<PAGE>
==============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31,1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___ to ___
Commission file number: 0-7062
NOBLE AFFILIATES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 73-0785597
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
110 WEST BROADWAY
ARDMORE, OKLAHOMA 73401
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(405) 223-4110
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
_____ ____
Number of shares of common stock outstanding as of May 4, 1995: 50,028,980
==============================================================================
<PAGE>
FORM 10-Q
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NOBLE AFFILIATES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
MARCH 31, DECEMBER 31,
1995 1994
----------- -----------
<S> <C> <C>
ASSETS:
Current Assets:
Cash and short-term cash investments . . . . . . . . . $ 24,824 $ 22,192
Accounts receivable-trade. . . . . . . . . . . . . . . 55,251 49,692
Materials and supplies inventories . . . . . . . . . . 3,572 3,591
Other current assets . . . . . . . . . . . . . . . . . 21,517 28,412
---------- ---------
Total Current Assets . . . . . . . . . . . . . . . . . 105,164 103,887
---------- ---------
Property, Plant and Equipment. . . . . . . . . . . . . . 1,612,119 1,588,459
Less: accumulated depreciation,
depletion and amortization . . . . . . . . . . . . . (793,663) (775,079)
---------- ----------
818,456 813,380
Other Assets. . . . . . . . . . . . . . . . . . . . . . . 17,950 16,249
---------- ----------
Total Assets . . . . . . . . . . . . . . . . . . . . . . $ 941,570 $ 933,516
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current Liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . $ 50,198 $ 46,473
Other current liabilities. . . . . . . . . . . . . . . . 27,486 21,747
Income taxes . . . . . . . . . . . . . . . . . . . . . . 3,768 3,768
---------- ----------
Total Current Liabilities. . . . . . . . . . . . . . . . 81,452 71,988
---------- ----------
Deferred Income Taxes. . . . . . . . . . . . . . . . . . . 62,012 61,802
---------- ----------
Other Deferred Credits and
Noncurrent Liabilities . . . . . . . . . . . . . . . . . 10,366 10,704
---------- ----------
Long-term Debt . . . . . . . . . . . . . . . . . . . . . . 376,965 376,956
---------- ----------
Shareholders' Equity:
Common stock . . . . . . . . . . . . . . . . . . . . . . 171,839 171,790
Capital in excess of par value . . . . . . . . . . . . . 142,132 141,911
Retained earnings. . . . . . . . . . . . . . . . . . . . 112,222 113,783
---------- ----------
426,193 427,484
Less common stock in treasury
(at cost, 1,524,900 shares). . . . . . . . . . . . . . . (15,418) (15,418)
---------- ----------
Total Shareholders' Equity . . . . . . . . . . . . . . . 410,775 412,066
---------- ----------
Total Liabilities and Shareholders' Equity . . . . . . . $ 941,570 $ 933,516
========== ==========
</TABLE>
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
Page 2
<PAGE>
FORM 10-Q
NOBLE AFFILIATES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
1995 1994
----- -----
<S> <C> <C>
REVENUES:
Oil and gas sales and royalties . . . . . . . . . . . . $73,821 $80,902
Gathering, marketing and processing . . . . . . . . . . 17,055
Other income . . . . . . . . . . . . . . . . . . . . . . 978 2,639
------- -------
91,854 83,541
------- -------
COSTS AND EXPENSES:
Oil and gas operations . . . . . . . . . . . . . . . . . 22,311 18,211
Oil and gas exploration . . . . . . . . . . . . . . . . 4,406 3,995
Gathering, marketing and processing . . . . . . . . . . 16,967
Depreciation, depletion and
amortization . . . . . . . . . . . . . . . . . . . . . 33,387 33,552
Selling, general and
administrative . . . . . . . . . . . . . . . . . . . . 9,517 9,233
Interest expense . . . . . . . . . . . . . . . . . . . . 5,248 7,595
Interest capitalized . . . . . . . . . . . . . . . . . . (693) (2,023)
------- -------
91,143 70,563
------- -------
INCOME BEFORE INCOME TAXES . . . . . . . . . . . . . . . . 711 12,978
INCOME TAX PROVISION . . . . . . . . . . . . . . . . . . . 271(1) 4,561(1)
------- -------
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . $ 440 $ 8,417
======= =======
NET INCOME PER SHARE . . . . . . . . . . . . . . . . . . . $.01(2) $.17(2)
======= =======
</TABLE>
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
Page 3
<PAGE>
FORM 10-Q
NOBLE AFFILIATES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
<S> <C> <C>
1995 1994
----- -----
Cash Flows from Operating Activities:
Net income . . . . . . . . . . . . . . . . . . . . . . $ 440 $ 8,417
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation, depletion and amortization . . . . . . 33,387 33,552
Amortization of undeveloped lease costs, net . . . . 1,036 1,408
Change in deferred credits . . . . . . . . . . . . (128) 8,056
Change in other noncash items, net. . . . . . . . (1,544) (2,479)
Changes in working capital, not including cash
(Increase) decrease in accounts receivable . . . . . (5,559) 4,149
(Increase) decrease in other current assets . . . . 6,929 3,495
Increase (decrease) in accounts payable . . . . . . 3,725 21,426
Increase (decrease) in other current liabilities . . 5,739 5,337
-------- --------
Net Cash Provided by Operating Activities . . . . . . . 44,025 83,361
-------- --------
Cash Flows From Investing Activities:
Capital expenditures . . . . . . . . . . . . . . . . (40,099) (44,834)
Proceeds from sale of plant and equipment . . . . . . 437 619
-------- --------
Net Cash Used in Investing Activities . . . . . . . . . (39,662) (44,215)
-------- --------
Cash Flows From Financing Activities:
Exercise of stock options . . . . . . . . . . . . . . 270 121
Cash dividends . . . . . . . . . . . . . . . . . . . (2,001) (1,997)
Repayment of short-term debt for property
acquisition . . . . . . . . . . . . . . . . . . . . . (95,600)
-------- --------
Net Cash Used in Financing Activities . . . . . . . . . (1,731) (97,476)
-------- --------
Increase (decrease) in Cash and Short-term Cash
Investments . . . . . . . . . . . . . . . . . . . . . . 2,632 (58,330)
Cash and Short-term Cash Investments at Beginning
of Period . . . . . . . . . . . . . . . . . . . . . . 22,192 176,432
-------- --------
Cash and Short-term Cash Investments at End of Period. . $ 24,824 $118,102
======== ========
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest (net of amount capitalized) . . . . . . . . . $110 $ -0-
Income taxes (refund) . . . . . . . . . . . . . . . . $(5,000) $ -0-
</TABLE>
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
Page 4
<PAGE>
FORM 10-Q
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
In the opinion of the Company, the accompanying unaudited consolidated
condensed financial statements contain all adjustments, consisting only of
necessary and normal recurring adjustments, necessary to present fairly the
Company's financial position as of March 31, 1995 and December 31, 1994, and
the results of operations and the cash flows for the three month periods
ended March 31, 1995 and 1994. These consolidated condensed financial
statements should be read in conjunction with the financial statements and
the Notes thereto incorporated in the Company's annual report on Form 10-K
for the year ended December 31, 1994.
(1) INCOME TAX PROVISION
For the three months ended March 31:
<TABLE>
<CAPTION>
(IN THOUSANDS)
---------------
1995 1994
---- -------
<S> <C> <C>
Current........................................ $ 62 $(2,293)
Deferred....................................... 209 6,854
---- -------
$271 $ 4,561
==== =======
</TABLE>
(2) NET INCOME PER SHARE
The earnings per share of common stock was computed using the weighted
average number of shares of common stock outstanding during the period as
follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
---------------
1995 1994
------ ------
<S> <C> <C>
For the three months ended March 31............ 50,017 49,941
</TABLE>
Page 5
<PAGE>
FORM 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities decreased to $44.0 million in the
three months ended March 31, 1995 from the $83.4 million in the same period
of 1994. Cash and short-term cash investments increased from $22.2 million at
December 31, 1994 to $24.8 million at March 31, 1995.
The Company has expended approximately $40.1 million of its $205 million
capital budget through March 31, 1995. The Company expects to fund internally
its remaining 1995 capital budget. The Company's $205 million capital budget
includes $20 million for potential acquisitions of producing properties. The
Company continues to evaluate possible strategic acquisitions and believes it
is positioned to access external sources of funding should it be necessary or
desirable in connection with an acquisition.
During 1994 the Company reduced its debt $220.6 million by utilizing
available cash balances and its bank line of credit. On January 4, 1994, the
Company paid the $95.6 million installment note used to acquire a producing
property in 1993. On June 1, 1994, the Company borrowed $48 million from its
bank credit facility and used the proceeds, plus available cash, to redeem
its $125,000,000 10 1/8% notes which were due June 1, 1997.
On May 1, 1995 the Company announced that its wholly owned subsidiary,
Samedan Oil Corporation (Samedan), has become a party to a comprehensive
producer settlement agreement which was entered into with Columbia Gas
Transmission Corporation ("Columbia Transmission") and Columbia Gas System,
Inc. in connection with their plans of reorganization filed in the Bankruptcy
Court on April 17, 1995. The producer settlement, if approved, would provide
Samedan with a right to receive a distribution, upon confirmation of a
Columbia Transmission plan of reorganization, in the amount of $48,925,000,
which amount would be based on an agreed claim against Columbia Transmission
of $71,034,483. In addition, the proposed settlement would give Samedan a
contingent right to receive approximately $2,575,000 upon the resolution of
certain other contested producer claims. For additional information
concerning the proposed settlement reference is made to the Company's press
release dated May 1, 1995, a copy of which is filed as Exhibit 99.1 to this
Form 10-Q and hereby incorporated herein by reference.
The Company's current ratio (current assets divided by current liabilities)
was 1.29 at March 31, 1995 compared to 1.44 at December 31, 1994.
The Company follows an entitlements method of accounting for its gas
imbalances. The Company's estimated gas imbalance receivables were $11.1
million at March 31, 1995 and $11.7 million at December 31, 1994. Estimated
gas imbalance liabilities were $10.3 million at March 31, 1995 and $10.5
million at December 31, 1994. These imbalances are valued at the amount which
is expected to be received or paid to settle the imbalances. The settlement
of the imbalances can occur either over the life of, or at the end of the
life of a well, on a volume basis or by cash settlement. The Company does not
expect that a significant portion of the settlements will occur in any one
year. Thus, the Company believes the settlement of gas imbalances will have
little impact on its liquidity.
RESULTS OF OPERATIONS
For the first quarter of 1995, the Company had net income of $.4 million,
or 1 cent per share, compared to net income of $8.4 million, or 17 cents per
share, in the first quarter of 1994. The results primarily reflected
depressed gas prices in the first three months of 1995 compared with the
previous year.
Oil sales increased 36 percent for the three months ended March 31, 1995,
compared to the same period of 1994. The increase in sales is primarily due
to an average oil price increase of 35 percent in the first quarter of 1995
compared to the first quarter of 1994.
Page 6
<PAGE>
FORM 10-Q
Gas sales, excluding third party sales by Noble Gas Marketing, Inc. (NGM),
a wholly owned subsidiary of the Company, decreased 29 percent for the three
months ended March 31, 1995, compared to the same period of 1994. The
decrease in sales is primarily due to an average gas price decrease of 29
percent in the first quarter of 1995, compared to the first quarter of 1994.
NGM began marketing the Company's natural gas in June 1994. The Company
records all of NGM's sales as gathering, marketing and processing revenues.
Income for the first quarter of 1995 includes $17.1 million of gathering,
marketing and processing revenues and $17 million of gathering, marketing and
processing expense relating to third party gas sales. All intercompany sales
and costs have been eliminated.
The Company uses oil and gas swap agreements to hedge both fixed term
sales and sales of its own oil and gas production in order to obtain a fixed
margin and minimize price risk. The marketing of natural gas results in price
risk due to a fixed supply cost and a variable market or, conversely, a
variable supply cost and a fixed market. NGM employs various hedging
techniques to lock in profits or limit exposure to price risk. During the
first quarter of 1995, the Company had swap transactions with broker-dealers
that represented approximately 38,000 MMBTU per day at prices ranging from
$1.35 to $2.02 per MMBTU. At March 31, 1995 the Company had swaps for April
1995 through January 1996 representing 23,000 MMBTU per day at prices ranging
from $1.47 to $1.56 per MMBTU. The Company had no oil hedges in place, or any
related deposits, at March 31, 1995. The Company records hedging gains or
losses relating to fixed term sales in gathering, marketing and processing
revenues in the period the related contract is completed, and records hedging
gains or losses relating to its own oil and gas production in oil and gas
sales and royalties.
Certain selected oil and gas operating statistics follow:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
------------------------
1995 1994
----------- -----------
<S> <C> <C>
Oil sales.......................................... $33,585,000 $24,768,000
Average daily oil - BBLs........................... 23,374 22,775
Average oil price per BBL.......................... $ 16.37 $ 12.22
Gas sales.......................................... $38,377,000 $54,045,000
Average daily gas - MCFs........................... 271,635 269,800
Average gas price per MCF.......................... $ 1.61 $ 2.26
</TABLE>
BBLS - BARRELS
MCF - THOUSAND CUBIC FEET
Oil and gas operations expense increased $4.1 million to $22.3 million for
the three months ended March 31, 1995, as compared to the same period of
1994. On a barrel of oil equivalent (BOE) basis (converting gas to oil on the
basis of 6 MCF per barrel), operations expense increased $.62 per BOE for the
three months ended March 31, 1995, as compared to the same period of 1994.
This increase is due primarily to an increase in expenses relating to the
number of offshore properties and platforms in the Gulf of Mexico and to new
properties not yet fully on line, as well as increases in costs of certain
acquired properties.
Depreciation, depletion and amortization (DD&A) expense remained flat at
$33.4 million for the three months ended March 31, 1995, compared to the same
period in 1994. The unit rate of DD&A per equivalent barrel, converting gas
to oil on a the basis of 6 MCF per barrel, was $5.40 for the first three
months of 1995 compared to $5.50 for the same period of 1994. The Company has
recorded, through charges to DD&A, a reserve for future liabilities related
to dismantlement and reclamation costs for offshore facilities. This reserve
is based on the best estimates of Company engineers of such costs to be
incurred in future years.
Interest expense decreased 31 percent to $5.2 million for the three months
ended March 31, 1995, compared to the same period of 1994. The decrease is
due to the reduction in borrowings mentioned in the Liquidity and Capital
Resources section above.
Page 7
<PAGE>
FORM 10-Q
Interest capitalized decreased from $2.0 million for the three months
ended March 31, 1994 to $.7 million for the three months ended March 31,
1995. This decrease resulted from the completion and discontinuation of
capitalized interest on the Company's East Cameron 331/332 property in the
Gulf of Mexico.
FUTURE TRENDS
Management believes that the Company is well positioned with its balanced
reserves of oil and gas to take advantage of future price increases that may
occur. However, the uncertainty of oil and gas prices continues to affect the
domestic oil and gas industry. Due to the volatility of oil and gas prices,
the Company, from time to time, uses hedging and plans to do so in the future
as a means of controlling its exposure to price changes. The Company cannot
predict the extent to which its revenues will be affected by inflation,
government regulation or changing prices.
Page 8
<PAGE>
FORM 10-Q
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The annual meeting of shareholders of the Company was held at 10:00
a.m., local time, on Tuesday, April 25, 1995 in Ardmore, Oklahoma.
(b) Proxies were solicited by the Board of Directors of the Company pursuant
to Regulation 14A under the Securities Exchange Act of 1934. There was no
solicitation in opposition to the Board of Directors' nominees as listed
in the proxy statement and all of such nominees were duly elected.
(c) Out of a total of 50,024,356 shares of common stock of the Company
outstanding and entitled to vote, 45,841,076 shares were present in
person or by proxy, representing approximately 92 percent. The only
matter voted on by the shareholders, as fully described in the proxy
statement for the annual meeting, was the election of directors of the
Company. The results of voting were as follows:
<TABLE>
<CAPTION>
NUMBER OF SHARES
NUMBER OF SHARES WITHHOLDING AUTHORITY
VOTING FOR ELECTION TO VOTE FOR ELECTION
AS DIRECTOR AS DIRECTOR
------------------- ---------------------
<S> <C> <C>
Roy Butler......................... 45,526,558 314,518
Michael A. Cawley.................. 45,532,273 308,803
Edward F. Cox...................... 45,372,349 448,727
James C. Day....................... 45,501,048 340,028
Robert Kelley...................... 45,532,923 308,153
Harold F. Kleinman................. 45,638,060 203,016
George J. McLeod................... 45,521,458 319,618
Guy W. Nichols..................... 45,676,257 164,819
John F. Snodgrass.................. 45,522,458 318,618
</TABLE>
(d) Inapplicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The information required by this Item 6 (a) is set forth in the Index to
Exhibits accompanying this quarterly report and is incorporated herein
by reference.
(b) The Company did not file any reports on Form 8-K during the three months
ended March 31, 1995.
Page 9
<PAGE>
FORM 10-Q
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NOBLE AFFILIATES, INC.
-----------------------------------
(Registrant)
Date May 12, 1995 WM. D. DICKSON
-------------- ------------------------------------
WM. D. DICKSON, Vice President-Finance
and Treasurer
(Principal Financial Officer
and Authorized Signatory)
Page 10
<PAGE>
INDEX TO EXHIBITS
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
- ------- ------- ------------
10.1 Credit agreement dated as of May 27, 1994,
among the Registrant, Texas Commerce Bank
National Association, as Agent, and the banking
institutions listed in Annex I thereto.
27.1 Financial Data Schedule.
99.1 Press Release of Noble Affiliates, Inc. dated
May 1, 1995 regarding proposed settlement
agreement with Columbia Gas Transmission
Corporation.
Page 11
<PAGE>
- ------------------------------------------------------------------------------
NOBLE AFFILIATES, INC.
----------------------
$100,000,000
CREDIT AGREEMENT
----------------------
Dated as of May 27, 1994
- ------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS*
PAGE
----
<S> <C> <C>
Section 1. Amount and Terms of Credit ............................ 1
1.01 Commitments ........................................... 1
1.02 Notice of Loans ....................................... 1
1.03 Disbursement of Funds ................................. 1
1.04 Notes and Repayment ................................... 2
1.05 Conversions and Continuations ......................... 3
1.06 Pro Rata Loans and Borrowings ......................... 3
1.07 Interest .............................................. 3
1.08 Interest Periods ...................................... 5
1.09 Increased Costs, Illegality, etc. ..................... 6
1.10 Compensation .......................................... 8
1.11 Reduction of Costs .................................... 8
1.12 Replacement of Bank ................................... 8
Section 2. Fees; Commitments ..................................... 9
2.01 Fees .................................................. 9
2.02 Voluntary Reduction Commitments ....................... 9
Section 3. Payments .............................................. 10
3.01 Voluntary Prepayments ................................. 10
3.02 Method and Place of Payment ........................... 10
3.03 Net Payments .......................................... 10
Section 4. Conditions Precedent .................................. 11
4.01 Notes ................................................. 11
4.02 No Default; Representations and Warranties ............ 11
4.03 Officer's Certificate ................................. 11
4.04 Opinions of Counsel ................................... 12
4.05 Corporate Documentation and Proceedings ............... 12
4.06 Prior Credit Facility ................................. 12
<FN>
- ----------------------------------------
* This Table of Contents is provided for convenience only and is not a part
of the attached Credit Agreement.
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Section 5. Representations, Warranties and Agreements ............ 12
5.01 Corporate Status ...................................... 12
5.02 Corporate Power and Authority ......................... 12
5.03 No Violation .......................................... 13
5.04 Litigation ............................................ 13
5.05 Financial Statements; Financial Condition; etc. ....... 13
5.06 Use of Proceeds; Margin Regulations ................... 13
5.07 Governmental Approvals ................................ 14
5.08 Tax Returns and Payments .............................. 14
5.09 Compliance with ERISA ................................. 14
5.10 Investment Company Act ................................ 14
5.11 Public Utility Holding Company Act .................... 14
5.12 True and Complete Disclosure .......................... 15
5.13 Subsidiaries .......................................... 15
5.14 Restrictions on Dividends or Redemptions .............. 15
5.15 Compliance with Statutes, etc. ........................ 15
Section 6. Affirmative Covenants ................................. 15
6.01 Information Covenants ................................. 16
6.02 Books, Records and Inspections ........................ 17
6.03 Maintenance of Property; Insurance .................... 17
6.04 Taxes ................................................. 17
6.05 Corporate Franchises .................................. 17
6.06 Compliance with Statutes, etc. ........................ 18
6.07 ERISA ................................................. 18
6.08 Subordination of Indebtedness of Company
to Subsidiaries ....................................... 18
Section 7. Negative Covenants .................................... 19
7.01 Liens ................................................. 19
7.02 Consolidation, Merger, Assets, etc. ................... 20
7.03 Indebtedness .......................................... 20
7.04 Consolidated Tangible Net Worth ....................... 20
7.05 Consolidated Total Senior Indebtedness to Consolidated
Capitalization Ratio .................................. 20
7.06 Business .............................................. 20
7.07 Restrictions on Dividends and Advances ................ 20
7.08 ERISA ................................................. 20
Section 8. Events of Default ..................................... 21
8.01 Payments .............................................. 21
8.02 Representations, etc. ................................. 21
</TABLE>
(ii)
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
8.03 Covenants ............................................. 21
8.04 Default Under Other Agreements ........................ 21
8.05 Bankruptcy, etc. ...................................... 22
8.06 ERISA ................................................. 22
8.07 Judgments ............................................. 22
8.08 Ownership of Samedan Oil Corporation .................. 23
8.09 Invalidity ............................................ 23
Section 9. Definitions ........................................... 23
Section 10. The Agent ............................................. 32
10.01 Appointment ........................................... 32
10.02 Nature of Duties ...................................... 32
10.03 Lack of Reliance on the Agent ......................... 33
10.04 Certain Rights of the Agent ........................... 33
10.05 Reliance .............................................. 33
10.06 Indemnification ....................................... 33
10.07 The Agent in its Individual Capacity .................. 34
10.08 Holders ............................................... 34
10.09 Resignation by the Agent .............................. 34
Section 11. Miscellaneous ......................................... 35
11.01 Payment of Expenses, etc. ............................. 35
11.02 Right of Setoff ....................................... 35
11.03 Benefit of Agreement; Assignment and Participation .... 36
11.04 No Waiver; Remedies Cumulative ........................ 37
11.05 Pro Rata; Sharing of Payments ......................... 37
11.06 Calculations; Computations ............................ 38
11.07 LAW; SUBMISSION TO JURISDICTION ....................... 38
11.08 Counterparts .......................................... 39
11.09 Headings Descriptive .................................. 39
11.10 Amendment or Waiver ................................... 39
11.11 Termination; Survival of Indemnity and Confidentiality. 39
11.12 Domicile of Loans ..................................... 39
11.13 Representations by the Banks .......................... 40
11.14 Confidentiality ....................................... 40
11.15 No Duty ............................................... 40
11.16 No Fiduciary Relationship ............................. 40
11.17 Survival of Representations and Warranties ............ 40
11.18 ENTIRE AGREEMENT ...................................... 41
11.19 Maximum Interest Rate ................................. 41
11.20 Notices ............................................... 41
11.21 Severability .......................................... 41
</TABLE>
(iii)
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
11.22 Non-Application of Chapter 15 of Texas Credit Code .... 42
11.23 Construction .......................................... 42
11.24 WAIVER OF JURY TRIAL .................................. 42
11.25 Independence of Covenants ............................. 42
</TABLE>
INDEX TO ANNEXES AND EXHIBITS
ANNEX I Schedule of Commitments
ANNEX II List of Subsidiaries
EXHIBIT A Form of Note
EXHIBIT B Form of Opinion of Counsel to the Company
EXHIBIT C Form of Assignment and Assumption
(iv)
<PAGE>
CREDIT AGREEMENT, dated as of May 27, 1994 among NOBLE
AFFILIATES, INC., a Delaware corporation (the "Company"), the banking
institutions listed in Annex I hereto (each a "Bank" and, collectively, the
"Banks") and TEXAS COMMERCE BANK NATIONAL ASSOCIATION, acting in the manner
and to the extent described in Section 10 (in such capacity, the "Agent").
Unless otherwise defined herein, all capitalized terms used herein and
defined in Section 9 are used herein as so defined.
WITNESSETH:
WHEREAS, subject to and upon the terms and conditions
herein set forth, the Banks are willing to make available to the Company
the credit facility provided for herein;
NOW, THEREFORE., IT IS AGREED:
Section 1. Amount and Terms of Credit.
1.01 Commitments. Subject to and upon the terms and
conditions herein set forth, each Bank severally agrees, at any time and from
time to time on and after the Effective Date and prior to the Maturity Date
to make a loan or loans (each advance of funds by the Banks, or, as the
context requires any of them, to the Company pursuant to this Section 1.01
herein individually a "Loan" and collectively the "Loans") to the Company up
to but not exceeding the amount of such Bank's Commitment as then in effect.
The Loans (x) shall, at the option of the Company, be either Base Rate Loans,
CD Rate Loans or Eurodollar Loans and (y) may be repaid and reborrowed in
accordance with the provisions hereof.
1.02 Notice of Loans. The Company shall give the Agent at
its Houston Office prior to 10:00 A.M. (Houston, Texas time) notice by
telecopy or telephone (confirmed in writing) of each Loan, on the proposed
Business Day of the Loan if such Loan will be a Base Rate Loan, at least 2
Business Days prior to the Business Day of the Loan if such Loan will be a CD
Rate Loan and at least 3 Business Days prior to the Business Day of the Loan
if such Loan will be a Eurodollar Loan. Each such notice (each a "Notice of
Borrowing") shall specify the aggregate principal amount of the Loan to be
made by the Banks pursuant to such Notice of Borrowing, the date of Loan
(which shall be a Business Day), whether the Loan shall consist of Base Rate
Loans, CD Rate Loans or Eurodollar Loans and, if to be maintained as Fixed
Rate Loans, the initial Interest Period to be applicable thereto. Each Loan
made by the Banks on any day shall be in a minimum aggregate principal amount
of $5,000,000 (and if greater, an integral multiple of $1,000,000). The
aggregate principal amount of Fixed Rate Loans having the same Interest
Period shall be at least equal to $5,000,00 (and if greater, an integral
multiple of $1,000,000). The Agent shall promptly give each Bank telecopy or
telephonic notice (confirmed in writing) of each proposed Loan, of such
Bank's proportionate share thereof and of the other matters covered by the
Notice of Borrowing.
1.03 Disbursement of Funds. No later than Noon (Houston,
Texas time) on the date specified in each Notice of Borrowing, each Bank will
make available its pro rata portion (calculated based on the Banks'
respective Commitments) of each Loan requested to be made
CREDIT AGREEMENT, Page 1
<PAGE>
on such date. All such amounts shall be made available in U.S. dollars and
immediately available funds at the Payment Office of the Agent and the Agent
will make available to the Company at its Payment Office the aggregate of the
amounts so made available in the type of funds received. Unless the Agent
shall have been notified by any Bank prior to the date of a Loan that such
Bank does not intend to make available to the Agent such Bank's portion of
the Loan to be made on such date, the Agent may assume that such Bank has
made such amount available to the Agent on such date and the Agent may, in
reliance upon such assumption, make available to the Company a corresponding
amount. If such corresponding amount is not in fact made available to the
Agent by such Bank and the Agent has made available same to the Company, the
Agent shall be entitled to recover such corresponding amount on demand from
such Bank. If such Bank does not pay such corresponding amount forthwith upon
the Agent's demand therefor, the Agent shall promptly notify the Company and
the Company shall immediately pay such corresponding amount to the Agent. The
Agent shall also be entitled to recover from such Bank or the Company, as the
case may be, interest on such corresponding amount in respect of each day
from the date such corresponding amount was made available by the Agent to
the Company to the date such corresponding amount is recovered by the Agent
at a rate per annum equal to (x) if paid by such Bank, the Federal Funds Rate
or (y) if paid by the Company, the then applicable rate of interest
calculated in accordance with Section 1.07. Nothing herein shall be deemed to
relieve any Bank from its obligation to fulfill its Commitment hereunder or
to prejudice any rights which the Company may have against any Bank as a
result of any default by such Bank hereunder.
1.04 Notes and Repayment.
(a) The Company's obligation to pay the principal of, and
interest on, all the Loans made by each Bank shall be evidenced by a
promissory note (collectively, the "Notes") duly executed and delivered by
the Company substantially in the form of Exhibit A hereto with blanks
appropriately completed in conformity herewith.
(b) The Note issued to each Bank shall (i) be payable to
the order of such Bank and be dated the Effective Date, (ii) be in a stated
principal amount equal to the Commitment of such Bank and be payable in the
outstanding principal amount of the Loans evidenced thereby, (iii) mature on
the Maturity Date, (iv) bear interest as provided in the appropriate clause
of Section 1.07 in respect of the Base Rate Loans, CD Rate Loans and
Eurodollar Loans, as the case may be, evidenced thereby and (v) be entitled
to the benefits of this Agreement.
(c) Each Bank will note on its internal records the amount
of each Loan made by it and each payment in respect thereof, and will prior
to any transfer of its Note endorse on the reverse side thereof the
outstanding principal amount of Loans evidenced thereby. Failure to make any
such notation shall not affect the Company's obligations in respect of such
Loans.
(d) The Company shall pay to the Agent for the account of
the Banks the outstanding principal amount of the Loans on the Maturity Date.
Conversion from one Type
CREDIT AGREEMENT, Page 2
<PAGE>
of Borrowing to another Type and continuations of one Type of Borrowing from
one interest Period to the next will not require, or be deemed, repayments
and readvances of the Loans.
1.05 Conversions and Continuations. The Company shall have
the option to convert pro rata (on the basis of the Banks' respective
Commitments) on any Business Day all or a portion equal to at least
$5,000,000 (and if greater, an integral multiple of $1,000,000) of the
outstanding principal amount of the Loans from one Type of Borrowing into
another Type or continue one Type of Borrowing as Borrowing of the same Type,
provided that (i) except as otherwise provided in Section 1.09(b), Fixed Rate
Loans may be converted into Base Rate Loans or continued as Borrowing of the
same Type only on the last day of an Interest Period applicable thereto and
no such partial conversion of Fixed Rate Loans shall reduce the outstanding
principal amount of Fixed Rate Loans made pursuant to a single Borrowing to
less than $5,000,000, (ii) Base Rate Loans may only be converted into Fixed
Rate Loans if no Default or Event of Default is then in existence, and (iii)
no conversion shall be permitted which results in a greater number of
Interest Periods than permitted under Section 1.08. Each such conversion or
continuation shall be effected by the Company by giving notice by telecopy or
telephone (confirmed in writing) (a "Notice of Conversion/Continuation") to
the Agent at its Houston office prior to 10:00 A.M. (Houston, Texas time) on
the date of the conversion into a Base Rate Loan, prior to 1:00 P.M.
(Houston, Texas time) at least 2 Business Days before the conversion into or
continuation of a CD Rate Loan and prior to 1:00 P.M. (Houston, Texas time)
at least 3 Business Days before the conversion into or continuation of a
Eurodollar Rate Loan specifying the Borrowing to be so converted or continued
and if to be converted into or continued as a Fixed Rate Loan, the Interest
Period to be initially applicable thereto. The Agent shall give each Bank
prompt telecopy or telephonic notice of any such proposed conversion or
continuation. If the Company fails to give the Agent a Notice of
Conversion/Continuation of a Fixed Rate Loan prior to the end of the Interest
Period with respect thereto, such Fixed Rate Loans shall automatically be
converted into a Base Rate Loan on the last day of the Interest period for
such Fixed Rate Loan.
1.06 Pro Rata Loans and Borrowings. All] Loans and Borrowings
shall be incurred from the Banks pro rata on the basis of their Commitments.
It is understood that no Bank shall be responsible for any default by any
other Bank in its obligation to make Loans hereunder and that each Bank shall
be obligated to make the Loans provided to be made by it hereunder,
regardless of the failure of any other Bank to fulfill its Commitment
hereunder.
1.07 Interest.
(a) Rate. The Company agrees to pay interest in respect of
the unpaid principal amount of the Loans from the date advanced until paid
at a rate per annum which shall be equal to the lesser of (i) (A) in the case
of Base Rate Loans, the Base Lending Rate in effect from time to time, (B) in
the case of Eurodollar Loans, the relevant Eurodollar Rate plus the
Eurodollar Margin in effect from time to time, (C) in the case of CD Rate
Loans, the relevant Fixed CD Rate plus the CD Margin in effect from time to
time, and (D) in the case of overdue principal and, to the extent permitted
by law, overdue interest at a rate per annum equal to 2% per annum in excess
of the Base Lending Rate in effect from time to time (the rate applicable to
any portion of the Loans herein the "Applicable Rate") or (ii) the Maximum
Rate, each such
CREDIT AGREEMENT, Page 3
<PAGE>
change in the rate of interest charged on the Loans to become effective,
without notice to the Company, on the effective date of each change in the
Applicable Rate or the Maximum Rate, as the case may be; provided, however,
if at any time the rate of interest specified in clause (i) preceding shall
exceed the Maximum Rate, thereby causing the interest on the Loans to be
limited to the Maximum Rate, then any subsequent reduction in the Applicable
Rate shall not reduce the rate of interest on the Loans below the Maximum
Rate until the aggregate amount of interest accrued on the Loans equals the
aggregate amount of interest which would have accrued on the Loans if the
interest rate specified in clause (i) preceding had at all times been in
effect.
(b) Determinations of Margins. As used herein, the
term "Eurodollar Margin" shall mean, on any day, the rate per annum
(expressed in basis points) set forth in the column underneath the actual
Debt Rating (as defined below) on such day in the table below and opposite
the row representing the actual Facility Usage on such day:
<TABLE>
<CAPTION>
EURODOLLAR MARGIN TABLE
DEBT RATING
--------------------------------------------------------------------------------------------
GREATER THAN GREATER THAN BUT LESS THAN = LESS THAN
- - -
------------ -------------------------- ---- ---------
A- BBB A- BBB- BB+ S&P RATING
------------ -------------------------- ---- --------- ---------------
A3 Baa2 A3 Baa3 Ba1 MOODY'S RATING
------------ -------------------------- ---- --------- ---------------
<S> <C> <C> <C> <C> <C>
Facility Usage below 20.0 25.0 45.0 62.5
50%
- ----------------------------------------------------------------------------------------------------
Facility Usage at or 25.0 31.25 52.5 70.0
above 50%
- ----------------------------------------------------------------------------------------------------
</TABLE>
As used herein, the term "CD Margin" shall mean, on any day, the
rate per annum (expressed in basis points) set forth in the column underneath
the actual Debt Rating on such day in the table below and opposite the row
representing the actual Facility Usage on such day:
<TABLE>
<CAPTION>
CD MARGIN TABLE
DEBT RATING
--------------------------------------------------------------------------------------------
GREATER THAN GREATER THAN BUT LESS THAN = LESS THAN
- - -
------------ -------------------------- ---- ---------
A- BBB A- BBB- BB+ S&P RATING
------------ -------------------------- ---- --------- ---------------
A3 Baa2 A3 Baa3 Ba1 MOODY'S RATING
------------ -------------------------- ---- --------- ---------------
<S> <C> <C> <C> <C> <C>
Facility Usage below 32.50 37.50 57.50 75.0
50%
- ----------------------------------------------------------------------------------------------------
Facility Usage at or 37.50 43.75 65.0 82.50
above 50%
- ----------------------------------------------------------------------------------------------------
</TABLE>
Usage Adjustment. The Eurodollar Margin and CD Margin shall
automatically be adjusted in accordance with the tables set forth above (for
Interest Periods in existence or created at the time of such adjustment and
any Interest Period commencing thereafter until
CREDIT AGREEMENT, Page 4
<PAGE>
adjusted again in accordance with this Section 1.07) each day the Facility
Usage changes, such automatic adjustment to take effect on the date Loans are
made or repaid which cause the Facility Usage to change. As used herein, the
term "Facility Usage" means, on any day, the percentage obtained by (a)
dividing (i) the principal balance of the Loans on such day after giving
effect to any Loans made or to be made on such day by (ii) the Total
Commitment on such day and (b) multiplying the resulting quotient by 100.
Debt Rating Adjustment. As of the Effective Date, the Debt
Rating issued by S&P is BBB and the Debt Rating issued by Moody's is Baa2.
The Eurodollar Margin and CD Margin shall also automatically be adjusted
after the Effective Date in accordance with the tables set forth above (for
Interest Periods in existence or created at the time of such adjustment and
any Interest Period commencing thereafter until adjusted again in accordance
with this Section 1.07) each time the Debt Rating changes, such automatic
adjustment to take effect on the date a change in Debt Rating is publicly
announced. For purposes of this Agreement (including, without limitation,
Sections 1.07 and 2.01 and the tables set forth above), the following terms
shall have the following meanings:
"Debt Rating" means the credit rating assigned to the
Company's senior unsecured long-term debt issues by S&P or Moody's and in the
event S&P and Moody's assign different credit ratings to the Company's
senior unsecured long-term debt or if different issues of the Company's
senior unsecured long-term debt have different credit ratings ,the lowest of
any such credit ratings shall be the "Debt Rating" for purposes of this
Agreement.
"Moody's" means Moody's Investors Service, Inc. or its
successors.
"S&P" means Standard & Poor's Corporation or its successors.
(c) Payment. Interest shall accrue from and including the
date of any Loan to but excluding the date of any repayment thereof and shall
be payable (x) in respect of each Base Rate Loan, quarterly in arrears on
each Quarterly Payment Date, and (y) in respect of each Fixed Rate Loan, on
the last day of each Interest Period applicable to such Fixed Rate Loan and,
in the case of an Interest Period in excess of 3 months, on the date which is
the 3 month anniversary of the first day of such Interest Period, and (z) in
the case of all Loans, on any prepayment, conversion or continuation (on the
amount prepaid, converted or continued), at maturity (whether by acceleration
or otherwise) and, after such maturity, on demand.
(d) Advise of Rate. The Agent, upon determining the
Eurodollar Rate or the Fixed CD Rate for any Interest Period, shall promptly
notify the Company and the Banks thereof.
1.08 Interest Periods. At the time it gives any Notice of
Borrowing or Notice of Conversion/Continuation in respect of Fixed Rate
Loans (in the case of the initial Interest Period applicable thereto) or on
the second Business Day prior to the expiration of an Interest Period
applicable to such CD Rate Loans (in the case of subsequent Interest Periods)
or on the
CREDIT AGREEMENT, Page 5
<PAGE>
third Business Day prior to the expiration of an Interest Period applicable
to any such Eurodollar Loan (in the case of subsequent Interest Periods), the
Company shall have the right to elect by giving the Agent written notice (or
telephonic notice confirmed in writing) the interest period (each an
"Interest Period") applicable to each Fixed Rate Loan, which Interest Period
shall at the option of the Company, (x) in the case of CD Rate Loans, be
either a 30, 60, 90 or 180 day period, and (y) in the case of Eurodollar
Loans, be either a one, two, three or six month period, provided that: (i)
the initial Interest Period for any Fixed Rate Loan shall commence on the
date of such Borrowing (including the date of any conversion from a Borrowing
of another Type) and each Interest Period thereafter in respect of such
Borrowing shall commence on the day on which the next preceding Interest
Period expires; (ii) if any Interest Period would otherwise expire on a day
which is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day, provided, however, that if any Interest Period in
respect of a Eurodollar Loan would otherwise expire on a day which is not a
Business Day but is a day of the month after which no further Business Day
occurs in such month, such Interest Period shall expire on the next preceding
Business Day; (iii) no Interest period shall extend beyond the Maturity Date;
and (iv) no more than 5 Interest Periods shall be in effect at the same time.
1.09 Increased Costs, Illegality, etc. (a) In the event
that the Agent (in the case of following clause (i)) or any Bank (in the case
of following clauses (ii) and (iii)) shall have determined (which
determination shall, absent manifest error, be final and conclusive and
binding upon all parties hereto but, with respect to the following clause
(i), shall be made only after consultation with the Company):
(i) on any date for determining the Eurodollar Rate
or the Fixed CD Rate for any Interest Period applicable to any of its
Eurodollar Loans or CD Rate Loans, as the case may be, that by reason of any
changes arising after the date of this Agreement affecting the London
interbank market or the secondary certificate of deposit market generally, as
the case may be, adequate and fair means do not exist for ascertaining the
applicable interest rate on the basis provided for in the definition of
Eurodollar Rate or the Fixed CD Rate, as the case may be; or
(ii) at any time, that the relevant Eurodollar Rate
or the Fixed CD Rate, as the case may be, applicable to any of its Eurodollar
Loans or its CD Rate Loans, as the case may be, shall not represent the
effective pricing to such Bank for funding or maintaining the affected Fixed
Rate Loan because of (x) any Regulatory Change (such as for example but not
limited to a change in official reserve requirements, but, in all events,
including without limitation reserves required under Regulation D) and/or (y)
other circumstances affecting the London interbank market or the secondary
certificate of deposit market generally; or
(iii) at any time, that the making or continuance by
it of any Fixed Rate Loan has become unlawful by compliance by such Bank in
good faith with any law, governmental rule, regulation, guideline or order,
or has become impracticable as a result of a contingency occurring after the
date of this Agreement which materially and
CREDIT AGREEMENT, Page 6
<PAGE>
adversely affects the London interbank market or the secondary certificate of
deposit market generally; then, in any such event specified in clause (i)
above, the Agent shall, promptly after making such determination, give notice
(by telephone confirmed in writing) to the Company and to each of the Banks
of such determination, and in any such event specified in clause (ii) or
(iii) above, such Bank shall, promptly after making such determination, give
notice (by telephone confirmed in writing) to the Agent and the Company of
such determination (which notice the Agent shall promptly transmit to each of
the Banks). Thereafter (x) in the case of clauses (i) and (ii), the Company
shall pay to such Bank (or, in the case of clause (i) above, each Bank) upon
written demand therefor, such additional amounts [in the form of an increased
rate of, or a different method of calculating, interest or otherwise as such
Bank (or, in the case of clause (i) above, each Bank) in its reasonable
discretion shall determine] which, as a result of the foregoing, shall be
required to cause such Bank (or, in the case of clause (i) above, each Bank)
to receive interest with respect to its affected Fixed Rate Loan at a rate
per annum which shall be the applicable Differential in excess of the
effective pricing to such Bank (or in the case of clause (i) above, each
Bank) to make or maintain such fixed Rate Loan and (y) in the case of clause
(iii), the Company shall take one of the actions specified in Section 1.09(b)
as promptly as posible and, in any event, within the time period required by
law, Agent or any Bank demanding additional amount under this Section 1.09(a)
must, with such demand, furnish to the Company a written notice as to such
additional amounts showing the basis for and the calculation thereof, which
shall, absent manifest error, be final and conclusive and binding upon all of
the parties hereto.
(b) At any time that any of its Fixed Rate Loans are
affected by the circumstances described in Section 1.09(a), the Company may
(and in the case of a Fixed Rate Loan affected pursuant to Section
1.09(a)(iii) shall) either (x) (i) cancel said Borrowing or (ii) require the
affected Bank or Banks to make the requested Borrowing as, or maintain its
outstanding Borrowing being converted as, a Borrowing or Borrowings of a
different Type with (other than in the case of a Borrowing being converted
into a Base Rate Loan) an Interest Period ending on the date on which the
Interest Period applicable to the affected Fixed Rate Loan expires, in either
case by giving the Agent telephonic (confirmed in writing) notice thereof on
the same date that the Company was notified by the Agent pursuant to Section
1.09(a), or (y) if the affected Fixed Rate Loan or Fixed Rate Loans are then
outstanding, upon at least 1 Business Day's telephonic notice (confirmed in
writing) to the Agent, require the affected Bank or Banks to convert each
Fixed Rate Loan so affected into a Borrowing or Borrowings of a different
type with (other than in the case of Borrowings being converted into a Base
Rate Loan) an Interest Period ending on the date on which the Interest Period
applicable to the affected Fixed Rate Loan expires.
(c) If any Bank determines that any Regulatory Change
concerning capital adequacy will have the effect of increasing the amount of
capital required or expected to be maintained by such Bank based on the
existence of such Bank's Commitment hereunder or its obligations hereunder,
it will notify the Agent and the Agent shall promptly notify the Company.
This determination will be made on a Bank by Bank basis. The Company will pay
to the Bank
CREDIT AGREEMENT, Page 7
<PAGE>
on demand such additional amounts as are necessary to compensate for the
increased cost to such Bank as a result of the event described in the
first sentence of this Section 1.09(c). In determining such amount,
the Bank will act reasonably and in good faith and will use averaging
and attribution methods which are reasonable, and the Bank's
determination of compensation shall be conclusive if made in accordance
with this provision. Each Bank, upon determining that any increased
costs will be payable pursuant to this Section 1.09(c), will give prompt
written notice thereof to the Company, which notice shall show the basis
for and calculation of such increased costs.
1.10 Compensation. The Company shall compensate each Bank,
upon its written request submitted through the Agent (which request shall set
forth the basis for requesting such amounts), for all reasonable losses,
expenses and liabilities (including, without limitation, any interest paid by
such Bank to lenders of funds borrowed by it to make or carry its Fixed Rate
Loans to the extent not recovered by such Bank in connection with the
re-employment of such funds), which such Bank may sustain: (i) if for any
reason (other than a default by such Bank) a Fixed Rate Loan is not borrowed,
continued or converted on a date specified therefor in a Notice of Borrowing
or Notice of Conversion/Continuation (whether or not withdrawn), (ii) if any
prepayment, repayment, conversion or continuation of any of its Fixed Rate
Loans occurs on a date which is not the last day of an Interest Period
applicable thereto, or (iii) as a consequence of (x) any default by the
Company in repaying its Loans or any other amounts owing hereunder when
required by the terms of this Agreement or (y) an election made or action
taken by the Company pursuant to Section 1.09(b).
1.11 Reduction of Costs. Prior to requesting payments from
the Company under Sections 1.09, 1. 10 or 3.03, each Bank shall take such
reasonable actions, in addition to those described in Section 11.12, as it
can which are within its control and which in the sole opinion of such Bank,
will not violate any law, rule or regulation or be in any way disadvantageous
to such Bank, to avoid the need for, or reduce the amount of, such payments.
1.12 Replacement of Bank. If at any time any of the provisions
of Sections 1.09, 1.10 or 3.03 shall become applicable to and utilized by
any Bank so as to cause the Company to pay any material amount to such Bank
under any such Sections (other than compensation as a result of reserve
requirements actually imposed on such Bank under Regulation D), the Company
shall have the right to replace such Bank with another Person; provided that
(i) such new Person shall be acceptable to the Agent and such new Person
shall execute an assignment and assumption agreement substantially in the
form of Exhibit C (appropriately completed), (ii) neither the Agent nor
any Bank shall have any obligation to the Company to find such other Person,
and (iii) in order for the Company to be entitled to replace a Bank, such
replacement must take place no later than 180 days after the Bank demanded
payment under one of the Sections described above in this Section 1.12. Each
Bank agrees to its replacement at the option of the Company pursuant to this
Section 1.12; provided, that the successor Bank shall purchase (pursuant to
an assignment and assumption in substantially the form of Exhibit C hereto,
appropriately completed) such Bank's interest in the Obligations of the
Company to such Bank for cash in an aggregate amount equal to the aggregate
unpaid principal thereof, all unpaid interest accrued thereon, all unpaid
Facility Fee accrued for the
CREDIT AGREEMENT, Page 8
<PAGE>
account of such Bank, any breakage costs incurred by the selling Bank because
of the prepayment of any Fixed Rate Loans, all other fees (if any)
applicable thereto and all other amounts (including any amounts under
Sections 1.09, 1.10 or 3.03 then owing to such Bank hereunder or under any
other Credit Document).
Section 2. Fees: Commitments.
2.01 Fees. (a) The Company agrees to pay the Agent a facility
fee (the "Facility Fee") for the account of each Bank for the period from and
including the Effective Date to and including the date upon which the Total
Commitment shall have been terminated, computed on the Commitment of such
Bank at a rate for each day equal to the rate (expressed in basis points) set
forth in the column underneath the then existing Debt Rating in the table
below:
<TABLE>
<CAPTION>
DEBT RATING
--------------------------------------------------------------------------------------------
GREATER THAN GREATER THAN BUT LESS THAN = LESS THAN
- - -
------------ -------------------------- ---- ---------
A- BBB A- BBB- BB+ S&P RATING
------------ -------------------------- ---- --------- ---------------
A3 Baa2 A3 Baa3 Ba1 MOODY'S RATING
------------ -------------------------- ---- --------- ---------------
<S> <C> <C> <C> <C> <C>
Facility Fee 15.0 18.75 22.50 37.50
- ----------------------------------------------------------------------------------------------------
</TABLE>
The rate utilized to calculate the Facility Fee as of the
Effective Date is 18.75. The rate utilized to calculate the Facility Fee
shall automatically be adjusted after the Effective Date in accordance with
the table in this Section 2.01 each time the Debt Rating changes, each such
automatic adjustment to take effect on the date the corresponding change in
Debt Rating is publicly announced. Accrued Facility Fee shall be due and
payable in arrears on each Quarterly Payment Date after the Effective Date
and on the Maturity Date or upon such earlier date as the Total Commitment is
terminated.
(b) The Company agrees to pay to the Agent, for its own
account, such fees as have been agreed to in writing from time to time by the
Company and the Agent.
2.02 Voluntary Reduction of Commitments. Upon at least 5 days
prior telephonic notice confirmed in writing to the Agent (which notice the
Agent shall promptly transmit to each of the Banks), the Company shall have
the right, without premium or penalty, to reduce or terminate the unutilized
portion of the Total Commitment, in part or in whole, provided that any such
reduction of the Total Commitment shall apply pro rata (calculated based on
the Banks' respective Commitments) to the Commitment of each of the Banks,
any partial reduction pursuant to this Section 2.02 shall be in the amount of
at least $10,000,000 (and if greater, in $1,000,000 increments) and the
Company shall simultaneously prepay the amount by which the unpaid principal
amount of the Loans exceed the Total Commitment (after giving effect to such
notice) plus accrued and unpaid interest on the principal amount so prepaid.
The Total Commitment may not be reinstated after it has been terminated or
reduced.
CREDIT AGREEMENT, Page 9
<PAGE>
Section 3. Payments.
3.01 Voluntary Prepayments. The Company shall have the right
to prepay the Loans in whole or in part without premium or penalty at any
time and from time to time on the following terms and conditions: (i) each
partial prepayment shall be in an aggregate principal amount of at least
$1,000,000 (and if greater, an integral multiple thereof), provided that no
partial prepayment of a Fixed Rate Loan shall reduce the principal amount of
such Fixed Rate Loan to an amount less than $5,000,000; (ii) prepayments of
Fixed Rate Loans made pursuant to this Section 3.01 may only be made on the
last day of an Interest Period applicable thereto unless such prepayment is
accompanied by all compensation due the Banks under Section 1.1O hereof; and
(iii) each prepayment in respect of any Loans made pursuant to a Borrowing
shall be applied pro rata among such Loans (calculated based on the principal
amount of the Loans in question).
3.02 Method and Place of Payment. Except as otherwise
specifically provided herein, all payments under this Agreement shall be
made to the Agent for the account of the Bank or Banks entitled thereto not
later than Noon (Houston, Texas time) on the date when due and shall be made
in lawful money of the United States of America in immediately available
funds at the Payment Office of the Agent. Whenever any payment to be
made hereunder or under any Note shall be stated to be due on a day which
is not a Business Day, the due date thereof shall be extended to the next
succeeding Business Day and, with respect to payments of principal, interest
shall be payable at the applicable rate during such extension.
3.03 Net Payments. All payments made by the Company hereunder
will be made without setoff, counterclaim or other defense (except
repayment). All payments made by the Company with respect to Fixed Rate Loans
will be made free and clear of and without deduction or withholding for, any
present or future taxes, levies, imposts, duties, fees, assessments or other
charges of whatever nature, now or hereafter imposed by any jurisdiction or
by any department, agency, state or other political subdivision or taxing
authority thereof or therein [but excluding, except as hereafter provided,
any tax imposed on or measured by the net income of a Bank (or tax imposed in
lieu of a tax on net income) pursuant to the laws of the jurisdiction in which
the principal office or lending office of such Bank is located or under the
laws of any political subdivision or taxing authority of any such
jurisdiction in which the principal office or lending office of such Bank is
located] and all interest, penalties, or similar liabilities with respect
thereto (collectively, "Taxes"). The Company shall also reimburse each Bank,
upon the written request of such bank, for such taxes imposed on or measured
by the net income of such Bank (or tax imposed in lieu of a tax on net
income) pursuant to the laws of the jurisdiction in which the principal
office or lending office of such Bank is located or under the laws of any
political subdivision or taxing authority of any such jurisdiction in which
the principal office or landing office of such Bank is located as such Bank
shall determine are payable by such Bank in respect of amounts paid to or on
behalf of such Bank pursuant to the preceding sentence. If any Taxes are so
levied or imposed, the Company agrees to pay the full amount of such Taxes,
and such additional amounts as may be necessary to that every net payment of
all amounts due hereunder, after withholding or deduction for or on account
of any Taxes, will not be less than the amount provided for herein. The
Company will furnish to the
CREDIT AGREEMENT, Page 10
<PAGE>
Agent within 45 days after the date the payment of any Taxes is due pursuant
to applicable law certified copies of tax receipts evidencing such payment by
the Company. The Company will indemnify and hold harmless each Bank, and
reimburse each Bank upon its written request, for the amount of any Taxes so
levied or imposed and paid by such Bank. Notwithstanding the foregoing, the
Company and the Agent shall be entitled, to the extent each is required to do
so by law, to deduct or withhold income or other similar taxes imposed by the
United States of America from interest, fees or other amounts payable
hereunder for the account of any Bank other than a Bank (i) who is a U.S.
person for Federal income tax purposes or (ii) who has the Prescribed Forms
on file with the Company and the Agent for the applicable year to the extent
deduction or withholding of such taxes is not required as a result of the
filing of such Prescribed Forms, provided that if the Company shall so deduct
or withhold any such taxes, it shall provide a statement to the Agent and
such Bank, setting forth the amount of such taxes so deducted or withheld,
the applicable rate and any other information or documentation which such
Bank may reasonably request for assisting such Bank to obtain any allowable
credits or deductions for the taxes so deducted or withheld in the
jurisdiction or jurisdictions in which such Bank is subject to tax. Each Bank
agrees that upon the request of the Company, such Bank wil provide its
taxpayer identification number to the Company. If any Taxes are levied or
imposed as described in this Section 3.03 with respect to any Bank, the
affected Bank will give written notice thereof to the Company, which notice
shall show the basis for calculation of such Taxes, although the failure to
give any such notice shall not release or diminish any of the Company's
obligations to pay Taxes pursuant to this Section.
Section 4. Conditions Precedent.
The obligation of each Bank to make Loans under Section 1.01
is subject, at the time of the making of each such Loan (except as
hereinafter indicated), to the satisfaction of the following conditions:
4.01 Notes. On the Initial Borrowing Date, there shall have
been delivered to the Agent for the account of each of the Banks, the
appropriate Note, executed by the Company in the amount, maturity and as
otherwise provided herein.
4.02 No Default, Representations and Warranties. At the time
of the making of each Loan and also after giving effect thereto (i) there
shall exist no Default or Event of Default, and (ii) all representations and
warranties contained herein shall be true and correct in all material
respects with the same effect as though such representations and warranties
had been made on and as of the date of the making of such Loan, except for
any representation of warranty limited by its terms to the Effective Date or
another specific date and taking into account any changes thereto resulting
from transactions otherwise permitted hereunder.
4.03 Officer's Certificate. On the Initial Borrowing Date, the
Agent shall have received a certificate dated the Initial Borrowing Date
signed by the chief financial officer of the Company stating that the
conditions set forth in Section 4.02 exist as of such date.
CREDIT AGREEMENT, Page 11
<PAGE>
4.04 Opinions of Counsel, On the Effective Date, the Agent
shall have received an opinion, addressed to each of the Banks and dated
the Effective Date, from Thompson & Knight, P.C. counsel to the Company,
covering the matters set forth in Exhibit B hereto.
4.05 Corporate Documentation and Proceedings, On the
Initial Borrowing Date, all corporate and legal proceedings and all
instruments and agreements in connection with the transactions contemplated
by this Agreement and the other Credit Documents shall be satisfactory in
form and substance to the Banks, and the Agent shall have received all
information and copies of all documents and papers, including records of
corporate proceedings and governmental approvals, if any, which any Bank
reasonably may have requested in connection therewith, such documents and
papers where appropriate to be certified by proper corporate or governmental
authorities.
4.06 Prior Credit Facility. On the Initial Borrowing Date,
the Company shall have provided evidence to Agent that, simultaneously with
the first Loan hereunder, all obligations owing in connection with its Credit
Agreement dated March 2, 1988 among the Company, Bankers Trust Company and
the banking institutions listed in Annex 1 thereto will be paid and satisfied
in full and such Credit Agreement will be terminated.
The acceptance of the proceeds of each Loan shall constitute a
representation and warranty by the Company to each of the Banks that the
conditions specified in Section 4.02 exist as of that time. All of the Notes,
certificates, legal opinions and other documents and papers referred to in
this Section 4, unless otherwise specified, shall be delivered to the Agent
for the account of each of the Banks and, except for the Notes, in sufficient
counterparts for each of the Banks and shall be satisfactory in form and
substance to the Banks.
Section 5. Representations, Warranties and Agreements.
In order to induce the Banks to enter into this Agreement and
to make the Loans, the Company makes the following representations,
warranties and agreements:
5.01 Corporate Status. Each of the Company and each of its
Significant Subsidiaries (i) is a duly organized and validly existing
corporation in good standing under the laws of the jurisdiction of its
incorporation or organization or is a duly organized and validly existing
partnership, (ii) has the power and authority to own its property and assets
and to transact the business in which it is engaged, and (iii) in the case of
each such Person which is a corporation, is duly qualified and is authorized
to do business and is in good standing as of the Effective Date as a foreign
corporation in each jurisdiction where the ownership, lease or operation of
property or the conduct of its business requires such qualification except
where the failure to be so qualified would not have a Material Adverse Effect.
5.02 Corporate Power and Authority. The Company has the
corporate power to execute, deliver and carry out the terms and provisions of
each of the Credit Documents and has taken all necessary corporate action to
authorize the execution, delivery and performance by it of each of the Credit
Documents. The Company has duly executed and delivered each Credit
CREDIT AGREEMENT, Page 12
<PAGE>
Document and each Credit Document constitutes the Company's legal, valid and
binding obligation enforceable against the Company in accordance with its
terms except to the extent that enforcement may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws affecting
creditors' rights generally and by equity principles (regardless of whether
enforcement is sought in equity or at law).
5.03 No Violation. Neither the execution, delivery or
performance by the Company of the Credit Documents, nor compliance by it with
the terms and provisions thereof, (i) will contravene any applicable
provision of any law, statute, rule, regulation, order, writ, injunction or
decree of any court or governmental instrumentality, (ii) will conflict or be
inconsistent with or result in any breach of, any of the terms, covenants,
conditions or provisions of, or constitute a default under, or result in the
creation or imposition of (or the obligation to create or impose) any Lien
upon any of the property or assets of the Company or any of its Subsidiaries
pursuant to, the terms of any indenture, mortgage, deed of trust, agreement
or other instrument to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries or any of the
property or assets of the Company or any of its Subsidiaries is bound or to
which the Company or any of its Subsidiaries may be subject which conflict,
inconsistency, breach, or default is reasonably likely to have a Material
Adverse Effect, or (iii) will violate any provision of the Certificate of
Incorporation or By-laws of the Company.
5.04 Litigation. There are no actions, suits or proceedings
brought by the Company or any of its Affiliates which are pending or, to the
best of the knowledge of the Company, threatened with respect to any Credit
Document and as of the Effective Date there are no actions, suits or
proceedings pending or, to the best of the knowledge of the Company,
threatened that are reasonably likely to have a Material Adverse Effect.
5.05 Financial Statements; Financial Condition; etc. Prior
to the Effective Date, the Company delivered to each Bank historical
consolidated financial statements of the Company and its Subsidiaries as at
December 31, 1993, reported on by Arthur Andersen & Co., which financial
statements fairly present the financial position of the entities covered
thereby on the dates and for the periods covered thereby. From December 31,
1993 to the Effective Date, no event has occurred that is reasonably likely
to have a Material Adverse Effect.
5.06 Use of Proceeds; Margin Regulations. Proceeds of the
Loans will be used by the Company for general corporate purposes; provided,
that no part of the proceeds of any Loan will be used by the Company to
purchase or carry any Margin Stock or to extend credit to others for the
purpose of purchasing or carrying any Margin Stock in violation of Regulation
U or X of the Board of Governors of the Federal Reserve Board. Not more than
25% of the value of the assets of the Company or of the Company and its
Subsidiaries subject to the restrictions contained in Sections 7.01 and 7.02
constitute Margin Stock and, at the time of each Loan, not more than 25% of
the value of the assets of the Company or of the Company and its Subsidiaries
subject to the restrictions contained in Sections 7.01 and 7.02 will
constitute Margin Stock.
CREDIT AGREEMENT, Page 13
<PAGE>
5.07 Governmental Approvals. No order, consent, approval,
license, authorization, or validation of, or filing, recording or
registration with (except as have been obtained or made), or exemption by,
any governmental or public body or authority, or any subdivision thereof, is
required on the part of the Company or any of its Subsidiaries to authorize,
or is required on the part of the Company or any of its Subsidiaries in
connection with, (i) the execution, delivery and performance (other than
orders, consents, approvals, licenses, authorizations, validations, filings,
recordings, registrations or exemptions required in order to comply with the
provisions of Sections 6 and 7) of any Credit Document or (ii) the legality,
validity, binding effect or enforceability of any Credit Document.
5.08 Tax Returns and Payments. Each of the Company and
each of its Significant Subsidiaries has filed all tax returns required to
be filed by it and has paid all taxes and assessments payable by it which
have become due and payable, other than those not yet delinquent and except
for those contested in good faith. Each of the Company and each of its
Significant Subsidiaries has paid, or has provided adequate reserves (in the
good faith judgment of the management of the Company or such Significant
Subsidiary) for the payment of, all federal, state and other income taxes
applicable for all prior fiscal years and for the current fiscal year down to
the date hereof.
5.09 Compliance with ERISA, All Plans are in substantial
compliance with ERISA and the Code, and as of the Effective Date no Plan is
a multiemployer plan as defined in Section 3(37) of ERISA or an "employee
stock ownership plan" as defined in Section 4975(e)(7) of the Code. As of
the Effective Date and to the best knowledge of the Company, there are no
facts and circumstances which have occurred or may reasonably be expected to
occur (a) with respect to any Plans which would cause the amount of the
"accumulated benefit obligation" (as that term is defined in the Statement of
Financial Accounting Standards No. 87) in excess of the fair market value of
Plan assets, or (b) with respect to plans providing medical benefits, which
would cause the "accumulated postretirement benefit obligation" (as defined
in the Statement of Financial Accounting Standards No. 106) in excess of the
fair market value of the related assets (if any), to increase by an amount
which will have a Material Adverse Effect. As of the Effective Date neither
the Company nor any of its Subsidiaries have provided or agreed to provide,
any material medical benefits to any former employees or dependent of such
employees for periods subsequent to the severance of such employees'
employment other than as specifically required under either Section 4980B of
the Code or Section 601 of ERISA or except to the extent that the full amount
of the accumulated postretirement benefit obligations attributable thereto in
excess of the fair market value of any assets set aside to fund such
obligations has been set forth on its financial statements.
5.10 Investment Company Act. Neither the Company nor any
of its Subsidiaries is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
5.11 Public Utility Holding Company Act. Neither the Company
nor any of its Subsidiaries is a "holding company", or a "subsidiary company"
of a "holding company",
CREDIT AGREEMENT, Page 14
<PAGE>
or an "affiliate" of a "holding company" or of a "subsidiary company" of a
"holding company" within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
5.12 True and Complete Disclosure. All factual information
(taken as a whole) heretofore or contemporaneously furnished by or on behalf
of the Company in writing to any Agent or Bank, for purposes of or in
connection with this Agreement or any transaction contemplated hereby is,
and all other such factual information (taken as a whole) hereafter furnished
by or on behalf of the Company in writing to any Bank will be, true and
accurate in all material respects on the date as of which such information is
dated or certified and not incomplete by omitting to state any material fact
necessary to make such information (taken as a whole) not misleading at such
time in light of the circumstances under which such information was provided.
5.13 Subsidiaries. Annex II hereto lists each Subsidiary of
the Company and accurately sets forth the ownership thereof as of the
Effective Date.
5.14 Restrictions on Dividends or Redemptions. No
Significant Subsidiary of the Company is a party to or bound by any
agreement, instrument, order of any court or governmental authority, law,
rule or regulation, or any note, debenture, bond or other security, under the
terms of or pursuant to which (i) such Subsidiary's right to perform any of
the provisions of its Certificate of Incorporation as in effect on the date
hereof, relating to dividends, redemptions and other payments and
distributions on its capital stock is restricted such that such Subsidiary is
restricted in any way from paying Dividends to, in the case of the Company's
direct Subsidiaries, the Company and, in the case of the Company's indirect
Subsidiaries, such Subsidiary's parent corporation, or (ii) such Subsidiary's
right to make loans or advances to the Company or, in the case of the
Company's indirect Subsidiaries, to such Subsidiary's parent corporation, is
restricted in any way; except in any such case to the extent that any such
right may be limited by the restrictions and financial covenants set forth in
this Agreement or the other Credit Documents.
5.15 Compliance with Statutes, etc. As of the Effective
Date, the Company and its Subsidiaries are in compliance with all applicable
statutes, regulations and orders of, and all applicable restrictions imposed
by, all governmental bodies, domestic or foreign, in respect of the conduct
of their businesses and the ownership of their properties (including
applicable statutes, regulations, orders and restrictions relating to
environmental standards and controls), except such noncompliances as would
not reasonably be likely to have a Material Adverse Effect.
Section 6. Affirmative Covenants.
The Company covenants and agrees that on and after the
Effective Date and until the Total Commitment has terminated and the Loans,
together with interest, Fees and all other Obligations incurred hereunder,
are paid in full:
CREDIT AGREEMENT, Page 15
<PAGE>
6.01 Information Covenants. The Company will furnish to
each Bank:
(a) Quarterly Financial Statements of the Company. Within 45
days after the close of each of the first 3 quarterly accounting periods in
each fiscal year of the Company, the consolidated balance sheet of the
Company and its consolidated Subsidiaries, as at the end of such quarterly
period and the related consolidated statements of operation and cash flows
(or the equivalent thereof under generally accepted accounting principles as
in effect at such time) for such quarterly period and for the elapsed portion
of the fiscal year ended with the last day of such quarterly period, and in
each case setting forth comparative figures for the related periods in the
prior fiscal year, all of which (i) shall be certified by the chief financial
officer of the Company, subject to year-end audit adjustments and (ii) shall
be substantially identical in scope and detail to the financial statements
delivered pursuant to Section 5.05 or otherwise comply with the requirements
of the Securities and Exchange Commission for quarterly reporting by publicly
held companies.
(b) Annual Financial Statements of the Company. Within 90
days after the close of each fiscal year of the Company, the consolidated
balance sheet of the Company and its consolidated Subsidiaries, as at the end
of such fiscal year, and the related consolidated statements of operations,
cash flows and retained earnings (or the equivalent thereof under generally
accepted accounting principles as in effect at such time) for such fiscal
year, in each case setting forth comparative figures for the preceding fiscal
year and certified without exception or qualifications (other than
exceptions or qualifications relating to changes in elective accounting
practices which are identified in the accountant's report accompanying such
financial statement and with which the accountants preparing the same concur)
by Arthur Andersen & Co. or other independent certified public accountants of
recognized national standing.
(c) Compliance Certificates. At the time of the delivery of
the financial statements provided for in Section 6.01(a) and (b), a
certificate in form and substance acceptable to the Agent executed by the
chief financial officer of the Company (i) stating that such financial
statements fairly present, in all material respects, the financial position
of the Company and its Subsidiaries as of the dates and for the periods
indicated; (ii) certifying to the effect that, to the best of such officer's
knowledge, no Default or Event of Default exists or, if any Default or Event
of Default does exist, specifying the nature and extent thereof; and (iii)
setting forth the calculations required to establish whether the Company was
in compliance with the provisions of Section 7.03, 7.04 and 7.05 at the end
of such fiscal year or quarter, as the case may be, and which of its
Subsidiaries are Significant Subsidiaries.
(d) Notice of Default: Litigation: and Indebtedness owed to
Subsidiaries. Promptly, and in any event within 3 Business Days after an
officer of the Company obtains actual knowledge thereof, notice (w) of the
occurrence of any event which constitutes a Default or Event of Default; (x)
of any litigation or governmental proceeding pending (i) against the Company
or any of its Subsidiaries in which the amount claimed is $10,000,000 or more
or (ii) with respect to any Credit Document; (y) of any other event which is
reasonably likely to have a Material Adverse Effect; and (z) when the
Indebtedness owed by the Company to its Subsidiaries exceeds $15,000,000 in
the aggregate.
CREDIT AGREEMENT, Page 16
<PAGE>
(e) SEC Filings. Promptly, copies of all regular and
periodic financial information, proxy materials and other information and
reports, if any, which the Company or any of its Subsidiaries shall file with
the Securities and Exchange Commission or any governmental agencies
substituted therefor.
(f) Additional Financial Statements. Upon the reasonable
request of the Required Banks, at the time of the delivery of the financial
statements provided for in Section 6.01(a) or (b), any financial statements
which the Company has already prepared for its own purposes covering the
matters set forth in Section 6.01(a) or (b), as the case may be, with respect
to the Company or any Subsidiary of the Company on an unconsolidated basis.
(g) Other Information. From time to time such further
information or documents (financial or otherwise) as the Required Banks may
reasonably request.
6.02 Books, Records and Inspections. The Company will, and
will cause each of its Subsidiaries to, keep proper books of record and
account (true and correct in all material respects) in which entries in
conformity with generally accepted accounting principles and all requirements
of law shall be made of all dealings and transactions in relation to its
business and activities. The Company will, and will cause each of its
Subsidiaries to, permit officers and designated representatives of any Bank
to visit and inspect, under guidance of officers of the Company or such
Subsidiary, any of the properties of the Company or such Subsidiary, and to
examine the books of account of the Company or such Subsidiary and discuss
the affairs, finances and accounts of the Company or such Subsidiary with,
and be advised as to the same by, its and their officers, all at such
reasonable times and intervals and to such reasonable extent as such Bank may
desire.
6.03 Maintenance of Property; Insurance. The Company shall,
and shall cause each of its Significant Subsidiaries to, (i) keep all
property useful and necessary in its business in good working order and
condition, provided that nothing in this Section 6.03 shall require the
Company or any of its Subsidiaries to maintain or retain assets or property
which it deems to be inadequate, unproductive, surplus or otherwise not in
its best interest to maintain or retain; (ii) maintain with financially sound
and reputable insurance companies insurance on its property in at least such
amounts and against at least such risks as are usually insured against in the
same general area by similar companies engaged in the same or a similar
business; and (iii) furnish to each Bank, upon written request, full
information as to the insurance then in force.
6.04 Taxes. The Company will, and will cause each of
its Significant Subsidiaries to, pay all taxes before they become
delinquent, except as contested in good faith and by appropriate proceedings
if adequate reserves (in the good faith judgment of the management of the
Company) have been established with respect thereto.
6.05 Corporate Franchises. The Company will, and will cause
each of its Significant Subsidiaries to, do or cause to be done, all things
necessary to preserve and keep in full force and effect its existence and its
material rights and franchises; provided, however, that nothing in this
Section 6.05 shall prevent (a) any dissolution, merger or consolidation
permitted
CREDIT AGREEMENT, Page 17
<PAGE>
under Section 7.02, or (b) the withdrawal by the Company or any of its
Subsidiaries of its qualification as a foreign corporation in any
jurisdiction where such withdrawal would not reasonably be expected to have a
Material Adverse Effect.
6.06 Compliance with Statutes, etc. The Company will, and
will cause each of its Subsidiaries to, comply with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property (including applicable statutes,
regulations, orders and restrictions relating to environmental standards and
controls), except such non-compliances as would not reasonably be expected to
have a Material Adverse Effect.
6.07 ERISA. As soon as possible and, in any event, within 30
days after the Company or a Subsidiary of the Company or an ERISA Affiliate
knows or has reason to know of any of the following which is reasonably
likely to have a Material Adverse Effect or result in a Default or an Event
of Default:
(a) that a Reportable Event has occurred with respect
to a Plan,
(b) that an application is to be or has been made to the
Secretary of the Treasury for a waiver of the minimum funding standard or the
extension of any amortization period under Section 412 of the Code with
respect to a Plan,
(c) that a Plan has been or is likely to be terminated
by the Company, any Subsidiary of the Company, any ERISA Affiliate or the
PBGC,
(d) that any proceedings by the PBGC are likely to be or
have been instituted to terminate a Plan, or
(e) that the Company, or a Subsidiary of the Company or
an ERISA Affiliate will or may incur any liability to or on account of a
Plan under Sections 515, 4062, 4063, 4064, 4201 or 4204 of ERISA or Section
412 of the Code, the Company will deliver to the Agent (in sufficient copies
for each of the Banks) a certificate of a financial officer setting forth
details as to such occurrence and action, if any, which the Company or the
Subsidiary of the Company or the ERISA Affiliate is required or proposes to
take, together with any notices required or proposed to be filed with or by
the Company, the Subsidiary of the Company, the ERISA Affiliate, the PBGC,
the Internal Revenue Service, or the plan administrator with respect thereto.
6.08 Subordination of Indebtedness of Company to
Subsidiaries. At any time after the Indebtedness of the Company owed to its
Subsidiaries exceeds in the aggregate $15,000,000 and upon the request of the
Required Banks, the Company agrees to cause all such Indebtedness to be
evidenced by promissory notes and to be subordinated to the Obligations on
terms and conditions acceptable to the Required Banks.
CREDIT AGREEMENT, Page 18
<PAGE>
Section 7. Negative Covenants.
The Company covenants and agrees that on and after the
Effective Date and until the Total Commitment has terminated and the Loans,
together with interest, Fees and all other Obligations incurred hereunder,
are paid in full:
7.01 Liens. The Company shall not, and shall not permit any
of its Significant Subsidiaries to, create, incur, assume, or suffer to exist
any Lien upon or with respect to any of it or their property or assets of any
kind (real or personal, tangible or intangible), whether now owned or
hereafter acquired; provided, that the provisions of this Section 7.01 shall
not prevent the creation, incurrence, assumption or existence of:
(i) Liens for taxes not yet due or Liens for taxes
being contested in good faith and by appropriate proceedings, for which
adequate reserves (in the good faith judgment of the management of the
Company or such Subsidiary) have been established;
(ii) Liens in respect of property or assets of the
Company or any of its Significant Subsidiaries which were incurred in the
ordinary course of business and were either imposed by law or do not secure
Indebtedness, such as landlord's, carriers', warehousemen's and mechanics'
liens and other similar liens arising in the ordinary course of business, and
(x) which do not in the aggregate materially detract from the value of such
property or assets or materially impair the use thereof in the operation of
the business of the Company or any of its Significant Subsidiaries or (y)
which are being contested in good faith by appropriate proceedings, which
proceedings have the effect of preventing the forfeiture or sale of the
property or assets subject to such Lien;
(iii) Liens arising under operating agreements,
pooling orders, unitization agreements or other similar agreements or orders
customary in the oil and gas industry to the extent that such liens secure
obligations not yet due or which are being contested in good faith and by
appropriate proceedings, for which adequate reserves (in the good faith
judgment of the management of the Company or such Subsidiary) have been
established;
(iv) Liens affecting the Producing Properties which
individually or in the aggregate are not such as to interfere materially with
the operation, value or use of the property affected thereby, could not
prevent the Company or the Subsidiary of the Company holding the interest in
such property from receiving the proceeds of production from such property,
do not reduce the Net Revenue Interest of such property to less than the Net
Revenue Interest as exists with respect to such property on the Effective
Date or, if an interest in such property is acquired after the Effective
Date, on the date of such acquisition, and do not obligate the Company or the
Subsidiary of the Company holding the interest in such property to bear costs
and expenses relating to the maintenance, development, and operation of any
such property in an amount greater than the Working Interest as exists with
respect to such property on the Effective Date or, if an interest in such
property is acquired after the Effective Date, on the date of such
acquisition;
CREDIT AGREEMENT, Page 19
<PAGE>
(v) Liens arising by operation of law in connection
with a judgment against the Company or any of its Subsidiaries to the extent
no Event of Default arise therefrom under Section 8.07; and
(vi) Liens in addition to those permitted above which
do not encumber or attach to any equity interest in a Significant Subsidiary
so long as at the time each such Lien attaches, Restricted Indebtedness does
not exceed the Restricted Indebtedness Basket.
7.02 Consolidation, Merger, Assets, etc. The Company shall
not, and shall not permit any of its Subsidiaries to enter into or
participate in any transaction (whether a liquidation, dissolution, merger,
consolidation, conveyance, sale, lease, or other disposition) which has the
effect of transferring all or substantially all of the assets of the Company
and its Subsidiaries to Persons other than the Company and its Subsidiaries.
In addition, the Company will not merge with or consolidate into any Person
unless no Default or Event of Default then exists or would result therefrom
and either (i) the surviving entity is the Company or (ii) the surviving
entity, if not the Company, is approved by the Required Banks and expressly
assumes the Obligations.
7.03 Indebtedness. The Company will not permit any of its
Significant Subsidiaries to contract, create, incur or assume any
Indebtedness, except (i) Indebtedness of a Significant Subsidiary owed to the
Company or one of the Company's other Subsidiaries or (ii) other Indebtedness
if at the time of incurrence thereof, Restricted Indebtedness does not exceed
the Restricted Indebtedness Basket.
7.04 Consolidated Tangible Net Worth. The Company shall not
permit Consolidated Tangible Net Worth to be less than $350,000,000.
7.05 Consolidated Total Senior Indebtedness to Consolidated
Capitalization Ratio. The Company shall not permit the ratio of Consolidated
Total Senior Indebtedness to Consolidated Capitalization at any time to
exceed 50%.
7.06 Business. The Company shall not, and shall not permit
any of its Subsidiaries to, enter into any business which differs in any
material respect from the business in which it is engaged on the Effective
Date, any natural extensions thereof or any business reasonably related
thereto.
7.07 Restrictions on Dividends and Advances. The Company will
not permit any Subsidiary to enter into or become bound by any agreement,
instrument, note, debenture, bond or other security of the type described in
Section 5.14.
7.08 ERISA. Neither the Company, a Subsidiary of the Company,
nor an ERISA Affiliate shall amend a Plan, if such amendment would have the
effect of causing the accumulated benefit obligation (as interpreted in
accordance with Section 5.09) of the amended Plan to materially exceed (or
exceed by a materially greater amount) the fair market value of
CREDIT AGREEMENT, Page 20
<PAGE>
the assets of the Plan, or (except in the ordinary course of business in
connection with an acquisition of an unrelated company) adopt a Plan after
the Effective Date where the pension plan which is proposed to be adopted and
become a Plan has an accumulated benefit obligation (as interpreted in
accordance with Section 5.09) materially in excess of the fair market value
of its assets on the proposed date of adoption or provide material medical
benefits to any former employees or dependents of such employees for periods
subsequent to the severance of such employees' employment other than as
specifically required under either Section 4980B of the Code or Section 601
of ERISA or unless the full amount of the accumulated postretirement benefit
obligation (as interpreted in accordance with Section 5.09) attributable
thereto which is in excess of the fair market value of any assets set aside
to fund that obligation has been set forth on its financial statement.
Section 8. Events of Default.
Upon the occurrence of any of the following specified events
(each an "Event of Default"):
8.01 Payments. The Company shall (i) default in the payment
when due of any principal of the Loans or (ii) default, and such default
shall continue unremedied for 3 or more Business Days, in the payment when
due of any interest on the Loans or any Fees or (iii) default, and such
default shall continue unremedied for 30 or more days, in the payment when
due of any amounts owing under the Credit Documents other than the amounts
described in clauses (i) and (ii) of this Section 8.01; or
8.02 Representations, etc. Any representation, warranty,
certification or statement made by the Company herein or in any other Credit
Document or in any certificate delivered pursuant hereto or thereto shall
prove to be untrue in any material respect on the date as of which made or
deemed made; or
8.03 Covenants. The Company shall (i) default in the due
performance or observance by it of any term, covenant or agreement contained
in Sections 6.01(d)(w) or 7, or (ii) default in the due performance or
observance by it of any term, covenant or agreement (other than those
referred to in Sections 8.01 and 8.02 and clause (i) of this Section 8.03)
contained in this Agreement and such default shall continue unremedied for a
period of 30 days after written notice to the Company by the Agent; or
8.04 Default Under Other Agreements. The Company or any of
its Significant Subsidiaries shall default in the payment when due (subject
to any applicable grace period), whether by acceleration or otherwise, of any
other Indebtedness of the Company or any of its Significant Subsidiaries or
the Company or any of its Significant Subsidiaries shall default in the
performance or observance of any obligation or condition with respect to any
such other Indebtedness or any other event shall occur if the effect of such
default or event (after giving effect to any applicable grace period) is to
accelerate the maturity of any such Indebtedness or any such Indebtedness
shall become due prior to its stated maturity as a result of an event of
default, provided that no Default or Event of Default shall exist under this
Section 8.04 unless
CREDIT AGREEMENT, Page 21
<PAGE>
the amount of payment defaults of the type described above and, without
duplication, the amount of Indebtedness which has become due and payable
prior to its stated maturity exceeds $5,000,000 in the aggregate for all
such Indebtedness; or
8.05 Bankruptcy, etc. The Company or any of its Significant
Subsidiaries shall commence a voluntary case concerning itself under Title II
of the United States Code entitled "Bankruptcy" as now or hereafter in
effect, or any successor thereto (the "Bankruptcy Code"); or an involuntary
case is commenced against the Company or any of its Significant Subsidiaries,
and the petition is not controverted within 10 days, or is not dismissed or
stayed within 60 days, after commencement of the case; or a custodian (as
defined in the Bankruptcy Code) is appointed for, or takes charge of, all or
substantially all of the property of the Company or any of its Significant
Subsidiaries, or the Company or any of its Significant Subsidiaries commences
any other proceeding under any reorganization, arrangement, adjustment of
debt, relief of debtors, dissolution, insolvency or liquidation or similar
law of any jurisdiction whether now or hereafter in effect relating to the
Company or any of its Significant Subsidiaries, or there is commenced against
the Company or any of its Significant Subsidiaries any such proceeding which
remains undismissed and not stayed for a period of 60 days, or the Company or
any of its Significant Subsidiaries is adjudicated insolvent or bankrupt, or
any order of relief or other order approving any such case or proceeding is
entered, or the Company or any of its Significant Subsidiaries suffers any
appointment of any custodian or the like for it or any substantial part of
its property to continue undischarged or unstayed for a period of 60 days, or
the Company or any of its Significant Subsidiaries makes a general assignment
for the benefit of creditors, or any corporate action is taken by the Company
or any of its Significant Subsidiaries for the purpose of effecting any of
the foregoing; or
8.06 ERISA. (a) A Plan shall fail to maintain the minimum
funding standard required by Section 412 of the Code for any plan year or a
waiver of such standard or the extension of any amortization period is sought
or granted under Section 412(d) or (e) of the Code, or (b) a Plan is or shall
have been terminated or shall be the subject of termination proceedings under
ERISA, or an event has occurred entitling the PBGC to terminate a Plan under
Section 4042(a) of ERISA or (c) the Company or a Subsidiary of the Company or
an ERISA Affiliate has incurred or is likely to incur a material liability to
or on account of a termination of or a withdrawal from a Plan under Sections
514, 4062, 4063, 4064, 4201 or 4204 of ERISA or Section 412 of the Code, and
(d) there shall result from any such event or events either (i) the provision
of security to induce the issuance of a waiver or extension of any funding
requirement under Section 412 of the Code or (ii) liability of the Company or
a Subsidiary of the Company to the PBGC or a Plan or a trustee appointed
under Sections 4042 of ERISA, in an amount in excess of $10,000,000 in the
aggregate for any or all such events.
8.07 Judgments. A final judgment or final judgments for the
payment of money are entered by a court or courts of competent jurisdiction
against the Company or any of its Significant Subsidiaries (except to the
extent such judgment is covered by insurance) and such judgment or judgments
remain unstayed or undischarged for a period of 30 days, and the aggregate
amount of all such judgments (net of insurance proceeds receivable) exceeds
$5,000,000; or
CREDIT AGREEMENT, Page 22
<PAGE>
8.08 Ownership of Samedan Oil Corporation. The Company shall
cease to own 100% of the capital stock of Samedan Oil Corporation (except as
a result of the merger of the Company and Samedan Oil Corporation or
dissolution of Samedan Oil Corporation into the Company);
8.09 Invalidity. This Agreement or any other Credit Document
shall cease to be enforceable as warranted by the Company in Section 5.02.
then, at any time during the continuance of any such event, the Agent may,
with the consent of the Required Banks, and shall, upon the written request
of the Required Banks, by written notice to the Company take any or all of
the following actions, without prejudice to the rights of the Agent, any Bank
or the holder of any Note to enforce its claims against the Company
(provided, that, if an Event of Default specified in Section 8.05 shall occur
with respect to the Company, the result which would occur upon the giving of
written notice by the Agent to the Company as specified in clauses (i) and
(ii) below, shall occur automatically without the giving of any such notice):
(i) declare the Total Commitment terminated, whereupon the Commitment of each
Bank shall forthwith terminate immediately and any Facility Fee then accrued
shall forthwith become due and payable without any other notice of any kind;
and (ii) declare the principal of and any accrued interest in respect of all
Loans, and all obligations owing hereunder, to be, whereupon the same shall
become, forthwith due and payable without presentment, demand, notice of
intent to accelerate, notice of acceleration, protest or other notice of any
kind, all of which are hereby waived by the Company. If an Event of Default
occurs but a Bank does not have actual knowledge that the Event of Default
has been cured or otherwise no longer continues, then neither the Bank in
question nor the Agent acting at that Bank's direction shall have any
liability whatsoever to the Company for any actions taken under or pursuant
to this Section 8 after such Event of Default has ceased to continue.
Section 9. Definitions.
As used herein, the following terms shall have the meanings
herein specified unless the context otherwise requires. Defined terms in this
Agreement shall include in the singular number the plural and in the plural
number the singular:
"Affiliate" shall mean, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under direct or
indirect common control with such Person. A Person shall be deemed to control
a corporation if such Person possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of such
corporation, whether through the ownership of voting securities, by contract
or otherwise.
"Agent" shall have the meaning provided in the first paragraph
of this Agreement.
"Agreement" shall mean this Credit Agreement as the same may
hereafter be supplemented, amended or otherwise modified.
"Applicable Rate" shall have the meaning provided in
Section 1.07(a).
CREDIT AGREEMENT, Page 23
<PAGE>
"Assessment Rate" shall mean for any day, the annual
assessment rate in effect on such day which is payable by a member of the
Bank Insurance Fund classified as well capitalized and within supervisory
subgroup "B" (or a comparable successor assessment risk classification)
within the meaning of 12 C.F.R. 327.3(d) (or any successor provision) to the
Federal Deposit Insurance Corporation (or any successor) for such
Corporation's (or such successor's) insuring time deposits at offices of such
institution in the United States. The Fixed CD Rate shall be adjusted
automatically on and as of the effective date of any change in the Assessment
Rate.
"Bank" shall have the meaning provided in the first paragraph
of this Agreement.
"Bankruptcy Code" shall have the meaning provided in
Section 8.05.
"Base Lending Rate" shall mean for any day, a rate per annum
equal to the greatest of (a) the Prime Rate in effect on such day or (b) the
Federal Funds Rate in effect on such day plus one-half of one percent (.50%).
If for any reason the Agent shall have determined (which determination shall
be conclusive absent manifest error) that it is unable to ascertain the
Federal Funds Rate, for any reason, including the inability or failure of
Agent to obtain sufficient quotations in accordance with the definitions
thereof, the Base Lending Rate shall be determined without regard to clause
(b) of the first sentence of this definition until the circumstances giving
rise to such inability no longer exist. Any change in the Base Lending Rate
due to a change in the Prime Rate or the Federal Funds Rate shall be
effective on the effective date of such change in the Prime Rate or the
Federal Funds Rate, respectively.
"Base Rate Loan" shall mean any portion of the Loans
designated as such by the Company at the time of the incurrence thereof or
conversion thereto which bears interest based on the Base Lending Rate.
"Borrowing" shall mean a portion of the Loans which bears
interest based on one of the interest rates available to the Company
hereunder (i.e. the Base Lending Rate, the Fixed CD Rate, or the Eurodollar
Rate) and having, in the case of Fixed Rate Loans, the same Interest Period;
provided that Borrowings of a different Type extended pursuant to Section
1.09(b) shall be considered part of any related Borrowing for purposes of
compliance with the restriction on the minimum principal amount of Fixed Rate
Loans permitted hereunder.
"Business Day" shall mean (i) for all purposes other than as
covered by clause (ii) below, any day excluding Saturday, Sunday and any day
which shall be in the City of New York, New York or the City of Houston,
Texas a legal holiday or a day on which banking institutions are authorized
by law or other government actions to close and (ii) with respect to all
notices and determinations in connection with, and payments of principal and
interest on, Eurodollar Loans, any day which is a Business Day described in
clause (i) and which is also a day for trading by and between banks in U.S.
dollar deposits in the London interbank market.
"CD Margin" shall have the meaning provided in Section 1.07(b).
CREDIT AGREEMENT, Page 24
<PAGE>
"CD Rate Loan" shall mean any portion of the Loans designated
as such by the Company at the time of the incurrence or continuation thereof
or conversion thereto, which bears interest at a rate based on the Fixed CD
Rate.
"Certificate of Deposit Rate" shall mean for any CD Rate Loan
for any Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest .01%) determined by the Agent to be the average of
the bid rates quoted to the Reference Bank at its principal office in
Houston, Texas at approximately 11:00 A.M. (Houston, Texas time) (or as soon
thereafter as practicable) on the first day of such Interest Period by three
(3) or more certificate of deposit dealers of recognized national standing
selected by the Reference Bank for the purchase at face value of certificates
of deposit of the Reference Bank having a term comparable to such Interest
Period and in an amount comparable to the principal amount of the CD Rate
Loan made by the Reference Bank to which such Interest Period relates. If the
Reference Bank is not participating in any CD Rate Loan during any Interest
Period therefor, the Certificate of Deposit Rate for such Loans for such
Interest Period shall be determined by reference to the amount of the Loans
which the Reference Bank would have made had it been participating in such
Loans.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Commitment" shall mean, with respect to each Bank, the amount
set forth opposite such Bank's name in Annex I hereto, as the same may be
reduced from time to time pursuant to Section 2.02 and/or Section 8.
"Company" shall have, the meaning provided in the first
paragraph of this Agreement.
"Consolidated Capitalization" shall mean Consolidated Tangible
Net Worth plus Consolidated Total Senior Indebtedness plus Consolidated
Subordinated Debt.
"Consolidated Subordinated Debt" means (a) the Company's 4 1/4%
Convertible Subordinated Notes due 2003 as such notes exist on the
Effective Date, without giving effect to any changes to the subordination
provisions thereof unless changed with the consent of the Required Banks (the
"Subordinated Notes"), plus (b) any other unsecured Indebtedness evidenced by
promissory notes, bonds or other similar instruments hereafter sold by the
Company which is subordinated to the Obligations in right of payment on
substantially the same terms as the Subordinated Notes plus (c) any other
Indebtedness of the Company and its Subsidiaries determined on a consolidated
basis hereafter subordinated in right of payment to the Obligations on terms
and conditions acceptable to the Required Banks.
"Consolidated Total Senior Indebtedness" shall mean all
Indebtedness of the Company and its Subsidiaries determined on a consolidated
basis, excluding Consolidated Subordinated Debt.
CREDIT AGREEMENT, Page 25
<PAGE>
"Consolidated Tangible Net Worth" means, at any particular
time, the Net Worth of the Company and its Subsidiaries determined on a
consolidated basis excluding (without duplication) the following: (i) any
amount at which shares of capital stock of the Company appear as an asset on
the Company's balance sheet; (ii) goodwill, including any amounts, however
designated, that represent the excess of the purchase price paid for assets
or stock over the value assigned thereto; (iii) patents, trademarks, trade
names, and copyrights, (iv) loans and advances to any of the Company's
Affiliates; (v) minority interests in Subsidiaries; and (vi) all other assets
which are properly classified as intangible assets.
"Contingent Obligation" as to any Person shall mean any
obligation of such Person guaranteeing or intended to guarantee any
Indebtedness ("primary obligations") of and other Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, any obligation of such Person, whether or not contingent, (a) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (b) to advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor, (c) to purchase
property, securities or services primarily for the purpose of assuring the
owner of any such primary obligation of the ability of the primary obligor to
make payment of such primary obligation or (d) otherwise to assure or hold
harmless the owner of such primary obligation against loss in respect
thereof; provided, however, that the term Contingent Obligation shall not
include endorsements of instruments for deposit or collection in the ordinary
course of business. The amount of any Contingent Obligation shall be deemed
to be an amount equal to the stated or determined amount of the primary
obligation in respect of which such Contingent Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability in
respect thereof (assuming such Person is required to perform thereunder) as
determined by such Person in good faith, provided that if any Contingent
Obligation is limited by its terms to apply to only a limited amount of a
primary obligation, the amount of such Contingent Obligation shall in no
event be deemed to exceed such limited amount.
"Credit Documents" shall mean this Agreement and each Note.
"Debt Rating" shall have the meaning provided in Section
1.07(b).
"Default" shall mean any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of Default.
"Differential" shall mean (x) with respect to CD Rate Loans,
the relevant CD Margin and (y) with respect to Eurodollar Loans, the relevant
Eurodollar Margin.
"Dividends" means, as to any Person, the declaration or
payment of any dividends, the return of capital to its shareholders, the
authorization, distribution, payment or delivery of property or cash to its
stockholders, the redemption, retirement, purchase or other acquisition,
directly or indirectly, for consideration of any shares of any class of
capital stock of such Person or the setting aside of any funds for any of the
foregoing purposes.
CREDIT AGREEMENT, Page 26
<PAGE>
"Effective Date" means May 27, 1994.
"Eligible Assignee" shall mean and include a commercial
bank, financial institution, other "accredited investor: (as defined in
Regulation D of the Securities Act) or a "qualified institutional buyer" as
defined in Rule 144A of the Securities Act.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time. Section references
to ERISA are to ERISA, as in effect at the date of this Agreement and
any subsequent provisions of ERISA, amendatory thereof, supplemental
thereto or substituted therefor.
"ERISA Affiliate" shall mean any person (as defined in
Section 3(9) of ERISA) (including each trade or business (whether or
not incorporated)) which is a member of a "controlled group"
including, or under common control with the Company or a Subsidiary
of the Company within the meaning of Sections 414(b) and (c) of the Code or
Section 4001 (a)(14) of ERISA.
"Eurodollar Loan" shall mean any portion of the Loans
designated as such by the Company at the time of the incurrence or
continuation thereof or conversion thereto which bears interest at a rate
based on the Eurodollar Rate..
"Eurodollar Margin" shall mean have the meaning provided in
Section 1.07(b).
"Event of Default" shall have the meaning provided in Section
8.
"Eurodollar Rate" means, for any Eurodollar Loan for
any Interest Period therefor, the rate of interest per annum equal to the
rate for deposits in U.S. dollars for such Interest Period which appears
on the Telerate Page 3750 (or such other page as may replace that page on
the Dow Jones Telerate Service) as of 11:00 a.m., London time, on the day
that is 2 Business Days prior to the first day of such Interest Period. If
such rate does not appear on such screen, the Eurodollar Rate for such
Eurodollar Loan for such Interest Period shall be the rate per annum
(rounded upwards, if necessary, to the nearest .01%) quoted by the Reference
Bank at approximately 11:00 A.M. London time (or as soon thereafter as
practicable)2 Business Days prior to the first day of such Interest Period
for the offering by the Reference Bank to leading banks in the London
interbank market of U.S. dollar deposits in immediately available funds
having a term comparable to such Interest Period and in an amount comparable
to the principal amount of the Eurodollar Loan made by the Reference Bank to
which such Interest Period relates. If the Reference Bank is not
participating in any Eurodollar Loan during any Interest Period therefor, the
Eurodollar Rate for such Loans for such Interest Period shall be determined
by reference to the amount of the Loans which the Reference Bank would have
made had it been participating in such Loans.
"Facility Fee" shall have the meaning provided in Section
2.01(a).
"Facility Usage" shall have the meaning provided in Section
1.07(b).
CREDIT AGREEMENT, Page 27
<PAGE>
"Fees" shall mean all amounts payable pursuant to Section
2.01.
"Federal Funds Rate" shall mean, for any day, the rate
per annum on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day, provided that (a) if the day for which such rate is to
be determined is not a Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Business Day
as so published on the next succeeding Business Day, and (b) if such
rate is not so published on such next succeeding Business Day, the
Federal Funds Rate for any day shall be the average rate charged to the
Reference Bank on such day on such transactions as determined by the Agent.
"Fixed CD Rate" shall mean, for any CD Rate Loan for
any Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 0.01%) determined by the Agent to be equal to
the sum of (a) the Certificate of Deposit Rate for such CD Rate Loan
for such Interest Period plus (b) the Assessment Rate.
"Fixed Rate Loan" shall mean each Eurodollar Loan and each CD
Rate Loan.
"Houston Office" shall mean the office of the Agent located
at 712 Main, Houston, Texas 77002-8096, or such other office as the Agent may
hereafter designate in writing as such to the other parties hereto.
"Indebtedness" of any Person shall mean, without duplication,
(i) all indebtedness of such Person for borrowed money; (ii) all
obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable of such Person in the ordinary
course of business which are not past due by more than ninety (90) days
unless such trade accounts payable are being contested in good faith by
appropriate proceedings; (iii) the principal portion of all leases of
such Person which in conformity with generally accepted accounting
principles are required to be capitalized for balance sheet purposes; (iv)
except to the extent supporting Indebtedness of such Person (but no other
indebtedness) of the type described in clause (i) above, the face amount of
all letters of credit issued for the account of such Person and, without
duplication, all drafts drawn thereunder but excluding trade letters
of credit incurred by such Person in the ordinary course of business; (v)
all indebtedness for borrowed money or for the deferred purchase price of
property or services secured by any Lien on any property owned by such
Person, whether or not such indebtedness has been assumed; and (vi) all
Contingent Obligations of such Person.
"Initial Borrowing Date" shall mean the date of the initial
Loan hereunder.
"Interest Period" shall have the meaning provided in Section
1.08.
"Lien" shall mean any mortgage, pledge, hypothecation,
assignment or deposit arrangement to provide collateral, lien (statutory or
other), or other agreement of any kind or nature whatsoever to secure
Indebtedness or obligations (including, without limitation, (x) any
CREDIT AGREEMENT, Page 28
<PAGE>
conditional sale or other title retention agreement and any financing lease
having substantially the same effect as any of the foregoing and (y) any
production payment of any kind created or arranged by the Company or any of
its Subsidiaries).
"Loan" shall have the meaning provided in Section 1.01.
"Margin Stock" shall have the meaning provided such term in
Regulation U of the Board of Governors of the Federal Reserve System.
"Material Adverse Effect" shall mean a material adverse
effect on the business, operations, property or condition (financial or
otherwise) of the Company or the Company and its Subsidiaries taken as a
whole. In determining whether any individual event would result in a
Material Adverse Effect, notwithstanding that such event does not itself have
such effect, a Material Adverse Effect shall be deemed to have occurred if
the cumulative effect of such event and all other substantially
contemporaneous events would result in a Material Adverse Effect.
"Maturity Date" shall mean May 31, 1997.
"Maximum Rate" means the maximum rate of nonusurious
interest permitted from day to day by applicable law, including as to
Article 5069-1.04, Vernon's Texas Civil Statutes (and as the same may be
incorporated by reference in other Texas statutes), but otherwise
without limitation, that rate based upon the "indicated rate ceiling" and
calculated after taking into account any and all relevant fees, payments,
and other charges contracted for, charged or received in connection
with the Credit Documents which are deemed to be interest under
applicable law.
"Moody's" shall have the meaning provided in Section 1.07(b).
"Net Revenue Interest" shall mean, with respect to any
Producing Property, the interest in net revenues which the Company or the
respective Subsidiary of the Company is entitled to receive with respect to
such Producing Property.
"Net Worth" of a Person shall mean the sum of its capital
stock, capital in excess of par or stated value of shares of its capital
stock, retained earnings, and any other account which, in accordance with
generally accepted accounting principles, constitutes stockholder's equity.
"Notes" shall have the meaning provided in Section 1.04(a).
"Notice of Borrowing" shall have the meaning provided in
Section 1.02.
"Notice of Conversion/Continuation" shall have the meaning
provided in Section 1.05.
CREDIT AGREEMENT, Page 29
<PAGE>
"Obligations" shall mean all amounts owing to the Agent or any
Bank pursuant to the terms of this Agreement or any other Credit Document.
"Payment Office" shall mean the office of the Agent located
at 712 Main, Houston, Texas 77002-8096, or such other office as the Agent may
hereafter designate in writing as such to the other parties hereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established under ERISA, or any successor thereto.
"Person" shall mean and include any individual, partnership,
joint venture, firm, corporation, association, trust or other enterprise or
any government or political subdivision or agency, department or
instrumentality thereof.
"Plan" shall mean any "multiemployer plan" or
"single-employer plan" as defined in Section 4001 of ERISA which is subject
to Title IV of ERISA or Section 412 of the Code and is maintained or
contributed to, or at any time during the five calendar years preceding the
date of this Agreement was maintained or contributed to, by the
Company, a Subsidiary of the Company or an ERISA Affiliate.
"Prescribed Forms" shall mean such duly executed form(s) or
statement(s), and in such number of copies, which may, from time to time, be
prescribed by law and which, pursuant to applicable provisions of (a) an
income tax treaty between the United States and the country of residence of
the Bank providing the form(s) or statement(s), (b) the Code, or (c) any
applicable rule or regulation under the Code, permit the Company and the
Agent to make payments hereunder for the account of such Bank free of
deduction or withholding of income or similar taxes.
"Prime Rate" shall mean the rate of interest per
annum then most recently established by Texas Commerce as its prime rate
in effect from day to day at its principal office in Houston, Texas; each
change in the Prime Rate shall be effective on the date of such change,
the Prime Rate may not be Texas Commerce's best or favored rate and Texas
Commerce may make other loans to other Persons at rates lower than its Prime
Rate.
"Producing Property" shall mean any petroleum or natural gas
producing property for which the Company or any Subsidiary of the Company is
entitled to receive, or has an interest in, net revenues.
"Quarterly Payment Date" shall mean each March 31, June 30,
September 30 and December 31.
"Reference Bank" shall mean Texas Commerce (or any successor
Agent, acting in its individual capacity).
CREDIT AGREEMENT, Page 30
<PAGE>
"Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System as from time to time in effect and
any successor to all or a portion thereof establishing reserve requirements.
"Regulatory Change" means, with respect to any Bank, any
change after the date of this Agreement in United States federal, state, or
foreign laws or regulations (including any change in Regulation D and the
adoption of any new laws or regulations) or the adoption or making
after such date of any interpretations, directives, or requests applying to a
class of banks including such Bank of or under any United States federal
or state, or any foreign, laws or regulations (whether or not having
the force of law) by any court or governmental or monetary authority
charged with the interpretation or administration thereof but excluding, in
all cases, changes in laws which result in the imposition of, or a change
in the amount or calculation of any tax imposed on or measured by the
net income of a Bank (or a tax imposed in lieu of a tax on net income)
pursuant to the laws of the jurisdiction in which the principal office or
lending office of such Bank is located or under the laws of any political
subdivision or taxing authority of any such jurisdiction in which the
principal office or lending office of such Bank is located.
"Reportable Event" shall mean an event described in
Section 4043(b) of ERISA (with respect to which the 30 day notice
requirement has not been waived by the PBGC), a withdrawal described
in Section 4063 of ERISA, or a cessation of operations described
in Section 4062(e) of ERISA.
"Required Banks" shall mean Banks holding more than 66-2/3% of
the principal amount of Loans outstanding or, if no Loans are outstanding,
more than 66-2/3% of the Total Commitment.
"Restricted Indebtedness" shall mean, at the time of
determination and after giving effect to any Indebtedness incurred or to be
incurred in connection with such determination and to any substantially
contemporaneous use of the proceeds thereof to repay other Indebtedness, the
sum of (i) the principal amount of the Indebtedness of the Company or its
Significant Subsidiaries then secured (or to be secured in connection with
such determination) by Liens permitted under Sections 7.01 (vi) plus (ii)
the principal amount of all the Indebtedness of the Significant Subsidiaries
then outstanding (or to be incurred in connection with such determination)
other than Indebtedness of the Significant Subsidiaries permitted by Section
7.03(i).
"Restricted Indebtedness Basket" shall mean, at the time of
determination, an amount equal to 5% of Consolidated Tangible Net Worth as
reported in the Company's consolidated financial statements most recently
delivered to the Banks.
"S&P" shall have the meaning provided in Section 1.07(b).
"Significant Subsidiary" shall mean Samedan Oil
Corporation or any other Subsidiary of the Company, as determined from
time to time at the end of each fiscal quarter of the Company, which
contributes more than 5% of the Consolidated Tangible Net Worth.
CREDIT AGREEMENT, Page 31
<PAGE>
"Subsidiary" shall mean, with respect to any Person. (i) any
corporation 50% or more of whose outstanding stock of any class or classes
having by the terms thereof ordinary voting power to elect a majority of the
directors of such corporation (irrespective of whether or not at the time
stock of any class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency) is at the time
owned by such Person directly or indirectly through its Subsidiaries and
(ii) any partnership, association, joint venture or other entity in which
such Person, directly or indirectly through its Subsidiaries, has a 50% or
more equity interest at the time; provided, that joint ownership of oil and
gas property alone will not constitute a "Subsidiary" so long as the terms
of such joint ownership are not governed by a partnership or joint
venture agreement or such joint ownership is not operated as a partnership,
association or joint venture.
"Taxes" shall have the meaning provided in Section 3.03.
"Texas Commerce" means Texas Commerce Bank National
Association in its individual capacity and not as Agent.
"Total Commitment" shall mean, at any time, the sum of the
Commitments of each of the Banks.
"Type" shall mean any type of Borrowing determined with
respect to the interest option applicable thereto, i.e., whether a Base Rate
Loan, a CD Rate Loan or a Eurodollar Loan.
"Working Interest" with respect to any Producing Property,
shall mean the percentage of the costs and expenses relating to the
operations and development of such Producing Property required to be borne
by the Company or respective Subsidiary of the Company.
Section 10. The Agent.
10.01 Appointment. The Banks hereby designate Texas
Commerce as Agent to act as specified herein and in the other Credit
Documents. Each Bank hereby irrevocably authorizes, and each holder of any
Note by the acceptance of such Note shall be deemed irrevocably to authorize,
the Agent to take such action on its behalf under the provisions of this
Agreement, the other Credit Documents and any other instruments and
agreements referred to herein or therein and to exercise such powers and to
perform such duties hereunder and thereunder as are specifically delegated to
or required of the Agent by the terms hereof and thereof and such other
powers as are reasonably incidental thereto. The Agent may perform any of its
duties hereunder by or through its agents or employees.
10.02 Nature of Duties. The Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement. Neither
the Agent nor any of its officers, directors, employees or agents shall be
liable for any action taken or omitted by it as such hereunder or under any
other Credit Documents or in connection herewith or therewith, unless caused
by its
CREDIT AGREEMENT, Page 32
<PAGE>
or their gross negligence or willful misconduct. The duties of the Agent
shall be mechanical and administrative in nature; the Agent shall not have
by reason of this Agreement or any other Credit Documents a fiduciary
relationship in respect of any Bank; and nothing in this Agreement or any
other Credit Documents, expressed or implied, is intended to or shall be so
construed as to impose upon the Agent any obligations in respect of this
Agreement or any other Credit Documents except as expressly set forth herein.
10.03 Lack of Reliance on the Agent. Independently and
without reliance upon the Agent, each Bank, to the extent it deems
appropriate, has made and shall continue to make (i) its own independent
investigation of the financial condition and affairs of the Company in
connection with the making and the continuance of the Loans hereunder and
the taking or not taking of any action in connection herewith, and (ii) its
own appraisal of the creditworthiness of the Company and, except as expressly
provided in this Agreement, the Agent shall have no duty or responsibility,
either initially or on a continuing basis, to provide any Bank with any
credit or other information with respect thereto, whether coming into its
possession before the making of the Loans, or at any time or times
thereafter. The Agent shall not be responsible to any Bank for any
recitals, statements, information, representations or warranties herein or
in any document, certificate or other writing delivered in connection
herewith or for the execution, effectiveness, genuineness, validity,
enforceability, collectibility, priority or sufficiency of this Agreement or
any other Credit Documents or the financial condition of the Company or be
required to make any inquiry concerning either the performance or observance
of any of the terms, provisions or conditions of this Agreement or any other
Credit Document, or the financial condition of the Company or the existence
or possible existence of any Default or Event of Default.
10.04 Certain Rights of the Agent. If the Agent shall
request instructions from the Required Banks with respect to any act or
action (including failure to act) in connection with this Agreement or any
other Credit Document, the Agent shall be entitled to refrain from such act
or taking such action unless and until the Agent shall have received
instructions from the Required Banks; and the Agent shall not incur
liability to any Person by reason of so refraining. Without limiting the
foregoing, no Bank shall have any right of action whatsoever against the
Agent as a result of the Agent acting or refraining from acting hereunder or
under any other Credit Document in accordance with the instructions of the
Required Banks.
10.05 Reliance. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any note, writing, resolution,
notice, statement, certificate, telex, teletype or telecopier message,
cablegram, radiogram, order or other document or telephone message signed,
sent or made by the proper Person or entity, and, with respect to all legal
matters pertaining to this Agreement and its duties hereunder, upon advice of
counsel selected by it.
10.06 Indemnification. TO THE EXTENT NOT REIMBURSED AND
INDEMNIFIED BY THE COMPANY, THE BANKS WILL REIMBURSE AND INDEMNIFY THE AGENT,
ITS AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS AND AGENTS, IN
PROPORTION TO THEIR RESPECTIVE COMMITMENTS, FOR AND AGAINST ANY AND ALL
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENAL-
CREDIT AGREEMENT, Page 33
<PAGE>
TIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS OF ANY KIND
OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED BY OR ASSERTED AGAINST
ANY OF THEM ARISING OUT OF OR IN CONNECTION WITH THE CREDIT DOCUMENTS, THE
TRANSACTIONS CONTEMPLATED HEREBY OR BY REASON OF ANY INVESTIGATION,
LITIGATION OR OTHER PROCEEDING RELATING THERETO (INCLUDING ANY SUCH LOSSES,
LIABILITIES, OBLIGATIONS, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS,
COSTS, EXPENSES OR DISBURSEMENTS TO THE EXTENT INCURRED BY REASON OF THE
ORDINARY NEGLIGENCE OF THE PERSON TO BE INDEMNIFIED BUT EXCLUDING ANY
PORTION OF SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,
ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS RESULTING FROM
THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE PERSON TO BE INDEMNIFIED.)
10.07 The Agent in its Individual Capacity. With respect
to its obligation to make Loans under this Agreement, the Agent shall have
the rights and powers specified herein for a "Bank" and may exercise the same
rights and powers as though it were not performing the duties specified
herein; and the term "Banks", "Required Banks", "holders of Notes", or
any similar terms shall, unless the context clearly otherwise indicates,
include the Agent in its individual capacity. The Agent may accept deposits
from, lend money to, and generally engage in any kind of banking, trust or
other business with the Company or any Affiliate of the Company as if it were
not performing the duties specified herein, and may accept fees and other
consideration from the Company for services in connection with this Agreement
and otherwise without having to account for the same to the Banks.
10.08 Holders. The Agent may deem and treat the payee of any
Note as the owner thereof for all purposes hereof unless and until a written
notice of the assignment, transfer or endorsement thereof, as the case may
be, shall have been filed with the Agent. Any request, authority or consent
of any person or entity who, at the time of making such request or giving
such authority or consent, is the holder of any Note shall be conclusive and
binding on any subsequent holder, transferee, assignee or indorsee, as the
case may be, of such Note or of any Note(s) issued in exchange therefor.
10.09 Resignation by the Agent. (a) The Agent may resign
from the performance of all its functions and duties hereunder and/or under
the other Credit Documents at any time by giving 15 Business Days prior
written notice to the Company and the Banks. Such resignation shall take
effect upon the appointment of a successor Agent pursuant to clauses (b) and
(c) below or as otherwise provided below.
(b) Upon any such notice of resignation, the Banks shall
appoint a successor Agent hereunder or thereunder who shall be a commercial
bank or trust company reasonably acceptable to the Company.
(c) If a successor Agent shall not have been so appointed
within said 15 Business Day period, the Agent, with the consent of the
Company, shall then appoint a successor
CREDIT AGREEMENT, Page 34
<PAGE>
Agent who shall serve as Agent hereunder or thereunder until such time, if
any, as the Banks appoint a successor Agent as provided above.
(d) If no successor Agent has been appointed pursuant to
clause (b) or (c) by the 20th Business Day after the date such notice of
resignation was given by the Agent, the Agent's resignation shall become
effective and the Banks shall thereafter perform all the duties of the Agent
hereunder and/or under the other Credit Documents until such time, if any,
as the Banks appoint a successor agent as provided above.
Section 11. Miscellaneous.
11.01 Payment of Expenses, etc. The Company shall: (i)
whether or not the transactions hereby contemplated are consummated, pay all
reasonable out-of-pocket costs and expenses of the Agent in connection with
the preparation, execution and delivery of the Credit Documents, the
documents and instruments referred to therein, any amendment, waiver or
consent relating thereto and the syndication of the Loans by the Agent or its
Affiliates (including, without limitation, the reasonable fees and
disbursements of Jenkens & Gilchrist, a Professional Corporation) and of the
Agent and each Bank in connection with the enforcement of, the Credit
Documents and the documents and instruments referred to therein (including,
without limitation, the reasonable fees and disbursements of counsel for the
Agent and for any of the Banks); (ii) pay and hold each of the Banks harmless
from and against any and all present and future stamp and other similar taxes
with respect to the foregoing matters and save each Bank harmless from and
against any and all liabilities with respect to or resulting from any delay
or omission (other than to the extent attributable to such Bank) to pay such
taxes; and (iii) INDEMNIFY THE AGENT AND EACH BANK, THEIR RESPECTIVE
AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS AND AGENTS FROM AND
HOLD EACH OF THEM HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS,
DAMAGES OR EXPENSES INCURRED BY ANY OF THEM ARISING OUT OF OR IN CONNECTION
WITH ANY CREDIT DOCUMENTS, THE TRANSACTIONS CONTEMPLATED HEREBY OR BY REASON
OF ANY INVESTIGATION, LITIGATION OR OTHER PROCEEDING RELATED THERETO,
INCLUDING, WITHOUT LIMITATION, THE REASONABLE FEES AND DISBURSEMENTS OF
COUNSEL INCURRED IN CONNECTION WITH ANY SUCH INVESTIGATION, LITIGATION OR
OTHER PROCEEDING (INCLUDING ANY SUCH LOSSES, LIABILITIES, CLAIMS, DAMAGES OR
EXPENSES TO THE EXTENT INCURRED BY REASON OF THE ORDINARY NEGLIGENCE OF THE
PERSON TO BE INDEMNIFIED, BUT EXCLUDING ANY SUCH LOSSES, LIABILITIES, CLAIMS,
DAMAGES OR EXPENSES TO THE EXTENT INCURRED BY REASON OF THE GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT OF THE PERSON TO BE INDEMNIFIED).
11.02 Right of Setoff. In addition to any rights now or
hereafter granted under applicable law or otherwise and not by way of
limitation of any such rights, upon the occurrence of an Event of Default,
each Bank is hereby authorized at any time or from time to time, without
presentment, demand, protest or other notice of any kind to the Company or to
any other Person, any such notice being hereby expressly waived, to set off
and to appropriate and apply
CREDIT AGREEMENT, Page 35
<PAGE>
any and all deposits (general or special) and any other indebtedness at any
time held or owing by such Bank to or for the credit or the account of the
Company against and on account of the Obligations and liabilities of the
Company to such Bank under this Agreement or under any of the other Credit
Documents, including, without limitation all interests in obligations
purchased by such Bank pursuant to Section 11.03(c), and all other claims of
any nature or description arising out of or connected with this Agreement or
any other Credit Document, irrespective of whether or not such Bank shall
have made any demand hereunder and although said obligations, liabilities or
claims, or any of them, shall be contingent or unmatured. After any Bank
takes any action pursuant to the provisions of this Section 11.02, such Bank
shall give written notice thereof to the Company.
11.03 Benefit of Agreement; Assignment and Participation.
(a) This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of
the parties hereto; provided, however, the Company may not assign or transfer
any of its rights, obligations or interest hereunder without the prior
written consent of the Banks.
(b) Any Bank may sell participations to one or more banks
or other institutions in or to all or a portion of its rights and
obligations under this Agreement and the other Credit Documents; provided,
that no Bank shall grant any participation under which the participant shall
have rights to approve any amendment to or waiver of this Agreement or any
other Credit Document except to the extent such amendment or waiver would
(i) extend the final maturity of any Loan or Note in which such participant
is participating, or reduce the rate or extend the time of payment of
interest or Fees thereon (except in connection with a waiver of
applicability of any post-default increase in interest rates) or reduce the
principal amount thereof, or increase the amount of the participant's
participation over the amount thereof then in effect (it being understood
that a waiver of any Default or Event of Default or of a mandatory reduction
in the Total Commitment or of a mandatory prepayment shall not constitute a
change in the terms of such participation, and that an increase in any
Commitment or Loan shall be permitted without the consent of any participant
if the participant's participation is not increased as a result thereof) or
(ii) consent to the assignment or transfer by the Company of any of its
rights and obligations under this Agreement. In the case of any such
participation, the participant shall not have any rights under this Agreement
or any other Credit Documents (the participant's rights against such Bank in
respect of such participation to be those set forth in the agreement executed
by such Bank in favor of the participant relating thereto) and all amounts
payable by the Company hereunder shall be determined as if such Bank had not
sold such participation.
(c) Any Bank (or any Bank together with one or more
other Banks) may (x) (A) pledge its Loans and/or Notes hereunder to a
Federal Reserve Bank in support of borrowings made by such Bank from
such Federal Reserve Bank or (B) assign all or a portion of its
Commitments and related outstanding obligations hereunder to its parent
company and/or any Affiliate of such Bank which is at least 50% owned by
such Bank or its parent company or to one or more other Banks or (y) assign
all, or if less than all, a portion equal to at least $10,000,000 of such
Commitments and related outstanding Obligations hereunder to an Eligible
CREDIT AGREEMENT, Page 36
<PAGE>
Assignee, each of which assignees shall become a party to this Agreement
as a Bank by execution of an assignment and assumption agreement
substantially in the form of Exhibit C (appropriately completed), provided
that, (i) at such time Annex I shall be deemed modified to reflect the
Commitments of such new Bank and of the existing Banks, (ii) new Notes will
be issued to such new Bank and to the assigning Bank upon the request of such
new Bank or assigning Bank, such new Notes to be in conformity with the
requirements of Section 1.04 to the extent needed to reflect the revised
Commitments, (iii) the consent of the Company (which consent shall not be
unreasonably withheld) shall be required in connection with any assignment
to an Eligible Assignee pursuant to clause (y) above (it being agreed that
the Company will not be unreasonable if, among other things, it refuses to
consent to assignments which increase the number of Banks to more than 5 or
which increases the risk of the Company being required to make payments
under Sections 1.09, 1.10 or 3.03), and (iv) the Agent shall receive at the
time of each such assignment (but not in connection with any pledge to a
Federal Reserve Bank), from the assigning Bank, the payment of a
non-refundable assignment fee of (A) $3,000 in the case of an assignment
pursuant to clause (c)(y) above or (B) $500 in the case of an assignment
pursuant to clause (c)(x)(B) above. To the extent of any assignment pursuant
to this Section 11.03(c), the assigning Bank shall be relieved of its
obligations hereunder with respect to its assigned Commitments. After receipt
of notice of any assignment pursuant to this Section 11.03(c) the Agent shall
give notice thereto to the Company. At the time of each assignment pursuant
to this Section 11.03(c) to a Person which is not already a Bank hereunder and
which is not a United States person (as such term is defined in Section
7701(a)(30) of the Code) for Federal income tax purposes, the respective
assignee shall, to the extent legally entitled to do so, provide the Company
and the Agent with Prescribed Forms pursuant to Section 3.03.
11.04 No Waiver: Remedies Cumulative. No failure or delay on
the part of the Agent or any Bank or any holder of a Note in exercising any
right, power or privilege hereunder or under any other Credit Document and
no course of dealing between the Company and the Agent or any Bank or the
holder of any Note shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder or under any
other Credit Document preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder or thereunder. The
rights and remedies herein expressly provided are cumulative and not
exclusive of any rights or remedies which the Agent or any Bank or the holder
of any Note would otherwise have. No notice to or demand on the Company in
any case shall entitle the Company to any other or further notice or demand
in similar or other circumstances or constitute a waiver of the rights of the
Agent, the Banks or the holder of any other Credit Document to any other or
further action in any circumstances without notice or demand.
11.05 Pro Rata; Sharing of Payments.
(a) The Agent agrees that on the date of its receipt of
each payment from or on behalf of the Company in respect of any
Obligations of the Company hereunder, it shall distribute such payment
to the Banks pro rata based upon their respective shares, if any, of the
Obligations with respect to which such payment was received.
CREDIT AGREEMENT, Page 37
<PAGE>
(b) Each of the Banks agrees that if it should receive
any amount hereunder (whether by voluntary payment, by realization upon
security, by the exercise of the right of setoff or banker's lien, by
counterclaim or cross action, by the enforcement of any right under the
Credit Documents, or otherwise) which is applicable to the payment of the
principal of, or interest on, the Loans, of a sum which with respect to the
related sum or sums received by other Banks is in a greater proportion than
the total of such obligation then owed and due to such Bank bears to the
total of such obligation then owed and due to all of the Banks immediately
prior to such receipt, then such Bank receiving such excess payment
shall purchase for cash without recourse or warranty from the other Banks
an interest in the Obligations of the Company to such Banks in such amount as
shall result in a proportional participation by all of the Banks in such
amount; provided that if all or any portion of such excess amount is
thereafter recovered from such Bank, such purchase shall be rescinded and the
purchase price restored to the extent of such recovery, but without interest.
11.06 Calculations: Computations.
(a) The financial statements to be furnished to the Banks
pursuant hereto shall be made and prepared, and all accounting terms used
herein shall be interpreted, in accordance with generally accepted
accounting principles consistently applied throughout the periods involved
(except as set forth in the notes thereto or as otherwise disclosed in
writing by the Company to the Banks); provided that, except as otherwise
specifically provided herein, all computations determining compliance with
Section 7 shall utilize accounting principles in conformity with those used
to prepare the financial statements of the Company referred to in Section
5.05.
(b) All computations of interest and Facility Fee
hereunder shall be made on the actual number of days elapsed (including the
first day but excluding the last) over a year of 360 days provided that
computations of interest in respect of Base Rate Loans when calculated based
only on the Prime Rate (as determined in accordance with the definition of
Base Lending Rate) shall be made on the actual number of days elapsed over a
year of 365 or 366 days, as the case may be.
11.07 LAW; SUBMISSION TO JURISDICTION. THIS AGREEMENT AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND UNDER THE NOTES SHALL
BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF
TEXAS WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF. ANY
LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT
DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS OR OF THE UNITED
STATES OF AMERICA FOR THE NORTHERN DISTRICT OF TEXAS, AND, BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, THE COMPANY HEREBY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF
THE AFORESAID COURTS. THE COMPANY IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY
CREDIT AGREEMENT, Page 38
<PAGE>
THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE
PREPAID, TO THE COMPANY, AS THE CASE MAY BE, AT ITS ADDRESS SET FORTH
OPPOSITE ITS SIGNATURE BELOW, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER
SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT, ANY BANK OR
ANY HOLDER OF A NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY
OTHER JURISDICTION.
11.08 Counterparts. This Agreement may be executed in
any number of counterparts, by the different parties hereto on separate
counterparts and by telecopy counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together constitute
one and the same agreement. A complete set of counterparts shall be lodged
with the Company and the Agent.
11.09 Headings Descriptive. The headings of the several
sections and subsections of this Agreement are inserted for convenience only
and shall not in any way affect the meaning or construction of any provision
of this Agreement.
11.10 Amendment or Waiver. This Agreement may not be amended,
changed, waived or discharged without the written consent of the Required
Banks and the Company, provided that (a) no provision of Sections 1, 2, 3,
8.01(i), 8.01(ii), 8.05, 10, 11.01, 11.02, 11.03, 11.05, 11.06(b), this
Section 11.10 and Section 11.12 (and all definitions to the extent used in
said Sections) may be so modified without the consent of each Bank and the
Company, (b) no provision of Section 10 may be so modified without the
consent of Agent, and (c) if a Default or an Event of Default has occurred
under Section 8.01 (iii) as a result of the Company's failure to make a
payment of the Obligations of type described therein to the Agent or any
Bank, the Company and the Person to whom such Obligation is owed may
agree to waive such Default or Event of Default and any such waiver shall
be binding on the Agent and all other Banks. Each waiver or consent granted
hereunder shall only be effective in the specific instance and for the
specific purpose for which given.
11.11 Termination: Survival of Indemnity and Confidentiality.
Once the Commitments have been terminated and all Obligations outstanding on
the date of such termination are paid in full, this Agreement and the other
Credit Documents shall terminate; provided that all indemnities set forth
herein (including, without limitation, in Sections 10.06 and 11.01) and the
provisions of Section II. 14 shall survive any such termination.
11. 12 Domicile of Loans. Each Bank may transfer and carry
its Loans at, to or for the account of any branch office, subsidiary or
affiliate of such Bank, provided, that if a Bank shall be able to avoid
incurring increased costs or the effect of any tax or event contemplated by
Section 1.09 or 3.03 by changing its lending office with respect to any Loan,
without, in the opinion solely of such Bank, adversely affecting such Bank or
its Loans hereunder, such Bank shall, subject to overall policy
considerations of such Bank, make all reasonable efforts so to change its
lending office with respect to such Loan.
CREDIT AGREEMENT, Page 39
<PAGE>
11.13 Representations by the Banks. Each Bank represents that
it is its present intention to make its Loans and to acquire its Notes for
its own account in the ordinary course of its commercial banking business
and not with a view to the distribution or resale thereof in contravention of
applicable securities laws, but such Bank reserves the right to dispose of
all or any part of its Loans or its Notes in accordance with Section 11.03
(including, without limitation, the granting of participations therein) if at
some future time in its sole discretion it deems it advisable so to do.
11.14 Confidentiality. Each Bank agrees that it will use its
best efforts not to disclose without the prior consent of the Company (other
than to its employees, auditors, affiliates or counsel or to another Bank if
the Bank or such Bank's holding or parent company in its sole discretion
determines that any such party should have access to such information) any
information with respect to the Company or any of its Subsidiaries which is
furnished pursuant to this Agreement, provided that any Bank may disclose
any such information (a) as has become generally available to the public, (b)
as may be required or appropriate in any report, statement or testimony
submitted to any municipal, state or Federal regulatory body having or
claiming to have jurisdiction over such Bank or to the Federal Reserve Board
or the Federal Deposit Insurance Corporation or similar organizations
(whether in the United States or elsewhere) or their successors, (c) as may
be required or appropriate in response to any summons or subpeona or in
connection with any litigation, (d) in order to comply with any law, order,
regulation or ruling applicable to such Bank, and (e) to any prospective
transferee in connection with any contemplated transfer of any of the Notes
or any interest therein by such Bank, provided, that such prospective
transferee executes an agreement with such Bank containing provisions
substantially identical to those contained in this Section.
11.15 No Duty. All attorneys, accountants, and other
professional Persons and consultants retained by the Agent and the Banks
shall have the right to act exclusively in the interest of the Agent and the
Banks and shall have no duty of disclosure, duty of loyalty, duty of care, or
other duty or obligation of any type or nature whatsoever to the Company or
any of the Company's shareholders or any other Person.
11.16 No Fiduciary Relationship. The relationship between
the Company and each Bank is solely that of debtor and creditor, and neither
the Agent nor any Bank has any fiduciary or other special relationship with
the Company, and no term or condition of any of the Credit Documents shall be
construed so as to deem the relationship between the Company and any Bank to
be other than that of debtor and creditor.
11.17 Survival of Representations and Warranties. All
representations and warranties made in this Agreement or any other Credit
Document or in any document, statement, or certificate furnished in
connection with this Agreement shall survive the execution and delivery of
this Agreement and the other Credit Documents, and no investigation by the
Agent or any Bank or any closing shall affect the representations and
warranties or the right of the Agent or any Bank to rely upon them.
CREDIT AGREEMENT, Page 40
<PAGE>
11.18 ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER
CREDIT DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT AMONG
THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE
PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES THERETO.
11.19 Maximum Interest Rate. No provision of this Agreement
or of any other Credit Document shall require the payment or the collection
of interest in excess of the maximum permitted by applicable law. If any
excess of interest in such respect is hereby provided for, or shall be
adjudicated to be so provided, in any Credit Document or otherwise in
connection with this loan transaction, the provisions of this Section shall
govern and prevail and neither the Company nor the sureties, guarantors,
successors, or assigns of the Company shall be obligated to pay the excess
amount of such interest or any other excess sum paid for the use,
forbearance, or detention of sums loaned pursuant hereto. In the event any
Bank ever receives, collects, or applies as interest any such sum, such
amount which would be in excess of the maximum amount permitted by applicable
law shall be applied as a payment and reduction of the principal of the
Indebtedness evidenced by the Notes; and, if the principal of the Notes has
been paid in full, any remaining excess shall forthwith be paid to the
Company. In determining whether or not the interest paid or payable exceeds
the Maximum Rate, the Company and each Bank shall, to the extent permitted by
applicable law, (i) characterize any nonprincipal 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 in
equal or unequal parts the total amount of interest throughout the entire
contemplated term of the Indebtedness evidenced by the Notes so that interest
for the entire term does not exceed the Maximum Rate.
11.20 Notices. All notices and other communications provided
for in this Agreement and the other Credit Documents shall be given or made
in writing and telecopied, mailed by certified mail return receipt requested,
or delivered to the intended recipient at the address specified opposite its
name on the signature pages hereof; or as to any party at such other address
as shall be designated by such party in a notice to each other party given in
accordance with this Section. Except as otherwise provided in this
Agreement, all such communications shall be deemed to have been duly given
when transmitted by telecopy, subject to telephone confirmation of receipt,
or when personally delivered or, in the case of a mailed notice, 3 days after
being duly deposited in the mails, in each case given or addressed as
aforesaid; provided, however, notices to the Agent pursuant to Sections 1.02
and 1.05 shall not be effective until received by the Agent.
11.21 Severability. Any provision of this Agreement held by
a court of competent jurisdiction to be invalid or unenforceable shall not
impair or invalidate the remainder
CREDIT AGREEMENT, Page 41
<PAGE>
of this Agreement and the effect thereof shall be confined to the provision
held to be invalid or illegal.
11.22 Non-Application of Chapter 15 of Texas Credit Code. The
provisions of Chapter 15 of the Texas Credit Code (Vernon's Texas Civil
Statutes, Article 5069-15) are specifically declared by the parties hereto
not to be applicable to this Agreement or any of the other Credit Documents
or to the transactions contemplated hereby.
11.23 Construction. The Company, the Agent, and each Bank
acknowledges that each of them has had the benefit of legal counsel of its
own choice and has been afforded an opportunity to review this Agreement and
the other Credit Documents with its legal counsel and that this Agreement and
the other Credit Documents shall be construed as if jointly drafted by the
parties hereto.
11.24 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
AND EXPRESSLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING,
OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT. TORT, OR OTHERWISE) ARISING OUT
OF OR RELATING TO ANY OF THE CREDIT DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED THEREBY OR THE ACTIONS OF THE AGENT OR ANY BANK IN THE
NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT THEREOF.
11.25 Independence of Covenants. All covenants hereunder
shall be given in any jurisdiction independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or be otherwise within
the limitations of, another covenant shall not avoid the occurrence of a
Default or an Event of Default if such action is taken or condition exists.
CREDIT AGREEMENT, Page 42
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date
first above written.
110 West Broadway NOBLE AFFILIATES, INC.
Ardmore, Oklahoma 73401
Attention: William D. Dickson
Telephone No.: (405) 223-4110
Telecopier No.: (405) 221-1386 By:
Name:
Title:
712 Main Street TEXAS COMMERCE BANK NATIONAL
Houston, Texas 77002-8096 ASSOCIATION, as a Bank
Attention: Agent Services and as Agent
Telephone No.: 713-216-2108
Telecopier No.: 713-216-2339 By: DALE S. HURD
Name: Dale S. Hurd
Title: Senior Vice President
With a required copy to:
2200 Ross Avenue, 3rd Floor
Dallas, Texas 75201
Attention: Energy Department
Telephone No.: (214) 922-2583
Telecopier No.: (214) 922-2997
CREDIT AGREEMENT, Page 43
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date
first above written.
110 West Broadway NOBLE AFFILIATES, INC.
Ardmore, Oklahoma 73401
Attention: William D. Dickson
Telephone No.: (405) 223-4110
Telecopier No.: (405) 221-1386 By: WM. D. DICKSON
Name: Wm. D. Dickson
Title: Vice President-Finance
712 Main Street TEXAS COMMERCE BANK NATIONAL
Houston, Texas 77002-8096 ASSOCIATION, as a Bank and as Agent
Attention: Agent Services
Telephone No.: 713-216-2108
Telecopier No.: 713-216-2339
By:
Name:
Title:
With a required copy to:
2200 Ross Avenue, 3rd Floor
Dallas, Texas 75201
Attention: Energy Department
Telephone No.: (214) 922-2583
Telecopier No.: (214) 922-2997
CREDIT AGREEMENT, Page 43
<PAGE>
700 Louisiana Street, Suite 4400 BANK OF MONTREAL
Houston, Texas 77002 as a Bank
Attention: Mike Stuckey By: MICHAEL P. STUCKEY
Telephone No.: (713) 546-9771 Name: Michael P. Stuckey
Telecopier No.: (713) 223-4007 Title: Director, U.S. Corporate
Banking
Except Notices of Loans, Continuations
and Conversions to:
Attention: Jane Wiley
Telephone No.: (713) 546-9744
Telecopier No. (713) 225-1845
CREDIT AGREEMENT, Page 44
<PAGE>
901 Main Street, 49th Floor NATIONSBANK OF TEXAS, N.A.
Dallas, Texas 75202 as a Bank
Attention: Mark 0. Ames
Telephone: (214) 508-1262 By: MARK O. AMES
Telecopy: (214) 508-1285 Name: Mark O. Ames
Title: Senior Vice President
Except notices of Loans, Continuations
and Conversions to:
901 Main Street, 49th Floor
Dallas, Texas 75202
Attention: Loan Administration
Betty Canales
Telephone No. (214) 508-1225
Telecopy No. (214) 508-1215
CREDIT AGREEMENT, Page 45
<PAGE>
ANNEX I TO
NOBLE AFFILIATES, INC.
CREDIT AGREEMENT
<TABLE>
<CAPTION>
BANK COMMITMENT
- ---- -------------
<S> <C>
Texas Commerce Bank National Association $ 40,000,000
NationsBank of Texas, N.A. $ 30,000,000
Bank of Montreal $ 30,000,000
- ---------------- ------------
TOTAL: $100,000,000
</TABLE>
ANNEX I, Solo Page
<PAGE>
ANNEX II TO
NOBLE AFFILIATES, INC.
CREDIT AGREEMENT
List of Subsidiaries
<TABLE>
<CAPTION>
STATE OF JURISDICTION
SUBSIDIARY OR ORGANIZATION
- ---------- ---------------------
<S> <C>
Samedan Oil Corporation 1 Delaware
Samedan Oil of Canada, Inc. 2 Delaware
Samedan of North Africa, Inc. 2 Delaware
Samedan North Sea, Inc. 2 Delaware
Samedan Oil of Indonesia, Inc. 2 Delaware
Samedan Pipe Line Corporation 2 Delaware
Samedan Royalty Corporation 2 Delaware
Samedan of Tunisia, Inc. 2 Delaware
Samedan - NEEI Exploration Company 3 Oklahoma
Samedan of Papua New Guinea, Inc. 2 Delaware
Noble Gas Marketing, Inc. 1 Delaware
<FN>
________________
1 100% owned by Noble Affiliates, Inc.
2 100% owned by Samedan Oil Corporation
3 50% general partnership interest owned by Samedan Oil Corporation
</TABLE>
ANNEX II, Solo Page
<PAGE>
EXHIBIT A
NOTE
$________________ Houston, Texas
May 27, 1994
FOR VALUE RECEIVED, NOBLE AFFILIATES, INC., a Delaware
corporation (the "Company"), hereby promises to pay to the order of
______________________ (the "Bank'), in lawful money of the United States of
America in immediately available funds, at the office of Texas Commerce
Bank National Association ("Agent") located at 712 Main Street, Houston,
Texas 77002-8096, on the Maturity Date (as defined in the Agreement referred
to below) the principal sum of _________________________ DOLLARS or so much
thereof which constitutes the unpaid principal amount of all Loans (as
defined in the Agreement) made by the Bank pursuant to the Agreement and then
outstanding.
The Company promises also to pay interest on the unpaid
principal amount hereof in like money at said office from the date hereof
until paid at the rates and at the times provided in the Agreement.
This Note is one of the Notes referred to in the Credit
Agreement dated as of May 27, 1994, among the Company, the Agent, the Bank
and the other banking institutions party thereto (as from time to time in
effect, the "Agreement") and is entitled to the benefits thereof and shall
be subject to the provisions thereof. As provided in the Agreement, this Note
is subject to voluntary prepayment, in whole or in part.
In case an Event of Default (as defined in the Agreement)
shall occur and be continuing, the principal of and accrued interest on this
Note may be declared to be due and payable in the manner and with the effect
provided in the Agreement.
The Company hereby waives presentment, demand, notice of
intent to accelerate, notice of acceleration, protest or notice of any kind
in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAW OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAW PRINCIPLES THEREOF.
NOBLE AFFILIATES, INC.
By:___________________
Name:
Title:
NOTE, Solo Page
<PAGE>
EXHIBIT B
May 27, 1994
Texas Commerce Bank National Association
Texas Commerce Tower
2200 Ross Avenue
Dallas, Texas 75201
NationsBank of Texas, N.A.
901 Main Street
Dallas, Texas 75201
Bank of Montreal
700 Louisiana
Houston, Texas 77002
Gentlemen and Ladies:
We have acted as counsel to Noble Affiliates, Inc., a Delaware
corporation (the "Company"), in connection with a $100,000,000 Credit
Agreement dated as of May 27, 1994 (the "Agreement") among the Company and
each of you and Texas Commerce Bank National Association, as Agent, providing
for the Company's issuance and delivery to you on this date of its Notes.
This opinion letter is delivered to you pursuant to Section 4.04 of the
Agreement. Capitalized terms used but not otherwise defined herein shall have
the meanings given to them in the Agreement.
In our capacity as counsel for the Company, we have examined
either executed originals or telecopies of executed originals of the
Agreement and the Notes (the "Credit Documents") and all other certificates,
instruments or documents that have been executed and delivered to you by the
Company today in connection with the Agreement. We have also examined and
relied upon originals or copies, certified or otherwise authenticated to our
satisfaction, of such corporate records of the Company, certificates of
officers of the Company and its Subsidiaries, certificates and letters of
public officials, and other instruments and documents as we have deemed
necessary to require as a basis for the opinions hereinafter expressed. In
such examination, we have assumed the genuineness and authenticity of all
documents submitted to us as originals (other than the Credit Documents), the
conformity with genuine and authentic originals of all documents submitted to
us as copies, and the genuineness of all signatures (other than on the Credit
Documents).
Where facts material to the opinions hereinafter expressed
were not independently established by us, we have relied upon the
representations and warranties made to you by the Company in the Credit
Documents and upon oral and written statements of and information
EXHIBIT B, Page 1 of 5
<PAGE>
May 27, 1994
Page 2
furnished by officers of the Company and its Subsidiaries, where we deemed
such reliance appropriate under the circumstances. We have necessarily
assumed the accuracy and completeness of such representations, warranties,
statements and other information.
Based on the foregoing and on the assumptions hereinafter set
forth, and subject to the exceptions, limitations and qualifications
hereinafter expressed, it is our opinion that:
1. The Company (i) is a duly incorporated and validly existing
corporation in good standing under the laws of the state of its
incorporation, (ii) has the corporate power and authority to own its property
and assets and to transact the business in which it is engaged, and (iii) is
duly qualified and is authorized to do business and is in good standing as a
foreign corporation in the State of Oklahoma.
2. The Company has the corporate power to execute, deliver and
carry out the terms and provisions of each of the Credit Documents and has
taken all necessary corporate action to authorize the execution, delivery and
performance by it of each of the Credit Documents. The Company has duly
executed and delivered each Credit Document and each Credit Document
constitutes its legal, valid and binding obligation enforceable against the
Company in accordance with its terms except to the extent that enforcement
may be limited by applicable bankruptcy, insolvency, reorganization or other
similar laws affecting creditors' rights generally and by equity principles
(including any legal requirement that a material breach must occur before a
remedy is exercised and regardless of whether enforcement is sought in equity
or at law).
3. Neither the execution, delivery or performance by the Company
of the Credit Documents, nor compliance by it with the terms and provisions
thereof, (i) will contravene any applicable provision of any law, statute,
rule or regulation, or, to the best of our knowledge, any order, writ,
injunction or decree, of any court or governmental instrumentality, (ii) will
conflict or be inconsistent with or result in any breach of, any of the
terms, covenants, conditions or provisions of, or constitute a default under,
or result in the creation or imposition of (or the obligation to create or
impose) any lien upon any of the property or assets of the Company pursuant
to the terms of, any indenture, mortgage, deed of trust, agreement or other
instrument known to us, after reasonable investigation, to which the Company
is a party or by which the Company or any of the property or assets of the
Company is bound or to which the Company may be subject which conflict,
inconsistency, breach or default is reasonably likely to have a Material
Adverse Effect, or (iii) will violate any provision of the Certificate of
Incorporation or Bylaws of the Company.
EXHIBIT B, Page 2 of 5
<PAGE>
May 27, 1994
Page 3
4. To the best of our knowledge, there are no actions, suits or
proceedings pending or threatened (i) with respect to any Credit Document or
(ii) that are reasonably likely to have a Material Adverse Effect.
5. Assuming the truth and correctness of the representations
contained in Section 5.06 of the Agreement, neither the making of any Loan
nor the use of the proceeds thereof will violate or be inconsistent with the
provisions of Regulations U or X of the Board of Governors of the Federal
Reserve System as in effect on the date hereof.
6. No order, consent, approval, license, authorization, or
validation of, or filing, recording or registration with (except as have
been obtained or made), or exemption by, any governmental or public body or
authority, or any subdivision thereof, is required on the part of the
Company or any of its Subsidiaries to authorize, or is required on the part
of the Company or any of its Subsidiaries in connection with,, (i) the
execution, delivery and performance (other than orders, consents, approvals,
licenses, authorizations, validations, filings, recordings, registrations or
exemptions required in order to comply with the provisions of Sections 6 and
7 of the Agreement) of any Credit Document or (ii) the legality, validity,
binding effect or enforceability of any Credit Document.
7. The Company is not an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
8. Neither the Company nor any of its Subsidiaries is a "holding
company", or a "subsidiary company" of a "holding company", or an "affiliate"
of a "holding company" or of a "subsidiary company" of a "holding company",
within the meaning of the Public Utility Holding Company Act of 1935, as
amended.
The opinions expressed above are based in part upon the assumptions,
and are subject to the exceptions, limitations and qualifications, set forth
below:
(i) Whenever any opinion expressed herein with respect to any
matter is qualified by the phrase "to the best of our knowledge" or "known to
us", such phrase (I) indicates that (i) no information has come to the
attention of any shareholder or associate of this firm who has devoted
substantive attention to the transactions contemplated in the Agreement that
has given any such person actual knowledge concerning such matter different
from that expressed in such opinion, (ii) we have not undertaken any
independent investigation with respect to such matter but have relied on
representations made by the Company in the Credit Documents and on
information otherwise provided to us by them, and (iii) no inference that any
such person has actual knowledge concerning such matters should be drawn from
the fact of our representation
EXHIBIT B, Page 3 of 5
<PAGE>
May 27, 1994
Page 4
of the Company and its Subsidiaries or our expression of such opinion, and
(II) does not encompass the actual knowledge of any shareholder or associate
of this firm who obtained such knowledge in his capacity as an officer or
director of the Company or any of its Subsidiaries. We wish to advise you
that Harold F. Kleinman, a shareholder of this firm, is a director of the
Company.
(ii) Except as expressly set forth herein, we have made no
independent investigation as to the accuracy or completeness of any
representation, warranty, data or other information, written or oral, made
or furnished in or in connection with the Credit Documents or otherwise,
and we have assumed that none of the Credit Documents or any other
information furnished to us contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements made in
the Credit Documents not misleading.
(iii) We do not purport to be experts as to the laws of any
jurisdiction other than the State of Texas and the United States of America,
and we express no opinion herein with respect to the laws of any such other
jurisdiction, except insofar as the matters covered by the foregoing
opinions may involve or be governed by or construed under the General
Corporation Law of the State of Delaware. Insofar as the matters covered by
the opinions expressed in paragraphs 2, 3 and 6 above may involve or be
governed by or construed under the laws of any jurisdiction other than the
State of Texas, we have necessarily assumed, without knowing, and without
making any investigation to determine, that such laws are the same as those
of the State of Texas and that the courts of any such other jurisdiction
would construe and apply such laws in the same manner as would the courts of
the State of Texas.
(iv) In rendering certain of the opinions expressed above we
have assumed that each of you (i) is duly authorized to execute and deliver
(or accept), and has duly executed and delivered (or accepted), the Credit
Documents required to be executed and delivered (or accepted) by you, and
(ii) will fund the Loans to the extent required to be funded by you under the
Agreement.
(v) In rendering the opinions expressed in paragraphs 3(i) and
6 above, we have assumed that the representations made by you in Section
11.13 of the Agreement are accurate and complete.
(vi) We express no opinion concerning (i) any purported right of
offset against unmatured obligations, (ii) any right of any Bank or any other
person to be indemnified against (or released from the consequences of its
own negligence, (iii) the enforceability of any obligations of any party
other than the Company, or (iv) the effectiveness or enforceability of any
waiver of the right to trial by jury.
EXHIBIT B, Page 4 of 5
<PAGE>
May 27, 1994
Page 5
(vii) In rendering the opinions expressed herein, we have assumed
that the conditions specified in Section 4.06 of the Agreement will be
satisfied on or prior to the time contemplated therein.
(viii) This opinion letter incorporates by reference the Other
Common Texas Qualifications contained in the Report of the Legal Opinions
Committee Regarding Legal Opinions in Business Transactions of the Business
Law Section of the State Bar of Texas (1992), and this opinion letter should
be read in conjunction with such report.
(ix) This opinion letter is to be limited in its use to reliance
by you and your counsel in consummating the Agreement. No other person or
entity may rely or claim reliance on any opinion expressed herein except
with our express written consent.
Respectfully submitted,
THOMPSON & KNIGHT,
A Professional Corporation
By: _______________________
Kenn W. Webb, Attorney
KWW/rac
EXHIBIT B, Page 5 of 5
<PAGE>
EXHIBIT C
ASSIGNMENT AND ASSUMPTION AGREEMENT
Date__________________19____
Reference is made to the Credit Agreement described in Item 2
of Annex I hereto (as such Credit Agreement may hereafter be amended,
supplemented or otherwise modified from time to time, the "Credit
Agreement"). Unless defined in Annex I hereto, terms defined in the Credit
Agreement are used herein as therein defined. ____________________________
(the "Assignor") and ___________________________ (the "Assignee") hereby
agree as follows:
1. The Assignor hereby sells and assigns to the
Assignee without recourse and without representation or warranty (other than
as expressly provided herein), and the Assignee hereby purchases and
assumes from the Assignor, that interest in and to all of the Assignor's
rights and obligations under the Credit Agreement as of the date hereof which
represents the percentage interest specified in Item 4 of Annex I hereto
(the "Assigned Share") of all of the outstanding rights and obligations
under the Credit Agreement relating to the facilities listed in Item 4 of
Annex I hereto, including, without limitation, all rights and obligations
with respect to the Assigned Share of the Assignor's Loans. After giving
effect to such sale and assignment, the Assignee's Commitment will be as set
forth in Item 4 of Annex I hereto.
2. The Assignor (i) represents and warrants that it is
the legal and beneficial owner of the interest being assigned by it
hereunder and that such interest is free and clear of any adverse claim;
(ii) makes no representation or warranty and assume no responsibility with
respect to any statements, warranties or representations made in or in
connection with the Credit Agreement or the other Credit Documents or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Credit Agreement or the other Credit Documents or any other
instrument or document furnished pursuant thereto; and (iii) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Company or any of its Subsidiaries or the
performance or observance by the Company of any of its obligations under the
Credit Agreement or the other Credit Documents or any other instrument or
document furnished pursuant thereto.
3. The Assignee (i) confirms that it has received a copy
of the Credit Agreement and the Note which is the subject hereof, together
with copies of the financial statements referred to therein and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Assumption Agreement;
(ii) agrees that it will, independently and without reliance upon the Agent,
the Assignor or any other Bank and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Credit Agreement; (iii)
confirms that it is an Eligible Assignee under Section 11.03(c) of the Credit
Agreement; (iv) appoints and authorizes the Agent to take such action as
ASSIGNMENT AND ASSUMPTION AGREEMENT, Page 1 of 3
<PAGE>
agent on its behalf and to exercise such powers under the Credit Agreement
and the other Credit Documents as are delegated to the Agent, as the case may
be, by the terms thereof, together with such powers as are reasonably
incidental thereto; [and] (v) agrees that it will perform in accordance with
their terms all of the obligations which by the terms of the Credit Agreement
are required to be performed by it as a Bank (including without limitation,
the obligation to make future Loans); [and (vi) to the extent legally
entitled to do so, attaches the forms described in the last sentence of
Section 11.03(c) of the Credit Agreement]**.
4. Following the execution of this Assignment and
Assumption Agreement by the Assignor and the Assignee, an executed original
hereof (together with all attachments) will be delivered to the Agent. The
effective date of this Assignment and Assumption Agreement shall be the date
of execution hereof by the Assignor and the Assignee and the receipt of the
consent of Agent and the Company to the extent required by Section 11.03 of
the Credit Agreement and receipt by the Agent of a fully executed original
hereof and of the administrative fee referred to in such Section 11.03,
unless otherwise specified in Item 5 of Annex I hereto (the "Settlement
Date").
5. As of the Settlement Date, (i) the Assignee shall be a
party to the Credit Agreement and to the extent provided in this Assignment
and Assumption Agreement, have the rights and obligations of a Bank
thereunder and under the other Credit Documents and (ii) the Assignor shall,
to the extent provided in this Assignment and Assumption Agreement,
relinquish its rights and be released from its obligations under the Credit
Agreement and the other Credit Documents.
6. It is agreed that the Assignee shall be entitled to (x)
an interest on the Assigned Share of the Loans at the rates specified in Item
6 of Annex I and (y) all Facility Fee on the Assigned Share of the Total
Commitment at the rate specified in Item 7 of Annex I hereto which, in each
case, accrue on and after the Settlement Date, such interest and, if
applicable, Facility Fee, to be paid by the Agent directly to the Assignee.
It is further agreed that all payments of principal made on the Assigned
Share of the Loans which occur on and after the Settlement Date will be paid
directly by the Agent to the Assignee. Upon the Settlement Date, the Assignee
shall pay to the Assignor an amount specified by the Assignor in writing
which represents the Assigned Share of the principal amount of the respective
Loans made by the Assignor pursuant to the Credit Agreement which are
outstanding on the Settlement Date, net of any closing costs, and which are
being assigned hereunder. The Assignor and the Assignee shall make all
appropriate adjustments in payments under the Credit Agreement for periods
prior to the Settlement Date directly between themselves on the Settlement
Date.
7. THIS ASSIGNMENT AND ASSUMPTION AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
** Include if the Assignee is organized under the laws of a jurisdiction
outside of the United States.
ASSIGNMENT AND ASSUMPTION AGREEMENT, Page 2 of 3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Assignment and Assumption
Agreement, as of the date first above written, such execution also being made
on Annex I hereto.
Accepted this ______ day [NAME OF ASSIGNOR]
of _________________,19___ as Assignor
By:
Title:
[NAME OF ASSIGNEE]
as Assignee
By:
Title:
Acknowledged and Agreed:
NOBLE AFFILIATES, INC.
By:
Title:
ASSIGNMENT AND ASSUMPTION AGREEMENT, Page 3 of 3
<PAGE>
ANNEX FOR ASSIGNMENT AND ASSUMPTION AGREEMENT
ANNEX I
1. Borrower: Noble Affiliates, Inc.
2. Name and Date of Credit Agreement:
Credit Agreement, dated as of May 27, 1994, among Noble Affiliates,
Inc., the Banks from time to time party thereto, and Texas Commerce
Bank National Association, as Agent, as amended, supplemented or
otherwise modified prior to the date hereof.
3. Date of Assignment Agreement:
4. Amounts (as of date of item #3 above):
Commitment
a. Aggregate Amount for all $
Banks
b. Assigned Share* %
c. Amount of Assigned Share $
5. Settlement Date:
6. Rate of Interest: As set forth in Section 1.07 of the Credit Agreement
to the Assignee: (unless otherwise agreed to by the Assignor and the
Assignee)**
- ------------------------------
* Percentage taken to 12 decimal places.
** Noble Affiliates, Inc. and the Agent shall direct the entire amount of
the interest to the Assignee at the rate set forth in Section 1.07 of the
Credit Agreement, with the Assignor and Assignee effecting the agreed upon
sharing of the interest through payments by the Assignee to the Assignor.
ANNEX I TO ASSIGNMENT AND ASSUMPTION AGREEMENT, Page 1 of 3
<PAGE>
7. Facility Fee: As set forth in Section 2.01 of the Credit Agreement
(unless otherwise agreed to by the Assignor and the
Assignee)***
8. Notice:
ASSIGNOR:
Attention:
Telephone:
Telecopier:
Reference:
ASSIGNEE:
Attention:
Telephone:
Telecopier:
Reference:
- ----------------------------
***Noble Affiliates, Inc. and the Agent shall direct the entire amount of
the Facility Fee to the Assignee at the rate set forth in Section 2.01 of the
Credit Agreement, with the Assignor and the Assignee effecting the agreed
upon sharing of Facility Fee through payment by the Assignee to the Assignor
ANNEX I TO ASSIGNMENT AND ASSUMPTION AGREEMENT, Page 2 of 3
<PAGE>
Payment Instructions:
ASSIGNOR:
Attention:
Reference:
ASSIGNEE:
Attention:
Reference:
Accepted and Agreed:
[NAME OF ASSIGNEE) [NAME OF ASSIGNOR]
By: By:
(Print Name and Title) (Print Name and Title)
ANNEX I TO ASSIGNMENT AND ASSUMPTION AGREEMENT, Page 3 of 3
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 24,824
<SECURITIES> 0
<RECEIVABLES> 55,251
<ALLOWANCES> 0
<INVENTORY> 3,572
<CURRENT-ASSETS> 105,164
<PP&E> 1,612,119
<DEPRECIATION> (793,663)
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<PAGE>
NOBLE AFFILIATES, INC. NEWS
P. O. Box 1967 Ardmore, OK 73402
For further information, contact:
William D. Dickson (405) 223-4110
FOR IMMEDIATE RELEASE
NOBLE AFFILIATES SUBSIDIARY ENTERS AGREEMENT TO SETTLE CLAIM IN COLUMBIA
TRANSMISSION BANKRUPTCY CASE
ARDMORE, Okla., May 1 -- Noble Affiliates, Inc. (NYSE) announced today
that its wholly owned subsidiary, Samedan Oil Corporation, has entered into
an agreement to settle its bankruptcy claim against Columbia Gas Transmission
Corporation, a subsidiary of Columbia Gas System, Inc. Columbia Transmission
and its parent company filed for protection from creditors under Chapter 11
of the United States Bankruptcy Code on July 31, 1991. Shortly after the
filing of its Chapter 11 petition, Columbia Transmission, pursuant to the
provisions of the Bankruptcy Code, rejected a number of its long-term gas
purchase contracts with producers, including a long-term gas purchase
contract with Samedan.
Samedan has become a party to a comprehensive producer settlement
agreement entered into with Columbia Transmission and Columbia Gas System,
Inc. in connection with their plans of reorganization filed in the Bankruptcy
Court on April 17, 1995. The producer settlement, if approved, would provide
Samedan with a right to receive a distribution, upon confirmation of a
Columbia Transmission plan of reorganization, in the amount of $48,925,000,
which amount would be based on an agreed claim against Columbia Transmission
of $71,034,483. In addition, the proposed settlement would give Samedan a
contingent right to receive approximately $2,575,000 upon the resolution of
certain other contested producer claims.
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<PAGE>
- 2 -
The producer settlement to which Samedan is now a party is subject to
various conditions, including approval by the Bankruptcy Court and
confirmation of plans of reorganization in the Columbia bankruptcy cases. The
confirmations of the plans of reorganization are subject to approval by,
among others, various classes of creditors, the Bankruptcy Court, the
Securities and Exchange Commission and the Federal Energy Regulatory
Commission.
Because of both the contingent nature of the Columbia Transmission
producer settlement agreement and the uncertain timing of any receipt by
Samedan of its distribution, no accounting accrual of the revenues
recoverable in respect of Samedan's claim against Columbia Transmission will
be made at this time.
Noble Affiliates, Inc. is an independent energy company with exploration
and production operations throughout major basins in the United States,
including the Gulf of Mexico, as well as international operations primarily
in Canada, Tunisia and Equatorial Guinea. Its common stock is listed on the
NYSE under the symbol "NBL."
