indebtedness of any other Person and, without limiting the generality of
the foregoing, any obligation, direct or indirect, contingent or otherwise,
-13-
of such Person (i) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness (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 or otherwise, other than agreements to purchase
assets, goods, securities or services at an arm's length price in the
ordinary course of business) or (ii) entered into for the purpose of
assuring in any other manner the holder of such Indebtedness of the payment
thereof or to protect such holder 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.
The term "Guarantee" used as a verb has a corresponding meaning.
"Hazardous Substance" shall mean petroleum products, and any hazardous
or toxic waste or substance defined or regulated as such from time to time
by any law, rule, regulation or order described in the definition of
"Requirements of Environmental Law".
"Highest Lawful Rate" shall mean, on any day, the maximum nonusurious
rate of interest permitted for that day by whichever of applicable federal
or Texas law permits the higher interest rate, stated as a rate per annum.
On each day, if any, that Chapter One establishes the Highest Lawful Rate,
the Highest Lawful Rate shall be the "indicated rate ceiling" (as defined
in Chapter One) for that day.
"Hydrocarbons" shall mean oil, gas, casinghead gas, drip gasoline,
natural gasoline, condensate and all other liquid or gaseous hydrocarbons
and related minerals, in each case whether in a natural or a processed
state.
"Indebtedness" shall mean, as to any Person: (i) indebtedness of such
Person for borrowed money (whether by loan or the issuance and sale of debt
securities) or for the deferred purchase or acquisition price of property
or services, including, without limitation, obligations (excluding
volumetric obligations with respect to pre-sales of Hydrocarbon production
which have already been accounted for in the calculation of the Borrowing
Base) payable out of Hydrocarbon production; (ii) obligations, whether
fixed or contingent, of such Person in respect of letters of credit,
acceptances or similar instruments issued or accepted by banks and other
financial institutions for the account of such Person or any other Person;
(iii) Capital Lease Obligations of such Person; (iv) Redemption Obligations
of such Person and other obligations of such Person to redeem or otherwise
retire shares of capital stock of such Person or any other Person; (v)
indebtedness of others of the type described in clause (i), (ii), (iii) or
(iv) above secured by a Lien on the property of such Person, whether or not
the respective obligation so secured has been assumed by such Person; and
(vii) indebtedness of others of the type described in clause (i), (ii),
(iii) or (iv) above Guaranteed by such Person.
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"Intercreditor Agreement" shall mean that certain Intercreditor
Agreement dated December 30, 1993 executed by and among the Company,
Seagull Energy Canada Ltd., the Administrative Agent and the
"Administrative Agent" under the Canadian Facility, as amended by that
certain First Amendment to Intercreditor Agreement in the form of Exhibit R
hereto dated concurrently herewith executed by and among the Company,
Seagull Energy Canada Ltd., the Administrative Agent and the
"Administrative Agent" under the Canadian Facility and as the same may be
further amended or modified from time to time.
"Interest Period" shall mean:
(a) With respect to any Eurodollar Loan, the period commencing on
(i) the date such Loan is made or converted into or continued as a
Eurodollar Loan or (ii) in the case of a roll-over to a successive Interest
Period, the last day of the immediately preceding Interest Period and
ending on the numerically corresponding day in the first, second, third or
sixth calendar month thereafter, as the Company may select as provided in
Section 3.3 hereof, except that each such Interest Period which commences
on any day for which there is no numerically corresponding day in the
appropriate subsequent calendar month shall end on the last Business Day of
the appropriate subsequent calendar month.
(b) With respect to any Alternate Base Rate Loan, the period
commencing on the date such Loan is made and ending on the next succeeding
Quarterly Date.
(c) With respect to any Existing Competitive Loan, the applicable
interest period specified on Exhibit Q hereto, and with respect to any
other Competitive Loan, the period commencing on the date such Loan is made
and ending on the date specified in the Competitive Bid in which the offer
to make the Competitive Loan was extended; provided, however, that each
such period shall have a duration of not less than seven calendar days or
more than 180 calendar days.
Notwithstanding the foregoing: (i) no Interest Period applicable to any
Eurodollar Loan or any Competitive Loan may commence before and end after
the date of any scheduled reduction in the Commitments if, after giving
effect thereto, the aggregate principal amount of the Eurodollar Loans or
Competitive Loans which have Interest Periods which end after such
reduction date shall be greater than the aggregate principal amount of the
Commitments scheduled to be in effect after such reduction date; (ii) each
Interest Period which would otherwise end on a day which is not a Business
Day shall end on the next succeeding Business Day (or, in the case of an
Interest Period for Eurodollar Loans, if such next succeeding Business Day
falls in the next succeeding calendar month, on the next preceding Business
Day); (iii) no Interest Period applicable to any Eurodollar Loan or any
Competitive Loan shall extend beyond the end of the scheduled Revolving
Credit Availability Period, and (iv) no Interest Period for any Eurodollar
Loans shall have a duration of less than one month and, if the Interest
-15-
Period therefor would otherwise be a shorter period, such Loans shall not
be available hereunder.
"Investments" shall have the meaning assigned to such term in Sec-
tion 10.3 hereof.
"Investments Tests" shall mean compliance with each of the following
restrictions (both before and immediately after giving effect to the
applicable Investments):
(i) there shall exist no Borrowing Base Deficiency;
(ii) no Default or Event of Default shall have occurred and
be continuing; and
(iii) the applicable Investment, when aggregated with any
prior permitted Investments, shall not exceed 10% of
Tangible Net Worth of the Company and its Subsidiaries
on a consolidated basis.
"Issuer" shall mean each Bank issuing a Letter of Credit hereunder.
"Legal Requirement" shall mean any law, statute, ordinance, decree,
requirement, order, judgment, rule, regulation (or interpretation of any of
the foregoing) of, and the terms of any license or permit issued by, any
Governmental Authority, now or hereafter in effect.
"Letter of Credit" shall have the meaning assigned to such term in
Section 2.2 hereof.
"Letter of Credit Fee" shall mean a per annum rate equal to the
Applicable Margin for Eurodollar Loans in effect from time to time.
"Letter of Credit Liabilities" shall mean, at any time and in respect
of any Letter of Credit, the sum of (i) the amount available for drawings
under such Letter of Credit plus (ii) the aggregate unpaid amount of all
Reimbursement Obligations at the time due and payable in respect of
previous drawings made under such Letter of Credit.
"Lien" shall mean, with respect to any asset, any mortgage, lien,
pledge, charge, collateral assignment, security interest or encumbrance of
any kind in respect of such asset. For the purposes of this Agreement, a
Person shall be deemed to own subject to a Lien any asset which it has
acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention
agreement relating to such asset.
"Liquid Investments" shall mean:
(I) in the case of investments of U.S. Dollars
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(i) securities issued or directly, fully and unconditional-
ly guaranteed or insured by the United States of
America or any agency or instrumentality thereof
(provided that the full faith and credit of the United
States of America is pledged in support thereof) having
maturities of not more than one year from the date of
issue;
(ii) U.S. Dollar time deposits and certificates of deposit
(A) of any Bank having capital and surplus in excess of
U.S. $300,000,000, or (B) of any commercial bank
incorporated in the United States, of recognized
standing, having capital and surplus in excess of U.S.
$500,000,000 and which has (or which is a Subsidiary of
a holding company which has) publicly traded debt
securities rated, at the time of issuance of such time
deposits, AA or higher by Standard & Poor's Corporation
or Aa-2 or higher by Moody's Investors Service, Inc.
with maturities of not more than one year from the date
of issue;
(iii) repurchase obligations with a term of not more than
seven days for underlying securities of the types
described in clause (I)(i) above entered into with any
bank meeting the qualifications specified in clause
(I)(ii) above, provided that the terms of such
agreements comply with the guidelines set forth in the
Federal Financial Institution Examination Counsel
Supervisory Policy--Repurchase Agreements of Depository
Institutions With Securities Dealers and Others, as
adopted by the Comptroller of the Currency on October
31, 1985;
(iv) commercial paper or other U.S. Dollar obligations
issued by the parent corporation (A) of any Bank
having capital and surplus in excess of U.S.
$300,000,000, or (B) of any commercial bank (provided
that the parent corporation and the bank are both
incorporated in the United States) of recognized
standing having capital and surplus in excess of U.S.
$500,000,000 and commercial paper or other U.S. Dollar
obligations issued by any Person incorporated in the
United States, which commercial paper is rated at least
A-2 or the equivalent thereof by Standard & Poor's
Corporation or at least P-2 or the equivalent thereof
by Moody's Investors Service, Inc. and in each case
maturing not more than six months after the date of
issue;
(v) obligations of any state or political subdivision
thereof rated at least F-1 by Fitch Investors Service,
-17-
Inc. or AA by Standard & Poor's Corporation with an
original maturity of 180 days or less; and
(vi) investments in money market funds substantially all the
assets of which are comprised of securities of the
types described in clauses (I)(i) through (v) above;
and
(II) in the case of investments of Canadian dollars
(i) bonds or other evidences of indebtedness of, or the
principal and interest of which is fully guaranteed by,
the Government of Canada or any province of Canada,
payable in Canadian dollars and (in the case of any
provincial obligations and any Government of Canada
obligations that are rated) rated AAA or AA (or the
then equivalent grade) by Dominion Bond Rating Service
Limited, or any other nationally recognized bond rating
service, having a maturity not in excess of one year,
(ii) certificates of deposit issued or guaranteed by a bank
or trust company organized under the laws of Canada or
any province thereof, provided such bank or trust
company has capital and retained earnings in the
aggregate in excess of Canadian $500,000,000 on its
most recent balance sheet (whether audited or
unaudited), having a maturity not in excess of one
year,
(iii) bankers' acceptances of any bank or trust company the
certificates of deposit of which would constitute
Liquid Investments as provided in clause (II)(ii)
above, if outstanding unsecured debt of such bank or
trust company is rated no less than AA (or the then
equivalent grade) by Dominion Bond Rating Service
Limited, or any other nationally recognized bond rating
service; and
(iv) commercial paper rated no less than R-1 (or the then
equivalent grade) by Dominion Bond Rating Service
Limited or A-1 (or the then equivalent grade) by CBRS
Inc., having a maturity not in excess of one year;
excluding any bonds or other evidences of indebtedness,
certificates of deposit or commercial paper which a
Canadian chartered bank may not hold as security under
the Bank Act (Canada).
"Loan Documents" shall mean this Agreement, the Notes, the
Intercreditor Agreement, all Applications, all instruments, certificates
and agreements now or hereafter executed or delivered to either of the
Agents or any Bank pursuant to any of the foregoing, and all amendments,
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modifications, renewals, extensions, increases and rearrangements of, and
substitutions for, any of the foregoing.
"Loans" shall mean Committed Loans and Competitive Loans.
"Majority Banks" shall mean (a) prior to the termination of the
Commitments, Banks having greater than 66-2/3% of the aggregate amount of
the Commitments and (b) after the termination of the Commitments, Banks
having greater than 66-2/3% of the aggregate principal amount of the Loans
and the Letter of Credit Liabilities.
"Material Adverse Effect" shall mean a material adverse effect on the
business, condition (financial or otherwise), operations, properties
(including proven oil and gas reserves) or prospects of the Company and its
Subsidiaries, taken as a whole, or on the ability of the Company to perform
its material obligations under any Loan Document to which it is a party.
"Maximum Revolving Credit Available Amount" shall mean, at any date,
an amount equal to the lesser of (i) the aggregate of the Commitments or
(ii) the amount by which (a) the Borrowing Base exceeds (b) the aggregate
outstanding amount of all Borrowing Base Debt of the Company and its
Subsidiaries (other than ENSTAR Alaska).
"Mesa Contract" shall mean that certain Purchase and Sale Agreement
dated February 6, 1991 executed by and among Mesa Limited Partnership, a
Delaware limited partnership, Mesa Operating Limited Partnership, a
Delaware limited partnership, and Mesa Midcontinent Limited Partnership, a
Delaware limited partnership, as Sellers, and the Company, as Buyer, as
amended by that certain First Amendment to Purchase and Sale Agreement
dated February 22, 1991 and as further amended by that certain Second
Amendment to Purchase and Sale Agreement dated March 8, 1991.
"Midcon" shall mean Seagull Midcon Inc., a Delaware corporation, all
of the issued and outstanding shares of each class of which are owned by
Seagull Energy E & P Inc., a Texas corporation and a wholly owned
Subsidiary of the Company.
"Mortgages" shall mean, collectively, the Acts of Collateral Mortgage
and each of the other mortgages, deeds of trust, assignments or pledges of
production, leasehold mortgages, leasehold deeds of trust and deeds to
secure debt described or referenced on Exhibit D hereto. The parties
recognize and acknowledge that the Acts of Collateral Mortgage and the
other mortgages, deeds of trust, assignments and pledges of production,
leasehold mortgages, leasehold deeds of trust and deeds to secure debt
described or referenced on Exhibit D hereto have each been released or
redelivered to the Company and are no longer in effect, and that the
inclusion of such Acts of Collateral Mortgage and such other mortgages,
deeds of trust, assignments and pledges of production, leasehold mortgages,
leasehold deeds of trust and deeds to secure debt in this definition is
solely for the purpose of those provisions of this Agreement that continue
to refer to the Mortgages even following their release or redelivery.
-19-
"Net Proceeds of Production" shall mean, with respect to any Person,
all revenue received by or credited to the account of such Person from the
sale of Hydrocarbons and other minerals in, under or produced from their
respective oil, gas and mineral properties after deducting royalties,
overriding royalties, volumetric production payments with respect to pre-
sales of Hydrocarbon production, production payments pledged to secure non-
recourse financing payable solely out of such production payments, net
profits interests and other burdens payable out of production, normal and
reasonable operating expenses and severance, ad valorem, excise and
windfall profit taxes.
"Notes" shall mean the Committed Notes and the Competitive Notes.
"Obligations" shall mean, as at any date of determination thereof, the
sum of the following: (i) the aggregate principal amount of Loans
outstanding hereunder plus (ii) the aggregate amount of the Letter of
Credit Liabilities hereunder plus (iii) all other liabilities, obligations
and indebtedness of the Company or any Subsidiary of the Company under any
Loan Document.
"Oil and Gas Reserves Component Value" shall mean (A) prior to the
initial Borrowing Base Determination, $538,000,000 and (B) thereafter, that
amount of Indebtedness that the Super Majority Banks shall agree can be
supported by the producing and non-producing proved oil and gas reserves of
the Company and its Subsidiaries, after an engineering and economic review
of the reserves conducted by the Banks using customary standards for oil
and gas lending.
"Oil and Gas Subsidiaries" shall mean any Subsidiary of the Company
whose assets consist primarily of oil and gas properties. As of the date
hereof, the Oil and Gas Subsidiaries are listed as such on Exhibit A
hereto.
"Original Closing Date" shall mean December 31, 1992.
"Organizational Documents" shall mean, with respect to a corporation,
the certificate of incorporation, articles of incorporation and bylaws of
such corporation; with respect to a partnership, the partnership agreement
establishing such partnership; with respect to a joint venture, the joint
venture agreement establishing such joint venture, and with respect to a
trust, the instrument establishing such trust; in each case including any
and all modifications thereof as of the date of the Loan Document referring
to such Organizational Document.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Person" shall mean an individual, a corporation, a company, a bank, a
voluntary association, a partnership, a trust, an unincorporated
organization, any Governmental Authority or any other entity.
-20-
"Pipeline Component Value" shall mean (A) prior to the initial
Borrowing Base Determination $44,000,000 and (B) thereafter, the amount by
which:
(i) the sum of (I) EBITDA of the Pipeline Operations (other than
EBITDA of portions of the Pipeline Operations acquired or
constructed in the immediately preceding calendar year) on a
consolidated basis for the three year period ending on the most
recent December 31 (or, in the case of those portions of the
Pipeline Operations constructed during the three year period
ending on the most recent December 31, for the period commencing
on January 1 of the year following the year in which such
portions of the Pipeline Operations were acquired or constructed
and ending on the most recent December 31), minus non-recurring
profits and losses such as construction fees arising during such
three year period, and minus cash flow from gas plant operations
during such three year period in excess of $3,000,000 in any
calendar year, plus (II) an amount equal to (x) three times the
Projected Pipeline Cash Flow of those portions of the Pipeline
Operations acquired or constructed in the immediately preceding
calendar year, (y) two times the Projected Pipeline Cash Flow of
those portions of the Pipeline Operations acquired or
constructed in the second calendar year immediately preceding
the then current calendar year and (z) one times the Projected
Pipeline Cash Flow of those portions of the Pipeline Operations
acquired or constructed in the third calendar year immediately
preceding the then current calendar year exceeds
(ii) Capital Expenditures attributable to the Pipeline Operations
(other than Capital Expenditures which would have the effect of
increasing throughput capacity, as approved by the Majority
Banks) during such three year period.
"Pipeline Operations" shall mean the natural gas gathering and
transmission, gas liquids plant, gas marketing, engineering and
construction and liquids pipeline operations of the Company and its
Subsidiaries, excluding any portion of such operations attributable to
ENSTAR Alaska.
"Plan" shall mean an employee pension benefit plan which is covered by
Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code and is either (a) maintained by the Company or any
ERISA Affiliate for employees of the Company or any ERISA Affiliate or (b)
maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to
which the Company or any ERISA Affiliate is then making or accruing an
obligation to make contributions or has within the preceding five plan
years made contributions.
"Post-Default Rate" shall mean, in respect of any principal of any
Loan, any Reimbursement Obligation or any other amount payable by the
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Company under this Agreement or any other Loan Document which is not paid
when due (whether at stated maturity, by acceleration, or otherwise), a
rate per annum during the period commencing on the due date until such
amount is paid in full equal to the lesser of (a) the sum of (x) with
respect to Eurodollar Loans, 2% per annum plus the applicable Eurodollar
Rate then in effect plus the Applicable Margin for Eurodollar Loans until
the expiration of the applicable Interest Period, (y) with respect to
Competitive Loans, 2% per annum plus the applicable fixed rate offered by
the applicable Bank and accepted by the Company in accordance with Section
2.10 hereof (or, in the case of the Existing Competitive Loans, the
applicable fixed rate specified on Exhibit Q hereto), and (z) with respect
to Alternate Base Rate Loans and with respect to Eurodollar Loans after the
expiration of the applicable Interest Period (and also with respect to
indebtedness other than Loans), 2% plus the Alternate Base Rate as in
effect from time to time plus the Applicable Margin for Alternate Base Rate
Loans or (b) the Highest Lawful Rate.
"Principal Office" shall mean the principal office of the
Administrative Agent, presently located at 712 Main Street, Houston, Harris
County, Texas.
"Projected Pipeline Cash Flow" shall mean the amount by which (i) the
projection of operating cash flow for the period from January 1 through
December 31 of the next calendar year of newly acquired or constructed
assets comprising a portion of the Pipeline Operations, to the extent and
only to the extent that such cash flow has not been included in the EBITDA
of the Pipeline Operations then being used in connection with the
calculation of the Pipeline Component Value exceeds (ii) the projection of
Capital Expenditures attributable to such Pipeline Operations (other than
Capital Expenditures which would have the effect of increasing throughput
capacity, as approved by the Majority Banks) during such next calendar
year. Projections of operating cash flow and Capital Expenditures must be
acceptable to the Majority Banks to be included in the calculation of the
Pipeline Component Value.
"Quarterly Dates" shall mean the last day of each March, June,
September and December, provided that, if any such date is not a Business
Day, then the relevant Quarterly Date shall be the next succeeding Business
Day.
"Redemption Obligations" shall mean with respect to any Person all
mandatory redemption obligations of such Person with respect to preferred
stock or other equity securities issued by such Person or put rights in
favor of the holder of such preferred stock or other equity securities.
"Reference Banks" shall mean Texas Commerce Bank National Association
and such other Banks (up to a maximum of two (2) additional Banks) as the
Company, with the approval of the Administrative Agent (which approval
shall not be unreasonably withheld), may from time to time designate.
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"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System as the same may be amended or supplemented from
time to time and any successor or other regulation relating to reserve
requirements.
"Regulatory Change" shall mean, with respect to any Bank, any change
on or after the date of this Agreement in Legal Requirements (including
Regulation D) or the adoption or making on or after such date of any
interpretation, directive or request applying to a class of banks including
such Bank under any Legal Requirements (whether or not having the force of
law) by any Governmental Authority.
"Reimbursement Obligations" shall mean, as at any date, the
obligations of the Company then outstanding in respect of Letters of Credit
under this Agreement, to reimburse the Administrative Agent for the account
of the applicable Issuer for the amount paid by the applicable Issuer in
respect of any drawing under such Letter of Credit.
"Relevant Party" shall mean the Company and each other party to any of
the Loan Documents other than (a) the Banks and (b) the Agents.
"Request for Extension of Credit" shall mean a request for extension
of credit duly executed by the chief executive officer, chief financial
officer, or treasurer of the Company, appropriately completed and
substantially in the form of Exhibit C attached hereto.
"Requested Redetermination" shall have the meaning assigned to such
term in Section 2.9 hereof.
"Requesting Banks" shall mean (a) prior to the termination of the
Commitments, Banks having greater than 50% of the aggregate amount of the
Commitments and (b) after the termination of the Commitments, Banks having
greater than 50% of the aggregate principal amount of the Loans and the
Letter of Credit Liabilities.
"Requirements of Environmental Law" means all requirements imposed by
any law (including for example and without limitation The Resource
Conservation and Recovery Act and The Comprehensive Environmental Response,
Compensation, and Liability Act), rule, regulation, or order of any
federal, state or local executive, legislative, judicial, regulatory or
administrative agency, board or authority in effect at the applicable time
which relate to (i) noise; (ii) pollution, protection or clean-up of the
air, surface water, ground water or land; (iii) solid, gaseous or liquid
waste generation, treatment, storage, disposal or transportation;
(iv) exposure to Hazardous Substances; (v) the safety or health of
employees or (vi) regulation of the manufacture, processing, distribution
in commerce, use, discharge or storage of Hazardous Substances.
"Reserve Requirement" shall mean, for any Eurodollar Loan for any
Interest Period therefor, the stated maximum rate for all reserves
(including any marginal, supplemental or emergency reserves) required to be
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maintained during such Interest Period under Regulation D by any member
bank of the Federal Reserve System or any Bank against "Eurocurrency
liabilities" (as such term is used in Regulation D). Without limiting the
effect of the foregoing, the Reserve Requirement shall reflect and include
any other reserves required to be maintained by such member banks by reason
of any Regulatory Change against (i) any category of liabilities which
includes deposits by reference to which the Eurodollar Rate is to be
determined as provided in the definition of "Eurodollar Base Rate" in this
Section 1.1 or (ii) any category of extensions of credit or other assets
which include Eurodollar Loans. Any determination by the Administrative
Agent of the Reserve Requirement shall be conclusive and binding, absent
manifest error, and may be made using any reasonable averaging and
attribution method.
"Responsible Officer" shall mean the chairman of the board, the
president, any executive vice president, the vice president of finance and
administration, the chief executive officer or the chief operating officer
or any equivalent officer (regardless of title) and in the case of the
Company, any other vice president, and in respect of financial or
accounting matters, shall also include the chief financial officer, the
treasurer and the controller or any equivalent officer (regardless of
title).
"Revolving Credit Availability Period" shall mean the period from and
including the date hereof to but not including December 31, 2000 or the
date the Commitments are terminated pursuant to Section 11.1, whichever is
first to occur.
"Revolving Credit Obligations" shall mean, as at any date of
determination thereof, the sum of the following (determined without
duplication): (i) the aggregate principal amount of Loans outstanding
hereunder plus (ii) the aggregate amount of the Letter of Credit
Liabilities hereunder.
"Scheduled Redetermination" shall having the meaning assigned to such
term in Section 2.9 hereof.
"Seagull Energy Group" shall have the meaning assigned to the term
"Seagull Energy" in the Articles of Amendment.
"Security Documents" shall mean, collectively, the Mortgages, the
Collateral Pledge Agreements, the Collateral Mortgage Notes, and all
applicable financing statements; and, from and after the execution and
delivery thereof, shall include any addition or supplement to such
document. As of the Effective Date, there are no Security Documents.
"Senior Debt" shall mean Indebtedness having a weighted average
maturity at least seven (7) years from the date of issuance and having no
conditions precedent or covenants materially more onerous to the Company
than the conditions precedent and covenants contained herein and in the
other Loan Documents with respect to the Loans. The documents evidencing
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any Senior Debt shall contain a provision substantially identical to
Section 10.2(y) hereof permitting Liens securing the Notes and the other
Obligations on a pari passu basis with such Senior Debt.
"Short Term Borrowings" shall mean, as of any date, the aggregate
outstanding principal amount of ENSTAR Alaska's borrowed money Indebtedness
(other than borrowed money Indebtedness owed by ENSTAR Natural Gas Company
to APC or by APC to ENSTAR Natural Gas Company) which is not Funded
Indebtedness.
"Short Term Borrowings Measuring Period" shall mean that period of
ninety (90) consecutive days during the twelve-month period ending on the
applicable date that average Short Term Borrowings were lower than any
other period of ninety (90) consecutive days during such twelve-month
period.
"Subordinated Debt" shall mean Indebtedness of the Company having a
weighted average maturity at least seven (7) years from the date of
issuance and having no conditions precedent or covenants materially more
onerous to the Company than the conditions precedent and covenants
contained herein and in the other Loan Documents with respect to the Loans
and which is expressly made subordinate and junior in right of payment to
the Obligations and in respect of any collateral or security by the express
terms of the instruments evidencing the Subordinated Debt or the indenture
or other similar instrument under which the Subordinated Debt is issued
(which indenture or other instrument will be binding on all holders of such
Subordinated Debt), by provisions not more favorable to the holders of the
Subordinated Debt than the following:
(a) in the event a Default exists and is continuing, no payment of
principal or interest will be made on account of Subordinated Debt and no
remedy for default shall be exercised until (i) such Default will have been
cured or waived or until the Obligations will have been paid in full (or
provisions made therefor reasonably satisfactory to the Banks) or (ii) 179
days after the occurrence of such Default (as to which the Banks have
knowledge as a result of having received notice from the Company pursuant
to this Agreement or otherwise) and no action being taken by the Banks with
respect to such Default, whichever occurs earlier;
(b) upon the occurrence of any of the events or proceedings
specified in Subsections 11.1(f) or (g) hereof (or, as to any Subsidiary of
the Company, Subsection 11.1(j) to the extent that it refers to
Subsections 11.1(f) or (g)), the holders of any Obligations will be
entitled to receive payment in full of all principal or interest on all
Obligations before the holders of the Subordinated Debt are entitled to
receive any payment on account of principal or interest on the Subordinated
Debt, and to that end (but subject to the power of a court of competent
jurisdiction to make other provision) the holders of the Obligations will
be entitled to receive distributions of any kind or character, whether in
cash or property or securities (other than equity securities and other
securities establishing rights in the holders thereof which are subordinate
-25-
to the rights of the holders of the Obligations in accordance with this
definition of Subordinated Debt), which may be or would otherwise be
payable or deliverable in any such proceedings in respect of the
Subordinated Debt (provided that, the Subordinated Debt may provide that if
the Obligations have been paid in full or provision therefor reasonably
satisfactory to the Banks has been made, the holders of the Subordinated
Debt will be subrogated to the rights of the holders of the Obligations);
(c) in the event that any Subordinated Debt is declared due and
payable before its expressed maturity because of the occurrence of an event
of default thereunder (under circumstances when the provisions of the
foregoing clauses (a) and (b) will not be applicable), the holders of the
Obligations at the time such Subordinated Debt becomes due and payable
because of such an event of default will be entitled to receive payment in
full of all Obligations (or have provision therefor satisfactory to the
Banks made) before the holders of the Subordinated Debt are entitled to
receive any payment on account of the principal or interest on the
Subordinated Debt; and
(d) no holder of the Obligations will be prejudiced in its right to
enforce subordination of the Subordinated Debt by any act or failure to act
on the part of the Company or the part of the holders of the Obligations;
provided that, the Subordinated Debt may provide that the foregoing
provisions are solely for the purpose of defining the relative rights of
the holders of the Obligations on the one hand, and the holders of the
Subordinated Debt on the other hand, and that nothing therein will impair,
as between the Company and the holders of the Subordinated Debt, the
obligation of the Company, which may be unconditional and absolute, to pay
to the holders of the Subordinated Debt the principal and interest thereon
in accordance with its terms, nor will anything herein prevent the holders
of the Subordinated Debt from exercising all remedies otherwise permitted
by applicable law or thereunder upon default thereunder, subject to the
rights under clauses (a), (b) and (c) above of the holders of the
Obligations to receive cash, property or securities otherwise payable or
deliverable to the holders of the Subordinated Debt.
"Subsidiary" shall mean, with respect to any Person (the "parent"),
(a) any corporation of which at least a majority of the outstanding shares
of stock having by the terms thereof ordinary voting power to elect a
majority of the board of directors of such corporation (irrespective of
whether or not at the time stock of any other class or classes of such
corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time directly or indirectly owned
or controlled by the parent or one or more of the Subsidiaries of the
parent or by the parent and one or more of the Subsidiaries of the parent,
and (b) any partnership, limited partnership, joint venture or other form
of entity, the majority of the legal or beneficial ownership of which is at
the time directly or indirectly owned or controlled by the parent or one or
more of the Subsidiaries of the parent or by the parent and one or more of
the Subsidiaries of the parent.
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"Super Majority Banks" shall mean (a) prior to the termination of the
Commitments, Banks having 75% or more of the aggregate amount of the
Commitments and (b) after the termination of the Commitments, Banks having
75% or more of the aggregate principal amount of the Loans and the Letter
of Credit Liabilities.
"Tangible Net Worth" shall mean the sum of preferred stock, par value
of common stock, capital in excess of par value of common stock (additional
paid-in capital) and retained earnings, less treasury stock, goodwill,
deferred development costs, franchises, licenses, patents, trademarks and
copyrights and all other assets which are properly classified as intangible
assets in accordance with GAAP less any Redemption Obligations.
"Type" shall have the meaning assigned to such term in Section 1.3
hereof.
"Unfunded Liabilities" shall mean, with respect to any Plan, at any
time, the amount (if any) by which (a) the present value of all benefits
under such Plan exceeds (b) the fair market value of all Plan assets
allocable to such benefits, all determined as of the then most recent
actuarial valuation report for such Plan, but only to the extent that such
excess represents a potential liability of any ERISA Affiliate to the PBGC
or a Plan under Title IV of ERISA.
1.2. Accounting Terms and Determinations. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made,
and all financial statements and certificates and reports as to financial
matters required to be delivered hereunder shall be prepared, in accordance
with GAAP. To enable the ready determination of compliance with the
provisions hereof, the Company will not change from December 31 in each
year the date on which its fiscal year ends, nor from March 31, June 30 and
September 30 the dates on which the first three fiscal quarters in each
fiscal year end.
1.3. Types of Loans. Loans hereunder are distinguished by "Type".
The "Type" of a Loan refers to the determination whether such Loan is a
Eurodollar Loan, a Competitive Loan or an Alternate Base Rate Loan.
1.4. Miscellaneous. The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
Any reference to Sections shall refer to Sections of this Agreement.
Section 2. Commitments; Borrowing Base Determinations; Competitive
Bid Facility.
2.1. Committed Loans. From time to time on or after the date hereof
and during the Revolving Credit Availability Period, each Bank shall make
Committed Loans under this Section 2.1 to the Company in an aggregate
principal amount at any one time outstanding (including its Commitment
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Percentage of all Letter of Credit Liabilities at such time) up to but not
exceeding such Bank's Commitment Percentage of the amount by which the
Maximum Revolving Credit Available Amount exceeds the aggregate unpaid
principal balance of all Competitive Loans from time to time outstanding.
Subject to the conditions herein, any such Committed Loan repaid prior to
the end of the Revolving Credit Availability Period may be reborrowed
pursuant to the terms of this Agreement; provided, that any and all such
Committed Loans shall be due and payable in full at the end of the
Revolving Credit Availability Period.
2.2. Letters of Credit.
(a) Letters of Credit. Subject to the terms and conditions hereof,
and on the condition that aggregate Letter of Credit Liabilities shall
never exceed $20,000,000, the Company shall have the right, in addition to
Committed Loans provided for in Section 2.1 hereof, to utilize the
Commitments from time to time from and after the Original Closing Date
through the expiration of the Revolving Credit Availability Period by
obtaining the issuance of letters of credit for the account of the Company
and on behalf of the Company by the applicable Issuer if the Company shall
so request in the notice referred to in Section 2.2(b)(i) (such letters of
credit being collectively referred to as the "Letters of Credit"). Upon
the date of the issuance of a Letter of Credit, the applicable Issuer shall
be deemed, without further action by any party hereto, to have sold to each
Bank, and each Bank shall be deemed, without further action by any party
hereto, to have purchased from the applicable Issuer, a participation, to
the extent of such Bank's Commitment Percentage, in such Letter of Credit
and the related Letter of Credit Liabilities. No Letter of Credit issued
pursuant to this Agreement shall have an expiry date later than one (1)
year from date of issuance, provided that any Letter of Credit having an
expiry date after the end of the Revolving Credit Availability Period shall
have been fully Covered or shall be backed by a letter of credit in form
and substance, and issued by an issuer, acceptable to the Administrative
Agent in its reasonably exercised discretion. Subject to the terms and
conditions hereof, upon the request of the Company, if TCB is the
designated Issuer, TCB shall issue the applicable Letter of Credit and if
any other Bank is the designated Issuer, such Bank may, but shall not be
obligated to, issue such Letter of Credit.
(b) Additional Provisions. The following additional provisions
shall apply to each Letter of Credit:
(i) The Company shall give the Administrative Agent at
least three (3) Business Days' prior notice (effective upon receipt)
specifying the proposed Issuer and the date such Letter of Credit is to be
issued and describing the proposed terms of such Letter of Credit and the
nature of the transaction proposed to be supported thereby, and shall
furnish such additional information regarding such transaction as the
Administrative Agent or the applicable Issuer may reasonably request. Upon
receipt of such notice the Administrative Agent shall promptly notify each
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Bank of the contents thereof and of such Bank's Commitment Percentage of
the amount of such proposed Letter of Credit.
(ii) No Letter of Credit may be issued if after giving
effect thereto (i) the aggregate outstanding principal amount of Committed
Loans plus the aggregate Letter of Credit Liabilities would exceed (ii) the
amount by which the Maximum Revolving Credit Available Amount exceeds the
aggregate unpaid principal balance of all Competitive Loans from time to
time outstanding. On each day during the period commencing with the
issuance of any Letter of Credit and until such Letter of Credit shall have
expired or been terminated, the Commitment of each Bank shall be deemed to
be utilized for all purposes hereof in an amount equal to such Bank's
Commitment Percentage of the amount then available for drawings under such
Letter of Credit.
(iii) Upon receipt from the beneficiary of any Letter of
Credit of any demand for payment thereunder, the applicable Issuer shall
promptly notify the Company and each Bank as to the amount to be paid as a
result of such demand and the payment date. If at any time the applicable
Issuer shall have made a payment to a beneficiary of a Letter of Credit in
respect of a drawing under such Letter of Credit, each Bank will pay to the
applicable Issuer immediately upon demand by the applicable Issuer at any
time during the period commencing after such payment until reimbursement
thereof in full by the Company, an amount equal to such Bank's Commitment
Percentage of such payment, together with interest on such amount for each
day from the date of demand for such payment (or, if such demand is made
after 11:00 a.m. Houston, Texas time on such date, from the next succeeding
Business Day) to the date of payment by such Bank of such amount at a rate
of interest per annum equal to the Federal Funds Rate for such period.
(iv) The Company shall be irrevocably and unconditionally
obligated forthwith to reimburse the applicable Issuer for any amount paid
by the applicable Issuer upon any drawing under any Letter of Credit,
without presentment, demand, protest or other formalities of any kind.
Such reimbursement may, subject to satisfaction of any other applicable
conditions set forth in this Agreement, including the existence of the
Maximum Revolving Credit Available Amount (after adjustment in the same to
reflect the elimination of the corresponding Letter of Credit Liability) be
made by borrowing of Loans. In the event any such reimbursement is not
made by borrowing of Loans, the Company shall make such reimbursement in
immediately available funds within five (5) days after demand therefor by
the applicable Issuer. The applicable Issuer will pay to each Bank such
Bank's Commitment Percentage of all amounts received from the Company for
application in payment, in whole or in part, of the Reimbursement
Obligation in respect of any Letter of Credit, but only to the extent such
Bank has made payment to the applicable Issuer in respect of such Letter of
Credit pursuant to clause (iii) above.
(v) The Company will pay to the Administrative Agent at the
Principal Office for the account of each Bank a fee on such Bank's
Commitment Percentage of the daily average amount available for drawings
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under each Letter of Credit, in each case for the period from and including
the date of issuance of such Letter of Credit to and including the date of
expiration or termination thereof at a rate per annum equal to the Letter
of Credit Fee in effect from time to time, such fee to be paid in arrears
on the Quarterly Dates and on the date of the expiration or termination
thereof. The Administrative Agent will pay to each Bank, promptly after
receiving any payment in respect of letter of credit fees referred to in
the preceding sentence of this clause (v), an amount equal to such Bank's
Commitment Percentage of such fees. The Company shall pay to the
applicable Issuer an administration and issuance fee in an amount equal to
1/8 of 1% per annum of the daily average amount available for drawings
under such Letter of Credit, in each case for the period from and including
the date of issuance of such Letter of Credit to and including the date of
expiration or termination thereof, such fee to be paid in arrears on the
Quarterly Dates and on the date of the expiration or termination thereof.
Such administration and issuance fee shall be retained by the applicable
Issuer.
(vi) The issuance by the applicable Issuer of each Letter of
Credit shall, in addition to the conditions precedent set forth in Section
7 hereof, be subject to the conditions precedent that such Letter of Credit
shall be in such form and contain such terms as shall be reasonably
satisfactory to the applicable Issuer and that the Company shall have
executed and delivered such other instruments and agreements relating to
such Letter of Credit as the applicable Issuer shall have reasonably
requested and are not inconsistent with the terms of this Agreement
including an Application therefor. In the event of a conflict between the
terms of this Agreement and the terms of any Application, the terms of this
Agreement shall control. Without limiting the generality of the foregoing
sentence, in the event any such Application shall include requirements for
Cover, it is agreed that there shall be no requirements for the Company to
provide Cover except as expressly required in this Agreement.
(c) Indemnification. The Company hereby indemnifies and holds
harmless the Administrative Agent, the applicable Issuer and each Bank from
and against any and all claims and damages, losses, liabilities, costs or
expenses which such Bank, the applicable Issuer or the Administrative Agent
may incur (or which may be claimed against such Bank, the applicable Issuer
or the Administrative Agent by any Person whatsoever) in connection with
the execution and delivery or transfer of or payment or failure to pay
under any Letter of Credit, including, without limitation, any claims,
damages, losses, liabilities, costs or expenses which the Administrative
Agent, the applicable Issuer or such Bank, as the case may be, may incur
(whether incurred as a result of its own negligence or otherwise) by reason
of or in connection with the failure of any other Bank (whether as a result
of its own negligence or otherwise) to fulfill or comply with its
obligations to the Administrative Agent, the applicable Issuer or such
Bank, as the case may be, hereunder (but nothing herein contained shall
affect any rights the Company may have against such defaulting Bank);
provided that, the Company shall not be required to indemnify any Bank, the
applicable Issuer or the Administrative Agent for any claims, damages,
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losses, liabilities, costs or expenses to the extent, but only to the
extent, caused by (i) the willful misconduct or gross negligence of the
party seeking indemnification, or (ii) by such Bank's, the applicable
Issuer's or the Administrative Agent's, as the case may be, failure to pay
under any Letter of Credit after the presentation to it of a request
required to be paid under applicable law. Nothing in this Section 2.2(c)
is intended to limit the obligations of the Company under any other
provision of this Agreement.
(d) Co-issuance or Separate Issuance of Letters of Credit. The
Company may, at its option, request that any requested Letter of Credit
which exceeds $1,000,000 be issued severally, but not jointly, by any two
or more of the Banks or issued through separate Letters of Credit issued by
any two or more of the Banks, respectively, each in an amount equal to a
portion of the amount of the applicable Letter of Credit requested by the
Company. In either such event, the Banks issuing such Letters of Credit
shall each constitute an "Issuer" and the Letters of Credit so issued shall
each constitute a "Letter of Credit" for all purposes hereunder and under
the Loan Documents. Notwithstanding the foregoing, no Bank other than TCB
shall have any obligation to issue any Letter of Credit, but may do so at
its option.
2.3. Reductions and Changes of Commitments.
(a) Mandatory.
(i) The total Commitment of the Banks shall be reduced as follows:
Reduction Resulting Revolving
Reduction Date Amount Credit Commitment
March 31, 1997 $45,000,000 $680,000,000
June 30, 1997 $45,000,000 $635,000,000
September 30, 1997 $45,000,000 $590,000,000
December 31, 1997 $45,000,000 $545,000,000
March 31, 1998 $45,000,000 $500,000,000
June 30, 1998 $45,000,000 $455,000,000
September 30, 1998 $45,000,000 $410,000,000
December 31, 1998 $45,000,000 $365,000,000
March 31, 1999 $45,000,000 $320,000,000
June 30, 1999 $45,000,000 $275,000,000
September 30, 1999 $45,000,000 $230,000,000
December 31, 1999 $45,000,000 $185,000,000
March 31, 2000 $45,000,000 $140,000,000
June 30, 2000 $45,000,000 $ 95,000,000
September 30, 2000 $45,000,000 $ 50,000,000
December 31, 2000 $50,000,000 $0
(ii) On December 31, 2000, all Commitments shall be terminated in
their entirety unless terminated at an earlier date pursuant to
Section 11.1.
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(b) Optional. The Company shall have the right to terminate or
reduce the unused portion of the Commitments at any time or from time to
time, provided that: (i) the Company shall give notice of each such
termination or reduction to the Administrative Agent as provided in Section
5.5 hereof, (ii) each such partial reduction shall be permanent and in an
aggregate amount at least equal to $5,000,000 and (iii) no such reduction
shall cause Borrowing Base Deficiency.
(c) No Reinstatement. Any reduction in or termination of the
Commitments may not be reinstated without the approval of the
Administrative Agent and any Bank whose Commitment (or the applicable part
thereof) is to be so reinstated.
2.4. Fees.
(a) The Company shall pay to the Administrative Agent for the account
of each Bank a facility fee accruing from the Effective Date, computed for
each day at a rate per annum equal to the Facility Fee Percentage times
such Bank's pro rata share (based on its respective Commitment) of the
Maximum Revolving Credit Available Amount on such day. Such facility fees
shall be payable on the Quarterly Dates and on the earlier of the date the
Commitments are terminated in their entirety or the last day of the
Revolving Credit Availability Period.
(b) The Company shall pay to the Administrative Agent for the
account of each Bank a commitment fee with respect to such Bank's
Commitment accruing from the Effective Date, computed for each day at a
rate per annum equal to 0.125% times the amount of such Bank's pro rata
share (based on its respective Commitment) of (i) the aggregate Commitments
on such day minus (ii) the sum of the aggregate outstanding Loans on such
day plus the aggregate Letter of Credit Liabilities outstanding on such
day. Commitment fees accruing pursuant to this clause (b) shall be payable
on the Quarterly Dates and on the earlier of the date the Commitments are
terminated in their entirety or the last day of the Revolving Credit
Availability Period.
(c) The Company shall pay to the Administrative Agent for the
account of each Bank an additional facility fee upon any increase in such
Bank's available Commitment as a result of an increase in the Borrowing
Base or a decrease in Borrowing Base Debt. Such additional facility fee
shall be in an amount equal to such Bank's pro rata share (based on its
respective Commitment) of the product of (i) one-fourth (1/4th) of the
amount (if any) by which the then current Facility Fee Percentage exceeds
0.125% times (ii) the amount of such increase in a Bank's available
Commitment as a result of an increase in the Borrowing Base or a decrease
in Borrowing Base Debt. Payment of such additional fee resulting from an
increase in the Borrowing Base shall be due and payable upon the effective
date of such increase in the Borrowing Base. Payment of such additional
fee resulting from a decrease in Borrowing Base Debt shall be due and
payable upon delivery of a Request for Extension of Credit pursuant to
Section 7.2 hereof or a certificate of compliance pursuant to Sections
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9.2(a)(i) or 9.2(b) hereof, whichever shall first occur, reflecting such
decrease in Borrowing Base Debt. The facility fee provided for in this
Section 2.4(c) shall be payable notwithstanding any prior decrease in the
available Commitments which may have occurred as a result of a decrease in
the Borrowing Base or an increase in Borrowing Base Debt.
(d) The Company agrees to pay to the Administrative Agent and the
Auction Agent fees as provided in the separate letter agreements executed
by and between the Administrative Agent and the Company and the Auction
Agent and the Company, respectively.
2.5. Affiliates; Lending Offices.
(a) Any Bank may, if it so elects, fulfill any obligation to make a
Eurodollar Loan or Competitive Loan by causing a branch, foreign or
otherwise, or Affiliate of such Bank to make such Loan and may transfer and
carry such Loan at, to or for the account of any branch office or Affiliate
of such Bank; provided that, in such event for the purposes of this
Agreement such Loan shall be deemed to have been made by such Bank and the
obligation of the Company to repay such Loan shall nevertheless be to such
Bank and shall be deemed to be held by such Bank and, to the extent of such
Loan, to have been made for the account of such branch or Affiliate.
(b) Notwithstanding any provision of this Agreement to the contrary,
each Bank shall be entitled to fund and maintain its funding of all or any
part of its Loans hereunder 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 each Interest Period through the purchase of
deposits having a maturity corresponding to such Interest Period and
bearing an interest rate equal to the Eurodollar Rate for such Interest
Period.
2.6. Several Obligations. The failure of any Bank to make any Loan
to be made by it on the date specified therefor shall not relieve any other
Bank of its obligation to make its Loan on such date, but neither the
Agents nor any Bank shall be responsible for the failure of any other Bank
to make a Loan to be made by such other Bank.
2.7. Notes. The Committed Loans made by each Bank shall be evidenced
by a single Committed Note of the Company in substantially the form of
Exhibit E hereto payable to the order of such Bank in a principal amount
equal to the Commitment of such Bank, and otherwise duly completed. The
Competitive Loans made by each Bank shall be evidenced by a single
Competitive Note of the Company in substantially the form of Exhibit O
hereto payable to the order of such Bank and otherwise duly completed.
Each Bank is hereby authorized by the Company to endorse on the schedules
(or a continuations thereof) attached to the Notes of such Bank, to the
extent applicable, the date, amount and Type of and the Interest Period for
each Loan made by such Bank to the Company hereunder, and the amount of
each payment or prepayment of principal of such Loan received by such Bank,
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provided, that any failure by such Bank to make any such endorsement shall
not affect the obligations of the Company under such Note or hereunder in
respect of such Loan.
2.8. Use of Proceeds. The proceeds of the Loans shall be used for
general corporate purposes.
2.9. Borrowing Base Determinations.
(a) Within 45 days after receipt of the Engineering Report required
to be delivered each year, commencing with the Engineering Report required
to be delivered in 1994, the Administrative Agent shall notify the Company,
in writing, of the Oil and Gas Reserves Component Value determined on the
basis of such Engineering Report and the Borrowing Base determined on the
basis of such Oil and Gas Reserves Component Value, together with the
determination of the Alaskan Gas Component Value and the Pipeline Component
Value. Each such determination is herein called a "Scheduled Redetermina-
tion". Each Scheduled Redetermination shall be effective when the Company
is notified of the amount of the redetermined Borrowing Base by the
Administrative Agent.
(b) The Requesting Banks or the Company may, from time to time (but
not more frequently than one time during any calendar year by the
Requesting Banks and one time during any calendar year by the Company),
request a redetermination of the Oil and Gas Reserves Component Value based
upon the most recently received Engineering Report or Company Report, as
the case may be, and of the Borrowing Base based upon such redetermination
of the Oil and Gas Reserves Component Value, together with the
determination of the Alaskan Gas Component Value and the Pipeline Component
Value. Each such requested redetermination is herein called a "Requested
Redetermination." Each Requested Redetermination shall be effective when
the Company is notified, in writing, of the amount of the redetermined
Borrowing Base by the Administrative Agent.
(c) The Borrowing Base is also subject to adjustment as provided for
in Section 3.2(b)(4) and Section 9.13.
2.10. Competitive Bid Procedure.
(a) In order to request Competitive Bids, the Company shall hand
deliver, telex or telecopy to the Agents a duly completed request
substantially in the form of Exhibit K, with the blanks appropriately
completed (a "Competitive Bid Request"), to be received by the Agents not
later than 11:00 a.m., Houston, Texas time, five Business Days before the
date specified for a proposed Competitive Loan. No Alternate Base Rate
Loan shall be requested in, or, except pursuant to Section 6, made pursuant
to, a Competitive Bid Request. A Competitive Bid Request that does not
conform substantially to the format of Exhibit K may be rejected at the
Auction Agent's sole discretion, and the Auction Agent shall promptly
notify the Company of such rejection by telecopier. Each Competitive Bid
Request shall in each case refer to this Agreement and specify (x) the date
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of such Competitive Loans (which shall be a Business Day) and the aggregate
principal amount thereof (which shall not be less than $25,000,000 or
greater than the unused portion of the Maximum Revolving Credit Available
Amount on such date and shall be an integral multiple of $5,000,000) and
(y) the Interest Period with respect thereto (which may not end after the
termination of the Revolving Credit Availability Period). Promptly after
its receipt of a Competitive Bid Request that is not rejected as aforesaid,
the Auction Agent shall invite by telecopier (in substantially the form set
forth in Exhibit L hereto) the Banks to bid, on the terms and conditions of
this Agreement, to make Competitive Loans pursuant to such Competitive Bid
Request. Notwithstanding the foregoing, the Auction Agent shall have no
obligation to invite any Bank to make a Competitive Bid pursuant to this
Section 2.10(a) until such Bank has delivered a properly completed
Competitive Bid Administrative Questionnaire to the Auction Agent.
(b) Each Bank may, in its sole discretion, make one or more
Competitive Bids to the Company responsive to each Competitive Bid Request.
Each Competitive Bid by a Bank must be received by the Auction Agent via
telecopier, in the form of Exhibit M hereto, not later than 11:00 a.m.,
Houston, Texas time, four Business Days before the date specified for a
proposed Competitive Loan. Competitive Bids that do not conform
substantially to the format of Exhibit M may be rejected by the Auction
Agent after conferring with, and upon the instruction of, the Company, and
the Auction Agent shall notify the Bank of such rejection as soon as
practicable. Each Competitive Bid shall refer to this Agreement and (x)
specify the principal amount (which shall be in a minimum principal amount
of $10,000,000 and in an integral multiple of $1,000,000 and which may
equal the entire aggregate principal amount of the Competitive Loan
requested by the Company) of the Competitive Loan that the Bank is willing
to make to the Company, (y) specify the Competitive Bid Rate at which the
Bank is prepared to make the Competitive Loan and (z) confirm the Interest
Period with respect thereto specified by the Company in its Competitive Bid
Request. A Competitive Bid submitted by a Bank pursuant to this paragraph
(b) shall be irrevocable.
(c) The Auction Agent shall, by 2:00 p.m. four Business Days before
the date specified for a proposed Competitive Loan, notify the Company by
telecopier of all the Competitive Bids made, the Competitive Bid Rate and
the maximum principal amount of each Competitive Loan in respect of which a
Competitive Bid was made and the identity of the Bank that made each bid.
The Auction Agent shall send a copy of all Competitive Bids to the Company
for its records as soon as practicable after completion of the bidding
process set forth in this Section 2.10.
(d) The Company may in its sole and absolute discretion, subject
only to the provisions of this Section 2.10(d), accept or reject any
Competitive Bid referred to in Section 2.10(c); provided, however, that the
aggregate amount of the Competitive Bids so accepted by the Company may not
exceed the principal amount of the Competitive Loan requested by the
Company. The Company shall notify the Auction Agent by telecopier whether
and to what extent it has decided to accept or reject any or all of the
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bids referred to in Section 2.10(c), not later than 11:00 a.m., Houston,
Texas time, three Business Days before the date specified for a proposed
Competitive Loan; provided, however, that (w) the failure by the Company to
give such notice shall be deemed to be a rejection of all the bids referred
to in Section 2.10(c), (x) the Company shall not accept a bid made at a
particular Competitive Bid Rate if the Company has decided to reject a bid
made at a lower Competitive Bid Rate, (y) if the Company shall accept bids
made at a particular Competitive Bid Rate but shall be restricted by other
conditions hereof from borrowing the maximum principal amount of
Competitive Loans in respect of which bids at such Competitive Bid Rate
have been made, then the Company shall accept a pro rata portion of each
bid made at such Competitive Bid Rate based as nearly as possible on the
respective maximum principal amounts of Competitive Loans for which such
bids were made and (z) no bid shall be accepted for a Competitive Loan
unless such Competitive Loan is in a minimum principal amount of
$10,000,000 and an integral multiple of $1,000,000. Notwithstanding the
foregoing, if it is necessary for the Company to accept a pro rata
allocation of the bids made in response to a Competitive Bid Request
(whether pursuant to the events specified in clause (y) above or otherwise)
and the available principal amount of Competitive Loans to be allocated
among the Banks is not sufficient to enable Competitive Loans to be
allocated to each Bank in a minimum principal amount of $10,000,000 and in
integral multiples of $1,000,000, then the Company shall select the Banks
to be allocated such Competitive Loans and shall round allocations up or
down to the next higher or lower multiple of $1,000,000 as it shall deem
appropriate. In addition, the Company shall be permitted under the
foregoing procedures to accept a bid or bids in a principal amount of less
than $10,000,000 (i) in order to enable the Company to accept bids equal to
(but not in excess of) the principal amount of the Competitive Loan
requested by the Company or (ii) in order to enable the Company to accept
all remaining bids, or all remaining bids at a particular Competitive Bid
Rate. A notice given by Company pursuant to this paragraph (d) shall be
irrevocable.
(e) The Auction Agent shall promptly notify each bidding Bank
whether or not its Competitive Bid has been accepted (and if so, in what
amount and at what Competitive Bid Rate) by telex or telecopier sent by the
Auction Agent, and each successful bidder will thereupon become bound,
subject to the other applicable conditions hereof, to make the Competitive
Loan in respect of which its bid has been accepted. After completing the
notifications referred to in the immediately preceding sentence, the
Auction Agent shall (i) notify the Agent of each Competitive Bid that has
been accepted, the amount thereof and the Competitive Bid Rate therefor and
(ii) notify each Bank of the aggregate principal amount of all Competitive
Bids accepted.
(f) No Competitive Loan shall be made within five Business Days of
the date of any other Competitive Loan, unless the Company and the Auction
Agent shall mutually agree otherwise.
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(g) If the Auction Agent shall at any time have a Commitment
hereunder and shall elect to submit a Competitive Bid in its capacity as a
Bank, it shall submit such bid directly to the Company one quarter of an
hour earlier than the latest time at which the other Banks are required to
submit their bids to the Auction Agent pursuant to paragraph (b) above.
(h) All notices required by this Section 2.10 shall be made in
accordance with Section 13.2 and the Competitive Bid Administrative
Questionnaire most recently placed on file by each Bank with the Auction
Agent.
Section 3. Borrowings, Prepayments and Selection of Interest
Rates.
3.1. Borrowings. The Company shall give the Administrative Agent
notice of each borrowing to be made hereunder as provided in Sections 2.10
and 5.5 hereof. Not later than 2:00 p.m. Houston, Texas time on the date
specified for each such borrowing hereunder, each Bank shall make available
the amount of the Loan, if any, to be made by it on such date to the
Administrative Agent, at its Principal Office, in immediately available
funds, for the account of the Company. The amount so received by the
Administrative Agent shall, subject to the terms and conditions of this
Agreement, be made available to the Company by depositing the same, in
immediately available funds, in an account designated by the Company
maintained with the Administrative Agent at the Principal Office.
3.2. Prepayments.
(a) Optional Prepayments. Subject to the provisions of Sections 4,
5 and 6, the Company shall have the right to prepay, on any Business Day,
in whole or in part, without the payment of any penalty or fee, Loans at
any time or from time to time, provided that, the Company shall give the
Administrative Agent notice of each such prepayment as provided in Section
5.5 hereof. Eurodollar Loans and Competitive Loans may be prepaid on the
last day of an Interest Period applicable thereto. Neither Eurodollar
Loans nor Competitive Loans may be otherwise prepaid unless prepayment is
accompanied by payment of all compensation required by Section 6.
(b) Mandatory Prepayments and Cover; Borrowing Base Deficiency.
(1) Reduction of Commitments. The Company shall from time to time
on demand by the Administrative Agent prepay the Loans (or provide Cover
for Letter of Credit Liabilities) in such amounts as shall be necessary so
that at all times the aggregate outstanding principal amount of all
Revolving Credit Obligations shall not be in excess of the aggregate amount
of the Commitments, as reduced from time to time pursuant to Section 2.3
hereof plus any Cover provided under this Section 3.2(b)(1).
(2) Borrowing Base Deficiency. Should a Borrowing Base Deficiency
occur, the Administrative Agent may (and, at the direction of the Majority
Banks, shall) notify the Company in writing of such Borrowing Base
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Deficiency. Within 30 days from and after the Borrowing Base Deficiency
Notification Date, the Company shall, at its election, take one of the
following actions:
(i) execute and deliver to the Administrative Agent
Security Documents, in form and substance satisfactory
to the Administrative Agent and its counsel, securing
the Notes and the other Obligations or, at the sole
option of the Administrative Agent, any designated
Collateral Mortgage Note, and covering additional
assets, which are not included in the Borrowing Base
and which are not then covered by any Security
Documents, of a type and nature, and having a value
(determined by the Majority Banks using customary
standards for lending) satisfactory to the Majority
Banks; or
(ii) make a payment on the Loans or Borrowing Base Debt of
the Company or its Subsidiaries, as the Company may
elect, in an amount sufficient to eliminate such
Borrowing Base Deficiency, and deliver to the
Administrative Agent evidence satisfactory to the
Administrative Agent of any such payment of Borrowing
Base Debt of the Company or its Subsidiaries.
If the Company shall elect to execute and deliver Security Documents to the
Administrative Agent pursuant to subsection (i) above, it shall provide the
Administrative Agent and each Bank with descriptions of the assets to be
collaterally assigned (together with current valuations, Engineering
Reports and title evidence applicable thereto, each of which shall be in
form and substance satisfactory to the Administrative Agent) within 20 days
after the Borrowing Base Deficiency Notification Date.
If the Company fails to take either of the actions described above within
such 30-day period, then without any necessity for notice to the Company or
any other person, the Company shall become obligated to pay on the Loans
three (3) installments, each in an amount equal to one-third (1/3rd) of the
applicable Borrowing Base Deficiency, such installments to be due and
payable on or before three (3), six (6) and nine (9) calendar months after
the Borrowing Base Deficiency Notification Date, respectively. Payments of
principal otherwise required hereunder shall be credited against such
installments.
(3) Asset Dispositions. If the Company or any Subsidiary sells,
transfers or otherwise disposes of assets that have been given value in the
most recent determination of the Borrowing Base and having a fair market
value in the aggregate for the Company and such Subsidiaries in excess of
$10,000,000 during the period from the effective date of any Borrowing Base
Determination until the effective date of the next Borrowing Base
Determination, the Borrowing Base shall be immediately reduced, until the
effective date of the next Borrowing Base Determination, by an amount equal
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to (i) in the case of sale, transfer or other disposition of all or
substantially all of the assets comprising (x) ENSTAR Alaska, (y) the
Pipeline Operations or (z) the producing and non-producing proved oil and
gas reserves of the Company and its Subsidiaries, the value of such assets
reflected in the most recent Borrowing Base, or if the value of the
applicable asset reflected in the most recent Borrowing Base cannot be
readily determined, the net sales proceeds realized from the sale, transfer
or other disposition of such assets and (ii) in the case of sale, transfer
or other disposition of less than all or substantially all of the assets
comprising any of the business segments described in (x), (y) or (z) above,
the value of such assets reflected in the most recent Borrowing Base (if
such value can be readily determined), or if the value of the applicable
asset reflected in the most recent Borrowing Base cannot be readily
determined, the net sales proceeds realized from the sale, transfer or
other disposition of such assets. If such reduction shall result in a
Borrowing Base Deficiency, then in lieu of the provisions of Sec-
tion 3.2(b)(2) hereof, the Company shall immediately make a payment on the
Loans in an amount equal to such Borrowing Base Deficiency. In addition to
and cumulative of the foregoing, if a Borrowing Base Deficiency exists
prior to such sale, transfer or other disposition of assets, then in lieu
of the provisions of Section 3.2(b)(2) hereof, the Company shall
immediately make a payment on the Loans in an amount equal to the lesser of
the amount of the Borrowing Base Deficiency (after giving effect to the
applicable sale, transfer or other disposition) or 100% of the net sales
proceeds realized from the applicable sale, transfer or other disposition.
(4) Adjustable Alaskan Gas Debt. In the event that the Adjustable
Alaskan Gas Debt shall increase by $3,000,000 or more (determined on a net
basis considering both increases and decreases in Adjustable Alaskan Gas
Debt) over the amount thereof on the effective date of the then most recent
Borrowing Base Certificate, then until the effective date of the next
Borrowing Base Determination, the Borrowing Base shall be immediately
reduced by an amount equal to the amount by which the Adjustable Alaskan
Gas Debt at the time of the reduction exceeds the amount of the Adjustable
Alaskan Gas Debt reflected in the then most recent Borrowing Base
Certificate.
3.3. Selection of Interest Rates. Subject to the terms and
provisions of this Agreement, the Company shall have the right either to
convert any Loan (in whole or in part) into a Loan of another Type
(provided that no such conversion of Eurodollar Loans or Competitive Loans
shall be permitted other than on the last day of an Interest Period
applicable thereto) or to continue such Loan (in whole or in part) as a
Loan of the same Type. In the event the Company fails to so give such
notice prior to the end of the applicable Interest Period with respect to
any Eurodollar Loan or Competitive Loan, such Loan shall become an
Alternate Base Rate Loan on the last day of such Interest Period.
Section 4. Payments of Principal and Interest.
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4.1. Repayment of Loans and Reimbursement Obligations. The Company
will pay to the Administrative Agent for the account of each Bank (a) the
principal of each Loan made by such Bank on the dates provided in the
respective Notes and as provided hereunder and (b) the amount of each
Reimbursement Obligation promptly upon its occurrence. The amount of any
Reimbursement Obligation may, if the applicable conditions precedent
specified in Section 7 hereof have been satisfied, be paid with the
proceeds of Loans.
4.2. Interest. (a) Subject to Section 13.6 hereof, the Company
will pay to the Administrative Agent for the account of each Bank interest
on the unpaid principal amount of each Loan made by such Bank for the
period commencing on the date of such Loan to but excluding the date such
Loan shall be paid in full, at the lesser of (I) the following rates per
annum:
(i) if such Loan is an Alternate Base Rate Loan, the
Alternate Base Rate plus the Applicable Margin,
(ii) if such Loan is a Eurodollar Loan, the applicable
Eurodollar Rate plus the Applicable Margin, and
(iii) if such Loan is a Competitive Loan, the applicable
fixed rate offered by the applicable Bank and accepted by the Company in
accordance with Section 2.10 hereof (or, in the case of Existing
Competitive Loans, the applicable fixed rate specified on Exhibit Q
hereto),
or (II) the Highest Lawful Rate.
(b) Notwithstanding any of the foregoing but subject to Section 13.6
hereof, the Company will pay to the Administrative Agent for the account of
each Bank interest at the applicable Post-Default Rate on any principal of
any Loan made by such Bank, on any Reimbursement Obligation and on any
other amount payable by the Company hereunder to or for the account of such
Bank (but, if such amount is interest, only to the extent legally allowed),
which shall not be paid in full when due (whether at stated maturity, by
acceleration or otherwise), for the period commencing on the due date
thereof until the same is paid in full.
(c) Accrued interest on each Loan shall be payable on the last day
of each Interest Period for such Loan (and, if such Interest Period exceeds
three months' duration, quarterly, commencing on the first quarterly
anniversary of the first day of such Interest Period), except that (i)
accrued interest payable at the Post-Default Rate shall be due and payable
from time to time on demand of the Administrative Agent or the Majority
Banks (through the Administrative Agent) and (ii) accrued interest on any
amount prepaid or converted pursuant to Section 6 hereof shall be paid on
the amount so prepaid or converted.
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Section 5. Payments; Pro Rata Treatment; Computations, Etc.
5.1. Payments.
(a) Except to the extent otherwise provided herein, all payments of
principal, interest, Reimbursement Obligations and other amounts to be made
by the Company hereunder and under the Notes shall be made in Dollars, in
immediately available funds, to the Administrative Agent at the Principal
Office (or in the case of a successor Administrative Agent, at the
principal office of such successor Administrative Agent in the United
States), not later than 11:00 a.m. Houston, Texas time on the date on which
such payment shall become due (each such payment made after such time on
such due date to be deemed to have been made on the next succeeding
Business Day). The Administrative Agent, or any Bank for whose account any
such payment is made, may (but shall not be obligated to) debit the amount
of any such payment which is not made by such time to any ordinary deposit
account of the Company with the Administrative Agent or such Bank, as the
case may be.
(b) The Company shall, at the time of making each payment hereunder
or under any Note, specify to the Administrative Agent the Loans or other
amounts payable by the Company hereunder or thereunder to which such
payment is to be applied. Each payment received by the Administrative
Agent hereunder or under any Note or any other Loan Document for the
account of a Bank shall be paid promptly to such Bank, in immediately
available funds for the account of such Bank's Applicable Lending Office.
(c) If the due date of any payment hereunder or under any Note or
any other Loan Document falls on a day which is not a Business Day, the due
date for such payment (subject to the definition of Interest Period) shall
be extended to the next succeeding Business Day and interest shall be
payable for any principal so extended for the period of such extension.
5.2. Pro Rata Treatment. Except to the extent otherwise provided
herein: (a) each borrowing from the Banks under Section 2.1 hereof shall
be made ratably from the Banks on the basis of their respective Commitments
and each payment of commitment or facility fees shall be made for the
account of the Banks, and each termination or reduction of the Commitments
of the Banks under Section 2.3 hereof shall be applied, pro rata, according
to the Banks' respective Commitments; (b) each payment by the Company of
principal of or interest on Loans of a particular Type shall be made to the
Administrative Agent for the account of the Banks pro rata in accordance
with the respective unpaid principal amounts of such Loans held by the
Banks; and (c) the Banks (other than the applicable Issuer) shall purchase
from the applicable Issuer participations in the Letters of Credit to the
extent of their respective Commitment Percentages.
5.3. Computations. Interest on Competitive Loans and interest based
on the Eurodollar Base Rate or the Federal Funds Rate will be computed on
the basis of a year of 360 days and actual days elapsed (including the
first day but excluding the last day) occurring in the period for which
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payable, unless the effect of so computing shall be to cause the rate of
interest to exceed the Highest Lawful Rate, in which case interest shall be
calculated on the basis of the actual number of days elapsed in a year
composed of 365 or 366 days, as the case may be. All other interest and
fees shall be computed on the basis of a year of 365 (or 366) days and
actual days elapsed (including the first day but excluding the last day)
occurring in the period for which payable.
5.4. Minimum and Maximum Amounts. Except for prepayments made
pursuant to Section 3.2(b) hereof, and subject to the provisions of Section
2.10 hereof with respect to Competitive Loans, each borrowing and repayment
of principal of Loans, each termination or reduction of Commitments, each
optional prepayment and each conversion of Type shall be in an aggregate
principal amount at least equal to (a) in the case of Eurodollar Loans and
Competitive Loans, $5,000,000, and (b) in the case of Alternate Base Rate
Loans, $1,000,000 (borrowings or prepayments of Loans of different Types
or, in the case of Eurodollar Loans and Competitive Loans, having different
Interest Periods at the same time hereunder to be deemed separate
borrowings and prepayments for purposes of the foregoing, one for each Type
or Interest Period). Upon any mandatory prepayment that would reduce
Eurodollar Loans or Competitive Loans, respectively, having the same
Interest Period to less than $5,000,000 such Loans shall automatically be
converted into Alternate Base Rate Loans. Notwithstanding anything to the
contrary contained in this Agreement, there shall not be, at any one time,
more than eight (8) Interest Periods in effect with respect to Eurodollar
Loans or Competitive Loans, in the aggregate.
5.5. Certain Actions, Notices, Etc. Notices to the Administrative
Agent of any termination or reduction of Commitments, of borrowings and
prepayments, conversions and continuations of Loans and of the duration of
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Interest Periods shall be irrevocable and shall be effective only if
received by the Administrative Agent not later than 11:00 a.m. Houston,
Texas time on the number of Business Days prior to the date of the relevant
termination, reduction, borrowing and/or repayment, conversion or
continuance specified below:
Number of
Business
Notice Days Prior
Termination or
Reduction of Commitments 2
Borrowing or prepayment
of or conversion into or
continuance of
Alternate Base Rate 11:00 a.m. of
Loans the same day
Borrowing or
prepayment of or conversion
into or continuance of
Eurodollar Loans 3
Each such notice of termination or reduction shall specify the amount of
the Commitments to be terminated or reduced. Each such notice of borrowing
or prepayment shall specify the amount and Type of the Loans to be borrowed
or prepaid (subject to Sections 3.2(a) and 5.4 hereof), the date of
borrowing or prepayment (which shall be a Business Day) and, in the case of
Eurodollar Loans, the duration of the Interest Period therefor (subject to
the definition of "Interest Period"). Each such notice of conversion of a
Loan into a Loan of another Type shall identify such Loan (or portion
thereof) being converted and specify the Type of Loan into which such Loan
is being converted (subject to Section 5.4 hereof) and the date for
conversion (which shall be a Business Day) and, unless such Loan is being
converted into an Alternate Base Rate Loan, the duration (subject to the
definition of "Interest Period") of the Interest Period therefor which is
to commence as of the last day of the then current Interest Period therefor
(or the date of conversion, if such Loan is being converted from an
Alternate Base Rate Loan). Each such notice of continuation of a Loan (or
portion thereof) as the same Type of Loan shall identify such Loan (or
portion thereof) being continued (subject to Section 5.4 hereof) and,
unless such Loan is an Alternate Base Rate Loan, the duration (subject to
the definition of "Interest Period") of the Interest Period therefor which
is to commence as of the last day of the then current Interest Period
therefor. The Administrative Agent shall promptly notify the affected
Banks of the contents of each such notice. Notice of any prepayment having
been given, the principal amount specified in such notice, together with
interest thereon to the date of prepayment, shall be due and payable on
such prepayment date. Section 2.10 hereof shall control the time periods
applicable to Competitive Loans.
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5.6. Non-Receipt of Funds by the Administrative Agent. Unless the
Administrative Agent shall have been notified by a Bank or the Company (the
"Payor") prior to the date on which such Bank is to make payment to the
Administrative Agent of the proceeds of a Loan to be made by it hereunder
(or the payment of any amount by such Bank to reimburse the applicable
Issuer for a drawing under any Letter of Credit) or the Company is to make
a payment to the Administrative Agent for the account of one or more of the
Banks, as the case may be (such payment being herein called the "Required
Payment"), which notice shall be effective upon receipt, that the Payor
does not intend to make the Required Payment to the Administrative Agent,
the Administrative Agent may assume that the Required Payment has been made
and may, in reliance upon such assumption (but shall not be required to),
make the amount thereof available to the intended recipient on such date
and, if the Payor has not in fact made the Required Payment to the
Administrative Agent on or before such date, the recipient of such payment
(or, if such recipient is the beneficiary of a Letter of Credit, the
Company and, if the Company fails to pay the amount thereof to the
Administrative Agent forthwith upon demand, the Banks ratably in proportion
to their respective Commitment Percentages) shall, on demand, pay to the
Administrative Agent the amount made available to it together with interest
thereon in respect of the period commencing on the date such amount was so
made available by the Administrative Agent until the date the
Administrative Agent recovers such amount at a rate per annum equal to the
Federal Funds Rate for such period.
5.7. Sharing of Payments, Etc. If a Bank shall obtain payment of any
principal of or interest on any Loan made by it under this Agreement, or on
any Reimbursement Obligation or other obligation then due to such Bank
hereunder, through the exercise of any right of set-off, banker's lien,
counterclaim or similar right, or otherwise, it shall promptly purchase
from the other Banks participations in the Loans made, or Reimbursement
Obligations or other obligations held, by the other Banks in such amounts,
and make such other adjustments from time to time as shall be equitable to
the end that all the Banks shall share the benefit of such payment (net of
any expenses which may be incurred by such Bank in obtaining or preserving
such benefit) pro rata in accordance with the unpaid principal and interest
on the Obligations then due to each of them (provided, however, that the
foregoing shall not apply to payments of Competitive Loans made prior to
the termination of the Commitments following the occurrence of an Event of
Default). To such end all the Banks shall make appropriate adjustments
among themselves (by the resale of participations sold or otherwise) if
such payment is rescinded or must otherwise be restored. The Company
agrees, to the fullest extent it may effectively do so under applicable
law, that any Bank so purchasing a participation in the Loans made, or
Reimbursement Obligations or other obligations held, by other Banks may
exercise all rights of set-off, bankers' lien, counterclaim or similar
rights with respect to such participation as fully as if such Bank were a
direct holder of Loans and Reimbursement Obligations or other obligations
in the amount of such participation. Nothing contained herein shall
require any Bank to exercise any such right or shall affect the right of
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any Bank to exercise, and retain the benefits of exercising, any such right
with respect to any other Indebtedness or obligation of the Company.
Section 6. Yield Protection and Illegality.
6.1. Additional Costs.
(a) Subject to Section 13.6, the Company shall pay to the
Administrative Agent, on demand for the account of each Bank from time to
time such amounts as such Bank may determine to be necessary to compensate
it for any costs incurred by such Bank which such Bank determines are
attributable to its making or maintaining of any Eurodollar Loan or any
Competitive Loan hereunder or its obligation to make any such Loan
hereunder, or any reduction in any amount receivable by such Bank hereunder
in respect of any of such Loans or such obligation (such increases in costs
and reductions in amounts receivable being herein called "Additional
Costs"), in each case resulting from any Regulatory Change which:
(i) subjects such Bank (or makes it apparent that such Bank
is subject) to any tax (including without limitation any United States
interest equalization tax), levy, impost, duty, charge or fee
(collectively, "Taxes"), or any deduction or withholding for any Taxes on
or from the payment due under any Eurodollar Loan or any Competitive Loan
or other amounts due hereunder, other than income and franchise taxes of
the jurisdiction (or any subdivision thereof) in which such Bank has an
office or its Applicable Lending Office; or
(ii) changes the basis of taxation of any amounts payable to
such Bank under this Agreement or its Notes in respect of any of such Loans
(other than changes which affect taxes measured by or imposed on the
overall net income or franchise taxes of such Bank or of its Applicable
Lending Office for any of such Loans by the jurisdiction (or any
subdivision thereof) in which such Bank has an office or such Applicable
Lending Office); or
(iii) imposes or modifies or increases or deems applicable
any reserve, special deposit or similar requirements (including, without
limitation, any such requirement imposed by the Board of Governors of the
Federal Reserve System) relating to any extensions of credit or other
assets of, or any deposits with or other liabilities of, such Bank or loans
made by such Bank, or against any other funds, obligations or other
property owned or held by such Bank (including any of such Loans or any
deposits referred to in the definition of "Eurodollar Base Rate" in Section
1.1 hereof) and such Bank actually incurs such additional costs; or
(iv) imposes any other condition affecting this Agreement
(or any of such extensions of credit or liabilities).
Each Bank (if so requested by the Company through the Administrative Agent)
will designate a different available Applicable Lending Office for the
Eurodollar Loans or the Competitive Loans of such Bank or take such other
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action as the Company may request if such designation or action will avoid
the need for, or reduce the amount of, such compensation and will not, in
the sole opinion of such Bank, be disadvantageous to such Bank (provided
that such Bank shall have no obligation so to designate an Applicable
Lending Office for Eurodollar Loans located in the United States of
America). Each Bank will furnish the Company with a statement setting
forth the basis and amount of each request by such Bank for compensation
under this Section 6.1(a); subject to Section 6.8, such certificate shall
be conclusive, absent manifest error, and may be prepared using any
reasonable averaging and attribution methods.
(b) Without limiting the effect of the foregoing provisions of this
Section 6.1, in the event that, by reason of any Regulatory Change, any
Bank either (i) incurs Additional Costs based on or measured by the excess
above a specified level of the amount of a category of deposits or other
liabilities of such Bank which includes deposits by reference to which the
interest rate on Eurodollar Loans is determined as provided in this
Agreement or a category of extensions of credit or other assets of such
Bank which includes Eurodollar Loans or Competitive Loans or (ii) becomes
subject to restrictions on the amount of such a category of liabilities or
assets which it may hold, then, if such Bank so elects by notice to the
Company (with a copy to the Administrative Agent), the obligation of such
Bank to make Eurodollar Loans or Competitive Loans, as the case may be,
hereunder shall be suspended until the date such Regulatory Change ceases
to be in effect (in which case the provisions of Section 6.4 hereof shall
be applicable).
(c) Good faith determinations and allocations by any Bank for
purposes of this Section 6.1 of the effect of any Regulatory Change on its
costs of maintaining its obligations to make Loans or of making or
maintaining Loans or on amounts receivable by it in respect of Loans, and
of the additional amounts required to compensate such Bank in respect of
any Additional Costs, shall be conclusive, absent manifest error.
(d) The Company's obligation to pay Additional Costs and
compensation with regard to each Eurodollar Loan and each Competitive Loan
shall survive termination of this Agreement.
6.2. Limitation on Types of Loans. Anything herein to the contrary
notwithstanding, if, with respect to any Eurodollar Loans:
(a) the Administrative Agent determines in good faith (which
determination shall be conclusive) that quotations of interest rates for
the relevant deposits referred to in the definition of "Eurodollar Base
Rate" in Section 1.1 hereof are not being provided by the Reference Banks
in the relevant amounts or for the relevant maturities for purposes of
determining the rate of interest for such Loans for Interest Periods
therefor as provided in this Agreement; or
(b) the Majority Banks determine (which determination shall be
conclusive) and notify the Administrative Agent that the relevant rates of
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interest referred to in the definition of "Eurodollar Base Rate" in Section
1.1 hereof upon the basis of which the rates of interest for such Loans are
to be determined do not accurately reflect the cost to such Banks of making
or maintaining such Loans for Interest Periods therefor; or
(c) the Administrative Agent determines in good faith (which
determination shall be conclusive) that by reason of circumstances
affecting the interbank Dollar market generally, deposits in United States
dollars in the relevant interbank Dollar market are not being offered for
the applicable Interest Period and in an amount equal to the amount of the
Eurodollar Loan requested by the Company;
then the Administrative Agent shall promptly notify the Company and each
Bank thereof, and, so long as such condition remains in effect, the Banks
shall be under no obligation to make Eurodollar Loans (but shall maintain
until the end of the Interest Period then in effect the Eurodollar Loans
then outstanding).
6.3. Illegality. Notwithstanding any other provision of this
Agreement to the contrary, if (x) by reason of the adoption of any
applicable Legal Requirement or any change in any applicable Legal
Requirement or in the interpretation or administration thereof by any
Governmental Authority or compliance by any Bank with any request or
directive (whether or not having the force of law) of any central bank or
other Governmental Authority or (y) circumstances affecting the relevant
interbank Dollar market or the position of a Bank therein shall at any time
make it unlawful or impracticable in the sole discretion of a Bank
exercised in good faith for such Bank or its Applicable Lending Office to
(a) honor its obligation to make Eurodollar Loans or Competitive Loans
hereunder, or (b) maintain Eurodollar Loans or Competitive Loans hereunder,
then such Bank shall promptly notify the Company thereof through the
Administrative Agent and such Bank's obligation to make or maintain
Eurodollar Loans or Competitive Loans, as the case may be, hereunder shall
be suspended until such time as such Bank may again make and maintain
Eurodollar Loans or Competitive Loans, as the case may be (in which case
the provisions of Section 6.4 hereof shall be applicable). Before giving
such notice pursuant to this Section 6.3, such Bank will designate a
different available Applicable Lending Office for the Eurodollar Loans or
the Competitive Loans, as the case may be, of such Bank or take such other
action as the Company may request if such designation or action will avoid
the need to suspend such Bank's obligation to make Eurodollar Loans or
Competitive Loans, as the case may be, hereunder and will not, in the sole
opinion of such Bank exercised in good faith, be disadvantageous to such
Bank (provided, that such Bank shall have no obligation so to designate an
Applicable Lending Office for Eurodollar Loans located in the United States
of America).
6.4. Substitute Alternate Base Rate Loans. If the obligation of any
Bank to make or maintain Eurodollar Loans or Competitive Loans, as the case
may be, shall be suspended pursuant to Section 6.1, 6.2 or 6.3 hereof, all
Loans which would otherwise be made by such Bank as Eurodollar Loans or
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Competitive Loans, as the case may be, shall be made instead as Alternate
Base Rate Loans (and, if an event referred to in Section 6.1(b) or 6.3
hereof has occurred and such Bank so requests by notice to the Company with
a copy to the Administrative Agent, each Eurodollar Loan or each
Competitive Loan, as the case may be, of such Bank then outstanding shall
be automatically converted into an Alternate Base Rate Loan on the date
specified by such Bank in such notice) and, to the extent that Eurodollar
Loans or Competitive Loans, as the case may be, are so made as (or
converted into) Alternate Base Rate Loans, all payments of principal which
would otherwise be applied to such Eurodollar Loans or such Competitive
Loans, as the case may be, shall be applied instead to such Alternate Base
Rate Loans.
6.5. Compensation. Subject to Section 13.6 hereof, the Company shall
pay to the Administrative Agent for the account of each Bank, within four
(4) Business Days after demand therefor by such Bank through the
Administrative Agent, such amount or amounts as shall be sufficient (in the
reasonable opinion of such Bank) to compensate it for any loss, cost or
expense actually incurred by it (exclusive of any lost profits or
opportunity costs) as a result of:
(a) any payment, prepayment or conversion of a Eurodollar Loan or a
Competitive Loan made by such Bank on a date other than the last day of an
Interest Period for such Loan; or
(b) any failure by the Company to borrow a Eurodollar Loan or a
Competitive Loan to be made by such Bank on the date for such borrowing
specified in the relevant notice of borrowing under Section 5.5 or Section
2.10 hereof or to convert a Eurodollar Loan or a Competitive Loan into an
Alternate Base Rate Loan on such date after giving notice of such
conversion;
such compensation to include, without limitation, any loss or expense
actually incurred (exclusive of any lost profits or opportunity costs) by
reason of the liquidation or reemployment of deposits or other funds
acquired by the applicable Bank to fund or maintain its share of any Loan.
Subject to Section 6.8, each determination of the amount of such
compensation by a Bank shall be conclusive and binding, absent manifest
error, and may be computed using any reasonable averaging and attribution
method. No costs shall be payable under this Section solely by reason of
the conversion of loans designated as "Eurodollar Loans" under that certain
Amended and Restated Credit Agreement referred to in Section 13.15 hereof
into the Existing Competitive Loans.
6.6. Additional Costs in Respect of Letters of Credit. If as a
result of any Regulatory Change there shall be imposed, modified or deemed
applicable any tax, reserve, special deposit or similar requirement against
or with respect to or measured by reference to Letters of Credit issued or
to be issued hereunder or participations in such Letters of Credit, and the
result shall be to increase the cost to any Bank of issuing or maintaining
any Letter of Credit or any participation therein, or reduce any amount
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receivable by any Bank hereunder in respect of any Letter of Credit or any
participation therein (which increase in cost, or reduction in amount
receivable, shall be the result of such Bank's reasonable allocation of the
aggregate of such increases or reductions resulting from such event), then
such Bank shall notify the Company through the Administrative Agent, and
upon demand therefor by such Bank through the Administrative Agent, the
Company (subject to Section 13.6 hereof) shall pay to such Bank, from time
to time as specified by such Bank, such additional amounts as shall be
sufficient to compensate such Bank for such increased costs or reductions
in amount. Before making such demand pursuant to this Section 6.6, such
Bank will designate a different available Applicable Lending Office for the
Letter of Credit of such Bank or take such other action as the Company may
request, if such designation or action will avoid the need for, or reduce
the amount of, such compensation and will not, in the sole opinion of such
Bank exercised in good faith, be disadvantageous to such Bank. A statement
as to such increased costs or reductions in amount incurred by such Bank,
submitted by such Bank to the Company, shall be conclusive as to the amount
thereof, absent manifest error.
6.7. Capital Adequacy. If any Bank shall have determined that the
adoption after the date hereof or effectiveness after the date hereof
(whether or not previously announced) of any applicable law, rule,
regulation or treaty regarding capital adequacy, or any change therein
after the date hereof, or any change in the interpretation or
administration thereof after the date hereof by any Governmental Authority
charged with the interpretation or administration thereof, or compliance by
any Bank (or its Applicable Lending Office) with any request or directive
after the date hereof regarding capital adequacy (whether or not having the
force of law) of any such Governmental Authority has or would have the
effect of reducing the rate of return on such Bank's capital as a conse-
quence of such Bank's obligations hereunder, under the Loans made by it,
under the Letters of Credit and under the Notes held by it to a level below
that which such Bank could have achieved but for such adoption, change or
compliance (taking into consideration such Bank's policies with respect to
capital adequacy) by an amount deemed by such Bank to be material, then
from time to time, upon satisfaction of the conditions precedent set forth
in this Section 6.7, upon demand by such Bank (with a copy to the
Administrative Agent), the Company (subject to Section 13.6 hereof) shall
pay to such Bank such additional amount or amounts as will compensate such
Bank for such reduction. A certificate as to such amounts, submitted to
the Company and the Administrative Agent by such Bank, setting forth the
basis for such Bank's determination of such amounts, shall constitute a
demand therefor and shall be conclusive and binding for all purposes,
absent manifest error. The Company shall pay the amount shown as due on
any such certificate within four (4) Business Days after delivery of such
certificate. Subject to Section 6.8, in preparing such certificate, a Bank
may employ such assumptions and allocations of costs and expenses as it
shall in good faith deem reasonable and may use any reasonable averaging
and attribution method.
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6.8 Limitation on Additional Charges; Substitute Banks; Non-
Discrimination. Anything in this Section 6 notwithstanding:
(a) the Company shall not be required to pay to any Bank
reimbursement with regard to any costs or expenses, unless such Bank
notifies the Company of such costs or expenses within 90 days after the
date paid or incurred;
(b) none of the Banks shall be permitted to pass through to the
Company charges and costs under this Section 6 on a discriminatory basis
(i.e., which are not also passed through by such Bank to other customers of
such Bank similarly situated where such customer is subject to documents
providing for such pass through); and
(c) if any Bank elects to pass through to the Company any material
charge or cost under this Section 6 or elects to terminate the availability
of Eurodollar Loans for any material period of time, the Company may,
within 60 days after the date of such event and so long as no Default shall
have occurred and be continuing, elect to terminate such Bank as a party to
this Agreement; provided that, concurrently with such termination the
Company shall (i) if the Administrative Agent and each of the other Banks
shall consent, pay that Bank all principal, interest and fees and other
amounts owed to such Bank through such date of termination or (ii) have
arranged for another financial institution approved by the Administrative
Agent (such approval not to be unreasonably withheld) as of such date, to
become a substitute Bank for all purposes under this Agreement in the
manner provided in Section 13.5; provided further that, prior to
substitution for any Bank, the Company shall have given written notice to
the Administrative Agent of such intention and the Banks shall have the
option, but no obligation, for a period of 60 days after receipt of such
notice, to increase their Commitments in order to replace the affected Bank
in lieu of such substitution.
Section 7. Conditions Precedent.
7.1. Initial Loans. The obligation of each Bank or any applicable
Issuer to make its initial Loans after the date hereof or issue or
participate in a Letter of Credit after the date hereof (if such Letter of
Credit is issued prior to the funding of the initial Loans after the date
hereof) hereunder is subject to the following conditions precedent, each of
which shall have been fulfilled or waived to the satisfaction of the
Majority Banks:
(a) Corporate Action and Status. The Administrative Agent shall
have received from the appropriate Governmental Authorities certified
copies of the Organizational Documents (other than bylaws) of the Company
and each of its Subsidiaries, and evidence satisfactory to the
Administrative Agent of all corporate action taken by the Company or any of
its Subsidiaries authorizing the execution, delivery and performance of the
Loan Documents and all other documents related to this Agreement to which
it is a party (including, without limitation, a certificate of the
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secretary of each such party setting forth the resolutions of its Board of
Directors authorizing the transactions contemplated thereby and attaching a
copy of its bylaws), together with such certificates as may be appropriate
to demonstrate the qualification and good standing of and payment of taxes
by the Company and each of its Subsidiaries in each state in which such
qualification is necessary.
(b) Incumbency. The Company and each Relevant Party shall have
delivered to the Administrative Agent a certificate in respect of the name
and signature of each of the officers (i) who is authorized to sign on its
behalf the applicable Loan Documents related to any Loan or the issuance of
any Letter of Credit and (ii) who will, until replaced by another officer
or officers duly authorized for that purpose, act as its representative for
the purposes of signing documents and giving notices and other
communications in connection with any Loan or the issuance of any Letter of
Credit. The Administrative Agent and each Bank may conclusively rely on
such certificates until they receive notice in writing from the Company or
the appropriate Relevant Party to the contrary.
(c) Notes. The Administrative Agent shall have received the
appropriate Note of the Company for each Bank, duly completed and executed.
(d) Loan Documents. The Company and each other Relevant Party shall
have duly executed and delivered the other Loan Documents to which it is a
party (in such number of copies as the Administrative Agent shall have
requested) and each such Loan Document shall be in form satisfactory to
Administrative Agent. Each such Loan Document shall be in substantially
the form furnished to the Banks prior to their execution of this Agreement,
together with such changes therein as the Administrative Agent may approve.
(e) Fees and Expenses. The Company shall have paid to the
Administrative Agent for the account of each Bank all accrued and unpaid
commitment fees and other fees in the amounts previously agreed upon in
writing among the Company and the Administrative Agent; and shall have in
addition paid to the Administrative Agent all amounts payable under the
letter agreements referred to Section 2.4(d) hereof and under Section 9.7
hereof on or before the date of this Agreement.
(f) Opinions of Counsel. The Administrative Agent shall have
received (1) an opinion of Vinson & Elkins L.L.P., counsel to the Company,
in form and substance reasonably satisfactory to the Administrative Agent
and (2) such opinions of counsel to the Company and other Relevant Parties
and special local counsel of the Administrative Agent as the Administrative
Agent shall reasonably request with respect to the Company and the Loan
Documents.
(g) Execution by Banks and Auction Agent. The Administrative Agent
shall have received counterparts of this Agreement executed and delivered
by or on behalf of each of the Banks and by the Auction Agent or the
Administrative Agent shall have received evidence satisfactory to it of the
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execution and delivery by each of the Banks and by the Auction Agent of a
counterpart hereof.
(h) Consents. The Administrative Agent shall have received evidence
satisfactory to it that, except as disclosed in the Disclosure Statement
and except as provided in the Mortgages, all material consents of each
Governmental Authority and of each other Person, if any, reasonably
required in connection with (a) the Loans and the Letters of Credit and (b)
the execution, delivery and performance of this Agreement and the other
Loan Documents have been satisfactorily obtained.
(i) Amendment to Intercreditor Agreement. The Administrative Agent
shall have received counterparts of the Amendment to Intercreditor
Agreement referred to in the definition of "Intercreditor Agreement" in
Section 1.1 hereof executed and delivered by or on behalf of each of the
Company and by the "Administrative Agent" under the Canadian Facility or
the Administrative Agent shall have received evidence satisfactory to it of
the execution and delivery by each such Person of a counterpart of such
Amendment to Intercreditor Agreement.
(j) Amendment to Canadian Facility. The Administrative Agent shall
have received counterparts of the Amendment to Credit Agreement referred to
in the definition of "Canadian Facility" in Section 1.1 hereof executed and
delivered by or on behalf of each of Seagull Energy Canada Ltd., Chemical
Bank of Canada, as Arranger and as Administrative Agent, The Bank of Nova
Scotia, as Paying Agent and as Co-Agent, Canadian Imperial Bank of
Commerce, as Co-Agent, and certain banks parties thereto or the
Administrative Agent shall have received evidence satisfactory to it of the
execution and delivery by each such Person of a counterpart of such
Amendment to Credit Agreement.
(k) Other Documents. The Administrative Agent shall have received
such other documents consistent with the terms of this Agreement and
relating to the transactions contemplated hereby as the Administrative
Agent may reasonably request.
All provisions and payments required by this Section 7.1 are subject
to the provisions of Section 13.6.
7.2. Initial and Subsequent Loans. The obligation of each Bank or
any applicable Issuer to make any Loan (including, without limitation, its
initial Loan) to be made by it hereunder or to issue or participate in any
Letter of Credit is subject to the additional conditions precedent that (i)
the Administrative Agent shall have received a Request for Extension of
Credit and such other certifications as the Administrative Agent may
reasonably require, (ii) in the case of Competitive Loans, the Company
shall have complied with the provisions of Section 2.10 hereof and (iii) as
of the date of such Loan or such issuance, and after giving effect thereto:
(a) no Default shall have occurred and be continuing;
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(b) except for facts timely disclosed to the Administrative Agent
from time to time in writing, which facts (I) are not materially more
adverse to the Company and its Subsidiaries, (II) do not materially
decrease the ability of the Banks to collect the Obligations as and when
due and payable and (III) do not materially increase the liability of the
Administrative Agent or any of the Banks, in each case compared to those
facts existing on the date hereof and the material details of which have
been set forth in the Financial Statements delivered to the Administrative
Agent prior to the date hereof or in the Disclosure Statement, and except
for the representations set forth in the Loan Documents which, by their
terms, are expressly (or by means of similar phrasing) made as of the
Original Closing Date or as of the date hereof, as the case may be, only,
the representations and warranties made in each Loan Document shall be true
and correct in all material respects on and as of the date of the making of
such Loan or such issuance, with the same force and effect as if made on
and as of such date;
(c) the making of such Loan or the issuance of such Letter of Credit
shall not violate any Legal Requirement applicable to any Bank.
Each Request for Extension of Credit by the Company hereunder or
request for issuance of a Letter of Credit shall include a representation
and warranty by the Company to the effect set forth in Subsections 7.2(a)
and (b) (both as of the date of such notice and, unless the Company
otherwise notifies the Administrative Agent prior to the date of such
borrowing or issuance, as of the date of such borrowing or issuance).
Section 8. Representations and Warranties. To induce the Banks to
enter into this Agreement and to make the Loans and issue or participate in
the Letters of Credit, the Company represents and warrants (such
representations and warranties to survive any investigation and the making
of the Loans and the issuance of the Letters of Credit) to the Banks and
the Administrative Agent as follows:
8.1. Corporate Existence. The Company and each Subsidiary of the
Company are corporations duly incorporated and organized, legally existing
and in good standing under the laws of the respective jurisdictions in
which they are incorporated, and are duly qualified as foreign corporations
in all jurisdictions wherein the property owned or the business transacted
by them makes such qualification necessary and the failure to so qualify
could reasonably be expected to result in a Material Adverse Effect.
8.2. Corporate Power and Authorization. The Company is duly
authorized and empowered to create and issue the Notes; each of the Company
and each Subsidiary of the Company is duly authorized and empowered to
execute, deliver, and perform this Agreement and the other Loan Documents
to which it is a party; and all corporate action on the Company's part
requisite for the due creation and issuance of the Notes and on the
Company's part and on the part of each Subsidiary of the Company for the
due execution, delivery, and performance of this Agreement and the other
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Loan Documents to which each of the Company and each such Subsidiary is a
party has been duly and effectively taken.
8.3. Binding Obligations. This Agreement, the Notes and the other
Loan Documents constitute legal, valid and binding obligations of the
Company and its Subsidiaries, to the extent each is a party thereto,
enforceable against the Company and its Subsidiaries, to the extent each is
a party thereto, in accordance with their respective terms, except as may
be limited by any bankruptcy, insolvency, moratorium or other similar laws
or judicial decisions affecting creditors' rights generally.
8.4. No Legal Bar or Resultant Lien. The Company's and each of its
Subsidiaries' creation, issuance, execution, delivery and performance of
this Agreement, the Notes and the other Loan Documents, to the extent they
are parties thereto, do not and will not violate any provisions of the
Organizational Documents of the Company or any Subsidiary of the Company
or any Legal Requirement to which the Company or any Subsidiary of the
Company is subject or by which its property may be presently bound or
encumbered, or result in the creation or imposition of any Lien upon any
properties of the Company or any Subsidiary of the Company, other than
those permitted by this Agreement.
8.5. No Consent. Except as set forth in the Disclosure Statement and
except as provided in the Mortgages, the Company's creation and issuance of
the Notes and the Company's and each of its Subsidiaries' execution,
delivery, and performance of this Agreement, the Notes and the other Loan
Documents to which they are parties do not and will not require the consent
or approval of any Person other than such consents and/or approvals
obtained by the Company contemporaneously with or prior to the execution of
this Agreement, including, without limitation, any Governmental
Authorities, other than those consents the failure to obtain which could
not be reasonably expected to have a Material Adverse Effect.
8.6. Financial Condition. The audited consolidated and unaudited
consolidating annual financial statements of the Company and its
Subsidiaries for the year ended December 31, 1992 and the unaudited
consolidated interim financial statements of the Company and its
Subsidiaries for the quarter and three-month period ended March 31, 1993,
which have been delivered to the Banks, have been prepared in accordance
with GAAP, and present fairly the financial condition and results of the
operations of the Company and its Subsidiaries for the period or periods
stated (subject only to normal year-end audit adjustments with respect to
the unaudited interim statements). No material adverse change, either in
any case or in the aggregate, has occurred since March 31, 1993 in the
assets, liabilities, financial condition, business, operations, affairs or
circumstances of the Company and its Subsidiaries taken as a whole, except
as disclosed to the Banks in the Disclosure Statement. Each Engineering
Report and Company Report fairly presents the values and prospective
performances of the property described therein and there are no statements
or conclusions therein which were based upon or included materially
misleading information or fail to take into account material information.
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8.7. Investments and Guaranties. As of the Original Closing Date,
neither the Company nor any Subsidiary of the Company had made Investments
in, advances to, or Guarantees of, the obligations of any Person, except as
(a) disclosed to the Banks in the Disclosure Statement or (b) not
prohibited by applicable provisions of Section 10.
8.8. Liabilities and Litigation. Neither the Company nor any
Subsidiary of the Company has any material (individually or in the
aggregate) liabilities, direct or contingent, except as (a) disclosed or
referred to in the Financial Statements, (b) disclosed to the Banks in the
Disclosure Statement, (c) disclosed in a notice to the Administrative Agent
pursuant to Section 9.11 with respect to such as could reasonably be
expected to have a Material Adverse Effect or (d) not prohibited by
applicable provisions of Section 10. Except as (a) described in the
Financial Statements, (b) otherwise disclosed to the Banks in the
Disclosure Statement, (c) disclosed in a notice to the Administrative Agent
pursuant to Section 9.11 with respect to such as could reasonably be
expected to have a Material Adverse Effect or (d) not prohibited by
applicable provisions of Section 10, no litigation, legal, administrative
or arbitral proceeding, investigation, or other action of any nature exists
or (to the knowledge of the Company) is threatened against or affecting the
Company or any Subsidiary of the Company which could reasonably be expected
to result in any judgment which could reasonably be expected to have a
Material Adverse Effect, or which in any manner challenges or may challenge
or draw into question the validity of this Agreement, the Notes or any
other Loan Document, or enjoins or threatens to enjoin or otherwise
restrain any of the transactions contemplated by any of them.
8.9. Taxes and Governmental Charges. The Company and its
Subsidiaries have filed, or obtained extensions with respect to the filing
of, all material tax returns and reports required to be filed and have paid
all material taxes, assessments, fees and other governmental charges levied
upon any of them or upon any of their respective properties or income which
are due and payable, including interest and penalties, or have provided
adequate reserves for the payment thereof.
8.10. Title to Properties. The Company and its Subsidiaries have good
and defensible title to their respective properties included in the
Borrowing Base (including, without limitation, all fee and leasehold
interests), free and clear of all Liens except (a) those referred to in the
Financial Statements, (b) as disclosed to the Banks in the Disclosure
Statement or (c) as permitted by Section 10.2.
8.11. Defaults. Neither the Company nor any Subsidiary of the Company
is in default, which default could reasonably be expected to have a
Material Adverse Effect, under any indenture, mortgage, deed of trust,
agreement or other instrument to which the Company or any Subsidiary of the
Company is a party or by which the Company or any Subsidiary of the Company
or the property of the Company or any Subsidiary of the Company is bound,
except as (a) disclosed to the Banks in the Disclosure Statement, (b)
disclosed in a notice to the Administrative Agent pursuant to Section 9.11
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with respect to such as could reasonably be expected to have a Material
Adverse Effect or (c) specifically permitted by applicable provisions of
Section 10. No Default under this Agreement, the Notes or any other Loan
Document has occurred and is continuing.
8.12. Location of Businesses and Offices. Except to the extent that
the Administrative Agent has been furnished written notice to the contrary
or of additional locations, pursuant to Section 9.11, the Company's
principal place of business and chief executive offices are located at the
address stated on the signature page hereof and the principal places of
business and chief executive offices of each Subsidiary are described on
Exhibit F hereto.
8.13. Compliance with Law. Neither the Company nor any Subsidiary of
the Company (except as (a) disclosed to the Banks in the Disclosure
Statement, (b) disclosed in a notice to the Administrative Agent pursuant
to Section 9.11 with respect to such as could reasonably be expected to
have a Material Adverse Effect or (c) not prohibited by applicable
provisions of Section 10):
(a) is in violation of any Legal Requirement; or
(b) has failed to obtain any license, permit, franchise or other
governmental authorization necessary to the ownership of any of their
respective properties or the conduct of their respective business;
which violation or failure could reasonably be expected to have a Material
Adverse Effect.
8.14. Margin Stock. None of the proceeds of the Notes will be used
for the purpose of, and neither the Company nor any Subsidiary of the
Company is engaged in the business of extending credit for the purpose of
(a) purchasing or carrying any "margin stock" as defined in Regulation U of
the Board of Governors of the Federal Reserve System (12 C.F.R. Part 221)
or (b) reducing or retiring any indebtedness which was originally incurred
to purchase or carry margin stock, if such purpose under either (a) or (b)
above would constitute this transaction a "purpose credit" within the
meaning of said Regulation U, or for any other purpose which would
constitute this transaction a "purpose credit". Neither the Company nor
any Subsidiary of the Company is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose
of purchasing or carrying margin stocks. Neither the Company nor any
Subsidiary of the Company nor any Person acting on behalf of the Company or
any Subsidiary of the Company has taken or will take any action which might
cause the Notes or any of the Loan Documents, including this Agreement, to
violate Regulation U or any other regulation of the Board of Governors of
the Federal Reserve System, or to violate any similar provision of the
Securities Exchange Act of 1934 or any rule or regulation under any such
provision thereof.
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8.15. Subsidiaries. The Company has no Subsidiaries as of the date of
this Agreement except those shown in Exhibit F hereto.
8.16. ERISA. With respect to each Plan, the Company and each ERISA
Affiliate have fulfilled their obligations, including obligations under
the minimum funding standards of ERISA and the Code, and are in compliance
in all material respects with the provisions of ERISA and the Code. The
Company has no knowledge of any event which could result in a liability of
the Company or any ERISA Affiliate to the PBGC or a Plan (other than to
make contributions in the ordinary course). Since the effective date of
Title IV of ERISA, there have not been any nor are there now existing any
events or conditions that would cause the Lien provided under Section 4068
of ERISA to attach to any property of the Company or any ERISA Affiliate.
There are no Unfunded Liabilities with respect to any Plan other than those
specifically described in the certificate delivered in accordance with
Section 7.1(i). No "prohibited transaction" has occurred with respect to
any Plan.
8.17. Investment Company Act. Neither the Company nor any of its
Subsidiaries is an investment company within the meaning of the Investment
Company Act of 1940, as amended, or, directly or indirectly, controlled by
or acting on behalf of any Person which is an investment company, within
the meaning of said Act.
8.18. Public Utility Holding Company Act. Neither the Company nor any
of its Subsidiaries (i) is subject to regulation under the Public Utility
Holding Company Act of 1935, as amended (the "PUHC Act"), except as to
Section 9(a)(2) thereof (15 U.S.C.A. 79(i)(a)(2)), or (ii) is in violation
of any of the provisions, rules, regulations or orders of or under the PUHC
Act. Further, none of the transactions contemplated under this Agreement,
including without limitation, the making of the Loans and the issuance of
the Letters of Credit, shall cause or constitute a violation of any of the
provisions, rules, regulations or orders of or under the PUHC Act and the
PUHC Act does not in any manner impair the legality, validity or
enforceability of the Notes. The Company has duly filed with the
Securities and Exchange Commission good faith applications (each an
"Application") under Section 2(a)(8) of the PUHC Act (15 U.S.C.A.
79(b)(a)(8)) for a declaration of non-subsidiary status pursuant to such
Section 2(a)(8) with respect to each Person (each a "Specified
Shareholder") which owns, controls or holds with power to vote, directly or
indirectly, a sufficient quantity of the voting securities of the Company
to be construed as a "holding company", as such term is defined in the PUHC
Act, in respect of the Company. All of the information contained in such
Applications, as amended, was true as of the most recent filing date with
respect thereto (provided that the Company may, unless it has actual
current knowledge to the contrary, rely solely upon written information
furnished by any Specified Shareholder with respect to background
information about the Specified Shareholder and the nature of the ownership
by such Specified Shareholder or its Affiliates of the voting securities of
the Company), and the Company knows of no reason why each such Application,
if acted upon by the Securities and Exchange Commission, would not be
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approved. True and correct copies of each such Application and any
amendments thereto, as filed, have been furnished to the Administrative
Agent. The Company has not received any written notice from the Securities
and Exchange Commission with respect to any such Application other than as
disclosed in writing to the Administrative Agent.
8.19. Environmental Matters. Except as disclosed in the Disclosure
Statement, (i) the Company and it Subsidiaries have obtained and maintained
in effect all Environmental Permits (or has initiated the necessary steps
to transfer the Environmental Permits into its name), the failure to obtain
which could reasonably be expected to have a Material Adverse Effect, (ii)
the Company and its Subsidiaries and their properties, assets, business and
operations have been and are in compliance with all applicable Requirements
of Environmental Law and Environmental Permits failure to comply with which
could reasonably be expected to have a Material Adverse Effect, (iii) the
Company and its Subsidiaries and their properties, assets, business and
operations are not subject to any (A) Environmental Claims or (B)
Environmental Liabilities, in either case direct or contingent, and whether
known or unknown, arising from or based upon any act, omission, event,
condition or circumstance occurring or existing on or prior to the date
hereof which could reasonably be expected to have a Material Adverse
Effect, and (iv) no Responsible Officer of the Company or any of its
Subsidiaries has received any notice of any violation or alleged violation
of any Requirements of Environmental Law or Environmental Permit or any
Environmental Claim in connection with its assets, properties, business or
operations which could reasonably be expected to have a Material Adverse
Effect. The liability (including without limitation any Environmental
Liability and any other damage to persons or property), if any, of the
Company and its Subsidiaries and with respect to their properties, assets,
business and operations which is reasonably expected to arise in connection
with Requirements of Environmental Laws currently in effect and other
environmental matters presently known by a Responsible Officer of the
Company will not have a Material Adverse Effect. No Responsible Officer of
the Company knows of any event or condition with respect to Environmental
Matters with respect to any of its properties or the properties of any of
its Subsidiaries which could reasonably be expected to have a Material
Adverse Effect. For purposes of this Section 8.19, "Environmental Matters"
shall mean matters relating to pollution or protection of the environment,
including, without limitation, emissions, discharges, releases or
threatened releases of Hazardous Substances into the environment
(including, without limitation, ambient air, surface water or ground water,
or land surface or subsurface), or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Substances.
8.20. Claims and Liabilities. Except as disclosed to the Banks in
writing, neither the Company nor any of its Subsidiaries has accrued any
liabilities under gas purchase contracts for gas not taken, but for which
it is liable to pay if not made up and which, if not paid, would have a
Material Adverse Effect. Except as disclosed to the Banks in writing, no
claims exist against the Company or its Subsidiaries for gas imbalances
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which claims if adversely determined would have a Material Adverse Effect.
No purchaser of product supplied by the Company or any of its Subsidiaries
has any claim against the Company or any of its Subsidiaries for product
paid for, but for which delivery was not taken as and when paid for, which
claim if adversely determined would have a Material Adverse Effect.
8.21. Solvency. Neither the Company nor the Company and its
Subsidiaries, on a consolidated basis, is "insolvent", as such term is used
and defined in (i) the Bankruptcy Code and (ii) the Texas Uniform
Fraudulent Transfer Act, Tex. Bus. & Com. Code Ann. 24.001 et seq.
Section 9. Affirmative Covenants. A deviation from the provisions
of this Section 9 will not constitute a Default under this Agreement if
such deviation is consented to in writing by the Majority Banks. Without
the prior written consent of the Majority Banks, the Company agrees with
the Banks and the Administrative Agent that, so long as any of the
Commitments is in effect and until payment in full of all Loans hereunder,
the termination or expiry of all Letters of Credit and payment in full of
Letter of Credit Liabilities, all interest thereon and all other amounts
payable by the Company hereunder:
9.1. Financial Statements and Reports. The Company will promptly
furnish to any Bank from time to time upon request such information
regarding the business and affairs and financial condition of the Company
and its Subsidiaries as such Bank may reasonably request, and will furnish
to the Administrative Agent and each of the Banks:
(a) Annual Reports - promptly after becoming available and in any
event within 100 days after the close of each fiscal year of the Company:
(i) the audited consolidated balance sheet, statement of
earnings and statement of cash flows of ENSTAR Alaska
each as of the end of such year or for such year, as
applicable;
(ii) the audited consolidated balance sheet of the Company
and its Subsidiaries as of the end of such year;
(iii) the audited consolidated statement of earnings of the
Company and its Subsidiaries for such year;
(iv) the audited consolidated statement of cash flows of the
Company and its Subsidiaries for such year;
(v) the unaudited consolidating balance sheet and statement
of earnings of ENSTAR Alaska, each for such year or as
of the end of such year, as the case may be;
(vi) the unaudited consolidating balance sheet and statement
of earnings of the Company and its Subsidiaries, each
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for such year or as of the end of such year, as the
case may be;
(vii) a report prepared by a petroleum engineer, who may be
an employee of the Company or its Subsidiaries, setting
forth the historical monthly production data for
Hydrocarbons produced and sold by the Company and its
Subsidiaries for such year;
setting forth in each case in comparative form the corresponding figures
for the preceding fiscal year, and, in the case of the audited Financial
Statements, audited and accompanied by the related opinion of KPMG Peat
Marwick or other independent certified public accountants of recognized
national standing acceptable to the Majority Banks, which opinion shall
state that such audited balance sheets and statements have been prepared in
accordance with GAAP consistently followed throughout the period indicated
and fairly present the consolidated financial condition and results of
operations of the applicable Persons as at the end of, and for, such fiscal
year; and
(b) Quarterly Reports - as soon as available and in any event within
50 days after the end of each of the first three quarterly periods in each
fiscal year of the Company:
(i) the unaudited consolidated balance sheet, statement of
earnings and statement of cash flows of ENSTAR Alaska,
each as of the end of such quarter or for such quarter
and for the period from the beginning of the fiscal
year to the close of such quarter, as the case may be;
(ii) the unaudited consolidated balance sheet of the Company
and its Subsidiaries as of the end of such quarter;
(iii) the unaudited consolidated statement of earnings of the
Company and its Subsidiaries for such quarter and for
the period from the beginning of the fiscal year to the
close of such quarter;
(iv) the unaudited consolidated statement of cash flows of
the Company and its Subsidiaries for such quarter and
for the period from the beginning of the fiscal year to
the close of such quarter;
(v) the unaudited consolidating balance sheet and statement
of earnings of the Company and its Subsidiaries, each
for such quarter and for the period from the beginning
of the fiscal year to the close of such quarter;
(vi) a report prepared by a petroleum engineer, who may be
an employee of the Company or its Subsidiaries, setting
forth the historical monthly production data for
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Hydrocarbons produced and sold by the Company and its
Subsidiaries for such quarter;
all of items (i) through (v) above prepared on substantially the same
accounting basis as the annual reports described in Subsection 9.1(a),
subject to normal changes resulting from year-end adjustments; and
(c) Company Report - promptly after becoming available and in any
event on or before September 1 of each year, a Company Report; and
(d) Other Bank Requirements - at such time as the same are required
to be furnished to other lenders under other financing arrangements to
which the Company or any of its Subsidiaries may be a party or be bound
from time to time, a copy of any report, certificate, affidavit or other
information required to be furnished to any such lender; and
(e) SEC and Other Reports - promptly upon their becoming publicly
available, one copy of each financial statement, report, notice or
definitive proxy statement sent by the Company or any Subsidiary to
shareholders generally, and of each regular or periodic report and any
registration statement, prospectus or written communication (other than
transmittal letters) in respect thereof filed by the Company or any of its
Subsidiaries with, or received by the Company or any of its Subsidiaries in
connection therewith from, any securities exchange or the Securities and
Exchange Commission or any successor agency; and
(f) Engineering Report and other Component Values - promptly after
becoming available and in any event on or before March 15 of each year,
commencing with March 15, 1993, an Engineering Report, together with
unaudited financial reports with respect to the Pipeline Operations.
All of the balance sheets and other financial statements referred to
in this Section 9.1 will be in such detail as any Bank may reasonably
request and will conform to GAAP applied on a basis consistent with those
of the Financial Statements as of December 31, 1992. In addition, if GAAP
shall change with respect to any matter relative to determination of
compliance with this Agreement, the Company will also provide financial
information necessary for the Banks to determine compliance with this
Agreement.
9.2. Officers' Certificates. (a) Concurrently with the furnishing of
the annual financial statements pursuant to Subsection 9.1(a), commencing
with the annual financial statements required to be delivered in 1993, the
Company will furnish or cause to be furnished to the Administrative Agent
certificates of compliance, as follows:
(i) a certificate signed by the principal financial officer
of the Company in the form of Exhibit G; and
(ii) a certificate from the independent public accountants
stating that their audit has not disclosed the
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existence of any condition which constitutes a Default,
or if their audit has disclosed the existence of any
such condition, specifying the nature and period of
existence.
(b) Concurrently with the furnishing of the quarterly financial
statements pursuant to Subsection 9.1(b), the Company will furnish to the
Administrative Agent a principal financial officer's certificate in the
form of Exhibit G.
(c) Not later than concurrently with the furnishing of any annual
reports pursuant to Section 9.1(a) or concurrently with any request by the
Company for a Requested Redetermination (using then available Financial
Statements) and within ten (10) Business Days after any request by the
Requesting Banks for a Requested Redetermination (using then available
Financial Statements), the Company will furnish to the Administrative Agent
a Borrowing Base Certificate and, in the event aggregate Adjustable Alaskan
Gas Debt shall have increased by $3,000,000.00 (determined on a net basis
considering both increases and decreases in Adjustable Alaskan Gas Debt)
since the effective date of the preceding Borrowing Base Certificate, the
Company will furnish to the Administrative Agent a Borrowing Base
Certificate on which the revised Alaskan Gas Component Value is reflected
(but without requiring any adjustment to the Pipeline Component Value shown
on the preceding Borrowing Base Certificate).
(d) Concurrently with the furnishing of any Engineering Report or
Company Report, the Company will furnish to the Administrative Agent a
certificate signed by an appropriate officer of the Company and the
applicable Relevant Party in the form of Exhibit I.
9.3. Taxes and Other Liens. The Company will and will cause each
Subsidiary of the Company to pay and discharge promptly all taxes,
assessments and governmental charges or levies imposed upon the Company or
such Subsidiary, or upon the income or any property of the Company or such
Subsidiary, as well as all claims of any kind (including claims for labor,
materials, supplies, rent and payment of proceeds attributable to
Hydrocarbon production) which, if unpaid, might result in or become a Lien
upon any or all of the property of the Company or such Subsidiary;
provided, however, that neither the Company nor such Subsidiary will be
required to pay any such tax, assessment, charge, levy or claims if the
amount, applicability or validity thereof will currently be contested in
good faith by appropriate proceedings diligently conducted and if the
Company or such Subsidiary will have set up reserves therefor adequate
under GAAP.
9.4. Maintenance. Except as referred to in Section 8.1 and 8.13 the
Company will and will cause each Subsidiary of the Company to: (i)
maintain its corporate existence; (ii) maintain its rights and franchises,
except for any mergers or consolidations otherwise permitted by this
Agreement and except to the extent failure to so maintain the same would
not have a Material Adverse Effect; (iii) observe and comply (to the extent
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that any failure would have a Material Adverse Effect) with all valid Legal
Requirements (including without limitation Requirements of Environmental
Law); and (iv) maintain (except to the extent failure to so maintain the
same would not have a Material Adverse Effect) its properties (and any
properties leased by or consigned to it or held under title retention or
conditional sales contracts) consistent with the standards of a reasonably
prudent operator at all times and make all repairs, replacements,
additions, betterments and improvements to its properties consistent with
the standards of a reasonably prudent operator.
9.5. Further Assurances. The Company will and will cause each
Subsidiary of the Company to cure promptly any defects in the creation and
issuance of the Notes and the execution and delivery of the Loan Documents,
including this Agreement. The Company at its expense will promptly execute
and deliver to the Administrative Agent upon request all such other and
further documents, agreements and instruments (or cause any of its
Subsidiaries to take such action) in compliance with or accomplishment of
the covenants and agreements of the Company or any of its Subsidiaries in
the Loan Documents, including this Agreement, or to correct any omissions
in the Loan Documents, or to make any recordings, to file any notices, or
obtain any consents, all as may be necessary or appropriate in connection
therewith.
9.6. Performance of Obligations. The Company will pay the Notes
according to the reading, tenor and effect thereof; and the Company will do
and perform every act and discharge all of the obligations provided to be
performed and discharged by the Company under this Agreement and the other
Loan Documents at the time or times and in the manner specified, and cause
each of its Subsidiaries to take such action with respect to their
obligations to be performed and discharged under the Loan Documents to
which they respectively are parties.
9.7. Reimbursement of Expenses. Whether or not any Loan is ever made
or any Letter of Credit is ever issued, the Company agrees to pay or
reimburse the Administrative Agent for paying the reasonable fees and
expenses of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P., special counsel
to the Administrative Agent, together with the reasonable fees and expenses
of local counsel engaged by the Administrative Agent, in connection with
the negotiation of the terms and structure of the Obligations, the
preparation, execution and delivery of this Agreement and the other Loan
Documents and the making of the Loans and the issuance of Letters of Credit
hereunder, as well as any modification, supplement or waiver of any of the
terms of this Agreement and the other Loan Documents. The Company will
promptly upon request and in any event within 30 days from the date of
receipt by the Company of a copy of a bill for such amounts, reimburse any
Bank or the Administrative Agent for all amounts reasonably expended,
advanced or incurred by such Bank or Administrative Agent to satisfy any
obligation of the Company under this Agreement or any other Loan Document,
to protect the properties or business of the Company or any Subsidiary of
the Company, to collect the Obligations, or to enforce the rights of such
Bank or Administrative Agent under this Agreement or any other Loan
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Document, which amounts will include without limitation all court costs,
attorneys' fees (but not including allocated costs of in-house counsel),
any engineering fees and expenses, fees of auditors, accountants and
appraisers, investigation expenses, all transfer, stamp, documentary or
similar taxes, assessments or charges levied by any governmental or revenue
authority in respect of any of the Loan Documents or any other document
referred to therein, all costs, expenses, taxes, assessments and other
charges incurred in connection with any filing, registration, recording or
perfection of any lien contemplated by any of the Loan Documents or any
document referred to therein, fees and expenses incurred in connection with
such Bank's participation as a member of a creditors' committee in a case
commenced under the Bankruptcy Code or other similar law of the United
States or any state thereof, fees and expenses incurred in connection with
lifting the automatic stay prescribed in 362 Title 11 of the United States
Code, and fees and expenses incurred in connection with any action pursuant
to 1129 Title 11 of the United States Code and all other customary out-of-
pocket expenses incurred by such Bank or Administrative Agent in connection
with such matters, together with interest after the expiration of the 30-
day period stated above in this Section if no Event of Default has occurred
and is continuing, or from the date of the request to the Company if an
Event of Default has occurred and is continuing, at either (i) the Post-
Default Rate on each such amount until the date of reimbursement to such
Bank or Administrative Agent, or (ii) if no Event of Default will have
occurred and be continuing, the Alternate Base Rate plus the highest
Applicable Margin for Alternate Base Rate Loans (not to exceed the Highest
Lawful Rate) on each such amount until the date of the Company's receipt of
written demand or request by such Bank or Administrative Agent for the
reimbursement of same, and thereafter at the applicable Post-Default Rate
until the date of reimbursement to such Bank or Administrative Agent. The
obligations of the Company under this Section are compensatory in nature,
shall be deemed liquidated as to amount upon receipt by the Company of a
copy of any invoice therefor, and will survive the non-assumption of this
Agreement in a case commenced under the Bankruptcy Code or other similar
law of the United States or any state thereof, and will remain binding on
the Company and any trustee, receiver, or liquidator of the Company
appointed in any such case.
9.8. Insurance. The Company and its Subsidiaries will maintain, with
financially sound and reputable insurers, insurance with respect to their
respective properties and business against such liabilities, casualties,
risks and contingencies and in such types and amounts as is customary in
the case of corporations engaged in the same or similar businesses and
similarly situated. Upon the request of the Administrative Agent acting at
the instruction of the Majority Banks, the Company will furnish or cause to
be furnished to the Administrative Agent from time to time a summary of the
insurance coverage of the Company and its Subsidiaries in form and
substance satisfactory to the Majority Banks in their reasonable judgment,
and if requested will furnish the Administrative Agent copies of the
applicable policies. Subject to the terms of Section 3 hereof, in the case
of any fire, accident or other casualty causing loss or damage to any
properties of the Company or any of its Subsidiaries, the proceeds of such
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policies will be used (i) to repair or replace the damaged property or (ii)
to prepay the Obligations, at the election of the Company.
9.9. Accounts and Records. The Company will keep and will cause each
Subsidiary of the Company to keep books of record and account which fairly
reflect all dealings or transactions in relation to their respective
businesses and activities, in accordance with GAAP, which books of record
and account will be maintained, to the extent necessary to enable
compliance with all provisions of this Agreement, separately for each such
Subsidiary, the Company and any division of the Company.
9.10. Rights of Inspection. The Company will permit and will cause
each of its Subsidiaries to permit any officer, employee, or agent of the
Administrative Agent or any Bank to meet with the consultants who prepared
any applicable Engineering Report and to review such Engineering Report
with such consultants and to visit and inspect any of the properties of the
Company or such Subsidiary, examine the Company's or such Subsidiary's
books of record and accounts, take copies and extracts therefrom, and
discuss the affairs, finances and accounts of the Bank or such Subsidiary
with the Company's or such Subsidiary's officers, accountants and auditors,
all at such reasonable times during normal business hours and as often as
the Administrative Agent or such Bank may reasonably desire, and will
assist in all such matters.
9.11. Notice of Certain Events. The Company will promptly notify the
Administrative Agent (and the Administrative Agent will then notify all of
the Banks) if a Responsible Officer of the Company learns of the occurrence
of, or if the Company causes or intends to cause, as the case may be:
(i) any event which constitutes a Default, together with a
detailed statement by a responsible officer of the Company of the steps
being taken to cure the effect of such Default; or
(ii) the receipt of any notice from, or the taking of any
other action by, the holder of any promissory note, debenture or other
evidence of indebtedness of the Company or any Subsidiary of the Company or
of any security (as defined in the Securities Act of 1933, as amended) of
the Company or any Subsidiary of the Company with respect to a claimed
default, together with a detailed statement by a Responsible Officer of the
Company specifying the notice given or other action taken by such holder
and the nature of the claimed default and what action the Company or such
Subsidiary is taking or proposes to take with respect thereto; or
(iii) any legal, judicial or regulatory proceedings affecting
the Company or any Subsidiary of the Company or any of the properties of
the Company or any Subsidiary of the Company in which the amount involved
is materially adverse to the Company and its Subsidiaries taken as a whole,
and is not covered by insurance or which, if adversely determined, would
have a Material Adverse Effect; or
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(iv) any dispute between the Company or any Subsidiary of
the Company and any Governmental Authority or any other Person which, if
adversely determined, could reasonably be expected to have a Material
Adverse Effect; or
(v) any material adverse change, either in any case or in
the aggregate, in the assets, liabilities, financial condition, proven oil
and gas reserves, business, operations, affairs or circumstances of the
Company and its Subsidiaries taken as a whole, from those reflected in the
Financial Statements or by the facts warranted or represented in any Loan
Document, including this Agreement; or
(vi) the occurrence of a default or event of default by the
Company or any Subsidiary of the Company under any other agreement to which
it is a party, which default or event of default could reasonably be
expected to have a Material Adverse Effect; or
(vii) any change in the accuracy of the representations and
warranties of the Company or any Subsidiary contained in this Agreement or
any other Loan Document; or
(viii) any material violation or alleged material violation of
any Requirements of Environmental Law or Environmental Permit or any
Environmental Claim or any Environmental Liability; or
(ix) any tariff and rate cases and other material reports
filed by the Company or any of its Subsidiaries with any Governmental
Authority and any notice to the Company or any of its Subsidiaries from any
Governmental Authority concerning noncompliance with any applicable Legal
Requirement; or
(x) the existence of any Borrowing Base Deficiency; or
(xi) within 10 days after the date on which a Responsible
Officer of the Company has actual knowledge thereof, the receipt of any
notice by the Company or any of its Subsidiaries of any claim of nonpayment
of, or any attempt to collect or enforce, accounts payable of the Company
or any of its Subsidiaries exceeding, in the case of any one account
payable at one time outstanding, $1,000,000 and in the case of all accounts
payable in the aggregate at any one time outstanding, $3,000,000; or
(xii) any requirement for the payment of all or any portion
of any Indebtedness of the Company or any of its Subsidiaries prior to the
stated maturity thereof (whether by acceleration or otherwise) or as the
result of any failure to maintain or the reaching of any threshold amount
provided in any promissory note, bond, debenture, or other evidence of
Indebtedness or under any credit agreement, loan agreement, indenture or
similar agreement executed in connection with any of the foregoing; or
(xiii) the increase in aggregate Adjustable Alaskan Gas Debt
since the effective date of the preceding Borrowing Base Certificate by
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$3,000,000 (determined on a net basis considering both increases and
decreases in Adjustable Alaskan Gas Debt), which notice requirement may be
satisfied by means of delivery of a Borrowing Base Certificate; or
(xiv) any notice from the Securities and Exchange Commission
with respect to any Application (as defined in Section 8.18 hereof).
9.12. ERISA Information and Compliance. The Company will promptly
furnish to the Administrative Agent (i) immediately upon receipt, a copy of
any notice of complete or partial withdrawal liability under Title IV of
ERISA and any notice from the PBGC under Title IV of ERISA of an intent to
terminate or appoint a trustee to administer any Plan, (ii) if requested by
the Administrative Agent, acting on the instruction of the Majority Banks,
promptly after the filing thereof with the United States Secretary of Labor
or the PBGC or the Internal Revenue Service, copies of each annual and
other report with respect to each Plan or any trust created thereunder,
(iii) immediately upon becoming aware of the occurrence of any "reportable
event", as such term is defined in Section 4043 of ERISA, for which the
disclosure requirements of Regulation Section 2615.3 promulgated by the
PBGC have not been waived, or of any "prohibited transaction", as such term
is defined in Section 4975 of the Code, in connection with any Plan or any
trust created thereunder, a written notice signed by the President or the
principal financial officer of the Company or the applicable ERISA
Affiliate specifying the nature thereof, what action the Company or the
applicable ERISA Affiliate is taking or proposes to take with respect
thereto, and, when known, any action taken by the PBGC, the Internal
Revenue Service or the Department of Labor with respect thereto, (iv)
promptly after the filing or receiving thereof by the Company or any ERISA
Affiliate of any notice of the institution of any proceedings or other
actions which may result in the termination of any Plan, and (v) each
request for waiver of the funding standards or extension of the
amortization periods required by Sections 303 and 304 of ERISA or Section
412 of the Code promptly after the request is submitted by the Company or
any ERISA Affiliate to the Secretary of the Treasury, the Department of
Labor or the Internal Revenue Service, as the case may be. To the extent
required under applicable statutory funding requirements, the Company will
fund, or will cause each ERISA Affiliate to fund, all current service
pension liabilities as they are incurred under the provisions of all Plans
from time to time in effect, and comply with all applicable provisions of
ERISA, except to the extent that any such failure to comply could not
reasonably be expected to have a Material Adverse Effect. The Company
covenants that it shall and shall cause each ERISA Affiliate to (1) make
contributions to each Plan in a timely manner and in an amount sufficient
to comply with the contribution obligations under such Plan and the minimum
funding standards requirements of ERISA; (2) prepare and file in a timely
manner all notices and reports required under the terms of ERISA including
but not limited to annual reports; and (3) pay in a timely manner all
required PBGC premiums, in each case, to the extent failure to do so would
have a Material Adverse Effect.
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9.13. Minimum APC Dividends and/or ENSTAR Alaska Advances. The
Company will receive Dividend Payments from APC and/or permanent advances
of funds from ENSTAR Alaska without any repayment obligation on the part of
the Company and that would be accounted for as a reduction of the equity of
ENSTAR Alaska not less than, in the aggregate, $8,000,000 for any 15-month
period ending on the last day of any calendar quarter (unless and to the
extent the same is not permitted by the Alaska Public Utilities Commission
or any successor; provided that if the Alaska Public Utilities Commission
or any successor shall not permit such Dividend Payments and advances, the
Administrative Agent, the Banks and the Company shall endeavor in good
faith to agree on an alternate method of determining the Alaskan Gas
Component Value [and the Borrowing Base] to take such action into account,
with the decision of the Majority Banks to be binding on all of the Banks
hereunder).
9.14. Minimum ENSTAR Alaska Management Fees. The Company will receive
management fees from ENSTAR Alaska during each calendar year not less than
the amount permitted to be recovered by the Alaska Public Utilities
Commission.
9.15. Minimum ENSTAR Alaska Tax Payments. The Company will receive
from ENSTAR Alaska during each calendar year not less than the amount of
federal income tax liability which the Company in good faith determines
would have been payable by ENSTAR Alaska for the previous year if ENSTAR
Alaska were a separate taxable Person.
Section 10. Negative Covenants. A deviation from the provisions of
this Section 10 will not constitute a Default under this Agreement if such
deviation is consented to in writing by the Majority Banks. The Company
agrees with the Banks and the Administrative Agent that, so long as any of
the Commitments is in effect and until payment in full of all Loans
hereunder, the termination or expiry of all Letters of Credit and payment
in full of Letter of Credit Liabilities, all interest thereon and all
amounts payable by the Company hereunder:
10.1. Debts, Guaranties and Other Obligations. The Company will not
and will not permit any of its Subsidiaries (other than APC) to incur,
create, assume or in any manner become or be liable in respect of any
Indebtedness (including obligations for the payment of rentals); and the
Company will not and will not permit any of its Subsidiaries (other than
APC) to Guarantee or otherwise in any way become or be responsible for
obligations of any other Person, whether by agreement to purchase the
Indebtedness of any other Person or agreement for the furnishing of funds
to any other Person through the purchase or lease of goods, supplies or
services (or by way of stock purchase, capital contribution, advance or
loan) for the purpose of paying or discharging the Indebtedness of any
other Person, or otherwise, except that the foregoing restrictions will not
apply to:
(a) the Notes or other Indebtedness under the Loan Documents;
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(b) liabilities, direct or contingent, of the Company or any
Subsidiary of the Company existing on the date of this Agreement which are
reflected in the Financial Statements or the Disclosure Statement and all
renewals, extensions, refinancings and rearrangements, but not increases,
thereof;
(c) endorsements of negotiable or similar instruments for collection
or deposit in the ordinary course of business;
(d) trade payables, lease acquisition and lease maintenance obliga-
tions, extensions of credit from suppliers or contractors, liabilities
incurred in exploration, development and operation of the Company's or any
Subsidiary's oil and gas properties or similar obligations from time to
time incurred in the ordinary course of business, other than for borrowed
money, which are paid within 90 days after the invoice date (inclusive of
applicable grace periods) or (i) are being contested in good faith, if such
reserve as required by GAAP has been made therefor or (ii) trade accounts
payable of the Company and its Subsidiaries (with respect to which no legal
proceeding to enforce collection has been commenced or, to the knowledge of
a Responsible Officer of the Company, threatened) not exceeding, in the
aggregate at any time outstanding, $5,000,000;
(e) taxes, assessments or other government charges which are not yet
due or are being contested in good faith by appropriate action promptly
initiated and diligently conducted, if such reserve as will be required by
GAAP will have been made therefor;
(f) Borrowing Base Debt of the Company; provided that the aggregate
of all Indebtedness permitted under this Subsection 10.1(f) shall not
exceed the amount by which the then current Borrowing Base exceeds the then
current Revolving Credit Obligations;
(g) to the extent, if any, not covered by Subsection (b)
hereinabove, the Indebtedness of the Company to APC evidenced solely by the
Intercompany Notes, as defined in the Beluga Financing Documents and the
APC Long Term Financing Documents, together with any renewals, extensions,
amendments, refinancings, rearrangements, modifications, restatements or
supplements, but not increases (other than increases which are permitted
under the present terms of the Beluga Financing Documents and the APC Long
Term Financing Documents) thereof from time to time;
(h) intercompany Indebtedness owed to the Company by any Subsidiary
of the Company and intercompany Indebtedness owed to any Subsidiary of the
Company by the Company or any other Subsidiary of the Company which is
fully subordinated to the Obligations;
(i) loans, advances or extensions of credit to the Company for the
purpose of financing no more than 75% of the purchase price of any fixed
assets which are not included in the property taken into account in
determining the Borrowing Base and which are considered in the categories
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of property, plant or equipment according to GAAP applied on a consistent
basis;
(j) obligations of the Company under the Gas Sales Contract,
together with any renewals, extensions, amendments, refinancings,
rearrangements, modifications, restatements or supplements, but not
increases, thereof from time to time;
(k) the Guarantee by the Company or any Subsidiary of the Company of
payment or performance by any Subsidiary of the Company under any agreement
so long as the obligation guaranteed does not constitute Indebtedness for
borrowed money;
(l) obligations of the Company or any of its Subsidiaries under gas
purchase contracts for gas not taken, as to which the Company or its
respective Subsidiary is liable to pay if not made up;
(m) obligations of the Company or any of its Subsidiaries under any
contract for sale for future delivery of oil or gas (whether or not the
subject oil or gas is to be delivered), hedging contract, forward contract,
swap agreement, futures contract or other similar agreement;
(n) obligations of the Company or any of its Subsidiaries under any
interest rate swap agreement, or any contract implementing any interest
rate cap, collar or floor, or any similar interest hedging contract;
(o) obligations in connection with gas imbalances arising in the
ordinary course of business;
(p) Indebtedness not exceeding $1,000,000 in the aggregate borrowed
from the Amarillo Economic Development Commission and related Guarantees
and related obligations of the Company and its Subsidiaries;
(q) liabilities under leases and lease agreements which do not cover
oil and gas properties to the extent the incurrence and existence of such
liabilities will still enable the Company and each Subsidiary to comply
with all other requirements of this Agreement and the other Loan Documents
to which they respectively are parties;
(r) Subordinated Debt;
(s) Funded Indebtedness of any Oil and Gas Subsidiary for borrowed
money payable solely by recourse to properties not included in the
Borrowing Base and Indebtedness incurred by any Gas and Liquids Pipeline
Subsidiary in connection with the construction or acquisition of new assets
(exclusive of any assets with respect to which EBITDA or Projected Cash
Flow is included in the Pipeline Component Value) in connection with the
Pipeline Operations which is payable solely by recourse to the assets so
constructed or acquired, each to the extent not otherwise expressly
permitted by this Section 10.1;
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(t) the Canadian Facility (and the "Bankers' Acceptances" provided
for therein) and the guaranty by the Company of the Canadian Facility; and
(u) Indebtedness of Seagull Energy Canada Ltd. having a maturity of
364 days or less from the date of its incurrence in an aggregate principal
amount not exceeding Canadian $10,000,000 at any one time outstanding.
10.2. Liens. The Company will not and will not permit any of its
Subsidiaries to create, incur, assume or permit to exist any Lien on any of
its or their properties (now owned or hereafter acquired), except:
(a) Liens securing the Indebtedness described in Subsection 10.1(a);
(b) Liens for taxes, assessments or other governmental charges or
levies not yet due or which are being contested in good faith by
appropriate action promptly initiated and diligently conducted, if such
reserve as will be required by GAAP will have been made therefor;
(c) Liens of landlords, vendors, contractors, subcontractors,
carriers, warehousemen, mechanics, laborers or materialmen or other like
Liens arising by law in the ordinary course of business for sums not yet
due or being contested in good faith by appropriate action promptly
initiated and diligently conducted, if such reserve as will be required by
GAAP will have been made therefor;
(d) Liens existing on property owned by the Company or any of its
Subsidiaries on the date of this Agreement which have been disclosed to the
Banks in the Disclosure Statement, together with any renewals, extensions,
amendments, refinancings, rearrangements, modifications, restatements or
supplements, but not increases, thereof from time to time;
(e) pledges or deposits made in the ordinary course of business in
connection with worker's compensation, unemployment insurance, social
security and other like laws;
(f) inchoate liens arising under ERISA to secure the contingent
liability of the Company permitted by Section 9.12;
(g) Liens in the ordinary course of business, not to exceed in the
aggregate $2,000,000 as to the Company and its Subsidiaries at any time in
effect, regarding (i) the performance of bids, tenders, contracts (other
than for the repayment of borrowed money or the deferred purchase price of
property or services) or leases, (ii) statutory obligations, (iii) surety
appeal bonds or (iv) Liens to secure progress or partial payments made to
the Company or any of its Subsidiaries and other Liens of like nature;
(h) covenants, restrictions, easements, servitudes, permits,
conditions, exceptions, reservations, minor rights, minor encumbrances,
minor irregularities in title or conventional rights of reassignment prior
to abandonment which do not materially interfere with the occupation, use
and enjoyment by the Company or any Subsidiary of the Company of its
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respective assets in the normal course of business as presently conducted,
or materially impair the value thereof for the purpose of such business;
(i) Liens of operators under joint operating agreements or similar
contractual arrangements with respect to the relevant entity's
proportionate share of the expense of exploration, development and
operation of oil, gas and mineral leasehold or fee interests owned jointly
with others, to the extent that same relate to sums not yet due or which
are being contested in good faith by appropriate action promptly initiated
and diligently conducted, if such reserve as will be required by GAAP will
have been made therefor;
(j) Liens created pursuant to the creation of trusts or other
arrangements funded solely with cash, cash equivalents or other marketable
investments or securities of the type customarily subject to such
arrangements in customary financial practice with respect to long-term or
medium-term indebtedness for borrowed money, the sole purpose of which is
to make provision for the retirement or defeasance, without prepayment, of
Indebtedness permitted under Section 10.1;
(k) Liens on the assets or properties of ENSTAR Alaska;
(l) Liens permitted under the terms of the Mortgages (applied as if
the Mortgages covered all oil and gas properties of the Company and its
Subsidiaries);
(m) the Vendor Financing Arrangements (as defined in the Mesa
Contract), to the extent that the same shall have been deducted in
calculating the Borrowing Base;
(n) purchase money Liens for the acquisition of fixed assets
pursuant to Subsection 10.1(i), so long as such Liens exist solely against
the relevant fixed asset acquired and secure only the purchase money debt;
provided, that the aggregate amount of Indebtedness which is secured by
Liens described in this subsection (other than Indebtedness which is
payable solely by recourse to the applicable property) shall not exceed
$10,000,000 at any one time outstanding;
(o) any Lien existing on any real or personal property of any
corporation or partnership at the time it becomes a Subsidiary of the
Company or of any other Subsidiary of the Company, or existing prior to the
time of acquisition upon any real or personal property acquired by the
Company or any of its Subsidiaries; provided, that such Liens may at all
times be deducted in calculating the Borrowing Base from time to time in
effect;
(p) legal or equitable encumbrances deemed to exist by reason of the
existence of any litigation or other legal proceeding or arising out of a
judgment or award with respect to which an appeal is being prosecuted in
good faith by appropriate action promptly initiated and diligently
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conducted, if such reserve as will be required by GAAP will have been made
therefor;
(q) any Liens securing Indebtedness neither assumed nor guaranteed
by the Company or any of its Subsidiaries nor on which it customarily pays
interest, existing upon real estate or rights in or relating to real estate
acquired by the Company or any of its Subsidiaries for substation, metering
station, pump station, storage, gathering line, transmission line,
transportation line, distribution line or right-of-way purposes, and any
Liens reserved in leases for rent and full compliance with the terms of the
leases in the case of leasehold estates, to the extent that any such Lien
referred to in this clause arises in the normal course of business as
presently conducted and does not materially impair the use of the property
covered by such Lien for the purposes for which such property is held by
the Company or its applicable Subsidiary;
(r) rights reserved to or vested in any municipality or
governmental, statutory or public authority by the terms of any right,
power, franchise, grant, license or permit, or by any provision of law, to
terminate such right, power, franchise, grant, license or permit or to
purchase, condemn, expropriate or recapture or to designate a purchaser of
any of the property of the Company or any of its Subsidiaries;
(s) rights reserved to or vested in any municipality or
governmental, statutory or public authority to control or regulate any
property of the Company or any of its Subsidiaries, or to use such property
in a manner which does not materially impair the use of such property for
the purposes for which it is held by the Company or its applicable
Subsidiary;
(t) any obligations or duties affecting the property of the Company
or any of its Subsidiaries to any municipality, governmental, statutory or
public authority with respect to any franchise, grant, license or permit;
(u) rights of a common owner of any interest in real estate, rights-
of-way or easements held by the Company or any of its Subsidiaries and such
common owner as tenants in common or through other common ownership;
(v) any Liens arising from the matters described in Schedule 3.19 of
the Mesa Contract;
(w) Liens securing Indebtedness permitted under Section 10.1(s)
hereof (to the extent such Liens are permitted under such Section 10.1(s));
(x) as to assets located in Canada, reservations, limitations,
provisos and conditions in any original grant from the Crown or freehold
lessor of any of the properties of the Company or its Subsidiaries;
(y) other Liens securing Indebtedness not exceeding, in the
aggregate, $3,000,000 at any one time outstanding; and
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(z) other Liens securing Senior Debt, but only so long as such Liens
shall also secure the Obligations on a pari passu basis, in a manner and
pursuant to documentation acceptable to the Majority Banks.
10.3. Investments, Loans and Advances. The Company will not and will
not permit its Subsidiaries to make or permit to remain outstanding any
advances, loans or other extensions of credit or capital contributions
(other than prepaid expenses in the ordinary course of business) to (by
means of transfers of property or assets or otherwise), or purchase or own
any stocks, bonds, notes, debentures or other securities of, or incur
contingent liability with respect to (except for the endorsement of checks
in the ordinary course of business and except for the Indebtedness and
Liens permitted under this Agreement) any Person (all such transactions
being herein called "Investments"), except that the foregoing restriction
will not apply to:
(a) Investments (all prior to the date hereof) the material details
of which have been set forth in the Financial Statements delivered to the
Administrative Agent prior to the date hereof or the Disclosure Statement;
(b) Liquid Investments;
(c) advances or extensions of credit in the form of accounts
receivable incurred in the ordinary course of business;
(d) the acquisition of all of the capital stock of wholly owned
Subsidiaries incorporated or acquired subsequent to the date of this
Agreement;
(e) investments where the consideration paid is capital stock of the
Company, plus cash paid in lieu of issuing fractional shares and cash paid
in settlement of claims of dissenters, such cash not to exceed 10% of the
aggregate purchase price in any such transaction;
(f) Investments in any Person which after giving effect thereto will
be a Subsidiary of the Company, so long as the Investment in such Person,
when consummated, would not result in a breach of the covenants set forth
in Section 10.1;
(g) intercompany loans, advances or investments by the Company to or
in any Subsidiary of the Company or, to the extent permitted under Section
10.1(h) hereof, by any Subsidiary of the Company to or in the Company or to
or in any other Subsidiary of the Company, provided, however, that APC may
not make any intercompany loans, advances or investments in any Subsidiary
of the Company pursuant to this clause (g);
(h) intercompany loans, advances or investments by the Company,
solely from income or cash flow of the Company subject to the Beluga
Financing Documents, to APC as required under the Beluga Financing
Documents and the APC Long Term Financing Documents;
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(i) to the extent, if any, not covered by Subsection (a)
hereinabove, the Indebtedness of the Company to APC evidenced solely by the
Intercompany Notes, as defined in the Beluga Financing Documents and the
APC Long Term Financing Documents, together with any renewals, extensions,
amendments, refinancings, rearrangements, modifications, restatements or
supplements, but not increases (other than increases which are permitted
under the present terms of the Beluga Financing Documents and the APC Long
Term Financing Documents) thereof from time to time;
(j) loans or advances to employees made in the ordinary course of
business, up to the aggregate principal amount at any one time outstanding
of $500,000;
(k) Investments in reasonable amounts of securities for purposes of
funding employee benefit plans maintained by the Company;
(l) advances or extensions of credit made in the ordinary course of
business to third parties under applicable contracts and agreements in
connection with (i) oil, gas or other mineral exploration, development and
production activities or (ii) Hydrocarbon or chemical pipeline gathering or
transportation activities;
(m) Investments where the consideration paid is assets of the
Company or its Subsidiaries other than capital stock, cash or oil and gas
reserves;
(n) Investments in EBOC Energy Ltd. made in connection with and
pursuant to that certain Sale Agreement dated November 19, 1993 executed by
and between Novacor Petrochemicals Ltd., as Vendor, and the Company, as
Purchaser; and
(o) any other Investments which in the aggregate do not cause the
Company to be in violation of the Investments Tests.
10.4. Dividend Payment Restrictions. The Company will not declare or
make any Dividend Payment other than:
(i) so long as no Default or Event of Default shall have occurred
and is continuing, dividends on up to $150,000,000 of
convertible preferred stock to extent that, in the reasonable
good faith determination of the Company and the Administrative
Agent, such dividends are not materially in excess of dividends
on similar securities issued in transactions of comparable type
and magnitude for issuers similarly situated to the Company at
the time of issuance of such preferred stock; provided, however,
that, with respect to any particular issue of convertible
preferred stock, the Administrative Agent shall be deemed to
have agreed with any determination of the Company that the
dividends for such issue satisfy the foregoing requirements if
the Administrative Agent shall not have objected to such
determination within 10 days after the Company has informed the
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Administrative Agent of the maximum dividend that could be paid
with respect to such issue; and
(ii) so long as no Default or Event of Default has occurred and is
continuing, any Dividend Payments attributable to the ENSTAR
Alaska Stock which, when aggregated with any prior Dividend
Payment attributable to the ENSTAR Alaska Stock, does not exceed
(a) $20,000,000 plus (b) 100% of the net income of the ENSTAR
Alaska Group on a cumulative basis for the period commencing on
January 1, 1994, through the then current date; and
(iii) so long as no Default or Event of Default has occurred and is
continuing and there exists no Borrowing Base Deficiency, any
Dividend Payment (other than those permitted by clauses (i) and
(ii) of this Section 10.4) which, when aggregated with any prior
Dividend Payment (other than those permitted by clauses (i) and
(ii) of this Section 10.4), does not exceed (a) $20,000,000 plus
(b) 33-1/3% of net income of the Seagull Energy Group on a
cumulative basis for the period commencing on January 1, 1994,
through the then current date plus (c) 100% of the net income of
the ENSTAR Alaska Group on a cumulative basis for such period
minus (d) any Dividend Payments previously made as permitted by
clause (ii) of this Section.
10.5. Mergers and Sales of Assets. The Company will not (a) merge or
consolidate with, or sell, assign, lease or otherwise dispose of, whether
in one transaction or in a series of transactions, more than ten percent
(10%) in the aggregate of the Company's and its Subsidiaries' consolidated
total assets (whether now owned or hereafter acquired) to any Person or
Persons during the period since the most recent Borrowing Base
Determination, or permit any Subsidiary of the Company to do so (other than
to the Company or another Subsidiary of the Company or the issuance by any
Subsidiary of the Company of any stock to the Company or another Subsidiary
of the Company), or (b) sell, assign, lease or otherwise dispose of,
whether in one transaction or in a series of transactions, any other
properties if receiving therefor consideration other than cash or other
consideration readily convertible to cash or which is less than the fair
market value of the relevant properties, or permit any Subsidiary of the
Company to do so; provided that the Company or any Subsidiary of the
Company may merge or consolidate with any other Person and any Subsidiary
of the Company may transfer properties to any other Subsidiary of the
Company or to the Company so long as, in each case, (i) immediately
thereafter and giving effect thereto, no event will occur and be continuing
which constitutes a Default, (ii) in the case of any such merger or
consolidation to which the Company is a party, the Company is the surviving
Person, (iii) in the case of any such merger or consolidation to which any
Subsidiary of the Company is a party (but not the Company), a Subsidiary is
the surviving Person and (iv) the surviving Person ratifies each applicable
Loan Document and provided further that any Subsidiary of the Company may
merge or consolidate with any other Subsidiary of the Company so long as,
in each case (i) immediately thereafter and giving effect thereto, no event
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will occur and be continuing which constitutes a Default and (ii) the
surviving Person ratifies each applicable Loan Document.
10.6. Proceeds of Notes. The Company will not permit the proceeds of
the Notes to be used for any purpose other than those permitted by this
Agreement.
10.7. ERISA Compliance. The Company will not at any time permit any
Plan maintained by it or any Subsidiary of the Company to:
(a) engage in any "prohibited transaction" as such term is defined
in Section 4975 of the Code;
(b) incur any "accumulated funding deficiency" as such term is
defined in Section 302 of ERISA; or
(c) terminate or be terminated in a manner which could result in the
imposition of a Lien on the property of the Company or any Subsidiary of
the Company pursuant to Section 4068 of ERISA,
in each case, to the extent that permitting the Plan to do so would have a
Material Adverse Effect.
10.8. Amendment of Certain Documents. The Company will not amend,
modify or obtain or grant a waiver of (except for waivers only of cross-
defaults created by a Default under this Agreement), or allow APC to enter
into any amendment or modification or obtain or grant any waiver of (except
for waivers only of cross-defaults created by a Default under this
Agreement), any provision of those documents relating to or constituting
the Beluga Financing Documents or the APC Long Term Financing Documents,
without prior written notification to the Administrative Agent.
10.9. Tangible Net Worth. The Company will not permit the Tangible
Net Worth of the Company and its Subsidiaries, on a consolidated basis, at
any time to be less than $225,000,000 plus
(i) 50% of net income of the Company and its Subsidiaries
on a consolidated basis, if positive, beginning with
the fiscal year ended December 31, 1993 and calculated
annually thereafter based upon positive net income of
the Company and its Subsidiaries for each applicable
fiscal year taken cumulatively;
plus
(ii) 75% of the net cash proceeds of any issuance of equity
in the Company during the period referred to in clause
(i) above.
10.10. ENSTAR Alaska Financial Ratios. The Company will not permit
the ratio of (A) the sum of Funded Indebtedness of ENSTAR Alaska plus
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Current Maturities of ENSTAR Alaska to (B) the sum of Funded Indebtedness
of ENSTAR Alaska plus Current Maturities of ENSTAR Alaska plus the Tangible
Net Worth of ENSTAR Alaska, to be, at any time, more than 60%. The Company
will not permit the ratio of (a) the sum of Funded Indebtedness of ENSTAR
Alaska plus Current Maturities of ENSTAR Alaska plus borrowed money
Indebtedness of ENSTAR Alaska that is not Funded Indebtedness to (b) the
sum of Funded Indebtedness of ENSTAR Alaska plus Current Maturities of
ENSTAR Alaska plus borrowed money Indebtedness of ENSTAR Alaska that is not
Funded Indebtedness plus the Tangible Net Worth of ENSTAR Alaska, to be, at
any time, more than 75%.
10.11. Company Debt/Capitalization Ratio. The Company will not
permit the Debt/Capitalization Ratio to be, at any time, more than 65%.
10.12. EBITDA/Interest Ratio. The Company will not permit the
EBITDA/Interest Ratio to be, at any time, less than 3.5:1.0 for any twelve
month period ending on the last day of any calendar quarter.
10.13. Nature of Business. The Company will not engage in, and
will not permit any Subsidiary of the Company to engage in, businesses
other than oil and gas exploration and production, gas processing,
transmission, distribution, marketing and storage and gas and liquids
pipeline operations and activities related or ancillary thereto; provided,
that if the Company acquires one or more Subsidiaries in transactions
otherwise permitted by the terms hereof, any such Subsidiary may be engaged
in businesses other than those listed in this Section so long as the assets
of such Subsidiaries which are used in the conduct of such other businesses
do not constitute more than five percent (5%) of the consolidated total
assets of the Company (inclusive of the assets of the Subsidiary so
acquired).
10.14. Futures Contracts. The Company will not, and will not
permit any Subsidiary of the Company to, enter into or be obligated under
any contract for sale for future delivery of oil or gas (whether or not the
subject oil or gas is to be delivered), hedging contract, forward contract,
swap agreement, futures contract or other similar agreement except for (i)
such contracts (x) which fall within the parameters set forth on Exhibit J
hereto or are otherwise approved in writing by the Majority Banks and (y)
which in the aggregate do not cover at any time a volume of oil and/or gas
equal to or greater than 50% of the proved producing reserves attributable
to the oil and gas properties of the Company and its Subsidiaries, taken as
a whole, as evidenced by the most current Engineering and Company Reports
and (ii) production sales contracts entered into in the ordinary course of
the Company's or the applicable Subsidiary's business.
10.15. Covenants in Other Agreements. The Company will not and
will not permit any of its Subsidiaries to become a party to or to agree
that it or any of its property is bound by any agreement, indenture,
mortgage, deed of trust or any other instrument directly or indirectly
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(i) restricting any loans, advances or any other
Investments to or in the Company by any of its Subsidiaries;
(ii) restricting the ability of any Subsidiary of the
Company to make tax payments or management fee payments;
(iii) restricting the capitalization structure of any
Subsidiary of the Company; or
(iv) restricting the ability or capacity of any Subsidiary
of the Company to make Dividend Payments.
Notwithstanding the foregoing, either of ENSTAR Alaska or APC may become a
party to, or grant a Lien in any of its property by way of, or agree that
it will be bound by, any indenture, mortgage, deed of trust or other
instrument containing provisions of the types described above in this
Section 10.15 so long as the terms and provisions thereof are not
materially more restrictive than the terms or provisions which were legally
binding on ENSTAR Alaska or APC on the Original Closing Date.
Section 11. Defaults.
11.1. Events of Default. If one or more of the following events
(herein called "Events of Default") shall occur and be continuing:
(a) Payments - (i) the Company or any other Relevant Party fails to
make any payment or prepayment of any installment of principal on the Loans
or any Reimbursement Obligation payable under the Notes, this Agreement or
the other Loan Documents when due or (ii) the Company or any other Relevant
Party fails to make any payment or prepayment of interest with respect to
the Loans, any Reimbursement Obligation or any other fee or amount under
the Notes, this Agreement or the other Loan Documents and such failure to
pay continues unremedied for a period of five (5) Business Days; or
(b) Representations and Warranties - any representation or warranty
made by the Company or any other Relevant Party in this Agreement or in any
other Loan Document or in any instrument executed in connection herewith or
therewith proves to have been incorrect in any material respect as of the
date thereof; or any representation, statement (including Financial
Statements), certificate or data furnished or made by the Company or any
other Relevant Party (or any officer of the Company or any other Relevant
Party) under or in connection with this Agreement or any other Loan
Document, including without limitation in the Disclosure Statement, proves
to have been untrue in any material respect, as of the date as of which the
facts therein set forth were stated or certified; or
(c) Affirmative Covenants - (i) default shall be made in the due
observance or performance of any of the covenants or agreements contained
in Sections 9.11 (or in Section 9.6 to the extent such default is
considered an Event of Default under the other Subsections of this Sec-
tion 11.1) or (ii) default is made in the due observance or performance of
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any of the other covenants or agreements contained in Section 9 of this
Agreement or any other affirmative covenant of the Company or any other
Relevant Party contained in this Agreement or any other Loan Document and
such default continues unremedied for a period of 30 days after (x) notice
thereof is given by the Administrative Agent to the Company or (y) such
default otherwise becomes known to the Company, whichever is earlier; or
(d) Negative Covenants - (i) default shall be made in the observance
or performance of any of the covenants or agreements contained in
Section 10.8 and such default continues unremedied for a period of five (5)
Business Days after (x) notice thereof is given by the Administrative Agent
to the Company or (y) such default otherwise becomes known to the Company,
whichever is earlier, or (ii) default is made in the due observance or
performance by the Company of any of the other covenants or agreements
contained in Section 10 of this Agreement or of any other negative covenant
of the Company or any other Relevant Party contained in this Agreement or
any other Loan Document; or
(e) Other Obligations - default is made in the due observance or
performance by the Company or any of its Subsidiaries (as principal or
guarantor or other surety) of any of the covenants or agreements contained
in any bond, debenture, note or other evidence of Indebtedness in excess of
$3,000,000 (singly or aggregating several such bonds, debentures, notes or
other evidence of Indebtedness) which default gives the holder the right to
accelerate the maturity of such Indebtedness, other than the Loan
Documents, or under any credit agreement, loan agreement, indenture,
promissory note or similar agreement or instrument executed in connection
with any of the foregoing, to which it (respectively) is a party and such
default is unwaived or continues unremedied beyond the expiration of any
applicable grace period which may be expressly allowed under such
instrument or agreement; or
(f) Involuntary Bankruptcy or Receivership Proceedings - a receiver,
conservator, liquidator or trustee of the Company or of any of its property
is appointed by the order or decree of any court or agency or supervisory
authority having jurisdiction, and such decree or order remains in effect
for more than 60 days; or the Company is adjudicated bankrupt or insolvent;
or any of its property is sequestered by court order and such order remains
in effect for more than 60 days; or a petition is filed against the Company
under any state or federal bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution, liquidation or receivership
law of any jurisdiction, whether now or hereafter in effect, and is not
dismissed within 60 days after such filing; or
(g) Voluntary Petitions or Consents - the Company commences a
voluntary case or other proceeding seeking liquidation, reorganization,
arrangement, insolvency, readjustment of debt, dissolution, liquidation or
other relief with respect to itself or its debt or other liabilities under
any bankruptcy, insolvency or other similar law nor or hereafter in effect
or seeking the appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its property, or
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consents to any such relief or to the appointment of or taking possession
by any such official in an involuntary case or other proceeding commenced
against it, or fails generally to, or cannot, pay its debts generally as
they become due or takes any corporate action to authorize or effect any of
the foregoing; or
(h) Assignments for Benefit of Creditors or Admissions of Insolvency
- the Company makes an assignment for the benefit of its creditors, or
admits in writing its inability to pay its debts generally as they become
due, or consents to the appointment of a receiver, trustee, or liquidator
of the Company or of all or any part of its property; or
(i) Undischarged Judgments - judgments (individually or in the
aggregate) for the payment of money in excess of $10,000,000 is rendered by
any court or other governmental body against the Company or any of its
Subsidiaries and the Company or such Subsidiary does not discharge the same
or provide for its discharge in accordance with its terms, or procure a
stay of execution thereof within 60 days from the date of entry thereof,
and within said period of 60 days from the date of entry thereof or such
longer period during which execution of such judgment will have been
stayed, the Company or such Subsidiary fails to appeal therefrom and cause
the execution thereof to be stayed during such appeal while providing such
reserves therefor as may be required under GAAP; or
(j) Subsidiary Defaults - any Subsidiary of the Company takes,
suffers, or permits to exist any of the events or conditions referred to in
Subsections 11.1(f), (g) or (h); or
(k) Change in Control - there should occur any Change of Control.
THEREUPON: the Administrative Agent may (and, if directed by the Majority
Banks, shall) (a) declare the Commitments terminated (whereupon the
Commitments shall be terminated) and/or (b) terminate any Letter of Credit
providing for such termination by sending a notice of termination as
provided therein and/or (c) declare the principal amount then outstanding
of and the accrued interest on the Loans and Reimbursement Obligations and
all fees and all other amounts payable hereunder and under the Notes to be
forthwith due and payable, whereupon such amounts shall be and become
immediately due and payable, without notice (including without limitation
notice of acceleration and notice of intent to accelerate), presentment,
demand, protest or other formalities of any kind, all of which are hereby
expressly waived by the Company; provided that in the case of the
occurrence of an Event of Default with respect to the Company referred to
in clause (f) or (g) of this Section 11.1 or in clause (j) of this
Section 11.1 to the extent it refers to clauses (f) or (g), the Commitments
shall be automatically terminated and the principal amount then outstanding
of and the accrued interest on the Loans and Reimbursement Obligations and
all fees and all other amounts payable hereunder and under the Notes shall
be and become automatically and immediately due and payable, without notice
(including but not limited to notice of intent to accelerate and notice of
acceleration) and without presentment, demand, protest or other formalities
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of any kind, all of which are hereby expressly waived by the Company and/or
(d) exercise any and all other rights available to it under the Loan
Documents, at law or in equity.
11.2. Collateral Account. The Company hereby agrees, in addition to
the provisions of Section 11.1 hereof, that upon the occurrence and during
the continuance of any Event of Default, it shall, if requested by the
Administrative Agent or the Majority Banks (through the Administrative
Agent), pay to the Administrative Agent an amount in immediately available
funds equal to the then aggregate amount available for drawings under all
Letters of Credit issued for the account of the Company, which funds shall
be held by the Administrative Agent as Cover.
11.3. Preservation of Security for Unmatured Reimbursement
Obligations. In the event that, following (i) the occurrence of an Event
of Default and the exercise of any rights available to the Administrative
Agent under the Loan Documents, and (ii) payment in full of the principal
amount then outstanding of and the accrued interest on the Loans and
Reimbursement Obligations and fees and all other amounts payable hereunder
and under the Notes, any Letters of Credit shall remain outstanding and
undrawn upon, the Administrative Agent shall be entitled to hold (and the
Company hereby grants and conveys to the Administrative Agent a security
interest in and to) all cash or other property ("Proceeds of Remedies")
realized or arising out of the exercise by Administrative Agent of any
rights available to it under the Loan Documents, at law or in equity,
including, without limitation, the proceeds of any foreclosure, as
collateral for the payment of any amounts due or to become due under or in
respect of such Letters of Credit. Such Proceeds of Remedies shall be held
for the ratable benefit of the applicable Issuers. The rights, titles,
benefits, privileges, duties and obligations of Administrative Agent with
respect thereto shall be governed by the terms and provisions of this
Agreement. The Administrative Agent may, but shall have no obligation to,
invest any such Proceeds of Remedies in such manner as the Administrative
Agent, in the exercise of its sole discretion, deems appropriate. Such
Proceeds of Remedies shall be applied to Reimbursement Obligations arising
in respect of any such Letters of Credit and/or the payment of any Issuer's
obligations under any such Letter of Credit when such Letter of Credit is
drawn upon. The Company hereby agrees to execute and deliver to the
Administrative Agent and the Banks such security agreements, pledges or
other documents as the Administrative Agent or any of the Banks may, from
time to time, require to perfect the pledge, lien and security interest in
and to any such Proceeds of Remedies provided for in this Section 11.3.
11.4. Right of Setoff. Upon (i) the occurrence and during the
continuance of any Event of Default referred to in clauses (f), (g) or (h)
of Section 11.1, or in clause (j) of Section 11.1 to the extent it refers
to clauses (f), (g) or (h), or upon (ii) the occurrence and continuance of
any other Event of Default and upon the making of the notice specified in
Section 11.1 to authorize the Administrative Agent to declare the Notes due
and payable pursuant to the provisions thereof, or if (iii) the Company or
any of its Subsidiaries becomes insolvent, however evidenced, the Banks are
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hereby authorized at any time and from time to time, without notice to the
Company or any of its Subsidiaries (any such notice being expressly waived
by the Company and its Subsidiaries), to setoff and apply any and all
deposits (general or special, time or demand, provisional or final, whether
or not such setoff results in any loss of interest or other penalty, and
including without limitation all certificates of deposit) at any time held,
and any other funds or property at any time held, and other Indebtedness at
any time owing by any Bank to or for the credit or the account of the
Company against any and all of the Obligations irrespective of whether or
not such Bank will have made any demand under this Agreement or the Notes
and although such obligations may be unmatured. Should the right of any
Bank to realize funds in any manner set forth hereinabove be challenged and
any application of such funds be reversed, whether by court order or
otherwise, the Banks shall make restitution or refund to the Company pro
rata in accordance with their Commitments. The Banks agree promptly to
notify the Company and the Administrative Agent after any such setoff and
application, provided that the failure to give such notice will not affect
the validity of such setoff and application. The rights of the
Administrative Agent and the Banks under this Section are in addition to
other rights and remedies (including without limitation other rights of
setoff) which the Administrative Agent or the Banks may have.
Section 12. The Agents.
12.1. Appointment, Powers and Immunities. Each Bank hereby
irrevocably appoints and authorizes the Agents to act as its Administrative
Agent and Auction Agent, respectively, hereunder and under the Letters of
Credit and the other Loan Documents with such powers as are specifically
delegated to the respective Agents by the terms hereof and thereof,
together with such other powers as are reasonably incidental thereto.
Neither of the Agents (which term as used in this Section 12 shall include
reference to their affiliates and their own and their affiliates' officers,
directors, employees and agents) (a) shall have any duties or
responsibilities except those expressly set forth in this Agreement, the
Letters of Credit, and the other Loan Documents, or shall by reason of this
Agreement or any other Loan Document be a trustee or fiduciary for any
Bank; (b) shall be responsible to any Bank for any recitals, statements,
representations or warranties contained in this Agreement, the Letters of
Credit or any other Loan Document, or in any certificate or other document
referred to or provided for in, or received by any of them under, this
Agreement, the Letters of Credit or any other Loan Document, or for the
value, validity, effectiveness, genuineness, enforceability or sufficiency
of this Agreement, the Letters of Credit, or any other Loan Document or any
other document referred to or provided for herein or therein or any
property covered thereby or for any failure by any Relevant Party or any
other Person to perform any of its obligations hereunder or thereunder; (c)
shall be required to initiate or conduct any litigation or collection
proceedings hereunder or under the Letters of Credit or any other Loan
Document except to the extent the Administrative Agent is so requested by
the Majority Banks, or (d) shall be responsible for any action taken or
omitted to be taken by them hereunder or under the Letters or Credit or any
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other Loan Document or any other document or instrument referred to or
provided for herein or therein or in connection herewith or therewith,
including, without limitation, pursuant to their own negligence, except for
their own gross negligence or willful misconduct. The Agents 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 them with reasonable care. Without in any way limiting any of the
foregoing, each Bank acknowledges that neither the Administrative Agent nor
any Issuer shall have any greater responsibility in the operation of the
Letters of Credit than is specified in the Uniform Customs and Practice for
Documentary Credits (1993 Revision, International Chamber of Commerce
Publication No. 500). In any foreclosure proceeding concerning any
collateral for the Notes, each holder of a Note if bidding for its own
account or for its own account and the accounts of other Banks is
prohibited from including in the amount of its bid an amount to be applied
as a credit against its Note or Notes or the Notes of the other Banks;
instead, such holder must bid in cash only; provided that this provision is
for the sole benefit of the Administrative Agent and the Banks and shall
not inure to the benefit of the Company or any of its Subsidiaries.
However, in any such foreclosure proceeding, the Administrative Agent may
(but shall not be obligated to) submit a bid for all Banks (including
itself) in the form of a credit against the Notes of all of the Banks, and
the Administrative Agent or its designee may (but shall not be obligated
to) accept title to such collateral for and on behalf of all Banks.
12.2. Reliance by Agents. The Agents shall be entitled to rely upon
any certification, notice or other communication (including any thereof by
telephone, telex, telegram or cable) believed by them to be genuine and
correct and to have been signed or sent by or on behalf of the proper
Person or Persons, and upon advice and statements of legal counsel (which
may be counsel for the Company), independent accountants and other experts
selected by the Agents. As to any matters not expressly provided for by
this Agreement, the Letters of Credit, or any other Loan Document, the
Agents shall in all cases be fully protected in acting, or in refraining
from acting, hereunder and thereunder in accordance with instructions of
the Majority Banks (or, where unanimous consent is required by the terms
hereof or of the other Loan Documents, all of the Banks), and any action
taken or failure to act pursuant thereto shall be binding on all of the
Banks. Pursuant to instructions of the Majority Banks (except as otherwise
provided in Section 13.4 hereof), the Administrative Agent shall have the
authority to execute releases of the Security Documents on behalf of the
Banks without the joinder of any Bank.
12.3. Defaults. The Agents shall not be deemed to have knowledge of
the occurrence of a Default (other than the non-payment of principal of or
interest on Loans or Reimbursement Obligations) unless they have received
notice from a Bank or the Company specifying such Default and stating that
such notice is a "Notice of Default". In the event that the Administrative
Agent receives such a notice of the occurrence of a Default, the
Administrative Agent shall give prompt notice thereof to the Banks (and
shall give each Bank prompt notice of each such non-payment). The
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Administrative Agent shall (subject to Section 12.7 hereof) take such
action with respect to such Default as shall be directed by the Majority
Banks and within its rights under the Loan Documents and at law or in
equity, provided that, unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action,
permitted hereby with respect to such Default as it shall deem advisable in
the best interests of the Banks and within its rights under the Loan
Documents, at law or in equity.
12.4. Rights as a Bank. With respect to its Commitments and the Loans
made and Letter of Credit Liabilities, TCB in its capacity as a Bank
hereunder--and Chemical, if it should subsequently become 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 the Administrative Agent
or Auction Agent, as the case may be, and the term "Bank" or "Banks" shall,
unless the context otherwise indicates, include the TCB in its individual
capacity and, if Chemical should subsequently become a Bank hereunder,
Chemical, in its individual capacity. Either Agent may (without having to
account therefor to any Bank) accept deposits from, lend money to and
generally engage in any kind of banking, trust, letter of credit, agency or
other business with the Company (and any of its Affiliates) as if it were
not acting as an Agent, and either Agent may accept fees and other
consideration from the Company and its Affiliates (in addition to the fees
heretofore agreed to between the Company and such Agent) for services in
connection with this Agreement or otherwise without having to account for
the same to the Banks.
12.5. Indemnification. The Banks agree to indemnify the Agents (to
the extent not reimbursed under Section 2.2(c), Section 9.7 or Section 13.3
hereof, but without limiting the obligations of the Company under said
Sections 2.2(c), 9.7 and 13.3), ratably in accordance with their respective
Commitments, for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of
any kind and nature whatsoever (including but not limited to, the
consequences of the negligence of either Agent) which may be imposed on,
incurred by or asserted against the Agents in any way relating to or
arising out of this Agreement, the Letters of Credit or any other Loan
Document or any other documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby (including,
without limitation, the costs and expenses which the Company is obligated
to pay under Sections 2.2(c), 9.8 and 13.3 hereof but excluding, unless a
Default has occurred and is continuing, normal administrative costs and
expenses incident to the performance of their respective agency duties
hereunder) or the enforcement of any of the terms hereof or thereof or of
any such other documents, 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 party to be indemnified. The obligations of the Banks
under this Section 12.5 shall survive the termination of this Agreement and
the repayment of the Obligations.
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12.6. Non-Reliance on Agents and Other Banks. Each Bank agrees that
it has received current financial information with respect to the Company
and that it has, independently and without reliance on either Agent or any
other Bank and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Company and decision to
enter into this Agreement and that it will, independently and without
reliance upon either 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 this
Agreement or any of the other Loan Documents. Neither Agent shall be
required to keep itself informed as to the performance or observance by any
Relevant Party of this Agreement, the Letters of Credit or any of the other
Loan Documents or any other document referred to or provided for herein or
therein or to inspect the properties or books of the Company or any
Relevant Party. Except for notices, reports and other documents and
information expressly required to be furnished to the Banks by the Agents
hereunder, under the Letters of Credit or the other Loan Documents, neither
Agent shall have any duty or responsibility to provide any Bank with any
credit or other information concerning the affairs, financial condition or
business of the Company or any other Relevant Party (or any of their
affiliates) which may come into the possession of the Agents.
12.7. Failure to Act. Except for action expressly required of the
Agents hereunder, under the Letters of Credit and under the other Loan
Documents, either Agent shall in all cases be fully justified in failing or
refusing to act hereunder and thereunder unless it shall receive further
assurances to its satisfaction by the Banks of their indemnification
obligations under Section 12.5 hereof against any and all liability and
expense which may be incurred by it by reason of taking or continuing to
take any such action.
12.8. Resignation or Removal of Agents. Subject to the appointment
and acceptance of a successor Agent as provided below, either Agent may
resign at any time by giving notice thereof to the Banks and the Company,
and either Agent may be removed at any time with or without cause by the
Majority Banks. Upon any such resignation or removal, the Majority Banks
shall have the right to appoint a successor Agent, provided deposits with a
successor Administrative Agent shall be insured by the Federal Deposit
Insurance Corporation or its successor. If no successor Agent shall have
been so appointed by the Majority Banks and shall have accepted such
appointment within 30 days after the retiring Agent's giving of notice of
resignation or the Majority Banks' removal of the retiring Agent, then the
retiring Agent may, on behalf of the Banks, appoint a successor Agent. Any
successor Agent shall be a bank which has an office in the United States
and a combined capital and surplus of at least $250,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations
hereunder. A successor Administrative Agent shall promptly specify by
notice to the Company, the Auction Agent and the Banks its Principal Office
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referred to in Sections 3.1 and 5.1 and a successor Auction Agent shall
promptly specify by notice to the Company, the Administrative Agent and the
Banks its address for notices hereunder. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this Section
12 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 an Agent.
Section 13. Miscellaneous.
13.1. Waiver. No waiver of any Default shall be a waiver of any other
Default. No failure on the part of any Agent or any Bank to exercise and
no delay in exercising, and no course of dealing with respect to, any
right, power or privilege under any Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege thereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The remedies provided in
the Loan Documents are cumulative and not exclusive of any remedies
provided by law or in equity.
13.2. Notices. All notices and other communications provided for
herein (including, without limitation, any modifications of, or waivers or
consents under, this Agreement) shall be given or made by telex, telegraph,
telecopy (confirmed by mail), cable, mail or other writing and telexed,
telecopied, telegraphed, cabled, mailed or delivered to the intended
recipient at the "Address for Notices" specified below its name on the
signature pages hereof; or, as to any party, at such other address as shall
be designated by such party in a notice to the Company, the Administrative
Agent and the Auction Agent given in accordance with this Section 13.2.
Except as otherwise provided in this Agreement, all such communications
shall be deemed to have been duly received when transmitted by telex or
telecopier during regular business hours, delivered to the telegraph or
cable office or personally delivered or, in the case of a mailed notice,
three (3) days after deposit in the United States mails, postage prepaid,
certified mail with return receipt requested (or upon actual receipt, if
earlier), in each case given or addressed as aforesaid.
13.3. Indemnification. The Company shall indemnify the Agents, the
Banks, and each Affiliate thereof and their respective directors, officers,
employees and agents from, and hold each of them harmless against, any and
all losses, liabilities, claims or damages to which any of them may become
subject (regardless of whether caused in whole or in part by the simple
(but not gross) negligence of the Person indemnified), insofar as such
losses, liabilities, claims or damages arise out of or result from any
(i) actual or proposed use by the Company of the proceeds of any extension
of credit (whether a Loan or a Letter of Credit) by any Bank hereunder,
(ii) breach by the Company of this Agreement or any other Loan Document,
(iii) violation by the Company or any of its Subsidiaries of any Legal
Requirement, including but not limited to those relating to Hazardous
Substances, (iv) Liens or security interests previously or hereafter
granted on any real or personal property, to the extent resulting from any
Hazardous Substance located in, on or under any such property, (v)
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ownership by the Banks or the Administrative Agent of any real or personal
property following foreclosure, to the extent such losses, liabilities,
claims or damages arise out of or result from any Hazardous Substance
located in, on or under such property, including, without limitation,
losses, liabilities, claims or damages which are imposed upon Persons under
laws relating to or regulating Hazardous Substances solely by virtue of
ownership, (vi) Bank's or the Administrative Agent's being deemed an
operator of any such real or personal property by a court or other
regulatory or administrative agency or tribunal in circumstances in which
neither the Administrative Agent nor any of the Banks is generally
operating or generally exercising control over such property, to the extent
such losses, liabilities, claims or damages arise out of or result from any
Hazardous Substance located in, on or under such property,
(vii) investigation, litigation or other proceeding (including any
threatened investigation or proceeding) relating to any of the foregoing,
and the Company shall reimburse the Agents, each Bank, and each Affiliate
thereof and their respective directors, officers, employees and agents,
upon demand, for any expenses (including legal fees) incurred in connection
with any such investigation or proceeding or (viii) taxes (excluding income
taxes and franchise taxes) payable or ruled payable by any Governmental
Authority in respect of the Notes or any other Loan Document, together with
interest and penalties, if any; provided, however, that the Company shall
not have any obligations pursuant to this Section 13.3 with respect to any
losses, liabilities, claims, damages or expenses (a) arising from or
relating solely to events, conditions or circumstances which, as to clauses
(iv), (v) or (vi) above, first came into existence or which first occurred
after the date on which the Company or any of its Subsidiaries conveyed to
an unrelated third party all of the Company's or the applicable
Subsidiary's rights, titles and interests to the applicable real or
personal property (whether by deed, deed-in-lieu, foreclosure or otherwise)
other than a conveyance made in violation of any Loan Document or (b)
incurred by the Person seeking indemnification by reason of the gross
negligence or willful misconduct of such Person. If the Company ever
disputes a good faith claim for indemnification under this Section 13.3 on
the basis of the proviso set forth in the preceding sentence, the full
amount of indemnification provided for shall nonetheless be paid, subject
to later adjustment or reimbursement at such time (if any) as a court of
competent jurisdiction enters a final judgment as to the applicability of
any such exceptions.
13.4. Amendments, Etc. No amendment or waiver of any provision of
this Agreement, the Notes or any other Loan Document, nor any consent to
any departure by the Company therefrom, shall in any event be effective
unless the same shall be agreed or consented to by the Majority Banks and
the Company, and each such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
that no amendment, waiver or consent shall, unless in writing and signed by
each Bank affected thereby, do any of the following: (a) increase the
Commitment of such Bank (it being understood that the waiver of any
reduction in the Commitments or any mandatory repayment other than (x) the
repayment of all Loans at the end of the Revolving Credit Availability
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Period and (y) the mandatory reductions of the Commitments provided for in
Section 2.3(a) and (z) the mandatory prepayments required by the terms of
Section 3.2(b), shall not be deemed to be an increase in any Commitment) or
subject the Banks to any additional obligation; (b) reduce the principal
of, or interest on, any Loan, Reimbursement Obligation or fee hereunder;
(c) postpone any scheduled date fixed for any payment or mandatory
prepayment of principal of, or interest on, any Loan, Reimbursement
Obligation, fee or other sum to be paid hereunder; (d) change the
percentage of any of the Commitments or of the aggregate unpaid principal
amount of any of the Loans and Letter of Credit Liabilities, or the number
of Banks, which shall be required for the Banks or any of them to take any
action under this Agreement; (e) change any provision contained in Sections
2.2(c), 9.7 or 13.3 hereof or this Section 13.4 or Section 6.7 hereof, or
(f) release all or substantially all of any security for the obligations of
the Company under this Agreement or any Note or all or substantially all of
the personal liability of any obligor created under any of the Loan
Documents. Anything in this Section 13.4 to the contrary, no amendment,
waiver or consent shall be made with respect to Section 12 without the
consent of the applicable Agent or Agents. The consent of the Super
Majority Banks shall be required to any amendment of any requirement under
this Agreement or the other the Loan Documents that the consent of the
Super Majority Banks be obtained.
13.5. Successors and Assigns. (a) This Agreement shall be binding
upon and inure to the benefit of the Company, the Agents and the Banks and
their respective successors and assigns. The Company may not assign or
transfer any of its rights or obligations hereunder without the prior
written consent of all of the Banks. Each Bank may sell participations to
any Person in all or part of any Loan or Letter of Credit, or all or part
of its Notes or Commitments, in which event, without limiting the
foregoing, the provisions of Section 6 shall inure to the benefit of each
purchaser of a participation and the pro rata treatment of payments, as
described in Section 5.2, shall be determined as if such Bank had not sold
such participation. In the event any Bank shall sell any participation,
such Bank shall retain the sole right and responsibility to enforce the
obligations of the Company relating to the Loans or Letters of Credit,
including, without limitation, the right to approve any amendment,
modification or waiver of any provision of this Agreement other than
amendments, modifications or waivers with respect to (i) any fees payable
hereunder to the Banks and (ii) the amount of principal or the rate of
interest payable on, or the dates fixed for the scheduled repayment of
principal of, the Loans.
(b) Each Bank may assign to one or more Banks or any other Person
all or a portion of its interests, rights and obligations under this
Agreement, provided, however, that (i) other than in the case of an
assignment to another Bank that is, at the time of such assignment, a party
hereto or an Affiliate of such Bank, the Company must give its prior
written consent, which consent will not be unreasonably withheld, (ii) the
aggregate amount of the Commitment and/or Loans or Letters of Credit of the
assigning Bank subject to each such assignment (determined as of the date
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the Assignment and Acceptance (as defined below) with respect to such
assignment is delivered to the Administrative Agent) shall in no event be
less than $10,000,000 (or $5,000,000 in the case of an assignment to an
Affiliate of a Bank or between Banks), (iii) no assignment shall have the
effect of reducing the pro rata share of the Loans or Letters of Credit and
the Commitments held by the assignor and its Affiliates below $10,000,000,
(iv) notwithstanding any other term or provision of this Agreement, unless
the Company shall have otherwise consented in writing (such consent not to
be unreasonably withheld), each such assignment shall be pro rata with
respect to the Loans, the Letters of Credit and the Commitment of the
assignor, and (v) the parties to each such assignment shall execute and
deliver to the Administrative Agent, for its acceptance and recording in
the Register (as defined below), an Assignment and Acceptance in the form
of Exhibit H hereto (each an "Assignment and Acceptance") with blanks
appropriately completed, together with any Note or Notes subject to such
assignment and a processing and recordation fee of $2,500 paid by the
assignee (for which the Company shall have no liability). Upon such
execution, delivery, acceptance and recording, from and after the effective
date specified in each Assignment and Acceptance, which effective date
shall be at least five Business Days after the execution thereof, (A) the
assignee thereunder shall be a party hereto and, to the extent provided in
such Assignment and Acceptance, have the rights and obligations of a Bank
hereunder and (B) the Bank thereunder shall, to the extent provided in such
Assignment and Acceptance, be released from its obligations under this
Agreement. Notwithstanding anything contained in this Agreement to the
contrary, any Bank may at any time assign all or any portion of its rights
under this Agreement and the Notes issued to it as collateral to a Federal
Reserve Bank; provided, that no such assignment shall release the assigning
Bank from any of its obligations hereunder.
(c) By executing and delivering an Assignment and Acceptance, the
Bank assignor thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than
the representation and warranty that it is the legal and beneficial owner
of the interest being assigned thereby free and clear of any adverse claim,
such Bank assignor makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or any of the
other Loan Documents or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any of the other
Loan Documents or any other instrument or document furnished pursuant
thereto; (ii) such Bank assignor makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Company or the performance or observance by the Company of any of its
obligations under this Agreement or any of the other Loan Documents or any
other instrument or document furnished pursuant hereto; (iii) such assignee
confirms that it has received a copy of this Agreement, together with
copies of the financial statements referred to in Section 8.6 and such
other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and
Acceptance; (iv) such assignee will, independently and without reliance
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upon any Agent, such Bank assignor or any other Bank and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under this Agreement and the other Loan Documents; (v) such assignee
appoints and authorizes the Agents to take such action as agent on its
behalf and to exercise such powers under this Agreement and the other Loan
Documents as are delegated to the Agents by the terms hereof, together with
such powers as are reasonably incidental thereto; and (vi) such assignee
agrees that it will perform in accordance with their terms all obligations
that by the terms of this Agreement and the other Loan Documents are
required to be performed by it as a Bank.
(d) The Administrative Agent shall maintain at its office a copy of
each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Banks and the Commitments of,
and principal amount of the Loans owing to, each Bank from time to time
(the "Register"). The entries in the Register shall be conclusive, in the
absence of manifest error, and the Company, the Agents and the Banks may
treat each person the name of which is recorded in the Register as a Bank
hereunder for all purposes of this Agreement and the other Loan Documents.
The Register shall be available for inspection by the Company or any Bank
at any reasonable time and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Bank and the assignee thereunder together with any Note or Notes
subject to such assignment, the written consent to such assignment executed
by the Company and the fee payable in respect thereto, the Administrative
Agent shall, if such Assignment and Acceptance has been completed with
blanks appropriately filled, (i) accept such Assignment and Acceptance,
(ii) record the information contained therein in the Register and (iii)
give prompt notice thereof to the Company. Within five Business Days after
receipt of notice, the Company, at its own expense, shall execute and
deliver to the Administrative Agent in exchange for the surrendered Notes
new Notes to the order of such assignee in an amount equal to the
Commitments and/or Loans or Letters of Credit assumed by it pursuant to
such Assignment and Acceptance and, if the assigning Bank has retained
Commitments and/or Loans hereunder, new Notes to the order of the assigning
Bank in an amount equal to the Commitment and/or Loans retained by it
hereunder. Such new Notes shall be in an aggregate principal amount equal
to the aggregate principal amount of such surrendered Notes, shall be dated
the effective date of such Assignment and Acceptance and shall otherwise be
in substantially the form of the respective Note. Thereafter, such
surrendered Notes shall be marked renewed and substituted and the originals
delivered to the Company (with copies, certified by the Company as true,
correct and complete, to be retained by the Administrative Agent).
(f) Any Bank may, in connection with any assignment or participation
or proposed assignment or participation pursuant to this Section 13.5,
disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Company furnished to such Bank
by or on behalf of the Company; provided, however, that, prior to any such
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disclosure, the Company shall have consented thereto, which consent shall
not be unreasonably withheld, and each such assignee or participant, or
proposed assignee or participant, shall execute an agreement whereby such
assignee or participant shall agree to preserve the confidentiality of any
Confidential Information (defined in Section 13.13) on terms substantially
the same as those provided in Section 13.13.
(g) The Company will have the right to consent to any material
intercreditor arrangements in connection with an assignment by any Bank of
any interest, right or obligation under this Agreement which is not pro
rata with respect to the Loans, the Letters of Credit and the Commitment of
the assignor and the Company may deny its consent to any such arrangements
which, in the reasonable judgement of the Company, would adversely affect
the Company in a material respect.
(h) The provisions of this Section shall not apply to the assignment
and pledge of a Bank's rights hereunder or under any Note to any Federal
Reserve Bank for collateral purposes pursuant to Regulation A of the Board
of Governors of the Federal Reserve System and any Operating Circular
issued by such Federal Reserve Bank; provided that such assignment and
pledge shall not relieve such Bank of any of its obligations hereunder.
13.6. Limitation of Interest. The Company and the Banks intend to
strictly comply with all applicable laws, including applicable usury laws.
Accordingly, the provisions of this Section 13.6 shall govern and control
over every other provision of this Agreement or any other Loan Document
which conflicts or is inconsistent with this Section, even if such
provision declares that it controls. As used in this Section, the term
"interest" includes the aggregate of all charges, fees, benefits or other
compensation which constitute interest under applicable law, provided that,
to the maximum extent permitted by applicable law, (a) any non-principal
payment shall be characterized as an expense or as compensation for
something other than the use, forbearance or detention of money and not as
interest, and (b) all interest at any time contracted for, reserved,
charged or received shall be amortized, prorated, allocated and spread, in
equal parts during the full term of the Obligations. In no event shall the
Company or any other Person be obligated to pay, or any Bank have any right
or privilege to reserve, receive or retain, (a) any interest in excess of
the maximum amount of nonusurious interest permitted under the laws of the
State of Texas or the applicable laws (if any) of the United States or of
any other applicable state, or (b) total interest in excess of the amount
which such Bank could lawfully have contracted for, reserved, received,
retained or charged had the interest been calculated for the full term of
the Obligations at the Highest Lawful Rate. On each day, if any, that the
interest rate (the "Stated Rate") called for under this Agreement or any
other Loan Document exceeds the Highest Lawful Rate, the rate at which
interest shall accrue shall automatically be fixed by operation of this
sentence at the Highest Lawful Rate for that day, and shall remain fixed at
the Highest Lawful Rate for each day thereafter until the total amount of
interest accrued equals the total amount of interest which would have
accrued if there were no such ceiling rate as is imposed by this sentence.
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Thereafter, interest shall accrue at the Stated Rate unless and until the
Stated Rate again exceeds the Highest Lawful Rate when the provisions of
the immediately preceding sentence shall again automatically operate to
limit the interest accrual rate. The daily interest rates to be used in
calculating interest at the Highest Lawful Rate shall be determined by
dividing the applicable Highest Lawful Rate per annum by the number of days
in the calendar year for which such calculation is being made. None of the
terms and provisions contained in this Agreement or in any other Loan
Document which directly or indirectly relate to interest shall ever be
construed without reference to this Section 13.6, or be construed to create
a contract to pay for the use, forbearance or detention of money at an
interest rate in excess of the Highest Lawful Rate. If the term of any
Obligation is shortened by reason of acceleration of maturity as a result
of any Default or by any other cause, or by reason of any required or
permitted prepayment, and if for that (or any other) reason any Bank at any
time, including but not limited to, the stated maturity, is owed or
receives (and/or has received) interest in excess of interest calculated at
the Highest Lawful Rate, then and in any such event all of any such excess
interest shall be canceled automatically as of the date of such
acceleration, prepayment or other event which produces the excess, and, if
such excess interest has been paid to such Bank, it shall be credited pro
tanto against the then-outstanding principal balance of the Company's
obligations to such Bank, effective as of the date or dates when the event
occurs which causes it to be excess interest, until such excess is
exhausted or all of such principal has been fully paid and satisfied,
whichever occurs first, and any remaining balance of such excess shall be
promptly refunded to its payor.
13.7. Survival. The obligations of the Company under Sections 2.2(c),
6, 9.7 and 13.3 hereof and the obligations of the Banks under Section 13.6
hereof shall survive the repayment of the Loans and Reimbursement
Obligations and the termination of the Commitments and the Letters of
Credit.
13.8. Captions. Captions and section headings appearing herein are
included solely for convenience of reference and are not intended to affect
the interpretation of any provision of this Agreement.
13.9. Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
agreement and any of the parties hereto may execute this Agreement by
signing any such counterpart.
13.10. Governing Law. This Agreement and the Notes and (except as
therein provided) the other Loan Documents are performable in Harris
County, Texas, which shall be a proper place of venue for suit on or in
respect thereof. The Company irrevocably agrees that any legal proceeding
in respect of this Agreement or the other Loan Documents shall be brought
in the district courts of Harris County, Texas or the United States
District Court for the Southern District of Texas, Houston Division
(collectively, the "Specified Courts"). The Company hereby irrevocably
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submits to the nonexclusive jurisdiction of the state and federal courts of
the State of Texas. The Company hereby 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 suit, action or proceeding arising out of or
relating to any Loan Document brought in any Specified Court, and hereby
further irrevocably waives any claims that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient
forum. The Company further (1) agrees to designate and maintain an agent
for service of process in the City of Houston in connection with any such
suit, action or proceeding and to deliver to the Administrative Agent
evidence thereof and (2) irrevocably consents to the service of process out
of any of the aforementioned courts in any such suit, action or proceeding
by the mailing of copies thereof by certified mail, return receipt
requested, postage prepaid, to the Company at its address as provided in
this Agreement or as otherwise provided by Texas law. Nothing herein shall
affect the right of any Agent or any Bank to commence legal proceedings or
otherwise proceed against the Company in any jurisdiction or to serve
process in any manner permitted by applicable law. The Company agrees that
a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by law. THIS AGREEMENT AND (EXCEPT AS THEREIN
PROVIDED) THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE APPLICABLE LAWS (OTHER THAN THE CONFLICT OF LAWS RULES)
OF THE STATE OF TEXAS AND THE UNITED STATES OF AMERICA FROM TIME TO TIME IN
EFFECT.
13.11. Severability. Whenever possible, each provision of the Loan
Documents shall be interpreted in such manner as to be effective and valid
under applicable law. If any provision of any Loan Document shall be
invalid, illegal or unenforceable in any respect under any applicable law,
the validity, legality and enforceability of the remaining provisions of
such Loan Document shall not be affected or impaired thereby.
13.12. Chapter 15 Not Applicable. Chapter 15, Subtitle 3, Title
79, Revised Civil Statutes of Texas, 1925, as amended, shall not apply to
this Agreement or to any Loan or Letter of Credit, nor shall this Agreement
or any Loan or Letter of Credit be governed by or be subject to the
provisions of such Chapter 15 in any manner whatsoever.
13.13. Confidential Information. The Agents and each Bank
separately agrees that:
(a) As used herein, the term "Confidential Information" means
written information about the Company or the transactions contemplated
herein furnished by the Company to the Agents and/or the Banks which is
specifically designated as confidential by the Company; Confidential
Information, however, shall not include information which (i) was publicly
known or available, or otherwise available on a non-confidential basis to
any Bank, at the time of disclosure from a source other than the Company,
(ii) subsequently becomes publicly known through no act or omission by such
Bank, (iii) otherwise becomes available on a non-confidential basis to any
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Bank other than through disclosure by the Company or (iv) has been in the
possession of any Bank for a period of more than two years from the date on
which such information originally was furnished to such Bank by the
Company, unless the Company shall have requested the Agents and the Banks
in writing, at least 30 days prior to the end of such two-year period, to
maintain the confidentiality of such information for another two (2) year
period (or for successive two (2) year periods); provided that the Company
shall not unreasonably withhold its consent to a request made after the
initial two (2) year period to eliminate information from "Confidential
Information".
(b) The Agents and each Bank agrees that it will take normal and
reasonable precautions to maintain the confidentiality of any Confidential
Information furnished to such Person; provided, however, that such Person
may disclose Confidential Information (i) upon the Company's consent; (ii)
to its auditors; (iii) when required by any Legal Requirement; (iv) as may
be required or appropriate in any report, statement or testimony submitted
to any Governmental Authority having or claiming to have jurisdiction over
it; (v) to such Person's and its Subsidiaries' or Affiliates' officers,
directors, employees, agents, representatives and professional consultants
in connection with this Agreement or administration of the Loans and
Letters of Credit; (vi) as may be required or appropriate, should such Bank
elect to assign or grant participations in any of the Obligations in
connection with (1) the enforcement of the Obligations to any such Person
under any of the Loan Documents or related agreements, or (2) any potential
transfer pursuant to this Agreement of any Obligation owned by any Bank
(provided any potential transferee has been approved by the Company if
required by this Agreement, which approval shall not be unreasonably
withheld, and has agreed in writing to be bound by substantially the same
provisions regarding Confidential Information contained in this Section);
(vii) as may be required or appropriate in response to any summons or
subpoena or in connection with any litigation or administrative proceeding;
(viii) to any other Bank; (ix) to the extent reasonably required in
connection with the exercise of any remedy hereunder or under the other
Loan Documents; or (x) to correct any false or misleading information which
may become public concerning such Person's relationship to the Company.
13.14. Tax Forms. With respect to each Bank which is organized
under the laws of a jurisdiction outside the United States, on the day of
the initial borrowing hereunder and from time to time thereafter if
requested by the Company or the Administrative Agent, such Bank shall
provide the Administrative Agent and the Company with the forms prescribed
by the Internal Revenue Service of the United States certifying as to such
Bank's status for purposes of determining exemption from United States
withholding taxes with respect to all payments to be made to such Bank
hereunder or other documents satisfactory to the Bank and the
Administrative Agent indicating that all payments to be made to such Bank
hereunder are subject to such tax at a rate reduced by an applicable tax
treaty. Unless the Company and the Administrative Agent shall have
received such forms or such documents indicating that payments hereunder
are not subject to United States withholding tax or are subject to such tax
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at a rate reduced by an applicable tax treaty, the Company or the
Administrative Agent shall withhold taxes from such payments at the
applicable statutory rate in the case of payments to or for any Bank
organized under the laws of a jurisdiction outside the United States.
13.15. Amendment and Restatement. This Agreement amends and
restates in its entirety that certain Amended and Restated Credit Agreement
dated as of June 25, 1993 executed by and among the Company, the Banks and
the Administrative Agent.
13.16. Intercreditor Agreement. Reference is hereby made to the
Intercreditor Agreement, which provides for certain matters relating to
both the Loans and the Canadian Facility. To the extent of any conflict
between the terms hereof and the terms of the Intercreditor Agreement, the
Intercreditor Agreement shall control. The execution and delivery by the
Administrative Agent of the Intercreditor Agreement on behalf of the Banks
is hereby ratified and confirmed by each of the Banks. Any Bank that
becomes a party to this Agreement after the Effective Date agrees to be
bound by the terms and provisions of the Intercreditor Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
SEAGULL ENERGY CORPORATION,
a Texas corporation
By:
Robert M. King,
Vice President, Corporate Development
and Treasurer
Address for Notices:
1001 Fannin, Suite 1700
Houston, Texas 77002
Attention: Robert M. King
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CHEMICAL BANK,
as Auction Agent
By:
Name:
Title:
Address for Notices:
140 East 45th
29th Floor
New York, New York 10017
Attention: Ms. Terri Reilly
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TEXAS COMMERCE BANK
NATIONAL ASSOCIATION,
as Administrative Agent and as a Bank
By:
Robert C. Mertensotto,
Commitment: Senior Vice President
$40,000,000 Address for Notices:
712 Main Street
Houston, Texas 77002
Attention: Manager, Energy Division
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THE CHASE MANHATTAN BANK, N.A.
By:
Commitment: Name:
Title:
$50,000,000
Address for Notices:
1221 McKinney, Suite 3000
Houston, Texas 77010
Attention: Scott Porter,
Vice President
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MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By:
Commitment: Name:
Title:
$50,000,000
Address for Notices:
60 Wall Street
New York, New York 10260-0060
Attention: Loan Department
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NATIONSBANK OF TEXAS, N.A.
By:
Commitment: Name:
Title:
$50,000,000
Address for Notices:
700 Louisiana
Houston, Texas 77002
Attention: Jo A. Tamalis,
Senior Vice President
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THE FIRST NATIONAL BANK OF BOSTON
By:
Commitment: Name:
Title:
$50,000,000
Address for Notices:
100 Federal Street
Energy & Utilities 01-15-04
Boston, Massachusetts 02110
Attention: George W. Passela,
Managing Director
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ABN AMRO BANK N.V., HOUSTON AGENCY
By:
Commitment: Name:
Title:
$30,000,000
By:
Name:
Title:
Address for Notices:
Three Riverway, Suite 1600
Houston, Texas 77056
Attention: Mr. Charles W. Randall,
Vice President
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THE BANK OF NEW YORK
By:
Commitment: Name:
Title:
$35,000,000
Address for Notices:
One Wall Street
New York, New York 10296
Attention: Mr. Andrew G. Mathews,
Vice President
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BANQUE PARIBAS HOUSTON AGENCY
By:
Commitment: Name:
Title:
$15,000,000
By:
Name:
Title:
Address for Notices:
1200 Smith, Suite 3100
Houston, Texas 77002
Attention: Barton D. Schouest,
Group Vice President
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CREDIT LYONNAIS NEW YORK BRANCH
By:
Commitment: Name:
Title:
$35,000,000
Address for Notices:
1000 Louisiana, Suite #5360
Houston, Texas 77002
Attention: Mr. A. David Dodd,
Assistant Vice President
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THE FUJI BANK, LIMITED
HOUSTON AGENCY
By:
Commitment: Soichi Yoshida,
Vice President and Manager
$30,000,000
Address for Notices:
909 Fannin, Suite #2800
Houston, Texas 77010
Attention: Mr. Jacques Azagury,
Assistant Vice President
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NBD BANK, N.A.
By:
Commitment: Name:
Title:
$30,000,000
Address for Notices:
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Mr. Douglas R. Liftman,
Second Vice President
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SOCIETE GENERALE, SOUTHWEST AGENCY
By:
Commitment: Name:
Title:
$30,000,000
Address for Notices:
4800 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201
Attention: Mr. Ralph Saheb,
Vice President
with a copy to:
1111 Bagby, Suite 2020
Houston, Texas 77002
Attention: Mr. Richard Erbert,
Vice President
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THE BANK OF TOKYO, LTD., DALLAS AGENCY
By:
Commitment: Name:
Title:
$10,000,000
Address for Notices:
909 Fannin, Suite 1104
Two Houston Center
Houston, Texas 77010
Attention: Mr. John M. McIntyre,
Vice President
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BANK OF SCOTLAND
By:
Commitment: Name:
Title:
$30,000,000
Address for Notices:
380 Madison Avenue
New York, New York 10017
Attention: Mr. Craig Wilson
-111-
CAISSE NATIONALE DE CREDIT AGRICOLE
By:
Commitment: Name:
Title:
$20,000,000
Address for Notices:
55 East Monroe Street
Chicago, Illinois 60603-5702
Attention: Mr. Joseph Kunze,
Vice President
-112-
CHRISTIANIA BANK OG KREDITKASSE
By:
Commitment: Name:
Title:
$35,000,000
By:
Name:
Title:
Address for Notices:
11 West 42nd Street
7th Floor
New York, New York 10036
Attention: Mr. Jahn Roising,
First Vice President
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DEN NORSKE BANK AS
By:
Commitment: Name:
Title:
$25,000,000
Address for Notices:
333 Clay
Suite 4890
Houston, Texas 77002
Attention: Mr. Byron L. Cooley,
First Vice President
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MIDLAND BANK PLC, NEW YORK BRANCH
By:
Commitment: Name:
Title:
$25,000,000
Address for Notices:
140 Broadway
New York, New York 10005
Attention: Mr. Gregory B. Jansen,
Director
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FIRST INTERSTATE BANK OF TEXAS, N.A.
By:
Commitment: Name:
Title:
$25,000,000
Address for Notices:
1000 Louisiana
3rd Floor/MS #156
Houston, Texas 77002
Attention: Ms. Collie Michaels,
Vice President
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THE BANK OF NOVA SCOTIA
By:
Commitment: Name:
Title:
$10,000,000
Address for Notices:
Suite 3000, 1100 Louisiana
Houston, Texas 77002
Attention: Mr. Mark Ammerman
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CIBC INC.
By:
Commitment: Name:
Title:
$10,000,000
Address for Notices:
Two Paces West
2727 Paces Ferry Road
Suite 1200
Atlanta, Georgia 30339
Attention: Loan Operations
with a copy to:
Canadian Imperial Bank of Commerce
Two Houston Center
909 Fannin Street
Houston, Texas 77010
Attention: Mr. Brian Swinford,
Vice President
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CITIBANK, N.A.
By:
Commitment: Name:
Title:
$25,000,000
Address for Notices:
1200 Smith Street
20th Floor
Houston, Texas 77002
Attention: Ms. Lydia Junek
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MELLON BANK
By:
Commitment: Name:
Title:
$15,000,000
Address for Notices:
Mellon Bank
One Mellon Bank Center
Room 151-4425
Pittsburgh, Pennsylvania 15258-0001
Attention: Mr. A. Gary Chace,
Senior Vice President,
Energy and Utilities Group
with a copy to:
Mellon Financial Services
1100 Louisiana, 36th Floor
Houston, Texas 77002-5210
Attention: Mr. Richard Gould
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FIRST UNION NATIONAL BANK OF NORTH
CAROLINA
By: First Union Corporation of
North Carolina
By:
Commitment: Jay M. Chernosky,
Vice President
$25,000,000
Address for Notices:
First Union Corporation of
North Carolina
1001 Fannin, Suite 2255
Houston, Texas 77002
Attention: Mr. Jay M. Chernosky,
Vice President
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BANK OF MONTREAL
By:
Commitment: Robert L. Roberts,
Director, U.S. Banking
$25,000,000
Address for Notices:
700 Louisiana, Suite 4400
Houston, Texas 77002
Attention: Mr. Robert L. Roberts,
Director, U.S. Banking
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EXHIBIT 4.2
COMMITTED NOTE
$ , 199
Houston, Harris County, Texas
FOR VALUE RECEIVED, SEAGULL ENERGY CORPORATION (the "Borrower"),
a Texas corporation, hereby promises to pay to
(the "Bank"), or order, at the principal office of Texas Commerce
Bank National Association, a national banking association, 712 Main Street,
Houston, Harris County, Texas 77002, the principal sum of
DOLLARS ($ )
(or such lesser amount as shall equal the outstanding principal balance
hereof), in lawful money of the United States of America and in immediately
available funds, on the dates and in the principal amounts provided in the
Credit Agreement referred to below, and to pay interest on the unpaid
principal amount of each Committed Loan made by the Bank to the Borrower
under the Credit Agreement, at such office, in like money and funds, for
the period commencing on the date of such Committed Loan until such
Committed Loan shall be paid in full, at the rates per annum and on the
dates provided in the Credit Agreement.
In addition to and cumulative of any payment required to be made
against this Note pursuant to the Credit Agreement, this Note, including
all principal then unpaid and accrued interest then unpaid, shall be due
and payable on December 31, 2000, its final maturity. All payments shall
be applied first to principal and the balance to accrued interest, except
as otherwise expressly provided in the Credit Agreement.
This Note is one of the Committed Notes referred to in the Credit
Agreement (as restated, amended, modified and supplemented and in effect
from time to time, the "Credit Agreement") dated as of May 24, 1994, among
the Borrower, certain signatory banks named therein, Chemical Bank, as
Auction Agent, and Texas Commerce Bank National Association, as
Administrative Agent, and evidences the Committed Loans made by the Bank
thereunder. This Note shall be governed by the Credit Agreement. This
Note is secured by the Security Documents. Capitalized terms used in this
Note and not defined in this Note, but which are defined in the Credit
Agreement, have the respective meanings herein as are assigned to them in
the Credit Agreement.
The Bank is hereby authorized by the Borrower to endorse on
Schedule A (or a continuation thereof) attached to this Note, the amount
and date of each Committed Loan made by the Bank to the Borrower under the
Credit Agreement, and the amount and date of each payment or prepayment of
principal of such Committed Loan received by the Bank, provided that any
failure by the Bank to make any such endorsement shall not affect the
obligations of the Borrower under the Credit Agreement or under this Note
in respect of such Committed Loans.
Except only for any notices which are specifically required by
the Credit Agreement or the other Loan Documents, the Borrower and any and
all co-makers, endorsers, guarantors and sureties severally waive notice
(including, but not limited to, notice of intent to accelerate and notice
of acceleration, notice of protest and notice of dishonor), demand,
presentment for payment, protest, diligence in collecting and the filing of
suit for the purpose of fixing liability and consent that the time of
payment hereof may be extended and re-extended from time to time without
notice to any of them. Each such person agrees that his, her or its
liability on or with respect to this Note shall not be affected by any
release of or change in any guaranty or security at any time existing or by
any failure to perfect or maintain perfection of any lien against or
security interest in any such security or the partial or complete
enforceability of any guaranty or other surety obligation, in each case in
whole or in part, with or without notice and before or after maturity.
The Credit Agreement provides for the acceleration of the
maturity of this Note upon the occurrence of certain events and for
prepayment of Committed Loans upon the terms and conditions specified
therein.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF TEXAS AND THE UNITED STATES OF AMERICA FROM TIME
TO TIME IN EFFECT.
SEAGULL ENERGY CORPORATION,
a Texas corporation
By:
Name:
Title:
EXHIBIT E
to
Credit Agreement
SCHEDULE A
This Note evidences Committed Loans made by the Bank under the within-
described Credit Agreement to the Borrower, in the principal amounts set
forth below, which Committed Loans are of the Type and for the Interest
Periods and were made on the dates set forth below, subject to the payments
of principal set forth below:
Principal Interest
Amount of Period/ Date of Amount Balance
Date Committed Maturity Payment or Paid or Out-
Made Loan Type Date Prepayment Prepaid standing
EXHIBIT E
to
Credit Agreement
EXHIBIT 4.3
COMPETITIVE NOTE
$725,000,000 , 199
Houston, Harris County, Texas
FOR VALUE RECEIVED, SEAGULL ENERGY CORPORATION (the "Borrower"),
a Texas corporation, hereby promises to pay to
(the "Bank"), or order, at the principal office of Texas Commerce
Bank National Association, a national banking association, 712 Main Street,
Houston, Harris County, Texas 77002, the principal sum of SEVEN HUNDRED
TWENTY-FIVE MILLION DOLLARS ($725,000,000) (or such lesser amount as shall
equal the outstanding principal balance hereof), in lawful money of the
United States of America and in immediately available funds, on the dates
and in the principal amounts provided in the Credit Agreement referred to
below, and to pay interest on the unpaid principal amount of each
Competitive Loan made by the Bank to the Borrower under the Credit
Agreement, at such office, in like money and funds, for the period
commencing on the date of such Competitive Loan until such Competitive Loan
shall be paid in full, at the rates per annum and on the dates provided in
the Credit Agreement.
In addition to and cumulative of any payment required to be made
against this Note pursuant to the Credit Agreement, (i) the principal
amount of each Competitive Loan made by the Bank, together with all accrued
and unpaid interest on each such Competitive Loan, shall be due and payable
on the last day of the Interest Period for such Competitive Loan and (ii)
this Note, including all principal then unpaid and accrued interest then
unpaid, shall be due and payable on December 31, 2000, its final maturity.
All payments shall be applied first to principal and the balance to accrued
interest, except as otherwise expressly provided in the Credit Agreement.
This Note is one of the Competitive Notes referred to in the
Credit Agreement (as restated, amended, modified and supplemented and in
effect from time to time, the "Credit Agreement") dated as of May 24, 1994,
among the Borrower, certain signatory banks named therein, Chemical Bank,
as Auction Agent, and Texas Commerce Bank National Association, as
Administrative Agent, and evidences the Competitive Loans made by the Bank
thereunder. This Note shall be governed by the Credit Agreement. This
Note is secured by the Security Documents. Capitalized terms used in this
Note and not defined in this Note, but which are defined in the Credit
Agreement, have the respective meanings herein as are assigned to them in
the Credit Agreement.
The Bank is hereby authorized by the Borrower to endorse on
Schedule A (or a continuation thereof) attached to this Note, the amount
and date of each Competitive Loan made by the Bank to the Borrower under
the Credit Agreement, and the amount and date of each payment or prepayment
of principal of such Competitive Loan received by the Bank, provided that
any failure by the Bank to make any such endorsement shall not affect the
obligations of the Borrower under the Credit Agreement or under this Note
in respect of such Competitive Loans.
Except only for any notices which are specifically required by
the Credit Agreement or the other Loan Documents, the Borrower and any and
all co-makers, endorsers, guarantors and sureties severally waive notice
(including, but not limited to, notice of intent to accelerate and notice
of acceleration, notice of protest and notice of dishonor), demand,
presentment for payment, protest, diligence in collecting and the filing of
suit for the purpose of fixing liability and consent that the time of
payment hereof may be extended and re-extended from time to time without
notice to any of them. Each such person agrees that his, her or its
liability on or with respect to this Note shall not be affected by any
release of or change in any guaranty or security at any time existing or by
any failure to perfect or maintain perfection of any lien against or
security interest in any such security or the partial or complete
enforceability of any guaranty or other surety obligation, in each case in
whole or in part, with or without notice and before or after maturity.
The Credit Agreement provides for the acceleration of the
maturity of this Note upon the occurrence of certain events and for
prepayment of Competitive Loans upon the terms and conditions specified
therein.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF TEXAS AND THE UNITED STATES OF AMERICA FROM TIME
TO TIME IN EFFECT.
EXHIBIT O
to
Credit Agreement
SCHEDULE A
This Note evidences Competitive Loans made by the Bank under the within-
described Credit Agreement to the Borrower, in the principal amounts set
forth below, which Competitive Loans are of the Type and for the Interest
Periods and were made on the dates set forth below, subject to the payments
of principal set forth below:
Principal Interest
Amount of Period/ Date of Amount Balance
Date Competitive Maturity Payment or Paid or Out-
Made Loan Type Date Prepayment Prepaid standing
EXHIBIT O
to
Credit Agreement
EXHIBIT 4.4
ASSIGNMENT AND ACCEPTANCE
Dated: , 199___
Reference is made to the Credit Agreement dated as of May 24, 1994 (as
restated, amended, modified, supplemented and in effect from time to time,
the "Credit Agreement"), among Seagull Energy Corporation, a Texas
corporation (the "Company"), the Banks named therein, Chemical Bank, as
Auction Agent, and Texas Commerce Bank National Association, as
Administrative Agent (the "Administrative Agent"). Capitalized terms used
herein and not otherwise defined shall have the meanings assigned to such
terms in the Credit Agreement. This Assignment and Acceptance, between the
Assignor (as defined and set forth on Schedule I hereto and made a part
hereof) and the Assignee (as defined and set forth on Schedule I hereto and
made a part hereof) is dated as of the Effective Date (as set forth on
Schedule I hereto and made a part hereof).
1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably
purchases and assumes from the Assignor without recourse to the Assignor,
as of the Effective Date, an undivided interest (the "Assigned Interest")
in and to all the Assignor's rights and obligations under the Credit
Agreement respecting those, and only those, credit facilities contained in
the Credit Agreement as are set forth on Schedule I (collectively, the
"Assigned Facilities," individually, an "Assigned Facility"), in a
principal amount for each Assigned Facility as set forth on Schedule I.
2. The Assignor (i) makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or any
other Loan Document or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement, any other Loan
Document or any other instrument or document furnished pursuant thereto,
other than that it is the legal and beneficial owner of the interest being
assigned by it hereunder and that such interest is free and clear of any
adverse claim; (ii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Company or
its Subsidiaries or the performance or observance by the Company or its
Subsidiaries of any of its respective obligations under the Credit
Agreement, any other Loan Document or any other instrument or document
furnished pursuant thereto; and (iii) attaches the Note(s) held by it
evidencing the Assigned Facility or Facilities, as the case may be, and
requests that the Administrative Agent exchange such Note(s) for a new Note
or Notes payable to the Assignor (if the Assignor has retained any interest
in the Assigned Facility or Facilities) and a new Note or Notes payable to
the Assignee in the respective amounts which reflect the assignment being
made hereby (and after giving effect to any other assignments which have
become effective on the Effective Date).
3. The Assignee (i) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance and that it is a
permitted assignee under Section 13.5 of the Credit Agreement; (ii)
confirms that it has received a copy of the Credit Agreement, together with
copies of the financial statements referred to in Section 8.6, or if later,
the most recent financial statements delivered pursuant to Section 9.1
thereof, and such other documents and information as it has deemed
appropriate to make its own credit analysis; (iii) agrees that it will,
independently and without reliance upon the Administrative Agent, the
Assignor or any other Bank and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Credit Agreement; (iv)
appoints and authorizes the Administrative Agent to take such action as
agent on its behalf and to exercise such powers under the Credit Agreement
as are delegated to the Administrative Agent by the terms thereof, together
with such powers as are reasonably incidental thereto; (v) agrees that it
will be bound by the provisions of the Credit Agreement and will perform in
accordance with its terms all the obligations which by the terms of the
Credit Agreement are required to be performed by it as a Bank; (vi) agrees
that it will be bound by the terms of the Intercreditor Agreement; (vii) if
the Assignee is organized under the laws of a jurisdiction outside the
United States, attaches the forms prescribed by the Internal Revenue
Service of the United States certifying as to the Assignee's exemption from
United States withholding taxes with respect to all payments to be made to
the Assignee under the Credit Agreement or such other documents as are
necessary to indicate that all such payments are subject to such tax at a
rate reduced by an applicable tax treaty, and (viii) has supplied the
information requested on the administrative questionnaire attached hereto
as Exhibit A.
4. Following the execution of this Assignment and Acceptance, it will
be delivered to the Administrative Agent for acceptance by it and the
Company and recording by the Administrative Agent pursuant to Section
13.5(e) of the Credit Agreement, effective as of the Effective Date (which
Effective Date shall, unless otherwise agreed to by the Administrative
Agent, be at least five Business Days after the execution of this
Assignment and Acceptance).
5. Upon such acceptance and recording, from and after the Effective
Date, the Administrative Agent shall make all payments in respect of the
Assigned Interest (including payments of principal, interest, fees and
other amounts) to the Assignee, whether such amounts have accrued prior to
the Effective Date or accrue subsequent to the Effective Date. The
Assignor and Assignee shall make all appropriate adjustments in payments
for periods prior to the Effective Date by the Administrative Agent or with
respect to the making of this assignment directly between themselves.
6. From and after the Effective Date, (i) the Assignee shall be a
party to the Credit Agreement and, to the extent provided in this
Assignment and Acceptance, have the rights and obligations of a Bank
thereunder and shall be bound by the terms of the Intercreditor Agreement,
and (ii) the Assignor shall, to the extent provided in this Assignment and
Acceptance, relinquish its rights and be released from its obligations
under the Credit Agreement.
7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
EXHIBIT H
to
Credit Agreement
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Acceptance to be executed by their respective duly
authorized officers on Schedule I hereto.
EXHIBIT H
to
Credit Agreement
Schedule I to Assignment and Acceptance
Respecting the Credit Agreement,
dated as of May 24, 1994, among
Seagull Energy Corporation,
the Banks named therein,
Chemical Bank, as Auction Agent
and Texas Commerce Bank
National Association, as Administrative Agent
Legal Name of Assignor:
Legal Name of Assignee:
Effective Date of Assignment: , 199
Percentage Assigned of Each
Facility (to at least 8
Principal decimals) (Shown as a
Amount (or, percentage of aggregate
with respect original principal amount
to Letters [or, with respect to Letters
Assigned of Credit, face Credit, face amount]
Facilities amount) Assigned of all Banks)
Committed Loans: $ %
Letter of Credit
participation
interests: $ %
Competitive Loans: $
Accepted:
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Administrative Agent as Assignor
By: By:
Name: Name:
Title: Title:
SEAGULL ENERGY CORPORATION as Assignee
By: By:
Name: Name:
EXHIBIT H
to
Credit Agreement
Title: Title:
EXHIBIT 4.5
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT ("First Amendment") dated as
of May 24, 1994 (the "First Amendment Effective Date") is made and entered
into by and among SEAGULL ENERGY CANADA LTD. (the "Borrower"), a
corporation duly organized and validly existing under the laws of the
Province of Alberta, Canada, the banking institutions from time to time a
party to the Credit Agreement (as hereinafter defined) as amended by this
First Amendment (each, together with its successors and assigns, a "Bank"
and collectively, the "Banks"), CHEMICAL BANK OF CANADA, as arranger and as
administrative agent for the Banks (in such capacity, the "Administrative
Agent"), THE BANK OF NOVA SCOTIA, as paying agent and co-agent for the
Banks (in such capacity, the "Paying Agent"), and CANADIAN IMPERIAL BANK OF
COMMERCE (in such capacity, the "Co-Agent"), as co-agent for the Banks.
RECITALS:
WHEREAS, the Borrower, the Administrative Agent, the Paying Agent, the
Co-Agent and the Banks are parties to a Credit Agreement dated as of
December 30, 1993 (the "Credit Agreement"); and
WHEREAS, the Borrower, the Administrative Agent, the Paying Agent, the
Co-Agent and the Banks have agreed, on the terms and conditions herein set
forth, that the Credit Agreement be amended in certain respects;
NOW, THEREFORE, IT IS AGREED:
Section 1. Definitions. Terms used herein which are defined in
the Credit Agreement shall have the same meanings when used herein unless
otherwise provided herein.
Section 2. Amendments to the Credit Agreement. On and after the
First Amendment Effective Date, the Credit Agreement shall be amended as
follows:
(a) The definition of "Key Contracts" set forth in Section 1 of the
Credit Agreement is hereby deleted.
(b) The following new definitions are hereby added to Section 1 of
the Credit Agreement:
"Articles of Amendment" shall mean the proposed Articles of
Amendment attached hereto as Exhibit L.
"B.A. Reference Banks" shall mean the Paying Agent and one (1)
other Bank selected by the Paying Agent (after consultation with the
Company) which is a "Schedule 1" accepting bank.
"ENSTAR Alaska Group" shall have the meaning assigned to such
term in the Articles of Amendment.
"ENSTAR Alaska Stock" shall have the meaning assigned to such
term in the Article of Amendment.
"Seagull Energy Group" shall have the meaning assigned to the
term "Seagull Energy" in the Articles of Amendment.
(c) The definition of "Applicable Margin" set forth in Section 1 of
the Credit Agreement is hereby amended to read in its entirety as follows:
"Applicable Margin" shall mean, on any day and with respect to
any Loan, the applicable per annum percentage set forth at the
appropriate intersection in the table shown below, based on the
Debt/Capitalization Ratio as of the last day of the most recently
ending fiscal quarter of the Parent and its Subsidiaries with respect
to which the Administrative Agent shall have received the financial
statements and other information (the "Current Information") required
to be delivered to the Administrative Agent pursuant to Section 9.1
hereof (said calculation to be made by the Administrative Agent as
soon as practicable after receipt by the Administrative Agent of all
required Current Information):
Applicable Margin For
Alternate Base Rate Applicable
Loans and Canadian Margin for
Prime Rate Eurodollar
Debt/Capitalization Ratio Loans Loans
Greater than or equal to 60% 0.50 1.50
Greater than or equal to 55%
but less than 60% 0.25 1.25
Greater than or equal to 50%
but less than 55% 0.00 1.00
Greater than or equal to 45%
but less than 50% 0.00 0.75
Less than 45% 0.00 0.625
Notwithstanding the foregoing, at all times that a Borrowing Base
Deficiency shall exist and is continuing for more than 30 days, the
Applicable Margins provided for in this definition shall each be
increased by adding 1.00%. Each change in the Applicable Margin based
on a change in the Current Information shall be effective as of the
fifteenth day of the month during which the Current Information used
to calculate the new Applicable Margin was delivered to the
Administrative Agent.
134
(d) The definition of "Canadian Bankers' Acceptance Discount Rate"
set forth in Section 1 of the Credit Agreement is hereby amended to read in
its entirety as follows:
"Canadian Bankers' Acceptance Discount Rate" shall mean
(i) with respect to each Bankers' Acceptance which is required to be
accepted and purchased by a Bank hereunder and which has a term
of more than 90 days, the percentage discount rate (expressed to
two decimal places) determined by the Paying Agent to be the
average of the quoted discount rates at which Canadian Dollar
Bankers' Acceptances having a comparable issue and maturity date
are being bid for discount by the B.A. Reference Banks at
approximately 11:00 a.m. Toronto, Ontario time (or as soon
thereafter as practicable) on the day of the issuance and
acceptance of the Bankers' Acceptances. If either B.A. Reference
Bank does not furnish a timely quotation, the Paying Agent shall
determine the relevant discount rate on the basis of the
quotation or quotations furnished by the remaining B.A. Reference
Bank; if neither of such quotations is available on a timely
basis, the provisions of Section 6.2 shall apply; and
(ii) with respect to each Bankers' Acceptance which is required to be
accepted and purchased by a Bank hereunder and which has a term
of 90 days or less, the percentage discount rate (expressed to
two decimal places) for Canadian Dollar Bankers' Acceptances
having a comparable issue and maturity date which is quoted on
the Reuter's Canadian Discount Offer Rate Screen for "Schedule 1"
accepting banks (or if such screen shall not be available, any
successor or similar services may be selected by the Paying Agent
and the Company) as of 11:00 a.m. Toronto, Ontario time (or as
soon thereafter as practicable) on the day of acceptance of the
Bankers' Acceptances. If none of such screen nor any successor
or similar services is available then the "Canadian Bankers'
Acceptance Discount Rate" shall mean, with respect to each
Bankers' Acceptance which is required to be accepted and
purchased by a Bank hereunder and which has a term of 90 days or
less, the percentage discount rate (expressed to two decimal
places) determined by the Paying Agent to be the average of the
quoted discount rates at which Canadian Dollar Bankers'
Acceptances having a comparable issue and maturity date are being
bid for discount by the B.A. Reference Banks at approximately
11:00 a.m. Toronto, Ontario time (or as soon thereafter as
practicable) on the day of the issuance and acceptance of the
Bankers' Acceptances. If either B.A. Reference Bank does not
furnish a timely quotation, the Paying Agent shall determine the
relevant discount rate on the basis of the quotation or
quotations furnished by the remaining B.A. Reference Bank; if
neither of such quotations is available on a timely basis, the
provisions of Section 6.2 shall apply.
Each determination of the Canadian Bankers' Acceptance Discount
Rate shall be conclusive and binding, absent manifest error, and
135
may be computed using any reasonable averaging and attribution
method.
(e) The definition of "Dividend Payment" set forth in Section 1 of
the Credit Agreement is hereby amended to read in its entirety as follows:
"Dividend Payment" shall mean, with respect to any Person,
dividends (in cash, property or obligations) on, or other payments or
distributions on account of, or the redemption of, or the setting
apart of money for a sinking or other analogous fund for the purchase,
redemption, retirement or other acquisition of, any shares of any
class of capital stock of such Person, or the exchange or conversion
of any shares of any class of capital stock of such Person for or into
any obligations of or shares of any other class of capital stock of
such Person or any other property, but excluding dividends to the
extent payable in, or exchanges or conversions for or into, shares of
common stock of the Parent or options or warrants to purchase common
stock of the Parent.
(f) The definition of "Dividend Tests" set forth in Section 1 of the
Credit Agreement is hereby deleted in its entirety.
(g) The definition of "Intercreditor Agreement" set forth in Section
1 of the Credit Agreement is hereby amended to read in its entirety as
follows:
"Intercreditor Agreement" shall mean that certain Intercreditor
Agreement dated December 30, 1993 executed by and among the Company,
the Parent, the Administrative Agent and the "Administrative Agent"
under the U.S. Facility, as amended by that certain First Amendment to
Intercreditor Agreement in the form of Exhibit I hereto dated May 24,
1994 executed by and among the Company, the Parent, the Administrative
Agent and the "Administrative Agent" under the U.S. Facility and as
the same may be further amended or modified from time to time.
(h) The definition of "Investments Tests" set forth in Section 1 of
the Credit Agreement is hereby amended to read in its entirety as follows:
"Investments Tests" shall mean compliance with each of the
following restrictions (both before and immediately after giving
effect to the applicable Investments):
(i) there shall exist no Borrowing Base Deficiency;
(ii) no Default or Event of Default shall have occurred and
be continuing; and
(iii) the applicable Investment, when aggregated with any
prior permitted Investments, shall not exceed 10% of
Tangible Net Worth of the Parent and its Subsidiaries
on a consolidated basis.
136
(i) The definition of "Revolving Credit Availability Period" set
forth in Section 1 of the Credit Agreement is hereby amended to read in its
entirety as follows:
"Revolving Credit Availability Period" shall mean the period from
and including the date hereof to but not including December 31, 2000
or the date the Commitments are terminated pursuant to Section 11.1,
whichever is first to occur.
(j) The definition of "U.S. Facility" set forth in Section 1 of the
Credit Agreement is hereby amended to read in its entirety as follows:
"U.S. Facility" shall mean that certain Credit Agreement dated
May 24, 1994 executed by and among the Parent, Texas Commerce Bank
National Association, as Administrative Agent, Chemical Bank, as
Auction Agent, and certain banks therein named, as amended by the
Intercreditor Agreement and as the same may be further amended or
modified from time to time.
(k) Section 2.3(a)(i) of the Credit Agreement is hereby amended to
read in its entirety as follows:
(i) The total Commitment of the Banks shall be reduced as
follows:
Reduction Resulting Revolving
Reduction Date Amount Credit Commitment
March 31, 1997 U.S. $10,937,500 U.S. $164,062,500
June 30, 1997 U.S.$ 10,937,500 U.S. $153,125,000
September 30, 1997 U.S. $10,937,500 U.S. $142,187,500
December 31, 1997 U.S. $10,937,500 U.S. $131,250,000
March 31, 1998 U.S. $10,937,500 U.S. $120,312,500
June 30, 1998 U.S. $10,937,500 U.S. $109,375,000
September 30, 1998 U.S. $10,937,500 U.S. $ 98,437,500
December 31, 1998 U.S. $10,937,500 U.S. $ 87,500,000
March 31, 1999 U.S. $10,937,500 U.S. $ 76,562,500
June 30, 1999 U.S. $10,937,500 U.S. $ 65,625,000
September 30, 1999 U.S. $10,937,500 U.S. $ 54,687,500
December 31, 1999 U.S. $10,937,500 U.S. $ 43,750,000
March 31, 2000 U.S. $10,937,500 U.S. $ 32,812,500
June 30, 2000 U.S. $10,937,500 U.S. $ 21,875,000
September 30, 2000 U.S. $10,937,500 U.S. $ 10,937,500
December 31, 2000 U.S. $10,937,500 U.S. $ 0
(l) Section 6.2(b) of the Credit Agreement is hereby amended to read
in its entirety as follows:
(b) the Paying Agent determines in good faith (which
determination shall be conclusive) that quotations of discount rates
for the purchase of Canadian Dollar bankers' acceptances referred to
in the definition of "Canadian Bankers' Acceptance Discount Rate" in
Section 1.1 hereof are not available in the relevant amounts or for
the relevant maturities for purposes of determining the Canadian
137
Bankers' Acceptance Discount Rate therefor as provided in this
Agreement; or
(m) Section 6.5 of the Credit Agreement is hereby amended to read in
its entirety as follows:
6.5 Compensation. Subject to Section 13.6 hereof, the Company
shall pay to the Paying Agent for the account of each Bank, within
four (4) Business Days after demand therefor by such Bank through the
Administrative Agent, such amount or amounts as shall be sufficient
(in the reasonable opinion of such Bank) to compensate it for any
loss, cost or expense actually incurred by it (exclusive of any lost
profits or opportunity costs) as a result of:
(a) any payment, prepayment or conversion of a Eurodollar Loan
made by such Bank or a Bankers' Acceptance accepted by such Bank on a
date other than the last day of an Interest Period for such Eurodollar
Loan or the specified maturity date for such Bankers' Acceptance, as
the case may be; or
(b) any failure by the Company to borrow a Eurodollar Loan to be
made by such Bank or to issue a Bankers' Acceptance to be accepted and
purchased by such Bank on the date for such borrowing or such issuance
specified in the relevant notice under Section 5.5 hereof or to
convert a Eurodollar Loan into a Bankers' Acceptance or a Loan of
another Type or to convert a Bankers' Acceptance into a Loan on such
date after giving notice of such conversion;
such compensation to include, without limitation, any loss or expense
incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by the applicable Bank to fund or maintain its
share of any Loan or to fund the acceptance and purchase of any
Bankers' Acceptance. Compensation due pursuant to this Section with
respect to Bankers' Acceptances shall be calculated using the Canadian
Bankers' Acceptance Discount Rate for bankers' acceptances maturing on
(or as close as reasonably possible) to the maturity date of the
Bankers' Acceptances with respect to which such compensation arises
(versus the actual Canadian Bankers' Acceptance Discount Rate for such
Bankers' Acceptances). Subject to Section 6.8, each determination of
the amount of such compensation by a Bank shall be conclusive and
binding, absent manifest error, and may be computed using any
reasonable averaging and attribution method.
(n) The reference in Section 8.4 of the Credit Agreement to "or any
Key Contract" is hereby deleted.
(o) Section 9.15 of the Credit Agreement is hereby amended to read in
its entirety as follows:
9.15 Minimum ENSTAR Alaska Tax Payments. The Parent will receive
from ENSTAR Alaska during each calendar year not less than the amount
of federal income tax liability which the Parent in good faith
determines would have been payable by ENSTAR Alaska for the previous
year if ENSTAR Alaska were a separate taxable Person.
138
(p) Section 10.1 of the Credit Agreement is hereby amended by
deleting the reference to "and" at the end of clause (v), by changing the
period (".") at the end of clause (w) to read "; and" and by adding the
following new clause (x):
(x) Indebtedness of the Company having a maturity of 364 days or
less from the date of its incurrence in an aggregate principal amount
not exceeding Canadian $10,000,000 at any one time outstanding.
(q) Section 10.4 of the Credit Agreement is hereby amended to read in
its entirety as follows:
10.4 Dividend Payment Restrictions. The Parent will not declare
or make any Dividend Payment other than:
(i) so long as no Default or Event of Default shall have
occurred and is continuing, dividends on up to $150,000,000
of convertible preferred stock to extent that, in the
reasonable good faith determination of the Parent and the
Administrative Agent, such dividends are not materially in
excess of dividends on similar securities issued in
transactions of comparable type and magnitude for issuers
similarly situated to the Parent at the time of issuance of
such preferred stock; provided, however, that, with respect
to any particular issue of convertible preferred stock, the
Administrative Agent shall be deemed to have agreed with any
determination of the Parent that the dividends for such
issue satisfy the foregoing requirements if the
Administrative Agent shall not have objected to such
determination within 10 days after the Parent has informed
the Administrative Agent of the maximum dividend that could
be paid with respect to such issue; and
(ii) so long as no Default or Event of Default has occurred and
is continuing, any Dividend Payments attributable to the
ENSTAR Alaska Stock which, when aggregated with any prior
Dividend Payment attributable to the ENSTAR Alaska Stock,
does not exceed (a) $20,000,000 plus (b) 100% of the net
income of the ENSTAR Alaska Group on a cumulative basis for
the period commencing on January 1, 1994, through the then
current date; and
(iii) so long as no Default or Event of Default has occurred and
is continuing and there exists no Borrowing Base Deficiency,
any Dividend Payment (other than those permitted by clauses
(i) and (ii) of this Section 10.4) which, when aggregated
with any prior Dividend Payment (other than those permitted
by clauses (i) and (ii) of this Section 10.4), does not
exceed (a) $20,000,000 plus (b) 33-1/3% of net income of the
Seagull Energy Group on a cumulative basis for the period
commencing on January 1, 1994, through the then current date
plus (c) 100% of the net income of the ENSTAR Alaska Group
on a cumulative basis for such period minus (d) any Dividend
139
Payments previously made as permitted by clause (ii) of this
Section.
(r) Section 10.11 of the Credit Agreement is hereby amended to read
in its entirety as follows:
10.11 Parent Debt/Capitalization Ratio. The Parent will not
permit the Debt/Capitalization Ratio to be, at any time, more than
65%.
(s) Section 10.13 of the Credit Agreement is hereby amended to read
in its entirety as follows:
10.13 Nature of Business. The Parent will not engage in, and
will not permit any Subsidiary of the Parent to engage in, businesses
other than oil and gas exploration and production, gas processing,
transmission, distribution, marketing and storage and gas and liquids
pipeline operations and activities related or ancillary thereto;
provided, that if the Parent acquires one or more Subsidiaries in
transactions otherwise permitted by the terms hereof, any such
Subsidiary may be engaged in businesses other than those listed in
this Section so long as the assets of such Subsidiaries which are used
in the conduct of such other businesses do not constitute more than
five percent (5%) of the consolidated total assets of the Parent
(inclusive of the assets of the Subsidiary so acquired).
(t) The third sentence of Section 11.3 of the Credit Agreement is
hereby amended to read in its entirety as follows:
The rights, titles, benefits, privileges, duties and obligations of
each applicable Agent with respect thereto shall be governed by the
terms and provisions of this Agreement.
(u) The reference in Section 12.1 to "Uniform Customs and Practice
for Documentary Credits (1983 Revision, International Chamber of Commerce
Publication No. 400)" is hereby amended to read "Uniform Customs and
Practice for Documentary Credits (1993 Revision, International Chamber of
Commerce Publication No. 500)".
(v) Section 13.15 of the Credit Agreement is hereby amended to read
in its entirety as follows:
13.15 Intercreditor Agreement. Reference is hereby made to
the Intercreditor Agreement, which provides for certain matters
relating to both the Obligations and the U.S. Facility. To the extent
of any conflict between the terms hereof and the terms of the
Intercreditor Agreement, the Intercreditor Agreement shall control.
The execution and delivery by the Administrative Agent of the
Intercreditor Agreement on behalf of the Banks is hereby ratified and
confirmed by each of the Banks. Any Bank that becomes a party to this
Agreement after the First Amendment Effective Date agrees to be bound
by the terms and provisions of the Intercreditor Agreement.
140
(w) Exhibit C-1 to the Credit Agreement is hereby amended to be
identical to Exhibit A attached hereto, being a revised Note (U.S.
Dollars).
(x) Exhibit C-2 to the Credit Agreement is hereby amended to be
identical to Exhibit B attached hereto, being a revised Note (Canadian
Dollars).
(y) Exhibit E to the Credit Agreement is hereby amended to be
identical to Exhibit C attached hereto, being a revised Compliance
Certificate.
(z) Exhibit I to the Credit Agreement is hereby amended to be
identical to Exhibit D attached hereto, being the form of the First
Amendment to Intercreditor Agreement referred to in the definition of
"Intercreditor Agreement" (as amended hereby).
(aa) A new Exhibit L is hereby added to the Credit Agreement, such new
exhibit to be identical to Exhibit E attached hereto, being the Articles of
Amendment of the Parent.
Section 3. Limitations. The amendments set forth herein are limited
precisely as written and shall not be deemed to (a) be a consent to, or
waiver or modification of, any other term or condition of the Credit
Agreement or any of the other Loan Documents, or (b) except as expressly
set forth herein, prejudice any right or rights which the Banks may now
have or may have in the future under or in connection with the Credit
Agreement, the Loan Documents or any of the other documents referred to
therein. Except as expressly modified hereby or by express written
amendments thereof, the terms and provisions of the Credit Agreement, the
Notes and any other Loan Documents or any other documents or instruments
executed in connection with any of the foregoing are and shall remain in
full force and effect. In the event of a conflict between this First
Amendment and any of the foregoing documents (other than the Intercreditor
Agreement), the terms of this First Amendment shall be controlling.
Section 4. Payment of Expenses. The Borrower agrees, whether or not
the transactions hereby contemplated shall be consummated, to reimburse and
save the Agents harmless from and against liability for the payment of all
reasonable substantiated out-of-pocket costs and expenses arising in
connection with the preparation, execution, delivery, amendment,
modification, waiver and enforcement of, or the preservation of any rights
under this First Amendment, including, without limitation, the reasonable
fees and expenses of any local or other counsel for the Administrative
Agent, and all stamp taxes (including interest and penalties, if any),
recording taxes and fees, filing taxes and fees, and other charges which
may be payable in respect of, or in respect of any modification of, the
Credit Agreement and the other Loan Documents. The provisions of this
Section shall survive the termination of the Credit Agreement and the
repayment of the Loans.
141
Section 5. Governing Law. THIS FIRST AMENDMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE APPLICABLE LAWS (OTHER THAN THE
CONFLICT OF LAWS RULES) OF THE PROVINCE OF ALBERTA AND OF CANADA FROM TIME
TO TIME IN EFFECT.
Section 6. Descriptive Headings, etc. The descriptive headings of
the several Sections of this First Amendment are inserted for convenience
only and shall not be deemed to affect the meaning or construction of any
of the provisions hereof.
Section 7. Entire Agreement. This First Amendment and the documents
referred to herein represent the entire understanding of the parties hereto
regarding the subject matter hereof and supersede all prior and
contemporaneous oral and written agreements of the parties hereto with
respect to the subject matter hereof, including, without limitation, any
commitment letters regarding the transactions contemplated by this First
Amendment.
Section 8. Counterparts. This First Amendment may be executed in any
number of counterparts and by different parties on separate counterparts
and all of such counterparts shall together constitute one and the same
instrument.
Section 9. Amended Definitions. As used in the Credit Agreement
(including all Exhibits thereto) and all other instruments and documents
executed in connection therewith, on and subsequent to the First Amendment
Effective Date the term "Agreement" shall mean the Credit Agreement as
amended by this First Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to be duly executed and delivered by their respective duly
authorized offices as of the date first above written.
Exhibit A - Note (U.S. Dollars)
Exhibit B - Note (Canadian Dollars)
Exhibit C - Compliance Certificate
Exhibit D - First Amendment to Intercreditor Agreement
Exhibit E - Articles of Amendment
SEAGULL ENERGY CANADA LTD.
By:
Robert M. King,
Vice President
142
CHEMICAL BANK OF CANADA,
individually and as Arranger
and as Administrative Agent
By:
Name:
Title:
THE BANK OF NOVA SCOTIA, as Paying
Agent, as Co-Agent and as a Bank
By:
Name:
Title:
By:
Name:
Title:
CANADIAN IMPERIAL BANK OF COMMERCE,
as Co-Agent and as a Bank
By:
Name:
Title:
ABN AMRO BANK CANADA
By:
Name:
Title:
By:
Name:
Title:
143
PARIBAS BANK OF CANADA
By:
Name:
Title:
By:
Name:
Title:
MELLON BANK CANADA
By:
Name:
Title:
NBD BANK, CANADA
By:
Name:
Title:
SOCIETE GENERALE (CANADA)
By:
Name:
Title:
THE BANK OF TOKYO CANADA
By:
Name:
Title:
144
CREDIT LYONNAIS CANADA
By:
Name:
Title:
145
The undersigned hereby joins in the execution of this Amendment to
evidence its consent hereto and its acknowledgment that the Guarantee shall
continue to apply to the Credit Agreement, as amended hereby.
SEAGULL ENERGY CORPORATION
By:
Robert M. King,
Vice President, Corporate
Development and Treasurer
146
EXHIBIT 4.6
PROMISSORY NOTE
(U.S. Dollars)
U.S. $ , 199
FOR VALUE RECEIVED, SEAGULL ENERGY CANADA LTD. (the "Borrower"),
a corporation organized under the laws of the Province of Alberta, Canada,
hereby promises to pay to (the
"Bank"), or order, at the principal office of The Bank of Nova Scotia,
International Banking Division-Loan Accounting, 14th Floor, 44 King Street
West, Toronto, Ontario, Canada M5H 1H1, Attention: Assistant Manager, the
principal sum of
UNITED STATES DOLLARS (U.S. $ ) (or such lesser amount as
shall equal the outstanding principal balance hereof), in lawful money of
the United States of America and in immediately available funds, on the
dates and in the principal amounts provided in the Credit Agreement
referred to below, and to pay interest on the unpaid principal amount of
each Loan denominated in U.S. Dollars made by the Bank to the Borrower
under the Credit Agreement, at such office, in like money and funds, for
the period commencing on the date of such Loan until such Loan shall be
paid in full, at the rates per annum and on the dates provided in the
Credit Agreement.
In addition to and cumulative of any payment required to be made
against this Note pursuant to the Credit Agreement, this Note, including
all principal then unpaid and accrued interest then unpaid, shall be due
and payable on December 31, 2000, its final maturity. All payments shall
be applied first to principal and the balance to accrued interest, except
as otherwise expressly provided in the Credit Agreement.
This Note is one of the Notes referred to in the Credit Agreement
(as restated, amended, modified and supplemented and in effect from time to
time, the "Credit Agreement") dated as of December 30, 1993, among the
Borrower, certain signatory banks named therein, Chemical Bank of Canada,
as Arranger and as Administrative Agent, The Bank of Nova Scotia, as Paying
Agent and as Co-Agent, and Canadian Imperial Bank of Commerce, as Co-Agent,
and evidences the Loans denominated in U.S. Dollars made by the Bank
thereunder. This Note shall be governed by the Credit Agreement.
Capitalized terms used in this Note and not defined in this Note, but which
are defined in the Credit Agreement, have the respective meanings herein as
are assigned to them in the Credit Agreement.
The Bank is hereby authorized by the Borrower to endorse on
Schedule A (or a continuation thereof) attached to this Note, the amount
and date of each Loan denominated in U.S. Dollars made by the Bank to the
Borrower under the Credit Agreement, and the amount and date of each
payment or prepayment of principal of such Loan received by the Bank,
provided that any failure by the Bank to make any such endorsement shall
not affect the obligations of the Borrower under the Credit Agreement or
under this Note in respect of such Loans.
147
Except only for any notices which are specifically required by
the Credit Agreement or the other Loan Documents, the Borrower and any and
all co-makers, endorsers, guarantors and sureties severally waive notice
(including, but not limited to, notice of intent to accelerate and notice
of acceleration, notice of protest and notice of dishonor), demand,
presentment for payment, protest, diligence in collecting and the filing of
suit for the purpose of fixing liability and consent that the time of
payment hereof may be extended and re-extended from time to time without
notice to any of them. Each such person agrees that his, her or its
liability on or with respect to this Note shall not be affected by any
release of or change in any guaranty or security at any time existing or by
any failure to perfect or maintain perfection of any lien against or
security interest in any such security or the partial or complete
enforceability of any guaranty or other surety obligation, in each case in
whole or in part, with or without notice and before or after maturity.
The Credit Agreement provides for the acceleration of the
maturity of this Note upon the occurrence of certain events and for
prepayment of Loans upon the terms and conditions specified therein.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE PROVINCE OF ALBERTA, CANADA AND OF CANADA FROM TIME TO TIME
IN EFFECT.
SEAGULL ENERGY CANADA LTD.
By:
Name:
Title:
EXHIBIT A
to
First Amendment to Credit Agreement
Page 148
SCHEDULE A
This Note evidences Loans denominated in U.S. Dollars made by the Bank
under the within-described Credit Agreement to the Borrower, in the
principal amounts set forth below, which Loans are of the Type and for the
Interest Periods and were made on the dates set forth below, subject to the
payments of principal set forth below:
Interest
Principal Period/ Date of Amount Balance
Date Amount of Maturity Payment or Paid or Out-
Made Loan Type Date Prepayment Prepaid standing
EXHIBIT A
to
First Amendment to Credit Agreement
Page 149
EXHIBIT 4.7
PROMISSORY NOTE
(Canadian Dollars)
Canadian $ , 199
FOR VALUE RECEIVED, SEAGULL ENERGY CANADA LTD. (the "Borrower"),
a corporation organized under the laws of the Province of Alberta, Canada,
hereby promises to pay to (the
"Bank"), or order, at the principal office of The Bank of Nova Scotia,
International Banking Division-Loan Accounting, 14th Floor, 44 King Street
West, Toronto, Ontario, Canada M5H 1H1, Attention: Assistant Manager, the
principal sum of
CANADIAN DOLLARS (Canadian $ ) (or such lesser amount as
shall equal the outstanding principal balance hereof), in lawful money of
Canada and in immediately available funds, on the dates and in the
principal amounts provided in the Credit Agreement referred to below, and
to pay interest on the unpaid principal amount of each Loan denominated in
Canadian Dollars made by the Bank to the Borrower under the Credit
Agreement, at such office, in like money and funds, for the period
commencing on the date of such Loan until such Loan shall be paid in full,
at the rates per annum and on the dates provided in the Credit Agreement.
In addition to and cumulative of any payment required to be made
against this Note pursuant to the Credit Agreement, this Note, including
all principal then unpaid and accrued interest then unpaid, shall be due
and payable on December 31, 2000, its final maturity. All payments shall
be applied first to principal and the balance to accrued interest, except
as otherwise expressly provided in the Credit Agreement.
This Note is one of the Notes referred to in the Credit Agreement
(as restated, amended, modified and supplemented and in effect from time to
time, the "Credit Agreement") dated as of December 30, 1993, among the
Borrower, certain signatory banks named therein, Chemical Bank of Canada,
as Arranger and as Administrative Agent, The Bank of Nova Scotia, as Paying
Agent and as Co-Agent, and Canadian Imperial Bank of Commerce, as Co-Agent,
and evidences the Loans denominated in Canadian Dollars made by the Bank
thereunder. This Note shall be governed by the Credit Agreement.
Capitalized terms used in this Note and not defined in this Note, but which
are defined in the Credit Agreement, have the respective meanings herein as
are assigned to them in the Credit Agreement.
The Bank is hereby authorized by the Borrower to endorse on
Schedule A (or a continuation thereof) attached to this Note, the amount
and date of each Loan denominated in Canadian Dollars made by the Bank to
the Borrower under the Credit Agreement, and the amount and date of each
payment or prepayment of principal of such Loan received by the Bank,
provided that any failure by the Bank to make any such endorsement shall
not affect the obligations of the Borrower under the Credit Agreement or
under this Note in respect of such Loans.
150
Except only for any notices which are specifically required by
the Credit Agreement or the other Loan Documents, the Borrower and any and
all co-makers, endorsers, guarantors and sureties severally waive notice
(including, but not limited to, notice of intent to accelerate and notice
of acceleration, notice of protest and notice of dishonor), demand,
presentment for payment, protest, diligence in collecting and the filing of
suit for the purpose of fixing liability and consent that the time of
payment hereof may be extended and re-extended from time to time without
notice to any of them. Each such person agrees that his, her or its
liability on or with respect to this Note shall not be affected by any
release of or change in any guaranty or security at any time existing or by
any failure to perfect or maintain perfection of any lien against or
security interest in any such security or the partial or complete
enforceability of any guaranty or other surety obligation, in each case in
whole or in part, with or without notice and before or after maturity.
The Credit Agreement provides for the acceleration of the
maturity of this Note upon the occurrence of certain events and for
prepayment of Loans upon the terms and conditions specified therein.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE PROVINCE OF ALBERTA, CANADA AND OF CANADA FROM TIME TO TIME
IN EFFECT.
SEAGULL ENERGY CANADA LTD.
By:
Name:
Title:
EXHIBIT B
to
First Amendment to Credit Agreement
Page 151
SCHEDULE A
This Note evidences Loans denominated in Canadian Dollars made by the Bank
under the within-described Credit Agreement to the Borrower, in the
principal amounts set forth below, which Loans are of the Type and for the
Interest Periods and were made on the dates set forth below, subject to the
payments of principal set forth below:
Interest
Principal Period/ Date of Amount Balance
Date Amount of Maturity Payment or Paid or Out-
Made Loan Type Date Prepayment Prepaid standing
EXHIBIT B
to
First Amendment to Credit Agreement
Page 152
EXHIBIT 4.8
FIRST AMENDMENT TO INTERCREDITOR AGREEMENT
THIS FIRST AMENDMENT TO INTERCREDITOR AGREEMENT ("First Amendment")
dated as of May 24, 1994 (the "First Amendment Effective Date") is made
and entered into by and among (i) the banks and other financial
institutions (the "Canadian Lenders") which are or may from time to time
become parties to the Canadian Credit Agreement (as defined in the
Intercreditor Agreement hereinafter referred to and defined), by Chemical
Bank of Canada, as their administrative agent (the "Canadian Agent");
(ii) the banks and other financial institutions (the "U.S. Lenders")
which are or may from time to time become parties to the U.S. Credit
Agreement (as defined in the Intercreditor Agreement hereinafter referred
to and defined), by Texas Commerce Bank National Association, as their
agent (the "U.S. Agent"); (iii) Seagull Energy Canada Ltd., as borrower
under the Canadian Credit Agreement (the "Canadian Borrower"); and (iv)
Seagull Energy Corporation, as borrower under the U.S. Credit Agreement
(the "U.S. Borrower") and guarantor of the obligations of the Canadian
Borrower (in such capacity, the "Guarantor").
RECITALS:
Reference is hereby made to that certain Intercreditor Agreement dated
December 30, 1993 executed by and among the Canadian Lenders, the U.S.
Lenders, the Canadian Agent, the U.S. Agent, the Canadian Borrower and the
U.S. Borrower (the "Intercreditor Agreement"); and
WHEREAS, the Canadian Lenders, the U.S. Lenders, the Canadian Agent,
the U.S. Agent, the Canadian Borrower and the U.S. Borrower have agreed,
on the terms and conditions herein set forth, that the Intercreditor
Agreement be amended in certain respects;
NOW, THEREFORE, IT IS AGREED:
Section 1. Definitions. Terms used herein which are defined in the
Intercreditor Agreement shall have the same meanings when used herein
unless otherwise provided herein.
Section 2. Amendments to the Intercreditor Agreement. On and after
the First Amendment Effective Date, the Intercreditor Agreement shall be
amended as follows:
(a) The definition of "Canadian Credit Agreement" set forth in
Section 1.1 of the Intercreditor Agreement is hereby amended to read in
its entirety as follows:
"Canadian Credit Agreement" shall mean that certain Credit
Agreement dated December 30, 1993 executed by and among Canadian
Borrower, the Banks signatory thereto, Chemical as arranger and
administrative agent, The Bank of Nova Scotia as paying agent and
co-agent and Canadian Imperial Bank of Commerce as co-agent, as
amended by that certain First Amendment to Credit Agreement dated
153
May 24, 1994, as further amended by this Agreement and as the same
may be further amended or modified from time to time.
(b) The definition of "Combined Majority Lenders" set forth in
Section 1.1 of the Intercreditor Agreement is hereby amended to read in its
entirety as follows:
"Combined Majority Lenders" means (a) prior to the termination
of the Commitments under the U.S. Credit Agreement, Lenders having
greater than 66-2/3% of the aggregate amount of the Combined
Commitments and (b) after the termination of the Commitments under
the U.S. Credit Agreement, Lenders having greater than 66-2/3% of the
Combined Outstandings.
(c) The definition of "Combined Requesting Lenders" set forth in
Section 1.1 of the Intercreditor Agreement is hereby amended to read in its
entirety as follows:
"Combined Requesting Lenders" means (a) prior to the
termination of the Commitments under the U.S. Credit Agreement,
Lenders having greater than 50% of the aggregate amount of the
Combined Commitments and (b) after the termination of the
Commitments under the U.S. Credit Agreement, Lenders having
greater than 50% of the Combined Outstandings.
(d) The definition of "Combined Super Majority Lenders" set forth in
Section 1.1 of the Intercreditor Agreement is hereby amended to read in its
entirety as follows:
"Combined Super Majority Lenders" means (a) prior to the
termination of the Commitments under the U.S. Credit Agreement,
Lenders having 75% or more of the aggregate amount of the Combined
Commitments and (b) after the termination of the Commitments under the
U.S. Credit Agreement, Lenders having 75% or more of the Combined
Outstandings.
(e) The definition of "U.S. Credit Agreement" set forth in Section
1.1 of the Intercreditor Agreement is hereby amended to read in its
entirety as follows:
"U.S. Facility" shall mean that certain Credit Agreement dated
May 24, 1994 executed by and among the U.S. Borrower, the Banks
signatory thereto, TCB as administrative agent and Chemical Bank as
auction agent, as amended by this Agreement and as the same may be
further amended or modified from time to time.
Section 3. Limitations. The amendments set forth herein are limited
precisely as written and shall not be deemed to (a) be a consent to, or
waiver or modification of, any other term or condition of the
Intercreditor Agreement or any of the other Loan Documents (as defined in
the Credit Agreements), or (b) except as expressly set forth herein,
prejudice any right or rights which the Lenders may now have or may have
in the future under or in connection with the Intercreditor Agreement, the
Loan Documents or any of the other documents referred to therein. Except
154
as expressly modified hereby or by express written amendments thereof, the
terms and provisions of the Intercreditor Agreement and any other Loan
Documents (as defined in the Credit Agreements) or any other documents or
instruments executed in connection with any of the foregoing are and shall
remain in full force and effect. In the event of a conflict between this
First Amendment and any of the foregoing documents, the terms of this
First Amendment shall be controlling.
Section 4. Governing Law. THIS FIRST AMENDMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE APPLICABLE LAWS (OTHER THAN THE
CONFLICT OF LAWS RULES) OF THE STATE OF TEXAS AND THE UNITED STATES OF
AMERICA FROM TIME TO TIME IN EFFECT.
Section 5. Descriptive Headings, etc. The descriptive headings of
the several Sections of this First Amendment are inserted for convenience
only and shall not be deemed to affect the meaning or construction of any
of the provisions hereof.
Section 6. Entire Agreement. This First Amendment and the documents
referred to herein represent the entire understanding of the parties hereto
regarding the subject matter hereof and supersede all prior and
contemporaneous oral and written agreements of the parties hereto with
respect to the subject matter hereof, including, without limitation, any
commitment letters regarding the transactions contemplated by this First
Amendment.
Section 7. Counterparts. This First Amendment may be executed in any
number of counterparts and by different parties on separate counterparts
and all of such counterparts shall together constitute one and the same
instrument.
Section 8. Amended Definitions. As used in the Intercreditor
Agreement (including all Exhibits thereto) and all other instruments and
documents executed in connection therewith, on and subsequent to the First
Amendment Effective Date the term "Agreement" shall mean the Intercreditor
Agreement as amended by this First Amendment.
155
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to be duly executed and delivered by their respective duly
authorized offices as of the date first above written.
NOTICE PURSUANT TO TEX. BUS. & COMM. CODE 26.02
THIS FIRST AMENDMENT AND ALL OTHER LOAN DOCUMENTS (AS DEFINED IN THE
RESPECTIVE CREDIT AGREEMENTS) EXECUTED BY ANY OF THE PARTIES BEFORE OR
SUBSTANTIALLY CONTEMPORANEOUSLY WITH THE EXECUTION HEREOF TOGETHER
CONSTITUTE A WRITTEN LOAN AGREEMENT AND REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Administrative Agent under the
U.S. Credit Agreement and on behalf of the U.S.
Lenders
By:
Robert C. Mertensotto,
Senior Vice President
CHEMICAL BANK OF CANADA, as
Administrative Agent under the Canadian
Credit Agreement and on behalf of the Canadian
Lenders
By:
Name:
Title:
156
JOINDER:
SEAGULL ENERGY CANADA LTD.
(as Borrower under the Canadian
Credit Agreement)
By:
Robert M. King,
Vice President
SEAGULL ENERGY CORPORATION
(as Borrower under the U.S.
Credit Agreement and as guarantor
in respect of the Canadian Credit
Agreement)
By:
Robert M. King,
Vice President, Corporate
Development and Treasurer
157
