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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 8-K
CURRENT REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT MAY 19, 1995 COMMISSION FILE NUMBER 0-11307
(DATE OF EARLIEST EVENT REPORTED)
GLOBAL NATURAL RESOURCES INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW JERSEY 93-0835865
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
5300 MEMORIAL DRIVE 77007
SUITE 800 (ZIP CODE)
HOUSTON, TEXAS
(ADDRESS OF PRINCIPAL
EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 880-5464
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ITEM 5. OTHER EVENTS
Global Natural Resources Inc. (The "Company") and the
Company's wholly-owned subsidiary, Global Natural Resources Corporation of
Nevada, a Nevada corporation (the "Borrower"), have executed and delivered a
Credit Agreement dated as of May 19, 1995 (the "Credit Agreement") among the
Borrower (as borrower), the Company (as Guarantor), NationsBank of Texas, N.A.,
as Agent, and certain other financial institutions (the "Lenders") which may
become party to the Credit Agreement pursuant to which the Lenders have agreed
to provide loans to the Borrower from time to time, not to exceed in the
aggregate $35,000,000 (subject in all events to certain periodic reductions and
to the calculation of the Available Borrowing Base, as defined in the Credit
Agreement). If the Borrower and the Agent consent and if the Aggregate Maximum
Credit Amounts are changed to exceed $35,000,000, a Lender may assign to a
commercial bank all or part of such Lender's rights under the Credit Agreement.
Subject to the restriction in the Credit Agreement, a Lender may assign
participation in all or part of such Lender's interest in the Credit Agreement.
The Borrower may borrow, repay and re-borrow such amounts available under the
Credit Agreement until March 31, 2000 (subject to certain early termination
dates determined in accordance with the Credit Agreement). In addition,
NationsBank of Texas, N.A., as issuing bank for the Lenders, has agreed to
extend credit to the Borrower (or any subsidiary of the Borrower or of the
company) by issuing, renewing, extending or reissuing letters of credit not
exceeding the lesser of (I) $20,000,000 or (ii) the Aggregate Commitments (as
defined in the Credit Agreement) minus the aggregate principle amount of all
loans then outstanding under the Credit Agreement.
The Company has issued a Guaranty Agreement pursuant to which
the Company has guarantied the payment of all indebtedness, obligations and
liabilities under the Credit Agreement.
Except for the Guaranty Agreement, the loan facility is
unsecured. The proceeds of the loan facility will be used for general corporate
purposes.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) EXHIBITS
1.1 Credit Agreement dated as of May 19, 1995 among
Global Natural Resources Corporation of Nevada, as
Borrower, Global Natural Resources Inc., as
Guarantor, NationsBank of Texas, N.A., as agent, and
the Lenders signatory thereto.
1.2 Form of Promissory Note issued by Global Natural
Resources Corporation of Nevada.
1.3 Guaranty Agreement dated as May 19, 1995 issued by
Global Natural Resources Inc. In favor of NationsBank
of Texas, N.A., as agent.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed by the undersigned
hereunto duly authorized.
GLOBAL NATURAL RESOURCES INC.
Dated: June 15, 1995 By: /s/ Eric Lynn Hill
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Eric Lynn Hill
Vice President-Finance and Administration
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EXHIBIT 1.1
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CREDIT AGREEMENT
DATED AS OF MAY 19, 1995
AMONG
GLOBAL NATURAL RESOURCES CORPORATION OF NEVADA
AS BORROWER,
GLOBAL NATURAL RESOURCES INC.
AS GUARANTOR,
NATIONSBANK OF TEXAS, N.A.,
AS AGENT,
AND
THE LENDERS SIGNATORY HERETO
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EXHIBIT 1.1
TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS
Section 1.01 Terms Defined Above................................................. 1
Section 1.02 Certain Defined Terms............................................... 1
Section 1.03 Accounting Terms and Determinations................................. 18
ARTICLE II
COMMITMENTS
Section 2.01 Loans and Letters of Credit......................................... 19
Section 2.02 Borrowings, Continuations and Conversions, Letters of Credit........ 19
Section 2.03 Changes of Commitments.............................................. 22
Section 2.04 Fees................................................................ 22
Section 2.05 Several Obligations................................................. 23
Section 2.06 Notes............................................................... 23
Section 2.07 Prepayments......................................................... 23
Section 2.08 Borrowing Base...................................................... 24
Section 2.09 Assumption of Risks................................................. 26
Section 2.10 Obligation to Reimburse and to Prepay............................... 27
Section 2.11 Lending Offices..................................................... 28
ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST
Section 3.01 Repayment of Loans.................................................. 28
Section 3.02 Interest............................................................ 29
ARTICLE IV
PAYMENTS; PRO RATA TREATMENT; COMPUTATIONS; ETC.
Section 4.01 Payments............................................................ 30
Section 4.02 Pro Rata Treatment.................................................. 30
Section 4.03 Computations........................................................ 31
Section 4.04 Set-off, Sharing of Payments, Etc................................... 31
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EXHIBIT 1.1
<TABLE>
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Section 4.05 Taxes............................................................... 32
ARTICLE V
CAPITAL ADEQUACY
Section 5.01 Additional Costs, Etc............................................... 35
Section 5.02 Limitation on Eurodollar Loans...................................... 37
Section 5.03 Illegality.......................................................... 38
Section 5.04 Base Rate Loans Pursuant to Sections 5.01, 5.02 and 5.03............ 38
Section 5.05 Compensation........................................................ 38
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.01 Initial Funding..................................................... 39
Section 6.02 Initial and Subsequent Loans........................................ 41
Section 6.03 Conditions Relating to Letters of Credit............................ 41
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Section 7.01 Corporate Existence................................................. 42
Section 7.02 Financial Condition................................................. 42
Section 7.03 Litigation.......................................................... 43
Section 7.04 No Breach........................................................... 43
Section 7.05 Authority........................................................... 43
Section 7.06 Approvals........................................................... 43
Section 7.07 Use of Loans........................................................ 43
Section 7.08 ERISA............................................................... 44
Section 7.09 Taxes............................................................... 45
Section 7.10 Titles, Etc......................................................... 45
Section 7.11 No Material Misstatements........................................... 46
Section 7.12 Investment Company Act.............................................. 46
Section 7.13 Public Utility Holding Company Act.................................. 46
Section 7.14 Subsidiaries and Partnerships....................................... 46
Section 7.15 Location of Business and Offices.................................... 46
Section 7.16 Defaults............................................................ 47
Section 7.17 Environmental Matters............................................... 47
Section 7.18 Compliance with the Law............................................. 48
Section 7.19 Insurance........................................................... 49
Section 7.20 Hedging Agreements.................................................. 49
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EXHIBIT 1.1
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Section 7.21 Material Agreements................................................. 49
Section 7.22 Gas Imbalances...................................................... 50
ARTICLE VIII
AFFIRMATIVE COVENANTS
Section 8.01 Financial Statements................................................ 50
Section 8.02 Litigation.......................................................... 52
Section 8.03 Maintenance, Etc.................................................... 53
Section 8.04 Environmental Matters............................................... 54
Section 8.05 Further Assurances.................................................. 54
Section 8.06 Performance of Obligations.......................................... 55
Section 8.07 Engineering Reports................................................. 55
Section 8.08 ERISA Information and Compliance.................................... 56
ARTICLE IX
NEGATIVE COVENANTS
Section 9.01 Debt................................................................ 57
Section 9.02 Liens............................................................... 58
Section 9.03 Investments, Loans and Advances..................................... 58
Section 9.04 Dividends, Distributions and Redemptions............................ 60
Section 9.05 Sales and Leasebacks................................................ 60
Section 9.06 Nature of Business.................................................. 60
Section 9.07 Limitation on Leases................................................ 61
Section 9.08 Mergers, Etc........................................................ 61
Section 9.09 Proceeds of Notes................................................... 61
Section 9.10 ERISA Compliance.................................................... 61
Section 9.11 Sale or Discount of Receivables..................................... 63
Section 9.12 Current Ratio....................................................... 63
Section 9.13 Tangible Net Worth.................................................. 63
Section 9.14 Sale of Oil and Gas Properties...................................... 63
Section 9.15 Environmental Matters............................................... 63
Section 9.16 Transactions with Affiliates........................................ 64
Section 9.17 Subsidiaries and Partnerships....................................... 64
Section 9.18 Negative Pledge Agreements.......................................... 64
Section 9.19 Gas Imbalances, Take-or-Pay or Other Prepayments.................... 64
ARTICLE X
EVENTS OF DEFAULT; REMEDIES
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EXHIBIT 1.1
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Section 10.01 Events of Default................................................... 65
Section 10.02 Remedies............................................................ 67
ARTICLE XI
THE AGENT
Section 11.01 Appointment, Powers and Immunities.................................. 67
Section 11.02 Reliance by Agent................................................... 68
Section 11.03 Defaults............................................................ 68
Section 11.04 Rights as a Lender.................................................. 69
Section 11.05 INDEMNIFICATION..................................................... 69
Section 11.06 Non-Reliance on Agent and other Lenders............................. 69
Section 11.07 Action by Agent..................................................... 70
Section 11.08 Resignation or Removal of Agent..................................... 70
ARTICLE XII
MISCELLANEOUS
Section 12.01 Waiver.............................................................. 71
Section 12.02 Notices............................................................. 71
Section 12.03 Payment of Expenses, Indemnities, Etc. ............................. 71
Section 12.04 Amendments, Etc. ................................................... 74
Section 12.05 Successors and Assigns.............................................. 74
Section 12.06 Assignments and Participations...................................... 74
Section 12.07 Invalidity.......................................................... 76
Section 12.08 Counterparts........................................................ 76
Section 12.09 References.......................................................... 76
Section 12.10 Survival............................................................ 76
Section 12.11 Captions............................................................ 77
Section 12.12 NO ORAL AGREEMENTS.................................................. 77
Section 12.13 GOVERNING LAW; SUBMISSION TO JURISDICTION........................... 77
Section 12.14 Interest............................................................ 77
Section 12.15 Confidentiality..................................................... 79
Section 12.16 Effectiveness....................................................... 79
Section 12.17 EXCULPATION PROVISIONS.............................................. 79
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EXHIBIT 1.1
<TABLE>
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Exhibit A - Form of Note
Exhibit B - Form of Borrowing, Continuation and Conversion Request
Exhibit C - Form of Compliance Certificate
Exhibit D - Form of Legal Opinion of Liddell, Sapp, Zively, Hill & LaBoon L.L.P.
Exhibit E - Form of Assignment Agreement
Exhibit F - List of Maximum Credit Amounts
Exhibit G - Officer's Certificate - Section 8.01
Schedule 7.02 - Liabilities Schedule 7.03 - Litigation Schedule 7.09 - Taxes
Schedule 7.10 - Titles, etc.
Schedule 7.14 - Subsidiaries and Partnerships
Schedule 7.17 - Environmental Matters
Schedule 7.19 - Insurance
Schedule 7.20 - Hedging Agreements
Schedule 7.21 - Material Agreements
Schedule 7.22 - Gas Imbalances
Schedule 9.01 - Debt
Schedule 9.02 - Liens
Schedule 9.03 - Investments, Loans and Advances
</TABLE>
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EXHIBIT 1.1
THIS CREDIT AGREEMENT dated as of May 19, 1995 is among:
GLOBAL NATURAL RESOURCES CORPORATION OF NEVADA, a corporation formed under the
laws of the State of Nevada (the "Borrower"); GLOBAL NATURAL RESOURCES INC., a
corporation formed under the laws of the State of New Jersey (the "Guarantor");
each of the lenders that is a signatory hereto or which becomes a signatory
hereto as provided in Section 12.06 (individually, together with its successors
and assigns, a "Lender" and, collectively, the "Lenders"); and NATIONSBANK OF
TEXAS, N.A., a national banking association (in its individual capacity,
"NationsBank"), as agent for the Lenders (in such capacity, together with its
successors in such capacity, the "Agent").
R E C I T A L S
A. The Borrower has requested that the Lenders provide certain
loans to and extensions of credit on behalf of the Borrower; and
B. The Lenders have agreed to make such loans and extensions of
credit subject to the terms and conditions of this Agreement.
C. In consideration of the mutual covenants and agreements herein
contained and of the loans, extensions of credit and commitments hereinafter
referred to, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS
Section 1.01 Terms Defined Above. As used in this
Agreement, the terms "Agent," "Borrower," "Guarantor," "Lender," "Lenders," and
"NationsBank" shall have the meanings indicated above.
Section 1.02 Certain Defined Terms. As used herein, the
following terms shall have the following meanings (all terms defined in this
Article I or in other provisions of this Agreement in the singular to have the
same meanings when used in the plural and vice versa):
"Additional Costs" shall have the meaning assigned such term
in Section 5.01(a).
"Affected Loans" shall have the meaning assigned such term in
Section 5.04.
"Affiliate" of any Person shall mean (i) any Person directly
or indirectly controlled by, controlling or under common control with
such first Person, (ii) any director or officer of such first Person
or of any Person referred to in clause (i) above and (iii) if any
Person in clause (i) above is an individual, any member of the
immediate family (including parents, spouse and children) of such
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EXHIBIT 1.1
individual and any trust whose principal beneficiary is such
individual or one or more members of such immediate family and any
Person who is controlled by any such member or trust. As used in
this definition, "control" (including, with its correlative
meanings, "controlled by" and "under common control with") shall
mean any Person which owns directly or indirectly 10% or more of
the securities having ordinary voting power for the election of
directors or other governing body of a corporation or 10% or more of
the partnership or other ownership interests of any other Person
(other than as a limited partner of such other Person) will be deemed
to control such corporation or other Person.
"Agreement" shall mean this Credit Agreement, as the same may
from time to time be amended or supplemented.
"Aggregate Commitments" at any time shall equal the amount
calculated in accordance with Section 2.03 hereof.
"Aggregate Maximum Credit Amounts" at any time shall equal the
sum of the Maximum Credit Amounts of the Lenders ($35,000,000) as the
same may be reduced pursuant to Sections 2.03(b) and (c).
"Applicable Lending Office" shall mean, for each Lender and
for each Type of Loan, the lending office of such Lender (or an
Affiliate of such Lender) designated for such Type of Loan on the
signature pages hereof or such other offices of such Lender (or of an
Affiliate of such Lender) as such Lender may from time to time specify
to the Agent and the Borrower as the office by which its Loans of such
Type are to be made and maintained.
"Applicable Margin" shall mean:
(a) at any time and for the duration of such time
(including the first day but excluding the last day) that the
aggregate principal amount outstanding under the Notes plus the LC
Exposure is less than 80% of the Available Borrowing Base then in
effect, 0% per annum with respect to Base Rate Loans and 1.125% per
annum with respect to Eurodollar Loans; and
(b) at any time and for the duration of such time
(including the first day but excluding the last day) that the
aggregate principal amount outstanding under the Notes plus the LC
Exposure is greater than 80% of the Available Borrowing Base then in
effect, 0% per annum with respect to Base Rate Loans and 1.375% per
annum with respect to Eurodollar Loans.
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EXHIBIT 1.1
"Assignment" shall have the meaning assigned such term in
Section 12.06(b).
"Available Borrowing Base" shall mean the Borrowing Base less
Total Other Debt.
"Base Rate" shall mean, with respect to any Base Rate Loan,
for any day, the higher of (i) the Federal Funds Rate for any such day
plus 1/2 of 1% or (ii) the Prime Rate for such day. Each change in
any interest rate provided for herein based upon the Base Rate
resulting from a change in the Base Rate shall take effect at the time
of such change in the Base Rate.
"Base Rate Loans" shall mean Loans that bear interest at rates
based upon the Base Rate.
"Borrowing Base" shall mean at any time an amount equal to the
amount determined in accordance with Section 2.08.
"Business Day" shall mean any day other than a day on which
commercial banks are authorized or required to close in Houston, Texas
and, where such term is used in the definition of "Quarterly Date" or
if such day relates to a borrowing or continuation of, a payment or
prepayment of principal of or interest on, or a conversion of or into,
or the Interest Period for, a Eurodollar Loan or a notice by the
Borrower with respect to any such borrowing or continuation, payment,
prepayment, conversion or Interest Period, any day which is also a day
on which dealings in Dollar deposits are carried out in the London
interbank market.
"Closing Date" shall mean May 19, 1995.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time and any successor statute.
"Commitment" shall mean, for any Lender, its obligation to
make Loans up to the lesser of such Lender's Maximum Credit Amount or
the Lender's Percentage Share of the amount equal to the then
effective Available Borrowing Base and to participate in the Letters
of Credit as provided in Section 2.01(b).
"Consolidated Net Income" shall mean with respect to the
Guarantor and its Consolidated Subsidiaries, for any period, the
aggregate of the net income (or loss) of the Guarantor and its
Consolidated Subsidiaries after allowances for taxes for such period,
determined on a consolidated basis in accordance with GAAP;
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EXHIBIT 1.1
provided that there shall be excluded from such net income (to the
extent otherwise included therein) the following: (i) the net income
of any Person in which the Guarantor or any Consolidated Subsidiary
has an interest (which interest does not cause the net income of such
other Person to be consolidated with the net income of the Guarantor
and its Consolidated Subsidiaries in accordance with GAAP), except to
the extent of the amount of dividends or distributions actually paid
in such period by such other Person to the Guarantor or to a
Consolidated Subsidiary, as the case may be; (ii) the net income (but
not loss) of any Consolidated Subsidiary (other than the Borrower) to
the extent that the declaration or payment of dividends or similar
distributions or transfers or loans by that Consolidated Subsidiary is
not at the time permitted by operation of the terms of its charter or
any agreement, instrument or Governmental Requirement applicable to
such Consolidated Subsidiary, or is otherwise restricted or prohibited
in each case determined in accordance with GAAP; (iii) the net income
(or loss) of any Person acquired in a pooling-of-interests transaction
for any period prior to the date of such transaction; (iv) any
extraordinary gains or losses, including gains or losses attributable
to Property sales not in the ordinary course of business; and (v) the
cumulative effect of a change in accounting principles and any gains
or losses attributable to writeups or writedowns of assets.
"Consolidated Subsidiaries" shall mean each Subsidiary (and
interests in partnerships and joint ventures) of the Guarantor
(whether now existing or hereafter created or acquired) the financial
statements of which shall be (or should have been) consolidated with
the financial statements of the Borrower or the Guarantor, as the case
may be, in accordance with GAAP and including, without limitation, the
Borrower.
"Conversion Date" shall mean the date which is the earlier of
(i) two (2) years from the Closing Date or (ii) April 30, 1997.
"Debt" shall mean, for any Person the sum of the following
(without duplication): (i) all obligations of such Person for borrowed
money or evidenced by bonds, debentures, notes or other similar
instruments (including principal, interest, fees and charges); (ii)
all obligations of such Person (whether contingent or otherwise) in
respect of bankers' acceptances, letters of credit, surety or other
bonds and similar instruments; (iii) all obligations of such Person to
pay the deferred purchase price of Property or services (other than
for borrowed money); (iv) all obligations under leases which shall
have been, or should have been, in accordance with GAAP, recorded as
capital leases in respect of which such Person is liable (whether
contingent or otherwise); (v) all obligations under leases which
require such Person or its Affiliate to make payments over the term of
such
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EXHIBIT 1.1
lease, including payments at termination, which are substantially
equal to at least eighty percent (80%) of the purchase price of the
Property subject to such lease plus interest at an imputed rate of
interest; (vi) all Debt and other obligations of others secured by a
Lien on any asset of such Person, whether or not such Debt is assumed
by such Person; (vii) all Debt and other obligations of others
guaranteed by such Person or in which such Person otherwise assures a
creditor against loss of the debtor or obligations of others (other
than the endorsement of negotiable instruments in the ordinary course
of business); (viii) all obligations or undertakings of such Person to
maintain or cause to be maintained the financial position or covenants
of others or to purchase the Debt or Property of others; (ix) the
undischarged balance of any production payment created by such Person
or for the creation of which such Person directly or indirectly
received payment; (x) the mark to market value of all obligations of
such Person under Hedging Agreements; and (xi) obligations to deliver
goods or services including Hydrocarbons in consideration of advance
payments.
"Default" shall mean an Event of Default or an event which
with notice or lapse of time or both would become an Event of Default.
"Deficiency" shall have the meaning assigned such term in
Section 2.07(b) and (c).
"Dollars" and "$" shall mean lawful money of the United States
of America.
"EBITDA" shall mean, for any period, the sum of Consolidated
Net Income for such period plus the following expenses or charges to
the extent deducted from Consolidated Net Income in such period:
interest, taxes, depreciation, depletion and amortization.
"Effective Date" shall have the meaning assigned such term in
Section 12.16.
"Environmental Laws" shall mean any and all Governmental
Requirements pertaining to health or the environment in effect in any
and all jurisdictions in which the Borrower or any Subsidiary is
conducting or at any time has conducted business, or where any
Property of the Borrower or any Subsidiary is located, including
without limitation, the Oil Pollution Act of 1990 ("OPA"), the Clean
Air Act, as amended, the Comprehensive Environmental, Response,
Compensation, and Liability Act of 1980 ("CERCLA"), as amended, the
Federal Water Pollution Control Act, as amended, the Occupational
Safety and Health
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EXHIBIT 1.1
Act of 1970, as amended, the Resource Conservation and Recovery Act of
1976 ("RCRA"), as amended, the Safe Drinking Water Act, as amended,
the Toxic Substances Control Act, as amended, the Superfund Amendments
and Reauthorization Act of 1986, as amended, the Hazardous Materials
Transportation Act, as amended, and other environmental conservation
or protection laws. The term "oil" shall have the meaning specified
in OPA, the terms "hazardous substance" and "release" (or "threatened
release") have the meanings specified in CERCLA, and the terms "solid
waste" and "disposal" (or "disposed") have the meanings specified in
RCRA; provided, however, that (i) in the event either OPA, CERCLA or
RCRA is amended so as to broaden the meaning of any term defined
thereby, such broader meaning shall apply subsequent to the effective
date of such amendment and (ii) to the extent the laws of the state in
which any Property of the Borrower or any Subsidiary is located
establish a meaning for "oil," "hazardous substance," "release,"
"solid waste" or "disposal" which is broader than that specified in
either OPA, CERCLA or RCRA, such broader meaning shall apply.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time and any successor statute.
"ERISA Affiliate" shall mean each trade or business (whether
or not incorporated) which together with the Borrower or any
Subsidiary would be deemed to be a "single employer" within the
meaning of section 4001(b)(1) of ERISA or subsections (b), (c), (m) or
(o) of section 414 of the Code.
"ERISA Event" shall mean (i) a "Reportable Event" described in
Section 4043 of ERISA and the regulations issued thereunder, (ii) the
withdrawal of the Borrower, any Subsidiary or any ERISA Affiliate from
a Plan during a plan year in which it was a "substantial employer" as
defined in Section 4001(a)(2) of ERISA, (iii) the filing of a notice
of intent to terminate a Plan or the treatment of a Plan amendment as
a termination under Section 4041 of ERISA, (iv) the institution of
proceedings to terminate a Plan by the PBGC or (v) any other event or
condition which might constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer,
any Plan.
"Eurodollar Loans" shall mean Loans the interest rates on
which are determined on the basis of rates referred to in the
definition of "Fixed Eurodollar Rate".
"Event of Default" shall have the meaning assigned such term
in Section 10.01.
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EXHIBIT 1.1
"Excepted Liens" shall mean: (i) Liens for taxes, assessments
or other governmental charges or levies not yet due or which are being
contested in good faith by appropriate action and for which adequate
reserves (as determined in accordance with GAAP) have been maintained;
(ii) Liens in connection with workmen's compensation, unemployment
insurance or other social security, old age pension or public
liability obligations not yet due or which are being contested in good
faith by appropriate action and for which adequate reserves have been
maintained in accordance with GAAP; (iii) operators', drillers',
vendors', carriers', warehousemen's, repairmen's, mechanics',
workmen's, materialmen's, construction or other like Liens arising by
operation of law in the ordinary course of business or incident to the
exploration, development, operation and maintenance of Oil and Gas
Properties or statutory landlord's liens, each of which is in respect
of obligations that have not been outstanding more than 90 days or
which are being contested in good faith by appropriate proceedings and
for which adequate reserves have been maintained in accordance with
GAAP; (iv) any Liens reserved in leases or farmout agreements for rent
or royalties and for compliance with the terms of the farmout
agreements or leases in the case of leasehold estates, to the extent
that any such Lien referred to in this clause does not materially
impair the use of the Property covered by such Lien for the purposes
for which such Property is held by the Guarantor or any Subsidiary or
materially impair the value of such Property subject thereto; (v)
encumbrances (other than to secure the payment of borrowed money or
the deferred purchase price of Property or services), easements,
restrictions, servitudes, permits, conditions, covenants, exceptions
or reservations in any rights of way or other Property of the
Guarantor or any Subsidiary for the purpose of roads, pipelines,
transmission lines, transportation lines, distribution lines for the
removal of gas, oil, coal or other minerals or timber, and other like
purposes, or for the joint or common use of real estate, rights of
way, facilities and equipment, and defects, irregularities, zoning
restrictions and deficiencies in title of any rights of way or other
Property which in the aggregate do not materially impair the use of
such rights of way or other Property for the purposes of which such
rights of way and other Property are held by the Guarantor or any
Subsidiary or materially impair the value of such Property subject
thereto; (vi) deposits of cash or securities to secure the performance
of bids, trade contracts, leases, statutory obligations and other
obligations of a like nature incurred in the ordinary course of
business; and (vii) Liens permitted by the Security Instruments.
"Federal Funds Rate" shall mean, for any day, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
equal to the weighted average of the rates on overnight federal funds
transactions with a member of the Federal Reserve System arranged by
federal funds brokers on such day, as
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EXHIBIT 1.1
published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (i) if the date 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 (ii) if such rate is not so published for any day, the
Federal Funds Rate for such day shall be the average rate charged to
the Agent on such day on such transactions as determined by the Agent.
"Fee Letter" shall mean that certain letter agreement from the
Agent to the Borrower dated of even date with this Agreement
concerning certain fees in connection with this Agreement and any
agreements or instruments executed in connection therewith, as the
same may be amended or replaced from time to time.
"Financial Statements" shall mean the financial statement or
statements of the Guarantor and its Consolidated Subsidiaries
described or referred to in Section 7.02.
"Fixed Eurodollar Rate" shall mean, with respect to any
Eurodollar Loan, the rate per annum (rounded upwards, if necessary, to
the nearest 1/16 of 1%) quoted by the Agent at approximately 11:00
a.m. London time (or as soon thereafter as practicable) two (2)
Business Days prior to the first day of the Interest Period for such
Loan for the offering by the Agent to leading banks in the London
interbank market of Dollar deposits having a term comparable to such
Interest Period and in an amount comparable to the principal amount of
the Eurodollar Loan to be made by the Lenders for such Interest
Period.
"Fixed Rate" shall mean, with respect to any Eurodollar Loan,
a rate per annum (rounded upwards, if necessary, to the nearest 1/100
of 1%) determined by the Agent to be equal to the quotient of (i) the
Fixed Eurodollar Rate for such Loan for the Interest Period for such
Loan divided by (ii) 1 minus the Reserve Requirement for such Loan for
such Interest Period.
"GAAP" shall mean generally accepted accounting principles in
the United States of America in effect from time to time.
"Governmental Authority" shall include the country, the state,
county, city and political subdivisions in which any Person or such
Person's Property is located or which exercises valid jurisdiction
over any such Person or such Person's Property, and any court, agency,
department, commission, board,
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<PAGE> 15
EXHIBIT 1.1
bureau or instrumentality of any of them including monetary
authorities which exercises valid jurisdiction over any such Person or
such Person's Property. Unless otherwise specified, all references to
Governmental Authority herein shall mean a Governmental Authority
having jurisdiction over, where applicable, the Guarantor, its
Subsidiaries or any of their Property or the Agent, any Lender or any
Applicable Lending Office.
"Governmental Requirement" shall mean any law, statute, code,
ordinance, order, determination, rule, regulation, judgment, decree,
injunction, franchise, permit, certificate, license, authorization or
other directive or requirement (whether or not having the force of
law), including, without limitation, Environmental Laws, energy
regulations and occupational, safety and health standards or controls,
of any Governmental Authority.
"Guaranty Agreement" shall mean an agreement executed by the
Guarantor in form and substance satisfactory to the Agent
guaranteeing, unconditionally, payment of the Indebtedness, as the
same may be amended, modified or supplemented from time to time.
"Hambros Trust" shall mean a Trust established under a Trust
Deed dated May 9, 1983, as amended, whereby Hambros Channel Islands
Trust Corporation Limited, a company incorporated under the laws of
Jersey, Channel Islands, was appointed Trustee.
"Hambros Trust Agreements" shall mean the Scheme of
Arrangement dated May 17, 1983, the Trust Deed dated May 9, 1983, the
Settlement Agreement dated January 12, 1989, the Deed of Indemnity
dated April 5, 1989 and the Letter Agreement Amending the Trust Deed
dated May 9, 1983.
"Hambros Trust Debt Letter of Credit" shall mean a letter of
credit issued by NationsBank which secures payment of borrowings by
the Borrower from the Hambros Trust.
"Hambros Trust Shares" shall mean registered common shares of
the Company registered in the name of Hambros Trust, held for the
owners of share warrants to bearer which were issued by the Company's
predecessor, Global Natural Resources PLC.
"Hedging Agreements" shall mean any commodity, interest rate
or currency swap, rate cap, rate floor, rate collar, forward agreement
or other exchange or rate protection agreements or any option with
respect to any such transaction; provided, however, Hedging Agreements
to which a Person is a party shall not be deemed Hedging Agreements
for purposes of this Agreement unless
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EXHIBIT 1.1
and until the aggregate notional amounts and commodity market value
covered by all Hedging Agreements of such Person equal or exceed
$2,000,000.
"Highest Lawful Rate" shall mean, with respect to each Lender,
the maximum nonusurious interest rate, if any, that at any time or
from time to time may be contracted for, taken, reserved, charged or
received on the Notes or on other Indebtedness under laws applicable
to such Lender which are presently in effect or, to the extent allowed
by law, under such applicable laws which may hereafter be in effect
and which allow a higher maximum nonusurious interest rate than
applicable laws now allow.
"Hydrocarbon Interests" shall mean all rights, titles,
interests and estates now or hereafter acquired in and to oil and gas
leases, oil, gas and mineral leases, or other liquid or gaseous
hydrocarbon leases, mineral fee interests, overriding royalty and
royalty interests, net profit interests and production payment
interests, including any reserved or residual interests of whatever
nature.
"Hydrocarbons" shall mean oil, gas, casinghead gas, drip
gasoline, natural gasoline, condensate, distillate, liquid
hydrocarbons, gaseous hydrocarbons and all products refined or
separated therefrom.
"Indebtedness" shall mean any and all amounts owing or to be
owing by the Borrower to the Agent and/or Lenders in connection with
the Loan Documents and the Letter of Credit Agreements, and any
Hedging Agreements now or hereafter arising between the Borrower and
any Lender and all renewals, extensions and/or rearrangements of any
of the above.
"Indemnified Parties" shall have the meaning assigned such
term in Section 12.03(b).
"Indemnity Matters" shall mean any and all actions, suits,
proceedings (including any investigations, litigation or inquiries),
claims, demands and causes of action made or threatened against a
Person and, in connection therewith, all losses, liabilities, damages
(including, without limitation, consequential damages) or reasonable
costs and expenses of any kind or nature whatsoever incurred by such
Person, whether caused by the sole or concurrent negligence, or
otherwise of such Person seeking indemnification.
"Initial Funding" shall mean the funding of the initial Loans
or issuance of the initial Letters of Credit pursuant to Section 6.01
hereof.
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EXHIBIT 1.1
"Initial Reserve Report" shall mean the report of Ryder Scott
Co. Petroleum Engineers, dated March 7, 1995 with respect to the Oil
and Gas Properties of the Borrower as of December 31, 1994, a copy of
which has been delivered to the Agent.
"Interest Period" shall mean, with respect to any Eurodollar
Loan, the period commencing on the date such Eurodollar Loan is made
and ending on the numerically corresponding day in the first, second,
third or sixth calendar month thereafter, as the Borrower may select
as provided in Section 2.02 (or such longer period as may be requested
by the Borrower and agreed to by the Majority Lenders), except that
each Interest Period which commences on the last Business Day of a
calendar month (or on any day for which there is no numerically
corresponding day in the appropriate subsequent calendar month) shall
end on the last Business Day of the appropriate subsequent calendar
month.
Notwithstanding the foregoing: (i) no Interest Period may
commence before and end after the Revolving Credit Termination Date;
(ii) no Interest Period for any Eurodollar Loan may end after the due
date of any installment, if any, provided for in Section 3.01 hereof
to the extent that such Eurodollar Loan would need to be prepaid prior
to the end of such Interest Period in order for such installment to be
paid when due; (iii) each Interest Period which would otherwise end on
a day which is not a Business Day shall end on the next succeeding
Business Day (or, if such next succeeding Business Day falls in the
next succeeding calendar month, on the next preceding Business Day);
and (iv) no Interest Period shall have a duration of less than one
month and, if the Interest Period for any Eurodollar Loans would
otherwise be for a shorter period, such Loans shall not be available
hereunder.
"LC Commitment" at any time shall mean $20,000,000.
"LC Exposure" at any time shall mean the difference between
(i) aggregate face amount of all undrawn and uncancelled Letters of
Credit and the aggregate of all amounts drawn under all Letters of
Credit and not yet reimbursed, minus (ii) the aggregate amount of all
cash securing outstanding Letters of Credit pursuant to Section
2.10(b).
"Letter of Credit Agreements" shall mean the written
agreements with NationsBank, as issuing lender for any Letter of
Credit, executed or hereafter executed in connection with the issuance
by NationsBank of the Letters of Credit, such agreements to be on
NationsBank's customary form for letters of credit of
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EXHIBIT 1.1
comparable amount and purpose as from time to time in effect or as
otherwise agreed to by the Borrower and NationsBank.
"Letters of Credit" shall mean the letters of credit issued
pursuant to Section 2.01(b) and all reimbursement obligations
pertaining to any such letters of credit, and "Letter of Credit" shall
mean any one of the Letters of Credit and the reimbursement
obligations pertaining thereto. For purposes hereof a Hambros Trust
Debt Letter of Credit which is not a Secured Hambros Trust Debt Letter
of Credit shall be deemed a Letter of Credit.
"Lien" shall mean any interest in Property securing an
obligation owed to, or a claim by, a Person other than the owner of
the Property, whether such interest is based on the common law,
statute or contract, and whether such obligation or claim is fixed or
contingent, and including but not limited to (i) the lien or security
interest arising from a mortgage, encumbrance, pledge, security
agreement, conditional sale or trust receipt or a lease, consignment
or bailment for security purposes or (ii) production payments and the
like payable out of Oil and Gas Properties. The term "Lien" shall
include reservations, exceptions, encroachments, easements, rights of
way, covenants, conditions, restrictions, leases and other title
exceptions and encumbrances affecting Property. For the purposes of
this Agreement, the Borrower or any Subsidiary shall be deemed to be
the owner of any Property which it has acquired or holds subject to a
conditional sale agreement, or leases under a financing lease or other
arrangement pursuant to which title to the Property has been retained
by or vested in some other Person in a transaction intended to create
a financing.
"Loan Documents" shall mean this Agreement, the Notes and the
Security Instruments.
"Loans" shall mean the loans as provided for by Section
2.01(a).
"Majority Lenders" shall mean, at any time while no Loans are
outstanding, Lenders having at least sixty-six and two-thirds percent
(66-2/3%) of the Aggregate Commitments and, at any time while Loans
and/or Letters of Credit are outstanding, Lenders holding at least
sixty-six and two-thirds percent (66-2/3%) of the outstanding
aggregate principal amount of the Loans (without regard to any sale by
a Lender of a participation in any Loan or Letter of Credit under
Section 12.06(c)) and/or outstanding Letters of Credit.
"Material Adverse Effect" shall mean any material and adverse
effect, as determined by the Majority Lenders, on (i) the assets,
liabilities, financial condition, business, operations or affairs of
the Guarantor and its Subsidiaries
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EXHIBIT 1.1
taken as a whole different from those reflected in the Financial
Statements or from the facts represented or warranted in this
Agreement or any Security Instrument, or (ii) the ability of the
Guarantor and its Subsidiaries or the Borrower and its Subsidiaries in
each case taken as a whole to carry out their business as at the
Closing Date or meet their obligations under the Loan Documents on a
timely basis.
"Maximum Credit Amount" shall mean, as to each Lender, the
amount set forth opposite such Lender's name on Exhibit F under the
caption "Maximum Credit Amounts" (as the same may be reduced pursuant
to Sections 2.03(b) and (c) hereof pro rata to each Lender based on
its Percentage Share) as modified from time to time to reflect any
assignments permitted by Section 12.06(b).
"Multiemployer Plan" shall mean a Plan defined as such in
Section 3(37) or 4001(a)(3) of ERISA.
"Notes" shall mean the Notes provided for by Section 2.06,
together with any and all renewals, extensions for any period,
increases, rearrangements, substitutions or modifications thereof.
"Oil and Gas Properties" shall mean Hydrocarbon Interests; the
Properties now or hereafter pooled or unitized with Hydrocarbon
Interests; all presently existing or future unitization, pooling
agreements and declarations of pooled units and the units created
thereby (including without limitation all units created under orders,
regulations and rules of any Governmental Authority) which may affect
all or any portion of the Hydrocarbon Interests; all operating
agreements, contracts and other agreements which relate to any of the
Hydrocarbon Interests or the production, sale, purchase, exchange or
processing of Hydrocarbons from or attributable to such Hydrocarbon
Interests; all Hydrocarbons in and under and which may be produced and
saved or attributable to the Hydrocarbon Interests, including all oil
in tanks, the lands covered thereby and all rents, issues, profits,
proceeds, products, revenues and other incomes from or attributable to
the Hydrocarbon Interests; all tenements, hereditaments, appurtenances
and Properties in any manner appertaining, belonging, affixed or
incidental to the Hydrocarbon Interests; and all Properties, rights,
titles, interests and estates described or referred to above,
including any and all Property, real or personal, now owned or
hereinafter acquired and situated upon, used, held for use or useful
in connection with the operating, working or development of any of
such Hydrocarbon Interests or Property (excluding drilling rigs,
automotive equipment or other personal property which may be on such
premises for the purpose of drilling a well or for other similar
temporary uses) and including any and all oil
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EXHIBIT 1.1
wells, gas wells, injection wells or other wells, buildings,
structures, fuel separators, liquid extraction plants, plant
compressors, pumps, pumping units, field gathering systems, tanks and
tank batteries, fixtures, valves, fittings, machinery and parts,
engines, boilers, meters, apparatus, equipment, appliances, tools,
implements, cables, wires, towers, casing, tubing and rods, surface
leases, rights-of-way, easements and servitudes together with all
additions, substitutions, replacements, accessions and attachments to
any and all of the foregoing.
"Other Taxes" shall have the meaning assigned such term in
Section 4.05(b).
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any entity succeeding to any or all of its functions.
"Percentage Share" shall mean the percentage of the Aggregate
Commitments to be provided by a Lender under this Agreement as
indicated on Exhibit F hereto, as modified from time to time to
reflect any assignments permitted by Section 12.06(b).
"Permitted Investments" shall mean United States Treasury
obligations with maturities of no more than seven (7) years which are
held by NationsBank.
"Person" shall mean any individual, corporation, company,
voluntary association, partnership, joint venture, trust,
unincorporated organization or government or any agency,
instrumentality or political subdivision thereof, or any other form of
entity.
"Plan" shall mean any employee pension benefit plan, as
defined in Section 3(2) of ERISA, which (i) is currently or hereafter
sponsored, maintained or contributed to by the Borrower, any
Subsidiary or an ERISA Affiliate or (ii) was at any time during the
preceding six calendar years sponsored, maintained or contributed to,
by the Borrower, any Subsidiary or an ERISA Affiliate.
"Post-Default Rate" shall mean, in respect of any principal of
any Loan or any other amount payable by the Borrower under this
Agreement or any Note which is not paid when due (whether at stated
maturity, by acceleration or otherwise), a rate per annum during the
period commencing on the due date until such amount is paid in full or
the default is cured or waived equal to 2% per annum above the Base
Rate as in effect from time to time plus the Applicable Margin (if
any), but in no event to exceed the Highest Lawful Rate; provided
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EXHIBIT 1.1
that, if such amount in default is principal of a Eurodollar Loan, the
"Post-Default Rate" for such principal shall be, for the period
commencing on the due date and ending on the last day of the Interest
Period therefor, 2% per annum above the interest rate for such Loan as
provided in Section 3.02(b), but in no event to exceed the Highest
Lawful Rate.
"Prime Rate" shall mean the rate of interest from time to time
announced publicly by the Agent at the Principal Office as its prime
commercial lending rate. Such rate is set by the Agent as a general
reference rate of interest, taking into account such factors as the
Agent may deem appropriate, it being understood that while many of the
Agent's commercial or other loans are priced in relation to such rate,
that it is not necessarily the lowest or best rate actually charged to
any customer and that the Agent may make various commercial or other
loans at rates of interest having no relationship to such rate.
"Principal Office" shall mean the principal office of the
Agent, presently located at 700 Louisiana, P. O. Box 2518, Houston,
Texas 77252-2518.
"Production Report" shall mean production reports as of the
appropriate date in form and substance reasonably satisfactory to the
Agent by lease for Borrower's Oil and Gas Properties located in the
United States, which reports shall include quantities or volume of
production, revenue, realized product prices, operating expenses,
taxes, capital expenditures and lease operating costs which have
accrued to the Borrower's accounts during the subject period, and such
other information with respect thereto as the Agent may reasonably
require.
"Project Financing" shall mean obligations of the Borrower or
the Guarantor with respect to the Ventures.
"Property" shall mean any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"Quarterly Dates" shall mean the last day of each March, June,
September and December, in each year, the first of which shall be June
30, 1995; provided, however, that if any such day is not a Business
Day, such Quarterly Date shall be the next succeeding Business Day.
"Redetermination Date" shall have the meaning assigned such
term in Section 2.08(a).
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EXHIBIT 1.1
"Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System (or any successor), as the
same may be amended or supplemented from time to time.
"Regulatory Change" shall mean, with respect to any Lender,
any change after the Closing Date in any Governmental Requirement
(including Regulation D) or the adoption or making after such date of
any interpretations, directives or requests applying to a class of
lenders (including such Lender or its Applicable Lending Office) of or
under any Governmental Requirement (whether or not having the force of
law) by any Governmental Authority charged with the interpretation or
administration thereof.
"Required Payment" shall have the meaning assigned such term
in Section 4.04.
"Reserve Report" shall mean a report, in form and substance
reasonably satisfactory to the Agent, setting forth, as of the
appropriate date (x) the oil and gas reserves attributable to the
Borrower's Oil and Gas Properties located in the United States
together with a projection of the rate of production and future net
income, taxes, operating expenses and capital expenditures with
respect thereto as of such date, based upon the pricing assumptions
consistent with SEC reporting requirements at the time and (y) such
other information as the Agent may reasonably request.
"Reserve Requirement" shall mean, for any Interest Period for
any Eurodollar Loan, the average maximum rate at which reserves
(including any marginal, supplemental or emergency reserves) are
required to be maintained during such Interest Period under Regulation
D by member banks of the Federal Reserve System in New York City with
deposits exceeding one billion Dollars against "Eurocurrency
liabilities" (as such term is used in Regulation D). Without limiting
the effect of the foregoing, the Reserve Requirement shall reflect any
other reserves required to be maintained by such member banks by
reason of any Regulatory Change against (i) any category of
liabilities which includes deposits by reference to which the Fixed
Eurodollar Rate for Eurodollar Loans is to be determined as provided
in the definition of "Fixed Eurodollar Rate" or (ii) any category of
extensions of credit or other assets which include a Eurodollar Loan.
"Responsible Officer" shall mean, as to any Person, the Chief
Executive Officer, the President or any Vice President of such Person
and, with respect to financial matters, the term "Responsible Officer"
shall include the Chief Financial Officer of such Person. Unless
otherwise specified, all references to a
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<PAGE> 23
EXHIBIT 1.1
Responsible Officer herein shall mean a Responsible Officer of the
Borrower.
"Revolving Credit Termination Date" shall mean, unless the
Commitments are sooner terminated pursuant to Sections 2.03(b) or (c)
or 10.02 hereof, March 31, 2000.
"Scheduled Redetermination Date" shall have the meaning
assigned such term in Section 2.08(d).
"SEC" shall mean the Securities and Exchange Commission or any
successor Governmental Authority.
"Secured Hambros Trust Debt Letter of Credit" shall mean a
Hambros Trust Debt Letter of Credit which is 100% collateralized by
Permitted Investments.
"Security Instruments" shall mean the Guaranty Agreement, the
Letters of Credit, the Letter of Credit Agreements, the Fee Letter and
any and all other agreements or instruments now or hereafter executed
and delivered by the Borrower, the Guarantor or any other Person
(other than participation or similar agreements between any Lender and
any other lender or creditor with respect to any Indebtedness pursuant
to this Agreement) in connection with, or as security for the payment
or performance of, the Notes, this Agreement, or reimbursement
obligations under the Letters of Credit, as such agreements may be
amended, supplemented or restated from time to time.
"Subsidiary" shall mean any corporation of which at least a
majority of the outstanding shares of stock having by the terms
thereof ordinary voting power to elect a majority of the board of
directors of such corporation (irrespective of whether or not at the
time stock of any other class or classes of such corporation shall
have or might have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned or controlled
by the Borrower, Guarantor or one or more of their Subsidiaries or by
the Borrower or Guarantor and one or more of their Subsidiaries.
"Tangible Net Worth" shall mean, as at any date, the sum of
the following for the Guarantor and its Consolidated Subsidiaries
determined (without duplication) in accordance with GAAP:
(i) the amount of share capital liability of the
Guarantor, plus
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EXHIBIT 1.1
(ii) the amount of surplus and retained earnings (or, in
the case of a surplus or retained earnings deficit, minus the amount
of such deficit), minus
(iii) the sum of the following: cost of treasury shares
and the book value of all assets of the Guarantor and its Consolidated
Subsidiaries which should be classified as intangibles (without
duplication of deductions in respect of items already deducted in
arriving at surplus and retained earnings) but in any event including
as such intangibles the following: goodwill, research and development
costs, trademarks, trade names, copyrights, patents and franchises,
unamortized debt discount and expense, all reserves and any writeup in
the book value of assets resulting from a revaluation thereof or
resulting from any changes in GAAP subsequent to March 31, 1995.
"Taxes" shall have the meaning assigned such term in Section
4.05(a).
"Total Debt" shall mean the aggregate of all Debt which is
recourse to the Borrower or the Guarantor including the aggregate
outstanding principal amount of the Loans plus the LC Exposure,
excluding (i) Debt owing to the Hambros Trust provided such Debt is
secured by a Secured Hambros Trust Debt Letter of Credit, (ii) Secured
Hambros Trust Debt Letters of Credit, and (iii) such Project Financing
as the Majority Lenders may hereafter agree, in writing, to exclude
from Total Debt.
"Total Other Debt" shall mean the aggregate of all Total Debt
other than the Notes and other Indebtedness.
"Type" shall mean, with respect to any Loan, a Base Rate Loan
or a Eurodollar Loan.
"Venture" shall mean any one of the entities described in
Section 9.03(h), (i) and (j).
"Wholly-Owned Subsidiary" shall mean, as to the Borrower, any
Subsidiary of which all of the outstanding shares of stock having by
the terms thereof ordinary voting power to elect the board of
directors of such corporation, other than directors' qualifying
shares, are owned or controlled by the Borrower or one or more of the
Wholly-Owned Subsidiaries or by the Borrower and one or more of the
Wholly-Owned Subsidiaries.
Section 1.03 Accounting Terms and Determinations. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all determinations with respect to accounting matters hereunder
shall be made, and all financial statements and certificates and
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EXHIBIT 1.1
reports as to financial matters required to be furnished to the Agent or the
Lenders hereunder shall be prepared, in accordance with GAAP, applied on a
basis consistent with the audited financial statements of the Guarantor and the
unaudited financial statements of the Borrower referred to in Section 7.02
(except for changes concurred with by the Guarantor's independent public
accountants).
ARTICLE II
COMMITMENTS
Section 2.01 Loans and Letters of Credit.
(a) Loans. Each Lender severally agrees, on the terms of
this Agreement, to make Loans to the Borrower during the period from
and including (i) the Closing Date or (ii) such later date that such
Lender becomes a party to this Agreement as provided in Section
12.06(b), to and up to, but excluding, the Revolving Credit
Termination Date in an aggregate principal amount at any one time
outstanding up to but not exceeding the amount of such Lender's
Commitment as then in effect; provided, however, that the aggregate
principal amount of all such Loans by all Lenders hereunder at any one
time outstanding together with the LC Exposure shall not exceed the
Aggregate Commitments. Subject to the terms of this Agreement, during
the period from the Closing Date to and up to, but excluding, the
Revolving Credit Termination Date, the Borrower may borrow, repay and
reborrow the amount described in this Section 2.01(a).
(b) Letters of Credit. During the period from and
including the Closing Date to but excluding the Revolving Credit
Termination Date, NationsBank, as issuing bank for the Lenders, agrees
to extend credit for the account of the Borrower or any Subsidiary at
any time and from time to time by issuing renewing, extending or
reissuing Letters of Credit; provided however, the LC Exposure at any
one time outstanding shall not exceed the lesser of (i) the LC
Commitment or (ii) the Aggregate Commitments, as then in effect, minus
the aggregate principal amount of all Loans then outstanding. The
Lenders shall participate in such Letters of Credit according to their
respective Percentage Shares.
(c) Limitation on Types of Loans. Subject to the other terms
and provisions of this Agreement, at the option of the Borrower, the
Loans may be Base Rate Loans or Eurodollar Loans; provided that,
without the prior written consent of the Majority Lenders, no more
than five (5) Eurodollar Loans may be outstanding at any time.
Section 2.02 Borrowings, Continuations and Conversions,
Letters of Credit.
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EXHIBIT 1.1
(a) Borrowings. The Borrower shall give the Agent (which
shall promptly notify the Lenders) advance notice as hereinafter
provided of each borrowing hereunder, which shall specify the
aggregate amount of such borrowing, the Type and the date (which shall
be a Business Day) of the Loans to be borrowed and (in the case of
Eurodollar Loans) the duration of the Interest Period therefor.
(b) Minimum Amounts. All Base Rate Loan borrowings shall
be in amounts of at least $100,000 or the remaining balance of the
Aggregate Commitments, if less, or any whole multiple of $100,000 in
excess thereof, and all Eurodollar Loans shall be in amounts of at
least $500,000 or any whole multiple of $500,000 in excess thereof.
(c) Notices. All borrowings, continuations and
conversions shall require advance written notice to the Agent (which
shall promptly notify the Lenders) in the form of Exhibit B hereto (or
telephonic notice promptly confirmed by such a written notice), which
in each case shall be irrevocable, from the Borrower to be received by
the Agent not later than 11:00 a.m. Houston, Texas time on the date of
each Base Rate Loan borrowing and three Business Days prior to the
date of each Eurodollar Loan borrowing, continuation or conversion.
Without in any way limiting the Borrower's obligation to confirm in
writing any telephonic notice, the Agent may act without liability
upon the basis of telephonic notice believed by the Agent in good
faith to be from the Borrower prior to receipt of written
confirmation. In each such case, the Borrower hereby waives the right
to dispute the Agent's record of the terms of such telephonic notice
except in the case of gross negligence or willful misconduct by the
Agent.
(d) Continuation Options. Subject to the provisions made
in this Section 2.02(d), the Borrower may elect to continue all or any
part of any Eurodollar Loan beyond the expiration of the then current
Interest Period relating thereto by giving advance notice as provided
in Section 2.02(c) to the Agent (which shall promptly notify the
Lenders) of such election, specifying the amount of such Loan to be
continued and the Interest Period therefor. In the absence of such a
timely and proper election, the Borrower shall be deemed to have
elected to convert such Eurodollar Loan to a Base Rate Loan pursuant
to Section 2.02(e). All or any part of any Eurodollar Loan may be
continued as provided herein, provided that (i) any continuation of
any such Loan shall be (as to each Loan as continued for an applicable
Interest Period) in amounts of at least $500,000 or any whole multiple
of $500,000 in excess thereof and (ii) no Default shall have occurred
and be continuing. If a Default shall have occurred and be
continuing, each Eurodollar Loan shall be converted to a Base Rate
Loan on the last day of the Interest Period applicable thereto.
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EXHIBIT 1.1
(e) Conversion Options. The Borrower may elect to
convert all or any part of any Eurodollar Loan on the last day of the
then current Interest Period relating thereto to a Base Rate Loan by
giving advance notice to the Agent (which shall promptly notify the
Lenders) of such election. Subject to the provisions made in this
Section 2.02(e), the Borrower may elect to convert all or any part of
any Base Rate Loan at any time and from time to time to a Eurodollar
Loan by giving advance notice as provided in Section 2.02(c) to the
Agent (which shall promptly notify the Lenders) of such election. All
or any part of any outstanding Loan may be converted as provided
herein, provided that (i) any conversion of any Base Rate Loan into a
Eurodollar Loan shall be (as to each such Loan into which there is a
conversion for an applicable Interest Period) in amounts of at least
$500,000 or any whole multiple of $500,000 in excess thereof and (ii)
no Default shall have occurred and be continuing. If a Default shall
have occurred and be continuing, no Base Rate Loan may be converted
into a Eurodollar Loan.
(f) Advances. Not later than 11:00 a.m. Houston, Texas time
on the date specified for each borrowing hereunder, each Lender shall
make available the amount of the Loan to be made by it on such date to
the Agent, to an account which the Agent shall specify, in immediately
available funds, for the account of the Borrower. The amounts so
received by the Agent shall, subject to the terms and conditions of
this Agreement, be made available to the Borrower by depositing the
same, in immediately available funds, in an account of the Borrower,
designated by the Borrower and maintained at the Principal Office.
(g) Letters of Credit. The Borrower shall give the Agent
(which shall promptly notify the Lenders of such request and their
Percentage Share of such Letter of Credit) advance notice to be
received by the Agent not later than 11:00 a.m. Houston, Texas time
not less than three (3) Business Days prior thereto of each request
for the issuance and at least thirty (30) days prior to the date of
the renewal or extension of a Letter of Credit hereunder which request
shall specify the amount of such Letter of Credit, the date (which
shall be a Business Day) such Letter of Credit is to be issued,
renewed or extended, the duration thereof, the name and address of the
beneficiary thereof, the form of the Letter of Credit and such other
information as the Agent may reasonably request all of which shall be
reasonably satisfactory to the Agent. Subject to the terms and
conditions of this Agreement, on the date specified for the issuance,
renewal or extension of a Letter of Credit, NationsBank shall issue
such Letter of Credit to the beneficiary thereof.
In conjunction with the issuance of each Letter of Credit, the
Borrower and the Subsidiary, if the account party, shall execute a
Letter of Credit Agreement. In the event of any conflict between any
provision of a Letter of Credit Agreement and this Agreement, the
Borrower, the Agent and the Lenders hereby agree that the provisions
of this Agreement shall govern.
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EXHIBIT 1.1
The Agent will send to the Borrower and each Lender,
immediately upon issuance of any Letter of Credit, or an amendment
thereto, a true and complete copy of such Letter of Credit, or such
amendment thereto.
Section 2.03 Changes of Commitments.
(a) The Aggregate Commitments shall at all times be equal
to the lesser of (i) the Aggregate Maximum Credit Amounts after
adjustments resulting from reductions pursuant to Section 2.03(b) or
(c) hereof or (ii) the Available Borrowing Base as determined from
time to time.
(b) On the Conversion Date and on each Quarterly Date
thereafter, the Aggregate Commitments shall reduce by an amount equal
to one-twelfth (1/12th) of the Aggregate Commitment on the Conversion
Date.
(c) The Borrower shall have the right to terminate or to
reduce the amount of the Aggregate Maximum Credit Amounts at any time
or from time to time upon not less than three (3) Business Days' prior
notice to the Agent (which shall promptly notify the Lenders) of each
such termination or reduction, which notice shall specify the
effective date thereof and the amount of any such reduction (which
shall not be less than $1,000,000 or any whole multiple of $1,000,000
in excess thereof) and shall be irrevocable and effective only upon
receipt by the Agent.
(d) The Aggregate Maximum Credit Amounts once terminated
or reduced may not be reinstated.
Section 2.04 Fees.
(a) The Borrower shall pay to the Agent for the account
of each Lender a commitment fee on the daily average unused amount of
the Aggregate Commitments (the difference of the Aggregate Commitments
minus the Loans and the LC Exposure) for the period from and including
the Effective Date up to but excluding the earlier of the date the
Aggregate Maximum Credit Amounts are terminated or the Revolving
Credit Termination Date at a rate per annum equal to 3/8 of 1%.
Accrued commitment fees shall be payable quarterly in arrears on each
Quarterly Date and on the earlier of the date the Aggregate Maximum
Credit Amounts are terminated or the Revolving Credit Termination
Date.
(b) The Borrower agrees to pay the Agent, for the account
of each Lender, commissions for issuing the Letters of Credit on the
daily average outstanding of the maximum liability of the Agent
existing from time to time under such Letter of Credit (calculated
separately for each Letter of Credit) at the rate of 1% per annum,
provided
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EXHIBIT 1.1
that each Letter of Credit shall bear a minimum commission of $500 and
that each Letter of Credit shall be deemed to be outstanding up to the
full face amount of the Letter of Credit until the Agent has received
the cancelled Letter of Credit or a written cancellation of the Letter
of Credit from the beneficiary of such Letter of Credit in form and
substance acceptable to the Agent, or for any reductions in the amount
of the Letter of Credit (other than from a drawing), written
notification from the Borrower. Such commissions are payable annually
in advance at issuance of each Letter of Credit and, if any such Letter
of Credit extends beyond one (1) year, annually in advance on each
annual anniversary thereof.
(c) The Borrower shall pay to the Agent for its account
such other fees as are set forth in the Fee Letter on the dates
specified therein to the extent not paid prior to the Closing Date.
Section 2.05 Several Obligations. The failure of any
Lender to make any Loan to be made by it or to provide funds for disbursements
or reimbursements under Letters of Credit on the date specified therefor shall
not relieve any other Lender of its obligation to make its Loan or provide
funds on such date, but no Lender shall be responsible for the failure of any
other Lender to make a Loan to be made by such other Lender or to provide funds
to be provided by such other Lender. Notwithstanding the foregoing with
respect to obligations to make Loans, NationsBank, as issuer of the Letter of
Credit, shall be obligated to duly honor any proper drawing thereunder.
Section 2.06 Notes. The Loans made by each Lender shall
be evidenced by a single promissory note of the Borrower in substantially the
form of Exhibit A hereto, dated (i) the Closing Date or (ii) the effective date
of an Assignment pursuant to Section 12.06(b), payable to the order of such
Lender in a principal amount equal to its Maximum Credit Amount as originally
in effect and otherwise duly completed. The date, amount, Type, interest rate
and Interest Period of each Loan made by each Lender, and all payments made on
account of the principal thereof, shall be recorded by such Lender on its books
for its Note, and, prior to any transfer, endorsed by such Lender on the
schedule attached to such Note or any continuation thereof. Such records shall
be deemed conclusive absent manifest error; provided that any failure to make
notation of any repayment of principal shall not cancel, limit or otherwise
affect the Borrower's entitlement to credit for that payment as of the date
received by the Agent.
Section 2.07 Prepayments.
(a) The Borrower may prepay (i) the Base Rate Loans
without notice and (ii) the Eurodollar Loans upon not less than three
(3) Business Days' prior notice to the Agent (which shall promptly
notify the Lenders), which notice shall specify the prepayment date
(which shall be a Business Day) and the amount of the prepayment
(which shall be at least $500,000 or the remaining aggregate principal
balance outstanding on the Notes) and shall be irrevocable and
effective only upon receipt
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EXHIBIT 1.1
by the Agent, provided that interest on the principal prepaid, accrued to the
prepayment date, shall be paid on the prepayment date. In addition, such
prepayments of Eurodollar Loans shall be subject to the terms of Section 5.05
and shall be in an amount equal to all of the Eurodollar Loans for the Interest
Period prepaid.
(b) If, after giving effect to any termination or
reduction of the Aggregate Maximum Credit Amounts pursuant to Section
2.03(b) or (c), the outstanding aggregate principal amount of the
Loans plus the LC Exposure exceeds the Aggregate Maximum Credit
Amounts, the Borrower shall (i) prepay the Loans on the date of such
termination or reduction in an aggregate principal amount equal to the
excess, together with interest on the principal amount paid accrued to
the date of such prepayment and (ii) if any excess remains after
prepaying all of the Loans, pay to the Agent on behalf of the Lenders
an amount equal to the excess (a "Deficiency") to be held as cash
collateral as provided in Section 2.10(b) hereof.
(c) Upon any redetermination of the amount of the
Borrowing Base in accordance with Section 2.08, if the redetermined
Borrowing Base is less than the Total Debt, then the Borrower shall,
upon receipt of written notice thereof, do one or a combination of the
following: (i) within ten (10) days prepay the outstanding principal
balance of the Loans by the amount of such deficiency, together with
interest on the principal amount paid accrued to the date of such
prepayment, (ii) prepay the outstanding principal balance of the Loans
by the amount of such deficiency in monthly installments in amounts
and over a period of months to be determined by the Agent, but in any
event within a period of no more than six (6) months of receipt of
such notice or (iii) within thirty (30) days of receipt of such
written notice, provide collateral satisfactory to the Agent and the
Lenders under Security Instruments which are reasonably satisfactory
in form and substance to the Agent, which collateral has not
previously been included in the Borrowing Base. If a Borrowing Base
deficiency remains after prepaying all of the Loans because of LC
Exposure, the Borrower shall pay to the Agent on behalf of the Lenders
an amount equal to such Borrowing Base deficiency (a "Deficiency") to
be held as cash collateral as provided in Section 2.10(b) hereof.
(d) Prepayments permitted or required under this Section
2.07 shall be without premium or penalty, except as required under
Section 5.05 for prepayment of Eurodollar Loans and Borrower may
select, if a choice is available, which Loans (Base Rate Loans or
Eurodollar Rate Loans) to so prepay.
Section 2.08 Borrowing Base.
(a) During the period from and after the Closing Date
until the Borrowing Base is redetermined pursuant to this Section
2.08, the amount of the Borrowing Base
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EXHIBIT 1.1
shall be $35,000,000. The Borrowing Base and all redeterminations
thereof shall be determined in accordance with Section 2.08(b) by the
Agent with the concurrence of the Majority Lenders and is subject to
redetermination in accordance with Section 2.08(d). Upon any
redetermination of the Borrowing Base, such redetermination shall
remain in effect until the next successive Redetermination Date.
"Redetermination Date" shall mean the date that the redetermined
Borrowing Base becomes effective subject to the notice requirements
specified in Section 2.08(e) both for scheduled redeterminations and
unscheduled redeterminations. So long as any of the Commitments are
in effect or any LC Exposure or Loans are outstanding hereunder, this
facility shall be governed by the then effective Borrowing Base.
(b) Upon receipt of the reports required by Section 8.07
and such other reports, data and supplemental information as may from
time to time be reasonably requested by the Agent, the Agent will
redetermine the Borrowing Base unless otherwise provided in Section
2.08(d) below. Such redetermination will be in accordance with its
normal and customary procedures for evaluating oil and gas reserves
and other related assets as such exist at that particular time. The
Agent, in its sole discretion, shall consider Oil and Gas Properties
and revenues therefrom located in the United States and Indonesia, and
may make adjustments to the rates, volumes and prices and other
assumptions set forth therein in accordance with its normal and
customary procedures for evaluating oil and gas reserves and other
related assets as such exist at that particular time. The Agent shall
propose to the Lenders a new Borrowing Base within 15 days following
receipt by the Agent and the Lenders of the Reserve Reports in a
timely and complete manner. After having received notice of such
proposal by the Agent, the Majority Lenders shall have 10 days to
agree or disagree with such proposal. If at the end of the 10 days,
the Majority Lenders have not communicated their approval or
disapproval, such silence shall be deemed to be an approval and the
Agent's proposal shall be the new Borrowing Base. If however, the
Majority Lenders notify Agent within 10 days of their disapproval, the
Majority Lenders shall, within a reasonable period of time, agree on a
new Borrowing Base. Until the Majority Lenders have agreed to a new
Borrowing Base, as aforesaid, the then existing Borrowing Base shall
continue.
(c) The Agent may exclude any Oil and Gas Property or
portion of production therefrom or any income from any other Property
from the Borrowing Base, at any time, because the title status or
information is not reasonably satisfactory; provided, however, so long
as there is no known claim against the status of title to the revenues
from the Oil and Gas Properties located in Indonesia, such title
status and information shall be deemed satisfactory.
(d) So long as any of the Commitments are in effect and
until payment in full of all Loans hereunder and termination of all LC
Exposure, on or around the last
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EXHIBIT 1.1
Business Day of each April and October, commencing October 31, 1995
(each being a "Scheduled Redetermination Date"), the Lenders shall
redetermine the amount of the Borrowing Base and the corresponding
quarterly reductions thereto in accordance with Section 2.08(b). The
October Scheduled Redetermination Date shall be waived in the event
that no Loans or Letters of Credit have been outstanding at any time
during the six (6) month period ending on October 31 of any year. In
addition, the Majority Lenders may initiate a redetermination of the
Borrowing Base when (i) the aggregate outstanding principal amount of
the Loans plus the LC Exposure is greater than or equal to 50% of the
Available Borrowing Base or (ii) the Agent has received notification
of a sale pursuant to Section 9.14(iv).
(e) The Agent shall promptly notify in writing the
Borrower and the Lenders of each new Borrowing Base. Any new
Borrowing Base shall not be in effect until written notice is received
by the Borrower.
Section 2.09 Assumption of Risks. The Borrower assumes
all risks of the acts or omissions of any beneficiary of any Letter of Credit
or any transferee thereof with respect to its use of such Letter of Credit.
NationsBank shall examine documents with the same care it exercises for all
letters of credit issued by it so as to ascertain that on their face they
appear to comply with the terms of the Letter of Credit, but neither
NationsBank (except in the case of gross negligence, willful misconduct or bad
faith on the part of NationsBank or any of its employees), its correspondents
nor any Lender shall be responsible for the validity, sufficiency or
genuineness of certificates or other documents or any endorsements thereon,
even if such certificates or other documents should in fact prove to be
invalid, insufficient, fraudulent or forged; for errors, omissions,
interruptions or delays in transmissions or delivery of any messages by mail,
telex, or otherwise, whether or not they be in code; for errors in translation
or for errors in interpretation of technical terms; the validity or sufficiency
of any instrument transferring or assigning or purporting to transfer or assign
any Letter of Credit or the rights or benefits thereunder or proceeds thereof,
in whole or in part, which may prove to be invalid or ineffective for any
reason; or for any other consequences arising from causes beyond NationsBank's
control or the control of NationsBank's correspondents. In addition, neither
NationsBank nor any Lender shall be responsible for any error, neglect, or
default of any of NationsBank's correspondents; and none of the above shall
affect, impair or prevent the vesting of any of NationsBank's or any Lender's
rights or powers hereunder or under the Letter of Credit Agreements, all of
which rights shall be cumulative. NationsBank and its correspondents may
accept certificates or other documents that appear on their face to be in
order, without responsibility for further investigation of any matter contained
therein regardless of any notice or information to the contrary. In
furtherance and not in limitation of the foregoing provisions, the Borrower
agrees that any action, inaction or omission taken or not taken by NationsBank
or by any correspondent for NationsBank in good faith in connection with any
Letter of Credit, or any related drafts, certificates, documents or
instruments, shall be binding on the Borrower and
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EXHIBIT 1.1
shall not put NationsBank or its correspondents under any resulting liability
to the Borrower.
Section 2.10 Obligation to Reimburse and to Prepay.
(a) If a disbursement by NationsBank is made under any
Letter of Credit, the Borrower shall pay to the Agent within two (2)
Business Days after notice of any such disbursement is received by the
Borrower, the amount of each such disbursement made by NationsBank
under the Letter of Credit (if such payment is not sooner effected as
may be required under this Section 2.10 or under other provisions of
the Letter of Credit), together with interest on the amount disbursed
from and including the date of disbursement until payment in full of
such disbursed amount at a varying rate per annum equal to (i) the
then applicable interest rate for Base Rate Loans through the second
Business Day after notice of such disbursement is received by the
Borrower and (ii) thereafter, the Post-Default Rate for Base Rate
Loans (but in no event to exceed the Highest Lawful Rate) for the
period from and including the third Business Day following the date of
such disbursement to and including the date of repayment in full of
such disbursed amount. The obligations of the Borrower under this
Agreement with respect to each Letter of Credit shall be absolute,
unconditional and irrevocable and shall be paid or performed strictly
in accordance with the terms of this Agreement under all circumstances
whatsoever, including, without limitation, but only to the fullest
extent permitted by applicable law, the following circumstances: (i)
any lack of validity or enforceability of this Agreement, any Letter
of Credit or any of the Security Instruments; (ii) the existence of
any claim, set-off, defense or other rights which the Borrower may
have at any time against the beneficiary of any Letter of Credit or
any transferee of any Letter of Credit (or any Persons for whom any
such beneficiary or any such transferee may be acting), the Agent, any
Lender or any other Person, whether in connection with this Agreement,
any Letter of Credit, the Security Instruments, the transactions
contemplated hereby or an unrelated transaction, (iii) any statement,
certificate, draft, notice or any other document presented under any
Letter of Credit proves to have been forged, fraudulent, insufficient
or invalid in any respect or any statement therein proves to have been
untrue or inaccurate in any respect whatsoever, but in each case only
if the same appear on their face to conform to the terms of the Letter
of Credit; and (iv) payment by the Agent under any Letter of Credit
against presentation of a draft or certificate which appears on its
face to comply, but does not comply, with the terms of such Letter of
Credit.
Notwithstanding anything in this Agreement to the contrary, the
Borrower will not be liable for payment or performance that results
from the gross negligence or willful misconduct of the Agent, except
where the Borrower or any Subsidiary actually recovers the proceeds
for itself or the Agent of any payment made by the Agent in connection
with such gross negligence or willful misconduct.
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EXHIBIT 1.1
(b) In the event of the occurrence of any Event of
Default, a payment or prepayment requirement pursuant to Sections
2.07(b) and (c) hereof or the maturity of the Notes, whether by
acceleration or otherwise, an amount equal to the LC Exposure (or in
the case of a prepayment requirement under Section 2.07(b) or (c), an
amount equal to the Deficiency) shall be deemed to be forthwith due
and owing by the Borrower to the Agent and the Lenders as of the date
of any such occurrence; and the Borrower's obligation to pay such
amount shall be absolute and unconditional, without regard to whether
any beneficiary of any such Letter of Credit has attempted to draw
down all or a portion of such amount under the terms of a Letter of
Credit, and, to the fullest extent permitted by applicable law, shall
not be subject to any defense or be affected by a right of set-off,
counterclaim or recoupment which the Borrower may now or hereafter
have against any such beneficiary, the Agent, the Lenders or any other
Person for any reason whatsoever. Such payments shall be held by the
Agent on behalf of the Lenders as cash collateral securing the
obligations of the Borrower with respect to Letters of Credit in an
interest-bearing account or accounts at the Principal Office; and the
Borrower hereby grants to and by its deposit with the Agent grants to
the Agent a security interest in such cash collateral. In the event
of any such payment by the Borrower of amounts contingently owing
under outstanding Letters of Credit and in the event that thereafter
(i) drafts or other demands for payment complying with the terms of
such Letters of Credit are not made prior to the respective expiration
dates thereof, or (ii) the amount on hold hereunder exceeds the
Deficiency, the Agent agrees, if no Default has occurred and is
continuing, to remit to the Borrower amounts for which the contingent
obligations evidenced by the Letters of Credit have ceased and/or the
amount of the excess over the Deficiency.
(c) Each Lender severally and unconditionally agrees that
it shall promptly reimburse the Agent an amount equal to such Lender's
Percentage Share of any disbursement made by the Agent under any
Letter of Credit that is not reimbursed according to this Section
2.10.
Section 2.11 Lending Offices. The Loans of each Type made
by each Lender shall be made and maintained at such Lender's Applicable Lending
Office for Loans of such Type.
ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST
Section 3.01 Repayment of Loans. The Borrower will pay to
the Agent, for the account of each Lender, the principal payments required by
Section 2.07, Section 10.02 and this
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EXHIBIT 1.1
Section 3.01. On the Revolving Credit Termination Date the Borrower shall
repay the outstanding aggregate principal and accrued and unpaid interest under
the Notes.
Section 3.02 Interest. The Borrower will pay to the
Agent, for account of each Lender, interest on the unpaid principal amount of
each Loan made by such Lender for the period commencing on the date such Loan
is made to but excluding the date such Loan shall be paid in full, at the
following rates per annum:
(i) if such a Loan is a Base Rate Loan, the Base Rate (as
in effect from time to time) plus the Applicable Margin, but in no
event to exceed the Highest Lawful Rate; and
(ii) if such a Loan is a Eurodollar Loan, for each
Interest Period relating thereto, the Fixed Rate for such Loan plus
the Applicable Margin, but in no event to exceed the Highest Lawful
Rate.
Notwithstanding the foregoing, the Borrower will pay to the Agent, for the
account of each Lender interest at the applicable Post-Default Rate on any
principal of any Loan made by such Lender, and (to the fullest extent permitted
by law) on any other amount payable by the Borrower hereunder, under any
Security Instrument or under any Note held by such Lender to or for account of
such Lender, which shall not be paid in full when due (whether at stated
maturity, by acceleration or otherwise), for the period commencing on the due
date thereof until the same is paid in full.
Accrued interest on Base Rate Loans shall be payable on each Quarterly
Date commencing on June 30, 1995 and accrued interest on each Eurodollar Loan
shall be payable on the last day of the Interest Period therefor and, if such
Interest Period is longer than three months at three-month intervals following
the first day of such Interest Period, except that interest payable at the
Post-Default Rate shall be payable from time to time on demand and interest on
any Eurodollar Loan that is converted into a Base Rate Loan (pursuant to
Section 5.04) shall be payable on the date of conversion (but only to the
extent so converted).
Promptly after the determination of any interest rate provided for
herein or any change therein, the Agent shall notify the Lenders to which such
interest is payable and the Borrower thereof. Each determination by the Agent
of an interest rate or fee hereunder shall, except in cases of manifest error,
be final, conclusive and binding on the parties.
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EXHIBIT 1.1
ARTICLE IV
PAYMENTS; PRO RATA TREATMENT; COMPUTATIONS; ETC.
Section 4.01 Payments. Except to the extent otherwise
provided herein, all payments of principal, interest and other amounts to be
made by the Borrower under this Agreement, the Notes and the Letter of Credit
Agreements shall be made in Dollars, in immediately available funds, to the
Agent at such account as the Agent shall specify by notice to the Borrower from
time to time, not later than 11:00 a.m. Houston, Texas time on the date on
which such payments shall become due (each such payment made after such time on
such due date to be deemed to have been made on the next succeeding Business
Day, to the extent permitted by applicable law). Each payment received by the
Agent under this Agreement or any Note for account of a Lender shall be paid
promptly to such Lender in immediately available funds. If the due date of any
payment under this Agreement or any Note would otherwise fall on a day which is
not a Business Day such date shall be extended to the next succeeding Business
Day and interest shall be payable for any principal so extended for the period
of such extension at the pre-default rate applicable thereto. At the time of
each payment to the Agent of any principal of or interest on any borrowing, the
Borrower shall notify the Agent of the Loans to which such payment shall apply.
In the absence of such notice the Agent may specify the Loans to which such
payment shall apply, but to the extent possible such payment or prepayment will
be applied first to the Loans comprised of Base Rate Loans.
Section 4.02 Pro Rata Treatment. Except to the extent
otherwise provided herein each Lender agrees that: (i) each borrowing from the
Lenders under Section 2.01 shall be made from the Lenders pro rata in
accordance with their Percentage Share, each payment of commitment fee or other
fees under Section 2.04(a) or (b) be made for account of the Lenders pro rata
in accordance with their Percentage Share, and each termination or reduction of
the amount of the Aggregate Maximum Credit Amounts under Section 2.03(b) or (c)
shall be applied to the Commitment of each Lender, pro rata according to the
amounts of its respective Commitment; (ii) each payment of principal of Loans
by the Borrower shall be made for account of the Lenders pro rata in accordance
with the respective unpaid principal amount of the Loans held by the Lenders;
and (iii) each payment of interest on Loans by the Borrower shall be made for
account of the Lenders pro rata in accordance with the amounts of interest due
and payable to the respective Lenders; and (iv) each reimbursement by the
Borrower of disbursements under Letters of Credit shall be made for account of
the Agent or, if funded by the Lenders, pro rata for the account of the
Lenders, in accordance with the amounts of reimbursement obligations due and
payable to each respective Lender; provided, however, if a Lender has failed to
make a Loan or to pay its share of any LC Exposure as and when required
hereunder and there is subsequently a repayment on the Loans or LC Exposure,
such repayment shall be split among the non-defaulting Lenders ratably in
accordance with their respective percentages until each Lender has its correct
Percentage Share of all outstanding Loans and LC Exposure, and the
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EXHIBIT 1.1
balance of such repayment shall be divided among all of the Lenders in
accordance with their respective Percentage Shares.
Section 4.03 Computations. Interest on Eurodollar Loans
and fees shall be computed on the basis of a year of 360 days and actual days
elapsed (including the first day but excluding the last day) occurring in the
period for which such interest is payable, unless such calculation would exceed
the Highest Lawful Rate, in which case interest shall be calculated on the per
annum basis of a year of 365 or 366 days, as the case may be. Interest on Base
Rate Loans shall be computed on the basis of a year of 365 or 366 days, as the
case may be, and actual days elapsed (including the first day but excluding the
last day) occurring in the period for which such interest is payable.
Section 4.04 Set-off, Sharing of Payments, Etc.
(a) The Borrower agrees that, in addition to (and without
limitation of) any right of set-off, bankers' lien or counterclaim a
Lender may otherwise have, each Lender shall have the right and be
entitled (after consultation with the Agent), at its option, to offset
balances held by it or by any of its Affiliates for account of the
Borrower at any of its offices, in Dollars or in any other currency,
against any principal of or interest on any of such Lender's Loans, or
any other amount payable to such Lender hereunder, which is not paid
when due (regardless of whether such balances are then due to the
Borrower), in which case it shall promptly notify the Borrower and the
Agent thereof, provided that such Lender's failure to give such notice
shall not affect the validity thereof.
(b) If any Lender shall obtain payment of any principal
of or interest on any Loan made by it to the Borrower under this
Agreement through the exercise of any right of set-off, banker's lien
or counterclaim or similar right or otherwise, and, as a result of
such payment, such Lender shall have received a greater percentage of
the principal or interest then due hereunder by the Borrower to such
Lender than the percentage received by any other Lenders, it shall
promptly (i) notify the Agent and each other Lender thereof and (ii)
purchase from such other Lenders participations in (or, if and to the
extent specified by such Lender, direct interests in) the Loans made
by such other Lenders (or in interest due thereon, as the case may be)
in such amounts, and make such other adjustments from time to time as
shall be equitable, to the end that all the Lenders shall share the
benefit of such excess payment (net of any expenses which may be
incurred by such Lender in obtaining or preserving such excess
payment) pro rata in accordance with the unpaid principal and/or
interest on the Loans held by each of the Lenders. To such end all
the Lenders shall make appropriate adjustments among themselves (by
the resale of participations sold or otherwise) if such payment is
rescinded or must otherwise be restored. The Borrower agrees that any
Lender so purchasing a participation (or direct interest) in the Loans
made by other Lenders (or in interest due thereon, as the case may be)
may exercise all rights of set-off, banker's lien, counter
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EXHIBIT 1.1
claim or similar rights with respect to such participation as fully as
if such Lender were a direct holder of Loans in the amount of such
participation. Nothing contained herein shall require any Lender to
exercise any such right or shall affect the right of any Lender to
exercise, and retain the benefits of exercising, any such right with
respect to any other indebtedness or obligation of the Borrower. If
under any applicable bankruptcy, insolvency or other similar law, any
Lender receives a secured claim in lieu of a set-off to which this
Section 4.04 applies, such Lender shall, to the extent practicable,
exercise its rights in respect of such secured claim in a manner
consistent with the rights of the Lenders entitled under this Section
4.04 to share the benefits of any recovery on such secured claim.
Section 4.05 Taxes.
(a) Payments Free and Clear. Any and all payments by the
Borrower hereunder shall be made, in accordance with Section 4.01,
free and clear of and without deduction for any and all present or
future taxes, levies, imposts, deductions, charges or withholdings,
and all liabilities with respect thereto, excluding, in the case of
each Lender and the Agent, taxes imposed on its income, and franchise
or similar taxes imposed on it, by (i) any jurisdiction (or political
subdivision thereof) of which the Agent or such Lender, as the case
may be, is a citizen or resident or in which such Lender has an
Applicable Lending Office, (ii) the jurisdiction (or any political
subdivision thereof) in which the Agent or such Lender is organized,
or (iii) any jurisdiction (or political subdivision thereof) in which
such Lender or the Agent is presently doing business which taxes are
imposed solely as a result of doing business in such jurisdiction (all
such non- excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as
"Taxes"). If the Borrower shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder to the Lenders
or the Agent (i) the sum payable shall be increased by the amount
necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section
4.05) such Lender or the Agent (as the case may be) shall receive an
amount equal to the sum it would have received had no such deductions
been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall pay the full amount deducted to the relevant taxing
authority or other Governmental Authority in accordance with
applicable law.
(b) Other Taxes. In addition, to the fullest extent
permitted by applicable law, the Borrower agrees to pay any present or
future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies that arise from any payment made
hereunder or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement or any Security Instrument
(hereinafter referred to as "Other Taxes").
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EXHIBIT 1.1
(c) INDEMNIFICATION. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE BORROWER WILL INDEMNIFY EACH LENDER AND THE AGENT
FOR THE FULL AMOUNT OF TAXES AND OTHER TAXES (INCLUDING, BUT NOT
LIMITED TO, ANY TAXES OR OTHER TAXES IMPOSED BY ANY GOVERNMENTAL
AUTHORITY ON AMOUNTS PAYABLE UNDER THIS SECTION 4.05) PAID BY SUCH
LENDER OR THE AGENT (ON THEIR BEHALF OR ON BEHALF OF ANY LENDER), AS
THE CASE MAY BE, AND ANY LIABILITY (INCLUDING PENALTIES, INTEREST AND
EXPENSES) ARISING THEREFROM OR WITH RESPECT THERETO, WHETHER OR NOT
SUCH TAXES OR OTHER TAXES WERE CORRECTLY OR LEGALLY ASSERTED UNLESS
THE PAYMENT OF SUCH TAXES WAS NOT CORRECTLY OR LEGALLY ASSERTED AND
SUCH LENDER'S PAYMENT OF SUCH TAXES OR OTHER TAXES WAS THE RESULT OF
ITS GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. ANY PAYMENT PURSUANT TO
SUCH INDEMNIFICATION SHALL BE MADE WITHIN THIRTY (30) DAYS AFTER THE
DATE ANY LENDER OR THE AGENT, AS THE CASE MAY BE, MAKES WRITTEN DEMAND
THEREFOR. IF ANY LENDER OR THE AGENT RECEIVES A REFUND OR CREDIT IN
RESPECT OF ANY TAXES OR OTHER TAXES FOR WHICH SUCH LENDER OR THE AGENT
HAS RECEIVED PAYMENT FROM THE BORROWER IT SHALL PROMPTLY NOTIFY THE
BORROWER OF SUCH REFUND OR CREDIT AND SHALL, IF NO DEFAULT HAS
OCCURRED AND IS CONTINUING, WITHIN THIRTY (30) DAYS AFTER RECEIPT OF A
REQUEST BY THE BORROWER (OR PROMPTLY UPON RECEIPT, IF THE BORROWER HAS
REQUESTED APPLICATION FOR SUCH REFUND OR CREDIT PURSUANT HERETO), PAY
AN AMOUNT EQUAL TO SUCH REFUND OR CREDIT TO THE BORROWER WITHOUT
INTEREST (BUT WITH ANY INTEREST SO REFUNDED OR CREDITED), PROVIDED
THAT THE BORROWER, UPON THE REQUEST OF SUCH LENDER OR THE AGENT,
AGREES TO RETURN SUCH REFUND OR CREDIT (PLUS PENALTIES, INTEREST OR
OTHER CHARGES) TO SUCH LENDER OR THE AGENT IN THE EVENT SUCH LENDER OR
THE AGENT IS REQUIRED TO REPAY SUCH REFUND OR CREDIT.
(d) Lender Representations.
(i) Each Lender represents that it is either (a)
a corporation organized under the laws of the United States of
America or any state thereof or (b) it is entitled to complete
exemption from United States withholding tax imposed on or
with respect to any payments, including fees, to be made to it
pursuant to this Agreement (A) under an applicable provision
of a tax convention to which the United States of America is a
party or (B) because it is acting through a branch, agency or
office in the United States of America and any payment to be
received by it hereunder is effectively connected with a trade
or business in the United States of America. Each Lender that
is not a corporation organized under the laws of the United
States of America or any state thereof agrees to provide to
the Borrower and the Agent on the Closing Date, or on the date
of its delivery of the Assignment pursuant to which it becomes
a Lender, and at such other times as required by United States
law or as the Borrower or the Agent shall reasonably
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EXHIBIT 1.1
request, two accurate and complete original signed copies of
either (A) Internal Revenue Service Form 4224 (or successor
form) certifying that all payments to be made to it hereunder
will be effectively connected to a United States trade or
business (the "Form 4224 Certification") or (B) Internal
Revenue Service Form 1001 (or successor form) certifying that
it is entitled to the benefit of a provision of a tax
convention to which the United States of America is a party
which completely exempts from United States withholding tax
all payments to be made to it hereunder (the "Form 1001
Certification"). In addition, each Lender agrees that if it
previously filed a Form 4224 Certification, it will deliver to
the Borrower and the Agent a new Form 4224 Certification prior
to the first payment date occurring in each of its subsequent
taxable years; and if it previously filed a Form 1001
Certification, it will deliver to the Borrower and the Agent a
new certification prior to the first payment date falling in
the third year following the previous filing of such
certification. Each Lender also agrees to deliver to the
Borrower and the Agent such other or supplemental forms as may
at any time be required as a result of changes in applicable
law or regulation in order to confirm or maintain in effect
its entitlement to exemption from United States withholding
tax on any payments hereunder, provided that the circumstances
of such Lender at the relevant time and applicable laws permit
it to do so. If a Lender determines, as a result of any
change in either (i) a Governmental Requirement or (ii) its
circumstances, that it is unable to submit any form or
certificate that it is obligated to submit pursuant to this
Section 4.05, or that it is required to withdraw or cancel any
such form or certificate previously submitted, it shall
promptly notify the Borrower and the Agent of such fact. If a
Lender is organized under the laws of a jurisdiction outside
the United States of America, unless the Borrower and the
Agent have received a Form 1001 Certification or Form 4224
Certification satisfactory to them indicating that all
payments to be made to such Lender hereunder are not subject
to United States withholding tax, the Borrower shall withhold
taxes from such payments at the applicable statutory rate.
Each Lender agrees to indemnify and hold harmless from any
United States taxes, penalties, interest and other expenses,
costs and losses incurred or payable by (i) the Agent as a
result of such Lender's failure to submit any form or
certificate that it is required to provide pursuant to this
Section 4.05 or (ii) the Borrower or the Agent as a result of
their reliance on any such form or certificate which such
Lender has provided to them pursuant to this Section 4.05.
(ii) For any period with respect to which a Lender
has failed to provide the Borrower with the form required
pursuant to this Section 4.05, if any, (other than if such
failure is due to a change in a Governmental Requirement
occurring subsequent to the date on which a form originally
was required to be provided), such Lender shall not be
entitled to indemnificationunder Section 4.05 with
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EXHIBIT 1.1
respect to taxes imposed by the United States which taxes
would not have been imposed but for such failure to provide
such forms; provided, however, that should a Lender, which is
otherwise exempt from or subject to a reduced rate of
withholding tax becomes subject to taxes because of its
failure to deliver a form required hereunder, the Borrower
shall take such steps as such Lender shall reasonably request
to assist such Lender to recover such taxes.
(iii) Any Lender claiming any additional amounts
payable pursuant to this Section 4.05 shall use reasonable
efforts (consistent with legal and regulatory restrictions) to
file any certificate or document requested by the Borrower or
the Agent or to change the jurisdiction of its Applicable
Lending Office or to contest any tax imposed if the making of
such a filing or change or contesting such tax would avoid the
need for or reduce the amount of any such additional amounts
that may thereafter accrue and would not, in the sole
determination of such Lender, be otherwise disadvantageous to
such Lender.
ARTICLE V
CAPITAL ADEQUACY
Section 5.01 Additional Costs, Etc.
(a) Eurodollar Regulations, Etc. The Borrower shall pay
directly to each Lender from time to time such amounts as such Lender
may determine to be necessary to compensate such Lender for any costs
which it determines are attributable to its making or maintaining of
any Eurodollar Loans or issuing or participating in Letters of Credit
hereunder or its obligation to make any Eurodollar Loans or issue or
participate in any Letters of Credit hereunder, or any reduction in
any amount receivable by such Lender hereunder in respect of any of
such Eurodollar Loans, Letters of Credit or such obligation (such
increases in costs and reductions in amounts receivable being herein
called "Additional Costs"), resulting from any Regulatory Change
which: (i) changes the basis of taxation of any amounts payable to
such Lender under this Agreement or any Note in respect of any of such
Eurodollar Loans or Letters of Credit (other than taxes imposed on the
overall net income of such Lender or of its Applicable Lending Office
for any of such Eurodollar Loans by the jurisdiction in which such
Lender has its principal office or Applicable Lending Office); or (ii)
imposes or modifies any reserve, special deposit, minimum capital,
capital ratio or similar requirements (other than the Reserve
Requirement utilized in the determination of the Fixed Rate for such
Loan) relating to any extensions of credit or other assets of, or any
deposits with or other liabilities of such Lender (including any of
such Eurodollar Loans or any deposits referred to in the definition of
"Fixed Eurodollar Rate" in Section 1.02 hereof), or the
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EXHIBIT 1.1
Commitment of such Lender or the Eurodollar interbank market; or (iii)
imposes any other condition affecting this Agreement or any Note (or
any of such extensions of credit or liabilities) or such Lender's
Commitment. Each Lender will notify the Agent and the Borrower of any
event occurring after the Closing Date which will entitle such Lender
to compensation pursuant to this Section 5.01(a) as promptly as
practicable after it obtains knowledge thereof and determines to
request such compensation, and will designate a different Applicable
Lending Office for the Loans of such Lender affected by such event if
such designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the sole opinion of such Lender, be
disadvantageous to such Lender, provided that such Lender shall have
no obligation to so designate an Applicable Lending Office located in
the United States. If any Lender requests compensation from the
Borrower under this Section 5.01(a), the Borrower may, by notice to
such Lender, suspend the obligation of such Lender to make additional
Loans of the Type with respect to which such compensation is requested
until the Regulatory Change giving rise to such request ceases to be
in effect (in which case the provisions of Section 5.04 shall be
applicable).
(b) Regulatory Change. Without limiting the effect of
the provisions of Section 5.01(a), in the event that, by reason of any
Regulatory Change or any other circumstances arising after the Closing
Date affecting such Lender, the Eurodollar interbank market or such
Lender's position in such market, any Lender either (i) incurs
Additional Costs based on or measured by the excess above a specified
level of the amount of a category of deposits or other liabilities of
such Lender which includes deposits by reference to which the interest
rate on Eurodollar Loans is determined as provided in this Agreement
or a category of extensions of credit or other assets of such Lender
which includes Eurodollar Loans or (ii) becomes subject to
restrictions on the amount of such a category of liabilities or assets
which it may hold, then, if such Lender so elects by notice to the
Borrower, the obligation of such Lender to make additional Eurodollar
Loans shall be suspended until such Regulatory Change or other
circumstances ceases to be in effect (in which case the provisions of
Section 5.04 shall be applicable).
(c) Capital Adequacy. Without limiting the effect of the
foregoing provisions of this Section 5.01 (but without duplication),
the Borrower shall pay directly to any Lender from time to time on
request such amounts as such Lender may reasonably determine to be
necessary to compensate such Lender or its parent or holding company
for any costs which it determines are attributable to the maintenance
by such Lender or its parent or holding company (or any Applicable
Lending Office), pursuant to any Governmental Requirement following
any Regulatory Change, of capital in respect of its Commitment, its
Note, or its Loans or any interest held by it in any Letter of Credit,
such compensation to include, without limitation, an amount equal to
any reduction of
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EXHIBIT 1.1
the rate of return on assets or equity of such Lender or its parent or
holding company (or any Applicable Lending Office) to a level below
that which such Lender or its parent or holding company (or any
Applicable Lending Office) could have achieved but for such
Governmental Requirement. Such Lender will notify the Borrower that
it is entitled to compensation pursuant to this Section 5.01(c) as
promptly as practicable after it determines to request such
compensation.
(d) Compensation Procedure. Any Lender notifying the
Borrower of the incurrence of additional costs under this Section 5.01
shall in such notice to the Borrower and the Agent set forth in
reasonable detail the basis and amount of its request for
compensation. Determinations and allocations by each Lender for
purposes of this Section 5.01 of the effect of any Regulatory Change
pursuant to Section 5.01(a) or (b), or of the effect of capital
maintained pursuant to Section 5.01(c), on its costs or rate of return
of maintaining Loans or its obligation to make Loans or issue Letters
of Credit, or on amounts receivable by it in respect of Loans or
Letters of Credit, and of the amounts required to compensate such
Lender under this Section 5.01, shall be conclusive and binding for
all purposes, provided that such determinations and allocations are
made on a reasonable basis and further provided that additional costs
incurred more than 180 days prior to notice thereof to the Borrower
shall not be reimbursable. Any request for additional compensation
under this Section 5.01 shall be paid by the Borrower within thirty
(30) days of the receipt by the Borrower of the notice described in
this Section 5.01(d).
(e) Replacement of Bank. In the event that any Bank
shall require payment of any additional costs pursuant to this Section
5.01, the Borrower shall have the right (without prejudice to its
obligations to pay such additional costs) to replace such Bank (a
"Replaced Bank") with another commercial bank or other financial
institution (a "Replacement Bank"); provided that such Replacement
Bank (a) shall be reasonably acceptable to the Agent and (b) offers to
purchase the Replaced Bank's Loan position at par together with all
accrued and unpaid interest and fees and to execute and deliver to the
Agent an Assignment pursuant to Section 12.06 hereof pursuant to which
such Replacement Bank will become a party hereto with a Commitment
equal to that of the Bank being replaced. If the Replaced Bank fails
to accept such purchase offer, the Borrower shall not obligated to pay
to such Replaced Bank such additional amounts incurred or accrued from
and after the date of such purchase offer.
Section 5.02 Limitation on Eurodollar Loans. Anything
herein to the contrary notwithstanding, if, on or prior to the determination of
any Fixed Eurodollar Rate for any Interest Period:
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EXHIBIT 1.1
(i) the Agent determines (which determination shall be
conclusive, absent manifest error) that quotations of interest rates
for the relevant deposits referred to in the definition of "Fixed
Eurodollar Rate" in Section 1.02 are not being provided in the
relevant amounts or for the relevant maturities for purposes of
determining rates of interest for Eurodollar Loans as provided herein;
or
(ii) the Agent determines (which determination shall be
conclusive, absent manifest error) that the relevant rates of interest
referred to in the definition of "Fixed Eurodollar Rate" in Section
1.02 upon the basis of which the rate of interest for Eurodollar Loans
for such Interest Period is to be determined are not sufficient to
adequately cover the cost to the Lenders of making or maintaining
Eurodollar Loans;
then the Agent shall give the Borrower prompt notice thereof, and so long as
such condition remains in effect, the Lenders shall be under no obligation to
make additional Eurodollar Loans.
Section 5.03 Illegality. Notwithstanding any other
provision of this Agreement, in the event that it becomes unlawful for any
Lender or its Applicable Lending Office to honor its obligation to make or
maintain Eurodollar Loans hereunder, then such Lender shall promptly notify the
Borrower thereof and such Lender's obligation to make Eurodollar Loans shall be
suspended until such time as such Lender may again make and maintain Eurodollar
Loans (in which case the provisions of Section 5.04 shall be applicable).
Section 5.04 Base Rate Loans Pursuant to Sections 5.01,
5.02 and 5.03. If the obligation of any Lender to make Eurodollar Loans shall
be suspended pursuant to Sections 5.01, 5.02 or 5.03 ("Affected Loans"), all
Affected Loans which would otherwise be made by such Lender shall be made
instead as Base Rate Loans (and, if an event referred to in Section 5.01(b) or
Section 5.03 has occurred and such Lender so requests by notice to the
Borrower, all Affected Loans of such Lender then outstanding shall be
automatically converted into Base Rate Loans on the date specified by such
Lender in such notice) and, to the extent that Affected Loans are so made as
(or converted into) Base Rate Loans, all payments of principal which would
otherwise be applied to such Lender's Affected Loans shall be applied instead
to its Base Rate Loans.
Section 5.05 Compensation. The Borrower shall pay to each
Lender within thirty (30) days of receipt of written request of such Lender
(which request shall set forth, in reasonable detail, the basis for requesting
such amounts and which shall be conclusive and binding for all purposes
provided that such determinations are made on a reasonable basis), such amount
or amounts as shall compensate it for any loss, cost, expense or liability
which such Lender determines are attributable to:
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EXHIBIT 1.1
(i) any payment, prepayment or conversion of a Eurodollar
Loan properly made by such Lender or the Borrower for any reason
(including, without limitation, the acceleration of the Loans pursuant
to Section 10.01) on a date other than the last day of the Interest
Period for such Loan; or
(ii) any failure by the Borrower for any reason (including
but not limited to, the failure of any of the conditions precedent
specified in Article VI to be satisfied) to borrow, continue or
convert a Eurodollar Loan from such Lender on the date for such
borrowing, continuation or conversion specified in the relevant notice
given pursuant to Section 2.02(c).
Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the present value (discounted at the interest rate
implied in clause (ii) of this sentence) of the excess, if any, of (i) the
amount of interest which would have accrued on the principal amount so paid,
prepaid or converted or not borrowed for the period from the date of such
payment, prepayment or conversion or failure to borrow to the last day of the
Interest Period for such Loan (or, in the case of a failure to borrow, the
Interest Period for such Loan which would have commenced on the date specified
for such borrowing) at the applicable rate of interest for such Loan provided
for herein over (ii) the interest component of the amount such Lender would
have bid in the London interbank market for Dollar deposits of leading banks in
amounts comparable to such principal amount and with maturities comparable to
such period (as reasonably determined by such Lender).
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.01 Initial Funding.
The obligation of the Lenders to make the Initial Funding is
subject to the receipt by the Agent and the Lenders of all fees payable
pursuant to Section 2.04 on or before the Closing Date and the receipt by the
Agent of the following documents and satisfaction of the other conditions
provided in this Section 6.01, each of which shall be satisfactory to the Agent
in form and substance:
(a) A certificate of the Secretary or an Assistant
Secretary of the Borrower setting forth (i) resolutions of its board
of directors with respect to the authorization of the Borrower to
execute and deliver the Loan Documents to which it is a party and to
enter into the transactions contemplated in those documents, (ii) the
officers of the Borrower (y) who are authorized to sign the Loan
Documents to which Borrower is a party and (z) who will, until
replaced by another officer or officers duly authorized for
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EXHIBIT 1.1
that purpose, act as its representative for the purposes of signing
documents and giving notices and other communications in connection
with this Agreement and the transactions contemplated hereby, (iii)
specimen signatures of the authorized officers, and (iv) the articles
or certificate of incorporation and bylaws of the Borrower, certified
as being true and complete. The Agent and the Lenders may
conclusively rely on such certificate until the Agent receives notice
in writing from the Borrower to the contrary.
(b) A certificate of the Secretary or an Assistant
Secretary of the Guarantor setting forth (i) resolutions of its board
of directors with respect to the authorization of the Guarantor to
execute and deliver the Loan Documents to which it is a party and to
enter into the transactions contemplated in those documents, (ii) the
officers of the Guarantor (y) who are authorized to sign the Loan
Documents to which Guarantor is a party and (z) who will, until
replaced by another officer or officers duly authorized for that
purpose, act as its representative for the purposes of signing
documents and giving notices and other communications in connection
with this Agreement and the transactions contemplated hereby, (iii)
specimen signatures of the authorized officers, and (iv) the articles
or certificate of incorporation and bylaws of the Guarantor, certified
as being true and complete. The Agent and the Lenders may
conclusively rely on such certificate until they receive notice in
writing from the Guarantor to the contrary.
(c) Certificates of the appropriate state agencies of the
States of New Jersey, Nevada and Texas with respect to the existence,
qualification and good standing of the Borrower and Guarantor.
(d) A compliance certificate which shall be substantially
in the form of Exhibit C, duly and properly executed by a Responsible
Officer and dated as of the date of the Initial Funding.
(e) The Notes, duly completed and executed.
(f) The Security Instruments, duly completed and executed.
(g) An opinion of Liddell, Sapp, Zivley, Hill & LaBoon,
L.L.P., special counsel to the Borrower and the Guarantor,
substantially in the form of Exhibit D hereto.
(h) One or more certificates of insurance coverage of the
Borrower evidencing that the Borrower is carrying insurance in
accordance with Section 7.19 hereof.
(i) Such other documents as the Agent or any Lender or
special counsel to the Agent may reasonably request in writing before
the Closing Date.
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EXHIBIT 1.1
Section 6.02 Initial and Subsequent Loans. The obligation
of the Lenders to make Loans to the Borrower upon the occasion of each
borrowing hereunder and to issue, renew, extend or reissue Letters of Credit
for the account of the Borrower or any Subsidiary (including the Initial
Funding) is subject to the further conditions precedent that, as of the date of
such Loans and after giving effect thereto: (i) no Default shall have occurred
and be continuing; (ii) no Material Adverse Effect shall have occurred; and
(iii) the representations and warranties made by the Borrower in Article VII
and in the Security Instruments to which it is a party shall be true on and as
of the date of the making of such Loans or issuance, renewal, extension or
reissuance of a Letter of Credit with the same force and effect as if made on
and as of such date and following such new borrowing, except to the extent such
representations and warranties are expressly limited to an earlier date or the
Agent may expressly consent to the contrary as hereinafter provided. Each
request for a borrowing or issuance, renewal, extension or reissuance of a
Letter of Credit by the Borrower hereunder shall constitute a certification by
the Borrower to the effect set forth in the preceding sentence (both as of the
date of such notice and, unless the Borrower otherwise notifies the Agent prior
to the date of and immediately following such borrowing or issuance, renewal,
extension or reissuance of a Letter of Credit as of the date thereof). In
connection with the foregoing, the Borrower may notify the Agent in writing of
any variance or change occurring after the Closing Date in the representations
and warranties and, if the Agent has not notified the Borrower in writing
within ten (10) Days following receipt of such notice that it does not consent
to such change or variance, it shall be deemed to have consented thereto.
Section 6.03 Conditions Relating to Letters of Credit. In
addition to the satisfaction of all other conditions precedent set forth in
this Article VI, the issuance, renewal, extension or reissuance of the Letters
of Credit referred to in Section 2.01(b) hereof is subject to the following
conditions precedent:
(a) At least three (3) Business Days prior to the date of
the issuance and at least thirty (30) days prior to the date of the
renewal, extension or reissuance of each Letter of Credit, the Agent
shall have received a written request for a Letter of Credit.
(b) Each of the Letters of Credit shall (i) be issued by
NationsBank, (ii) contain such terms and provisions as are reasonably
required by NationsBank, (iii) be for the account of the Borrower and
(iv) expire not later than two (2) days before the Revolving Credit
Termination Date.
(c) The Borrower shall have duly and validly executed and
delivered to NationsBank a Letter of Credit Agreement pertaining to
the Letter of Credit.
ARTICLE VII
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EXHIBIT 1.1
REPRESENTATIONS AND WARRANTIES
The Borrower and the Guarantor represent and warrant to the Agent and
the Lenders that (each representation and warranty herein is given as of the
Closing Date and shall be deemed repeated and reaffirmed on the dates of each
borrowing and issuance, renewal, extension or reissuance of a Letter of Credit
as provided in Section 6.02):
Section 7.01 Corporate Existence. Each of the Borrower and the
Guarantor: (i) is a corporation duly organized, legally existing and in good
standing under the laws of the jurisdiction of its incorporation; (ii) has all
requisite corporate power, and has all material governmental licenses,
authorizations, consents and approvals necessary to own its assets and carry on
its business as now being or as proposed to be conducted; and (iii) is qualified
to do business in all jurisdictions in which the nature of the business
conducted by it makes such qualification necessary and where failure so to
qualify would have a Material Adverse Effect.
Section 7.02 Financial Condition. The audited consolidated
balance sheet of the Guarantor and its Consolidated Subsidiaries and the
unaudited consolidating balance sheet of the Guarantor and its Consolidated
Subsidiaries as at December 31, 1994 and the related consolidated and
consolidating statement of operations, shareholders' equity and cash flow
(consolidated statements only for shareholders' equity and cash flow) of the
Guarantor and its Consolidated Subsidiaries for the fiscal year ended on said
date, with the opinion thereon of KPMG Peat Marwick L.L.P. heretofore furnished
to the Agent and the unaudited consolidated and consolidating balance sheet of
the Guarantor and its Consolidated Subsidiaries as at March 31, 1995 and their
related consolidated and consolidating statements of operations and cash flow of
the Guarantor and its Consolidated Subsidiaries for the three-month period ended
on such date heretofore furnished to the Agent, are complete and correct and
fairly present the consolidated and consolidating financial condition of the
Guarantor and its Consolidated Subsidiaries as at said dates and the results of
its operations for the fiscal year and the three-month period on said dates, all
in accordance with GAAP, as applied on a consistent basis (subject, in the case
of the interim financial statements, to normal year-end adjustments). Neither
the Guarantor nor any Subsidiary has on the Closing Date any material Debt,
contingent liabilities, liabilities for taxes, unusual forward or long-term
commitments or unrealized or anticipated losses from any unfavorable
commitments, except as referred to or reflected or provided for in the Financial
Statements. Since December 31, 1994, there has been no change or event having a
Material Adverse Effect. Since the date of the Financial Statements, neither the
business nor the Properties of the Guarantor or any Subsidiary have been
materially and adversely affected as a result of any fire, explosion,
earthquake, flood, drought, windstorm, accident, strike or other labor
disturbance, embargo, requisition or taking of Property or cancellation of
contracts, permits or concessions by any Governmental Authority, riot,
activities of armed forces or acts of God or of any public enemy.
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EXHIBIT 1.1
Section 7.03 Litigation. Except as disclosed to the Lenders in
Schedule 7.03 hereto, at the Closing Date there is no litigation, legal,
administrative or arbitral proceeding, investigation or other action of any
nature pending or, to the knowledge of the Borrower threatened against or
affecting the Guarantor or any Subsidiary which involves the possibility of any
judgment or liability against the Guarantor or any Subsidiary for the payment of
money in excess of $500,000 (net of insurance coverage) or which could otherwise
have a Material Adverse Effect.
Section 7.04 No Breach. Neither the execution and delivery of
the Loan Documents, nor compliance with the terms and provisions hereof will
conflict with or result in a breach of, or require any consent which has not
been obtained as of the Closing Date under, the respective charter or by-laws of
the Guarantor or any Subsidiary, or any material Governmental Requirement or any
material agreement or instrument to which the Guarantor or any Subsidiary is a
party or by which it is bound or to which it or its Properties are subject, or
constitute a default under any such agreement or instrument, or result in the
creation or imposition of any Lien upon any of the revenues or assets of the
Guarantor or any Subsidiary pursuant to the terms of any such agreement or
instrument other than the Liens created by the Loan Documents.
Section 7.05 Authority. The Guarantor and each Subsidiary have
all necessary corporate power and authority to execute, deliver and perform its
obligations under the Loan Documents to which it is a party; and the execution,
delivery and performance by the Guarantor and each Subsidiary of the Loan
Documents to which it is a party, have been duly authorized by all necessary
corporate action on its part; and the Loan Documents constitute the legal, valid
and binding obligations of the Guarantor and each Subsidiary, enforceable in
accordance with their terms except to the extent such enforceability may be
affected by bankruptcy, insolvency or other similar laws relating to or
affecting creditor's rights.
Section 7.06 Approvals. No authorizations, approvals or
consents of, and no filings or registrations with, any Governmental Authority
are necessary for the execution, delivery or performance by the Guarantor or any
Subsidiary of the Loan Documents or for the validity or enforceability thereof.
Section 7.07 Use of Loans. The proceeds of the Loans shall be
used for general corporate purposes. Neither the Borrower nor the Guarantor is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose, whether immediate, incidental or ultimate, of
buying or carrying margin stock (within the meaning of Regulation G, U or X of
the Board of Governors of the Federal Reserve System) and no part of the
proceeds of any Loan hereunder will be used to buy or carry any margin stock.
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EXHIBIT 1.1
Section 7.08 ERISA.
(a) The Guarantor, each Subsidiary and each ERISA Affiliate
have complied in all material respects with ERISA and, where
applicable, the Code regarding each Plan.
(b) Each Plan is, and has been, maintained in substantial
compliance with ERISA and, where applicable, the Code.
(c) No act, omission or transaction has occurred which could
result in imposition on the Guarantor, any Subsidiary or any ERISA
Affiliate (whether directly or indirectly) of (i) either a civil
penalty assessed pursuant to section 502(c), (i) or (l) of ERISA or a
tax imposed pursuant to Chapter 43 of Subtitle D of the Code or (ii)
breach of fiduciary duty liability damages under section 409 of ERISA.
(d) No Plan (other than a defined contribution plan) or any
trust created under any such Plan has been terminated since September
2, 1974. No liability to the PBGC (other than for the payment of
current premiums which are not past due) by the Guarantor, any
Subsidiary or any ERISA Affiliate has been or is expected by the
Guarantor, any Subsidiary or any ERISA Affiliate to be incurred with
respect to any Plan. No ERISA Event with respect to any Plan has
occurred.
(e) Full payment when due has been made of all amounts which
the Guarantor, any Subsidiary or any ERISA Affiliate is required under
the terms of each Plan or applicable law to have paid as contributions
to such Plan, and no accumulated funding deficiency (as defined in
section 302 of ERISA and section 412 of the Code), whether or not
waived, exists with respect to any Plan.
(f) The actuarial present value of the benefit liabilities
under each Plan which is subject to Title IV of ERISA does not, as of
the end of the Guarantor's most recently ended fiscal year, exceed the
current value of the assets (computed on a plan termination basis in
accordance with Title IV of ERISA) of such Plan allocable to such
benefit liabilities by more than $2,000,000. The term "actuarial
present value of the benefit liabilities" shall have the meaning
specified in section 4041 of ERISA.
(g) None of the Guarantor, any Subsidiary or any ERISA
Affiliate sponsors, maintains, or contributes to an employee welfare
benefit plan, as defined in section 3(1) of ERISA, including, without
limitation, any such plan maintained to provide benefits to former
employees of such entities, that may not be terminated by the
Guarantor, a Subsidiary or any ERISA Affiliate in its sole discretion
at any time without any material liability.
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EXHIBIT 1.1
(h) None of the Guarantor, any Subsidiary or any ERISA
Affiliate sponsors, maintains or contributes to, or has at any time in
the preceding six calendar years, sponsored, maintained or contributed
to, any Multiemployer Plan.
(i) None of the Guarantor, any Subsidiary or any ERISA
Affiliate is required to provide security under section 401(a)(29) of
the Code due to a Plan amendment that results in an increase in current
liability for the Plan.
Section 7.09 Taxes. Except as set out in Schedule 7.09, each of
the Guarantor and its Subsidiaries has filed all United States Federal income
tax returns or appropriate extensions and all other tax returns which are
required to be filed by them and have paid all material taxes due pursuant to
such returns or pursuant to any assessment received by the Guarantor or any
Subsidiary, except those which are being contested in good faith and by
appropriate proceedings diligently conducted. The charges, accruals and reserves
on the books of the Guarantor and its Subsidiaries in respect of taxes and other
governmental charges are, in the opinion of the Borrower, adequate. No tax lien
has been filed and, to the knowledge of the Borrower, no claim is being asserted
with respect to any such tax, fee or other charge.
Section 7.10 Titles, Etc.
(a) Except as set out in Schedule 7.10, each of the Borrower
and its Subsidiaries has good and defensible title to its material
(individually or in the aggregate) Properties, free and clear of all
Liens except Liens permitted by Section 9.02. Except as set forth in
Schedule 7.10, after giving full effect to the Excepted Liens, the
Borrower owns the net interests in production attributable to the
Hydrocarbon Interests reflected in the most recently delivered Reserve
Report and the ownership of such Properties shall not in any material
respect obligate the Borrower to bear the costs and expenses relating
to the maintenance, development and operations of each such Property in
an amount in excess of the working interest of each Property set forth
in the most recently delivered Reserve Report. All information
contained in the most recently delivered Reserve Report is true and
correct in all material respects as of the date thereof.
(b) All leases and agreements necessary for the conduct of the
business of the Borrower and its Subsidiaries are valid and subsisting,
in full force and effect and there exists no default or event or
circumstance which with the giving of notice or the passage of time or
both would give rise to a default under any such lease or leases, which
would affect in any material respect the conduct of the business of the
Borrower and its Subsidiaries.
(c) The rights, properties and other assets presently owned,
leased or licensed by the Borrower and its Subsidiaries including,
without limitation, all
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EXHIBIT 1.1
easements and rights of way, include all rights, Properties and other
assets necessary to permit the Borrower and its Subsidiaries to conduct
their business in all material respects in the same manner as its
business has been conducted prior to the Closing Date.
(d) All of the assets and Properties of the Borrower and its
Subsidiaries which are reasonably necessary for the operation of its
business are in good working condition and are maintained in accordance
with prudent business standards.
Section 7.11 No Material Misstatements. No written information,
statement, exhibit, certificate, document or report furnished to the Agent and
the Lenders (or any of them) by the Guarantor or any Subsidiary in connection
with the negotiation of this Agreement contained any material misstatement of
fact or omitted to state a material fact or any fact necessary to make the
statement contained therein not materially misleading in the light of the
circumstances in which made and with respect to the Guarantor and its
Subsidiaries or Borrower and its Subsidiaries, in each case, taken as a whole.
There is no fact peculiar to the Guarantor or any Subsidiary which has a
Material Adverse Effect or in the future is reasonably likely to have (so far as
the Borrower can now foresee) a Material Adverse Effect and which has not been
set forth in this Agreement or the other documents, certificates and statements
furnished to the Agent by or on behalf of the Guarantor or any Subsidiary prior
to, or on, the Closing Date in connection with the transactions contemplated
hereby.
Section 7.12 Investment Company Act. Neither the Guarantor nor
the Borrower nor any Subsidiary is an "investment company" or a company
"controlled" by an "investment company," within the meaning of the Investment
Company Act of 1940, as amended.
Section 7.13 Public Utility Holding Company Act. Neither the
Guarantor nor the Borrower nor any Subsidiary 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," or a "public
utility" within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
Section 7.14 Subsidiaries and Partnerships. Except as set forth
on Schedule 7.14, neither the Guarantor nor the Borrower has Subsidiaries nor
any interest in any partnerships.
Section 7.15 Location of Business and Offices. The Borrower's
and the Guarantor's principal place of business and chief executive offices are
located at the address stated on the signature pages of this Agreement. The
principal place of business and chief executive office of each Subsidiary are
located at the addresses stated on Schedule 7.14.
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EXHIBIT 1.1
Section 7.16 Defaults. Neither the Guarantor nor any Subsidiary
is in default nor has any event or circumstance occurred which, but for the
expiration of any applicable grace period or the giving of notice, or both,
would constitute a default under any material agreement or instrument to which
the Guarantor or any Subsidiary is a party or by which the Guarantor or any
Subsidiary is bound which default would have a Material Adverse Effect. No
Default hereunder has occurred and is continuing.
Section 7.17 Environmental Matters. Except (i) as provided in
Schedule 7.17 or (ii) as would not have a Material Adverse Effect (or with
respect to (c), (d) and (e) below, where the failure to take such actions would
not have a Material Adverse Effect):
(a) Neither any Property of the Guarantor or any Subsidiary nor
the operations conducted thereon violate any order or requirement of
any court or Governmental Authority or any Environmental Laws;
(b) Without limitation of clause (a) above, no Property of the
Guarantor or any Subsidiary nor the operations currently conducted
thereon or, to the best knowledge of the Borrower, by any prior owner
or operator of such Property or operation, are in violation of or
subject to any existing, pending or threatened action, suit,
investigation, inquiry or proceeding by or before any court or
Governmental Authority or to any remedial obligations under
Environmental Laws;
(c) All notices, permits, licenses or similar authorizations,
if any, required to be obtained or filed in connection with the
operation or use of any and all Property of the Guarantor and each
Subsidiary, including without limitation past or present treatment,
storage, disposal or release of a hazardous substance or solid waste
into the environment, have been duly obtained or filed, and the
Guarantor and each Subsidiary are in compliance with the terms and
conditions of all such notices, permits, licenses and similar
authorizations;
(d) All hazardous substances, solid waste, and oil and gas
exploration and production wastes, if any, generated at any and all
Property of the Guarantor or any Subsidiary have in the past been
transported, treated and disposed of in accordance with Environmental
Laws and so as not to pose an imminent and substantial endangerment to
public health or welfare or the environment, and, to the best knowledge
of the Borrower, all such transport carriers and treatment and disposal
facilities have been and are operating in compliance with Environmental
Laws and so as not to pose an imminent and substantial endangerment to
public health or welfare or the environment, and are not the subject of
any existing, pending or threatened action, investigation or inquiry by
any Governmental Authority in connection with any Environmental Laws;
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EXHIBIT 1.1
(e) The Guarantor has taken all steps reasonably necessary to
determine and has determined that no hazardous substances, solid waste,
or oil and gas exploration and production wastes, have been disposed of
or otherwise released and there has been no threatened release of any
hazardous substances on or to any Property of the Guarantor or any
Subsidiary except in compliance with Environmental Laws and so as not
to pose an imminent and substantial endangerment to public health or
welfare or the environment;
(f) To the extent applicable, all Property of the Guarantor and
each Subsidiary currently satisfies all design, operation, and
equipment requirements imposed by the OPA or scheduled as of the
Closing Date to be imposed by OPA during the term of this Agreement,
and the Borrower does not have any reason to believe that such
Property, to the extent subject to OPA, will not be able to maintain
compliance with the OPA requirements during the term of this Agreement;
and
(g) Neither the Guarantor nor any Subsidiary has any known
contingent liability in connection with any release or threatened
release of any oil, hazardous substance or solid waste into the
environment.
Section 7.18 Compliance with the Law. Neither the Borrower nor
any Subsidiary has violated any Governmental Requirement or failed to obtain any
license, permit, franchise or other governmental authorization necessary for the
ownership of any of its Properties or the conduct of its business, which
violation or failure would have (in the event such violation or failure were
asserted by any Person through appropriate action) a Material Adverse Effect.
Except for such acts or failures to act as would not have a Material Adverse
Effect, the Oil and Gas Properties of the Guarantor and its Subsidiaries (and
properties unitized therewith) have been maintained, operated and developed in a
good and workmanlike manner and in conformity with all applicable laws and all
rules, regulations and orders of all duly constituted authorities having
jurisdiction and in conformity with the provisions of all leases, subleases or
other contracts comprising a part of the Hydrocarbon Interests and other
contracts and agreements forming a part of such Oil and Gas Properties;
specifically in this connection, (i) after the Closing Date, no such Oil and Gas
Property is subject to having allowable production reduced below the full and
regular allowable (including the maximum permissible tolerance) because of any
overproduction (whether or not the same was permissible at the time) prior to
the Closing Date and (ii) none of the wells comprising a part of such Oil and
Gas Properties (or properties unitized therewith) are deviated from the vertical
more than the maximum permitted by applicable laws, regulations, rules and
orders, and such wells are, in fact, bottomed under and are producing from, and
the well bores are wholly within, such Oil and Gas Properties (or in the case of
wells located on properties unitized therewith, such unitized properties).
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EXHIBIT 1.1
Section 7.19 Insurance. Schedule 7.19 attached hereto contains
an accurate and complete description of all material policies of fire,
liability, worker's compensation and other forms of insurance owned or held by
the Borrower and each Subsidiary. All such policies are in full force and
effect, all premiums with respect thereto covering all periods up to and
including the date of the closing have been paid, and no notice of cancellation
or termination has been received with respect to any such policy. Such policies
are sufficient for compliance with all (i) requirements of law and (ii)
agreements to which the Borrower or any Subsidiary is a party; are valid,
outstanding and enforceable policies; provide adequate insurance coverage in at
least such amounts and against at least such risks (but including in any event
public liability) as are usually insured against in the same general area by
companies engaged in the same or a similar business for the assets and
operations of the Borrower and each Subsidiary; will remain in full force and
effect through the respective dates set forth in Schedule 7.19 without the
payment of additional premiums, except operators additional expense insurance
which requires quarterly premiums based upon drilling activity; and will not in
any way be affected by, or terminate or lapse by reason of, the transactions
contemplated by this Agreement. Neither the Borrower nor any Subsidiary has been
refused any insurance with respect to its assets or operations, nor has its
coverage been limited below usual and customary policy limits, by an insurance
carrier to which it has applied for any such insurance or with which it has
carried insurance during the last three years.
Section 7.20 Hedging Agreements. Schedule 7.20 sets forth, as
of the Closing Date, a true and complete list of all Hedging Agreements
(including commodity price swap agreements, forward agreements or contracts of
sale which provide for prepayment for deferred shipment or delivery of oil, gas
or other commodities) of the Borrower and each Subsidiary, the material terms
thereof (including the type, term, effective date, termination date and notional
amounts or volumes), the net mark to market value thereof, all credit support
agreements relating thereto (including any margin required or supplied), and the
counterparty to each such agreement.
Section 7.21 Material Agreements. Set forth on Schedule 7.21
hereto is a complete and correct list of all material credit agreements,
indentures, purchase agreements, obligations in respect of letters of credit,
guarantees, joint venture agreements, and other instruments in effect or to be
in effect as of the Closing Date (other than Hedging Agreements) providing for,
evidencing, securing or otherwise relating to any Debt of the Guarantor or any
of its Subsidiaries, and all obligations of the Guarantor or any of its
Subsidiaries to issuers of surety or appeal bonds issued for account of the
Guarantor or any such Subsidiary. Such list correctly sets forth the names of
the debtor or lessee and creditor or lessor with respect to the Debt or lease
obligations (except with respect to mineral leases which do not create or are
not otherwise subject to Debt) outstanding or to be outstanding and the property
subject to any Lien securing such Debt or lease obligation.
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EXHIBIT 1.1
Section 7.22 Gas Imbalances. As of April 30, 1995, except as
set forth on Schedule 7.22 or on the most recent certificate delivered pursuant
to Section 8.07(c), on a net basis there are no gas imbalances, take or pay or
other prepayments with respect to the Borrower's Oil and Gas Properties which
would require the Borrower to deliver Hydrocarbons produced from the Oil and Gas
Properties at some future time without then or thereafter receiving full payment
therefor exceeding 200,000 cubic feet of gas in the aggregate.
ARTICLE VIII
AFFIRMATIVE COVENANTS
The Borrower and the Guarantor covenant and agree that, so long as any
of the Commitments are in effect and until payment in full of all Loans
hereunder, all interest thereon and all other amounts payable by the Borrower
hereunder:
Section 8.01 Financial Statements. The Borrower and the
Guarantor, as the case may be, shall deliver, or shall cause to be delivered, to
the Agent with a copy for each Lender:
(a) As soon as available and in any event within 90 days after
the end of each fiscal year of the Guarantor, the audited consolidated
statements of operations, shareholders' equity and cash flow of the
Guarantor and its Consolidated Subsidiaries, the unaudited
consolidating statements of operations of the Guarantor and its
Consolidated Subsidiaries for such fiscal year, and the related
consolidated and consolidating balance sheets of the Guarantor and its
Consolidated Subsidiaries as at the end of such fiscal year, and
setting forth in each case in comparative form the corresponding
figures for the preceding fiscal year, and accompanied by the related
opinion of independent public accountants of recognized national
standing which opinion shall state that said financial statements
fairly present the consolidated financial condition and results of
operations of the Guarantor and its Consolidated Subsidiaries as at the
end of, and for, such fiscal year and that such financial statements
have been prepared in accordance with GAAP except for such changes in
such principles with which the independent public accountants shall
have concurred and such opinion shall not contain a "going concern" or
like qualification or exception.
(b) As soon as available and in any event within 90 days after
the end of each fiscal year of the Borrower, the unaudited consolidated
statement of operations of the Borrower for such fiscal year, and the
related balance sheets of the Borrower as at the end of such fiscal
year, and setting forth in each case in comparative form the
corresponding figures for the preceding fiscal year, which financial
statements
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EXHIBIT 1.1
shall fairly present the financial condition and results of operations of the
Borrower as at the end of, and for, such fiscal year and state that such
financial statements have been prepared in accordance with GAAP (other than
footnotes).
(c) As soon as available and in any event within 45 days after
the end of each of the first three fiscal quarterly periods of each
fiscal year of the Guarantor, consolidated and consolidating statements
of operations and cash flow (consolidated only) of the Guarantor and
its Consolidated Subsidiaries for such period and for the period from
the beginning of the respective fiscal year to the end of such period,
and the related consolidated and consolidating balance sheets as at the
end of such period, and setting forth in each case in comparative form
the corresponding figures for the corresponding period in the preceding
fiscal year, accompanied by the certificate of a Responsible Officer of
the Guarantor in the form of Exhibit G attached hereto.
(d) As soon as available and in any event within 45 days after
the end of each of the first three fiscal quarterly periods of each
fiscal year of the Borrower, consolidated statements of operations of
the Borrower for such period and for the period from the beginning of
the respective fiscal year to the end of such period, and the related
balance sheets as at the end of such period, and setting forth in each
case in comparative form the corresponding figures for the
corresponding period in the preceding fiscal year, accompanied by the
certificate of a Responsible Officer of the Borrower in the form of
Exhibit G attached hereto.
(e) Promptly after either the Borrower or the Guarantor knows
that any Default or any Material Adverse Effect has occurred, a notice
of such Default or Material Adverse Effect, describing the same in
reasonable detail and the action the Borrower proposes to take with
respect thereto.
(f) Promptly upon receipt thereof, a copy of each other report
or letter submitted to the Guarantor or the Borrower or any Subsidiary
by independent accountants in connection with any annual, interim or
special audit made by them of the books of the Guarantor or the
Borrower or any Subsidiary, and a copy of any response by the Borrower
or any Subsidiary, or the Board of Directors of the Guarantor, Borrower
or any Subsidiary, to such letter or report.
(g) Promptly upon its becoming available, each financial
statement, report, notice or proxy statement sent by the Guarantor to
shareholders generally and each regular or periodic report and any
registration statement, prospectus or written
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EXHIBIT 1.1
communication (other than transmittal letters) in respect thereof filed
by the Guarantor with or received by the Guarantor in connection
therewith from any securities exchange or the SEC or any successor
agency.
(h) Promptly after the furnishing thereof, copies of any
material statement, report or notice furnished to or for any Person
pursuant to the terms of any indenture, loan or credit or other similar
agreement, other than this Agreement and not otherwise required to be
furnished to the Lenders pursuant to any other provision of this
Section 8.01.
(i) From time to time such other information regarding the
business, affairs or financial condition of the Borrower, Guarantor or
any Subsidiary (including, without limitation, any Plan or
Multiemployer Plan and any reports or other information required to be
filed under ERISA) as any Lender or the Agent may reasonably request.
(j) As soon as available and in any event within ten (10)
Business Days after the last day of each calendar year, a report, in
form and substance satisfactory to the Agent, setting forth as of the
last Business Day of such calendar year a true and complete list of all
Hedging Agreements (including commodity price swap agreements, forward
agreements or contracts of sale which provide for prepayment for
deferred shipment or delivery of oil, gas or other commodities) of the
Borrower and each Subsidiary, the material terms thereof (including the
type, term, effective date, termination date and notional amounts or
volumes), the net mark to market value therefor, any new credit support
agreements relating thereto not listed on Schedule 7.21, any margin
required or supplied under any credit support document, and the
counterparty to each such agreement.
The Borrower will furnish to the Agent, at the time it furnishes each set of
financial statements pursuant to paragraph (a) or (c) above, a certificate
substantially in the form of Exhibit C hereto executed by a Responsible Officer.
Section 8.02 Litigation. The Borrower and the Guarantor shall
promptly give to the Agent notice of all legal or arbitral proceedings, and of
all proceedings before any Governmental Authority affecting the Guarantor, the
Borrower or any Subsidiary, except proceedings which, if adversely determined,
would (i) not create a monetary liability in excess of $500,000 (net of
insurance coverage) or (ii) not have a Material Adverse Effect. The Borrower
will, and will cause the Guarantor and each Subsidiary to, promptly notify the
Agent and each of the Lenders of any claim, judgment, Lien or other encumbrance
affecting any Property of the Guarantor, the Borrower or any Subsidiary if the
value of the claim, judgment, Lien, or other encumbrance affecting such Property
shall exceed $500,000.
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EXHIBIT 1.1
Section 8.03 Maintenance, Etc.
(a) The Guarantor shall cause each Subsidiary to: preserve and
maintain its corporate existence and all of its material rights,
privileges and franchises, to the extent that the failure to do so
would have a Material Adverse Effect; keep books of record and account
in which full, true and correct entries will be made of all dealings or
transactions in relation to its business and activities in accordance
with GAAP; comply with all Governmental Requirements if failure to
comply with such requirements will have a Material Adverse Effect; pay
and discharge all taxes, assessments and governmental charges or levies
imposed on it or on its income or profits or on any of its Property
prior to the date on which penalties attach thereto, except for any
such tax, assessment, charge or levy the payment of which is being
contested in good faith and by proper proceedings and against which
adequate reserves (determined in accordance with GAAP) are being
maintained; upon reasonable notice, permit representatives of the Agent
or any Lender, during normal business hours, to examine, copy and make
extracts from its books and records, to inspect its Properties, and to
discuss its business and affairs with its officers, all to the extent
reasonably requested by such Lender or the Agent (as the case may be);
and keep, or cause to be kept, insured by financially sound and
reputable insurers all Property of a character usually insured by
Persons engaged in the same or similar business similarly situated
against loss or damage of the kinds and in the amounts customarily
insured against by such Persons and carry such other insurance as is
usually carried by such Persons including, without limitation,
environmental risk insurance to the extent reasonably available.
(b) The Guarantor will cause each Subsidiary to operate its
Properties or cause such Properties to be operated in a careful and
efficient manner in accordance with the practices of the industry and
in material compliance with all applicable contracts and agreements and
in compliance in all material respects with all Governmental
Requirements.
(c) The Guarantor will cause each Subsidiary to, at its own
expense, do or cause to be done all things reasonably necessary to
preserve and keep in good repair, working order and efficiency all of
its Oil and Gas Properties and other material Properties including,
without limitation, all equipment, machinery and facilities, and from
time to time will make all the reasonably necessary repairs, renewals
and replacements so that at all times the state and condition of its
Oil and Gas Properties and other material Properties will be fully
preserved and maintained, except to the extent a portion of such
Properties is no longer capable of producing Hydrocarbons in
economically reasonable amounts. The Guarantor will cause each
Subsidiary to promptly: (i) pay and discharge, or make reasonable and
customary efforts to cause to be paid and discharged, all delay
rentals, royalties, expenses and indebtedness accruing under the leases
or other agreements affecting or pertaining to its Oil and Gas
Properties,
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EXHIBIT 1.1
(ii) perform or make reasonable and customary efforts to cause to be
performed, in accordance with industry standards, the obligations
required by each and all of the assignments, deeds, leases, sub-leases,
contracts and agreements affecting its interests in its Oil and Gas
Properties and other material Properties, (iii) do, or to cause to be
done, all other things necessary to keep unimpaired, except for Liens
described in Section 9.02, its rights with respect thereto and prevent
any forfeiture thereof or a default thereunder, except to the extent a
portion of such Properties is no longer capable of producing
Hydrocarbons in economically reasonable amounts and except for
dispositions permitted by Section 9.14 hereof. The Guarantor will cause
each Subsidiary to operate its Oil and Gas Properties and other
material Properties or cause or make reasonable and customary efforts
to cause such Oil and Gas Properties and other material Properties to
be operated in a careful and efficient manner in accordance with the
practices of the industry and in material compliance with all
applicable contracts and agreements and in compliance in all material
respects with all Governmental Requirements.
Section 8.04 Environmental Matters.
(a) The Guarantor will cause each Subsidiary to establish and
implement such procedures as may be reasonably necessary to
continuously determine and assure that any failure of the following
does not have a Material Adverse Effect: (i) all Property of the
Borrower and its Subsidiaries and the operations conducted thereon and
other activities of the Borrower and its Subsidiaries are in compliance
with and do not violate the requirements of any applicable
Environmental Laws, (ii) no oil, hazardous substances or solid wastes
are disposed of or otherwise released on or to any Property owned by
any such party except in compliance with applicable Environmental Laws,
(iii) no hazardous substance will be released on or to any such
Property in a quantity equal to or exceeding that quantity which
requires reporting pursuant to Section 103 of CERCLA or otherwise
prohibited by applicable law or regulation, and (iv) no oil, oil and
gas exploration and production wastes or hazardous substance is
released on or to any such Property so as to pose an imminent and
substantial endangerment to public health or welfare or the
environment.
(b) The Borrower will promptly notify the Agent and the Lenders
in writing of any threatened action, investigation or inquiry by any
Governmental Authority of which the Borrower has knowledge in
connection with any Environmental Laws, excluding (1) the same which,
if adversely determined, would not have a Material Adverse Effect and
(2) routine testing and corrective action.
Section 8.05 Further Assurances. The Guarantor will cause each
Subsidiary to cure promptly any defects in the creation and issuance of the
Notes and the execution and delivery of the Security Instruments and this
Agreement to which it is a party. The Borrower
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EXHIBIT 1.1
at its expense will and will cause the Guarantor and each Subsidiary to promptly
execute and deliver to the Agent upon request all such other documents,
agreements and instruments to comply with or accomplish the covenants and
agreements of the Guarantor, the Borrower or any Subsidiary, as the case may be,
in the Security Instruments and this Agreement.
Section 8.06 Performance of Obligations. The Borrower will pay
the Notes according to the reading, tenor and effect thereof; and the Borrower
will and will cause each Subsidiary to do and perform every act and discharge
all of the obligations to be performed and discharged by them under the Security
Instruments and this Agreement, at the time or times and in the manner
specified.
Section 8.07 Engineering Reports.
(a) On or before the last day of each March of each year, the
Borrower shall furnish to the Agent and the Lenders a Reserve Report.
The Reserve Report furnished as of the last day of each March shall be
prepared as of the previous December 31. The December 31 Reserve Report
shall be prepared by Ryder Scott Co. Petroleum Engineers or other
certified independent petroleum engineers or other independent
petroleum consultant(s) reasonably acceptable to the Agent.
(b) In the event of an unscheduled redetermination, the
Borrower shall furnish to the Agent and the Lenders a Reserve Report
prepared by or under the supervision of the chief engineer of the
Borrower who shall certify such Reserve Report to be true and accurate
and to have been prepared substantially in accordance with the
procedures used in the immediately preceding Reserve Report. For any
unscheduled redetermination requested by the Agent (or as requested by
the Lenders pursuant to Section 2.08(d)), the Borrower shall provide
such Reserve Report with an "as of" date as required by the Majority
Lenders as soon as possible, but in any event no later than 90 days
following the receipt of the request by the Borrower.
(c) On or before August 30 of each year, the Borrower shall
furnish to the Agent and the Lenders a Production Report prepared as of
the previous June 30. The June 30 Production Report shall be prepared
by or under the supervision of the chief engineer of the Borrower who
shall certify such Production Report to be true and accurate and to
have been prepared substantially in accordance with the procedures used
in the immediately proceeding December 31 Reserve Report.
(d) With the delivery of each Reserve Report and Production
Report, the Borrower shall provide to the Agent (with a copy for each
Lender), a certificate from a Responsible Officer certifying that, to
the best of his knowledge and in all material respects: (i) the
information contained in the Reserve Report (or Production Report) and
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EXHIBIT 1.1
any other information delivered in connection therewith is true and
correct in all material respects, (ii) the Borrower owns good and
defensible title to its Oil and Gas Properties evaluated in such
Reserve Report (or Production Report) and such Properties are free of
all Liens except for Liens permitted by Section 9.02, (iii) except as
set forth on an exhibit to the certificate, on a net basis there are no
gas imbalances, take or pay or other prepayments with respect to its
Oil and Gas Properties evaluated in such Reserve Report (or Production
Report) which would require the Borrower to deliver Hydrocarbons
produced from such Oil and Gas Properties at some future time without
then or thereafter receiving full payment therefor, (iv) none of its
Oil and Gas Properties have been sold since the date of the last
Borrowing Base determination except as set forth on an exhibit to the
certificate, which certificate shall list all of the material Oil and
Gas Properties sold and in such detail as reasonably required by the
Agent, (v) attached to the certificate is a list of the material Oil
and Gas Properties added to and deleted from the immediately prior
Reserve Report, (vi) any material change in working interest or net
revenue interest in its Oil and Gas Properties occurring and the reason
for such change.
Section 8.08 ERISA Information and Compliance. The Guarantor
will promptly furnish and will cause the Subsidiaries and any ERISA Affiliate to
promptly furnish to the Agent with sufficient copies to the Lenders (i) promptly
after the filing thereof with the United States Secretary of Labor, the Internal
Revenue Service or the PBGC, copies of each annual and other report with respect
to each Plan or any trust created thereunder, (ii) promptly upon becoming aware
of the occurrence of any ERISA Event or of any "prohibited transaction," as
described in section 406 of ERISA or in section 4975 of the Code, in connection
with any Plan or any trust created thereunder, a written notice signed by a
Responsible Officer specifying the nature thereof, what action the Guarantor,
the Subsidiary or the ERISA Affiliate is taking or proposes to take with respect
thereto, and, when known, any action taken or proposed by the Internal Revenue
Service, the Department of Labor or the PBGC with respect thereto, and (iii)
promptly upon receipt thereof, copies of any notice of the PBGC's intention to
terminate or to have a trustee appointed to administer any Plan. With respect to
each Plan (other than a Multiemployer Plan), the Guarantor will, and will cause
each Subsidiary and ERISA Affiliate to, (i) satisfy in full and in a timely
manner, without incurring any late payment or underpayment charge or penalty and
without giving rise to any lien, all of the contribution and funding
requirements of section 412 of the Code (determined without regard to
subsections (d), (e), (f) and (k) thereof) and of section 302 of ERISA
(determined without regard to sections 303, 304 and 306 of ERISA), and (ii) pay,
or cause to be paid, to the PBGC in a timely manner, without incurring any late
payment or underpayment charge or penalty, all premiums required pursuant to
sections 4006 and 4007 of ERISA.
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EXHIBIT 1.1
ARTICLE IX
NEGATIVE COVENANTS
The Borrower and the Guarantor covenant and agree that, so long as any
of the Commitments are in effect and until payment in full of Loans hereunder,
all interest thereon and all other amounts payable by the Borrower hereunder and
termination of all Letters of Credit outstanding hereunder, without the prior
written consent of the Majority Lenders:
Section 9.01 Debt.
(a) Neither the Borrower nor the Guarantor individually or in
the aggregate between them will incur, create, assume or suffer to
exist Total Debt in excess of the Borrowing Base then in effect; and
(b) neither the Borrower nor any Subsidiary will incur, create,
assume or suffer to exist any Debt except:
(i) the Indebtedness;
(ii) Debt of the Borrower or any Subsidiary existing
on the Closing Date which is reflected in the Financial
Statements or is disclosed in Schedule 9.01, and any renewals
or extensions (but not increases) thereof;
(iii) accounts payable (for the deferred purchase
price of Property or services) from time to time incurred in
the ordinary course of business which, if greater than 90 days
past the invoice or billing date, are being contested in good
faith by appropriate proceedings if reserves adequate under
GAAP shall have been established therefor;
(iv) Debt of the Borrower and its Subsidiaries under
Hedging Agreements having a net mark to market value (as
determined in accordance with GAAP) not to exceed $2,000,000 in
the aggregate entered into as a part of its normal business
operations as a risk management strategy and/or hedge against
changes resulting from market conditions related to its
operations;
(v) Debt associated with bonds or surety obligations
required by Governmental Requirements in connection with the
operation of the Oil and Gas Properties;
(vi) Debt between the Borrower and any of its
Subsidiaries; and
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EXHIBIT 1.1
(vii) Project Financing with respect to the Ventures
described in Section 9.03(h)(ii) and (iii) and 9.03(i) and (j)
not to exceed $39,000,000 in the aggregate.
Section 9.02 Liens. Neither the Borrower, Guarantor nor any
Subsidiary will create, incur, assume or permit to exist any Lien on any of its
Properties (now owned or hereafter acquired), except:
(a) Liens securing the payment of any Indebtedness;
(b) Excepted Liens;
(c) Liens disclosed on Schedule 9.02;
(d) Other Liens which in the aggregate cover Properties with a
fair market value of not more than $1,000,000; and
(e) Liens on Property owned by a Venture securing Project
Financing of such Venture.
Section 9.03 Investments, Loans and Advances. Neither the
Borrower, Guarantor nor any Subsidiary will make or permit to remain outstanding
any loans or advances to or investments in any Person, except that the foregoing
restriction shall not apply to:
(a) investments, loans or advances reflected in the Financial
Statements or which are disclosed to the Lenders in Schedule 9.03;
(b) accounts receivable arising in the ordinary course of
business;
(c) direct obligations of the United States or any agency
thereof, or obligations guaranteed by the United States or any agency
thereof, in each case maturing within one year from the date of
creation thereof;
(d) commercial paper maturing within one year from the date of
creation thereof rated in the highest grade by Standard & Poors Ratings
Group or Moody's Investors Service, Inc.;
(e) bankers acceptances accepted by banks organized under the
laws of the United States or any state thereof which have capital,
surplus and undivided profits of at least $500,000,000 (as of the date
of such bank's most recent call report);
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EXHIBIT 1.1
(f) deposits maturing within one year from the date of creation
thereof with, including certificates of deposit issued by, any Lender
or any office located in the United States of any other bank or trust
company which is organized under the laws of the United States or any
state thereof, has capital, surplus and undivided profits aggregating
at least $100,000,000.00 (as of the date of such Lender's or bank or
trust company's most recent financial reports) and has a short term
deposit rating of no lower than A2 or P2, as such rating is set forth
from time to time, by Standard & Poors Ratings Group or Moody's
Investors Service, Inc., respectively;
(g) deposits in money market funds investing exclusively in
investments described in Section 9.03(c), 9.03(d) or 9.03(e);
(h) advances required of the Borrower under the existing
agreements with respect to:
(i) Indonesian Joint Venture - a joint venture
between Opicoil Houston, Inc. and Perusahaan Pertambangan
Minyak Dan Gas Bumi Negara established for the exploration,
development and production of oil and natural gas in East
Kalimantan, Indonesia, under a Production Sharing Contract
with Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, the
state petroleum enterprise of Indonesia.
(ii) Ivory Coast Joint Venture - a joint venture
between GNR Cote d'Ivoire Ltd. and Societe National
d'Operations Petrolieres de la Cote d'Ioire ("Petroci")
established for the exploration, development and production of
oil and natural gas in Block CI-11 and Block CI-12 offshore
Cote d'Ivoire, under Production Sharing Contracts with Societe
National d' Operations Petrolieres de la Cote d'Ioire, the
state petroleum enterprise of Cote d'Ivoire.
(iii) Egyptian Joint Venture - a joint venture between
GNR (Egypt) Ltd. and EGPC established for the exploration,
development and production of oil in the Qarun Concession
onshore Egypt, under the Qarun Concession Agreement with EGPC,
the state petroleum enterprise of Egypt.
(iv) Malaysian Joint Venture - a joint venture
between GNR (Malaysia) Ltd. and Petroliam Berhad established
for the exploration, development and production of oil and
natural gas in Block SB-4 offshore Sabah, Malaysia, under a
production sharing contract with Petroliam Nasional Berhad,
the state petroleum enterprise of Malaysia.
(v) Tatex Joint Venture - a joint venture between
Texneft Inc. and Tatneft established to conduct various oil
production and development
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EXHIBIT 1.1
activities in Tatarstan - Russia, under a joint venture agreement with
Tatneft, a Russian oil production amalgamation which operates the oil
fields of Tatarstan.
(i) investments, loans or advances hereafter approved in
writing by the Agent and the Majority Lenders to joint ventures
(including those described in Section 9.03(h) and those hereafter
created between the Borrower or a Subsidiary and other Persons) or
guarantees of Debt of such Ventures so approved;
(j) other investments, loans or advances to other joint
ventures hereinafter created between the Borrower and other Persons, or
guarantees of Debt of such joint ventures which investments, loans,
advances and obligations under guarantees do not exceed $4,000,000 at
any one time outstanding;
(k) investments by the Borrower in direct ownership interests
in additional Oil and Gas Properties and gas gathering systems related
thereto; and
(l) Permitted Investments.
Section 9.04 Dividends, Distributions and Redemptions. The
Guarantor will not declare or pay any dividend, purchase, redeem or otherwise
acquire for value any of its stock now or hereafter outstanding, return any
capital to its shareholders or make any distribution of its assets to its
shareholders, except that the Guarantor may, provided (i) no Default has
occurred and is continuing, (ii) such payment shall not cause a Default and
(iii) a Borrowing Base deficiency does not exist, declare and deliver dividends
or redeem capital stock in an amount not to exceed in any fiscal year the
greater of $2,500,000 or 25% of the Guarantor's net income for such fiscal year.
Notwithstanding the foregoing, the Guarantor may purchase the Hambros Trust
Shares as required under the Hambros Trust Agreements and such purchases shall
not be counted against the foregoing dollar limitation.
Section 9.05 Sales and Leasebacks. Neither the Guarantor, the
Borrower nor any Subsidiary will enter into any arrangement, directly or
indirectly, with any Person whereby the Borrower or any Subsidiary shall sell or
transfer any of its Property, whether now owned or hereafter acquired, and
whereby the Guarantor, the Borrower or any Subsidiary shall then or thereafter
rent or lease as lessee such Property or any part thereof or other Property
which the Guarantor, the Borrower or any Subsidiary intends to use for
substantially the same purpose or purposes as the Property sold or transferred
where such transactions exceed $250,000.
Section 9.06 Nature of Business. Neither the Guarantor, the
Borrower nor any Subsidiary will allow any material change to be made in the
character of its business as an independent oil and gas exploration and
production company.
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EXHIBIT 1.1
Section 9.07 Limitation on Leases. Neither the Guarantor, the
Borrower nor any Subsidiary will create, incur, assume or suffer to exist any
obligation for operating expenses, the payment of rent or hire of Property of
any kind whatsoever (real or personal, but excluding including capital leases
and leases of Hydrocarbon Interests), under leases or lease agreements which
would cause the aggregate amount of all payments made by the Guarantor, the
Borrower and its Subsidiaries pursuant to all such leases or lease agreements to
exceed $2,500,000 in the aggregate in any period of twelve consecutive calendar
months during the life of such leases.
Section 9.08 Mergers, Etc. Neither the Guarantor, the Borrower
nor any Subsidiary will merge into or with or consolidate with any other Person
(excluding the Guarantor, the Borrower and the Subsidiaries provided no Default
exists or will exist following such merger or consolidation), or sell, lease or
otherwise dispose of (whether in one transaction or in a series of transactions)
all or substantially all of its Property or assets to any other Person (other
than the Guarantor, the Borrower or any Subsidiary).
Section 9.09 Proceeds of Notes. The Borrower will not permit
the proceeds of the Notes to be used for any purpose other than those permitted
by Section 7.07. Further, in no event shall the proceeds of the Notes be used
for the payment of dividends or for the making of loans or advances to any
Person except to the extent permitted under Section 9.03(g), (h) or (i). Neither
the Borrower, the Guarantor nor any Person acting on behalf of the Borrower or
the Guarantor has taken or will take any action which might cause any of the
Loan Documents to violate Regulation G, U or X or any other regulation of the
Board of Governors of the Federal Reserve System or to violate Section 7 of the
Securities Exchange Act of 1934 or any rule or regulation thereunder, in each
case as now in effect or as the same may hereinafter be in effect.
Section 9.10 ERISA Compliance. The Guarantor will not at any
time:
(a) Engage in, or permit any Subsidiary or ERISA Affiliate to
engage in, any transaction in connection with which the Guarantor, any
Subsidiary or any ERISA Affiliate could be subjected to either a civil
penalty assessed pursuant to section 502(c), (i) or (l) of ERISA or a
tax imposed by Chapter 43 of Subtitle D of the Code;
(b) Terminate, or permit any Subsidiary or ERISA Affiliate to
terminate, any Plan in a manner, or take any other action with respect
to any Plan, which could result in any liability to the Guarantor, any
Subsidiary or any ERISA Affiliate to the PBGC;
(c) Fail to make, or permit any Subsidiary or ERISA Affiliate
to fail to make, full payment when due of all amounts which, under the
provisions of any Plan,
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EXHIBIT 1.1
agreement relating thereto or applicable law, the Guarantor, a
Subsidiary or any ERISA Affiliate is required to pay as contributions
thereto;
(d) Permit to exist, or allow any Subsidiary or ERISA Affiliate
to permit to exist, any accumulated funding deficiency within the
meaning of Section 302 of ERISA or section 412 of the Code, whether or
not waived, with respect to any Plan;
(e) Permit, or allow any Subsidiary or ERISA Affiliate to
permit, the actuarial present value of the benefit liabilities under
any Plan maintained by the Guarantor, any Subsidiary or any ERISA
Affiliate which is regulated under Title IV of ERISA to exceed the
current value of the assets (computed on a plan termination basis in
accordance with Title IV of ERISA) of such Plan allocable to such
benefit liabilities. The term "actuarial present value of the benefit
liabilities" shall have the meaning specified in section 4041 of ERISA;
(f) Contribute to or assume an obligation to contribute to, or
permit any Subsidiary or ERISA Affiliate to contribute to or assume an
obligation to contribute to, any Multiemployer Plan;
(g) Acquire, or permit any Subsidiary or ERISA Affiliate to
acquire, an interest in any Person that causes such Person to become an
ERISA Affiliate with respect to the Guarantor, any Subsidiary or any
ERISA Affiliate if such Person sponsors, maintains or contributes to,
or at any time in the six-year period preceding such acquisition has
sponsored, maintained, or contributed to, (1) any Multiemployer Plan,
or (2) any other Plan that is subject to Title IV of ERISA under which
the actuarial present value of the benefit liabilities under such Plan
exceeds the current value of the assets (computed on a plan termination
basis in accordance with Title IV of ERISA) of such Plan allocable to
such benefit liabilities;
(h) Incur, or permit any Subsidiary or ERISA Affiliate to
incur, a liability to or on account of a Plan under sections 515, 4062,
4063, 4064, 4201 or 4204 of ERISA;
(i) Contribute to or assume an obligation to contribute to, or
permit any Subsidiary or ERISA Affiliate to contribute to or assume an
obligation to contribute to, any employee welfare benefit plan, as
defined in section 3(1) of ERISA, including, without limitation, any
such plan maintained to provide benefits to former employees of such
entities, that may not be terminated by such entities in their sole
discretion at any time without any material liability; or
(j) Amend or permit any Subsidiary or ERISA Affiliate to amend,
a Plan resulting in an increase in current liability such that the
Guarantor, any Subsidiary or any
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EXHIBIT 1.1
ERISA Affiliate is required to provide security to such Plan under
section 401(a)(29) of the Code.
Section 9.11 Sale or Discount of Receivables. Neither the
Guarantor, the Borrower nor any Subsidiary will discount or sell (with or
without recourse) any of its notes receivable or accounts receivable in excess
of $100,000 in the aggregate.
Section 9.12 Current Ratio. The Guarantor and its Consolidated
Subsidiaries will not permit its ratio of (i) consolidated current assets to
(ii) consolidated current liabilities (excluding current maturities of the
Notes) to be less than 1.0 to 1.0 at the end of any quarter of the Guarantor's
fiscal year. As used in this Section 9.12, "current liabilities" shall exclude
Secured Hambros Trust Debt Letters of Credit and advances from the Hambros Trust
to the extent such advances are secured by a Secured Hambros Trust Debt Letter
of Credit.
Section 9.13 Tangible Net Worth. The Guarantor will not permit
its Tangible Net Worth to be less than $95,000,000 at the end of any quarter of
the Guarantor's fiscal year. The Tangible Net Worth maintenance covenant shall
increase at the inception of each fiscal year of the Guarantor (starting with
the year beginning January 1, 1995) by an amount equal to (i) 50% of the
Guarantor's Consolidated Net Income (if a positive amount) for the immediately
preceding fiscal year and (ii) 75% of any sales (net of expenses) of equity by
the Guarantor.
Section 9.14 Sale of Oil and Gas Properties. The Guarantor will
not, and will not permit any Subsidiary to, sell, assign, farm-out, convey or
otherwise transfer any Oil and Gas Property or any interest in any Oil and Gas
Property except for (i) the sale of Hydrocarbons in the ordinary course of
business; (ii) farmouts of undeveloped acreage and assignments in connection
with such farmouts; (iii) the sale or transfer of equipment that is no longer
necessary for the business of the Borrower or such Subsidiary or is replaced by
equipment of at least comparable value and use and (iv) during any consecutive
12 month period, sales in the ordinary course of business of Oil and Gas
Properties which shall not exceed $5,000,000 in the aggregate in any fiscal year
and for which the Agent shall have received prior written notice of at least
thirty (30) days' prior to the projected closing date.
Section 9.15 Environmental Matters. Neither the Guarantor, the
Borrower nor any Subsidiary will cause or permit any of its Property to be in
violation of, or do anything or permit anything to be done which will subject
any such Property to any remedial obligations under any Environmental Laws,
assuming disclosure to the applicable Governmental Authority of all relevant
facts, conditions and circumstances, if any, pertaining to such Property where
such violations or remedial obligations would have a Material Adverse Effect.
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EXHIBIT 1.1
Section 9.16 Transactions with Affiliates. Neither the
Guarantor, the Borrower nor any Subsidiary will enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of Property
or the rendering of any service, with any Affiliate unless such transactions are
otherwise permitted under this Agreement, are in the ordinary course of its
business and are upon fair and reasonable terms no less favorable to it than it
would obtain in a comparable arm's length transaction with a Person not an
Affiliate.
Section 9.17 Subsidiaries and Partnerships. Neither the
Guarantor nor the Borrower nor any Subsidiary shall create any additional
Subsidiaries, or to the extent the aggregate of the Borrower's, the Guarantor's
and all Subsidiaries' liability will not exceed the amount specified in Section
9.03(i), partnerships or joint ventures. Neither the Guarantor, the Borrower nor
any Subsidiary shall sell or issue any stock of a Subsidiary or any interest in
a partnership or joint venture. The Borrower shall not permit any Subsidiary to
issue any stock except to the Borrower or Guarantor and except in compliance
with Section 9.03.
Section 9.18 Negative Pledge Agreements. Neither the Guarantor,
the Borrower nor any Subsidiary will create, incur, assume or suffer to exist
any contract, agreement or understanding (other than this Agreement and the
Security Instruments) which in any way prohibits or restricts the granting,
conveying, creation or imposition of any Lien on any of its Oil and Gas
Properties or restricts any Subsidiary from paying dividends to the Guarantor or
the Borrower, or which requires the consent of or notice to other Persons in
connection therewith other than restrictions contained in Venture agreements
which restrict payment of dividends until certain advances by Venture partners
have been repaid.
Section 9.19 Gas Imbalances, Take-or-Pay or Other Prepayments.
The Borrower will not allow gas imbalances, take-or-pay or other prepayments
with respect to its Oil and Gas Properties which would require the Borrower to
deliver Hydrocarbons produced on its Oil and Gas Properties at some future time
without then or thereafter receiving full payment therefor to exceed the lesser
of (i) one (1) billion cubic feet of gas in the aggregate on a net basis for the
Borrower and (ii) a volume of gas equal to 1/12th of the total gas production
produced from the Borrower's Oil and Gas Properties over the past 12 months
considered on a continuing running basis.
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EXHIBIT 1.1
ARTICLE X
EVENTS OF DEFAULT; REMEDIES
Section 10.01 Events of Default. One or more of the following
events shall constitute an "Event of Default":
(a) the Borrower shall default in the payment or prepayment
when due of any principal of or interest on any Loan, or any
reimbursement obligation for a disbursement made under any Letter of
Credit, or any fees or other amount payable by it hereunder or under
any Security Instrument and such default shall continue unremedied for
a period of 3 Business Days]; or
(b) the Borrower, Guarantor or any Subsidiary shall default in
the payment when due (whether by acceleration or otherwise) of any
principal of or interest on any of its other Debt aggregating $500,000
or more, or any event specified in any note, agreement, indenture or
other document evidencing or relating to any such Debt shall occur if
the effect of such event is to cause, or (with the giving of any notice
or the lapse of time or both) to permit the holder or holders of such
Debt (or a trustee or agent on behalf of such holder or holders) to
cause, such Debt to become due prior to its stated maturity; or
(c) any representation, warranty or certification made or
deemed made herein or in any Security Instrument by the Borrower,
Guarantor or any Subsidiary, or any certificate furnished to any Lender
or the Agent pursuant to the provisions hereof or any Security
Instrument, shall prove to have been false or misleading as of the time
made or furnished in any material respect; or
(d) the Borrower or the Guarantor shall default in the
performance of any of its obligations under Article IX or any other
Article of this Agreement other than under Article VIII; or the
Borrower or the Guarantor shall default in the performance of any of
its obligations under Article VIII or any Security Instrument (other
than the payment of amounts due which shall be governed by Section
10.01(a)) and such default shall continue unremedied for a period of
thirty (30) days after the earlier to occur of (i) notice thereof to
the Borrower by the Agent or any Lender (through the Agent), or (ii) a
Responsible Officer of the Borrower otherwise becoming aware of such
default; or
(e) the Borrower or the Guarantor shall admit in writing its
inability to, or be generally unable to, pay its debts as such debts
become due; or
(f) the Borrower or the Guarantor shall (i) apply for or
consent to the
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EXHIBIT 1.1
appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of itself or of all or a substantial part of its
property, (ii) make a general assignment for the benefit of its
creditors, (iii) commence a voluntary case under the Federal Bankruptcy
Code (as now or hereafter in effect), (iv) file a petition seeking to
take advantage of any other law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or readjustment of debts,
(v) fail to controvert in a timely and appropriate manner, or acquiesce
in writing to, any petition filed against it in an involuntary case
under the Federal Bankruptcy Code, or (vi) take any corporate action
for the purpose of effecting any of the foregoing; or
(g) a proceeding or case shall be commenced, without the
application or consent of the Borrower or the Guarantor, in any court
of competent jurisdiction, seeking (i) its liquidation, reorganization,
dissolution or winding-up, or the composition or readjustment of its
debts, (ii) the appointment of a trustee, receiver, custodian,
liquidator or the like of the Borrower or the Guarantor of all or any
substantial part of its assets, or (iii) similar relief in respect of
the Borrower or the Guarantor under any law relating to bankruptcy,
insolvency, reorganization, winding-up, or composition or adjustment of
debts, and such proceeding or case shall continue undismissed, or an
order, judgment or decree approving or ordering any of the foregoing
shall be entered and continue unstayed and in effect, for a period of
60 days; or (iv) an order for relief against the Borrower or the
Guarantor shall be entered in an involuntary case under the Federal
Bankruptcy Code; or
(h) a judgment or judgments for the payment of money in excess
of $1,000,000 in the aggregate shall be rendered by a court against the
Borrower or the Guarantor or any Subsidiary and the same shall not be
discharged (or provision shall not be made for such discharge), or a
stay of execution thereof shall not be procured, within thirty (30)
days from the date of entry thereof and the Borrower, the Guarantor or
such Subsidiary shall not, within said period of 30 days, or such
longer period during which execution of the same shall have been
stayed, appeal therefrom and cause the execution thereof to be stayed
during such appeal; or
(i) the Borrower or the Guarantor discontinues its usual
business or suffers to exist any material change in its ownership,
control or management; or]
(j) any Subsidiary takes, suffers or permits to exist any of
the events or conditions referred to in paragraphs (e), (f), (g) or (h)
hereof; or
(k) any event which would trigger an action under the
Borrower's Amended and Restated Rights Agreement dated as of September
28, 1993, between Borrower and Registrar and Transfer Company (the
"Rights Agreement"), including any Acquiring Person (as defined in the
Rights Agreement) becoming the Beneficial Owner (as defined in the
Rights Agreement) of 20% or more of the Borrower's Voting Shares (as
defined in the Rights Agreement) outstanding.
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EXHIBIT 1.1
Section 10.02 Remedies.
(a) In the case of an Event of Default other than one referred
to in clauses (e), (f) or (g) of Section 10.01 or in clause (k) to the
extent it relates to clauses (e), (f) or (g), the Agent may and, upon
request of the Majority Lenders, shall, by notice to the Borrower,
cancel the Commitments and/or declare the principal amount then
outstanding of, and the accrued interest on, the Loans and all other
amounts payable by the Borrower hereunder and under the Notes
(including without limitation the payment of cash collateral to secure
the LC Exposure as provided in Section 2.10(b) hereof) to be forthwith
due and payable, whereupon such amounts shall be immediately due and
payable without presentment, demand, protest, notice of intent to
accelerate, notice of acceleration or other formalities of any kind,
all of which are hereby expressly waived by the Borrower.
(b) In the case of the occurrence of an Event of Default
referred to in clauses (e), (f) or (g) of Section 10.01 or in clause
(k) to the extent it relates to clauses (e), (f) or (g), the
Commitments shall be automatically cancelled and the principal amount
then outstanding of, and the accrued interest on, the Loans and all
other amounts payable by the Borrower hereunder and under the Notes
(including without limitation the payment of cash collateral to secure
the LC Exposure as provided in Section 2.10(b) hereof) shall become
automatically immediately due and payable without presentment, demand,
protest, notice of intent to accelerate, notice of acceleration or
other formalities of any kind, all of which are hereby expressly waived
by the Borrower.
(c) All proceeds received after maturity of the Notes, whether
by acceleration or otherwise shall be applied first to reimbursement of
expenses and indemnities provided for in this Agreement and the
Security Instruments; second to accrued interest on the Notes; third to
fees; fourth pro rata to principal outstanding on the Notes and other
Indebtedness; fifth to serve as cash collateral to be held by the Agent
to secure the LC Exposure; and any excess shall be paid to the Borrower
or as otherwise required by any Governmental Requirement.
ARTICLE XI
THE AGENT
Section 11.01 Appointment, Powers and Immunities. Each Lender
hereby irrevocably appoints and authorizes the Agent to act as its agent
hereunder and under the Security Instruments with such powers as are
specifically delegated to the Agent by the terms of this Agreement and the
Security Instruments, together with such other powers as are reasonably
incidental thereto. The Agent (which term as used in this sentence and in
Section
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EXHIBIT 1.1
11.05 and the first sentence of Section 11.06 shall include reference to its
Affiliates and its and its Affiliates' officers, directors, employees,
attorneys, accountants, experts and agents): (i) shall have no duties or
responsibilities except those expressly set forth in this Agreement, and shall
not by reason of this Agreement be a trustee or fiduciary for any Lender; (ii)
makes no representation or warranty to any Lender and shall not be responsible
to the Lenders for any recitals, statements, representations or warranties
contained in this Agreement, or in any certificate or other document referred to
or provided for in, or received by any of them under, this Agreement, or for the
value, validity, effectiveness, genuineness, execution, effectiveness, legality,
enforceability or sufficiency of this Agreement, any Note or any other document
referred to or provided for herein or for any failure by the Borrower or any
other Person (other than the Agent) to perform any of its obligations hereunder
or thereunder or for the existence, value, perfection or priority of any
collateral security or the financial or other condition of the Borrower, its
Subsidiaries or any other obligor or guarantor; (iii) except pursuant to Section
11.07 shall not be required to initiate or conduct any litigation or collection
proceedings hereunder; and (iv) shall not be responsible for any action taken or
omitted to be taken by it hereunder or under any other document or instrument
referred to or provided for herein or in connection herewith including its own
ordinary negligence, except for its own gross negligence or willful misconduct.
The Agent may employ agents, accountants, attorneys and experts and shall not be
responsible for the negligence or misconduct of any such agents, accountants,
attorneys or experts selected by it in good faith or any action taken or omitted
to be taken in good faith by it in accordance with the advice of such agents,
accountants, attorneys or experts. The Agent may deem and treat the payee of any
Note as the holder thereof for all purposes hereof unless and until a written
notice of the assignment or transfer thereof permitted hereunder shall have been
filed with the Agent.
Section 11.02 Reliance by Agent. The Agent shall be entitled to
rely upon any certification, notice or other communication (including any
thereof by telephone, telex, telecopier, telegram or cable) believed by it to be
genuine and correct and to have been signed or sent by or on behalf of the
proper Person or Persons, and upon advice and statements of legal counsel,
independent accountants and other experts selected by the Agent.
Section 11.03 Defaults. The Agent shall not be deemed to have
knowledge of the occurrence of a Default (other than the non-payment of
principal of or interest on Loans or of fees or failure to reimburse for Letter
of Credit drawings) unless the Agent has received notice from a Lender or the
Borrower specifying such Default and stating that such notice is a "Notice of
Default." In the event that the Agent receives such a notice of the occurrence
of a Default, the Agent shall give prompt notice thereof to the Lenders. In the
event of a payment Default, the Agent shall give each Lender prompt notice of
each such payment Default.
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EXHIBIT 1.1
Section 11.04 Rights as a Lender. With respect to its
Commitments and the Loans made by it and its participation in the issuance of
Letters of Credit, the Agent (and any successor acting as Agent) in its capacity
as a Lender hereunder shall have the same rights and powers hereunder as any
other Lender and may exercise the same as though it were not acting as the
Agent, and the term "Lender" or "Lenders" shall, unless the context otherwise
indicates, include the Agent in its individual capacity. The Agent (and any
successor acting as Agent) and its Affiliates may (without having to account
therefor to any Lender) accept deposits from, lend money to and generally engage
in any kind of banking, trust or other business with the Borrower (any and of
its Affiliates) as if it were not acting as the Agent, and the Agent and its
Affiliates may accept fees and other consideration from the Borrower for
services in connection with this Agreement or otherwise without having to
account for the same to the Lenders.
Section 11.05 INDEMNIFICATION. THE LENDERS AGREE TO INDEMNIFY
THE AGENT RATABLY IN ACCORDANCE WITH THEIR PERCENTAGE SHARES FOR THE INDEMNITY
MATTERS AS DESCRIBED IN SECTION 12.03 TO THE EXTENT NOT INDEMNIFIED OR
REIMBURSED BY THE BORROWER UNDER SECTION 12.03, BUT WITHOUT LIMITING THE
OBLIGATIONS OF THE BORROWER UNDER SAID SECTION 12.03 AND FOR ANY AND ALL OTHER
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS,
COSTS, EXPENSES OR DISBURSEMENTS OF ANY KIND AND NATURE WHATSOEVER WHICH MAY BE
IMPOSED ON, INCURRED BY OR ASSERTED AGAINST THE AGENT IN ANY WAY RELATING TO OR
ARISING OUT OF: (I) THIS AGREEMENT, THE SECURITY INSTRUMENTS OR ANY OTHER
DOCUMENTS CONTEMPLATED BY OR REFERRED TO HEREIN OR THE TRANSACTIONS CONTEMPLATED
HEREBY, BUT EXCLUDING, UNLESS A DEFAULT HAS OCCURRED AND IS CONTINUING, NORMAL
ADMINISTRATIVE COSTS AND EXPENSES INCIDENT TO THE PERFORMANCE OF ITS AGENCY
DUTIES HEREUNDER OR (II) THE ENFORCEMENT OF ANY OF THE TERMS OF THIS AGREEMENT,
ANY SECURITY INSTRUMENT OR OF ANY SUCH OTHER DOCUMENTS; WHETHER OR NOT ANY OF
THE FOREGOING SPECIFIED IN THIS SECTION 11.05 ARISES FROM THE SOLE OR CONCURRENT
NEGLIGENCE OF THE AGENT, PROVIDED THAT NO LENDER SHALL BE LIABLE FOR ANY OF THE
FOREGOING TO THE EXTENT THEY ARISE FROM THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF THE AGENT.
Section 11.06 Non-Reliance on Agent and other Lenders. Each
Lender acknowledges and agrees that it has, independently and without reliance
on the Agent or any other Lender, and based on such documents and information as
it has deemed appropriate, made its own credit analysis of the Borrower and its
decision to enter into this Agreement, and that it will, independently and
without reliance upon the Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own analysis and decisions in taking or not taking action under this Agreement.
The Agent shall not be required to keep itself informed as to the performance or
observance by the Borrower of this Agreement, the Notes, the Security
Instruments or any other document referred to or provided for herein or to
inspect the properties or books of the Borrower. Except for notices, reports and
other documents and information expressly required to be furnished to the
Lenders
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EXHIBIT 1.1
by the Agent hereunder, the Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the affairs,
financial condition or business of the Borrower (or any of its Affiliates) which
may come into the possession of the Agent or any of its Affiliates.
Section 11.07 Action by Agent. Except for action or other
matters expressly required of the Agent hereunder, the Agent shall in all cases
be fully justified in failing or refusing to act hereunder unless it shall (i)
receive written instructions from the Majority Lenders specifying the action to
be taken, and (ii) be indemnified to its satisfaction by the Lenders against any
and all liability and expenses which may be incurred by it by reason of taking
or continuing to take any such action. The instructions of the Majority Lenders
and any action taken or failure to act pursuant thereto by the Agent shall be
binding on all of the Lenders. If a Default has occurred and is continuing, the
Agent shall take such action with respect to such Default as shall be directed
by the Majority Lenders in the written instructions (with indemnities) described
in this Section 11.07, provided that, unless and until the Agent shall have
received such directions, the Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default as
it shall deem advisable in the best interests of the Lenders. In no event,
however, shall the Agent be required to take any action which exposes the Agent
to personal liability or which is contrary to this Agreement and the Security
Instruments or applicable law.
Section 11.08 Resignation or Removal of Agent. Subject to the
appointment and acceptance of a successor Agent as provided below, the Agent may
resign at any time by giving notice thereof to the Lenders and the Borrower, and
the Agent may be removed at any time with or without cause by the Majority
Lenders. Upon any such resignation or removal, the Majority Lenders shall have
the right to appoint a successor Agent. If no successor Agent shall have been so
appointed by the Majority Lenders and shall have accepted such appointment
within thirty (30) days after the retiring Agent's giving of notice of
resignation or the Majority Lenders' removal of the retiring Agent, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent. Upon
the acceptance of such appointment hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder. After any
retiring Agent's resignation or removal hereunder as Agent, the provisions of
this Article XI and Section 12.03 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
the Agent.
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EXHIBIT 1.1
ARTICLE XII
MISCELLANEOUS
Section 12.01 Waiver. No failure on the part of the Agent or
any Lender to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power or privilege under any of the Loan Documents shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege under any of the Loan Documents preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
Section 12.02 Notices. All notices and other communications
provided for herein and in the Security Instruments (including, without
limitation, any modifications of, or waivers or consents under, this Agreement
or the Security Instruments) shall be given or made by telex, telecopy,
telegraph, cable, courier or U.S. Mail or in writing and telexed, telecopied,
telegraphed, cabled, mailed or delivered to the intended recipient at the
"Address for Notices" specified below its name on the signature pages hereof or
on the relevant Assignment Agreement, as the case may be, or in the Security
Instruments or, as to any party, at such other address as shall be designated by
such party in a notice to each other party. Except as otherwise provided in this
Agreement or in the Security Instruments, all such communications shall be
deemed to have been duly given when transmitted by telex or telecopier,
delivered to the telegraph or cable office or personally delivered or, in the
case of a mailed notice, three (3) Business Days after the date deposited in the
mails, postage prepaid, in each case given or addressed as aforesaid.
Section 12.03 Payment of Expenses, Indemnities, Etc. The
Borrower agrees:
(a) whether or not the transactions hereby contemplated are
consummated, pay all reasonable expenses of the Agent in the
administration (both before and after the execution hereof and
including advice of counsel as to the rights and duties of the Agent
and the Lenders with respect thereto) of, and in connection with the
negotiation, syndication, investigation, preparation, execution and
delivery of, recording or filing of, preservation of rights under,
enforcement of, and refinancing, renegotiation or restructuring of, the
Loan Documents and any amendment, waiver or consent relating thereto
(including, without limitation, travel, photocopy, mailing, courier,
telephone and other similar expenses of the Agent, the cost of
environmental audits, surveys and appraisals at reasonable intervals
(but not more often than annually), the reasonable fees and
disbursements of counsel for the Agent and in the case of enforcement
for any of the Lenders); and promptly reimburse the Agent for all
amounts reasonably expended, advanced or incurred by the Agent or the
Lenders to satisfy any obligation of the
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EXHIBIT 1.1
Borrower or the Guarantor under this Agreement or any Security
Instrument;
(b) TO INDEMNIFY THE AGENT AND EACH LENDER AND EACH OF THEIR
AFFILIATES AND EACH OF THEIR OFFICERS, DIRECTORS, EMPLOYEES,
REPRESENTATIVES, AGENTS, ATTORNEYS, ACCOUNTANTS AND EXPERTS
("INDEMNIFIED PARTIES") FROM, HOLD EACH OF THEM HARMLESS AGAINST AND
PROMPTLY UPON DEMAND PAY OR REIMBURSE EACH OF THEM FOR, THE INDEMNITY
MATTERS WHICH MAY BE INCURRED BY OR ASSERTED AGAINST OR INVOLVE ANY OF
THEM (WHETHER OR NOT ANY OF THEM IS DESIGNATED A PARTY THERETO) AS A
RESULT OF, ARISING OUT OF OR IN ANY WAY RELATED TO (I) ANY ACTUAL OR
PROPOSED USE BY THE BORROWER OF THE PROCEEDS OF ANY OF THE LOANS, (II)
THE EXECUTION, DELIVERY AND PERFORMANCE OF THE LOAN DOCUMENTS, (III)
THE OPERATIONS OF THE BUSINESS OF THE BORROWER AND ITS SUBSIDIARIES,
(IV) THE FAILURE OF THE BORROWER, THE GUARANTOR OR ANY SUBSIDIARY TO
COMPLY WITH THE TERMS OF ANY SECURITY INSTRUMENT OR THIS AGREEMENT, OR
WITH ANY GOVERNMENTAL REQUIREMENT, (V) ANY INACCURACY OF ANY
REPRESENTATION OR ANY BREACH OF ANY WARRANTY OF THE BORROWER OR
GUARANTOR SET FORTH IN ANY OF THE LOAN DOCUMENTS, (VI) THE ISSUANCE,
EXECUTION AND DELIVERY OR TRANSFER OF OR PAYMENT OR FAILURE TO PAY
UNDER ANY LETTER OF CREDIT, OR (VII) THE PAYMENT OF A DRAWING UNDER ANY
LETTER OF CREDIT NOTWITHSTANDING THE NON-COMPLIANCE, NON-DELIVERY OR
OTHER IMPROPER PRESENTATION OF DRAFT(S) AND CERTIFICATION(S),
INCLUDING, WITHOUT LIMITATION, THE REASONABLE FEES AND DISBURSEMENTS OF
COUNSEL AND ALL OTHER EXPENSES INCURRED IN CONNECTION WITH
INVESTIGATING, DEFENDING OR PREPARING TO DEFEND ANY SUCH ACTION, SUIT,
PROCEEDING (INCLUDING ANY INVESTIGATIONS, LITIGATION OR INQUIRIES) OR
CLAIM AND INCLUDING ALL INDEMNITY MATTERS ARISING BY REASON OF THE
ORDINARY NEGLIGENCE OF ANY INDEMNIFIED PARTY, BUT EXCLUDING ALL
INDEMNITY MATTERS ARISING SOLELY BY REASON OF CLAIMS BETWEEN THE
LENDERS OR ANY LENDER AND THE AGENT OR A LENDER'S SHAREHOLDERS AGAINST
THE AGENT OR LENDER OR BY REASON OF THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT ON THE PART OF THE INDEMNIFIED PARTY; AND
(c) TO INDEMNIFY AND HOLD HARMLESS FROM TIME TO TIME THE
INDEMNIFIED PARTY FROM AND AGAINST ANY AND ALL LOSSES, CLAIMS, COST
RECOVERY ACTIONS, ADMINISTRATIVE ORDERS OR PROCEEDINGS, DAMAGES AND
LIABILITIES TO WHICH ANY SUCH PERSON MAY BECOME SUBJECT (I) UNDER ANY
ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER OR ANY SUBSIDIARY OR ANY
OF THEIR PROPERTIES, INCLUDING WITHOUT LIMITATION, THE TREATMENT OR
DISPOSAL OF HAZARDOUS SUBSTANCES ON ANY OF THEIR PROPERTIES, (II) AS A
RESULT OF THE BREACH OR NON-COMPLIANCE BY THE BORROWER OR ANY
SUBSIDIARY WITH ANY ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER OR ANY
SUBSIDIARY, (III) DUE TO PAST OWNERSHIP BY THE BORROWER OR ANY
SUBSIDIARY OF ANY OF THEIR
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EXHIBIT 1.1
PROPERTIES OR PAST ACTIVITY ON ANY OF THEIR PROPERTIES WHICH, THOUGH LAWFUL AND
FULLY PERMISSIBLE AT THE TIME, COULD RESULT IN PRESENT LIABILITY, (IV) THE
PRESENCE, USE, RELEASE, STORAGE, TREATMENT OR DISPOSAL OF HAZARDOUS SUBSTANCES
ON OR AT ANY OF THE PROPERTIES OWNED OR OPERATED BY THE BORROWER OR ANY
SUBSIDIARY, OR (V) ANY OTHER ENVIRONMENTAL, HEALTH OR SAFETY CONDITION IN
CONNECTION WITH THE LOAN DOCUMENTS, PROVIDED, HOWEVER, NO INDEMNITY SHALL BE
AFFORDED UNDER THIS SECTION 12.03(C) IN RESPECT OF ANY PROPERTY FOR ANY
OCCURRENCE ARISING FROM THE ACTS OR OMISSIONS OF THE AGENT OR ANY LENDER DURING
THE PERIOD AFTER WHICH SUCH PERSON, ITS SUCCESSORS OR ASSIGNS SHALL HAVE
OBTAINED POSSESSION OF SUCH PROPERTY (WHETHER BY FORECLOSURE OR DEED IN LIEU OF
FORECLOSURE, AS MORTGAGEE-IN-POSSESSION OR OTHERWISE).
(d) No Indemnified Party may settle any claim to be indemnified
without the consent of the indemnitor, such consent not to be
unreasonably withheld; provided, that the indemnitor may not reasonably
withhold consent to any settlement that an Indemnified Party proposes,
if the indemnitor does not have the financial ability to pay all its
obligations outstanding and asserted against the indemnitor at that
time, including the maximum potential claims against the Indemnified
Party to be indemnified pursuant to this Section 12.03.
(e) In the case of any indemnification hereunder, the Agent or
Lender, as appropriate shall give notice to the Borrower of any such
claim or demand being made against the Indemnified Party and the
Borrower shall have the non-exclusive right to join in the defense
against any such claim or demand provided that if the Borrower provides
a defense, the Indemnified Party shall bear its own cost of defense
unless there is a conflict between the Borrower and such Indemnified
Party.
(f) THE FOREGOING INDEMNITIES SHALL EXTEND TO THE INDEMNIFIED
PARTIES NOTWITHSTANDING THE SOLE OR CONCURRENT NEGLIGENCE OF EVERY KIND
OR CHARACTER WHATSOEVER, WHETHER ACTIVE OR PASSIVE, WHETHER AN
AFFIRMATIVE ACT OR AN OMISSION, INCLUDING WITHOUT LIMITATION, ALL TYPES
OF NEGLIGENT CONDUCT IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF
ONE OR MORE OF THE INDEMNIFIED PARTIES OR BY REASON OF STRICT LIABILITY
IMPOSED WITHOUT FAULT ON ANY ONE OR MORE OF THE INDEMNIFIED PARTIES. TO
THE EXTENT THAT AN INDEMNIFIED PARTY IS FOUND TO HAVE COMMITTED AN ACT
OF GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, THIS CONTRACTUAL OBLIGATION
OF INDEMNIFICATION SHALL CONTINUE BUT SHALL ONLY EXTEND TO THE PORTION
OF THE CLAIM THAT IS DEEMED TO HAVE OCCURRED BY REASON OF EVENTS OTHER
THAN THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE INDEMNIFIED
PARTY.
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EXHIBIT 1.1
(g) The Borrower's obligations under this Section 12.03 shall
survive any termination of this Agreement and the payment of the Notes
and shall continue thereafter in full force and effect.
(h) The Borrower shall pay any amounts due under this Section
12.03 within thirty (30) days of the receipt by the Borrower of notice
of the amount due.
Section 12.04 Amendments, Etc. Any provision of this Agreement
or any Security Instrument may be amended, modified or waived with the
Borrower's and the Majority Lenders' prior written consent; provided that (i) no
amendment, modification or waiver which extends the maturity of the Loans,
increases the Aggregate Maximum Credit Amounts, modifies the Borrowing Base
provisions hereof, forgives the principal amount of any Indebtedness outstanding
under this Agreement, releases all or substantially all of the collateral (if
any), reduces the interest rate applicable to the Loans or the fees payable to
the Lenders generally, affects Section 2.03(a), this Section 12.04 or Section
12.06(a) or modifies the definition of "Majority Lenders" shall be effective
without consent of all Lenders; (ii) no amendment, modification or waiver which
increases the Maximum Credit Amount of any Lender shall be effective without the
consent of such Lender; and (iii) no amendment, modification or waiver which
modifies the rights, duties or obligations of the Agent shall be effective
without the consent of the Agent.
Section 12.05 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
Section 12.06 Assignments and Participations.
(a) The Borrower may not assign its rights or obligations
hereunder or under the Notes or any Letters of Credit without the prior
consent of all of the Lenders and the Agent.
(b) In the event the Aggregate Maximum Credit Amounts are
changed to exceed $35,000,000, any Lender may, upon the written consent
of the Agent and the Borrower (which consent will not be unreasonably
withheld), assign to one or more assignees (provided such assignees are
commercial banks) all or a portion of its rights and obligations under
this Agreement pursuant to an Assignment Agreement substantially in the
form of Exhibit E (an "Assignment"); provided, however, that (i) any
such assignment shall be in the amount of at least $10,000,000 or such
lesser amount to which the Borrower has consented, (ii) if the assignee
Lender remains a Lender, it shall retain a Commitment of at least
$10,000,000 and (iii) the assignee shall pay to the Agent a processing
and recordation fee of $2,500 for each assignment. Any such assignment
will become effective upon the execution and delivery to the Agent of
the Assignment and the consent of the Agent. Promptly after receipt of
an executed Assignment, the Agent shall
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EXHIBIT 1.1
send to the Borrower a copy of such executed Assignment. Upon receipt
of such executed Assignment, the Borrower, will, at its own expense,
execute and deliver new Notes to the assignor and/or assignee, as
appropriate, in accordance with their respective interests as they
appear. Upon the effectiveness of any assignment pursuant to this
Section 12.06(b), the assignee will become a "Lender," if not already a
"Lender," for all purposes of this Agreement and the Security
Instruments. The assignor shall be relieved of its obligations
hereunder to the extent of such assignment (and if the assigning Lender
no longer holds any rights or obligations under this Agreement, such
assigning Lender shall cease to be a "Lender" hereunder except that its
rights under Sections 4.05, 5.01, 5.05 and 12.03 shall not be
affected). The Agent will prepare on the last Business Day of each
month during which an assignment has become effective pursuant to this
Section 12.06(b), a new Exhibit E giving effect to all such assignments
effected during such month, and will promptly provide the same to the
Borrower and each of the Lenders.
(c) Each Lender may transfer, grant or assign participations in
all or any part of such Lender's interests hereunder pursuant to this
Section 12.06(c) to any Person, provided that: (i) such Lender shall
remain a "Lender" for all purposes of this Agreement and the transferee
of such participation shall not constitute a "Lender" hereunder; and
(ii) no participant under any such participation shall have rights to
approve any amendment to or waiver of any of the Loan Documents except
to the extent such amendment or waiver would (x) extend the Revolving
Credit Termination Date, (y) reduce the interest rate (other than as a
result of waiving the applicability of any post-default increases in
interest rates) or fees applicable to any of the Commitments or Loans
or Letters of Credit in which such participant is participating, or
postpone the payment of any thereof, or (z) release all or
substantially all of the collateral (if any and except as expressly
provided in the Security Instruments) supporting any of the Commitments
or Loans or Letters of Credit in which such participant is
participating. In the case of any such participation, the participant
shall not have any rights under this Agreement or any of the Security
Instruments (the participant's rights against the granting Lender in
respect of such participation to be those set forth in the agreement
with such Lender creating such participation), and all amounts payable
by the Borrower hereunder shall be determined as if such Lender had not
sold such participation. In addition, each agreement creating any
participation must include an agreement by the participant to be bound
by the provisions of Section 12.15.
(d) Each Lender may furnish any information concerning the
Borrower in the possession of such Lender from time to time to
assignees and participants (including prospective assignees and
participants); provided that, such Persons agree to be bound by the
provisions of Section 12.15 hereof.
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EXHIBIT 1.1
(e) Notwithstanding anything in this Section 12.06 to the
contrary, any Lender may assign and pledge its Note to any Federal
Reserve Bank or the United States Treasury as collateral security
pursuant to Regulation A of the Board of Governors of the Federal
Reserve System and any operating circular issued by such Federal
Reserve System and/or such Federal Reserve Bank. No such assignment
and/or pledge shall release the assigning and/or pledging Lender from
its obligations hereunder.
(f) Notwithstanding any other provisions of this Section 12.06,
no transfer or assignment of the interests or obligations of any Lender
or any grant of participations therein shall be permitted if such
transfer, assignment or grant would require the Borrower to file a
registration statement with the SEC or to qualify the Loans under the
"Blue Sky" laws of any state.
Section 12.07 Invalidity. In the event that any one or more of
the provisions contained in any of the Loan Documents, the Letters of Credit or
the Letter of Credit Agreements shall, for any reason, be held invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of the Notes, this Agreement or any
Security Instrument.
Section 12.08 Counterparts. This Agreement may be executed in
any number of counterparts, all of which taken together shall constitute one and
the same instrument and any of the parties hereto may execute this Agreement by
signing any such counterpart.
Section 12.09 References. The words "herein," "hereof,"
"hereunder" and other words of similar import when used in this Agreement refer
to this Agreement as a whole, and not to any particular article, section or
subsection. Any reference herein to a Section shall be deemed to refer to the
applicable Section of this Agreement unless otherwise stated herein. Any
reference herein to an exhibit or schedule shall be deemed to refer to the
applicable exhibit or schedule attached hereto unless otherwise stated herein.
Section 12.10 Survival. The obligations of the parties under
Section 4.05, Article V, and Sections 11.05 and 12.03 shall survive the
repayment of the Loans and the termination of the Commitments. To the extent
that any payments on the Indebtedness or proceeds of any collateral are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, debtor in possession, receiver or other
Person under any bankruptcy law, common law or equitable cause, then to such
extent, the Indebtedness so satisfied shall be revived and continue as if such
payment or proceeds had not been received and the Agent's and the Lenders'
Liens, security interests, rights, powers and remedies under this Agreement and
each Security Instrument shall continue in full force and effect. In such event,
each Security Instrument shall be automatically reinstated, and the Borrower and
the Guarantor shall take such action as may be reasonably requested by the Agent
and the Lenders to effect such reinstatement.
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EXHIBIT 1.1
Section 12.11 Captions. Captions and section headings appearing
herein are included solely for convenience of reference and are not intended to
affect the interpretation of any provision of this Agreement.
Section 12.12 NO ORAL AGREEMENTS. THE LOAN DOCUMENTS EMBODY THE
ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES AND SUPERSEDE ALL OTHER
AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH PARTIES RELATING TO THE SUBJECT
MATTER HEREOF AND THEREOF. THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Section 12.13 GOVERNING LAW; SUBMISSION TO JURISDICTION.
(a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS EXCEPT TO
THE EXTENT THAT UNITED STATES FEDERAL LAW PERMITS ANY LENDER TO CHARGE
INTEREST AT THE RATE ALLOWED BY THE LAWS OF THE STATE WHERE SUCH LENDER
IS LOCATED. TEX. REV. CIV. STAT. ANN. ART. 5069, CH. 15 (WHICH
REGULATES CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND REVOLVING
TRI-PARTY ACCOUNTS) SHALL NOT APPLY TO THIS AGREEMENT OR THE NOTES.
(b) EACH OF THE BORROWER, THE GUARANTOR AND EACH LENDER HEREBY
(I) IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE FULLEST EXTENT
PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY SECURITY INSTRUMENT AND FOR ANY
COUNTERCLAIM THEREIN; (II) IRREVOCABLY WAIVE, TO THE MAXIMUM EXTENT NOT
PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY
SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES;
(III) CERTIFY THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OF
COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVERS, AND (IV) ACKNOWLEDGE THAT IT HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT, THE SECURITY INSTRUMENTS AND THE
TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION 12.13.
Section 12.14 Interest. It is the intention of the parties
hereto that each Lender shall conform strictly to usury laws applicable to it.
Accordingly, if the transactions
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EXHIBIT 1.1
contemplated hereby would be usurious as to any Lender under laws applicable to
it (including the laws of the United States of America and the State of Texas or
any other jurisdiction whose laws may be mandatorily applicable to such Lender
notwithstanding the other provisions of this Agreement), then, in that event,
notwithstanding anything to the contrary in any of the Loan Documents or any
agreement entered into in connection with or as security for the Notes, it is
agreed as follows: (i) the aggregate of all consideration which constitutes
interest under law applicable to any Lender that is contracted for, taken,
reserved, charged or received by such Lender under any of the Loan Documents or
agreements or otherwise in connection with the Notes shall under no
circumstances exceed the maximum amount allowed by such applicable law, and any
excess shall be cancelled automatically and if theretofore paid shall be
credited by such Lender on the principal amount of the Indebtedness (or, to the
extent that the principal amount of the Indebtedness shall have been or would
thereby be paid in full, refunded by such Lender to the Borrower); and (ii) in
the event that the maturity of the Notes is accelerated by reason of an election
of the holder thereof resulting from any Event of Default under this Agreement
or otherwise, or in the event of any required or permitted prepayment, then such
consideration that constitutes interest under law applicable to any Lender may
never include more than the maximum amount allowed by such applicable law, and
excess interest, if any, provided for in this Agreement or otherwise shall be
cancelled automatically by such Lender as of the date of such acceleration or
prepayment and, if theretofore paid, shall be credited by such Lender on the
principal amount of the Indebtedness (or, to the extent that the principal
amount of the Indebtedness shall have been or would thereby be paid in full,
refunded by such Lender to the Borrower). All sums paid or agreed to be paid to
any Lender for the use, forbearance or detention of sums due hereunder shall, to
the extent not prohibited by law applicable to such Lender, be amortized,
prorated, allocated and spread throughout the full term of the Loans evidenced
by the Notes until payment in full so that the rate or amount of interest on
account of any Loans hereunder does not exceed the maximum amount allowed by
such applicable law. If at any time and from time to time (i) the amount of
interest payable to any Lender on any date shall be computed at the Highest
Lawful Rate applicable to such Lender pursuant to this Section 12.14 and (ii) in
respect of any subsequent interest computation period the amount of interest
otherwise payable to such Lender would be less than the amount of interest
payable to such Lender computed at the Highest Lawful Rate applicable to such
Lender, then the amount of interest payable to such Lender in respect of such
subsequent interest computation period shall continue to be computed at the
Highest Lawful Rate applicable to such Lender until the total amount of interest
payable to such Lender shall equal the total amount of interest which would have
been payable to such Lender if the total amount of interest had been computed
without giving effect to this Section 12.14; but this sentence shall not affect
the ability of the Borrower to repay the Loans as provided in this Agreement. To
the extent that Article 5069-1.04 of the Texas Revised Civil Statutes is
relevant for the purpose of determining the Highest Lawful Rate, such Lender
elects to determine the applicable rate ceiling under such Article by the
indicated weekly rate ceiling from time to time in effect.
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EXHIBIT 1.1
Section 12.15 Confidentiality. All information provided to the
Agent or any Lender hereunder (other than under Section 8.01(g) shall, unless
otherwise specified by the Borrower or the Guarantor in writing, be deemed
"confidential", the Agent and the Lenders shall thereafter maintain such
information in confidence in accordance with the standards of care and diligence
that each utilizes in maintaining its own confidential information. This
obligation of confidence shall not apply to such portions of the information
which (i) are in the public domain, (ii) hereafter become part of the public
domain without the Agent or the Lenders breaching their obligation of confidence
to the Borrower and the Guarantor, (iii) are previously known by the Agent or
the Lenders from some source other than the Borrower or the Guarantor, (iv) are
hereafter developed by the Agent or the Lenders without using the Borrower's or
the Guarantor's information, (v) are hereafter obtained by or available to the
Agent or the Lenders from a third party who owes no obligation of confidence to
the Borrower or the Guarantor with respect to such information or through any
other means other than through disclosure by the Borrower or the Guarantor, (vi)
are disclosed with the Borrower's or the Guarantor's consent, (vii) must be
disclosed either pursuant to any Governmental Requirement or to Persons
regulating the activities of the Agent or the Lenders, or (viii) as may be
required by law or regulation or order of any Governmental Authority in any
judicial, arbitration or governmental proceeding. Further, the Agent or a Lender
may disclose any such information to any other Lender, any independent petroleum
engineers or consultants, any independent certified public accountants, any
legal counsel employed by such Person in connection with this Agreement or any
Security Instrument, including without limitation, the enforcement or exercise
of all rights and remedies thereunder, or any assignee or participant (including
prospective assignees and participants) in the Loans; provided, however, that
the Agent or Lender imposes on the Person to whom such information is disclosed
the same obligation to maintain the confidentiality of such information as is
imposed upon it hereunder.
Section 12.16 Effectiveness. This Agreement shall be effective
on the date of execution hereof by all parties hereto (the "Effective Date").
Section 12.17 EXCULPATION PROVISIONS. EACH OF THE PARTIES
HERETO SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THE
SECURITY INSTRUMENTS AND AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF
THE TERMS OF THIS AGREEMENT AND THE SECURITY INSTRUMENTS; THAT IT HAS IN FACT
READ THIS AGREEMENT AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF
THE TERMS, CONDITIONS AND EFFECTS OF THIS AGREEMENT; THAT IT HAS BEEN
REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT THE
NEGOTIATIONS PRECEDING ITS EXECUTION OF THIS AGREEMENT AND THE SECURITY
INSTRUMENTS; AND HAS RECEIVED THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS
AGREEMENT AND THE SECURITY INSTRUMENTS; AND THAT IT RECOGNIZES THAT CERTAIN OF
THE TERMS OF THIS AGREEMENT AND THE SECURITY INSTRUMENTS RESULT IN ONE PARTY
ASSUMING THE LIABILITY INHERENT IN SOME ASPECTS OF THE TRANSACTION AND RELIEVING
THE OTHER PARTY OF ITS RESPONSIBILITY FOR SUCH LIABILITY. EACH PARTY HERETO
AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF
ANY EXCULPATORY PROVISION
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EXHIBIT 1.1
OF THIS AGREEMENT AND THE SECURITY INSTRUMENTS ON THE BASIS THAT THE PARTY HAD
NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT
"CONSPICUOUS."
The parties hereto have caused this Agreement to be duly executed as of
the day and year first above written.
BORROWER: GLOBAL NATURAL RESOURCES
CORPORATION OF NEVADA
By:/s/ Eric Lynn Hill
---------------------------
Name:
Title:
Address for Notices:
5300 Memorial, Suite 800
Houston, Texas 77007-8295
Telecopier No.: (713) 865-4386
Telephone No.: (713) 880-5464
Attention: Chief Financial Officer
GUARANTOR: GLOBAL NATURAL RESOURCES INC.
By:/s/ Eric Lynn Hill
---------------------------
Name:
Title:
Address for Notices:
5300 Memorial, Suite 800
Houston, Texas 77007-8295
Telecopier No.: (713) 865-4386
Telephone No.: (713) 880-5464
Attention: Chief Financial Officer
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EXHIBIT 1.1
LENDER AND AGENT: NATIONSBANK OF TEXAS, N.A.
By:/s/ James R. Allred
---------------------------
Name: James R. Allred
Title: Vice President
Lending Office for Base Rate Loans
and Eurodollar Loans:
700 Louisiana Street
Houston, Texas 77002-2725
Address for Notices:
700 Louisiana Street
Houston, Texas 77002-2725
Telecopier No.: (214) 508-1215
Telephone No.: (214) 508-2513
Attention: Karen Dumond
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EXHIBIT 1.1
EXHIBIT A
FORM OF NOTE
$_____________________________ ___________________, 199__
FOR VALUE RECEIVED, GLOBAL NATURAL RESOURCES CORPORATION OF NEVADA, a
Nevada corporation (the "Borrower") hereby promises to pay to the order of
_________________________________ (the "Lender"), at the Principal Office of
NATIONSBANK OF TEXAS, N.A. (the "Agent"), at 700 Louisiana, P.O. Box 2518,
Houston, Texas 77252-2518, the principal sum of __________ Dollars ($_________)
or such lesser amount as shall equal the aggregate unpaid principal amount of
the Loans made by the Lender to the Borrower under the Credit Agreement, as
hereinafter defined), in lawful money of the United States of America and in
immediately available funds, on the dates and in the principal amounts provided
in the Credit Agreement, and to pay interest on the unpaid principal amount of
each such Loan, at such office, in like money and funds, for the period
commencing on the date of such Loan until such Loan shall be paid in full, at
the rates per annum and on the dates provided in the Credit Agreement.
The date, amount, Type, interest rate, Interest Period and maturity of
each Loan made by the Lender to the Borrower, and each payment made on account
of the principal thereof, shall be recorded by the Lender on its books and,
prior to any transfer of this Note, endorsed by the Lender on the schedules
attached hereto or any continuation thereof.
This Note is one of the Notes referred to in the Credit Agreement dated
as of May 19, 1995 among the Borrower, Global Natural Resources Inc., the
Lenders which are or become parties thereto (including the Lender) and the
Agent, and evidences Loans made by the Lender thereunder (such Credit Agreement
as the same may be amended or supplemented from time to time, the "Credit
Agreement"). Capitalized terms used in this Note have the respective meanings
assigned to them in the Credit Agreement.
This Note is issued pursuant to the Credit Agreement and is entitled to
the benefits provided for in the Credit Agreement and the Security Instruments.
The Credit Agreement provides for the acceleration of the maturity of this Note
upon the occurrence of certain events, for prepayments of Loans upon the terms
and conditions specified therein and other provisions relevant to this Note.
GLOBAL NATURAL RESOURCES
CORPORATION OF NEVADA
By:
---------------------------
Name:
Title:
A-1
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EXHIBIT 1.1
EXHIBIT B
FORM OF BORROWING, CONTINUATION AND CONVERSION REQUEST
_____________________, 199__
GLOBAL NATURAL RESOURCES CORPORATION OF NEVADA, a Nevada corporation
(the "Borrower"), pursuant to the Credit Agreement dated as of ____________,
1995 (together with all amendments or supplements thereto, the "Credit
Agreement") among the Borrower, GLOBAL NATURAL RESOURCES INC., NATIONSBANK OF
TEXAS, N.A., as Agent and the lenders (the "Lenders") which are or become
parties thereto, and such Lenders, hereby makes the requests indicated below
(unless otherwise defined herein, capitalized terms are defined in the Credit
Agreement):
<TABLE>
<S> <C>
1. Loans:
(a) Aggregate amount of new Loans to be $______________________;
(b) Requested funding date is _________________, 199__;
(c) $_____________________ of such borrowings are to be Eurodollar Loans;
$_____________________ of such borrowings are to be Base Rate Loans; and
(d) Length of Interest Period for Eurodollar Loans is:
[ ] one month [ ] three months
[ ] two months [ ] six months
2. Eurodollar Loan continuation for Eurodollar Loans maturing on ________________, 199__:
(a) Aggregate amount to be continued as Eurodollar Loans is $____________________;
(b) Aggregate amount to be converted to Base Rate Loans is $____________________;
(c) Length of Interest Period for continued Eurodollar Loans is ________________________.
</TABLE>
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<PAGE> 90
EXHIBIT 1.1
3. Conversion of Outstanding Base Rate Loans to Eurodollar Loans:
Convert $__________________ of the outstanding Base
Rate Loans to Eurodollar Loans on ____________________
with an Interest Period of:
/ / one month / / three months
/ / two months / / six months
4. Conversion of outstanding Eurodollar Loans to Base Rate Loans:
Convert $__________________ of the outstanding Eurodollar Loans
with Interest Period maturing on ______________________, 199_,
to Base Rate Loans.
The undersigned certifies that he is the _____________________ of the
Borrower, and that as such he is authorized to execute this certificate on
behalf of the Borrower. The undersigned further certifies, represents and
warrants on behalf of the Borrower that the Borrower is entitled to receive the
requested borrowing, continuation or conversion under the terms and conditions
of the Credit Agreement.
GLOBAL NATURAL RESOURCES
CORPORATION OF NEVADA
By:
---------------------------
Name:
Title:
B-2
<PAGE> 91
EXHIBIT 1.1
EXHIBIT C
FORM OF COMPLIANCE CERTIFICATE
The undersigned hereby certifies that he is the ________________ of
GLOBAL NATURAL RESOURCES CORPORATION OF NEVADA, a Nevada corporation (the
"Borrower") and that as such he is authorized to execute this certificate on
behalf of the Borrower. With reference to the Credit Agreement dated as of May
19, 1995 (together with all amendments or supplements thereto being the
"Agreement") among the Borrower, GLOBAL NATURAL RESOURCES INC., NATIONSBANK OF
TEXAS, N.A., as Agent for the lenders (the "Lenders") which are or become a
party thereto, and such Lenders, the undersigned represents and warrants as
follows (each capitalized term used herein having the same meaning given to it
in the Agreement unless otherwise specified):
(a) The representations and warranties of the Borrower
contained in Article VII of the Agreement and in the Security
Instruments and otherwise made in writing by or on behalf of the
Borrower pursuant to the Agreement and the Security Instruments were
true and correct when made, and are repeated at and as of the time of
delivery hereof and are true and correct at and as of the time of
delivery hereof, except as such representations and warranties are
modified to give effect to transactions not prohibited by the Agreement.
(b) The Borrower has performed and complied with all agreements
and conditions contained in the Agreement and in the Security
Instruments required to be performed or complied with by it prior to or
at the time of delivery hereof.
(c) Neither the Borrower nor any Subsidiary has incurred any
material liabilities, direct or contingent, since December 31, 1994,
except those set forth in Schedule 9.01 to the Agreement and except
those allowed by the terms of the Agreement or consented to by the
Majority Lenders in writing.
(d) Since December 31, 1994, no change has occurred, either in
any case or in the aggregate, in the condition, financial or otherwise,
of the Borrower or any Subsidiary which would have a Material Adverse
Effect.
(e) There exists, and, after giving effect to the Loan or
Loans, if any, with respect to which this certificate is being
delivered, will exist, no Default under the Agreement.
(f) Attached hereto are the detailed computations necessary to
determine whether the Guarantor is in compliance with Sections 9.12 and
9.13 as of the end of the [fiscal quarter][fiscal year] ending ____.
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EXHIBIT 1.1
EXECUTED AND DELIVERED this ____ day of ______________.
GLOBAL NATURAL RESOURCES
CORPORATION OF NEVADA
By:
---------------------------
Name:
Title:
C-2
<PAGE> 93
EXHIBIT 1.1
EXHIBIT D
See Separate Form to Attach
D-1
<PAGE> 94
EXHIBIT 1.1
EXHIBIT E
FORM OF
ASSIGNMENT AGREEMENT
ASSIGNMENT AGREEMENT ("Agreement") dated as of ________________, 199___
between: _________________________________ (the "Assignor") and
__________________________ (the "Assignee").
RECITALS
A. The Assignor is a party to the Credit Agreement dated as of May 19,
1995 (as amended and supplemented and in effect from time to time, the "Credit
Agreement") among GLOBAL NATURAL RESOURCES CORPORATION OF NEVADA, a Nevada
corporation (the "Borrower"), GLOBAL NATURAL RESOURCES INC., each of the lenders
that is or becomes a party thereto as provided in Section 12.06 of the Credit
Agreement (individually, together with its successors and assigns, a "Lender",
and collectively, together with their successors and assigns, the "Lenders"),
and NATIONSBANK OF TEXAS, N.A., in its individual capacity, ("NationsBank") and
as agent for the Lenders (in such capacity, together with its successors in such
capacity, the "Agent").
B. The Assignor proposes to sell, assign and transfer to the Assignee,
and the Assignee proposes to purchase and assume from the Assignor, [all][a
portion] of the Assignor's Maximum Credit Amount, outstanding Loans and its
Percentage Share of the outstanding LC Exposure, all on the terms and conditions
of this Agreement.
C. In consideration of the foregoing and the mutual agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS.
Section 1.01 Definitions. All capitalized terms used but not defined
herein have the respective meanings given to such terms in the Credit Agreement.
Section 1.02 Other Definitions. As used herein, the following terms
have the following respective meanings:
"Assigned Interest" shall mean all of Assignor's (in its
capacity as a "Lender") rights and obligations under the Credit
Agreement and the other Security Instruments in respect of (i)
$___________ of the Maximum Credit Amount of the Assignor and (ii) a
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EXHIBIT 1.1
Percentage Share of _____%, including, without limitation, the right to
receive payment for $____________ (the "Loan Balance) of the Loans
outstanding on the date hereof and to participate in LC Exposure in the
amount of such Percentage Share, plus the interest and fees which will
accrue from and after the Assignment Date.
"Assignment Date" shall mean _____________________, 199___.
ARTICLE II
SALE AND ASSIGNMENT.
Section 2.01 Sale and Assignment. On the terms and conditions set forth
herein, effective on and as of the Assignment Date, the Assignor hereby sells,
assigns and transfers to the Assignee, and the Assignee hereby purchases and
assumes from the Assignor, all of the right, title and interest of the Assignor
in and to, and all of the obligations of the Assignor in respect of, the
Assigned Interest. Such sale, assignment and transfer is without recourse and,
except as expressly provided in this Agreement, without representation or
warranty. Accordingly, from and after the date hereof, Assignee's Maximum Credit
Amount and Percentage Share for all intents and purposes under the Credit
Agreement and Security Instruments shall be as stated in the definition of
Assigned Interest above.
Section 2.02 Assumption of Obligations. The Assignee agrees with the
Assignor (for the express benefit of the Assignor and the Borrower) that the
Assignee will, from and after the Assignment Date, perform all of the
obligations of the Assignor in respect of the Assigned Interest. From and after
the Assignment Date: (a) the Assignor shall be released from the Assignor's
obligations in respect of the Assigned Interest, and (b) the Assignee shall be
entitled to all of the Assignor's rights, powers and privileges under the Credit
Agreement and the other Security Instruments in respect of the Assigned
Interest.
Section 2.03 Consent by Borrower and Agent. By executing this Agreement
as provided below, in accordance with Section 12.06(b) of the Credit Agreement,
each of the Borrower and the Agent hereby acknowledges notice of the
transactions contemplated by this Agreement and consents to such transactions.
ARTICLE III
PAYMENTS.
Section 3.01 Payments. As consideration for the sale, assignment and
transfer contemplated by Section 2.01 hereof, the Assignee shall, on the
Assignment Date, assume Assignor's obligations in respect of the Assigned
Interest and pay to the Assignor an amount equal to the Loan Balance, if any. An
amount equal to all accrued and unpaid interest and fees shall be paid to the
Assignor as provided in Section 3.02 (iii) below. Except as otherwise
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EXHIBIT 1.1
provided in this Agreement, all payments hereunder shall be made in Dollars
and in immediately available funds, without setoff, deduction or counterclaim.
Section 3.02 Allocation of Payments. The Assignor and the Assignee
agree that (i) the Assignor shall be entitled to any payments of principal with
respect to the Assigned Interest made prior to the Assignment Date, together
with any interest and fees with respect to the Assigned Interest accrued prior
to the Assignment Date, (ii) the Assignee shall be entitled to any payments of
principal with respect to the Assigned Interest made from and after the
Assignment Date, together with any and all interest and fees (including any
unearned Letters of Credit fees) with respect to the Assigned Interest accruing
from and after the Assignment Date, and (iii) the Agent is authorized and
instructed to allocate payments received by it for account of the Assignor and
the Assignee as provided in the foregoing clauses. Each party hereto agrees that
it will hold any interest, fees or other amounts that it may receive to which
the other party hereto shall be entitled pursuant to the preceding sentence for
account of such other party and pay, in like money and funds, any such amounts
that it may receive to such other party promptly upon receipt.
Section 3.03 Delivery of Notes. Promptly following the receipt by the
Assignor of the consideration required to be paid under Section 3.01 hereof, the
Assignor shall, in the manner contemplated by Section 12.06(b) of the Credit
Agreement, (i) deliver to the Agent (or its counsel) the Note held by the
Assignor and (ii) notify the Agent to request that the Borrower execute and
deliver new Notes to the Assignor, if Assignor continues to be a Lender, and the
Assignee, dated the date of this Agreement in respective principal amounts equal
to the respective Maximum Credit Amounts of the Assignor (if appropriate) and
the Assignee after giving effect to the sale, assignment and transfer
contemplated hereby.
Section 3.04 Further Assurances. The Assignor and the Assignee hereby
agree to execute and deliver such other instruments, and take such other
actions, as either party may reasonably request in connection with the
transactions contemplated by this Agreement.
ARTICLE IV
CONDITIONS PRECEDENT.
Section 4.01 Conditions Precedent. The effectiveness of the sale,
assignment and transfer contemplated hereby is subject to the satisfaction of
each of the following conditions precedent:
(a) the execution and delivery of this Agreement by the
Assignor and the Assignee;
(b) the receipt by the Assignor of the payment required to be
made by the Assignee under Section 3.01 hereof; and
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EXHIBIT 1.1
(c) the acknowledgment and consent by the Borrower and the
Agent contemplated by Section 2.03 hereof.
ARTICLE V
REPRESENTATIONS AND WARRANTIES.
Section 5.01 Representations and Warranties of the Assignor. The
Assignor represents and warrants to the Assignee as follows:
(a) it has all requisite power and authority, and has taken all
action necessary to execute and deliver this Agreement and to fulfill
its obligations under, and consummate the transactions contemplated by,
this Agreement;
(b) the execution, delivery and compliance with the terms
hereof by Assignor and the delivery of all instruments required to be
delivered by it hereunder do not and will not violate any Governmental
Requirement applicable to it;
(c) this Agreement has been duly executed and delivered by it
and constitutes the legal, valid and binding obligation of the
Assignor, enforceable against it in accordance with its terms;
(d) all approvals and authorizations of, all filings with and
all actions by any Governmental Authority necessary for the validity or
enforceability of its obligations under this Agreement have been
obtained;
(e) the Assignor has good title to, and is the sole legal and
beneficial owner of, the Assigned Interest, free and clear of all
Liens, claims, participations or other charges of any nature
whatsoever; and
(f) the transactions contemplated by this Agreement are
commercial banking transactions entered into in the ordinary course of
the banking business of the Assignor.
Section 5.02 Disclaimer. Except as expressly provided in Section 5.01
hereof, the Assignor does not make any representation or warranty, nor shall it
have any responsibility to the Assignee, with respect to the accuracy of any
recitals, statements, representations or warranties contained in the Credit
Agreement or in any certificate or other document referred to or provided for
in, or received by any Lender under, the Credit Agreement, or for the value,
validity, effectiveness, genuineness, execution, effectiveness, legality,
enforceability or sufficiency of the Credit Agreement, the Notes or any other
document referred to or provided for therein or for any failure by the Borrower
or any other Person (other than Assignor) to perform any of its obligations
thereunder prior or for the existence, value, perfection or priority of any
collateral security or the financial or other condition of the Borrower, the
Guarantor or
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EXHIBIT 1.1
the Subsidiaries or any other obligor or guarantor, or any other matter relating
to the Credit Agreement or any other Security Instrument or any extension of
credit thereunder.
Section 5.03 Representations and Warranties of the Assignee. The
Assignee represents and warrants to the Assignor as follows:
(a) it has all requisite power and authority, and has taken all
action necessary to execute and deliver this Agreement and to fulfill
its obligations under, and consummate the transactions contemplated by,
this Agreement;
(b) the execution, delivery and compliance with the terms
hereof by Assignee and the delivery of all instruments required to be
delivered by it hereunder do not and will not violate any Governmental
Requirement applicable to it;
(c) this Agreement has been duly executed and delivered by it
and constitutes the legal, valid and binding obligation of the
Assignee, enforceable against it in accordance with its terms;
(d) all approvals and authorizations of, all filings with and
all actions by any Governmental Authority necessary for the validity or
enforceability of its obligations under this Agreement have been
obtained;
(e) the Assignee has fully reviewed the terms of the Credit
Agreement and the other Security Instruments and has independently and
without reliance upon the Assignor, and based on such information as
the Assignee has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement;
(f) the Assignee hereby affirms that the representations
contained in Section 4.05(d)(i)[(a)][(b)] of the Credit Agreement are
true and accurate as to it [IF (b) IS SELECTED ADD: and, the Assignee
has contemporaneously herewith delivered to the Agent and the Borrower
such certifications as are required thereby to avoid the withholding
taxes referred to in Section 4.05]; and
(g) the transactions contemplated by this Agreement are
commercial banking transactions entered into in the ordinary course of
the banking business of the Assignee.
ARTICLE VI
MISCELLANEOUS.
Section 6.01 Notices. All notices and other communications provided for
herein (including, without limitation, any modifications of, or waivers,
requests or consents under, this Agreement) and, with respect to the Assignee
under the Credit Agreement, shall be given or
E-5
<PAGE> 99
EXHIBIT 1.1
made in writing (including, without limitation, by telex or telecopy) to the
intended recipient at its "Address for Notices" specified below its name on the
signature pages hereof or, as to either party, at such other address as shall be
designated by such party in a notice to the other party.
Section 6.02 Amendment, Modification or Waiver. No provision of this
Agreement may be amended, modified or waived except by an instrument in writing
signed by the Assignor and the Assignee, and consented to by the Borrower and
the Agent.
Section 6.03 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. The representations and warranties made herein
by the Assignee are also made for the benefit of the Agent and the Borrower, and
the Assignee agrees that the Agent and the Borrower are entitled to rely upon
such representations and warranties.
Section 6.04 Assignments. Neither party hereto may assign any of its
rights or obligations hereunder except in accordance with the terms of the
Credit Agreement.
Section 6.05 Captions. The captions and section headings appearing
herein are included solely for convenience of reference and are not intended to
affect the interpretation of any provision of this Agreement.
Section 6.06 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be identical and all of which, taken
together, shall constitute one and the same instrument, and each of the parties
hereto may execute this Agreement by signing any such counterpart.
Section 6.07 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the law of the State of Texas.
Section 6.08 Expenses. To the extent not paid by the Borrower pursuant
to the terms of the Credit Agreement, each party hereto shall bear its own
expenses in connection with the execution, delivery and performance of this
Agreement.
Section 6.09 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
E-6
<PAGE> 100
EXHIBIT 1.1
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
Agreement to be executed and delivered as of the date first above written.
ASSIGNOR
------------------------------
By:
---------------------------
Name:
Title:
Address for Notices:
------------------------------
------------------------------
------------------------------
Telecopier No.:
--------------
Telephone No.:
--------------
Attention:
--------------
E-7
<PAGE> 101
EXHIBIT 1.1
ASSIGNEE
------------------------------
By:
------------------------
Name:
Title:
Address for Notices:
------------------------------
------------------------------
------------------------------
Telecopier No.:
--------------
Telephone No.:
--------------
Attention:
--------------
ACKNOWLEDGED AND CONSENTED TO:
NATIONSBANK OF TEXAS, N.A.,
as Agent
By:
--------------------------
Name:
Title:
GLOBAL NATURAL RESOURCES
CORPORATION OF NEVADA
By:
--------------------------
Name:
Title:
E-8
<PAGE> 102
EXHIBIT 1.1
EXHIBIT F
LIST OF MAXIMUM CREDIT AMOUNTS
<TABLE>
<CAPTION>
MAXIMUM PERCENTAGE
LENDER CREDIT AMOUNTS SHARE
-----------------------------------------------------------
<S> <C> <C>
NationsBank of Texas, N.A. $35,000,000 100%
</TABLE>
F-1
<PAGE> 103
EXHIBIT 1.1
EXHIBIT G
FORM OF OFFICER'S CERTIFICATE
(SECTION 8.01)
The undersigned hereby certifies that he is the ______________________
of Global Natural Resources Corporation of Nevada [Global Natural Resources,
Inc.] (the "Company") and that as such he is authorized to execute this
certificate on behalf of the Company. This certificate is given with respect to
Section 8.01(c) [d] of that certain Credit Agreement dated as of May 19, 1995,
among the Company, Global Natural Resources _______________________, the lenders
(the "Lenders") which are or become a party thereto, and NationsBank of Texas,
N.A., as Agent for the Lenders. The undersigned hereby certifies that the
financial statements furnished by the Company on this date pursuant to Section
8.01(__) of the Credit Agreement fairly present the consolidated and
consolidating financial condition and result of operations of the Company and
its Consolidated Subsidiaries in accordance with GAAP (except for footnotes) as
at the end of, and for the period ending ___________________ (subject to normal
year-end audit adjustments).
Executed and delivered this ______ day of ______________, 199__.
GLOBAL NATURAL RESOURCES
------------------------------
By:
---------------------------
Name:
Title:
G-1
<PAGE> 104
EXHIBIT 1.1
SCHEDULE 7.02
LIABILITIES
None
<PAGE> 105
EXHIBIT 1.1
SCHEDULE 7.03
LITIGATION
None
<PAGE> 106
EXHIBIT 1.1
SCHEDULE 7.09
TAXES
None
<PAGE> 107
EXHIBIT 1.1
SCHEDULE 7.10
TITLES, ETC.
None
<PAGE> 108
EXHIBIT 1.1
SCHEDULE 7.17
ENVIRONMENTAL MATTERS
None
<PAGE> 109
EXHIBIT 1.1
SCHEDULE 7.20
HEDGING AGREEMENTS
None
<PAGE> 110
EXHIBIT 1.1
SCHEDULE 7.21
MATERIAL AGREEMENTS
None
<PAGE> 111
EXHIBIT 1.1
SCHEDULE 9.01
DEBT
None
<PAGE> 112
EXHIBIT 1.1
SCHEDULE 9.02
LIENS
None
<PAGE> 113
EXHIBIT 1.1
SCHEDULE 9.03
INVESTMENTS, LOANS AND ADVANCES
None
<PAGE> 1
EXHIBIT 1.2
$35,000,000 May 19, 1995
FOR VALUE RECEIVED, GLOBAL NATURAL RESOURCES CORPORATION OF NEVADA, a
Nevada corporation (the "Borrower") hereby promises to pay to the order of
NATIONS BANK OF TEXAS, N.A. (the "Lender"), at the Principal Office of
NATIONSBANK OF TEXAS, N.A. (the "Agent"), at 700 Louisiana, P.O. Box 2518,
Houston, Texas 77252-2518, the principal sum of Thirty Five Million Dollars
($35,000,000) (or such lesser amount as shall equal the aggregate unpaid
principal amount of the Loans made by the Lender to the Borrower under the
Credit Agreement, as hereinafter defined), in lawful money of the United States
of America and in immediately available funds, on the dates and in the principal
amounts provided in the Credit Agreement, and to pay interest on the unpaid
principal amount of each such Loan, at such office, in like money and funds, for
the period commencing on the date of such Loan until such Loan shall be paid in
full, at the rates per annum and on the dates provided in the Credit Agreement.
The date, amount, Type, interest rate, Interest Period and maturity of
each Loan made by the Lender to the Borrower, and each payment made on account
of the principal thereof, shall be recorded by the Lender on its books and,
prior to any transfer of this Note, endorsed by the Lender on the schedules
attached hereto or any continuation thereof.
This Note is one of the Notes referred to in the Credit Agreement dated
as of May 19, 1995 among the Borrower, Global Natural Resources Inc., the
Lenders which are or become parties thereto (including the Lender) and the
Agent, and evidences Loans made by the Lender thereunder (such Credit Agreement
as the same may be amended or supplemented from time to time, the "Credit
Agreement"). Capitalized terms used in this Note have the respective meanings
assigned to them in the Credit Agreement.
This Note is issued pursuant to the Credit Agreement and is entitled to
the benefits provided for in the Credit Agreement and the Security Instruments.
The Credit Agreement provides for the acceleration of the maturity of this Note
upon the occurrence of certain events, for prepayments of Loans upon the terms
and conditions specified therein and other provisions relevant to this Note.
GLOBAL NATURAL RESOURCES
CORPORATION OF NEVADA
By:/s/ Eric Lynn Hill
---------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 1.3
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT by GLOBAL NATURAL RESOURCES, INC., a Nevada
corporation (hereinafter called "GUARANTOR"), is in favor of NATIONSBANK OF
TEXAS, N.A., a national banking association, as agent for the Lenders (as
defined in the Credit Agreement described below) (in such capacity, together
with its successors in such capacity, the "AGENT").
W I T N E S S E T H:
WHEREAS, on even date herewith, GLOBAL NATURAL RESOURCES OF NEVADA, a
Nevada corporation (the "BORROWER"), the Guarantor, the Lenders and the Agent
entered into that certain Credit Agreement (as the same may be amended from time
to time, the "CREDIT AGREEMENT"); and
WHEREAS, one of the terms and conditions stated in the Credit Agreement
for the making of the loans described therein is the execution and delivery to
the Agent of this Guaranty Agreement;
NOW, THEREFORE, (i) in order to comply with the terms and conditions of
the Credit Agreement, (ii) to induce the Lenders, at any time or from time to
time, to loan monies, with or without security to or for the account of Borrower
in accordance with the terms of the Credit Agreement, (iii) at the special
insistence and request of the Lenders, and (iv) for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Guarantor hereby agrees as follows:
ARTICLE 1
General Terms
Section 1.1 Terms Defined Above. As used in this Guaranty Agreement, the
terms "Agent", "Borrower", "Guarantor" and "Credit Agreement" shall have the
meanings indicated above.
Section 1.2 Certain Definitions. As used in this Guaranty Agreement, the
following terms shall have the following meanings, unless the context otherwise
requires:
"COLLATERAL" shall have the meaning indicated in Section 4.1 hereof.
"GUARANTOR CLAIMS" shall have the meaning indicated in Section 5.1
hereof.
"GUARANTY AGREEMENT" shall mean this Guaranty Agreement, as the same may
from time to time be amended or supplemented.
<PAGE> 2
EXHIBIT 1.3
"LIABILITIES" shall mean (a) any and all indebtedness, obligations and
liabilities pursuant to the Credit Agreement, including without
limitation, the unpaid principal of and interest on the Notes, including
without limitation, interest accruing subsequent to the filing of a
petition or other action concerning bankruptcy or other similar
proceeding; (b) any additional loans made by the Lenders to the Borrower
pursuant to the Credit Agreement;
"LOAN DOCUMENTS" shall mean the Credit Agreement, the Notes and the
Security Instruments.
Section 1.3 Credit Agreement Definitions. Unless otherwise defined
herein, all terms beginning with a capital letter which are defined in the
Credit Agreement shall have the same meanings herein as therein.
ARTICLE 2
The Guaranty
Section 2.1 Liabilities Guaranteed. Guarantor hereby irrevocably and
unconditionally guarantees the prompt payment at maturity of the Liabilities.
Section 2.2 Nature of Guaranty. This guaranty is an absolute,
irrevocable, completed and continuing guaranty of payment and not a guaranty of
collection, and no notice of the Liabilities or any extension of credit already
or hereafter contracted by or extended to Borrower need be given to Guarantor.
This guaranty may not be revoked by Guarantor and shall continue to be effective
with respect to debt under the Liabilities arising or created after any
attempted revocation by Guarantor and shall remain in full force and effect
until the Liabilities are paid in full and the Commitments are terminated,
notwithstanding that from time to time prior thereto no Liabilities may be
outstanding. Borrower and the Lenders may modify, alter, rearrange, extend for
any period and/or renew from time to time, the Liabilities, and the Lenders may
waive any Default or Events of Default without notice to the Guarantor and in
such event Guarantor will remain fully bound hereunder on the Liabilities. This
guaranty shall continue to be effective or be reinstated, as the case may be, if
at any time any payment of the Liabilities is rescinded or must otherwise be
returned by the Lenders upon the insolvency, bankruptcy or reorganization of
Borrower or otherwise, all as though such payment had not been made. This
Guaranty Agreement may be enforced by the Agent and shall not be discharged by
the assignment or negotiation of all or part of the Liabilities. Guarantor
hereby expressly waives presentment, demand, notice of non-payment, protest and
notice of protest and dishonor, notice of Event of Default, notice of intent to
accelerate the maturity and notice of acceleration of the maturity and any other
notice in connection with the Liabilities, and also notice of acceptance of this
Guaranty Agreement, acceptance on the part of the Lenders being conclusively
presumed by their request for this Guaranty Agreement and delivery of the same
to the Agent.
-2-
<PAGE> 3
EXHIBIT 1.3
Section 2.3 Agent's Rights. Guarantor authorizes the Agent, without
notice or demand and without affecting Guarantor's liability hereunder, to take
and hold security for the payment of the Liabilities, and exchange, enforce,
waive and release any such security; and to apply such security and direct the
order or manner of sale thereof as the Agent in its discretion may determine;
and to obtain a guaranty of the Liabilities from any one or more Persons and at
any time or times to enforce, waive, rearrange, modify, limit or release any of
such other Persons from their obligations under such guaranties.
Section 2.4 Guarantor's Waivers. Guarantor waives any right to require
the Lenders to (a) proceed against Borrower or any other person liable on the
Liabilities, (b) enforce its rights against any other guarantor of the
Liabilities, (c) proceed or enforce its rights against or exhaust any security
given to secure the Liabilities, (d) have Borrower joined with Guarantor in any
suit arising out of this Guaranty Agreement and/or the Liabilities, or (e)
pursue any other remedy in the Agent's powers whatsoever. The Agent shall not be
required to mitigate damages or take any action to reduce, collect or enforce
the Liabilities. Guarantor waives any defense arising by reason of any
disability, lack of corporate authority or power, or other defense of Borrower
or any other guarantor of the Liabilities, and shall remain liable hereon
regardless of whether Borrower or any other guarantor be found not liable
thereon for any reason. Until the Liabilities shall have been paid in full,
Guarantor shall have no right of subrogation, and waives any right to enforce
any remedy which the Lenders now has or may hereafter have against Borrower, and
waives any benefit of any right to participate in any security now or hereafter
held by the Lenders. Whether and when to exercise any of the remedies of the
Lenders under any of the Loan Documents shall be in the sole and absolute
discretion of the Agent, and no delay by the Agent in enforcing any remedy,
including delay in conducting a foreclosure sale, shall be a defense to the
Guarantor's liability under this Guaranty Agreement. To the extent allowed by
applicable law, the Guarantor hereby waives any good faith duty on the part of
the Agent in exercising any remedies provided in the Loan Documents.
Section 2.5 Maturity of Liabilities; Payment. Guarantor agrees that if
the maturity of the Liabilities is accelerated by bankruptcy or otherwise, such
maturity shall also be deemed accelerated for the purpose of this Guaranty
Agreement without demand or notice to Guarantor. Guarantor will, forthwith upon
notice from the Agent of Borrower's failure to pay the Liabilities at maturity,
pay to the Agent the amount due and unpaid by Borrower and guaranteed hereby.
The failure of the Agent to give this notice shall not in any way release
Guarantor hereunder, but Guarantor shall have no obligation to make any payment
hereunder until it receives notice from the Agent of the Borrower's failure to
pay the Liabilities.
Section 2.6 Agent's Expenses. If Guarantor fails to pay the Liabilities
after notice from the Agent of Borrower's failure to pay any Liabilities at
maturity, and if the Agent obtains the services of an attorney for collection of
amounts owing by Guarantor hereunder, or obtaining advice of counsel in respect
of any of its rights under this Guaranty Agreement, or if suit is filed to
enforce this Guaranty Agreement, or if proceedings are had in any bankruptcy,
probate, receivership or other judicial proceedings for the establishment or
collection of any amount owing by Guarantor hereunder, or if any amount owing by
Guarantor hereunder is collected
-3-
<PAGE> 4
EXHIBIT 1.3
through such proceedings, Guarantor agrees to pay to the Agent at its banking
quarters the Agent's reasonable attorneys' fees.
Section 2.7 Liability. It is expressly agreed that the liability of the
Guarantor for the payment of the Liabilities guaranteed hereby shall be primary
and not secondary.
Section 2.8 Events and Circumstances Not Reducing or Discharging
Guarantor's Obligations. Guarantor hereby consents and agrees to each of the
following to the fullest extent permitted by law, and agrees that Guarantor's
obligations under this Guaranty Agreement shall not be released, diminished,
impaired, reduced or adversely affected by any of the following, and waives any
rights (including without limitation rights to notice) which Guarantor might
otherwise have as a result of or in connection with any of the following:
(a) Modifications, etc. Any renewal, extension, modification,
increase, decrease, alteration or rearrangement of all or any part of
the Liabilities, or of the Notes, or the Credit Agreement or any
instrument executed in connection therewith, or any contract or
understanding between Borrower and the Lenders, or any other Person,
pertaining to the Liabilities;
(b) Adjustment, etc. Any adjustment, indulgence, forbearance or
compromise that might be granted or given by the Lenders to Borrower or
Guarantor or any Person liable on the Liabilities;
(c) Condition of Borrower or Guarantor. The insolvency,
bankruptcy arrangement, adjustment, composition, liquidation,
disability, dissolution, death or lack of power of Borrower or
Guarantor or any other Person at any time liable for the payment of all
or part of the Liabilities; or any dissolution of Borrower or
Guarantor, or any sale, lease or transfer of any or all of the assets
of Borrower or Guarantor, or any changes in the shareholders, partners,
or members of Borrower or Guarantor; or any reorganization of Borrower
or Guarantor;
(d) Invalidity of Liabilities. The invalidity, illegality or
unenforceability of all or any part of the Liabilities, or any document
or agreement executed in connection with the Liabilities, for any
reason whatsoever, including without limitation the fact that the
Liabilities, or any part thereof, exceed the amount permitted by law,
the act of creating the Liabilities or any part thereof is ultra vires,
the officers or representatives executing the documents or otherwise
creating the Liabilities acted in excess of their authority, the
Liabilities violate applicable usury laws, the creation, performance or
repayment of the Liabilities (or the execution, delivery and
performance of any document or instrument representing part of the
Liabilities or executed in connection with the Liabilities, or given to
secure the repayment of the Liabilities) is illegal, uncollectible,
legally impossible or unenforceable, or the Credit Agreement or other
documents or instruments
-4-
<PAGE> 5
EXHIBIT 1.3
pertaining to the Liabilities have been forged or otherwise are
irregular or not genuine or authentic.
(e) Release of Obligors. Any full or partial release of the
liability of Borrower on the Liabilities or any part thereof, of any
co-guarantors, or any other Person now or hereafter liable, whether
directly or indirectly, jointly, severally, or jointly and severally,
to pay, perform, guarantee or assure the payment of the Liabilities or
any part thereof, it being recognized, acknowledged and agreed by
Guarantor that Guarantor may be required to pay the Liabilities in full
without assistance or support of any other Person, and Guarantor has
not been induced to enter into this Guaranty Agreement on the basis of
a contemplation, belief, understanding or agreement that other parties
other than the Borrower will be liable to perform the Liabilities, or
the Agent will look to other parties to perform the Liabilities.
Notwithstanding the foregoing, Guarantor does not hereby waive or
release (expressly or impliedly) any rights of subrogation,
reimbursement or contribution which it may have, after payment in full
of the Liabilities, against others liable on the Liabilities;
Guarantor's rights of subrogation and reimbursement are however,
subordinate to the rights and claims of the Lenders with respect to the
Liabilities;
(f) Other Security. The taking or accepting of any other
security, collateral or guaranty, or other assurance of payment, for
all or any part of the Liabilities;
(g) Release of Collateral, etc. Any release, surrender,
exchange, subordination, deterioration, waste, loss or impairment
(including without limitation negligent, willful, unreasonable or
unjustifiable impairment) of any collateral, property or security, at
any time existing in connection with, or assuring or securing payment
of, all or any part of the Liabilities;
(h) Care and Diligence. The failure of the Agent or any other
Person to exercise diligence or reasonable care in the preservation,
protection, enforcement, sale or other handling or treatment of all or
any part of such collateral, property or security;
(i) Status of Liens. The fact that any collateral, security,
security interest or lien contemplated or intended to be given, created
or granted as security for the repayment of the Liabilities shall not
be properly perfected or created, or shall prove to be unenforceable or
subordinate to any other security interest or lien, it being recognized
and agreed by Guarantor that Guarantor is not entering into this
Guaranty Agreement in reliance on, or in contemplation of the benefits
of, the validity, enforceability, collectibility or value of any of the
collateral for the Liabilities. Notwithstanding the foregoing,
Guarantor does not hereby waive or release (expressly or impliedly) any
right to be subrogated to the rights of the Lenders in any collateral
or security for the Liabilities, after payment in full of the
-5-
<PAGE> 6
EXHIBIT 1.3
Liabilities; Guarantor's rights of subrogation are, however, subordinate
to the rights, claims, liens and security interests of the Lenders with
respect to the Liabilities;
(j) Payments Rescinded. Any payment by Borrower to the Lenders
is held to constitute a preference under the bankruptcy laws, or for any
reason the Lenders are required to refund such payment or pay such
amount to Borrower or someone else; or
(k) Other Actions Taken or Omitted. Any other action taken or
omitted to be taken with respect to the Credit Agreement, the
Liabilities, or the security and collateral therefor, whether or not
such action or omission prejudices Guarantor or increases the likelihood
that Guarantor will be required to pay the Liabilities pursuant to the
terms hereof; it being the unambiguous and unequivocal intention of
Guarantor that Guarantor shall be obligated to pay the Liabilities when
due, notwithstanding any occurrence, circumstance, event, action, or
omission whatsoever, whether contemplated or uncontemplated, and whether
or not otherwise or particularly described herein, except for the full
and final payment and satisfaction of the Liabilities.
ARTICLE 3
Representations and Warranties
Section 3.1 By Guarantor. In order to induce the Agent to accept this
Guaranty Agreement, Guarantor represents and warrants to the Agent (which
representations and warranties will survive the creation of the Liabilities and
any extension of credit thereunder) that:
(a) Benefit to Guarantor. Guarantor's guaranty pursuant to this
Guaranty Agreement reasonably may be expected to benefit, directly or
indirectly, Guarantor.
(b) Solvency. The Guarantor hereby represents that (i) it is
not insolvent as of the date hereof and will not be rendered insolvent
as a result of this Guaranty Agreement, (ii) it is not engaged in
business or a transaction, or about to engage in a business or a
transaction, for which any property or assets remaining with such
Guarantor is unreasonably small capital, and (iii) it does not intend to
incur, or believe it will incur, debts that will be beyond its ability
to pay as such debts mature.
Section 3.2 No Representation by Agent. Neither the Agent nor any other
Person has made any representation, warranty or statement to the Guarantor in
order to induce the Guarantor to execute this Guaranty Agreement.
-6-
<PAGE> 7
EXHIBIT 1.3
ARTICLE 4
Subordination of Indebtedness
Section 4.1 Subordination of All Guarantor Claims. As used herein, the
term "GUARANTOR CLAIMS" shall mean all debts and liabilities of Borrower to
Guarantor, whether such debts and liabilities now exist or are hereafter
incurred or arise, or whether the obligation of Borrower thereon be direct,
contingent, primary, secondary, several, joint and several, or otherwise, and
irrespective of whether such debts or liabilities be evidenced by note,
contract, open account, or otherwise, and irrespective of the person or persons
in whose favor such debts or liabilities may, at their inception, have been, or
may hereafter be created, or the manner in which they have been or may hereafter
be acquired by Guarantor. The Guarantor Claims shall include without limitation
all rights and claims of Guarantor against Borrower arising as a result of
subrogation or otherwise as a result of Guarantor's payment of all or a portion
of the Liabilities.
Section 4.2 Claims in Bankruptcy. In the event of receivership,
bankruptcy, reorganization, arrangement, debtor's relief, or other insolvency
proceedings involving Borrower as debtor, the Agent shall have the right to
prove the Lenders' claim in any proceeding, so as to establish the Agent's
rights hereunder and receive directly from the receiver, trustee or other court
custodian, dividends and payments which would otherwise be payable upon
Guarantor Claims. Guarantor hereby assigns such dividends and payments to the
Agent until the payment in full of the Liabilities. Should the Lenders receive,
for application upon the Liabilities, any such dividend or payment which is
otherwise payable to Guarantor, and which, as between Borrower and Guarantor,
shall constitute a credit upon the Guarantor Claims, then upon payment in full
of the Liabilities, Guarantor shall become subrogated to the rights of the
Lenders to the extent that such payments to the Lenders on the Guarantor Claims
have contributed toward the liquidation of the Liabilities, and such subrogation
shall be with respect to that proportion of the Liabilities which would have
been unpaid if the Lenders had not received dividends or payments upon the
Guarantor Claims.
Section 4.3 Payments Held in Trust. In the event that notwithstanding
Sections 4.1 and 4.2 above, Guarantor should receive any funds, payments, claims
or distributions which is prohibited by such Sections, Guarantor agrees to hold
in trust for the Agent an amount equal to the amount of all funds, payments,
claims or distributions so received, and agrees that it shall have absolutely no
dominion over the amount of such funds, payments, claims or distributions except
to pay them promptly to the Agent, and Guarantor covenants promptly to pay the
same to Agent.
Section 4.4 Liens Subordinate. Guarantor agrees that any liens,
security interests, judgment liens, charges or other encumbrances upon
Borrower's assets securing payment of the Guarantor Claims shall be and remain
inferior and subordinate to any liens, security interests, judgment liens,
charges or other encumbrances upon Borrower's assets securing payment of the
Liabilities, regardless of whether such encumbrances in favor of Guarantor or
the Agent presently exist or are hereafter created or attach. Without the prior
written consent of the
-7-
<PAGE> 8
EXHIBIT 1.3
Agent, Guarantor shall not (a) exercise or enforce any creditor's right it may
have against the Borrower, or (b) foreclose, repossess, sequester or otherwise
take steps or institute any action or proceeding (judicial or otherwise,
including without limitation the commencement of or joinder in any liquidation,
bankruptcy, rearrangement, debtor's relief or insolvency proceeding) to enforce
any lien, mortgages, deeds of trust, security interest, collateral rights,
judgments or other encumbrances on assets of Borrower held by Guarantor;
provided, however, that Guarantor may (in its capacity as shareholder of
Borrower) direct that Borrower commence or join in any liquidation, bankruptcy,
rearrangement, debtor's relief or insolvency proceeding.
Section 4.5 Notation of Records. All promissory notes, accounts
receivable ledgers or other evidence of the Guarantor Claims accepted by or held
by Guarantor shall contain a specific written notice thereon that the
indebtedness evidenced thereby is subordinated under the terms of this Guaranty
Agreement.
ARTICLE 5
Miscellaneous
Section 5.1 Successors and Assigns. This Guaranty Agreement is and shall
be in every particular available to the successors and assigns of the Agent and
is and shall always be fully binding upon the successors and assigns of
Guarantor, notwithstanding that some or all of the monies, the repayment of
which this Guaranty Agreement applies, may be actually advanced after any
bankruptcy, receivership, reorganization or other event affecting Guarantor.
Section 5.2 Notices. Any notice or demand to Guarantor under or in
connection with this Guaranty Agreement may be given and shall conclusively be
deemed and considered to have been given and received in accordance with Section
12.02 of the Credit Agreement, addressed to Guarantor at the address on the
signature page hereof or at such other address as Guarantor may provide to the
Agent in writing.
Section 5.3 Business and Financial Information. The Guarantor will
promptly furnish to the Agent from time to time upon request such information
regarding the business and affairs and financial condition of the Guarantor and
its subsidiaries as the Agent may reasonably request.
Section 5.4 Construction. This Guaranty Agreement is a contract made
under and shall be construed in accordance with and governed by the laws of the
State of Texas.
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<PAGE> 9
EXHIBIT 1.3
WITNESS THE EXECUTION HEREOF, as of the 19th day of May, 1995.
GLOBAL NATURAL RESOURCES, INC.
By:/s/ Eric Lynn Hill
-----------------------------------
Name:
Title:
Address for Notices:
5300 Memorial, Suite 800
Houston, Texas 77007-8295
Telecopier No.: (713) 865-4386
Telephone No.: (713) 880-5464
Attention: Chief Financial Officer
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