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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 22, 1995
PLAINS RESOURCES INC.
(Exact name of registrant as specified in its charter)
Delaware 0-9808 13-2898764
(State or other (Commission File Number) (IRS Employer
jurisdiction of incorporation) Identification No.)
1600 Smith 77002
Houston, Texas (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code (713) 654-1414
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ITEM 2. ACQUISITION OF ASSETS
Description of Transaction
On December 22, 1995, Plains Illinois Inc. ("Plains Illinois"), a wholly
owned subsidiary of Plains Resources Inc. (the "Company"), acquired, effective
November 1, 1995, all of the upstream oil and gas assets of Marathon Oil Company
("Marathon") in the Illinois Basin (the "Assets"). This acquisition was
pursuant to (i) a Purchase and Sale Agreement dated October 31, 1995 between
Marathon and Crete Oil Company, Inc. ("Crete"), as amended by Amendment dated
December 4, 1995 (the "Marathon Agreement"), pursuant to which Plains Illinois
assumed Crete's position as purchaser of the Assets. The aggregate purchase
price for the Assets was approximately $51 million including financing, closing
and other transactional costs, of which approximately $6 million was paid for by
the issuance of 798,143 shares of the Company's common stock. The cash portion
of the purchase price was financed through a combination of an advance under the
Company's existing revolving credit facility with Internationale Nederlanden
(U.S.) Capital Corporation ("INCC") and certain other lenders and a $42 million
non-recourse loan to Plains Illinois from INCC under a Credit Agreement dated
December 22, 1995.
Description of Assets Acquired
The Assets acquired are located primarily in southeastern Illinois and
include all of Marathon's interest in approximately 1,800 wells (1,200 producers
and 600 injectors) in three operated fields (the Lawrence, Elnora and St. James
Fields), various non-operated producing properties and all of Marathon's oil and
gas mineral interests, surface lands and undeveloped leasehold within the
Illinois Basin as well as Marathon's geological, geophysical and engineering
database for the entire region.
ITEM 7. FINANCIAL STATEMENT AND EXHIBITS.
(a) Financial Statements of Business Acquired.
Audited statements of revenues and direct operating expenses of the
Assets for the required periods are currently being prepared.
Since the audit of such financial statements has not yet been
completed, it is impracticable to provide such financial statements at
the time of the filing of this report. Such financial statements will
be filed under cover of Form 8 as soon as practicable but not later
than sixty days after the filing of this report.
(b) Pro Forma Financial Information.
Audited statements of revenues and direct operating expenses of the
Assets for the required periods are currently being prepared.
Since the audit of such financial statements has not yet been
completed, it is
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impracticable to provide the pro forma financial information relative
to the acquisition at the time of the filing of this report. Such pro
forma financial information will be filed under cover of Form 8 as soon
as practicable but not later than sixty days after the filing of this
report.
(c) Exhibits
2.1 Purchase and Sale Agreement dated October 31, 1995, between
Marathon and Crete, as amended by that certain Amendment dated
December 4, 1995, among Marathon, Plains Resources Inc., and Plains
Illinois.
2.2 Credit Agreement dated December 22, 1995, between Plains Illinois
and Internationale Nederlanden (U.S.) Capital Corporation.
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 hereunto duly authorized.
Date: January 4, 1996
PLAINS RESOURCES INC.
By: /s/ Michael R. Patterson
-----------------------------
Vice President and General Counsel
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EXHIBIT 2.1
PURCHASE AND SALE
AGREEMENT
BETWEEN
MARATHON OIL COMPANY
and
CRETE OIL COMPANY, INC.
dated
October 31, 1995
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<TABLE>
<CAPTION>
<S> <C>
ARTICLE I EXHIBITS.................................. 1
1.1 Exhibits....................................... 1
ARTICLE II SALE AND PURCHASE........................ 2
2.1 Assets Involved................................ 2
ARTICLE III PURCHASE PRICE.......................... 4
3.1 Performance.................................... 4
3.2 Purchase Price................................. 4
3.3 Crude Oil in Storage........................... 4
3.4 Property Exchange.............................. 5
ARTICLE IV REPRESENTATIONS OF MOC................... 5
4.1 Existence...................................... 5
4.2 Power.......................................... 5
4.3 Authorization.................................. 6
ARTICLE V REPRESENTATIONS OF PURCHASER.............. 6
5.1 Existence...................................... 6
5.2 Power.......................................... 7
5.3 Authorization.................................. 7
5.4 Further Distribution........................... 7
ARTICLE VI PRE-CLOSING OBLIGATIONS OF MOC........... 8
6.1 Hart-Scott-Rodino Act.......................... 8
6.2 Operations..................................... 8
6.3 Permissions.................................... 9
6.4 Notices to Holders of Preferential Purchase
Rights and Rights to Consent.................. 9
6.5 Access......................................... 9
ARTICLE VII PRE-CLOSING OBLIGATIONS OF PURCHASER.... 9
7.1 Hart-Scott-Rodino Act.......................... 9
7.2 Indemnity Regarding Access..................... 10
7.3 Permissions.................................... 10
7.4 Confidentiality................................ 11
ARTICLE VIII MOC'S CONDITIONS OF CLOSING............ 12
8.1 Representations................................ 12
8.2 Performance.................................... 12
8.3 Officer's Certificate.......................... 12
8.4 Pending Matters................................ 12
8.5 Opinion of Purchaser's Counsel................. 13
8.6 Governmental Bond.............................. 13
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
8.7 Corporate Documentation......................... 14
ARTICLE IX PURCHASER'S CONDITIONS OF CLOSING........... 14
9.1 Representations................................. 14
9.2 Performance..................................... 14
9.3 Officer's Certificate........................... 14
9.4 Pending Matters................................. 15
9.5 Opinion of MOC's Counsel........................ 15
9.6 Litigation...................................... 16
9.7 Default......................................... 16
9.8 Environment..................................... 17
ARTICLE X OPERATORSHIP................................. 18
10.1 Resignation of Operator and Selection of
Successor Operator............................. 18
ARTICLE XI CASUALTY LOSS............................... 18
11.1 Casualty Loss of Assets......................... 18
ARTICLE XII EMPLOYEES.................................. 18
12.1 Union Location.................................. 18
12.2 No Third Party Beneficiaries.................... 19
ARTICLE XIII CLOSING................................... 19
13.1 Time and Place.................................. 19
13.2 Closing Obligations............................. 19
ARTICLE XIV WARRANTY OF TITLE.......................... 20
14.1 Warranty of Title............................... 20
14.2 Definition of Title Defect...................... 20
14.3 Definition of Permitted Encumbrances............ 21
ARTICLE XV POST CLOSING OBLIGATIONS.................... 22
15.1 Receipts and Credits............................ 23
15.2 Assumption of Obligations and Indemnities....... 23
15.3 Call on Oil..................................... 26
15.4 Records......................................... 26
15.5 Employment...................................... 26
15.6 Further Assurances.............................. 27
ARTICLE XVI TERMINATION................................ 27
16.1 Right of Termination............................ 27
16.2 Effect of Termination........................... 27
16.3 MOC Rights Upon Termination..................... 29
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16.4 Return of Financial Data........................ 29
17.1 Apportionment of Real Property Taxes............ 29
17.2 Sales Taxes..................................... 30
17.3 Other Taxes..................................... 31
17.4 Taxes Paid For Others........................... 31
17.5 Cooperation..................................... 31
ARTICLE XVIII PREFERENTIAL PURCHASE RIGHTS AND RIGHTS
TO CONSENT............................................. 32
18.1 Exercise of Preferential Purchase Rights........ 32
18.2 Non-Consents to Assignments..................... 33
18.3 Excluded Leasehold Interest..................... 33
18.4 Support for Excluded Leasehold Interests........ 34
ARTICLE XIX INDEPENDENT INVESTIGATION AND DISCLAIMER... 34
ARTICLE XX MISCELLANEOUS............................... 35
20.1 Governing Law................................... 35
20.2 Entire Agreement................................ 36
20.3 Waiver.......................................... 36
20.4 Captions........................................ 36
20.5 Assignment...................................... 36
20.6 Notices......................................... 36
20.7 Expenses........................................ 37
20.8 Severability.................................... 37
20.9 Publicity....................................... 38
20.10 Use of MOC's Name............................... 38
20.11 Consequential Damages........................... 38
20.12 Brokers' and Finders' Fees...................... 38
20.13 Survival........................................ 39
</TABLE>
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This Purchase and Sale Agreement (this "Agreement") is made as of October
31, 1995, by and between Marathon Oil Company, an Ohio corporation ("MOC"), and
Crete Oil Company, Inc., an Illinois corporation ("Purchaser").
RECITALS
Whereas, MOC desires to sell and Purchaser desires to purchase certain oil
and gas properties and related rights on the terms and conditions provided in
this Agreement;
Now, therefore, MOC and Purchaser agree as follows:
ARTICLE I EXHIBITS
1.1 Exhibits. The following Exhibits (with their respective schedules)
are attached and are made a part hereof:
(a) (i) Exhibit A1 - "Oil and Gas Leasehold Interests."
(ii) Exhibit A2 - "Overriding Royalty Interests."
(iii) Exhibit A3 - "Mineral Interests Owned in Fee."
(iv) Exhibit A4 - "Surface Owned in Fee."
(v) Exhibit A5 - "Surface Leases."
(vi) Exhibit A6 - "Easements."
(vii) Exhibit A7 - "Miscellaneous Agreements."
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(b) Exhibit B - "Excluded Items and Reserved Interests."
(c) Exhibit C - "Preferential Purchase Rights and Rights to Consent."
(d) Exhibit D - "Pending Litigation, Contractual Defaults and
Conditions Affecting the Environment."
(e) Exhibit E - "Instrument of Conveyance."
ARTICLE II SALE AND PURCHASE
2.1 Assets Involved. Subject to the terms and conditions of this
Agreement, MOC shall sell and Purchaser shall purchase, effective as of November
1, 1995 at 7:00 a.m. Central Standard Time (the "Effective Date"), as
hereinafter provided, all of MOC's right, title and interest in the following
assets (the "Assets"):
(a) The oil and gas leases described at Exhibit A1 (the "Leasehold
Interests") and the overriding royalty and fee mineral interests described at
Exhibits A2 and A3, together with all of MOC's right, title and interest in
respect of any pooled or unitized acreage of which any such leases and interests
are a part, and, subject to the conditions set forth in Exhibit B, all of MOC's
right, title and interest in the surface interests described at Exhibits A4 and
A5 and the easements described at Exhibit A6 (all of which are collectively
referred to as the "Subject Interests");
(b) To the extent attributable or allocable to the Subject Interests,
all of MOC's right, title and interest in and to (i) all wells, equipment and
facilities, except as set forth at Exhibit B, which are located on (or in the
case of line injection wells,
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on or adjacent to) or used exclusively and directly in connection with the
production, treatment or transportation of oil and gas from the Subject
Interests, (ii) to the extent they are assignable, all orders, contracts,
agreements and other instruments which affect the Subject Interests, including,
but not limited to, those described at Exhibits A1 through A7 [but not including
the following: insurance contracts held by MOC; orders, contracts, agreements
and other instruments which include or affect oil and gas properties of MOC
other than the Subject Interests; and production sales agreements with any
affiliates or subsidiaries of MOC, the collective bargaining agreement between
MOC and Local No. 7-482 of the Oil, Chemical and Atomic Workers International
Union], (iii) to the extent they are assignable and subject to the conditions
set forth in Exhibit B, all easements, licenses, authorizations, permits and
similar rights and interests which affect, but only to the extent they affect,
the Subject Interests and (iv) to the extent they are assignable, all other
rights, privileges, benefits and powers conferred upon the owner and holder of
the Subject Interests, but not including any and all assets, facilities,
contract, real and personal property (whether tangible or intangible) owned or
operated by MOC's refining, pipeline, supply and transportation or marketing
organizations;
(c) Subject to Section 15.4, copies of general operating records, well
files, lease files, contract files (including unit and operating agreement
files), land files, regulatory reports and certificates, abstracts and title
opinions pertaining to the Subject Interests; but not including all of the
following: any legal files, attorney-client communications or attorney work
product; MOC's geophysical and geological data
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base (the "Data Base") for which there is a contractual prohibition upon
transfer or licensing to Purchaser; auditors' reports; and reserve reports.
ARTICLE III PURCHASE PRICE
3.1 Performance Deposit. Contemporaneously with the execution of
this agreement, Purchaser has paid MOC a partial Performance Deposit in the
amount of $250,000.00. On or before December 1, 1995, Purchaser shall remit
$1,750,000.00 to MOC as balance of the Performance Deposit. In the event that
the transactions contemplated by this Agreement are consummated, the Performance
Deposit, together with simple interest thereon at the rate of six and on-half
percent (6.5%) per annum (the "Interest Amount"), shall be applied to the
Purchase Price at Closing. In the event that this Agreement is terminated, the
remitted Performance Deposit and the Interest Amount, thereon, shall be applied
in accordance with the provisions of Section 16.2.
3.2 Purchase Price. The aggregate Purchase Price for the Assets
shall be cash in the amount of Forty-six Million Two Hundred Thousand Dollars US
($46,200,000.00 US) (the "Purchase Price"). Unless otherwise agreed to by MOC
and Purchaser prior to the Closing Date, or as modified by Section 3.4; payment
of the Purchase Price, minus the Performance Deposit and the Interest Amount,
shall be by wire transfer of federal (same day) funds by Purchaser to MOC's
designated United States bank account at Closing (as defined in Section 13.1).
3.3 Crude Oil in Storage. All oil in storage, above one foot (1')
from the bottom of the tanks, as of 7:00 a.m. Central Standard Time on the
Effective Date
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which is credited to the Subject Interests shall remain the property of MOC.
3.4 Property Exchange. MOC may desire to structure the conveyance
of a portion of the real property subject to this Agreement as an exchange under
Section 1031 of the Internal Revenue Code of 1986. MOC will have up to forty-
five (45) days after Closing to designate exchange properties. The conveyance
of such real property and the manner of payment of the Purchase Price under
Section 3.2 with respect to such real property shall be modified as necessary to
satisfy the requirements of Section 1031.
ARTICLE IV REPRESENTATIONS OF MOC
MOC represents and warrants to Purchaser that:
4.1 Existence. MOC is a corporation duly organized, validly
existing and in good standing under the laws of the State of Ohio and is duly
qualified to carry on its business in the States of Illinois, Indiana and
Kentucky.
4.2 Power. MOC has the corporate power to enter into and perform
this Agreement and the transactions contemplated hereby. Subject to any
applicable requirements under Title II of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended ("HSR Act") , to any preferential purchase
rights, rights to consent and restrictions on assignment of the type generally
found in the oil and gas industry, and to rights to consent by governmental
entities and required notices to and filings with governmental entities where
the same are customarily obtained or made
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subsequent to the assignment of oil and gas interests and leases, the execution,
delivery and performance of this Agreement by MOC, and the transactions
contemplated hereby, will not violate (i) any provision of the articles of
incorporation or by laws of MOC, (ii) any material agreement or instrument to
which MOC is a party or by which MOC is bound, (iii) any judgement, order,
ruling, or decree applicable to MOC as a party in interest, or (iv) to the best
of MOC's knowledge, any law, rule or regulation applicable to MOC.
4.3 Authorization. The execution, delivery and performance of this
Agreement and the transactions contemplated hereby have been duly and validly
authorized by all requisite corporate actions on the part of MOC. This
Agreement has been duly executed and delivered on behalf of MOC and at the
Closing all documents and instruments required hereunder to be executed and
delivered by MOC shall have been duly executed and delivered. This Agreement
does, and all such documents and instruments shall, constitute legal, valid and
binding obligations of MOC enforceable in accordance with their terms.
ARTICLE V REPRESENTATIONS OF PURCHASER
Purchaser represents and warrants to MOC that:
5.1 Existence. Purchaser is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Illinois and is
duly qualified to carry on its business in the State of Illinois, Indiana and
Kentucky as of the Closing
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Date.
5.2 Power. Purchaser has the corporate power to enter into and
perform this Agreement and the transactions contemplated hereby. Subject to any
applicable requirements under the HSR Act, and to any rights to consent by
governmental entities and required notices to and filings with governmental
entities where the same are customarily obtained or made subsequent to the
assignment of oil and gas interests and leases, the execution, delivery and
performance of this Agreement by Purchaser, and the transactions contemplated
hereby, will not violate (i) any provision of the articles of incorporation or
bylaws of Purchaser, (ii) any material agreement or instrument to which
Purchaser is a party or by which Purchaser is bound, (iii) any judgement, order,
ruling, or decree applicable to Purchaser as a party in interest, or (iv) to the
best of Purchaser's knowledge, any law, rule or regulation applicable to
Purchaser.
5.3 Authorization. The execution, delivery and performance of this
Agreement and the transactions contemplated hereby have been duly and validly
authorized by all requisite corporate actions on the part of Purchaser. This
Agreement has been duly executed and delivered on behalf of Purchaser, and at
the Closing all documents and instruments required hereunder to be executed and
delivered by Purchaser shall have been duly executed and delivered. This
Agreement does, and such documents and instruments shall, constitute legal,
valid and binding obligations of Purchaser enforceable in accordance with their
terms.
5.4 Further Distribution. Purchaser is acquiring the Assets for its
own
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account and not with a view to, or for offer or resale in connection with, a
distribution or transfer thereof within the meaning of the Securities Act of
1933 and the rules and regulations pertaining to it or in violation of any
applicable federal and state securities laws.
ARTICLE VI PRE-CLOSING OBLIGATIONS OF MOC
6.1 Hart-Scott-Rodino Act. MOC shall prepare and submit, in a
timely manner, any necessary filings for MOC in connection with the transactions
contemplated by this Agreement under the HSR Act and the rules and regulations
thereunder. MOC shall request expedited treatment of such filings by the
Federal Trade Commission, shall promptly make any appropriate or necessary
subsequent or supplemental filings, and shall furnish to Purchaser copies of all
such filings made under the HSR Act at the same time as they are filed with the
government.
6.2 Operations. From the date of this Agreement until Closing (the
"Interim Period"), except as otherwise approved by Purchaser, MOC (i) shall
operate and maintain those Assets operated by MOC in a reasonably prudent and
workmanlike manner, (ii) shall not transfer, sell, hypothecate, encumber or
otherwise dispose of any of the Assets (other than as required in connection
with the exercise by third parties of preferential rights to purchase any of the
Assets), and (iii) shall not commence or consent to any individual operation on
the Assets that it has not previously committed to and that may be expected to
cost in excess of $20,000.00
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(except for emergency operations).
6.3 Permissions. During the Interim Period, MOC will cooperate with
Purchaser in Purchaser's efforts pursuant to Section 7.3 to obtain all
permissions, approvals, and consents by federal, state and local governmental
authorities and others as may be required to consummate the sale contemplated
hereunder.
6.4 Notices to Holders of Preferential Purchase Rights and Rights to
Consent. MOC shall, except as noted on Exhibit C, send to each holder of a
preferential purchase right set forth at Exhibit C a notice offering to sell to
such holder, in accordance with the contractual provisions applicable to such
right, those Subject Interests covered by such right on substantially the terms
hereof, and for a portion of the Purchase Price determined in accordance with
Section 18.3 if the Subject Interest is a Leasehold Interest, or for the amount
specified in Exhibit C if the Subject Interest is not a Leasehold Interest. In
addition, MOC shall, except as noted on Exhibit C, send to each holder of a
right to consent to an assignment set forth in Exhibit C a request that the
holder consent to the assignment of the Subject Interest to which its right
applies.
6.5 Access. During the Interim Period and subject to Section 7.2,
MOC shall allow Purchaser to have, upon reasonable prior notice and only during
normal work hours, access to the Assets.
ARTICLE VII PRE-CLOSING OBLIGATIONS OF PURCHASER
7.1 Hart-Scott-Rodino Act. Purchaser shall prepare and submit, in a
timely
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manner, any necessary filings for Purchaser in connection with the transactions
contemplated by this Agreement under the HSR Act and the rules and regulations
thereunder. Purchaser shall request expedited treatment of such filings by the
Federal Trade Commission, shall promptly make any appropriate or necessary
subsequent or supplemental filings, and shall furnish to MOC copies of all
filings made under the HSR Act at the same time as they are filed with the
government.
7.2 Indemnity Regarding Access. Purchaser shall and do hereby
covenant and agree to indemnify, defend and hold harmless MOC, its officers,
directors, employees, agents, co-lessees a co-venturers (if any), from and
against any and all claims, liabilities, damages, losses, costs and expenses
(including without limitation, court costs and reasonable attorney's fees)
whether or not based on a theory of negligence, negligence per se, strict
liability, willful misconduct, products liability, condition of premises or
other theory of liability, in connection with personal injuries, including
death, or property damage or loss arising out of or relating to the access of
Purchaser, it officers, employees, and representatives to the Assets during the
Interim Period, as permitted under this Agreement; provided however, this
indemnity shall not include any claims, liabilities, damages, losses, costs or
expenses caused by MOC's gross negligence or willful misconduct.
7.3 Permissions. During the Interim Period, Purchaser will use
reasonable efforts to obtain all permissions, approvals, and consents by
federal, state and local governmental authorities and others as may be required
to consummate the sale contemplated hereunder (excluding governmental
permissions, approvals and
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consents which are customarily obtained after the assignment of an oil and gas
lease or interest).
7.4 Confidentiality. Until after Closing (and without limitation as
to time if Closing should not occur for any reason) , except as required by law,
Purchaser and its officers, employees, agents and representatives', will hold in
strict confidence all information, data and documents obtained from MOC in
connection with the transactions contemplated by this Agreement, except any such
information, datum or document which (i) at the time of disclosure to Purchaser
by MOC is in the public domain, (ii) after disclosure to Purchaser by MOC
becomes part of the public domain by publication or otherwise, except by breach
of this commitment by Purchaser, or by breach by Purchaser of that certain
Confidentiality Agreement dated June 19, 1995, between MOC and Purchaser, (iii)
Purchaser can establish by competent proof was rightfully in its possession at
the time of disclosure to Purchaser by MOC, (iv) Purchaser rightfully received
from third parties free of any obligation of confidence, or (v) is developed
independently by Purchaser, provided the information, datum or document
developed shall not be derived from data, information, or documents obtained
from MOC in connection with the transactions contemplated by this Agreement.
The obligations of Purchaser under this Section 7.4 shall be in addition to, and
not in lieu of, Purchaser's obligations under that certain Confidentiality
Agreement dated June 19, 1995, between MOC and Purchaser. In addition,
Purchaser agrees that if this Agreement is terminated for any reason whatsoever,
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Purchaser, at MOC's request, shall promptly return to MOC all documents
furnished to Purchaser, its officers, employees, agents and representatives in
connection with this Agreement, or Purchaser's investigation of the Assets, and
shall destroy documents derived or created by Purchaser from any information,
data or documents furnished by MOC.
ARTICLE VIII MOC'S CONDITIONS OF CLOSING
MOC's obligation to consummate the transaction provided for herein is subject to
the satisfaction or waiver by MOC of the following conditions:
8.1 Representations. The representations and warranties of
Purchaser contained in Article V shall be true and correct in all material
respects on the date of this Agreement and Closing Date as though made on and as
of those dates.
8.2 Performance. Purchaser shall have performed in all material
respects the obligations, covenants and agreements contained in Article VII to
be performed by it at or prior to the Closing.
8.3 Officer's Certificate. Purchaser shall have delivered to MOC a
certificate of a corporate officer, dated the date of Closing, certifying on
behalf of Purchaser that, to the best of its knowledge, the conditions set forth
in Sections 8.1 and 8.2 have been fulfilled.
8.4 Pending Matters. No suit, action or other proceeding by a
governmental authority shall be pending or threatened which seeks substantial
damages from MOC
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in connection with, or seeks to restrain, enjoin or otherwise prohibit, the
consummation of the transactions contemplated by this Agreement.
8.5 Opinion of Purchaser's Counsel. Purchaser shall have
delivered to MOC an opinion of Purchaser's counsel, Scott Helmholz, Esq., dated
as of Closing, in form and substance satisfactory to MOC, to the effect that:
(a) Purchaser is a corporation duly organized, validly existing and in
good standing existing and in good standing under the laws of the State of
Illinois and is duly qualified to carry on its business in the States of
Illinois, Indiana and Kentucky;
(b) The execution, delivery and performance of this Agreement and the
transactions contemplated hereby have been duly and validly authorized by all
requisite corporate action on part of Purchaser; and
(c) This Agreement and all documents and instruments executed by
Purchaser at Closing have been duly executed and delivered on behalf of
Purchaser, and constitute legal, valid and binding obligations of Purchaser
enforceable in accordance with their terms.
In giving this opinion, Purchaser's counsel may rely upon certificates
of governmental officials and of Purchaser's officers as to matters of fact, and
may qualify the opinion with such other assumptions and exceptions as are
reasonably acceptable to MOC.
8.6 Governmental Bond. Purchaser shall have delivered to MOC either
copies of any bonds, satisfactory to MOC, covering any MOC operated Subject
Interests required under any laws, rules or regulations of any federal, state or
local
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governmental agencies having jurisdiction over the Assets, or a commitment by a
surety company, satisfactory to MOC, to issue such bonds upon Closing.
8.7 Corporate Documentation. Purchaser, on or before the Closing
Date, shall have provided MOC copies of Purchaser's Articles of Incorporation,
and all amendments thereto, certified by the Secretary of State of its state of
incorporation, together with true and correct copies of the by-laws (or
comparable document) for Purchaser, certified by Purchaser's secretary.
Purchaser shall also have provided certificates of good standing from the
Secretary of State of its state of incorporation and the States of Illinois,
Indiana and Kentucky.
ARTICLE IX PURCHASER'S CONDITIONS OF CLOSING
Purchaser's obligation to consummate the transactions provided for
herein is subject to the satisfaction or waiver by Purchaser of the following
conditions:
9.1 Representations. The representations and warranties of MOC
contained in Article IV shall be true and correct in all material respects on
the date of this Agreement and on the Closing Date as though made on and as of
those dates.
9.2 Performance. MOC shall have performed in all material respects
the obligations, covenants and agreements contained in Article VI to be
performed by it at or prior to the Closing.
9.3 Officer's Certificate. MOC shall have delivered to Purchaser a
certificate of a corporate officer, dated the date of Closing, certifying on
behalf of MOC, that to
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the best of its knowledge, the conditions set forth in Sections 9.1 and 9.2 have
been fulfilled.
9.4 Pending Matters. No suit, action or other proceeding by a
governmental authority shall be pending or threatened which seeks substantial
damages from Purchaser in connection with, or seeks to restrain, enjoin or
otherwise prohibit, the consummation of the transactions contemplated by this
Agreement.
9.5 Opinion of MOC's Counsel. MOC shall have delivered to Purchaser
an opinion of MOC's counsel, Jeffrey L. Benson, Senior Attorney, dated the date
of Closing, in form and substance satisfactory to Purchaser, to the effect that:
(a) MOC is a corporation duly organized, validly existing and in good
standing under the laws of the State of Ohio, and is duly qualified to carry on
business in the State of Illinois, Indiana and Kentucky;
(b) The execution, delivery and performance of this Agreement and the
transactions contemplated hereby have been duly and validly authorized by all
requisite corporate action on the part of MOC; and
(c) This Agreement and all documents and instruments executed by MOC
at Closing have been duly executed and delivered on behalf of MOC, and
constitute legal, valid and binding obligations of MOC enforceable in
accordance with their terms.
In giving this opinion, MOC's counsel may rely upon certificates of
governmental officials and of MOC's officers as to matters of fact, and may
qualify
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the opinion with such other assumptions and exceptions as are reasonably
acceptable to Purchaser.
9.6 Litigation. Except as described in Exhibit D, or as revealed to
Purchaser in a separate writing or in the data room prior to execution of this
Agreement, as of the execution of this Agreement, MOC has not received official
notice of and is not aware of any legal, administrative or arbitration
proceeding or any claim (including, but not limited to, any audit claim under
any operating agreement where MOC is the operator), pending or threatened
against MOC or directly involving the Assets, that reasonably is expected to
materially and adversely affect the value of the Assets taken as a whole after
the Closing Date. If prior to Closing, Purchaser discovers any such proceeding
or claim which existed as of the execution of this Agreement but was not
disclosed by MOC as provided above, Purchaser shall, no later than fifteen (15)
days prior to the Closing Date, notify MOC in writing of such proceeding or.
claim. The parties will then negotiate in good faith to arrive at a mutually
acceptable written agreement concerning such proceeding or claim. If the
parties do not reach agreement by the closing Date, the sale shall nevertheless
close if MOC agrees to retain the liability for such proceeding or claim.
9.7 Default. Except as set forth at Exhibit D, or as revealed to
Purchaser in a separate writing or in the data room prior to the execution of
this Agreement, MOC, as of the execution of this Agreement, is not aware of any
default under or violation of any agreement or obligation to which the Assets
may be subject that reasonably is expected to materially and adversely affect
the value of the Assets taken as a
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whole after the Closing Date. If prior to Closing, Purchaser discovers any such
default which existed as of the execution of this Agreement but was not
disclosed by MOC as provided above, Purchaser shall, no later than fifteen (15)
days prior to the Closing Date, notify MOC in writing of such default. The
parties will then negotiate in good faith to arrive at a mutually acceptable
written agreement concerning such default. If the parties do not reach agreement
by the Closing Date, the sale shall nevertheless close if MOC agrees to retain
the liability for such default.
9.8 Environment. Except as described at Exhibit D, or as revealed
to Purchaser in a separate writing or in the data room prior to the execution of
this Agreement, as of the execution of this Agreement, MOC, through its
operations, has not created a condition of or upon the Subject Interests of
which it is aware which (i) adversely affects the environment and (ii) is
reasonably expected to materially and adversely affect the value of the Assets
taken as a whole after the Closing Date. If, prior to Closing, Purchaser
discovers such a condition which existed as of the execution of this Agreement
but was not disclosed by MOC as provided above, Purchaser shall, no later than
fifteen (15) days prior to the Closing Date, notify MOC in writing of such
condition. The parties will then negotiate in good faith to arrive at a
mutually acceptable written agreement concerning such condition. If the parties
do not reach agreement by the Closing Date, the sale shall nevertheless close if
MOC agrees to retain the liability for such condition.
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ARTICLE X OPERATORSHIP
10.1 Resignation of Operator and Selection of Successor Operator.
MOC is operator of certain oil and gas leases owned by MOC and others including,
but not limited to, unitized and pooled areas, which are part of the Assets, and
shall resign as operator of these properties as soon as reasonably possible
after the Closing of this transaction. Although Purchaser hereby represents
that it desires to succeed MOC as operator of these properties, MOC makes no
warranty or representation concerning Purchaser's ability to become successor
operator to MOC. The resignation of operator and selection of a successor
operator in such circumstances is controlled by applicable agreements, such as
unit agreements, pooling agreements and joint operating agreements. MOC agrees
to cooperate with Purchaser's efforts to be selected as operator of these
properties. Purchaser represents that it will act expeditiously to take all
reasonable measures., including, but not limited to, taking action prior to
Closing if the parties agree that it is appropriate, to be appointed successor
operator or have a successor operator to MOC appointed as soon as possible after
MOC resigns, in accordance with the applicable agreements.
ARTICLE XI CASUALTY LOSS
11.1 Casualty Loss of Assets. If prior to Closing any of the Assets
are damaged or destroyed by fire or other casualty, the Purchase Price shall not
be reduced, unless such damage or destruction is caused by the gross negligence
or willful misconduct of MOC.
ARTICLE XII EMPLOYEES
12.1 Union Location. Purchaser acknowledges that some employees
presently
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employed by MOC and working at or about the Subject Interests are represented by
Local No. 7-482 of the Oil, Chemical and Atomic Workers International Union.
12.2 No Third Party Beneficiaries. Nothing express or implied in
this Agreement is intended to confer upon or deny, any employee of MOC any
rights or remedies including, but not limited to, any rights of employment with
MOC or Purchaser for any specified period of time.
ARTICLE XIII CLOSING
13.1 Time and Place. If the conditions to Closing have been satisfied or
waived, the consummation of the transactions contemplated hereby (the "Closing")
shall be held at MOC's offices in Oklahoma City, Oklahoma, or at a mutually
agreeable location at 9:00 O'clock a.m. Central Standard Time on or before
December 28, 1995, unless delayed by mutual consent of the parties (the actual
date of Closing being herein referred to as the "Closing Date"), provided,
however, that if the necessary waiting period with respect to filings under the
HSR Act has not expired by that date, the Closing shall occur five (5) business
days after the expiration of such waiting period.
13.2 Closing Obligations. At the Closing:
(a) MOC shall execute, acknowledge and deliver to Purchaser, and Purchaser
will execute and acknowledge such sufficient copies of the Instrument of
Conveyance, in substantially the form set forth at Exhibits E, (the "Deed and
Assignments") as may be necessary for recording in the applicable county records
and for each party to retain duplicate originals for their records;
(b) MOC shall execute such other instruments, including any instrument
required under the Illinois Responsible Property Transfer Act, the Indiana
Voluntary Remediation of Hazardous Substances and Petroleum Act, and take such
other action as may be necessary to carry out its obligations under this
Agreement;
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(c) MOC and Purchaser shall execute and exchange duplicate originals of a
Closing statement (the "Closing Statement"). The Closing Statement shall account
for the Purchase Price, the Performance Deposit, the Interest Amount, and all
revenue, fees, expenses, costs, taxes and other items attributable or allocable
to either of the parties under this Agreement through midnight Central Standard
Time on December 31, 1995. Where the actual amounts of such items are not known
as of the Closing, they shall be estimated in good faith and shall be reconciled
within ninety (90) days after the Closing;
(d) Purchaser shall make payment of the Purchase Price in the manner
described in Section 3.2 and Section 3.4 (if applicable);
(e) Purchaser shall execute such other instruments, including any
instruments required under the Illinois Responsible Property Transfer Act, the
Indiana Voluntary Remediation of Hazardous Substances and Petroleum Act, and
take such other action as may be necessary to carry out its obligations under
this Agreement;
(f) MOC and Purchaser shall execute, acknowledge and deliver transfer orders
or letters in lieu thereof directing all purchasers of production to make
payment to Purchaser of proceeds attributable to production from the Assets; and
(g) MOC and Purchaser shall execute effective as of midnight Central
Standard Time on December 31, 1995, all required state change of operatorship
and ownership forms, and they shall be thereafter forwarded by MOC or Purchaser,
as may be appropriate, to the applicable state agencies.
ARTICLE XIV WARRANTY OF TITLE
14.1 Warranty of Title. The Leasehold Interest described at
Exhibit A1 and the overriding and fee mineral interests described at Exhibits A2
and A3 shall be sold with a warranty against Title Defects as defined in Section
14.2
14.2 Definition of Title Defect. The term "Title Defect" as used
herein shall mean any material encumbrance, encroachment, irregularity, defect
in or objection
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to MOC's title (expressly excluding "Permitted Encumbrances", as defined in
Section 14.3) that, alone or in combination with other defects, renders MOC's
title less than that which is customarily regarded as acceptable in the industry
for producing oil and gas properties. In evaluating whether an encumbrance,
encroachment, irregularity defect in or objection to title is material, due
consideration shall be given to the length of time that the property involved
has been or is in "pay status" and whether such defect is of the type expected
to be encountered in the area involved and customarily acceptable to prudent
operators and interest owners. Such usual and customary defects include, but are
not limited to defects that have been cured by possession under applicable
statues of limitation; defects which are more than forty (40) years old; defects
in the early chain of title such as failure recite marital status in documents
and omission of heirship succession proceedings; lack of survey; and failure to
record releases of liens, production payments or mortgages that have expired of
their own terms.
14.3 Definition of Permitted Encumbrances. As used herein, the term
"Permitted Encumbrances" shall mean:
(a) Lessors' royalties, overriding royalties, reversionary interests
and similar burdens if the net cumulative effect of the burdens does not operate
to reduce the interest of MOC with respect to all oil and gas produced from (or,
where subject to a unit or pooling agreement, allocated to) any leasehold or
interest below the "Net Revenue Interest" or "NRI" for such Leasehold Interest
as set forth at Exhibit A1, A2, or A3;
(b) Division orders and sales contracts terminable without penalty
upon no more than ninety (90) days' notice to the Purchaser;
(c) Preferential rights to purchase, rights to consent and
restrictions on assignment of the type generally found in the oil and gas
industry;
(d) Materialmen's, mechanics', repairmen's, employees', contractors',
operators', tax and other similar liens or charges arising in the ordinary
course of business (i) if they have not been filed pursuant to law, (ii) if
filed, they have not yet
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become due and payable or payment is being withheld as provided by law, or
(iii)if their validity is being contested in good faith by appropriate action;
(e) All rights to consent by, required notices to, filing with or
other actions by governmental entities in connection with the sale or conveyance
of oil and gas leases or interests if they are customarily obtained subsequent
to the sale or conveyance;
(f) Rights of reassignment;
(g) Easements, rights-of-way, servitude, permits, surface leases and
other rights in respect of surface operations, pipelines, grazing, logging,
canals, ditches, reservoirs or the like; covenants or other restrictions; and
easements for streets, alleys, highways, pipelines, telephone lines, power
lines, railways and other easements and rights-of-way, on, over or in respect of
any of the leases or interests;
(h) All other liens, charges, encumbrances, contracts, agreements,
instruments, obligations, defects and irregularities affecting the leaseholds
and interests which individually or in the aggregate do not reduce the interest
of MOC with respect to all oil and gas produced from (or, where subject to a
unit or pooling agreement, allocated to) any leasehold or interest below the
"Net Revenue Interest" or "NRI" set forth at Exhibit A1, A2, or A3;
(i) All rights reserved to or vested in any governmental, statutory or
public authority to control or regulate any of the leaseholds or interests in
any manner, and all applicable laws, rules and orders of governmental authority;
(j) Any Title Defects as Purchaser may have expressly waived in
writing;
(k) The terms and conditions of all leases, agreements, orders,
instruments and documents and all defects described in or referred to in the
Exhibits hereto;
(l) Failure to produce oil, gas or other hydrocarbons paying
quantities from a lease or interest, or lands pooled therewith; and
(m) Taxes not yet due or not yet delinquent.
ARTICLE XV POST CLOSING OBLIGATIONS
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15.1 Receipts and Credits. All monies, proceeds, receipts, credits
and income attributable to the Assets for all periods of time subsequent to the
Effective Date, shall be the sole property and entitlement of the Purchaser,
and, to the extent received by MOC, MOC shall fully disclose, account for and
transmit same to Purchaser. All monies, proceeds, receipts, credits and income
attributable to the Assets for all periods of time prior to the Effective Date,
shall be the sole property and entitlement of MOC and, to the extent received by
Purchaser, Purchaser shall fully disclose, account for and transmit same to MOC.
Except for those matters for which MOC is indemnified in Section 15.2, all
costs, expenses, taxes and disbursements, including without limitation, employee
salaries, taxes, assessments, benefit costs and related items, attributable to
periods of time prior to the Effective Date, regardless of when due or payable,
shall be the sole obligation of MOC and MOC shall promptly pay, or if paid by
Purchaser, reimburse Purchaser for same. All costs, expenses, taxes and
disbursements, including without limitation, employee salaries, taxes,
assessments, benefit costs and related items, attributable to the Assets for all
periods of time subsequent to the Effective Date, regardless of when due or
payable, shall be the sole obligation of the Purchaser and Purchaser shall
promptly pay, or, if paid by MOC, reimburse MOC for same.
15.2 Assumption of Obligations and Indemnities. If Closing occurs:
(a) Purchaser hereby agrees and shall agree, in writing, in the
instrument conveying the Assets, as of the Effective Date, to assume, perform
and comply with all of the provisions and obligations (express or implied) that
are attributable to the Assets, whether existing as of the Effective Date or
later arising, including, but not limited to: all of the terms and conditions of
all applicable and valid agreements, contracts and instruments, including, but
not limited to, those described at Exhibits A1 through A7, all lease agreements,
unit agreements, joint operating agreements, pooling agreements, communitization
agreements and easements and rights-of-way; all existing lease burdens
(including, but not limited to, royalties, overriding royalties, production
payments, net profits interests, carried working interests or similar
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burdens); all duties imposed by governmental law, rule or regulation; and the
obligations to properly and timely plug and abandon all wells (from the surface
down to the total depth drilled) now located on the Subject Interests (or in the
case of line injection wells, on or adjacent to the Subject Interests)
regardless of by whom they were drilled and all wells hereafter drilled on the
Subject Interests by Purchaser, its successors or assigns, to properly and
timely remove all buildings, equipment and materials from the Subject Interests
upon cessation of use thereof, and to properly and timely restore the surface of
the Subject Interests. Anything to the contrary in this Agreement
notwithstanding, Purchaser does not agree to assume or perform the provisions of
the collective bargaining agreement between MOC and Local No. 7-482 of the Oil,
Chemical and Atomic Workers International Union.
(b) Except only as provided at Section 15.2(c), below, Purchaser
agrees, effective as of the Effective Date, to indemnify, defend and hold
harmless MOC, its officers, directors, employees, parent, affiliate and
subsidiary corporations, from and against any and all claims, demands,
liabilities, costs, judgments, expenses (including, without limitation, court
costs and reasonable attorney's fees), damages and losses of whatsoever kind or
nature, that are attributable to the Assets or their operation; including, but
not limited to, with respect to all of the following: (i) the obligations
assumed by Purchaser in Section 15.2(a), above, and the operations and
activities contemplated at Subsection 15.2 (a) , above; (ii) damage to or loss
of property or natural resources, or injury to or death of any persons, no
matter when it occurs or what the cause, including, without limitation, whether
or not attributable, in whole or part, to a condition(s) of or upon the Assets
that existed before the Effective Date, (including, but not limited to, a
condition which may be considered to be a nuisance and/or which affects or
threatens to affect the environment); and (iii) any condition(s) of or upon the
Assets (including, without limitation, any condition which may be considered to
be a nuisance and/or which affects or threatens to affect the environment),
whether or not it existed prior to the Effective Date.
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(c) MOC agrees, effective as of the Effective Date, to indemnify,
defend and hold harmless Purchaser, its officers, directors, employees, parent,
affiliate and subsidiary corporations, from and against any and all claims,
demands, liabilities, costs, judgments, expenses (including, but not limited to,
court costs and reasonable attorney's fees), damages and losses relating
directly to the following only: (i) injury to (including death of) any person
occurring prior to the Effective Date and caused by MOC's operation of the.
Assets; (ii) any crop damage occurring prior to the year 1996 (but not including
crop damage which occurs in 1996 or thereafter but results from a condition(s)
of or upon the Assets that existed before 1996); and (iii) MOC's failure, during
the period it owned the Assets, to timely and properly account to a third party
for production proceeds MOC was obligated to pay pursuant to any applicable
lease agreement, unit agreement or pooling agreement conveyed to Purchaser under
this Agreement.
(d) The parties agree that the indemnity provisions of Sections
15.2(b) and (c), above, shall apply regardless of whether the applicable
indemnitee was wholly partially, actively or passively, negligent or otherwise
at fault, and whether or not the claim, damage, loss or liability is based on a
theory of negligence, negligence per se, strict liability, willful misconduct,
products liability, premises liability or other theory of liability.
(e) Purchaser agrees, and shall agree in the instrument conveying the
Assets, that any subsequent assignment or transfer of the Assets, or any portion
thereof, made by Purchaser, shall contain covenants respecting plugging and
abandonment and surface restoration similar to the terms in this Section
15.2(a), and Purchaser agrees that any such assignment or transfer will not
relieve the Purchaser herein of the obligations assumed in this Section 15.2.
(f) The parties agree that, to the extent the provisions of any
instrument conveying the Assets conflicts with the provisions of this Section
15.2, the provisions of this Section 15.2 shall control.
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15.3 Call on Oil. MOC, or its designee, will have, for a period of
twenty (20) years beginning with the Effective Date, the continuing right and
option, at any time, and from time to time, to purchase the crude oil (including
condensate, distillate and other liquids recovered from the well stream by
normal lease-separation methods) produced and saved from the Subject Interests.
The price to be paid therefor shall be the "posted" price of MOC, gravity
adjusted, applicable thereto for the particular crude type. In the event MOC
does not "post" for a particular crude type, the price will be based on a
mutually agreed upon major company's posting. MOC intends to exercise this
option initially and to purchase the crude oil on a continuing basis. MOC may
terminate or initiate the purchase of crude oil an three (3) months' notice.
Purchaser shall notify MOC in advance of significant changes in quantity or
quality of the stream resulting from development or other work in the Subject
Interests. For the purposes of this paragraph, notice can be given to:
Marathon Oil Company
Refinery Office Building
Robinson, Illinois 62454
Attn: Crude Oil Acquisition
unless MOC provides Purchaser prior written notice of a change of address.
15.4 Records. Within a reasonable amount of time after Closing, MOC
will deliver to Purchaser true and accurate copies of relevant records as
described at Section 2.1(d) pertaining to the Assets. Purchaser shall provide
MOC with access to, and MOC shall have the right to copy at its own expense, any
documents, data or material delivered to Purchaser under this Agreement.
15.5 Employment. Purchaser agrees to promptly provide MOC with the
name and address of every former employee of MOC, if any, who is employed by
Purchaser within thirty (30) days following the Closing.
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15.6 Further Assurances. After Closing, MOC and Purchaser agree
to take such further actions and to execute, acknowledge and deliver all such
further documents that are necessary useful in carrying out the purposes of this
Agreement or of document delivered pursuant hereto.
ARTICLE XVI TERMINATION
16.1 Right of Termination. This Agreement and the transactions
contemplated hereby may be terminated at any time at or prior to the Closing:
(a) By mutual consent of the parties;
(b) By MOC, if the Closing shall not have occurred as hereinabove
provided because Purchaser shall have failed to obtain financing or to
materially perform its obligations hereunder; or
(c) By Purchaser, if the Closing shall not have occurred as
hereinabove provided because MOC shall have failed to materially perform its
obligations hereunder.
16.2 Effect of Termination. The following provisions shall apply in
the event of termination of this Agreement:
(a) If this Agreement is terminated for a reason not stated in either
Section 16.2(b) or Section 16.2(c), then such termination shall be without
liability of either party to this Agreement, and MOC shall promptly return the
Performance Deposit, together with the Interest Amount, to Purchaser or its
designee(s) at ______________________________
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_______________Bank, Acct.#______________________, located at _______________
________________________________________________.
(b) If this Agreement is terminated by MOC as a result of Purchaser's
failure to remit the balance of the Performance Deposit as specified in Section
3.1 or to obtain financing or as a result of the negligent or willful failure of
Purchaser to perform its obligations hereunder, (i) Purchaser shall be fully
liable for any and all actual, incidental and consequential damages (including,
but not limited to, lost profits), costs and expenses (including, but not
limited to reasonable attorneys' fees) hereby sustained or incurred by MOC, and
(ii) MOC shall be entitled to retain all of the remitted Performance Deposit and
the Interest Amount thereon as payment toward the damages, costs and expenses
described in (i) above. If the Performance Deposit and the Interest Amount
together exceed the total damages, costs and expenses owed by Purchaser to MOC
under (i) above, MOC shall still be entitled to retain the entire remitted
Performance Deposit and Interest Amount.
(c) If this Agreement shall be terminated by Purchaser as a result of
the negligent or willful failure of MOC to perform its obligations hereunder,
MOC shall be fully liable for any and all actual, incidental and consequential
damages (including, but not limited to, lost profits), costs and expenses
(including, but not limited to, reasonable attorneys' fees) thereby sustained or
incurred by Purchaser, up to a maximum of $200,000.00, and MOC shall promptly
return the Performance Deposit, together with the Interest Amount to Purchaser
or its designee(s) at __________________
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_________________________Bank, Acct.#________________located at ____________
____________________________________________________.
16.3 MOC Rights Upon Termination. Notwithstanding anything to the
contrary contained in this Agreement, upon any termination of this Agreement
pursuant to Section 16.1, MOC shall be free immediately to enjoy all rights of
ownership of the Assets and to sell, transfer, encumber or otherwise dispose of
the Assets to any party without any restriction under this Agreement; and
Purchaser shall be liable for all actual, incidental and consequential damages
(including, but not limited to, lost profits) sustained or incurred by MOC if it
attempts to interfere in any way with any such enjoyment or action by MOC.
16.4 Return of Financial Data. Upon termination, MOC will promptly
return to Purchaser all financial data concerning Purchaser, except such data as
MOC may have obtained prior to any disclosure by Purchaser or rightfully
received from a third party under an obligation of confidence.
ARTICLE XVII TAXES
17.1 Apportionment of Real Property Taxes. All real property taxes
assessed as of the 1996 assessment dates, based on the volume of hydrocarbons
produced from the Assets in 1995 shall be the responsibility of and paid by
Purchaser. All real property taxes assessed as of the 1995 assessment dates,
based on the volume of
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hydrocarbons produced from the Assets in 1994 shall be prorated between
Purchaser and MOC as follows:
(a) MOC shall be responsible and liable for 83.29% of the 1995 assessed tax
payable in 1996; and
(b) Purchaser shall be responsible and liable for 16.71% of the 1995
assessed tax payable in 1996.
Purchase shall be responsible and liable for the entire portion of the
1995 assessed tax, payable in 1996, which is attributable to various lease
burdens, such as royalties and overriding royalties, and for other working
interest owners in jointly operated properties' provided, however, MOC shall
assign to Purchaser all monies withheld by MOC (if any) for such taxes.
Purchaser shall invoice MOC for its portion of said real property taxes assessed
for 1995 when due and payable to the taxing authority under state law. Provided
that, if MOC pays the properly invoiced amount to Purchaser at least one (1)
month before payment of the taxes is delinquent under state law, Purchaser shall
then be solely liable and responsible for payment to, and shall report and make
payment to, the appropriate taxing authority. Purchaser shall be responsible
for all such taxes assessed in any year thereafter.
Beginning with the Effective Date, Purchaser will be responsible for
filing all ad valorem tax returns with the appropriate authorities.
17.2 Sales Taxes. The Purchase Price provided for hereunder is net
of any sales taxes or other transfer taxes in connection with the sale of the
Assets. Purchaser shall be liable for any sales tax or other transfer tax, as
well as any
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applicable conveyance, transfer and recording fee, and real estate transfer
stamps or taxes imposed on the transfer of the Assets pursuant to this
Agreement. Purchaser shall indemnify and hold MOC harmless with respect to the
payment of any of those taxes including any interest or penalties assessed
thereon.
17.3 Other Taxes. All excise, windfall profit and other taxes
relating to production of oil, gas and condensate attributable to the Assets
prior to the Effective Date shall be paid by MOC, and all such taxes relating to
such production on or after the Effective Date shall be paid by Purchaser. Real
property taxes not related to production shall be prorated between MOC and
Purchaser as of the Effective Date.
17.4 Taxes Paid For Others. Purchaser agrees to withhold from
future income distributions to royalty owners, working interest owners,
overriding royalty interest owners and other production burden holders as to the
Assets, amounts sufficient to reimburse MOC for various taxes (e.g., ad valorem,
real property, severance, etc.) paid by MOC on behalf of such interest holders
while MOC operated the Assets. MOC will provide Purchaser with sufficient
documentation to allow Purchaser to confirm amounts to be withheld and will
indemnify and hold Purchaser harmless from liability for deducting such sums as
directed by MOC. Purchaser agrees to promptly forward to MOC such sums which
are deducted pursuant to this Section 17.4.
17.5 Cooperation. Each party to this Agreement shall provide the
other party with reasonable access to all relevant documents, data and other
information which may be required by the other party for the purpose of
preparing tax returns and responding to any audit by any taxing jurisdiction.
Each party to this Agreement shall
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cooperate with all reasonable requests of the other party made in connection
with contesting the imposition of taxes. Notwithstanding anything to the
contrary in this Agreement, neither party to this Agreement shall be required at
any time to disclose to the other party any tax returns or other confidential
tax information.
ARTICLE XVIII PREFERENTIAL PURCHASE RIGHTS AND RIGHTS TO CONSENT
18.1 Exercise of Preferential Purchase Rights. If, prior to
Closing, any holder of a preferential purchase right notifies MOC that it
intends to consummate the purchase of the Subject Interests to which its
preferential purchase right applies, then those Subject Interests shall be
excluded from the Assets to be conveyed to Purchaser under this Agreement. The
Purchase Price shall be reduced for any Leasehold Interest so excluded by the
portion of the Purchase Price determined in accordance with Section 18.3 and for
any non-Leasehold Interest so excluded by the amount specified in Exhibit C;
provided, however, that if the holder of such preferential purchase right fails
to consummate the purchase of the Subject Interest covered by such right, then
MOC shall so notify Purchaser, and within fifteen(15) days after Purchaser's
receipt of such notice from MOC, MOC shall sell to Purchaser, and Purchaser
shall purchase from MOC, for a price equal to the portion of the Purchase Price
specified above for the Subject Interest, and upon the other terms of this
Agreement, the Subject Interest to which the preferential purchase right
applied. All Subject Interests for which a preferential purchase right has not
been asserted
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prior to Closing by the holder of such right shall be sold to Purchaser at
Closing pursuant to the provisions of this Agreement. If one or more of the
holders of any such preferential purchase rights notifies MOC subsequent to the
Closing that it intends to assert its preferential purchase right, MOC shall
give notice thereof to Purchaser, whereupon Purchaser shall satisfy all such
preferential purchase rights obligations of MOC to such holders and shall
indemnify and hold harmless MOC from and against any and all claims,
liabilities, losses, costs and expenses (including, but not limited to, court
costs and reasonable attorney's fees) in connection therewith, and Purchaser
shall be entitled to receive (and MOC hereby assigns to Purchaser all of MOC's
rights to) all proceeds received from such holders in connection with such
preferential purchase rights.
18.2 Non-Consents to Assignments. If, prior to Closing, any holder
of a right to consent to assignment does not consent to the assignment of the
Subject Interests to which its right applies, then those Subject Interests shall
be excluded from the Assets to be assigned to Purchaser under this Agreement.
The Purchase Price shall be reduced for any Leasehold Interest excluded by the
portion of the Purchase Price determined in accordance with Section 18.3 and for
any non-Leasehold interests so excluded by the amount specified in Exhibit C.
18.3 Excluded Leasehold Interest. The value of an excluded
Leasehold Interest (V) is to the total Purchase Price (PP) , as the net revenue
attributable to the applicable Leasehold Interest for the nine (9) consecutive
months preceding October
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1, 1995 and ending on September 30, 1995 (IR) is to the net revenue attributable
to all of the Subject Interests for the same nine (9) month period (AR)
[or V : IR ].
-- --
PP AR
18.4 Support for Excluded Leasehold Interests. If any Leasehold
Interests are excluded from the Assets pursuant to Section 18.2, Purchaser
shall supply services to MOC or its assignee at cost as necessary to support a
waterflood operation by MOC or its assignee on such Leasehold Interests. These
services shall include, but not necessarily be limited to, the supply of water
and electricity; the receiving, processing and storage of produced fluids; the
disposal of produced water; and ingress and egress.
ARTICLE XIX INDEPENDENT INVESTIGATION AND DISCLAIMER
19.1 Independent Investigation and Disclaimer. Purchaser
acknowledges that in making the decision to enter into this Agreement and
consummate the transactions contemplated hereby, Purchaser has relied only on
its own independent investigation of the Assets, and upon the representations,
warranties and covenants in this Agreement. Accordingly, Purchaser acknowledges
that MOC has not made, AND MOC HEREBY EXPRESSLY DISCLAIMS AND NEGATES, ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT COMMON LAW, BY STATUTE, OR
OTHERWISE RELATING TO (i) TITLE (EXCEPT AS STATED IN SECTION 14.1), (ii) THE
34
<PAGE>
CONDITION OF THE ASSETS (INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED OR EXPRESSED
WARRANTY OF MERCHANTABILITY, OF FITNESS FOR A PARTICULAR PURPOSE, OR OF
CONFORMITY TO MODELS OR SAMPLES OF MATERIALS), (iii) ANY INFORMATION, DATA OR
OTHER MATERIALS (WRITTEN OR ORAL) FURNISHED OR SHOWN, OR TO BE FURNISHED OR
SHOWN TO PURCHASER BY OR ON BEHALF OF MOC (INCLUDING, BUT NOT LIMITED TO,
INFORMATION, DATA, GEOLOGICAL OR GEOPHYSICAL DATA, OR ANY INTERPRETATION,
RENDERING, CHARTING OR DRAWING THEREOF, OR OTHER MATERIALS REGARDING THE
EXISTENCE OR EXTENT OF OIL, GAS OR OTHER MINERAL RESERVES, THE RECOVERABILITY OF
OR THE COST OF RECOVERING ANY SUCH RESERVES, THE VALUE OF SUCH RESERVES, ANY
PRODUCT PRICING ASSUMPTION, PRESENT OR PAST PRODUCTION RATES, AND THE ABILITY TO
SELL OIL OR GAS PRODUCTION AFTER CLOSING), AND (iv) THE AMOUNT OF RESERVES OR
THE ABILITY TO PRODUCE; provided, however, that the foregoing disclaimer and
negation of representations and warranties shall not affect or impair the
representations and warranties of MOC set forth in Article IV hereof.
ARTICLE XX MISCELLANEOUS
20.1 Governing Law. This Agreement and all assignments and other
instruments executed in accordance with it shall be governed by and interpreted
in accordance with the laws of the State of Illinois.
35
<PAGE>
20.2 Entire Agreement. This Agreement constitutes the entire
agreement between the parties and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties, except for the Confidentiality Agreement dated June 19, 1995. No
supplement, amendment, alteration, modification, waiver or termination of this
Agreement shall be binding unless executed in writing by the parties hereto.
20.3 Waiver. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar), nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided.
20.4 Captions. The captions in this Agreement are for convenience
only and shall not be considered a part of or affect the construction or
interpretation of any provision of this Agreement.
20.5 Assignment. Neither party hereto shall assign this Agreement
or any of its rights or obligations hereunder without the prior written consent
of the other party and any assignment made without such consent shall be void.
Except as otherwise provided herein, this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
20.6. Notices. Any notice provided or permitted to be given under
this Agreement shall be in writing, and may be served by personal delivery,
telefax or by depositing same in the mail, addressed to the party to be
notified, postage prepaid, and registered or certified with a return receipt
requested. Notice shall be deemed
36
<PAGE>
to have been given and received only if and when actually received by the
addressee. For purposes of notice, the addresses of the parties shall be as
follows:
MOC's Mailing Address:
Marathon Oil Company
P. 0. Box 689
Oklahoma City, OK 73132
Attention: Region Manager
Purchaser's Mailing Address:
Crete Oil Company, Inc.
722 W. Exchange St.
Crete, Illinois 60417
Attention: President
Each party shall have the right, upon giving ten (10) days' prior written notice
to the other, in the manner hereinabove provided, to change its address for
purposes of notice.
20.7 Expenses. Except as otherwise provided herein, each party
shall be solely responsible for all expenses incurred by it in connection with
this transaction. MOC shall reimburse Purchaser for the filing fee required
under HSR.
20.8 Severability. If any term or other provision of this Agreement
is determined by a court to be invalid, illegal or incapable of being enforced
under any rule of law, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in a
materially adverse manner with respect to either party.
37
<PAGE>
20.9 Publicity. MOC and Purchaser shall consult with each other
with regard to all publicity and other releases issued at or prior to the
Closing concerning this Agreement and the transactions contemplated hereby and,
except as required by applicable law or the applicable rules or regulations of
any governmental body or stock exchange, neither party shall issue any publicity
or other release without the prior written consent of the other party. Without
limiting the above, the parties agree that the Purchase Price shall be kept
confidential.
20.10 Use of MOC's Name. As soon as practicable, but in any event
no later than thirty (30) days after the Closing, Purchaser shall remove or
cause to be removed the names and marks used by MOC and all variations and
derivatives thereof and logos relating thereto from the Assets and shall not
thereafter make any use whatsoever of those names, marks and logos. MOC, upon
reasonable notice, may enter the property any time after thirty (30) days, to
determine if Purchaser has taken the actions required by this Section and, if
such actions have not been taken, to remove such names and marks, and bill
Purchaser for the cost of such removal.
20.11 Consequential Damages. Except as expressly provided herein,
the parties waive any rights to incidental or consequential damages resulting
from a breach of this Agreement.
20.12 Brokers' and Finders' Fees. Neither party shall have any
liability, contingent or otherwise, for brokers' or finders' fees relating to
the sale of the Assets incurred by the other party, and each party agrees to
indemnify and hold the other harmless for any such liability arising as a result
of the other party's actions.
38
<PAGE>
20.13 Survival. Only the representations, warranties, covenants and
obligations of Articles IV, V, X, XIV, XV, XVI, XVII, XVIII, XIX, and XX, and
Sections 3.4, 7.2, 8.3, 8.5, 9.3 and 9.5, and those contained in the Deeds and
Assignments, shall survive the Closing.
20.14 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
In witness whereof, the parties have executed this Agreement as of the
day and year first set forth above.
ATTEST: MARATHON OIL COMPANY
/s/ D.C. GERARD
______________________________ By:_________________________________
Assistant Secretary Its Vice President, Domestic
Production
ATTEST: CRETE OIL COMPANY, INC.
/s/ ROBERT J. McCULLOUGH
______________________________ By:_________________________________
Assistant Secretary Its President
39
<PAGE>
AMENDMENT
to the
PURCHASE AND SALE AGREEMENT between
MARATHON OIL COMPANY and CRETE OIL COMPANY, INC.
dated October 31, 1995
This Amendment (the "Amendment") is made to the Purchase and Sale Agreement
(the "Agreement") dated October 31, 1995, between Marathon Oil Company, an Ohio
corporation ("MOC"), and Crete Oil Company, Inc., an Illinois corporation
("Purchaser").
RECITALS
Whereas, MOC desires to sell and Purchaser desires to purchase certain oil
and gas properties and related rights on the terms and conditions provided in
the Agreement;
And whereas, Plains Illinois Inc., a wholly owned subsidiary of Plains
Resources Inc., is the assignee of Crete Oil Company, Inc. pursuant to an
assignment of the Agreement and a consent thereto from MOC;
And whereas, MOC, Plains Resources Inc. and Plains Illinois Inc., as the
Purchaser, desire to amend certain terms and conditions of the Agreement;
Now, therefore, MOC, Purchaser and Plains Resources Inc., for good and
valuable consideration, the receipt of which is acknowledged, agree as follows:
A. The following Sections of the Agreement shall be amended to read as set
forth herein.
1. Section 2.1 (b)
To the extent attributable or allocable to the Subject Interests, all of
MOC's right, title and interest in and to (i) all wells, equipment and
facilities, except as set forth at Exhibit B, which are located on (or in the
case of line injection wells, on or adjacent to) or used exclusively and
directly in connection with the production, treatment or transportation of oil
and gas from the Subject Interests, (ii) all trucks, equipment, electrical poles
and lines, personal property and inventory owned by MOC and located on or used
exclusively and directly in connection with the Subject Interests, (iii) to the
extent they are assignable, all orders, contracts, agreements and other
instruments which affect the Subject Interests, including, but not limited to,
those described at Exhibits A1 through A7 [but not including the following:
insurance contracts held by MOC; orders, contracts, agreements and other
instruments which include or affect oil and gas properties of MOC other than the
Subject Interests; and production sales agreements with any affiliates or
subsidiaries of MOC, the collective bargaining agreement between MOC and Local
No. 7-482 of the Oil, Chemical and Atomic Workers International Union], (iv) to
the extent they are assignable and subject to the conditions set forth in
Exhibit B, all easements, licenses, authorizations, permits and similar rights
and interests which affect, but only to the extent they affect, the Subject
Interests and (v) to the extent they are assignable, all other rights,
privileges, benefits and powers conferred upon the owner and holder of the
Subject Interests; but not including any and all assets, facilities, contract,
real and personal property (whether tangible or intangible) owned or operated by
MOC's refining, pipeline, supply and transportation or marketing organizations;
2. Section 2.1 (c)
<PAGE>
Subject to Section 15.4, originals of general operating records, well
files, lease files, contract files (including unit and operating agreement
files), land files, regulatory reports and certificates, abstracts and title
opinions, logs, cores, geological, petrophysical, geophysical and engineering
data, and geologic and engineering studies pertaining to the Illinois Basin; but
not including all of the following: any legal files, attorney-client
communications or attorney work product; those items for which MOC is required
by law or regulation to retain the originals (and in such instance MOC shall
provide copies to Purchaser); MOC's geophysical and geological data base for
which there is a contractual prohibition upon transfer or licensing to
Purchaser; auditors' reports; and reserve reports. MOC shall also provide
Purchaser with copies of and/or access to actual revenue data for the last three
(3) years pertaining to the Assets.
3. Section 15.2 (c)
MOC agrees, effective as of the Effective Date, to indemnify, defend and
hold harmless Purchaser, its officers, directors, employees, parent, affiliate
and subsidiary corporations, from and against any and all claims, demands,
liabilities, costs, judgments, expenses (including, but not limited to, court
costs and reasonable attorney's fees), damages and losses relating directly to
the following only: (i) injury to (including death of) any person occurring
prior to the Closing Date and caused by MOC's operation of the Assets; (ii) any
crop damage occurring prior to the year 1996 (but not including crop damage
which occurs in 1996 or thereafter but results from a condition(s) of or upon
the Assets that existed before 1996); (iii) MOC's failure, during the period it
owned the Assets, to timely and properly account to a third party for production
proceeds MOC was obligated to pay pursuant to any applicable lease agreement,
unit agreement or pooling agreement conveyed to Purchaser under this Agreement;
(iv) the pending litigation, contractual defaults, claims and other items set
forth in sections I, III, IV, V and VI of Exhibit D; and (v) claims for
contractual defaults attributable to the Assets or their operation which
occurred prior to the Closing Date
4. Section 15.3
Call on Oil. MOC, or its designee, will have, for a period of twenty
(20) years beginning on January 1, 1996, the right to purchase the crude oil
(including condensate, distillate and other liquids recovered from the well
stream by normal lease-separation methods) produced and saved from the Subject
Interests. The price to be paid shall be the market price as mutually agreed
upon from time to time by the parties hereto. Each party agrees to negotiate
with the other party to establish the market price in a timely manner and in
good faith. In the event the parties cannot agree upon a market price to be
paid, the price proposed to be paid by MOC (the "MOC Price"), shall be
considered the market price, provided that, for a period of sixty (60) days
after the effective date of the MOC Price, Purchaser may cancel its contract or
obligation to deliver crude oil to MOC by providing MOC with five (5) business
days prior notice of cancellation. Purchaser may only exercise its right to
cancel if such crude oil is sold or to be sold to a third party for a price in
excess of the MOC Price. In such event, MOC's right to purchase such crude oil
shall be suspended for a period that does not exceed the lesser of (i) two
years, or (ii) the term of Purchaser's contract with such third party.
In the event that Purchaser desires to sell crude oil production subject to
this Agreement to a third party for a price that is in excess of the price
currently being paid by MOC, Purchaser shall provide MOC with the pertinent
terms of such third party offer. MOC shall have ten (10) business days to agree
to purchase the crude oil on the same terms and conditions, effective upon the
termination of the then existing agreement under which MOC is purchasing such
crude oil. If MOC does not exercise its right to match such third party offer,
Purchaser shall be entitled to sell such crude oil to said third party on the
terms provided to MOC, upon the expiration of the then existing agreement with
MOC. The term of any such sales to a third party shall not exceed two years.
Purchaser shall notify MOC in advance of significant changes in quantity or
quality of the stream resulting from development or other work in the Subject
Interests. For the purposes of this paragraph, notice can be given to:
Marathon Oil Company
Refinery Office Building
<PAGE>
Robinson, Illinois 62454
Attn: Crude Oil Acquisition
unless MOC provides Purchaser prior written notice of a change of address.
5. Exhibit "B", Section 5
Marathon Pipe Line Company has pipelines, pump stations, meters, corrosion
prevention equipment (and associated ground beds) and other equipment located
on or in easements and surface leases which are the subject of this Agreement.
All such pipelines, pump stations, meters, corrosion prevention equipment (and
associated ground beds) and other equipment and any other equipment or
facilities owned by a subsidiary or affiliate of MOC, are hereby excluded from
this sale. MOC shall, however grant a concurrent interest in the excluded
easements and rights of way for permitted uses thereunder for the purpose of
operating and maintaining the Assets. Marathon Pipe Line Company shall have a
concurrent interest in any easements and surface leases conveyed hereunder on in
which Marathon Pipe Line Company has located pipelines, pump stations, meters,
corrosion prevention equipment (and associated ground beds) and other equipment
for permitted uses thereunder for the purpose of operating and maintaining the
same and to lay, construct, operate and maintain future pipelines as necessary
and convenient. Marathon Pipe Line Company shall have the right to transport
electricity over power lines assigned under this Agreement for the purpose of
operating its pump stations.
6. Exhibit "E" shall be amended to incorporate the above and shall have
added the following Sections:
1. (d) A concurrent interest in the easements and rights of way described in
Exhibit "D" for permitted uses thereunder for the purpose of operating and
maintaining the Assets.
and,
5. MOC excepts and reserves unto itself, it successors and assigns, and unto
its wholly owned subsidiary, Marathon Pipe Line Company, a concurrent interest
in any easements, rights of way and surface leases conveyed hereunder on in
which Marathon Pipe Line Company has located pipelines, pump stations, meters,
corrosion prevention equipment (and associated ground beds) and other equipment
for permitted uses thereunder for the purpose of operating and maintaining the
same and to lay, construct, operate and maintain future pipelines as necessary
and convenient. MOC also excepts and reserves unto itself, it successors and
assigns, and unto its wholly owned subsidiary, Marathon Pipe Line Company, the
right to transport electricity over power lines assigned hereunder for the
purpose of operating Marathon Pipe Line Company pump stations.
The remaining sections of Exhibit"E" shall be renumbered accordingly.
7. Section 3.2
Purchase Price . The aggregate Purchase Price for the Assets shall be the
amount of Forty-six Million, Two Hundred Thousand Dollars US ($46,200,000.00 US)
(the "Purchase Price") payable as follows:
a) $41.5 million cash (less the Performance Deposit and Interest Account)
and
b) $4.7 million payable in Plains Resources Inc. Common Stock, $.10 par
value. The number of shares of Common Stock to be issued at Closing (the "Common
Stock") shall be equal to $4.7 million divided by the closing market price for
Plains Resources Inc.'s common stock on the day immediately preceding the
Closing ("Closing Price").
Purchaser shall as expeditiously as possible, but within 90 days of the Closing
Date prepare and file with the Securities Exchange Commission a Shelf
Registration Statement under Rule 415 of the Securities Act with
<PAGE>
respect to the Common Stock ("Registration Statement") and use its best efforts
to cause the Registration Statement to become and remain effective until all the
Common Stock can be sold.
For a one year period following the date the Registration Statement
becomes effective, Purchaser shall be obligated to make an adjustment to the
Purchase Price of up to $470,000 cash in the following circumstances (the "Price
Adjustment"). The Price Adjustment shall occur if MOC sells part or all of the
Common Stock at a price less than the Closing Price. Notwithstanding the
foregoing, if MOC sells a portion of the Common Stock at a price above the
Closing Price such that in the aggregate the average price received by MOC
equals or exceeds the Closing Price, there shall be no Price Adjustment. In the
event a Price Adjustment is applicable, MOC shall provide Purchaser written
request for such Price Adjustment, setting forth in detail the number of shares
sold, the price received by MOC for such shares and the date such shares were
sold. Payment shall be made by Purchaser in cash to MOC within thirty days from
receipt of such notice.
In the event MOC has received Price Adjustment in the manner described
above and subsequently sells additional Common Stock within two years following
the date the registration statement becomes effective above the Closing Price,
then MOC shall reimburse Purchaser for any Price Adjustment previously paid to
MOC which is in excess of the Price Adjustment which would be due to MOC if the
aggregate sales of Common Stock were used to calculate the Price Adjustment.
MOC hereby represents as follows:
a) it is acquiring Plains Resources Inc.'s Common Stock for its own
account with the present intention of holding such stock for purposes of
investment.
b) it has no intention of selling Plains Resources Inc.'s Common
Stock in a public distribution in violation of the Federal Securities Law
or any applicable state securities law, and
c) it is an accredited investor (as such term is defined in Rule 501
of Regulation D promulgated under the Securities Act).
Unless otherwise agreed to by MOC and Purchaser prior to the Closing
Date, or as modified by Section 3.4, payment of the cash portion of the Purchase
Price shall be by wire transfer of federal (same day) funds by Purchaser to
MOC's designated United States bank account at Closing (as defined in Section
13.1).
B. In all other respects the Agreement shall remain unchanged and in full force
and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of
December 4, 1995.
MARATHON OIL COMPANY
By: /s/ D. C. Gerard
----------------------------------
D. C. Gerard its Vice President
PLAINS RESOURCES INC. PLAINS ILLINOIS INC.
By: /s/ Greg L. Armstrong By: /s/ Greg L. Armstrong
---------------------------------- -----------------------------------
Greg L. Armstrong its President Greg L. Armstrong its President
<PAGE>
EXHIBIT 2.2
EXECUTION COPY
================================================================================
CREDIT AGREEMENT
----------
PLAINS ILLINOIS INC.
and
INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL CORPORATION,
Individually as a Lender and as Agent,
and CERTAIN FINANCIAL INSTITUTIONS
as Lenders
----------
$42,000,000
December 22, 1995
================================================================================
<PAGE>
CREDIT AGREEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I - Definitions and References. . . . . . . . . . . . . . . 1
Section 1.1. Defined Terms. . . . . . . . . . . . . . . . . . 1
Section 1.2. Exhibits and Schedules; Additional Definitions . 10
Section 1.3. Amendment of Defined Instruments . . . . . . . . 11
Section 1.4. References and Titles. . . . . . . . . . . . . . 11
Section 1.5. Calculations and Determinations. . . . . . . . . 11
ARTICLE II - The Loan . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.1. Making the Loans . . . . . . . . . . . . . . . . 11
Section 2.2. Requesting the Loan. . . . . . . . . . . . . . . 11
Section 2.3. Use of Proceeds. . . . . . . . . . . . . . . . . 12
Section 2.4. Rate Elections . . . . . . . . . . . . . . . . . 12
Section 2.5. Arrangement and Facility Fees. . . . . . . . . . 13
Section 2.6. Optional Prepayments . . . . . . . . . . . . . . 13
Section 2.7. Mandatory Prepayments. . . . . . . . . . . . . . 13
Section 2.8. Payments to Lenders. . . . . . . . . . . . . . . 14
Section 2.9. Initial Borrowing Base . . . . . . . . . . . . . 15
Section 2.10. Subsequent Determinations of Borrowing Base . . 15
Section 2.11. Capital Reimbursement . . . . . . . . . . . . . 15
Section 2.12. Increased Cost of Fixed Rate Portions . . . . . 16
Section 2.13. Availability. . . . . . . . . . . . . . . . . . 16
ARTICLE III - Conditions Precedent to Lending . . . . . . . . . . . 17
Section 3.1. Documents to be Delivered. . . . . . . . . . . . 17
Section 3.2. Additional Conditions Precedent. . . . . . . . . 18
ARTICLE IV - Representations and Warranties . . . . . . . . . . . . 19
Section 4.1. Borrower's Representations and Warranties. . . . 19
Section 4.2. Representation by Lenders. . . . . . . . . . . . 25
ARTICLE V - Covenants of Borrower . . . . . . . . . . . . . . . . . 25
Section 5.1. Affirmative Covenants. . . . . . . . . . . . . . 25
Section 5.2. Negative Covenants . . . . . . . . . . . . . . . 31
ARTICLE VI - Security . . . . . . . . . . . . . . . . . . . . . . . 34
Section 6.1. The Security . . . . . . . . . . . . . . . . . . 34
Section 6.2. Agreement to Deliver Security Documents. . . . . 34
Section 6.3. Perfection and Protection of Security Interests
and Liens . . . . . . . . . . . . . . . . . . . 35
Section 6.4. Bank Accounts; Offset. . . . . . . . . . . . . . 35
Section 6.5. Production Proceeds. . . . . . . . . . . . . . . 35
</TABLE>
i
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<TABLE>
<S> <C>
ARTICLE VII - Events of Default and Remedies. . . . . . . . . . . . 36
Section 7.1. Events of Default. . . . . . . . . . . . . . . . 36
Section 7.2. Remedies . . . . . . . . . . . . . . . . . . . . 38
Section 7.3. Indemnity. . . . . . . . . . . . . . . . . . . . 38
ARTICLE VIII - Agent. . . . . . . . . . . . . . . . . . . . . . . . 39
Section 8.1. Appointment and Authority. . . . . . . . . . . . 39
Section 8.2. Exculpation, Agent's Reliance, Etc.. . . . . . . 39
Section 8.3. Lenders' Credit Decisions. . . . . . . . . . . . 40
Section 8.4. Indemnification. . . . . . . . . . . . . . . . . 40
Section 8.5. Rights as Lender . . . . . . . . . . . . . . . . 41
Section 8.6. Sharing of Set-Offs and Other Payments . . . . . 41
Section 8.7. Investments. . . . . . . . . . . . . . . . . . . 41
Section 8.8. Benefit of Article VIII. . . . . . . . . . . . . 42
Section 8.9. Resignation. . . . . . . . . . . . . . . . . . . 42
ARTICLE IX - Miscellaneous. . . . . . . . . . . . . . . . . . . . . 42
Section 9.1. Waivers and Amendments; Acknowledgements . . . . 42
Section 9.2. Survival of Agreements; Cumulative Nature. . . . 44
Section 9.3. Notices. . . . . . . . . . . . . . . . . . . . . 44
Section 9.4. Parties in Interest. . . . . . . . . . . . . . . 45
SECTION 9.5. GOVERNING LAW; SUBMISSION TO PROCESS . . . . . . 45
Section 9.6. Limitation on Interest . . . . . . . . . . . . . 46
Section 9.7. Termination; Limited Survival. . . . . . . . . . 47
Section 9.8. Severability . . . . . . . . . . . . . . . . . . 47
Section 9.9. Counterparts . . . . . . . . . . . . . . . . . . 47
SECTION 9.10. WAIVER OF JURY TRIAL, PUNITIVE DAMAGES, ETC. . . 47
Schedules and Exhibits:
SCHEDULE 1 -- Disclosure Schedule
SCHEDULE 2 -- Security Schedule
SCHEDULE 3 -- Examined Properties
SCHEDULE 4 -- Insurance
SCHEDULE 5 -- Lease Operating Expenses
EXHIBIT A -- Promissory Note
EXHIBIT B -- Request for Loans
EXHIBIT C -- Rate Election
EXHIBIT D -- Certificate Accompanying Financial Statements
EXHIBIT E -- Environmental Compliance Certificate
EXHIBIT F-1 -- Opinion of Michael R. Patterson, Esq., general counsel for
Borrower
EXHIBIT F-2 -- Opinion of Fulbright & Jaworski L.L.P.,
special New York counsel for Borrower
</TABLE>
ii
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is made as of December 22, 1995, by and among
Plains Illinois Inc., a Delaware corporation ("Borrower"), Internationale
Nederlanden (U.S.) Capital Corporation ("ING Capital"), individually as a
Lender, the other Lenders from time to time party to this Agreement, and ING
Capital as agent for the Lenders (in such capacity, "Agent"). In
consideration of the mutual covenants and agreements contained herein the
parties hereto agree as follows:
ARTICLE I - Definitions and References
Section 1.1. Defined Terms. As used in this Agreement, each of the
following terms has the meaning given it in this Section 1.1 or in the sections
and subsections referred to below:
"Acquired Properties" means the properties to be sold by Seller and
purchased by Borrower pursuant to the Acquisition Documents.
"Acquisition Documents" means (i) the Marathon Acquisition Agreement,
(ii) the Crete Acquisition Agreement, (iii) that certain Instrument of
Conveyance of even date herewith by Seller in favor of Borrower, (iv) that
certain Operating Agreement of even date herewith between Borrower and Crete,
and (v) all other agreements, certificates, documents, instruments and other
writings delivered in connection therewith.
"Affiliate" means, as to any Person, each other Person that directly or
indirectly (through one or more intermediaries or otherwise) controls, is
controlled by, or is under common control with, such Person. A Person shall be
deemed to be "controlled by" any other Person if such other Person possesses,
directly or indirectly, power
(a) to vote 20% or more of the securities (on a fully diluted
basis) having ordinary voting power for the election of directors or managing
general partners; or
(b) to direct or cause the direction of the management and
policies of such Person whether by contract or otherwise.
"Agent" shall have the meaning assigned to such term in the first
paragraph of this Agreement as agent hereunder, and its successors in such
capacity; provided, however, that until such time as a Lender other than ING
Capital becomes a party hereto, "Agent" shall mean ING Capital, individually.
"Agreement" means this Credit Agreement.
"Base Rate" means the Base Rate Margin plus the higher of (a) the
Federal Funds Rate for such day plus one-half percent (0.5%) and (b) the
arithmetic average of the rates of interest publicly announced by The Chase
Manhattan Bank (National Association), Citibank, N.A. and Morgan Guaranty Trust
Company of New York (or their respective successors) as their respective prime
commercial lending rates (or, as to any such bank that does not
1
<PAGE>
announce such a rate, such bank's 'base' or other rate determined by Agent to be
the equivalent rate announced by such bank), except that, if any such bank
shall, for any period, cease to announce publicly its prime commercial lending
(or equivalent) rate, Agent shall, during such period, determine the "Base Rate"
based upon the prime commercial lending (or equivalent) rates announced publicly
by the other such banks. The Base Rate shall in no event, however, exceed the
Highest Lawful Rate.
"Base Rate Margin" means (a) one-quarter percent (0.25%) during the
period from the date hereof until September 30, 1996 and (b) one and
one-quarter percent (1.25%) thereafter.
"Base Rate Portion" means that portion of the unpaid principal balance
of the Loan which is not made up of Fixed Rate Portions.
"Borrower" means Plains Illinois Inc., a Delaware corporation.
"Borrowing Base" means, at the particular time in question, either the
amount provided for in Section 2.9 or the amount determined by Agent in
accordance with the provisions of Section 2.10.
"Business Day" means a day, other than a Saturday or Sunday, on which
commercial banks are open for business with the public in New York, New York.
Any Business Day in any way relating to Fixed Rate Portions (such as the day on
which an Interest Period begins or ends) must also be a day on which, in the
judgment of Agent, significant transactions in dollars are carried out in the
interbank eurocurrency market.
"Change of Control" means any Person, or two or more Persons acting as
a group, other than Plains, shall acquire beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, and including holding proxies to
vote for the election of directors) of forty percent (40%) or more of the
outstanding common stock of Borrower.
"Collateral" means all property of any kind which is subject to a Lien
in favor of Lenders (or in favor of Agent for the benefit of Lenders) or which,
under the terms of any Security Document, is purported to be subject to such a
Lien.
"Crete" means Crete Oil Company, Inc., an Illinois corporation.
"Crete Acquisition Agreement" means that certain Acquisition Agreement
dated November 28, 1995, among Crete, Plains and Borrower, as amended by a
First Amendment to Acquisition Agreement dated December 4, 1995.
"Debt" means, as to any Person, all indebtedness, liabilities and
obligations of such Person, whether matured or unmatured, liquidated or
unliquidated, primary or secondary, direct or indirect, absolute, fixed or
contingent, and whether or not required to be considered pursuant to GAAP.
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"Default" means any Event of Default and any default, event or
condition which would, with the giving of any requisite notices and the passage
of any requisite periods of time, constitute an Event of Default.
"Determination Date" has the meaning given it in Section 2.10.
"Disclosure Schedule" means Schedule 1 hereto.
"Engineering Report" means the Initial Engineering Report and each
engineering report delivered pursuant to Section 5.1(b)(iii).
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
other governmental restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals or industrial, toxic or hazardous substances or wastes into the
environment, including ambient air, surface water, groundwater or land, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations promulgated
with respect thereto.
"ERISA Plan" means any employee pension benefit plan subject to Title
IV of ERISA maintained by Borrower or any Affiliate thereof with respect to
which Borrower has a fixed or contingent liability.
"Eurodollar Rate" means, with respect to each particular Fixed Rate
Portion within a Tranche and with respect to the related Interest Period, the
rate per annum (rounded upwards, if necessary, to the nearest 1/16 of 1%)
reported, on the date two Business Days prior to the first day of such Interest
Period, on Telerate Access Service Page 3750 (British Bankers Association
Settlement Rate) as the London Interbank Offered Rate for dollar deposits
having a term comparable to such Interest Period and in an amount of $1,000,000
or more (or, if such Page shall cease to be publicly available or if the
information contained on such Page, in Agent's sole judgment, shall cease to
accurately reflect such London Interbank Offered Rate, as reported by any
publicly available source of similar market data selected by Agent that, in
Agent's sole judgment, accurately reflects such London Interbank Offered Rate).
"Event of Default" has the meaning given it in Section 7.1.
"Federal Funds Rate" shall mean, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided that (a) if the day for which
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such rate is to be determined is not a Business Day, the Federal Funds Rate for
such day shall be such rate on such transactions on the next preceding Business
Day as so published on the next succeeding Business Day, and (b) if such rate is
not so published for any day, the Federal Funds Rate for such day shall be such
rate as reported by any publicly available source of similar market data
selected by Agent that, in Agent's sole judgment, accurately reflects such rate
on overnight Federal funds transactions.
"Field Level Net Revenue" means, for a particular month:
(a) gross revenue accrued during such month with respect to the
Mortgaged Property (the gross amount realized from production sold during such
month, net of transportation expenses and after deduction of royalties,
overriding royalties and other leasehold burdens with respect to the Mortgaged
Property) plus other cash receipts received during such month with respect to
the Mortgaged Property, other than insurance proceeds used by Borrower within
six months of receipt thereof to repair or replace the insured property
relating thereto, minus the following, to the extent accrued during such month:
(i) lease operating expenses with respect to the Mortgaged Property for such
month in an amount not greater than the amount of such lease operating expenses
for such month as set forth on Schedule 5 attached hereto, and (ii) production
taxes with respect to the Mortgaged Property; plus
(b) the net cash flow accrued during such month with respect to the
Acquired Properties other than the Mortgaged Property.
All net payments to Plains under any Hedging Contract entered into by
Plains and attributed to the Acquired Properties will be deemed to be a cash
receipt attributable to the Acquired Properties, and all net payments by Plains
under any such Hedging Contract shall be a deduction from gross revenues
attributable to the Acquired Properties, in either case whether or not such
payment is borne or received by Borrower.
"Fiscal Quarter" means a three-month period ending on March 31, June
30, September 30 or December 31 of any year.
"Fiscal Year" means a twelve-month period ending on December 31 of any
year.
"Fixed Rate" means, with respect to each particular Fixed Rate Portion
and the associated Eurodollar Rate and Reserve Percentage, the rate per annum
calculated by Agent (rounded upwards, if necessary, to the next higher 0.01%)
determined on a daily basis pursuant to the following formula:
Fixed Rate =
Eurodollar Rate + A
---------------------------
100.0% - Reserve Percentage
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where A means 2% during the period from the date hereof through and
including September 30, 1996, and 3% thereafter. The Fixed Rate for any Fixed
Rate Portion shall change whenever A changes, but if the Reserve Percentage
changes during the Interest Period for a Fixed Rate Portion, Agent may, at its
option, either change the Fixed Rate for such Fixed Rate Portion or leave it
unchanged for the duration of such Interest Period. The Fixed Rate shall in no
event, however, exceed the Highest Lawful Rate.
"Fixed Rate Portion" means any portion of the unpaid principal balance
of a Loan constituting a portion of a Tranche designated by Borrower in a Rate
Election.
"GAAP" means those generally accepted accounting principles and
practices which are recognized as such by the Financial Accounting Standards
Board (or any generally recognized successor) and which, in the case of
Borrower, 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 Initial Financial Statements. If any change in any accounting principle
or practice is required by the Financial Accounting Standards Board (or any
such successor) in order for such principle or practice to continue as a
generally accepted accounting principle or practice, all reports and financial
statements required hereunder with respect to Borrower may be prepared in
accordance with such change, but all calculations and determinations to be made
hereunder may be made in accordance with such change only after notice of such
change is given to each Lender and Majority Lenders agree to such change
insofar as it affects the accounting of Borrower.
"Hazardous Materials" means any substances regulated under any
Environmental Law, whether as pollutants, contaminants, or chemicals, or as
industrial, toxic or hazardous substances or wastes, or otherwise.
"Hedging Contract" means any futures contract, forward contract, swap,
cap or collar contract, option contract, hedging contract, other derivative
contract, or similar agreement.
"Hedging Plan" means Borrower's Hedging Strategy dated as of the date
hereof regarding Borrower's hedging objectives and strategy with respect to the
Acquired Properties, as from time to time revised or updated as provided in
Section 5.1(b)(vii).
"Highest Lawful Rate" means, with respect to each Lender, the maximum
nonusurious rate of interest that such Lender is permitted under applicable law
to contract for, take, charge, or receive with respect to its Loan. All
determinations herein of the Highest Lawful Rate, or of any interest rate
determined by reference to the Highest Lawful Rate, shall be made separately
for each Lender as appropriate to assure that the Loan Documents are not
construed to obligate any Person to pay interest to any Lender at a rate in
excess of the Highest Lawful Rate applicable to such Lender.
"ING Capital" shall have the meaning assigned to such term in the first
paragraph of this Agreement, as a Lender hereunder and its successors in such
capacity.
"Initial Engineering Report" means the engineering reports concerning
oil and gas properties of Borrower furnished to Agent and Lenders prior to the
date hereof.
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"Initial Financial Statements" means (i) the pro forma balance sheet
and statement of earnings of Borrower as of the date hereof and (ii) a
statement of sources and uses of funds by Borrower in connection with the
consummation of the acquisition of the Acquired Properties pursuant to the
Acquisition Documents, certified by the chief financial officer of Borrower.
"Interest Period" means, with respect to each particular Fixed Rate
Portion of a Loan, a period of 1, 2 or 3 months (or, as to the first Rate
Election, 6 months), as specified in the Rate Election applicable thereto,
beginning on and including the date specified in such Rate Election (which must
be a Business Day), and ending on but not including the same day of the month
as the day on which it began (e.g., a period beginning on the third day of one
month shall end on but not include the third day of another month), provided
that each Interest Period which would otherwise end on a day which is not a
Business Day shall end on the next succeeding Business Day (unless such next
succeeding Business Day is the first Business Day of a calendar month, in which
case such Interest Period shall end on the immediately preceding Business Day).
No Interest Period may be elected which would extend past the date on which the
associated Note is due and payable in full.
"Late Payment Rate" means, at the time in question, four percent (4.0%)
per annum plus the Base Rate then in effect; provided that, with respect to any
Fixed Rate Portion with an Interest Period extending beyond the date such Fixed
Rate Portion becomes due and payable, "Late Payment Rate" shall mean four
percent (4.0%) per annum plus the related Fixed Rate. The Late Payment Rate
shall in no event, however, exceed the Highest Lawful Rate.
"Lenders" means each signatory hereto (other than Borrower), including
ING Capital in its capacity as a Lender hereunder rather than as Agent, and the
successors of each as holder of a Note; provided, however, that until such time
as a Lender other than ING Capital becomes a party hereto, "Lenders" shall mean
ING Capital, individually.
"Lien" means, with respect to any property or assets, any right or
interest therein of a creditor to secure Debt owed to him or any other
arrangement with such creditor which provides for the payment of such Debt out
of such property or assets or which allows him to have such Debt satisfied out
of such property or assets prior to the general creditors of any owner thereof,
including any lien, mortgage, security interest, pledge, deposit, production
payment, rights of a vendor under any title retention or conditional sale
agreement or lease substantially equivalent thereto, tax lien, mechanic's or
materialman's lien, or any other charge or encumbrance for security purposes,
whether arising by law or agreement or otherwise, but excluding any right of
offset which arises without agreement in the ordinary course of business.
"Lien" also means any filed financing statement, any registration of a pledge
(such as with an issuer of uncertificated securities), or any other arrangement
or action which would serve to perfect a Lien described in the preceding
sentence, regardless of whether such financing statement is filed, such
registration is made, or such arrangement or action is undertaken before or
after such Lien exists.
"Loan" has the meaning given it in Section 2.1.
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"Loan Documents" means this Agreement, the Notes, the Security
Documents and all other agreements, certificates, documents, instruments and
writings at any time delivered in connection herewith or therewith (exclusive
of term sheets, commitment letters, correspondence and similar documents used
in the negotiation hereof, except to the extent the same contain information
about Borrower or its Affiliates, properties, business or prospects).
"Majority Lenders" means Lenders having Percentage Shares equal to
sixty-six and two-thirds percent (66 2/3%).
"Marathon Acquisition Agreement" means that certain Purchase and Sale
Agreement dated October 31, 1995 between Seller and Borrower, as assignee of
Plains, as assignee of Crete, among Seller, Crete, Plains and Borrower, as
amended by an Amendment to Purchase and Sale Agreement dated December 4, 1995.
"Material Adverse Effect" shall mean a material adverse effect on any
of the following, either individually or in the aggregate with all other events
and circumstances then existing which would be a Default if such events or
circumstances were to have a Material Adverse Effect: (a) the financial
condition, business, operation or prospects of Borrower, (b) the ability of
Borrower to perform its obligations under any of the Loan Documents or (c) the
aggregate value of the security provided to Lenders under the Security
Documents.
"Mortgage" means that certain Mortgage, Assignment, Security Agreement
and Fixture Filing of even date herewith by Borrower in favor of Agent, for the
benefit of Lenders.
"Mortgaged Property" has the meaning given it in the Mortgage.
"Note" has the meaning given it in Section 2.1.
"Obligations" means all Debt from time to time owing by Borrower to
Agent or any Lender under or pursuant to any of the Loan Documents.
"Obligation" means any part of the Obligations.
"Percentage Share" means, with respect to any Lender (a) when used in
Sections 2.1, in any Request for Loans or when no Loans are outstanding
hereunder, the percentage set forth opposite such Lender's name on the
signature pages of this Agreement, and (b) when used otherwise, the percentage
equal to the unpaid principal balance of such Lender's Loan at the time in
question divided by the aggregate unpaid principal balance of all Loans at such
time.
"Permitted Investments" means investments:
(a) in open market commercial paper, maturing within 270 days
after acquisition thereof, which has the highest or second highest credit
rating given by either Rating Agency.
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(b) in marketable obligations, maturing within 12 months after
acquisition thereof, issued or unconditionally guaranteed by the United States
of America or an instrumentality or agency thereof and entitled to the full
faith and credit of the United States of America.
(c) in demand deposits, and time deposits (including certificates
of deposit) maturing within 12 months from the date of deposit thereof, with
any office of any Lender or with a domestic office of any national or state
bank or trust company which is organized under the laws of the United States of
America or any state therein, which has capital, surplus and undivided profits
of at least $500,000,000, and whose certificates of deposit have the highest
credit rating given by either Rating Agency.
"Person" means an individual, corporation, partnership, limited
liability company, association, joint stock company, trust or trustee thereof,
estate or executor thereof, unincorporated organization or joint venture, court
or governmental unit or any agency or subdivision thereof, or any other legally
recognizable entity.
"Plains" means Plains Resources Inc., a Delaware corporation.
"Prohibited Lien" means any Lien not expressly allowed under Section
5.2(b).
"Property" shall mean any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Rate Election" has the meaning given it in Section 2.4.
"Rating Agency" means either Standard & Poor's Ratings Group (a
division of McGraw Hill, Inc.) or Moody's Investors Service, Inc., or their
respective successors.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect.
"Request for Loans" means a written or telephonic request, with written
confirmation, made by Borrower which meets the requirements of Section 2.2.
"Required Hedges" means (i) Hedging Contracts as contemplated by and
pursuant to the Hedging Plan, and (ii) Hedging Contracts with the purpose and
effect of fixing interest rates on a principal amount of indebtedness of
Borrower that is accruing interest at a variable rate as from time to time
required by or otherwise acceptable to Agent in its discretion.
"Reserve Percentage" means, on any day with respect to each particular
Fixed Rate Portion in a Tranche, the maximum reserve requirement, as determined
by Agent (including without limitation any basic, supplemental, marginal,
emergency or similar reserves), expressed as a percentage and rounded to the
next higher 0.01%, which would then apply to Agent under Regulation D with
respect to "Eurocurrency liabilities" (as such term is defined in Regulation D)
equal in amount to Agent's Fixed Rate Portion in such Tranche, were Agent to
have any such "Eurocurrency liabilities". If such reserve requirement shall
change
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after the date hereof, the Reserve Percentage shall be automatically
increased or decreased, as the case may be, from time to time as of the
effective time of each such change in such reserve requirement.
"Restricted Debt" of any Person means Debt in any of the following
categories:
(a) Debt for borrowed money,
(b) Debt constituting an obligation to pay the deferred purchase
price of property or services,
(c) Debt evidenced by a bond, debenture, note or similar
instrument,
(d) Consensual Debt which (i) would under GAAP be shown on such
Person's balance sheet as a liability, and (ii) is payable more than one year
from the date of creation thereof (other than reserves for taxes and reserves
for contingent obligations),
(e) Debt arising under Hedging Contracts,
(f) Debt constituting principal under leases capitalized in
accordance with GAAP,
(g) Debt arising under conditional sales or other title retention
agreements,
(h) Debt owing under direct or indirect guaranties of Debt of any
other Person or constituting obligations to purchase or acquire or to otherwise
protect or insure a creditor against loss in respect of Debt of any other
Person (such as obligations under working capital maintenance agreements,
agreements to keep-well, or agreements to purchase Debt, assets, goods,
securities or services), but excluding endorsements in the ordinary course of
business of negotiable instruments in the course of collection,
(i) Debt (for example, repurchase agreements) consisting of an
obligation to purchase securities or other property, if such Debt arises out of
or in connection with the sale of the same or similar securities or property,
(j) Debt with respect to letters of credit or applications or
reimbursement agreements therefor,
(k) Debt with respect to payments received in consideration of
oil, gas, or other minerals yet to be acquired or produced at the time of
payment (including obligations under "take-or-pay" contracts to deliver gas in
return for payments already received and the undischarged balance of any
production payment created by such Person or for the creation of which such
Person directly or indirectly received payment), or
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(l) Debt with respect to other obligations to deliver goods or
services in consideration of advance payments therefor;
provided, however, that the "Restricted Debt" of any Person shall not
include Debt that was incurred by such Person on ordinary trade terms to
vendors, suppliers, or other Persons providing goods and services for use by
such Person in the ordinary course of its business, unless and until such Debt
is outstanding more than 120 days past the original invoice or billing date
therefor (unless the same is being contested as provided in Section 5.1(g)).
"Security Documents" means the instruments listed in the Security
Schedule and all other security agreements, deeds of trust, mortgages, chattel
mortgages, pledges, guaranties, financing statements, continuation statements,
extension agreements and other agreements or instruments now, heretofore, or
hereafter delivered by Borrower to Agent in connection with this Agreement or
any transaction contemplated hereby to secure or guarantee the payment of any
part of the Obligations or the performance of Borrower's other duties and
obligations under the Loan Documents.
"Security Schedule" means Schedule 2 hereto.
"Seller" means Marathon Oil Company, an Ohio corporation.
"Subsidiary" means, with respect to any Person, any corporation,
association, partnership, joint venture, or other business or corporate entity,
enterprise or organization which is directly or indirectly (through one or more
intermediaries) controlled by or owned fifty percent or more by such Person.
"Termination Event" means (a) the occurrence with respect to any ERISA
Plan of (i) a reportable event described in Sections 4043(b)(5) or (6) of ERISA
or (ii) any other reportable event described in Section 4043(b) of ERISA other
than a reportable event not subject to the provision for 30-day notice to the
Pension Benefit Guaranty Corporation pursuant to a waiver by such corporation
under Section 4043(a) of ERISA, or (b) the withdrawal of Borrower or of any
Affiliate of Borrower from an ERISA Plan during a plan year in which it was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA, or (c) the
filing of a notice of intent to terminate any ERISA Plan or the treatment of
any ERISA Plan amendment as a termination under Section 4041 of ERISA, or (d)
the institution of proceedings to terminate any ERISA Plan by the Pension
Benefit Guaranty Corporation under Section 4042 of ERISA, or (e) any other
event or condition which might constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
ERISA Plan.
"Tranche" has the meaning given it in Section 2.4.
Section 1.2. Exhibits and Schedules; Additional Definitions. All
Exhibits and Schedules attached to this Agreement are a part hereof for all
purposes. Reference is hereby made to the Security Schedule for the meaning of
certain terms defined therein and used but not defined herein, which
definitions are incorporated herein by reference.
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Section 1.3. Amendment of Defined Instruments. Unless the context
otherwise requires or unless otherwise provided herein the terms defined in
this Agreement which refer to a particular agreement, instrument or document
also refer to and include all renewals, extensions, modifications, amendments
and restatements of such agreement, instrument or document, provided that
nothing contained in this section shall be construed to authorize any such
renewal, extension, modification, amendment or restatement.
Section 1.4. References and Titles. All references in this Agreement
to Exhibits, Schedules, articles, sections, subsections and other subdivisions
refer to the Exhibits, Schedules, articles, sections, subsections and other
subdivisions of this Agreement unless expressly provided otherwise. Titles
appearing at the beginning of any subdivisions are for convenience only and do
not constitute any part of such subdivisions and shall be disregarded in
construing the language contained in such subdivisions. The words "this
Agreement", "this instrument", "herein", "hereof", "hereby", "hereunder" and
words of similar import refer to this Agreement as a whole and not to any
particular subdivision unless expressly so limited. The phrases "this section"
and "this subsection" and similar phrases refer only to the sections or
subsections hereof in which such phrases occur. The word "or" is not
exclusive, and the word "including" (in its various forms) means "including
without limitation". Pronouns in masculine, feminine and neuter genders shall
be construed to include any other gender, and words in the singular form shall
be construed to include the plural and vice versa, unless the context otherwise
requires.
Section 1.5. Calculations and Determinations. All calculations
under the Loan Documents of fees and of interest shall be made on the basis of
actual days elapsed (including the first day but excluding the last) and a year
of 360 days. Each determination by Agent or a Lender of amounts to be paid
under Sections 2.11 through 2.13 or any other matters which are to be
determined hereunder by Agent or a Lender (such as any Eurodollar Rate, Fixed
Rate, Business Day, Interest Period, or Reserve Percentage) shall, in the
absence of manifest error, be conclusive and binding. Unless otherwise
expressly provided herein or unless Majority Lenders otherwise consent all
financial statements and reports furnished to Agent or any Lender hereunder
shall be prepared and all financial computations and determinations pursuant
hereto shall be made in accordance with GAAP.
ARTICLE II - The Loans
Section 2.1. Making the Loans. Subject to the terms and conditions
hereof, each Lender agrees to make a single advance to Borrower on or before
December 26, 1995, in an amount which does not exceed such Lender's Percentage
Share of $42,000,000 (or, if less, such Lender's Percentage Share of the
aggregate amount then requested from all Lenders). Borrower's obligation to
repay to such Lender the amount of such advance (such Lender's "Loan"),
together with interest accruing in connection therewith, shall be evidenced by
a single promissory note (such Lender's "Note") made by Borrower payable to the
order of such Lender in the form of Exhibit A with appropriate insertions.
Interest on each Note shall accrue and be due and payable as provided herein
and therein.
Section 2.2. Requesting the Loan. Before the Loan is made Borrower
must give Agent a written request therefor in the form and substance of the
"Request for Loans"
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attached hereto as Exhibit B, duly completed. If all conditions precedent to the
Loan have been met, each Lender will on the date specified in such request
promptly remit to Agent, at such account of Agent as shall be specified, the
amount of such Lender's Loan in immediately available funds, and upon receipt of
such funds, unless to its actual knowledge any conditions precedent to the Loans
have been neither met nor waived as provided herein, Agent shall make the Loans
available to Borrower in immediately available funds at Agent's office in New
York, New York. Each Request for Loans shall be irrevocable and binding on
Borrower. Unless Agent shall have received prompt notice from a Lender that such
Lender will not make available to Agent such Lender's Loan, Agent may in its
discretion assume that such Lender has made such Loan available to Agent in
accordance with this section and Agent may if it chooses, in reliance upon such
assumption, make such Loan available to Borrower. If and to the extent such
Lender shall not so make its Loan available to Agent, such Lender and Borrower
severally agree to pay or repay to Agent within three days after demand the
amount of such Loan together with interest thereon, for each day from the date
such amount is made available to Borrower until the date such amount is paid or
repaid to Agent, at the interest rate applicable at the time to the other Loans
made on such date. The failure of any Lender to make any Loan to be made by it
hereunder shall not relieve any other Lender of its obligation hereunder, if
any, to make its Loan, but no Lender shall be responsible for the failure of any
other Lender to make the Loan to be made by such other Lender.
Section 2.3. Use of Proceeds. Borrower shall use all funds lent
hereunder to fund the purchase price of the Acquired Properties pursuant to the
Acquisition Documents and related fees and expenses. In no event shall the
funds lent hereunder be used directly or indirectly by any Person for personal,
family, household or agricultural purposes or for the purpose, whether
immediate, incidental or ultimate, of purchasing, acquiring or carrying any
"margin stock" or any "margin securities" (as such terms are defined
respectively in Regulation U and Regulation G promulgated by the Board of
Governors of the Federal Reserve System) or to extend credit to others directly
or indirectly for the purpose of purchasing or carrying any such margin stock
or margin securities. Borrower represents and warrants that Borrower is not
engaged principally, or as one of Borrower's important activities, in the
business of extending credit to others for the purpose of purchasing or
carrying such margin stock or margin securities.
Section 2.4. Rate Elections. Borrower may from time to time designate
all or any portions of the Loans (excluding any portions of the Loans which are
required to be repaid prior to the end of the designated Interest Period) as a
"Tranche", which term refers to a set of Fixed Rate Portions with identical
Interest Periods and with each Lender participating in such Tranche in
accordance with its Percentage Share. Without the consent of Majority Lenders,
Borrower may make no such election during the continuance of a Default, and
Borrower may make such an election with respect to already existing Fixed Rate
Portions only if such election will take effect at or after the termination of
the Interest Period applicable thereto. Each election by Borrower of a Tranche
shall:
(a) Be made in writing in the form and substance of the "Rate
Election" attached hereto as Exhibit C, duly completed;
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(b) Specify the aggregate amount of the Loans which Borrower
desires to designate as such Tranche, the first day of the Interest Period
which is to apply thereto, and the length of such Interest Period; and
(c) Be received by Agent not later than 10:00 a.m., New York, New
York time, on the third Business Day preceding the first day of the specified
Interest Period.
Promptly after receiving any such election (a "Rate Election") which meets
the requirements of this section, Agent shall notify each Lender thereof. Each
Rate Election shall be irrevocable. Borrower may make no Rate Election which
does not specify an Interest Period complying with the definition of "Interest
Period" in Section 1.1, and the aggregate amount of the Tranche elected in any
Rate Election must be $500,000 or a higher integral multiple of $100,000. Upon
the termination of each Interest Period the portion of each Loan within the
related Tranche shall, unless the subject of a new Rate Election then taking
effect, automatically be deemed to be the subject of a new Rate Election then
taking effect with an Interest Period of one month. Borrower shall have no
more than three Tranches in effect at any time.
Section 2.5. Arrangement and Facility Fees. In consideration of the
Loans, Borrower agrees to pay to Agent for its own account an arrangement fee
pursuant to a letter agreement of even date herewith between Agent and
Borrower. Borrower agrees to pay to Agent an additional quarterly facility fee
of three-quarters percent (0.75%) per annum on the outstanding principal
balance of the Loans commencing with the Fiscal Quarter beginning October 1,
1996, which shall be due and payable in arrears on the last day of each Fiscal
Quarter and at the final maturity of the Notes. Such quarterly facility fee
shall be for the account of each Lender in accordance with such Lender's
Percentage Share of the Loans.
Section 2.6. Optional Prepayments. Borrower may, upon three Business
Days' notice to each Lender, from time to time and without premium or penalty
prepay the Notes, in whole or in part, so long as the aggregate amount of all
partial prepayments of principal concurrently paid on the Notes equals $500,000
or any higher integral multiple of $100,000, and so long as Borrower does not
prepay any Fixed Rate Portion. Each prepayment of principal under this section
shall be accompanied by all interest then accrued and unpaid on the principal
so prepaid. Any principal or interest prepaid pursuant to this section shall
be in addition to, and not in lieu of, all payments otherwise required to be
paid under the Loan Documents at the time of such prepayment.
Section 2.7. Mandatory Prepayments. (a) On or before the last day of
each month, commencing February 29, 1996, Borrower shall pay to Lenders
eighty-five percent (85%) of the amount of the Field Level Net Revenues of
Borrower for the previous month. Such amount shall be applied (as of the date
as provided in Section 2.8) (i) first to interest then due and payable on the
Notes, and (ii) then as a mandatory prepayment of principal on the Notes.
(b) If the aggregate unpaid principal balance of the Loans ever
exceeds the Borrowing Base, Borrower shall, within twenty Business Days after
Agent gives notice of
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such fact to Borrower, prepay the principal of the Loans in an amount at least
equal to such excess.
(c) Immediately upon each sale of any stock of Borrower as permitted
under Section 5.2(d), the Obligations shall be due and payable in an amount
equal to the proceeds of such sale, net of costs of sale and issuance.
(d) Each prepayment of principal under this section shall be
accompanied by all interest then accrued and unpaid on the principal so
prepaid. Any principal or interest prepaid pursuant to this section shall be
in addition to, and not in lieu of, all payments otherwise required to be paid
under the Loan Documents at the time of such prepayment.
Section 2.8. Payments to Lenders. Borrower will make each payment
which it owes under the Loan Documents to Agent for the account of Agent or the
Lender to whom such payment is owed. Each such payment must be received by
Agent not later than 11:00 a.m., New York, New York time, on the date such
payment becomes due and payable, in lawful money of the United States of
America, without set-off, deduction or counterclaim, and in immediately
available funds. Any payment received by Agent after such time will be deemed
to have been made on the next following Business Day. Should any such payment
become due and payable on a day other than a Business Day, the maturity of such
payment shall be extended to the next succeeding Business Day, and, in the case
of a payment of principal or past due interest, interest shall accrue and be
payable thereon for the period of such extension as provided in the Loan
Document under which such payment is due. Each payment under a Loan Document
shall be due and payable at the place provided therein and, if no specific
place of payment is provided, shall be due and payable at the place of payment
of Agent's Note. When Agent collects or receives money on account of the
Obligations, Agent shall distribute all money so collected or received, and
Lenders and Agent shall apply all such money so distributed, as follows:
(a) first, for the payment of all Obligations which are then due
(and if such money is insufficient to pay all such Obligations, first to any
reimbursements due Agent under Section 5.1(i) or (j) and then to the partial
payment of all other Obligations then due in proportion to the amounts thereof,
or as Lenders shall otherwise agree);
(b) then for the prepayment of amounts owing under the Loan
Documents (other than principal on the Notes) if so specified by Borrower;
(c) then for the prepayment of principal on the Notes, together
with accrued and unpaid interest on the principal so prepaid; and
(d) last, for the payment or prepayment of any other Obligations.
All payments applied to principal or interest on any Note shall be applied
first to any interest then due and payable, then to principal then due and
payable, and last to any prepayment of principal and interest in compliance
with Sections 2.6 and 2.7. All distributions of amounts described in any of
subsections (b), (c) or (d) above shall be made by Agent pro rata to
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Agent and each Lender then owed Obligations described in such subsection in
proportion to all amounts owed to Agent and all Lenders which are described in
such subsection.
Section 2.9. Initial Borrowing Base. During the period from the date
hereof to the first Determination Date the Borrowing Base shall be $42,000,000.
Section 2.10. Subsequent Determinations of Borrowing Base. By March 15 and
September 1 of each year, commencing March 15, 1997, Borrower shall furnish to
each Lender all information, reports and data which Agent has then requested
concerning Borrower's business and properties (including Borrower's oil and gas
properties and interests and the reserves and production relating thereto),
together with the Engineering Report described in Section 5.1(b)(iii). Within
forty-five days after receiving such information, reports and data, or as
promptly thereafter as practicable, Majority Lenders shall agree upon an amount
for the Borrowing Base and Agent shall by notice to Borrower designate such
amount as the new Borrowing Base available to Borrower hereunder, which
designation shall take effect immediately on the date such notice is sent (a
"Determination Date") and shall remain in effect until but not including the
next date as of which the Borrowing Base is redetermined. If Borrower does not
furnish all such information, reports and data by the date specified in the
first sentence of this section, Agent may nonetheless designate the Borrowing
Base at any amount which Majority Lenders determine and may redesignate the
Borrowing Base from time to time thereafter until each Lender receives all such
information, reports and data, whereupon Majority Lenders shall designate a new
Borrowing Base as described above. Majority Lenders shall determine the amount
of the Borrowing Base based upon the loan collateral value which they in their
discretion assign to the various oil and gas properties of Borrower at the time
in question and based upon such other credit factors (including without
limitation the assets, liabilities, cash flow, hedged and unhedged exposure to
price, foreign exchange rate, and interest rate changes, business, properties,
prospects, management and ownership of Borrower and its Affiliates) as they in
their discretion deem significant. It is expressly understood that Lenders and
Agent have no obligation to agree upon or designate the Borrowing Base at any
particular amount, whether in relation to the aggregate amount of the Loans or
otherwise, and that Lenders' commitments to advance funds hereunder is
determined by reference to the Borrowing Base, and, to the extent permitted by
law and regulatory authorities, for the purposes of Section 2.12.
Section 2.11. Capital Reimbursement. If either (a) the introduction
or implementation of or the compliance with or any change in or in the
interpretation of any law, rule or regulation, or (b) the introduction or
implementation of or the compliance with any request, directive or guideline
from any central bank or other governmental authority (whether or not having
the force of law) affects or would affect the amount of capital required or
expected to be maintained by any Lender or any corporation controlling any
Lender, then, upon demand by such Lender, Borrower will pay to Agent for the
benefit of such Lender, from time to time as specified by such Lender, such
additional amount or amounts which such Lender shall determine to be
appropriate to compensate such Lender or any corporation controlling such
Lender in light of such circumstances, to the extent that such Lender
reasonably determines that the amount of any such capital would be increased or
the rate of return on any such capital would be reduced by or in whole or in
part based on
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the existence of the face amount of such Lender's Loan or commitments under
this Agreement.
Section 2.12. Increased Cost of Fixed Rate Portions. If any
applicable domestic or foreign law, treaty, rule or regulation (whether now in
effect or hereinafter enacted or promulgated, including Regulation D) or any
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof (whether or not having the
force of law):
(a) shall change the basis of taxation of payments to any Lender
of any principal, interest, or other amounts attributable to any Fixed Rate
Portion or otherwise due under this Agreement in respect of any Fixed Rate
Portion (other than taxes imposed on the overall net income of such Lender or
any lending office of such Lender by any jurisdiction in which such Lender or
any such lending office is located); or
(b) shall change, impose, modify, apply or deem applicable any
reserve, special deposit or similar requirements in respect of any Fixed Rate
Portion of any Lender (excluding those for which such Lender is fully
compensated pursuant to adjustments made in the definition of Fixed Rate) or
against assets of, deposits with or for the account of, or credit extended by,
such Lender; or
(c) shall impose on any Lender or the interbank eurocurrency
deposit market any other condition affecting any Fixed Rate Portion, the result
of which is to increase the cost to any Lender of funding or maintaining any
Fixed Rate Portion or to reduce the amount of any sum receivable by any Lender
in respect of any Fixed Rate Portion by an amount deemed by such Lender to be
material,
then such Lender shall promptly notify Agent and Borrower in writing of the
happening of such event and of the amount required to compensate such Lender
for such event (on an after-tax basis, taking into account any taxes on such
compensation), whereupon (i) Borrower shall pay such amount to Agent for the
account of such Lender and (ii) Borrower may elect, by giving to Agent and such
Lender not less than three Business Days' notice, to convert all (but not less
than all) of any such Fixed Rate Portion into a part of the Base Rate Portion.
Section 2.13. Availability. If (a) any change in applicable laws,
treaties, rules or regulations or in the interpretation or administration
thereof of or in any jurisdiction whatsoever, domestic or foreign, shall make
it unlawful or impracticable for any Lender to fund or maintain Fixed Rate
Portions, or shall materially restrict the authority of any Lender to purchase
or take offshore deposits of dollars (i.e., "eurodollars"), or (b) any Lender
determines that matching deposits appropriate to fund or maintain any Fixed
Rate Portion are not available to it, or (c) any Lender determines that the
formula for calculating the Fixed Rate does not fairly reflect the cost to such
Lender of making or maintaining loans based on such rate, then, upon notice by
such Lender to Borrower and Agent, Borrower's right to elect Fixed Rate
Portions of such Lender's Loan shall be suspended to the extent and for the
duration of such illegality, impracticability or restriction and all Fixed Rate
Portions of such Lender's Loan (or portions thereof) which are then outstanding
or are then the subject of any
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Rate Election and which cannot lawfully or practicably be maintained or funded
shall immediately become or remain part of the Base Rate Portion of such
Lender's Loan. Borrower agrees to indemnify Agent and each Lender and hold it
harmless against all costs, expenses, claims, penalties, liabilities and damages
which may result from any such change in law, treaty, rule, regulation,
interpretation or administration. Such indemnification shall be on an after-tax
basis, taking into account any taxes imposed on the amounts paid as indemnity.
ARTICLE III - Conditions Precedent to Lending
Section 3.1. Documents to be Delivered. No Lender has any obligation
to make its Loan unless Agent shall have received all of the following, at
Agent's office in New York, New York, duly executed and delivered and in form,
substance and date satisfactory to Agent:
(a) This Agreement and any other documents that Lenders are to
execute in connection herewith.
(b) Each Note.
(c) Certain certificates of Borrower including:
(i) An "Omnibus Certificate" of the Secretary and President
of Borrower, which shall contain the names and signatures of the officers of
Borrower authorized to execute Loan Documents and which shall certify to the
truth, correctness and completeness of the following exhibits attached thereto:
(1) a copy of resolutions duly adopted by the Board of Directors of Borrower
and in full force and effect at the time this Agreement is entered into,
authorizing the execution of this Agreement and the other Loan Documents
delivered or to be delivered in connection herewith and the consummation of the
transactions contemplated herein and therein, (2) a copy of the charter
documents of Borrower and all amendments thereto, certified by the appropriate
official of Borrower's state of organization, and (3) a copy of any bylaws of
Borrower; and
(ii) A "Compliance Certificate" of the President and of the
chief financial officer of Borrower, of even date with the Loans, in which such
officers certify to the satisfaction of the conditions set out in subsections
(a), (b), (c) and (d) of Section 3.2.
(d) A certificate (or certificates) of the due formation, valid
existence and good standing of Borrower in its state of organization, issued by
the appropriate authorities of such jurisdiction.
(e) A favorable opinion of (i) Michael R. Patterson, Esq., General
Counsel for Borrower, substantially in the form set forth in Exhibit F-1, and
(ii) Fulbright & Jaworski L.L.P., special New York counsel for Borrower,
substantially in the form
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set forth in Exhibit F-2, each together with the certificate provided for in
such Exhibits.
(f) A favorable opinion of Sorling, Northrup, Hanna, Cullen and
Cochran, Ltd., special Illinois counsel for Agent.
(g) Each Security Document listed in the Security Schedule and an
Administrative Support Agreement between Borrower and Plains.
(h) Certificates of Borrower's good standing and due qualification
to do business, issued by appropriate officials in Texas, Illinois, Indiana,
Kentucky and in any other states in which Borrower owns property subject to
Security Documents.
(i) Title opinions in form, substance and authorship satisfactory
to Agent, concerning the properties listed on Schedule 3.
(j) Certificates or binders evidencing Borrower's insurance on the
date hereof.
(k) A favorable report of Pilko and Associates regarding their
environmental assessment of the material properties of Borrower, in scope and
results acceptable to Agent.
(l) An "Environmental Compliance Certificate" of the President of
Borrower, of even date with the Loans, in the form of Exhibit E attached hereto.
(m) Plains shall have made a capital contribution in cash and
stock to Borrower in an amount not less than $7,850,000, the cash portion of
which shall be not less than $5,100,000.
(n) The acquisition of the Acquired Properties pursuant to the
Acquisition Documents shall have been duly consummated and Agent shall have
received copies of each Acquisition Document, duly executed and delivered by
each party thereto.
Section 3.2. Additional Conditions Precedent. No Lender has any
obligation to make its Loan unless the following conditions precedent have been
satisfied:
(a) All representations and warranties made by Borrower in any
Loan Document shall be true on and as of the date of the Loans (except to the
extent that the facts upon which such representations are based have been
changed by the extension of credit hereunder) as if such representations and
warranties had been made as of the date of the Loans.
(b) No Default shall exist at the date of the Loans.
(c) No material adverse change shall have occurred to Borrower's
financial condition or business since the date of this Agreement.
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(d) Borrower shall have performed and complied with all agreements
and conditions required in the Loan Documents to be performed or complied with
by it on or prior to the date of the Loans.
(e) The making of such Loan shall not be prohibited by any law or
any regulation or order of any court or governmental agency or authority and
shall not subject such Lender to any penalty or other onerous condition under
or pursuant to any such law, regulation or order.
(f) Agent shall have received all documents and instruments which
Agent has then requested, in addition to those described in Section 3.1
(including opinions of legal counsel for Agent and Lenders; corporate documents
and records; documents evidencing governmental authorizations, consents,
approvals, licenses and exemptions; and certificates of public officials and of
officers and representatives of Borrower and other Persons), as to (i) the
accuracy and validity of or compliance with all representations, warranties and
covenants made by Borrower in this Agreement and the other Loan Documents, (ii)
the satisfaction of all conditions contained herein or therein, and (iii) all
other matters pertaining hereto and thereto. All such additional documents and
instruments shall be satisfactory to Agent in form, substance and date.
(g) All legal matters relating to the Loan Documents and the
consummation of the transactions contemplated thereby shall be satisfactory to
Thompson & Knight, a Professional Corporation, counsel to Agent, and Borrower
shall, prior to the making of the Loans (or using the proceeds thereof), have
deposited $5,000 with Thompson & Knight, a Professional Corporation, to be held
by them and applied toward payment of the costs and expenses described in
Section 5.1(i). If such deposit exceeds the amount of such costs and expenses,
the excess shall be returned to Borrower. If such deposit is less than such
costs and expenses, the deficit shall be paid by Borrower pursuant to Section
5.1(i).
ARTICLE IV - Representations and Warranties
Section 4.1. Borrower's Representations and Warranties. To confirm
each Lender's understanding concerning Borrower and Borrower's business,
properties and obligations and to induce Agent and each Lender to enter into
this Agreement and to make the Loans, Borrower represents and warrants to Agent
and each Lender that:
(a) No Default. Borrower is not in default in the performance of
any of the covenants and agreements contained herein. No event has occurred
and is continuing which constitutes a Default.
(b) Organization and Good Standing. Borrower is a corporation
duly organized, validly existing and in good standing under the laws of
Delaware, having all corporate powers required to carry on its business and
enter into and carry out the transactions contemplated hereby, Borrower is duly
qualified, in good standing, and authorized to do business in all other
jurisdictions within the United States wherein the character of the properties
owned or held by it or the nature of the business
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transacted by it makes such qualification necessary and where failure to qualify
would have a Material Adverse Effect. Borrower does not conduct any business or
own any property in any jurisdiction outside the United States.
(c) Authorization. Borrower has duly taken all corporate action
necessary to authorize the execution and delivery by it of the Loan Documents
and to authorize the consummation of the transactions contemplated thereby and
the performance of its obligations thereunder. Borrower is duly authorized to
borrow funds hereunder.
(d) No Conflicts or Consents. The execution and delivery by the
Borrower of the Loan Documents, the performance by it of its obligations under
such Loan Documents, and the consummation of the transactions contemplated by
the various Loan Documents, do not and will not (i) conflict with any provision
of (1) any domestic or foreign law, statute, rule or regulation, (2) the
articles or certificate of incorporation, bylaws or charter of Borrower or (3)
any agreement, judgment, license, order or permit applicable to or binding upon
Borrower or any Affiliate thereof, (ii) result in the acceleration of any Debt
owed by Borrower or any Affiliate thereof, or (iii) result in or require the
creation of any Lien upon any assets or properties of Borrower or any Affiliate
thereof except as expressly contemplated in the Loan Documents. Except as
expressly contemplated in the Loan Documents no consent, approval,
authorization or order of, and no notice to or filing with, any court or
governmental authority or third party is required in connection with the
execution, delivery or performance by Borrower of any Loan Document or to
consummate any transactions contemplated by the Loan Documents.
(e) Enforceable Obligations. This Agreement is, and the other
Loan Documents when duly executed and delivered will be, legal, valid and
binding obligations of Borrower, enforceable in accordance with their terms
except as such enforcement may be limited by bankruptcy, insolvency or similar
laws of general application relating to the enforcement of creditors' rights.
(f) Initial Financial Statements. The Initial Financial
Statements fairly present Borrower's financial position at the date hereof. No
material adverse change has occurred in Borrower's financial condition or
business, except as reflected in the Initial Financial Statements. The Initial
Financial Statements were prepared in all material respects substantially in
accordance with GAAP.
(g) Other Obligations and Restrictions. Borrower has no
outstanding Debt of any kind (including contingent obligations, tax
assessments, and unusual forward or long-term commitments) which is, in the
aggregate, material to Borrower or material with respect to Borrower's
financial condition and not shown in the Initial Financial Statements or
disclosed in the Disclosure Schedule. Except as shown in the Initial Financial
Statements, Borrower is not subject to or restricted by any franchise,
contract, deed, charter restriction, or other instrument or restriction which
is materially likely in the foreseeable future to materially and adversely
affect the business, properties, prospects, operations or financial condition
of Borrower.
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(h) Full Disclosure. No certificate, statement or other
information delivered herewith or heretofore by Borrower or any Affiliate
thereof to Agent or any Lender in connection with the negotiation of this
Agreement or in connection with any transaction contemplated hereby contains
any untrue statement of a material fact or omits to state any material fact
known to Borrower or any Affiliate thereof (other than industry-wide risks
normally associated with the types of business conducted by Borrower) necessary
to make the statements contained herein or therein not misleading as of the
date made or deemed made. There is no fact known to Borrower (other than
industry-wide risks normally associated with the types of business conducted by
Borrower) that has not been disclosed to Agent and each Lender in writing which
could materially and adversely affect Borrower's properties, business,
prospects or condition (financial or otherwise). There are no statements or
conclusions in any Engineering Report which are based upon or include
misleading information or fail to take into account material information
regarding the matters reported therein, it being understood that each
Engineering Report is necessarily based upon professional opinions, estimates
and projections and that Borrower does not warrant that such opinions,
estimates and projections will ultimately prove to have been accurate.
Borrower has heretofore delivered to Agent and each Lender true, correct and
complete copies of the Initial Financial Statements and the Initial Engineering
Report.
(i) Litigation. Except as disclosed in the Initial Financial
Statements or in the Disclosure Schedule: (i) there are no actions, suits or
legal, equitable, arbitrative or administrative proceedings pending, or to the
knowledge of Borrower threatened, against Borrower before any federal, state,
municipal or other court, department, commission, body, board, bureau, agency,
or instrumentality, domestic or foreign, which do or may materially and
adversely affect Borrower, its ownership or use of any of its assets or
properties, its business or its financial condition or prospects, or the right
or ability of Borrower to enter into the Loan Documents or to consummate the
transactions contemplated thereby or to perform its obligations thereunder and
(ii) there are no outstanding judgments, injunctions, writs, rulings or orders
by any such governmental entity against Borrower or Borrower's stockholders,
partners, directors or officers which have or may have any such effect.
(j) Labor Disputes and Acts of God. Except as disclosed in the
Disclosure Schedule, neither the business nor the properties of Borrower has
been affected by any fire, explosion, accident, strike, lockout or other labor
dispute, drought, storm, hail, earthquake, embargo, act of God or of the public
enemy or other casualty (whether or not covered by insurance), which do or may
materially and adversely affect Borrower, its ownership or use of any of its
assets or properties, its business or its financial condition or prospects.
(k) ERISA Liabilities. There are no currently existing ERISA
Plans. Borrower is in compliance with ERISA in all material respects.
Borrower is not required to contribute to, or has any other absolute or
contingent liability in respect of, any "multiemployer plan" as defined in
Section 4001 of ERISA.
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(l) Environmental and Other Laws. As used in this subsection:
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, "CERCLIS" means the Comprehensive
Environmental Response, Compensation and Liability Information System List of
the Environmental Protection Agency, and "Release" has the meaning given such
term in 42 U.S.C. (S) 9601(22). Except as set forth in the Disclosure Schedule:
(i) Borrower is conducting its business in material
compliance with all applicable federal, state and local laws, including
Environmental Laws, and has all permits, licenses and authorizations required
in connection with the conduct of its business. Borrower is in compliance with
the terms and conditions of all such permits, licenses and authorizations, and
is also in compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in any applicable Environmental Law or in any regulation, code, plan,
order, decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, except to the extent failure to comply
would not have a Material Adverse Effect.
(ii) No notice, notification, demand, request for information,
citation, summons or order has been issued, no complaint has been filed, no
penalty has been assessed, and no investigation or review is pending or
threatened by any governmental agency or entity or any other Person with
respect to (1) any alleged generation, treatment, storage, recycling,
transportation, disposal, or Release of any Hazardous Materials, either by
Borrower or on any property owned by Borrower, (2) any material remedial action
which might be needed to respond to any such alleged generation, treatment,
storage, recycling, transportation, disposal, or Release, or (3) any alleged
failure by Borrower to have any permit, license or authorization required in
connection with the conduct of its business or with respect to any such
generation, treatment, storage, recycling, transportation, disposal, or Release.
(iii) Borrower does not otherwise have any known material
contingent liability in connection with any alleged generation, treatment,
storage, recycling, transportation, disposal, or Release of any Hazardous
Materials.
(iv) Borrower has not handled any Hazardous Materials, other
than as a generator, on any properties now or previously owned or leased by
Borrower to an extent that such handling has, or may reasonably be expected to
have, a Material Adverse Effect; and
(1) no PCBs are or have been present at any properties now or
previously owned or leased by Borrower;
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(2) no asbestos is or has been present at any properties now
or previously owned or leased by Borrower;
(3) there are no underground storage tanks for Hazardous
Materials, active or abandoned, at any properties now or previously owned or
leased by Borrower;
(4) no Hazardous Materials have been Released, in a
reportable quantity, where such a quantity has been established by statute,
ordinance, rule, regulation or order, at, on or under any properties now or
previously owned or leased by Borrower;
(5) no Hazardous Materials have been otherwise Released at,
on or under any properties now or previously owned or leased by Borrower to an
extent that such Release has, or may reasonably be expected to have, a Material
Adverse Effect.
(v) Borrower has not transported or arranged for the
transportation of any Hazardous Material to any location which is listed on the
National Priorities List under CERCLA, listed for possible inclusion on the
National Priorities List by the Environmental Protection Agency in CERCLIS, or
listed on any similar state list or which is the subject of federal, state or
local enforcement actions or other investigations which may lead to claims
against Borrower for clean-up costs, remedial work, damages to natural
resources or for personal injury claims, including, but not limited to, claims
under CERCLA.
(vi) No Hazardous Material generated by Borrower has been
recycled, treated, stored, disposed of or released by Borrower at any location
other than those listed in Disclosure Schedule.
(vii) No oral or written notification of a Release of a
Hazardous Material has been filed by or on behalf of Borrower (and to the best
knowledge of Borrower, no such notification has been filed with respect to
Borrower by any other Person), and no property now or previously owned or
leased by Borrower is listed or proposed for listing on the National Priority
list promulgated pursuant to CERCLA, in CERCLIS, or on any similar state list
of sites requiring investigation or clean-up.
(viii) There are no Liens arising under or pursuant to any
Environmental Laws on any of the real properties or properties owned or leased
by Borrower, and no government actions have been taken or are in process which
could subject any of such properties to such Liens; nor would Borrower be
required to place any notice or restriction relating to the presence of
Hazardous Materials at any properties owned by it in any deed to such
properties.
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(ix) There have been no environmental investigations, studies,
audits, tests, reviews or other analyses conducted by or which are in the
possession of Borrower or any Affiliate in relation to any properties or
facility now or previously owned or leased by Borrower which have not been made
available to Agent.
(m) Names and Places of Business. Borrower has not, during the
preceding five years, had, been known by, or used any other corporate, trade,
or fictitious name. The chief executive office and principal place of business
of Borrower is located at the address of Borrower set out in Section 9.3.
Except as disclosed in the Disclosure Schedule, Borrower has no other office or
place of business.
(n) Borrower's Subsidiaries. Borrower does not presently have any
Subsidiary or own any stock in any other corporation or association. Borrower
is not a member of any general or limited partnership, joint venture or
association of any type whatsoever.
(o) Title to Properties; Licenses. Borrower has good and
defensible title to all of its material properties and assets, free and clear
of all Prohibited Liens and of all impediments to the use of such properties
and assets in Borrower's business, except that no representation or warranty is
made with respect to any oil, gas or mineral property or interest to which no
proved oil or gas reserves are properly attributed. Borrower possesses all
licenses, permits, franchises, patents, copyrights, trademarks and trade names,
and other intellectual property (or otherwise possesses the right to use such
intellectual property without violation of the rights of any other Person)
which are necessary to carry out its business as presently conducted and as
presently proposed to be conducted hereafter, and Borrower is not in violation
in any material respect of the terms under which it possesses such intellectual
property or the right to use such intellectual property.
(p) Government Regulation. Borrower is not subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act,
the Investment Company Act of 1940 (as any of the preceding acts have been
amended) or any other statute, law, regulation or decree which regulates the
incurring by such Person of Debt, including statutes, laws, regulations or
decrees relating to common contract carriers or the sale of electricity, gas,
steam, water or other public utility services.
(q) Insider. Neither Borrower nor any Person having "control" (as
that term is defined in 12 U.S.C. (S) 375b(9) or in regulations promulgated
pursuant thereto) of Borrower, is a "director" or an "executive officer" or
"principal shareholder" (as those terms are defined in 12 U.S.C. (S) 375b(8) or
(9) or in regulations promulgated pursuant thereto) of Agent or any Lender, of
a bank holding company of which Agent or any Lender is a Subsidiary or of any
Subsidiary of a bank holding company of which Agent or any Lender is a
Subsidiary.
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Section 4.2. Representation by Lenders. Each Lender hereby represents
that it will acquire its Note for its own account in the ordinary course of its
commercial lending business; however, the disposition of such Lender's property
shall at all times be and remain within its control and, in particular and
without limitation, such Lender may sell or otherwise transfer its Note, any
participation interest or other interest in its Note, or any of its other
rights and obligations under the Loan Documents.
ARTICLE V - Covenants of Borrower
Section 5.1. Affirmative Covenants. To conform with the terms and
conditions under which each Lender is willing to have credit outstanding to
Borrower, and to induce Agent and each Lender to enter into this Agreement and
make the Loans, Borrower covenants and agrees that until the full and final
payment of the Obligations and the termination of this Agreement, unless
Majority Lenders have previously agreed otherwise:
(a) Payment and Performance. Borrower will pay all amounts due
under the Loan Documents in accordance with the terms thereof and will observe,
perform and comply with every covenant, term and condition expressed or implied
in the Loan Documents.
(b) Books, Financial Statements and Reports. Borrower will at
all times maintain full and accurate books of account and records. Borrower
will maintain a standard system of accounting and will furnish the following
statements and reports to Agent and each Lender at Borrower's expense:
(i) As soon as available, and in any event within ninety days
after the end of each Fiscal Year, complete financial statements of Borrower
together with all notes thereto, prepared in reasonable detail in accordance
with GAAP, together with an opinion, commencing Fiscal Year 1996, based on an
audit using generally accepted auditing standards, by Price Waterhouse or other
independent certified public accountants selected by Borrower and acceptable to
Majority Lenders, stating that such Consolidated financial statements have been
so prepared. These financial statements shall contain a balance sheet as of
the end of such Fiscal Year and statements of earnings, of cash flows, and of
changes in owners' equity for such Fiscal Year, each setting forth in
comparative form the corresponding figures for the preceding Fiscal Year. In
addition, within ninety days after the end of each Fiscal Year, commencing
Fiscal Year 1996, Borrower will furnish a report signed by such accountants
stating that they have read this Agreement, and further stating that in making
the examination and reporting on the financial statements described above they
did not conclude that any Default existed at the end of such Fiscal Year or at
the time of their report, or, if they did conclude that a Default existed,
specifying its nature and period of existence.
(ii) As soon as available, and in any event within forty-five
days after the end of each Fiscal Quarter, Borrower's balance sheet as of the
end of such Fiscal Quarter and statements of Borrower's earnings and cash flows
for
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the period from the beginning of the then current Fiscal Year to the end of
such Fiscal Quarter, all in reasonable detail and prepared in accordance with
GAAP, subject to changes resulting from normal year-end adjustments. In
addition Borrower will, together with each such set of financial statements and
each set of financial statements furnished under subsection (b)(i) of this
section, furnish a certificate in the form of Exhibit D attached hereto signed
by the chief financial officer of Borrower stating that such financial
statements are accurate and complete, stating that he has reviewed the Loan
Documents and stating that no Default exists at the end of such Fiscal Quarter
or at the time of such certificate or specifying the nature and period of
existence of any such Default.
(iii) By March 15 of each year, an engineering report prepared
as of January 1 of such year by Ryder Scott Company or other independent
petroleum engineers chosen by Borrower and acceptable to Majority Lenders, and
by September 1 of each year, an engineering report prepared by Borrower's or
Plains' in-house engineering staff as of July 1 of such year, concerning all
oil and gas properties and interests owned by Borrower which are located in or
offshore of the United States and which have attributable to them proved oil or
gas reserves. These reports shall be satisfactory to Agent, shall contain
sufficient information to enable Borrower to meet the reporting requirements
concerning oil and gas reserves contained in Regulations S-K and S-X
promulgated by the Securities and Exchange Commission, shall take into account
any "over-produced" status under gas balancing arrangements, and shall contain
information and analysis comparable in scope to that contained in the Initial
Engineering Report. These reports shall distinguish (or shall be delivered
together with a certificate from an appropriate officer of Borrower which
distinguishes) those properties treated in the report which are Collateral from
those properties treated in the report which are not Collateral.
(iv) As soon as available, and in any event within thirty days
after the end of each month, a report describing by lease or unit the gross
volume of production and sales attributable to production during such month
from the Acquired Properties and describing the related severance taxes, other
taxes, and leasehold operating expenses and capital costs attributable thereto
and incurred during such month, and computing Field Level Net Revenue for such
month with such detail and supporting information as Agent may request.
(v) As soon as available, and in any event within thirty (30)
days after the end of each Fiscal Year, Borrower shall deliver to Agent an
environmental compliance certificate signed by the president or chief executive
officer of Borrower in the form attached hereto as Exhibit E. Further, if
requested by Agent, Borrower shall permit and cooperate with an environmental
and safety review made in connection with the operations of Borrower's oil and
gas properties one time during each Fiscal Year beginning with the Fiscal Year
1996, by Pilko and Associates or other consultants selected by Agent which
review shall, if requested by Agent, be arranged and
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supervised by environmental legal counsel for Agent, all at Borrower's cost and
expense. The consultant shall render a verbal or written report, as specified by
Agent, based upon such review at Borrower's cost and expense.
(vi) Concurrently with the annual renewal of the Borrower's
insurance policies, Borrower shall, if requested by Agent in writing, cause a
certificate or report to be issued by insurance consultants satisfactory to
Agent certifying that Borrower's insurance for the next succeeding year after
such renewal (or for such longer period for which such insurance is in effect)
complies with in all material respects with the provisions of this Agreement
and the Security Documents.
(vii) As soon as available, notice of any Hedging Contract
which Borrower enters into (or Plains enters into and attributes to the
Acquired Properties or indebtedness of Borrower), and as soon as available, and
in any event within forty-five (45) days after the end of each Fiscal Quarter,
a hedging report prepared by Borrower regarding any Hedging Contracts entered
into by Borrower, or by Plains which are attributed to the Acquired Properties
or indebtedness of Borrower, and in effect as of the end of such Fiscal
Quarter, together with any proposed revisions or updates to the Hedging Plan.
Each such hedging report shall be in form and content satisfactory to Agent and
shall include unit volumes, pricing, term, counterparty and date of such
Hedging Contracts, and any revision or update to the Hedging Plan shall be
subject to the approval of Agent.
(c) Other Information and Inspections. Borrower will furnish to
Agent and each Lender any information which Agent may from time to time request
in writing concerning any covenant, provision or condition of the Loan
Documents or any matter in connection with Borrower's business and operations.
Borrower will permit representatives appointed by Agent (including independent
accountants, agents, attorneys, appraisers and any other Persons) to visit and
inspect Borrower's property, including its books of account, other books and
records, and any facilities or other business assets, and to make extra copies
therefrom and photocopies and photographs thereof, and to write down and record
any information such representatives obtain, and Borrower shall permit Agent or
its representatives to investigate and verify the accuracy of the information
furnished to Agent or any Lender in connection with the Loan Documents and to
discuss all such matters with its officers, employees and representatives.
Each of Agent and Lenders agrees (on behalf of itself and each of its
affiliates, directors, officers, employees and representatives) to use
reasonable precautions to keep confidential, in accordance with its customary
procedures for handling confidential information supplied to it by Borrower
pursuant to this Agreement which is identified by Borrower as being
confidential at the time the same is delivered to Agent or such Lender,
provided that nothing herein shall limit the disclosure of any such information
(i) to the extent required by statute, rule, regulation or judicial process,
(ii) to counsel for Agent or such Lender, (iii) to bank examiners, auditors or
accountants, (iv) in connection with any litigation to which Agent or such
Lender is a party, or (v) to any assignee or participant (or prospective
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assignee or participant), so long as such assignee or participant (or
prospective assignee or participant) first enters into a confidentiality
agreement with Agent or such Lender; and provided further that in no event
shall Agent or any Lender be required to return any materials furnished by
Borrower.
(d) Notice of Material Events and Change of Address. Borrower
will promptly notify Agent and each Lender:
(i) of any material adverse condition or in the aggregate value of
the Collateral,
(ii) of the occurrence of any Default,
(iii) of the acceleration of the maturity of any Debt owed by
Borrower or of any default by Borrower under any indenture, mortgage, agreement,
contract or other instrument to which it is a party or by which it or any of its
properties is bound, if such acceleration or default might have a Material
Adverse Effect.
(iv) of the occurrence of any Termination Event,
(v) of any claim of $100,000 or more, any notice of potential
liability under any Environmental Laws which might exceed such amount, or any
other material adverse claim asserted against Borrower or with respect to
Borrower's properties, and
(vi) of the filing of any suit or proceeding against Borrower
in which an adverse decision could have a Material Adverse Effect.
Upon the occurrence of any of the foregoing Borrower will take all necessary or
appropriate steps to remedy promptly any such material adverse change, Default,
acceleration, default or Termination Event, to protect against any such adverse
claim, to defend any such suit or proceeding, and to resolve all controversies
on account of any of the foregoing. Borrower will also notify Agent and Agent's
counsel in writing at least twenty Business Days prior to the date that Borrower
changes its name or the location of its chief executive office or principal
place of business or the place where it keeps its books and records concerning
the Collateral, furnishing with such notice any necessary financing statement
amendments or requesting Agent and its counsel to prepare the same.
(e) Maintenance of Properties. Borrower will maintain, preserve,
protect, and keep all Collateral and all other property used or useful in the
conduct of its business in good condition and in compliance in all material
respects with all applicable laws, rules and regulations, and will from time to
time make all repairs, renewals and replacements needed to enable the business
and operations carried on in connection therewith to be promptly and
advantageously conducted at all times.
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(f) Maintenance of Existence and Qualifications. Borrower will
maintain and preserve its corporate or partnership existence and its rights and
franchises in full force and effect and will qualify to do business as a
foreign corporation or partnership in all states or jurisdictions where
required by applicable law, except where the failure so to qualify will not
have any Material Adverse Effect.
(g) Payment of Trade Debt, Taxes, etc. Borrower will (i) timely
file all required tax returns; (ii) timely pay all taxes, assessments, and
other governmental charges or levies imposed upon it or upon its income,
profits or property; (iii) within 120 days after the original invoice or
billing date therefor, pay all Debt owed by it on ordinary trade terms to
vendors, suppliers and other Persons providing goods and services used by it in
the ordinary course of its business; (iv) pay and discharge when due all other
Debt now or hereafter owed by it; and (v) maintain appropriate accruals and
reserves for all of the foregoing in accordance with GAAP. Borrower may,
however, delay paying or discharging any of the foregoing so long as it is in
good faith contesting the validity thereof by appropriate proceedings and has
set aside on its books adequate reserves therefor.
(h) Insurance. Borrower will keep or cause to be kept insured by
financially sound and reputable insurers its property in accordance with
Schedule 4. Borrower will maintain the additional insurance coverage as
described in the respective Security Documents. Upon demand by Agent any
insurance policies covering Collateral shall be endorsed (i) to provide for
payment of losses jointly to Borrower and Agent as its interests may appear,
(ii) to provide that such policies may not be cancelled or reduced or affected
in any material manner for any reason without fifteen days prior notice to
Agent, (iii) to provide for any other matters specified in any applicable
Security Document or which Agent may reasonably require; and (iv) to provide
for insurance against fire, casualty and any other hazards normally insured
against, in the amount of the full value (less a reasonable deductible not to
exceed amounts customary in the industry for similarly situated businesses and
properties) of the property insured. Borrower shall at all times maintain
insurance against its liability for injury to persons or property in accordance
with Schedule 4, which insurance shall be by financially sound and reputable
insurers. Without limiting the foregoing, Borrower shall at all time maintain
liability insurance in the amounts set out on Schedule 4.
(i) Payment of Expenses. Whether or not the transactions
contemplated by this Agreement are consummated, Borrower will promptly (and in
any event, within 30 days after any invoice or other statement or notice) pay
(i) all transfer, stamp, mortgage, documentary or other similar taxes,
assessments or charges levied by any governmental or revenue authority in
respect of this Agreement or any of the other Loan Documents or any other
document referred to herein or therein, (ii) all reasonable costs and expenses
incurred by or on behalf of Agent (including attorneys' fees, consultants' fees
and engineering fees) in connection with (1) the negotiation, preparation,
execution and delivery of the Loan Documents, and any and all consents, waivers
or other documents or instruments relating thereto, (2) the filing, recording,
refiling and re-recording of any Loan Documents and any other documents or
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instruments or further assurances required to be filed or recorded or refiled
or re-recorded by the terms of any Loan Document, (3) the borrowings hereunder
and other action reasonably required in the course of administration hereof,
(4) monitoring or confirming (or preparation or negotiation of any document
related to) Borrower's compliance with any covenants or conditions contained in
this Agreement or in any Loan Document, and (5) the defense or enforcement of
the Loan Documents (including this section) or the defense of Agent's or any
Lender's exercise of its rights under any of the Loan Documents; and (iii) all
reasonable costs and expenses incurred by or on behalf of Agent or any Lender
(including attorneys' fees, consultants' fees and engineering fees) in
connection with the defense or enforcement of any of the Loan Documents
(including this section) or the defense of Agent's or any Lender's exercise of
its rights thereunder. In addition to the foregoing, until all Obligations
have been paid in full, Borrower will also pay or reimburse Agent for all
reasonable out-of-pocket costs and expenses of Agent or its agents or employees
in connection with the continuing administration of the Loans and the related
due diligence of Agent, including travel and miscellaneous expenses and fees
and expenses of Agent's outside counsel, reserve engineers and consultants
engaged in connection with the Loan Documents.
(j) Performance on Borrower's Behalf. If Borrower fails to pay
any taxes, insurance premiums, expenses, attorneys' fees or other amounts it is
required to pay under any Loan Document, Agent may pay the same. Borrower
shall immediately reimburse Agent for any such payments and each amount paid by
Agent shall constitute an Obligation owed hereunder which is due and payable on
the date such amount is paid by Agent.
(k) Interest. Borrower hereby promises to Agent and Lenders to
pay interest at the Late Payment Rate on all Obligations which Borrower has in
this Agreement promised to pay (including Obligations to pay fees or to
reimburse or indemnify Agent or any Lender) and which are not paid when due.
Such interest shall accrue from the date such Obligations become due until they
are paid.
(l) Compliance with Agreements and Law. Borrower will perform all
material obligations it is required to perform under the terms of each
indenture, mortgage, deed of trust, security agreement, lease, franchise,
agreement, contract or other instrument or obligation to which it is a party or
by which it or any of its properties is bound. Borrower will conduct its
business and affairs in compliance with all laws, regulations, and orders
applicable thereto. At all times the Required Hedges shall be maintained,
which shall in each case comply with Section 5.2(c).
(m) Environmental Matters; Environmental Reviews.
(i) Borrower will comply in all material respects with all
Environmental Laws now or hereafter applicable to Borrower and shall obtain, at
or prior to the time required by applicable Environmental Laws, all
environmental, health and safety permits, licenses and other authorizations
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necessary for its operations and will maintain such authorizations in full
force and effect.
(ii) Borrower will promptly furnish to Agent all written
notices of violation, orders, claims, citations, complaints, penalty
assessments, suits or other proceedings received by Borrower, or of which it
has notice, pending or threatened against Borrower, by any governmental
authority with respect to any alleged violation of or non-compliance with any
Environmental Laws or any permits, licenses or authorizations in connection
with its ownership or use of its properties or the operation of its business.
(iii) Borrower will promptly furnish to Agent all requests for
information, notices of claim, demand letters, and other notifications from any
governmental authority, received by Borrower in connection with its ownership
or use of its properties or the conduct of its business, relating to potential
responsibility with respect to any investigation or clean-up of Hazardous
Material at any location.
(n) Evidence of Compliance. Borrower will furnish to each Lender
at Borrower's expense all evidence which Agent from time to time reasonably
requests in writing as to the accuracy and validity of or compliance with all
representations, warranties and covenants made by Borrower in the Loan
Documents, the satisfaction of all conditions contained therein, and all other
matters pertaining thereto.
Section 5.2. Negative Covenants. To conform with the terms and
conditions under which each Lender is willing to have credit outstanding to
Borrower, and to induce Agent and each Lender to enter into this Agreement and
make the Loans, Borrower covenants and agrees that until the full and final
payment of the Obligations and the termination of this Agreement, unless
Majority Lenders have previously agreed otherwise:
(a) Restricted Debt. Borrower will not in any manner owe or be
liable for Restricted Debt except:
(i) the Obligations;
(ii) Debt arising under Hedging Contracts permitted under
Section 5.2(c);
(iii) Debt described in the Disclosure Schedule; and
(iv) Debt (A) arising under leases capitalized in accordance
with GAAP, or (B) incurred for the purchase price of property or assets not in
excess of seventy-five percent (75%) of the purchase price of such acquired
property or assets, and which acquired property or assets constitute collateral
for such Debt under security or other collateral agreements executed and
delivered on a substantially simultaneous basis with the incurrence of such
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Debt; provided, Debt under clauses (A) and (B) of this subsection (iv) shall
not in the aggregate exceed the outstanding principal amount of $250,000.
(b) Limitation on Liens. Borrower will not create, assume or
permit to exist any Lien upon any of the properties or assets which it now owns
or hereafter acquires, except, to the extent not otherwise forbidden by the
Security Documents:
(i) Liens which secure Obligations only;
(ii) as to property which is Collateral, any Liens expressly
permitted to encumber such Collateral under any Security Document covering such
Collateral;
(iii) Liens imposed by any governmental authority for taxes,
assessments or charges not yet due or which are being contested in good faith
and by appropriate proceedings if adequate reserves with respect thereto are
maintained on the books of Borrower, in accordance with GAAP;
(iv) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, landlord's, or other like statutory Liens arising in the ordinary
course of business for amounts which are not overdue for a period of more than
60 days or which are being contested in good faith and by appropriate
proceedings and for which adequate accruals and reserves are maintained on the
books of Borrower;
(v) pledges or deposits under worker's compensation,
unemployment insurance and other social security legislation;
(vi) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business;
(vii) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business and encumbrances
consisting of zoning restrictions, easements, licenses, restrictions on the use
of real Property or minor imperfections in title thereto which, in the
aggregate, are not material in amount, and which do not in any case materially
detract from the value of the property subject thereto or interfere with the
ordinary conduct of the business of Borrower; and
(viii) Liens securing any permitted Debt described in Section
5.1(iv).
(c) Hedging Contracts. Borrower will not be a party to or in any
manner be liable on any Hedging Contract, and no Hedging Contract shall be
attributable to the Acquired Properties or indebtedness of Borrower, except
Required Hedges; provided, (i) no such Hedging Contract shall require Borrower
(or Plains) to put up
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money, assets, letters of credit or other security against the event of its
nonperformance prior to actual default by Borrower (or Plains) in performing its
obligations thereunder, and (ii) each such Hedging Contract shall be with a
counterparty or shall have a guarantor of the obligation of the counterparty who
(unless such counterparty is (A) Agent, (B) any Lender or one of their
respective Affiliates, (C) Enron or one of its affiliates, provided that no
Hedging Contract with Enron or one of its affiliates shall have a term in excess
of one year, or (D) Chemical Bank or one of its affiliates, provided long-term
obligations of Chemical Bank are rated A or A2 or better, respectively, by
either Rating Agency) at the time the contract is made has long-term obligations
rated AA or Aa2 or better, respectively, by either Rating Agency.
(d) Limitation on Mergers, Issuances of Securities. Borrower will
not merge or consolidate with or into any other business entity. Borrower will
not issue any securities other than shares of its common stock and any options
or warrants giving the holders thereof only the right to acquire such shares,
provided, that the net proceeds of any such equity offering received by
Borrower shall be applied as a mandatory prepayment of the Obligations as set
forth in Section 2.7(c).
(e) Limitation on Sales of Property. Borrower will not sell,
transfer, lease, exchange, alienate or dispose of any of its assets or
properties or any material interest therein without the consent of Majority
Lenders, except:
(i) as to Collateral, to the extent expressly permitted under
the Security Documents;
(ii) as to Acquired Properties other than the properties
listed on Schedule 3, the assignment of such assets and properties by Borrower
to Crete as contemplated under Section 4.1 of the Crete Acquisition Agreement;
and
(iii) as to any other assets and properties of Borrower, cash
sales on an arm's-length basis to Persons other than Affiliates; provided, no
Default or Event of Default exists or would result as a result of any such
sale, and provided, further, Borrower shall immediately use all of the net
proceeds of any such sale to prepay the Loans (to be applied as set forth in
Section 2.6 hereof).
Borrower will not discount, sell, pledge or assign any notes payable to it,
accounts receivable or future income except to the extent expressly permitted
under the Loan Documents.
(f) Limitation on Dividends and Redemptions. Borrower will not
declare or pay any dividends on, or make any other distribution in respect of,
any class of its capital stock or any partnership or other interest in it, nor
will Borrower directly or indirectly make any capital contribution to or
purchase, redeem, acquire or retire any shares of the capital stock of Borrower
(whether such interests are now or hereafter
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issued, outstanding or created), or cause or permit any reduction or retirement
of the capital stock of Borrower.
(g) Limitation on Investments and New Businesses. Borrower will
not (i) make any expenditure or commitment or incur any obligation or enter
into or engage in any transaction except in the ordinary course of business
relating to the Mortgaged Property, (ii) engage directly or indirectly in any
business or conduct any operations except in connection with or incidental to
the ownership and operation of the Mortgaged Property, (iii) make any
acquisitions of or capital contributions to or other investments in any Person,
other than Permitted Investments, or (iv) make any significant acquisitions or
investments in any properties other than the Mortgaged Property.
(h) Limitation on Credit Extensions. Except for Permitted
Investments, Borrower will not extend credit, make advances or make loans other
than normal and prudent extensions of credit to customers buying goods and
services in the ordinary course of business, which extensions shall not be for
longer periods than those extended by similar businesses operated in a normal
and prudent manner.
(i) Transactions with Affiliates. Borrower will not extend
credit, make advances or make loans to any Affiliate, nor will Borrower engage
in any material transaction with any of its Affiliates on terms which are less
favorable to it than those which would have been obtainable at the time in
arm's-length dealing with Persons other than such Affiliates.
(j) Certain Contracts; Amendments; Multiemployer ERISA Plans.
Borrower will not enter into any "take-or-pay" contract or other contract or
arrangement for the purchase of goods or services which obligates it to pay for
such goods or service regardless of whether they are delivered or furnished to
it. Borrower will not amend or permit any amendment to any other contract or
lease which releases, qualifies, limits, makes contingent or otherwise
detrimentally affects the rights and benefits of Lenders under or acquired
pursuant to any Security Documents. Borrower will not incur any obligation to
contribute to any "multiemployer plan" as defined in Section 4001 of ERISA.
Borrower will not amend, modify, waive or otherwise change the Acquisition
Documents without the prior written consent of Majority Lenders.
(k) Fiscal Year. Borrower will not change its fiscal year.
ARTICLE VI - Security
Section 6.1. The Security. The Obligations will be secured by the
Security Documents listed in the Security Schedule and any additional Security
Documents hereafter delivered by Borrower and accepted by Agent.
Section 6.2. Agreement to Deliver Security Documents. Borrower agrees
to deliver to further secure the Obligations whenever requested by Agent in its
sole and absolute
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discretion, deeds of trust, mortgages, chattel mortgages, security agreements,
financing statements and other Security Documents in form and substance
satisfactory to Agent for the purpose of granting, confirming, and perfecting
first and prior liens or security interests in any real or personal property now
owned or hereafter acquired by Borrower. Borrower also agrees to deliver,
whenever requested by Agent in its sole and absolute discretion, favorable title
opinions from legal counsel acceptable to Agent with respect to Borrower's
properties and interests designated by Agent, based upon abstract or record
examinations to dates acceptable to Agent and (a) stating that Borrower has good
and defensible title to such properties and interests, free and clear of all
Prohibited Liens, (b) confirming that such properties and interests are subject
to Security Documents securing the Obligations that constitute and create legal,
valid and duly perfected first deed of trust or mortgage liens in such
properties and interests and first priority assignments of and security
interests in the oil and gas attributable to such properties and interests and
the proceeds thereof, and (c) covering such other matters as Agent may
reasonably request.
Section 6.3. Perfection and Protection of Security Interests and Liens.
Borrower will from time to time deliver to Agent any continuation statements,
extension agreements and other documents, properly completed and executed (and
acknowledged when required) by Borrower in form and substance satisfactory to
Agent, which Agent requests for the purpose of perfecting, confirming, or
protecting any Liens or other rights in Collateral securing any Obligations.
Section 6.4. Bank Accounts; Offset. To secure the repayment of the
Obligations Borrower hereby grants to Agent and each Lender a security
interest, a lien, and a right of offset, each of which shall be in addition to
all other interests, liens, and rights of Agent or any Lender at common law,
under the Loan Documents, or otherwise, and each of which shall be upon and
against (a) any and all moneys, securities or other property (and the proceeds
therefrom) of Borrower now or hereafter held or received by or in transit to
Agent or any Lender from or for the account of Borrower, whether for
safekeeping, custody, pledge, transmission, collection or otherwise, (b) any
and all deposits (general or special, time or demand, provisional or final) of
Borrower with Agent or any Lender, and (c) any other credits and claims of
Borrower at any time existing against Agent or any Lender, including claims
under certificates of deposit. Upon the occurrence and during the continuance
of a Default, each of Agent and Lenders is hereby authorized to foreclose upon,
or to offset against the Obligations then due and payable (in either case
without notice to Borrower), any and all items hereinabove referred to. The
remedies of foreclosure and offset are separate and cumulative, and either may
be exercised independently of the other without regard to procedures or
restrictions applicable to the other.
Section 6.5. Production Proceeds. Notwithstanding that, by the terms
of the various Security Documents, Borrower is and will be assigning to Agent
and Lenders all of the "Production Proceeds" (as defined therein) accruing to
the property covered thereby, so long as no Default has occurred and is
continuing, Borrower may continue to receive, collect and use from the
purchasers of production all such Production Proceeds, subject, however, to the
Liens created under the Security Documents, which Liens are hereby affirmed and
ratified. Upon the occurrence and during the continuance of a Default, Agent
and Lenders may exercise all rights and remedies granted under the Security
Documents, including the right to
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obtain possession of all Production Proceeds then held by Borrower or to receive
directly from the purchasers of production all other Production Proceeds. In no
case shall any failure, whether purposed or inadvertent, by Agent or Lenders to
collect directly any such Production Proceeds constitute in any way a waiver,
remission or release of any of their rights under the Security Documents, nor
shall any release of any Production Proceeds by Agent or Lenders to Borrower
constitute a waiver, remission, or release of any other Production Proceeds or
of any rights of Agent or Lenders to collect other Production Proceeds
thereafter.
ARTICLE VII - Events of Default and Remedies
Section 7.1. Events of Default. Each of the following events
constitutes an Event of Default under this Agreement:
(a) Borrower fails to pay any interest or fee within one Business Day
of when due and payable, or fails to pay any other Obligation when due and
payable, whether at a date for the payment of a fixed installment or as a
contingent or other payment becomes due and payable or as a result of
acceleration or otherwise;
(b) Any "default" or "event of default" occurs under any Loan
Document which defines either such term, and the same is not remedied within
the applicable period of grace (if any) provided in such Loan Document;
(c) Borrower fails to duly observe, perform or comply with any
covenant, agreement or provision of Section 5.1(d) or Section 5.2;
(d) Borrower fails (other than as referred to in subsections (a),
(b) or (c) above) to duly observe, perform or comply with any covenant,
agreement, condition or provision of any Loan Document to which it is a party,
and such failure remains unremedied for a period of thirty (30) days after
notice of such failure is given by Agent to Borrower;
(e) Any representation or warranty previously, presently or
hereafter made in writing by or on behalf of Borrower in connection with any
Loan Document to which it is a party, shall prove to have been false or
incorrect in any material respect on any date on or as of which made, or any
Loan Document to which it is a party, at any time ceases to be valid, binding
and enforceable as warranted in Section 4.1(e) for any reason other than its
release or subordination by Agent;
(f) Borrower fails to duly observe, perform or comply with any
agreement with any Person or any term or condition of any instrument, if such
agreement or instrument is materially significant to Borrower, and such failure
is not remedied within the applicable period of grace (if any) provided in such
agreement or instrument;
(g) Borrower (i) fails to pay any portion, when such portion is
due, of any of its Debt in excess of $50,000, or (ii) breaches or defaults in
the performance of
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any agreement or instrument by which any such Debt is issued, evidenced,
governed, or secured, and any such failure, breach or default continues beyond
any applicable period of grace provided therefor;
(h) Either (i) any "accumulated funding deficiency" (as defined in
Section 412(a) of the Internal Revenue Code of 1986, as amended) exists with
respect to any ERISA Plan, whether or not waived by the Secretary of the
Treasury or his delegate, or (ii) any Termination Event occurs with respect to
any ERISA Plan that, in either case, would constitute, in the determination of
Lender, a Material Adverse Effect;
(i) Borrower:
(i) suffers the entry against it of a judgment, decree or
order for relief by a court of competent jurisdiction in an involuntary
proceeding commenced under any applicable bankruptcy, insolvency or other
similar law of any jurisdiction now or hereafter in effect, including the
federal Bankruptcy Code, as from time to time amended, or has any such
proceeding commenced against it which remains undismissed for a period of
thirty days; or
(ii) commences a voluntary case under any applicable
bankruptcy, insolvency or similar law now or hereafter in effect, including the
federal Bankruptcy Code, as from time to time amended; or applies for or
consents to the entry of an order for relief in an involuntary case under any
such law; or makes a general assignment for the benefit of creditors; or fails
generally to pay (or admits in writing its inability to pay) its debts as such
debts become due; or takes corporate or other action to authorize any of the
foregoing; or
(iii) suffers the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official of all or a substantial part of its assets or of any part of the
Collateral in a proceeding brought against or initiated by it, and such
appointment or taking possession is neither made ineffective nor discharged
within thirty days after the making thereof, or such appointment or taking
possession is at any time consented to, requested by, or acquiesced to by it; or
(iv) suffers the entry against it of a final judgment for the
payment of money in excess of $200,000 (not covered by insurance satisfactory
to Agent in its discretion), unless the same is discharged within thirty days
after the date of entry thereof or an appeal or appropriate proceeding for
review thereof is taken within such period and a stay of execution pending such
appeal is obtained; or
(v) suffers a writ or warrant of attachment or any similar
process to be issued by any court against all or any substantial part of its
assets or any part of the Collateral, and such writ or warrant of attachment or
any similar
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process is not stayed or released within thirty days after the entry or levy
thereof or after any stay is vacated or set aside;
(j) for any reason a Change of Control shall occur; and
(k) an event or circumstance occurs that in the judgment of
Majority Lenders could reasonably be expected to have a Material Adverse
Effect, and the same shall continue for a period of ten Business Days after
written notice thereof is given by Agent to Borrower.
Upon the occurrence of an Event of Default described in subsection (i)(i),
(i)(ii) or (i)(iii) of this section with respect to Borrower, all of the
Obligations shall thereupon be immediately due and payable, without demand,
presentment, notice of demand or of dishonor and nonpayment, protest, notice of
protest, notice of intention to accelerate, declaration or notice of
acceleration, or any other notice or declaration of any kind, all of which are
hereby expressly waived by Borrower. During the continuance of any other Event
of Default, Agent at any time and from time to time may (and upon written
instructions from Majority Lenders shall), without notice to Borrower declare
any or all of the Obligations immediately due and payable, and all such
Obligations shall thereupon be immediately due and payable, without demand,
presentment, notice of demand or of dishonor and nonpayment, protest, notice of
protest, notice of intention to accelerate, declaration or notice of
acceleration, or any other notice or declaration of any kind, all of which are
hereby expressly waived by Borrower.
Section 7.2. Remedies. If any Default shall occur and be continuing,
each Lender may protect and enforce its rights under the Loan Documents by any
appropriate proceedings, including proceedings for specific performance of any
covenant or agreement contained in any Loan Document, and each Lender may
enforce the payment of any Obligations due it or enforce any other legal or
equitable right which it may have. All rights, remedies and powers conferred
upon Agent and Lenders under the Loan Documents shall be deemed cumulative and
not exclusive of any other rights, remedies or powers available under the Loan
Documents or at law or in equity.
Section 7.3. INDEMNITY. BORROWER AGREES TO INDEMNIFY AGENT AND EACH
LENDER, UPON DEMAND, FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS,
CLAIMS, LOSSES, DAMAGES, PENALTIES, FINES, ACTIONS, JUDGMENTS, SUITS,
SETTLEMENTS, COSTS, EXPENSES OR DISBURSEMENTS (INCLUDING REASONABLE FEES OF
ATTORNEYS, ACCOUNTANTS, EXPERTS AND ADVISORS) OF ANY KIND OR NATURE WHATSOEVER
(IN THIS SECTION COLLECTIVELY CALLED "LIABILITIES AND COSTS") WHICH TO ANY
EXTENT (IN WHOLE OR IN PART) MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED
AGAINST AGENT OR SUCH LENDER GROWING OUT OF, RESULTING FROM OR IN ANY OTHER WAY
ASSOCIATED WITH ANY OF THE COLLATERAL, THE LOAN DOCUMENTS, AND THE TRANSACTIONS
AND EVENTS (INCLUDING THE ENFORCEMENT OR DEFENSE THEREOF) AT ANY TIME
ASSOCIATED THEREWITH OR CONTEMPLATED THEREIN (INCLUDING ANY VIOLATION OR
NONCOMPLIANCE WITH ANY ENVIRONMENTAL LAWS BY BORROWER OR ANY LIABILITIES OR
DUTIES OF BORROWER OR OF AGENT OR ANY LENDER WITH RESPECT TO HAZARDOUS
MATERIALS FOUND IN OR RELEASED INTO THE ENVIRONMENT).
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THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES
AND COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER
ANY CLAIM OR THEORY OF STRICT LIABILITY, OR ARE CAUSED, IN WHOLE OR IN PART,
BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY AGENT OR ANY LENDER,
provided only that neither Agent nor any Lender shall be entitled under this
section to receive indemnification for that portion, if any, of any liabilities
and costs which is proximately caused by its own individual gross negligence or
willful misconduct, as determined in a final judgment. If any Person (including
Borrower or any of its Affiliates) ever alleges such gross negligence or willful
misconduct by Agent or any Lender, the indemnification provided for in this
section shall nonetheless be paid upon demand, subject to later adjustment or
reimbursement, until such time as a court of competent jurisdiction enters a
final judgment as to the extent and effect of the alleged gross negligence or
willful misconduct. As used in this section the terms "Agent" and "Lender" shall
refer not only to the Persons designated as such in Section 1.1 but also to each
director, officer, agent, attorney, employee, representative and Affiliate of
such Person.
ARTICLE VIII - Agent
Section 8.1. Appointment and Authority. Each Lender hereby irrevocably
authorizes Agent, and Agent hereby undertakes, to receive payments of
principal, interest and other amounts due hereunder as specified herein and to
take all other actions and to exercise such powers under the Loan Documents as
are specifically delegated to Agent by the terms hereof or thereof, together
with all other powers reasonably incidental thereto. The relationship of Agent
to Lenders is only that of one commercial bank acting as administrative agent
for others, and nothing in the Loan Documents shall be construed to constitute
Agent a trustee or other fiduciary for any holder of any of the Notes or of any
participation therein nor to impose on Agent duties and obligations other than
those expressly provided for in the Loan Documents. With respect to any
matters not expressly provided for in the Loan Documents and any matters which
the Loan Documents place within the discretion of Agent, Agent shall not be
required to exercise any discretion or take any action, and it may request
instructions from Lenders with respect to any such matter, in which case it
shall be required to act or to refrain from acting (and shall be fully
protected and free from liability to all Lenders in so acting or refraining
from acting) upon the instructions of Majority Lenders (including itself),
provided, however, that Agent shall not be required to take any action which
exposes it to a risk of personal liability that it considers unreasonable or
which is contrary to the Loan Documents or to applicable law. Upon receipt by
Agent from Borrower of any communication calling for action on the part of
Lenders or upon notice from any Lender to Agent of any Default or Event of
Default, Agent shall promptly notify each Lender thereof.
Section 8.2. Exculpation, Agent's Reliance, Etc. Neither Agent nor any
of its directors, officers, agents, attorneys, or employees shall be liable for
any action taken or omitted to be taken by any of them under or in connection
with the Loan Documents, INCLUDING THEIR NEGLIGENCE OF ANY KIND, except that
each shall be liable for
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its own gross negligence or willful misconduct. Without limiting the generality
of the foregoing, Agent (a) may treat the payee of any Note as the holder
thereof until Agent receives written notice of the assignment or transfer
thereof in accordance with this Agreement, signed by such payee and in form
satisfactory to Agent; (b) may consult with legal counsel (including counsel for
Borrower), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts; (c)
makes no warranty or representation to any Lender and shall not be responsible
to any Lender for any statements, warranties or representations made in or in
connection with the Loan Documents; (d) shall not have any duty to ascertain or
to inquire as to the performance or observance of any of the terms, covenants or
conditions of the Loan Documents on the part of Borrower or to inspect the
property (including the books and records) of Borrower; (e) shall not be
responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of any Loan Document or any
instrument or document furnished in connection therewith; (f) may rely upon the
representations and warranties of Borrower and Lenders in exercising its powers
hereunder; and (g) shall incur no liability under or in respect of the Loan
Documents by acting upon any notice, consent, certificate or other instrument or
writing (including any telecopy, telegram, cable or telex) believed by it to be
genuine and signed or sent by the proper Person or Persons.
Section 8.3. Lenders' Credit Decisions. Each Lender acknowledges that
it has, independently and without reliance upon Agent or any other Lender, made
its own analysis of Borrower and the transactions contemplated hereby and
own independent decision to enter into this Agreement and the other Loan
Documents. Each Lender also acknowledges that it will, independently and
without reliance upon Agent or any other Lender and based on such documents
and own credit decisions in taking or not taking action under the Loan
Documents.
Section 8.4. Indemnification. Each Lender agrees to indemnify Agent
(to the extent not reimbursed by Borrower within ten (10) days after demand)
from and against such Lender's Percentage Share of any and all liabilities,
obligations, claims, losses, damages, penalties, fines, actions, judgments,
suits, settlements, costs, expenses or disbursements (including reasonable fees
of attorneys, accountants, experts and advisors) of any kind or nature
whatsoever (in this section collectively called "liabilities and costs") which
to any extent (in whole or in part) may be imposed on, incurred by, or asserted
against Agent growing out of, resulting from or in any other way associated
with any of the Collateral, the Loan Documents and the transactions and events
(including the enforcement thereof) at any time associated therewith or
contemplated therein (including any violation or noncompliance with any
Environmental Laws by any Person or any liabilities or duties of any Person
with respect to Hazardous Materials found in or released into the environment).
THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES
AND COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER
ANY CLAIM OR THEORY OF STRICT LIABILITY, OR ARE CAUSED, IN WHOLE OR IN PART,
BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY AGENT,
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provided only that no Lender shall be obligated under this section to
indemnify Agent for that portion, if any, of any liabilities and costs which is
proximately caused by Agent's own individual gross negligence or willful
misconduct, as determined in a final judgment. Cumulative of the foregoing,
each Lender agrees to reimburse Agent promptly upon demand for such Lender's
Percentage Share of any costs and expenses to be paid to Agent by Borrower
under Section 5.1(i) to the extent that Agent is not timely reimbursed for such
expenses by Borrower as provided in such section. As used in this section the
term "Agent" shall refer not only to the Person designated as such in Section
1.1 but also to each director, officer, agent, attorney, employee,
representative and Affiliate of such Person.
Section 8.5. Rights as Lender. In its capacity as a Lender, Agent
shall have the same rights and obligations as any Lender and may exercise such
rights as though it were not Agent. Agent may accept deposits from, lend money
to, act as Trustee under indentures of, and generally engage in any kind of
business with Borrower or its Affiliates, all as if it were not Agent hereunder
and without any duty to account therefor to any other Lender.
Section 8.6. Sharing of Set-Offs and Other Payments. Each of Agent and
Lender agrees that if it shall, whether through the exercise of rights under
Security Documents or rights of banker's lien, set off, or counterclaim against
Borrower or otherwise, obtain payment of a portion of the aggregate Obligations
owed to it which, taking into account all distributions made by Agent under
Section 2.8, causes Agent or such Lender to have received more than it would
have received had such payment been received by Agent and distributed pursuant
to Section 2.8, then (a) it shall be deemed to have simultaneously purchased
and shall be obligated to purchase interests in the Obligations as necessary to
cause Agent and all Lenders to share all payments as provided for in Section
2.8, and (b) such other adjustments shall be made from time to time as shall be
equitable to ensure that Agent and all Lenders share all payments of
Obligations as provided in Section 2.8; provided, however, that nothing herein
contained shall in any way affect the right of Agent or any Lender to obtain
payment (whether by exercise of rights of banker's lien, set-off or
counterclaim or otherwise) of indebtedness other than the Obligations.
Borrower expressly consents to the foregoing arrangements and agrees that any
holder of any such interest or other participation in the Obligations, whether
or not acquired pursuant to the foregoing arrangements, may to the fullest
extent permitted by law exercise any and all rights of banker's lien, set-off,
or counterclaim as fully as if such holder were a holder of the Obligations in
the amount of such interest or other participation. If all or any part of any
funds transferred pursuant to this section is thereafter recovered from the
seller under this section which received the same, the purchase provided for in
this section shall be deemed to have been rescinded to the extent of such
recovery, together with interest, if any, if interest is required pursuant to
court order to be paid on account of the possession of such funds prior to such
recovery.
Section 8.7. Investments. Whenever Agent in good faith determines that
it is uncertain about how to distribute to Lenders any funds which it has
received, or whenever Agent in good faith determines that there is any dispute
among Lenders about how such funds should be distributed, Agent may choose to
defer distribution of the funds which are the subject of such uncertainty or
dispute. If Agent in good faith believes that the uncertainty or dispute will
not be promptly resolved, or if Agent is otherwise required to
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invest funds pending distribution to Lenders, Agent shall invest such funds
pending distribution; all interest on any such investment shall be distributed
upon the distribution of such investment and in the same proportion and to the
same Persons as such investment. All moneys received by Agent for distribution
to Lenders (other than to the Person who is Agent in its separate capacity as a
Lender) shall be held by Agent pending such distribution solely as Agent for
such Lenders, and Agent shall have no equitable title to any portion thereof.
Section 8.8. Benefit of Article VIII. The provisions of this Article
(other than the following Section 8.9) are intended solely for the benefit of
Agent and Lenders, and Borrower shall not be entitled to rely on any such
provision or assert any such provision in a claim or defense against Agent or
any Lender. Agent and Lenders may waive or amend such provisions as they
desire without any notice to or consent of Borrower.
Section 8.9. Resignation. Agent may resign at any time by giving
written notice thereof to Lenders and Borrower. Each such notice shall set
forth the date of such resignation. Upon any such resignation Majority
Lenders shall have the right to appoint a successor Agent. A successor must be
appointed for any retiring Agent, and such Agent's resignation shall become
effective when such successor accepts such appointment. If, within thirty days
after the date of the retiring Agent's resignation, no successor Agent has been
appointed and has accepted such appointment, then the retiring Agent may
appoint a successor Agent, which shall be a commercial bank organized or
licensed to conduct a banking or trust business under the laws of the United
States of America or of any state thereof. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, the retiring Agent shall
be discharged from its duties and obligations under this Agreement and the
other Loan Documents. After any retiring Agent's resignation hereunder the
provisions of this Article VIII shall continue to inure to its benefit as to
any actions taken or omitted to be taken by it while it was Agent under the
Loan Documents.
ARTICLE IX - Miscellaneous
Section 9.1. Waivers and Amendments; Acknowledgements.
(a) Waivers and Amendments. No failure or delay (whether by
course of conduct or otherwise) by Agent or any Lender in exercising any right,
power or remedy which Agent or such Lender may have under any of the Loan
Documents shall operate as a waiver thereof or of any other right, power or
remedy, nor shall any single or partial exercise by Agent or such Lender of any
such right, power or remedy preclude any other or further exercise thereof or
of any other right, power or remedy. No waiver of any provision of any Loan
Document and no consent to any departure therefrom shall ever be effective
unless it is in writing and signed as provided below in this section, and then
such waiver or consent shall be effective only in the specific instances and
for the purposes for which given and to the extent specified in such writing.
No notice to or demand on Borrower shall in any case of itself entitle Borrower
to any other or further notice or demand in similar or other circumstances.
This Agreement and the other Loan Documents set forth the entire understanding
among the parties hereto with respect to the transactions contemplated herein
and therein and supersede all prior discussions and understandings with respect
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to the subject matter hereof and thereof, and no waiver, consent, release,
modification or amendment of or supplement to this Agreement or the other Loan
Documents shall be valid or effective against any party hereto unless the same
is in writing and signed by (i) if such party is Borrower, by Borrower, (ii) if
such party is Agent, by Agent and (iii) if such party is a Lender, by such
Lender or by Agent on behalf of Lenders with the written consent of Majority
Lenders (which consent has already been given as provided in Section 9.7).
Notwithstanding the foregoing or anything to the contrary herein, Agent shall
not, without the prior consent of each individual Lender, execute and deliver
on behalf of such Lender any waiver or amendment which would: (1) waive any of
the conditions specified in Article III (provided that Agent may in its
discretion withdraw any request it has made under Section 3.2(f)), (2) increase
the commitment of such Lender or subject such Lender to any additional
obligations, (3) reduce any fees hereunder, or the principal of, or interest
on, such Lender's Note, (4) postpone any date fixed for any payment of any fees
hereunder, or principal of, or interest on, such Lender's Note, (5) amend the
definition herein of "Majority Lenders" or otherwise change the aggregate
amount of Percentage Shares which is required for Agent, Lenders or any of them
to take any particular action under the Loan Documents, or (6) release Borrower
from its obligation to pay such Lender's Note.
(b) Acknowledgements and Admissions. Borrower hereby represents,
warrants, acknowledges and admits that (i) it has been advised by counsel in
the negotiation, execution party, (ii) it has made an and the other Loan
Documents to which it is a party, without reliance on any representation,
warranty, covenant or undertaking by Agent or any Lender, whether written, oral
or implicit, other than as expressly set out in this Agreement or in another
Loan Document delivered on or after the date hereof, (iii) there are no
representations, warranties, covenants, undertakings or agreements by Agent or
any Lender as to the Loan Documents except as expressly set out in this
Agreement or in another Loan Document delivered on or after the date hereof,
(iv) neither Agent nor any Lender has any fiduciary obligation toward Borrower
with respect to any Loan Document or the transactions contemplated thereby, (v)
the relationship pursuant to the Loan Documents between Borrower, on one hand,
and Agent and each Lender, on the other hand, is and shall be solely that of
debtor and creditor, respectively, (vi) no partnership or joint venture exists
with respect to the Loan Documents between any of Borrower, Agent and Lenders,
(vii) Agent is not Borrower's Agent, but Agent for Lenders, (viii) should an
Event of Default or Default occur or exist Agent and each Lender will determine
in its sole discretion and for its own reasons what remedies and actions it will
or will not exercise or take at that time, (ix) without limiting any of the
foregoing, Borrower is not relying upon any representation or covenant by Agent
or any Lender, or any representative thereof, and no such representation or
covenant has been made, that Agent or any Lender will, at the time of an Event
of Default or Default, or at any other time, waive, negotiate, discuss, or take
or refrain from taking any action permitted under the Loan Documents with
respect to any such Event of Default or Default or any other provision of the
Loan Documents, and (x) Agent and
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all Lenders have relied upon the truthfulness of the acknowledgements in this
section in deciding to execute and deliver this Agreement and to make their
Loans.
THIS WRITTEN AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Section 9.2. Survival of Agreements; Cumulative Nature. All of
Borrower's various representations, warranties, covenants and agreements in the
Loan Documents shall survive the execution and delivery of this Agreement and
the other Loan Documents and the performance hereof and thereof, including the
making or granting of the Loans and the delivery of the Notes and the other
Loan Documents, and shall further survive until all of the Obligations are paid
in full to Agent and Lenders and all of Agent's and Lenders' obligations to
Borrower are terminated. All statements and agreements contained in any
certificate or other instrument delivered by Borrower or any Affiliate thereof
to Agent or any Lender under any Loan Document shall be deemed representations
and warranties by Borrower or agreements and covenants of Borrower under this
Agreement. The representations, warranties, indemnities, and covenants made by
Borrower in the Loan Documents, and the rights, powers, and privileges granted
to Agent and Lenders in the Loan Documents, are cumulative, and, except for
expressly specified waivers and consents, no Loan Document shall be construed
in the context of another to diminish, nullify, or otherwise reduce the benefit
to Agent or any Lender of any such representation, warranty, indemnity,
covenant, right, power or privilege. In particular and without limitation, no
exception set out in this Agreement to any representation, warranty, indemnity,
or covenant herein contained shall apply to any similar representation,
warranty, indemnity, or covenant contained in any other Loan Document, and each
such similar representation, warranty, indemnity, or covenant shall be subject
only to those exceptions which are expressly made applicable to it by the terms
of the various Loan Documents.
Section 9.3. Notices. All notices, requests, consents, demands and
other communications required or permitted under any Loan Document shall be in
writing, unless otherwise specifically provided in such Loan Document (provided
that Agent may give telephonic notices to Lenders), and shall be deemed
sufficiently given or furnished if delivered by personal delivery, by telecopy
or telex, by delivery service with proof of delivery, or by registered or
certified United States mail, postage prepaid, to Borrower at the address of
Borrower specified on the signature pages hereto and to Agent and the other
Lenders at their addresses specified on the signature pages hereto (unless
changed by similar notice in writing given by the particular Person whose
address is to be changed). Any such notice or communication shall be deemed to
have been given (a) in the case of personal delivery or delivery service, as of
the date of first attempted delivery at the address provided herein, (b) in the
case of telecopy or telex, upon receipt, or (c) in the case of registered or
certified United States mail, three days after deposit in the mail; provided,
however, that no Request for Loans or Rate Election shall become effective
until actually received by Agent.
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Section 9.4. Parties in Interest. All grants, covenants and agreements
contained in the Loan Documents shall bind and inure to the benefit of the
parties thereto and their respective successors and assigns; provided, however,
that Borrower may not assign or transfer any of its rights or delegate any of
its duties or obligations under any Loan Document without the prior consent of
Majority Lenders. Neither Borrower nor any Affiliates of Borrower shall
directly or indirectly purchase or otherwise retire any Obligations owed to any
Lender nor will any Lender accept any offer to do so, unless each Lender shall
have received substantially the same offer with respect to the same Percentage
Share of the Obligations owed to it. If Borrower or any Affiliate of Borrower
at any time purchases some but less than all of the Obligations owed to Agent
and all Lenders, such purchaser shall not be entitled to any rights of Agent or
Lender under the Loan Documents unless and until Borrower or its Affiliates
have purchased all of the Obligations.
SECTION 9.5. GOVERNING LAW; SUBMISSION TO PROCESS. EXCEPT TO THE
EXTENT THAT THE LAW OF ANOTHER JURISDICTION IS EXPRESSLY ELECTED IN A LOAN
DOCUMENT, THE LOAN DOCUMENTS SHALL BE DEEMED CONTRACTS AND INSTRUMENTS MADE
UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND THE LAWS
OF THE UNITED STATES OF AMERICA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE
STATE OF NEW YORK. BORROWER HEREBY AGREES THAT ANY LEGAL ACTION OR PROCEEDING
AGAINST BORROWER WITH RESPECT TO THIS AGREEMENT, THE NOTES OR ANY OF THE LOAN
DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE
UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK AS AGENT AND
LENDERS MAY ELECT, AND, BY EXECUTION AND DELIVERY HEREOF, BORROWER ACCEPTS AND
CONSENTS FOR ITSELF AND IN RESPECT TO ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS.
BORROWER AGREES THAT SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW
OF THE STATE OF NEW YORK SHALL APPLY TO THE LOAN DOCUMENTS AND WAIVES ANY RIGHT
TO STAY OR TO DISMISS ANY ACTION OR PROCEEDING BROUGHT BEFORE SAID COURTS ON
THE BASIS OF FORUM NON CONVENIENS. IN FURTHERANCE OF THE FOREGOING, BORROWER
HEREBY IRREVOCABLY DESIGNATES AND APPOINTS PRENTICE-HALL CORPORATION SYSTEM,
INC., 15 COLUMBUS CIRCLE, NEW YORK, NEW YORK 10023-7773, (212) 373-7500, AS
AGENT OF BORROWER TO RECEIVE SERVICE OF ALL PROCESS BROUGHT AGAINST BORROWER
WITH RESPECT TO ANY SUCH PROCEEDING IN ANY SUCH COURT IN NEW YORK, SUCH SERVICE
BEING HEREBY ACKNOWLEDGED BY BORROWER TO BE EFFECTIVE AND BINDING SERVICE IN
EVERY RESPECT. COPIES OF ANY SUCH PROCESS SO SERVED SHALL ALSO, IF PERMITTED
BY LAW, BE SENT BY REGISTERED MAIL TO BORROWER AT ITS ADDRESS SET FORTH BELOW,
BUT THE FAILURE OF BORROWER TO RECEIVE SUCH COPIES SHALL NOT AFFECT IN ANY WAY
THE SERVICE OF SUCH PROCESS AS AFORESAID.
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BORROWER SHALL FURNISH TO AGENT AND LENDERS A CONSENT OF PRENTICE-HALL
CORPORATION SYSTEM, INC. AGREEING TO ACT HEREUNDER PRIOR TO THE EFFECTIVE DATE
OF THIS AGREEMENT. NOTHING HEREIN SHALL AFFECT THE RIGHT OF AGENT AND LENDERS TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF
AGENT AND LENDERS TO BRING PROCEEDINGS AGAINST BORROWER IN THE COURTS OF ANY
OTHER JURISDICTION. IF FOR ANY REASON PRENTICE-HALL CORPORATION SYSTEM, INC.
SHALL RESIGN OR OTHERWISE CEASE TO ACT AS AGENT OF BORROWER, BORROWER HEREBY
IRREVOCABLY AGREES TO (a) IMMEDIATELY DESIGNATE AND APPOINT A NEW AGENT
ACCEPTABLE TO AGENT AND LENDERS TO SERVE IN SUCH CAPACITY AND, IN SUCH EVENT,
SUCH NEW AGENT SHALL BE DEEMED TO BE SUBSTITUTED FOR PRENTICE-HALL CORPORATION
SYSTEM, INC. FOR ALL PURPOSES HEREOF AND (b) PROMPTLY DELIVER TO AGENT AND
LENDERS THE WRITTEN CONSENT (IN FORM AND SUBSTANCE SATISFACTORY TO AGENT AND
LENDERS) OF SUCH NEW AGENT AGREEING TO SERVE IN SUCH CAPACITY.
Section 9.6. Limitation on Interest. Agent, Lenders, Borrower and the
other parties to the Loan Documents intend to contract in strict compliance
with applicable usury law from time to time in effect. In furtherance thereof
such Persons stipulate and agree that none of the terms and provisions
contained in the Loan Documents shall ever be construed to create a contract to
pay, for the use, forbearance or detention of money, or provide for interest in
excess of the maximum amount of interest permitted to be charged by applicable
law from time to time in effect. Neither Borrower nor any present or future
guarantors, endorsers, or other Persons hereafter becoming liable for payment
of any Obligation shall ever be liable for unearned interest thereon or shall
ever be required to pay interest thereon in excess of the maximum amount that
may be lawfully charged under applicable law from time to time in effect, and
the provisions of this section shall control over all other provisions of the
Loan Documents which may be in conflict or apparent conflict herewith. Agent
and each Lender expressly disavows any intention to charge or collect excessive
unearned interest or finance charges in the event the maturity of any
Obligation is accelerated. If (a) the maturity of any Obligation is
accelerated for any reason, (b) any Obligation is prepaid and as a result any
amounts held to constitute interest are determined to be in excess of the legal
maximum, or (c) Agent, any Lender or any other holder of any or all of the
Obligations shall otherwise collect moneys which are determined to constitute
interest which would otherwise increase the interest on any or all of the
Obligations to an amount in excess of that permitted to be charged by
applicable law then in effect, then all such sums determined to constitute
interest in excess of such legal limit shall, without penalty, be promptly
applied to reduce the then outstanding principal of the related Obligations or,
at Agent's, such Lender's or such holder's option, promptly returned to
Borrower or the other payor thereof upon such determination. In determining
whether or not the interest paid or payable, under any specific circumstance,
exceeds the maximum amount permitted under applicable law, Agent, Lenders and
Borrower (and any other payors thereof) shall to the greatest extent permitted
under applicable law, (i) characterize any non-principal payment as an expense,
fee or premium rather than as interest, (ii) exclude voluntary prepayments and
the effects thereof, and (iii) amortize, prorate, allocate, and spread the
total amount of interest throughout the entire
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contemplated term of the instruments evidencing the Obligations in accordance
with the amounts outstanding from time to time thereunder and the maximum legal
rate of interest from time to time in effect under applicable law in order to
lawfully charge the maximum amount of interest permitted under applicable law.
As used in this section the term "applicable law" means the laws of the State of
New York or the laws of the United States of America, whichever laws allow Agent
and Lenders the greater interest, as such laws now exist or may be changed or
amended or come into effect in the future.
Section 9.7. Termination; Limited Survival. In its sole and absolute
discretion Borrower may at any time that no Obligations are owing elect in a
written notice delivered to Agent to terminate this Agreement. Upon receipt by
Agent of such a notice, if no Obligations are then owing this Agreement and all
other Loan Documents shall thereupon be terminated and the parties thereto
released from all prospective obligations thereunder. Notwithstanding the
foregoing or anything herein to the contrary, any waivers or admissions made by
Borrower in any Loan Document, any Obligations under Sections 2.11 through
2.13, and any obligations which any Person may have to indemnify or compensate
Agent or any Lender shall survive any termination of this Agreement or any
other Loan Document. At the request and expense of Borrower, Agent shall
prepare and execute all necessary instruments to reflect and effect such
termination of the Loan Documents. Agent is hereby authorized to execute all
such instruments on behalf of all Lenders, without the joinder of or further
action by any Lender.
Section 9.8. Severability. If any term or provision of any Loan
Document shall be determined to be illegal or unenforceable all other terms and
provisions of the Loan Documents shall nevertheless remain effective and shall
be enforced to the fullest extent permitted by applicable law.
Section 9.9. Counterparts. This Agreement may be separately executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to constitute one
and the same Agreement.
SECTION 9.10. WAIVER OF JURY TRIAL, PUNITIVE DAMAGES, ETC. TO THE
EXTENT PERMITTED BY LAW, AGENT, LENDERS AND BORROWER HEREBY KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF SUCH PERSONS OR BORROWER. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR AGENT'S AND LENDERS' ENTERING INTO THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS. EACH OF BORROWER, AGENT AND LENDERS HEREBY FURTHER
(a) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT
IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO,
ACTUAL DAMAGES; (b) CERTIFIES THAT NO PARTY HERETO
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NOR ANY REPRESENTATIVE OR AGENT OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (c) ACKNOWLEDGES THAT IT
HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND THE
TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION.
IN WITNESS WHEREOF, this Agreement is executed as of the date first
written above.
PLAINS ILLINOIS INC., Borrower
By:/s/ Phillip D. Kramer
------------------------------------
Phillip D. Kramer, Vice President
Address:
1600 Smith Street, Suite 1500
Houston, Texas 77002
Attention: Phillip D. Kramer, Vice President
Telephone: (713) 654-1523
Telecopy: (713) 654-1414
Percentage INTERNATIONALE NEDERLANDEN (U.S.)
Share Amount of Loan CAPITAL CORPORATION,
- ---------- -------------- Individually as a Lender and as Agent
100% $42,000,000
By:/s/ Robi Artman-Hodge
------------------------------------
Robi Artman-Hodge, Managing Director
Address:
135 East 57th Street
New York, New York 10022-2101
Attention: Robi Artman-Hodge
Telephone: (212) 446-1729
Telecopy: (212) 832-3616
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