SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Commission
Date of Report (Date of earliest event reported)
December 18, 1997
HOWELL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 1-8704 74-1223027
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
1111 Fannin, Suite 1500, Houston, Texas 77002
(Address of principal office) (Zip Code)
Registrant's telephone number, including area code: (713) 658-4000
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On December 18, 1997, Howell Petroleum Corporation (the "Buyer"), a
wholly owned subsidiary of Howell Corporation (the "Company"), completed the
acquisition of a group of producing oil and natural gas properties located in
Wyoming, Montana, Colorado and North Dakota from Amoco Production Company
("Amoco") for approximately $115.4 million in cash (the "Acquisition"). The
effective date of the Acquisition was December 1, 1997.
The properties acquired in the Acquisition consist of interests in
2,324 gross oil and natural gas wells covering approximately 26,000 gross
acres. The Company estimates that total net proved reserves attributable to
the acquired interests as of December 1, 1997 were approximately 34.2 million
barrels of oil and natural gas liquids and 25.9 billion cubic feet of natural
gas, or a total of approximately 38.5 million barrels of oil equivalent. As
of December 1, 1997, daily net production from the acquired properties was
approximately 7,650 barrels of oil and natural gas liquids and 4 million
cubic feet of natural gas.
The Acquisition was consummated pursuant to the terms of a Purchase and
Sale Agreement dated November 20, 1997 (the "Purchase Agreement") between
Amoco and the Buyer. Under the terms of the Purchase Agreement, the purchase
price is subject to certain customary post-closing adjustments. The Purchase
Agreement also provides for adjustment of the purchase price for material
title defects raised by the Buyer within 90 days after closing and for
environmental or physical conditions that are in violation of law raised by
the Buyer within 270 days after closing if the cost to cure the defect or
condition exceeds $75,000 and the cost to cure all title defects or all
environmental or physical conditions exceeds three percent of the purchase
price in the aggregate.
Under the terms of the Purchase Agreement, Amoco will indemnify the
Buyer for non-environmental third party claims relating to the period of time
prior to closing that are identified within eighteen months after closing if
the claims exceed three percent of the purchase price in the aggregate.
Amoco also will indemnify the Buyer for environmental third party claims
relating to the period of time prior to closing that are identified within
twelve months after closing if the claims exceed three percent of the
purchase price in the aggregate but in no event to exceed 50% of the purchase
price. The Buyer is obligated to indemnify Amoco for all third party claims
other than those for which Amoco is obligated to indemnify the Buyer
regardless of whether the claims relate to periods of time prior to or after
the closing. The obligations of the Buyer under the Purchase Agreement are
guaranteed by the Company.
Under the terms of the Purchase Agreement, Amoco has a call on certain
oil production from the properties acquired in the Acquisition. Beginning
March 1, 1998, for a fifteen year period Amoco has a call, if exercised, on
4,000 barrels per day of sweet crude oil production net to the Company's
interest from the acquired Salt Creek field at a price per barrel equal to
the average of three postings chosen by the Buyer from an approved group plus
$1.50; provided however, the maximum price paid shall not exceed Platt's
Wyoming Sweet Monthly Average and the minimum price paid shall not be less
than Platt's Wyoming Sweet Monthly Average minus $1.00. Beginning March 1,
1998, for a seven year period Amoco has a call on 2,000 barrels per day of
sour crude oil production net to the Company's interest from the acquired Elk
Basin field and all of the sour crude oil production from the acquired Grass
Creek and Pitchfork fields at a price per barrel equal to the average of
three postings chosen by the Buyer from an approved group plus $0.25;
provided, however, the maximum price paid shall not exceed Platt's Wyoming
Sweet Monthly Average minus $2.75 and the minimum price paid shall not be
less than Platt's Wyoming Sweet Monthly Average minus $4.75. All crude oil
pricing is subject to gravity adjustment.
In the Purchase Agreement, the Company also agreed to purchase Amoco's
oil and natural gas properties in the Beaver Creek unit in the Wind River
Basin of Wyoming (the "Beaver Creek Unit") for approximately $187 million.
Completion of the acquisition of the Beaver Creek Unit is subject to the
satisfactory resolution of litigation relating to an alleged preferential
purchase right, and the Company is unable to predict at this time whether or
when its purchase of the Beaver Creek Unit will occur.
The Company financed the Acquisition with funds drawn under a new
credit facility with Bank of Montreal (the "Credit Facility"), which replaced
the Company's prior facility. The Company expects to recapitalize a portion
of this debt in 1998.
The Credit Facility comprises two tranches. Tranche A is a five-year
revolving credit facility with a maximum credit amount, subject to
semi-annual borrowing base redeterminations based on the Company's oil and
natural gas properties, of $130 million. The Company is required to pay
commitment fees on the unused portion of Tranche A at a rate of .25% per
annum, if 50% or less of the borrowing base is unused, or .30% per annum, if
more than 50% of the borrowing base is unused. Available credit under
Tranche A may also be used for letters of credit on the Company's behalf.
Tranche B is a one-year term loan facility providing for one $20 million
advance to finance the Acquisition.
Outstanding amounts under the Credit Facility bear interest, at the
Company's option, at either (i) the higher of the federal funds rate plus .5%
or Bank of Montreal's prime rate, plus, in either case, the applicable margin
(the "Applicable Margin") provided for in the credit agreement relating to
the Credit Facility (the "Credit Agreement") or (ii) LIBOR plus the
Applicable Margin.
The Credit Facility is unsecured. The Credit Agreement contains
customary affirmative and negative covenants, including limitations on the
ability of the Company to incur additional debt, sell assets, merge or
consolidate with other persons or pay dividends on its capital stock in
excess of historical levels and a prohibition on change of control or
management, as well as a covenant to raise at least $50 million in equity or
subordinated debt by December 15, 1998. In addition, the Credit Agreement
requires the Company to maintain a ratio of current assets plus Tranche A
borrowing capacity to current liabilities of at least 1.0 to 1.0 and an
interest coverage ratio of not less than 2.0 to 1.0 until the end of 1998 and
2.5 to 1.0 thereafter.
The Credit Facility also provides the Company with additional borrowing
capacity solely for the purpose of financing the acquisition of the Beaver
Creek Unit if such acquisition is consummated. If the acquisition of the
Beaver Creek Unit occurs on or before December 16, 1998, the additional
capacity comprises $85 million under Tranche A of the Credit Facility and $85
million under Tranche B (subject to certain reductions based upon previously
raised subordinated capital). Funding of the additional borrowing capacity
is subject to the satisfaction of certain customary conditions, including
that no Material Adverse Effect shall have occurred. The Credit Agreement
also contains certain additional provisions that will apply only if the
acquisition of the Beaver Creek Unit occurs. These provisions include a
change in the convenant described above so that the Company must raise in
total at least $175 million in equity or subordinated long-term debt,
including at least $75 million of equity, by December 15, 1998. In addition,
if this minimum capital is not raised within six months after the
consummation of the acquisition of the Beaver Creek Unit, the Credit Facility
will become secured by the Company's oil and natural gas properties.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired.
Pursuant to item 7(a)(4), the financial statements required by
this item are not included in this Form 8-K and will be filed by
amendment within 60 days of the date that this Form 8-K is
required to be filed.
(b) Pro forma financial information.
Pursuant to item 7(a)(4) and 7(b)(2), the pro forma financial
statements required by this item are not included in this Form
8-K and will be filed by amendment within 60 days of the date
that this Form 8-K is required to be filed.
(c) Exhibits.
2 Purchase and Sale Agreement dated November 20, 1997 between
Howell Petroleum Corporation and Amoco Production Company
99.1 Credit Agreement dated December 17, 1997 between Howell
Petroleum Corporation and Bank of Montreal
99.2 Guaranty Agreement dated December 17, 1997 between Howell
Corporation and Bank of Montreal
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HOWELL CORPORATION
Date: January 2, 1998 By: /s/ ROBERT T. MOFFETT
Robert T. Moffett
Vice President
EXHIBIT 2
PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
AMOCO PRODUCTION COMPANY, SELLER
AND
HOWELL PETROLEUM CORPORATION, BUYER
INDEX
Article 1. DEFINITIONS........................................... 1
Article 2. SALE AND PURCHASE
2.1 Sale and Purchase..................................... 9
Article 3. PURCHASE PRICE, DEPOSIT AND PREFERENTIAL RIGHTS
3.1 Purchase Price........................................ 9
3.2 Deposit............................................... 9
3.3 Preferential Rights To Purchase....................... 10
Article 4. TITLE REVIEW
4.1 Review of Title Records............................... 10
4.2 Alleged Title Defects................................. 10
4.3 Waiver ............................................... 11
Article 5. INSPECTION OF PREMISES
5.1 Inspection of Premises................................ 11
5.2 Alleged Adverse Conditions............................ 11
5.3 Waiver ............................................... 12
Article 6. ACCOUNTING
6.1 Revenues, Expenses and Capital Expenditures........... 13
6.2 Taxes................................................. 13
6.3 Obligations and Credits............................... 14
6.4 Miscellaneous Accounting.............................. 14
6.5 Final Accounting Settlement........................... 14
6.6 Post-Final Accounting Settlement...................... 14
Article 7. LOSS, CASUALTY AND CONDEMNATION
7.1 Notice of Loss........................................ 15
7.2 Casualty and Condemnation............................. 15
Article 8. ALLOCATION OF RESPONSIBILITIES AND INDEMNITIES
8.1 Opportunity for Review................................ 15
8.2 Seller's Non-Environmental Indemnity Obligation....... 15
8.3 Seller's Environmental Indemnity Obligation........... 16
8.4 Buyer's Non-Environmental Indemnity Obligation........ 17
8.5 Buyer's Environmental Indemnity Obligation............ 17
8.6 Asbestos and NORM..................................... 18
8.7 Buyer's Assumption of Obligations..................... 18
8.8 Process Safety Management............................. 18
8.9 Notice of Claims...................................... 19
8.10 Defense of Claims..................................... 19
8.11 Waiver of Certain Damages............................. 20
8.12 Limitation on Indemnities............................. 20
Article 9. SPECIAL WARRANTY AND DISCLAIMERS
9.1 Special Warranty of Title............................. 20
9.2 Disclaimer - Representations and Warranties........... 20
9.3 Disclaimer - Statements and Information............... 21
Article 10. SELLER'S REPRESENTATIONS AND WARRANTIES
10.1 Organization and Good Standing........................ 21
10.2 Corporate Authority; Authorization of Agreement....... 21
10.3 No Violations......................................... 22
10.4 Absence of Certain Changes............................ 22
10.5 Operating Costs....................................... 23
10.6 Litigation............................................ 23
10.7 Bankruptcy............................................ 23
Article 11. BUYER'S REPRESENTATIONS AND WARRANTIES
11.1 Organization and Good Standing........................ 23
11.2 Corporate Authority; Authorization of Agreement....... 23
11.3 No Violations......................................... 24
11.4 SEC Disclosure........................................ 24
11.5 Independent Evaluation................................ 24
11.6 Buyer's Reliance...................................... 25
Article 12. ADDITIONAL COVENANTS AND CONSIDERATIONS
12.1 Subsequent Operations................................. 25
12.2 Financial Assurances.................................. 25
12.3 Transition Agreement.................................. 25
12.4 License Agreement(s).................................. 25
12.5 Sublease Novation Agreement........................... 25
12.6 Crude Call............................................ 25
12.7 NGL Call.............................................. 27
12.8 Rights-Of-Way and Surface Leases...................... 27
12.9 APL\Salt Creek Electrical Service .................... 28
Article 13. PERSONNEL MATTERS
13.1 Employee Lists........................................ 28
13.2 Offer of Employment................................... 28
13.3 Pension Plans......................................... 29
13.4 Thrift Plan and Stock Purchase........................ 29
13.5 Other Employee Benefits............................... 30
13.6 Accrued and Unused Vacation........................... 30
13.7 Severance............................................. 30
13.8 Post Transition Date Benefits......................... 31
13.9 WARN Act.............................................. 31
Article 14. HSR FILINGS
14.1 HSR Filings........................................... 31
Article 15. CONDITIONS PRECEDENT TO CLOSING
15.1 Conditions Precedent to Seller's Obligation to Close.. 32
15.2 Conditions Precedent to Buyer's Obligation to Close... 32
15.3 Conditions Precedent to Obligation of Each Party to
Close................................................. 32
Article 16. THE CLOSING
16.1 Closing............................................... 33
16.2 Obligations of Seller at Closing...................... 33
16.3 Obligations of Buyer at Closing....................... 35
Article 17. TERMINATION
17.1 Grounds for Termination............................... 36
17.2 Effect of Termination................................. 36
17.3 Dispute over Right to Terminate....................... 36
17.4 Return of Documents................................... 37
17.5 Confidentiality....................................... 37
Article 18. ARBITRATION
18.1 Arbitration........................................... 37
Article 19. MISCELLANEOUS
19.1 Notices............................................... 38
19.2 Conveyance Costs...................................... 39
19.3 Brokers' Fees......................................... 39
19.4 Records............................................... 39
19.5 Further Assurances.................................... 40
19.6 Survival of Representations and Warranties............ 40
19.7 Amendments and Severability........................... 40
19.8 Successors and Assigns................................ 40
19.9 Headings.............................................. 41
19.10 Governing Law......................................... 41
19.11 No Partnership Created................................ 41
19.12 Public Announcements.................................. 41
19.13 No Third Party Beneficiaries.......................... 41
19.14 Waiver of Consumer Rights............................. 41
19.15 Not to be Construed Against Drafter................... 41
19.16 Tax Deferred Exchange Election........................ 42
19.17 Conspicuousness of Provisions......................... 42
19.18 Execution in Counterparts............................. 42
19.19 Entire Agreement...................................... 42
<PAGE>
EXHIBITS
EXHIBIT "A" - WORKING INTERESTS AND NET REVENUE INTERESTS
EXHIBIT "B" - PREFERENTIAL PURCHASE AND DEFECT ALLOCATION
EXHIBIT "C" - MATERIAL CONTRACTS
EXHIBIT "D" - GAS IMBALANCES
EXHIBIT "E" - PARTNERSHIPS
EXHIBIT "F" - EXCLUDED PROPERTIES - AFFILIATES
EXHIBIT "F-1" -EXCLUDED PROPERTIES - OTHER
EXHIBIT "G" - CLAIMS, DISPUTES AND LITIGATION
EXHIBIT "H" - ASSIGNMENT AND BILL OF SALE
EXHIBIT "I" - SURFACE DEED
EXHIBIT "J" - MINERAL DEED
EXHIBIT "K" - CERTIFICATE
EXHIBIT "L" - LETTERS-IN-LIEU
EXHIBIT "M" - OPINION OF COUNSEL
EXHIBIT "N" - NON-FOREIGN AFFIDAVIT
EXHIBIT "O" - TRANSITION AGREEMENT
EXHIBIT "P" - LICENSE AGREEMENT
EXHIBIT "Q" - SUBLEASE NOVATION AGREEMENT
EXHIBIT "R" - GUARANTEE AGREEMENT
EXHIBIT "S" - CRUDE CALL TERMS
<PAGE>
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is dated the 20th day
of November, 1997, by and between AMOCO PRODUCTION COMPANY, a Delaware
corporation, with an office at 501 WestLake Park Boulevard, Houston, Texas
77079 (hereinafter referred to as "Seller") and Howell Petroleum
Corporation, a Delaware corporation, with an office at 1111 Fannin, Suite
1500, Houston, Texas 77002-6923 (hereinafter referred to as "Buyer"), and is
based on the following premises:
WHEREAS, Seller desires to sell, assign and convey to Buyer and Buyer
desires to purchase and accept certain oil and gas properties and related
interests; and
WHEREAS, the parties have reached agreement regarding such sale and
purchase.
NOW, THEREFORE, for valuable consideration and the mutual covenants and
agreements herein contained, Seller and Buyer agree as follows:
ARTICLE 1. DEFINITIONS
1. Definitions: In this Agreement, capitalized terms have the meanings
provided in this Article, unless expressly provided otherwise in other
Articles. All defined terms include both the singular and the plural. All
references to Articles refer to Articles in this Agreement, and all
references to Exhibits refer to Exhibits attached to and made a part of this
Agreement.
1.1 "Accounting Referee" has the meaning set forth in Article 6.5.
1.2 "Affiliate" means any entity that, directly or indirectly, through
one or more intermediaries, controls or is controlled by or is under common
control with the entity specified. Control means ownership of fifty percent
(50%) or greater of the voting stock of such entity.
1.3 "Alleged Adverse Condition" means an environmental or physical
condition asserted by Buyer in accordance with Article 5.2 that, as of
Closing (as hereinafter defined), is not in compliance with the then
existing Laws (as hereinafter defined), and the costs associated with
remediating such individual Alleged Adverse Condition exceeds Seventy-Five
Thousand and No/100 United States Dollars (US $75,000) net to Seller's
interests. Notwithstanding anything contained in this Agreement to the
contrary, Buyer shall not be entitled to raise an Alleged Adverse Condition
unless the aggregate cost associated with remediating all such Alleged
Adverse Condition(s) exceeds three percent (3%) of the unadjusted Purchase
Price (as hereinafter defined) (it being acknowledged and agreed that Buyer
shall be solely responsible for any and all Alleged Adverse Condition(s) up
to three (3%) percent of the unadjusted Purchase Price).
1.4 "Alleged Title Defect" means a Title Defect (as hereinafter
defined) which is asserted by Buyer in accordance with Article 4.2, and the
costs associated with curing such individual Alleged Title Defect exceeds
Seventy-Five Thousand and No/100 United States Dollars (US $75,000) net to
Seller's interests. Notwithstanding anything contained in this Agreement to
the contrary, Buyer shall not be entitled to raise an Alleged Title Defect
unless the aggregate cost associated with curing all such Alleged Title
Defect(s) exceeds three percent (3%) of the unadjusted Purchase Price (it
being acknowledged and agreed that Buyer shall be solely responsible for any
and all Alleged Title Defect(s) up to three (3%) percent of the unadjusted
Purchase Price).
1.5 "Amoco Retirement Plan" has the meaning set forth in Article 13.3.
1.6 "Amoco Savings Plan" has the meaning set forth in Article 13.8.
1.7 "Amoco Severance Plan" has the meaning set forth in Article 13.7.
1.8 "Arbitrable Dispute" has the meaning set forth in Article 18.1.
1.9 "Assignment and Bill of Sale" means a document in the form of
Exhibit "H".
1.10 "Business Day" means a Day (as hereinafter defined) excluding
Saturdays, Sundays and U.S. legal holidays.
1.11 "Buyer Thrift and Stock Purchase Plans" has the meaning set forth
in Article 13.4.
1.12 "Buyer Group" has the meaning set forth in Article 8.2.
1.13 "Buyer SEP Plan" has the meaning set forth in Article 13.3.
1.14 "Casualty Loss" means any loss, damage or reduction in value of
the Properties which occurs prior to Closing resulting from mechanical
failure or defects, catastrophic occurrences, acts of God or any other losses
which are not the result of normal wear and tear or of natural reservoir
changes.
1.15 "Certificate" means a document in the form of Exhibit "K".
1.16 "Claim" means any and all claims, demands, suits, causes of action,
losses, damages, liabilities, fines, penalties and costs (including
attorneys' fees and costs of litigation) which have (or are alleged to have)
occurred and are alleged by or owed to a Third Party (as hereinafter
defined).
1.17 "Claimant" has the meaning set forth in Article 18.1.
1.18 "Claim Notice" has the meaning set forth in Article 8.9.
1.19 "Close" or "Closing" means the consummation of the transfer of
title to the Properties (as hereinafter defined) to Buyer, including
execution and delivery of all documents provided for in this Agreement.
1.20 "Closing Date" means December 15, 1997.
1.21 "Computed Interest" means simple interest of ten percent (10%) per
annum using a three hundred sixty-five (365) Day year.
1.22 "Confidentiality Agreement" has the meaning set forth in Article
17.5.
1.23 "Day" means a calendar day consisting of twenty-four (24) hours
from midnight to midnight.
1.24 "Defensible Title" means, as to the Properties, such title held by
Seller as of Closing that, except for the Permitted Encumbrances (as
hereinafter defined):
1.24.1 Entitles Seller as of Closing to receive not less than the
"Net Revenue Interests" set forth in Exhibit "A" of all oil, gas and
associated liquid and gaseous hydrocarbons and non-hydrocarbons produced,
saved and marketed from the Properties; and
1.24.2 Obligates Seller as of Closing to bear costs and expenses
relating to the ownership, operation, maintenance and repair of the
Properties in an amount not greater than the "Working Interests" set
forth in Exhibit "A", unless there is a corresponding increase in the Net
Revenue Interests.
1.25 "Deposit" has the meaning set forth in Article 3.2.
1.26 "Directly Engaged Employees" has the meaning set forth in Article
13.1.
1.27 "Effective Time" means December 1, 1997, at 7:00 a.m., local time
where the Properties are located.
1.28 "Environmental Claims" means all Claims which are based on breach
of Environmental Laws (as hereinafter defined).
1.29 "Environmental Laws" means any and all Laws that relate to: (a)
the prevention of pollution or environmental damage, (b) the remediation of
pollution or environmental damage, and/or (c) the protection of the
environment generally; including without limitation, the Clean Air Act, as
amended, the Clean Water Act, as amended, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, the Federal
Water Pollution Control Act, as amended, the Resource Conservation and
Recovery Act of 1976, as amended, the Safe Drinking Water Act, as amended,
the Toxic Substance and Control Act, as amended, the Superfund Amendments and
Reauthorization Act of 1986, as amended, the Hazardous and the Solid Waste
Amendments Act of 1984, as amended, and the Oil Pollution Act of 1990, as
amended.
1.30 "Final Accounting Settlement" has the meaning set forth in Article
6.5.
1.31 "Final Settlement Date" has the meaning set forth in Article 6.5.
1.32 "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
1.33 "Laws" means laws, statutes, ordinances, permits, decrees, orders,
judgments, rules or regulations (including without limitation Environmental
Laws) which are promulgated, issued or enacted by a governmental entity or
tribal authority having appropriate jurisdiction.
1.34 "Letters-in-Lieu" means a document in the form of Exhibit "L".
1.35 "License Agreement - SAMS" means a document in the form of Exhibit
"P", and "License Agreement - Seismic" means the document referred to in
Article 12.4.
1.36 "Mineral Deed" means a document in the form of Exhibit "J".
1.37 "Non-Environmental Claims" means all Claims, except Environmental
Claims.
1.38 "Non-Foreign Affidavit" means a document in the form of Exhibit "N".
1.39 "NORM" means naturally occurring radioactive materials.
1.40 "Opinion of Counsel" means a document in the form of Exhibit "M".
1.41 "Permitted Encumbrances" means:
1.41.1 Royalties, overriding royalties, production payments,
reversionary interests, convertible interests, net profits interests,
division orders and similar burdens encumbering the Properties to the
extent the net cumulative effect of such burdens do not, as of Closing,
operate to reduce the Net Revenue Interests of the Properties to less
than the Net Revenue Interests set forth in Exhibit "A";
1.41.2 Consents to assignment and similar contractual provisions
encumbering the Properties to which, prior to Closing, waivers or
consents are obtained from the appropriate parties;
1.41.3 Preferential rights to purchase encumbering any one (1) or
more of the Properties to which, prior to Closing: (a) waivers are
obtained from the appropriate parties, or (b) the time period for
exercising said right has elapsed.
1.41.4 All rights to consent by, required notices to, filings with
or other actions by a governmental entity or tribal authority in
connection with the sale or conveyance of the Properties, if the same
are customarily obtained subsequent to the transfer of title;
1.41.5 Rights reserved to or vested in a governmental entity or
tribal authority having appropriate jurisdiction to control or regulate
the Properties in any manner whatsoever, and all Laws of any such
governmental entity or tribal authority;
1.41.6 Easements, rights-of-way, servitudes, surface leases,
sub-surface leases, grazing rights, logging rights, canals, ditches,
reservoirs, pipelines, utility lines, telephone lines, power lines,
railways, streets, roads, highways and structures on, over and through
the Properties, to the extent such rights, interests or structures do
not materially interfere with the operation of the Properties;
1.41.7 The terms and conditions of all leases, units, agreements,
contracts, instruments, licenses and permits associated with,
attributable to or encumbering the Properties which have been filed with
the appropriate governmental entity or tribal authority, placed of
record in the appropriate County records or otherwise disclosed by
Seller to Buyer;
1.41.8 Liens for taxes or assessments not yet due or not yet
delinquent or, if delinquent, that are being contested by Seller in good
faith in the normal course of business;
1.41.9 Liens of operators relating to obligations not yet due or
not yet delinquent or, if delinquent, that are being contested by Seller
in good faith in the normal course of business;
1.41.10 Alleged Title Defect(s) which do not meet the individual or
aggregate threshold amounts set forth in Article 1.4 or which Buyer has
waived under Article 4.3;
1.41.11 Alleged Adverse Condition(s) which do not meet the
individual or aggregate threshold amounts set forth in Article 1.3 or
which Buyer has waived under Article 5.3;
1.41.12 Gas imbalances associated with the Properties;
1.41.13 Suspense funds associated with the Properties; and
1.41.14 Such defects or irregularities in the title to the
Properties that do not materially interfere with the operation, value or
use of the Properties affected thereby and that would be considered not
material when applying general industry standards.
1.42 "Personnel" has the meaning set forth in Article 13.1.
1.43 "Process Safety Management" has the meaning set forth in Article
8.8.
1.44 "Property" or "Properties" means Seller's ownership interests in the
properties (real, personal or mixed) and appurtenant rights (contractual or
otherwise) as follows:
1.44.1 All of Seller's right, title and interests in, to and
under, or derived from, the oil and gas leasehold interests, royalty
interests, overriding royalty interests, mineral interests, production
payments, net profits interests, surface interests and water rights
which are attributable to the interests described in Exhibit "A";
1.44.2 All of Seller's right, title and interests in, to and
under, or derived from, all of the presently existing and valid
unitization, communization and pooling declarations, orders, and
agreements (including all units formed by voluntary agreement and those
formed under the rules, regulations, orders or other official acts of
any governmental entity or tribal authority having appropriate
jurisdiction) to the extent they relate to any of the interests which
are described in Exhibit "A", or the production of oil, gas or other
hydrocarbon and non-hydrocarbon substances attributable thereto;
1.44.3 All of Seller's right, title and interests in, to and
under, or derived from, all of the presently existing and valid oil
sales contracts, casinghead gas sales contracts, gas sales contracts,
processing contracts, gathering contracts, transportation contracts,
easements, rights-of-way, servitudes, surface leases, subsurface leases,
permits, licenses, farm-out contracts, farm-in contracts, balancing
contracts (including but not limited to the gas imbalances described in
Exhibit "D"), suspense funds, operating agreements, areas of mutual
interest, and other contracts, agreements and instruments (including but
not limited to the material contracts described in Exhibit "C") to the
extent they relate to any of the interests which are described in
Exhibit "A", or the production of oil, gas or other hydrocarbon and
non-hydrocarbon substances attributable thereto;
1.44.4 All of Seller's right, title and interests in, to and
under, or derived from, the personal property, improvements, fixtures,
wells (whether producing, plugged and abandoned, shut-in, injection,
disposal or water supply), tanks, boilers, buildings, machinery,
vehicles, equipment, pipelines, utility lines, power lines, telephone
lines, roads and other appurtenances, to the extent the same are
situated upon and used or held for use by Seller solely in connection
with the ownership, operation, maintenance or repair of the interests
which are described in Exhibit "A", or the production of oil, gas or
other hydrocarbon and non-hydrocarbon substances attributable thereto;
1.44.5 All of Seller's right, title and interests in, to and
under, or derived from, the seismic, geologic or geophysical information
and data (including seismic data associated with the Grass Creek and
Pitchfork properties) to the extent the same relates to any of the
interests which are described in Exhibit "A", or the production of oil,
gas or hydrocarbon and non-hydrocarbon substances attributable thereto;
and
1.44.6 All of Seller's right, title and interests in, to and
under, or derived from, the partnerships (tax or otherwise) described in
Exhibit "E".
SELLER EXCEPTS, RESERVES AND RETAINS, unto itself, its Affiliates,
successors and assigns from the Properties the following properties (real,
personal or mixed) and appurtenant rights (contractual or otherwise):
(a) Any and all seismic, geologic or geophysical information and data
that are: (i) prepared internally by Seller and interpretive in nature, (ii)
covered an obligation of non-disclosure (provided however, Seller shall use
reasonable efforts to obtain authority to disclose said information and
data), (iii) covered by an obligation of confidentiality (provided however,
Seller shall use reasonable efforts to obtain authority to disclose said
information and data), (iv) covered by a prohibition against transfer
(provided however, Seller shall use reasonable efforts to obtain authority to
transfer said information and data), (v) covers (in whole or in part)
retained assets of Seller (provided however, Seller shall allow Buyer
reasonable access to said information and data in a form redacting the
information and data covering the retained assets);
(b) Any and all pipelines, equipment, facilities, permits, contracts,
agreements, easements, rights-of-way, surface leases and subsurface leases
owned by an Affiliate of Seller, including without limitation, the properties
(real, personal and mixed) and appurtenant rights (contractual or otherwise)
described in Exhibit "F",
(c) Any and all records which consist of previous offers and economic
analyses associated with the purchase, sale or exchange of the Properties,
reserve data, confidential internal communications, personnel information,
tax information, information covered by a non-disclosure obligation and
information covered by a legal privilege;
(d) The properties (real, personal and mixed) and appurtenant rights
(contractual or otherwise) described in Exhibit "F-1";
(e) A concurrent interest in, to and under, or derived from, the
contracts, agreements, instruments, permits, easements, rights-of-way,
servitudes, surface leases, subsurface leases and any other rights
(contractual or otherwise) to the extent that they relate to or affect the
interests not conveyed herein; and
(f) Any and all RTU's, except Buyer shall be entitled to fifty (50)
RTU's of its choice at the Salt Creek Unit.
1.45 "Purchase Price" has the meaning set forth in Article 3.1.
1.46 "Records" means all of Seller's books, records and files related to
the Properties; provided however, the term Records shall not include (and
Seller shall have no obligation to deliver to Buyer) previous offers and
economic analyses associated with the purchase, sale or exchange of the
Properties, reserve data, confidential internal communications, personnel
information, tax information, information covered by a non-disclosure
obligation and information covered by a legal privilege.
1.47 "Respondent" has the meaning set forth in Article 18.1.
1.48 "Seller Group" has the meaning set forth in Article 8.2.
1.49 "Sublease Novation Agreement" means a document in the form of
Exhibit "Q".
1.50 "Surface Deed" means a document in the form of Exhibit "I".
1.51 "Third Party" means any person or entity, governmental or
otherwise, other than Seller and Buyer.
1.52 "Title Defect" means any lien, encumbrance, encroachment or defect
associated with Seller's title to the Properties (excluding Permitted
Encumbrances) that would cause Seller, as of Closing, not to have Defensible
Title.
1.53 "Transition Agreement" means a document in the form of Exhibit "O".
1.54 "Transition Date" shall have the meaning set forth in Article 13.1.
1.55 "WARN Obligations" has the meaning set forth in Article 13.9.
ARTICLE 2. SALE AND PURCHASE
2.1 Sale and Purchase. On the Closing Date, effective as of the
Effective Time and upon the terms and conditions herein set forth, Seller
agrees to sell and assign the Properties to Buyer and Buyer agrees to buy and
accept the Properties.
ARTICLE 3. PURCHASE PRICE, DEPOSIT AND PREFERENTIAL RIGHTS
3.1 Purchase Price. The total purchase price, subject to adjustments as
set forth in this Agreement, paid to Seller by Buyer for the Properties shall
be Three Hundred Two Million Four Hundred Eighty-Five Thousand and No/100
United States Dollars (US $302,485,000) ("Purchase Price"), payable in full
at Closing in immediately available funds. If Closing does not occur on or
before the later of: (a) December 15, 1997, or (b) three (3) Days after the
time period for exercising all preferential rights to purchase encumbering
the Properties have elapsed; the Purchase Price shall be increased by the
Computed Interest from the Effective Time through Closing.
3.2 Deposit. Upon the execution of this Agreement, Buyer shall pay to
Seller a deposit in the amount of Twenty Million and No/100 United States
Dollars ($20,000,000) ("Deposit"). In the event of Closing, the Purchase
Price shall be credited by the amount of the Deposit (plus Computed Interest
on the Deposit from the date of receipt by Seller until Closing). If Closing
does not occur, the Deposit (plus Computed Interest on the Deposit from the
date of receipt by Seller until termination) will be refunded to Buyer,
unless Closing failed to occur as a result of Buyer's breach of this
Agreement (including without limitation Buyer's failure to comply with
Article 14.1) in which case Seller shall retain the Deposit plus all interest
thereon as liquidated damages and not as a penalty.
3.3 Preferential Rights To Purchase. Buyer's good faith allocation
of the Purchase Price as set forth in Exhibit "B" shall be used by Seller to
provide any required preferential purchase right notifications. If, prior to
Closing, a holder of a preferential purchase right notifies Seller that it
intends to exercise its rights with respect to a Property to which its
preferential purchase right applies (as determined in accordance with the
agreement in which the preferential purchase right arises), the Property
covered by said preferential purchase right shall be excluded from the
Properties to be conveyed to Buyer, and the Purchase Price shall be reduced
by the value allocated to said Property in Exhibit "B". Buyer acknowledges
and agrees that Seller shall determine (in is sole judgment) the extent of
the preferential purchase rights encumbering the Properties, and said
determination shall be used by Seller to provide the preferential purchase
right notifications. If the holder of the preferential purchase right fails
to consummate the purchase of the Property subject to the preferential
purchase right, Seller shall promptly notify Buyer. Within ten (10) Business
Days after Buyer's receipt of such notice or Closing, whichever is later,
Seller shall sell to Buyer, and Buyer shall purchase from Seller, such
Property under the terms of this Agreement for a price equal to the value
allocated to such Property in Exhibit "B". Notwithstanding the foregoing,
Buyer shall have no obligation under this Agreement or otherwise to purchase
the Property if Buyer is not notified of the preferential purchase right
holder's failure to consummate the purchase of the Property within ninety
(90) Days following Closing.
ARTICLE 4. TITLE REVIEW
4.1 Review of Title Records. Upon execution of this Agreement (and
prior to Closing), Seller shall make available to Buyer during reasonable
business hours Records in Seller's possession relating to the title to the
Properties. Buyer shall be entitled to review said title Records. Buyer
shall have the right to reasonably request copies of any and all such title
Records and upon such request, Seller shall provide the requested copies to
Buyer at Buyer's expense.
4.2 Alleged Title Defects. As soon as reasonably practicable (and on an
ongoing basis), but in no event later than ninety (90) Days after Closing,
Buyer shall notify Seller of any Properties which are subject to Alleged
Title Defect(s). Buyer's notice asserting Alleged Title Defect(s) shall
include a description and full explanation (including any and all supporting
documentation associated therewith) of each Alleged Title Defect being
claimed and a value which Buyer in good faith attributes to curing the same.
Seller, during said ninety (90) Day period, shall have the right to notify
Buyer of any increases in Net Revenue Interest or decreases in Working
Interest in the Properties and request a corresponding adjustment. Seller
shall not be entitled to an adjustment associated with any increases in Net
Revenue Interest or decreases in Working Interest unless the amount
associated with each such individual interest adjustment exceeds Seventy-Five
Thousand and No/100 United States Dollars (US $75,000) net to Seller's
interests and the amount associated with all such interest adjustments
exceeds three percent (3%) of the unadjusted Purchase Price. Buyer and
Seller shall meet from time to time as necessary in an attempt to mutually
agree on a proposed resolution with respect to the Alleged Title Defect(s)
raised by Buyer and increases in Net Revenue Interest or decreases in Working
Interest raised by Seller. The value allocated to each Property as set forth
on Exhibit "B" and the costs to cure such title defects shall be used by the
parties to determine the amount of any adjustment, if any, due to the
existence of an Alleged Title Defect. It is recognized that good faith
differences of opinion may exist between Buyer and Seller in connection with
the Alleged Title Defect(s) raised by Buyer and adjustments to the Net
Revenue Interests or Working Interests raised by Seller, including without
limitation, disputes as to: (a) whether or not the alleged defect constitutes
an Alleged Title Defect within the meaning of this Agreement, (b) whether or
not the magnitude of the alleged defect individually or in the aggregate
exceeds the threshold amounts set forth in Article 1.4, (c) whether or not
the Alleged Title Defect raised by Buyer was properly and timely asserted by
Buyer pursuant to this Article, and/or (d) the appropriate upward or downward
adjustment, if any, on account of a change in the Net Revenue Interest or
Working Interests from those set forth in Exhibit "A". If any such
differences of opinion are not resolved by mutual agreement of Buyer and
Seller, either party shall have the right, exercisable within one hundred
eighty (180) Days after Closing, to initiate binding arbitration in
accordance with Article 18.1, using arbitrators who are attorney(s) licensed
in the state where the Property at issue is located and who have at least ten
(10) years oil and gas title experience.
4.3 Waiver. Except for claims Buyer asserts under Seller's special
warranty of title contained Article 9.1, all title objections (including
without limitation Alleged Title Defect(s)) not raised or referred to binding
arbitration, as applicable, by Buyer within the time period provided in
Article 4.2 shall be waived by Buyer for all purposes, and Buyer shall have
no right to seek an adjustment to the Purchase Price, make a claim (in
accordance with Article 18.1 or otherwise) against Seller associated with the
same, and Buyer (on behalf of itself, its officers, agents, employees,
Affiliates, successors and assigns) irrevocably waives such claims.
ARTICLE 5. INSPECTION OF PREMISES
5.1 Inspection of Premises. Prior to Closing, Buyer shall have access
during reasonable business hours to the Seller-operated Properties, and
Seller shall use reasonable efforts to obtain permission for Buyer to gain
access to the Third Party-operated Properties, for the purpose of inspecting
the environmental and physical condition of the same. Such inspection shall
be conducted in accordance with the terms of the Confidentiality Agreement.
5.2 Alleged Adverse Conditions. As soon as reasonably practical (and on
an ongoing basis), but in no event later than two hundred and seventy (270)
Days after Closing, Buyer shall notify Seller of any Properties which are
subject to Alleged Adverse Condition(s). Buyer's notice of Alleged Adverse
Condition(s) shall include a complete description of each individual
condition to which Buyer takes exception (including any and all supporting
documentation associated therewith) and the costs which Buyer in good faith
attributes to remediating the same. In evaluating the existence or magnitude
of an Alleged Adverse Condition, due consideration shall be given to the
length of time the Alleged Adverse Condition has been in existence and
whether such fact, circumstance or condition is of the type expected to be
encountered in the area involved, and whether the Alleged Adverse Condition
is customarily acceptable to reasonable persons engaged in the business of
ownership and operation of oil and gas properties. Buyer and Seller shall
meet from time to time as necessary in an attempt to mutually agree on a
proposed resolution with respect to the Alleged Adverse Condition(s) raised
by Buyer. The value allocated to each Property as set forth on Exhibit "B"
and the costs to cure such adverse condition shall be used by the parties to
determine the amount of any adjustment, if any, due to the existence of an
Alleged Adverse Condition. It is recognized that good faith differences of
opinion may exist between Buyer and Seller in connection with the Alleged
Adverse Condition(s) raised by Buyer, including without limitation, disputes
as to: (a) whether or not the alleged defect constitutes an Alleged Adverse
Condition within the meaning of this Agreement, (b) whether or not the
magnitude of the alleged defect individually or in the aggregate exceeds the
threshold amounts set forth in Article 1.3, (c) whether or not the Alleged
Adverse Condition raised by Buyer was properly and timely asserted by Buyer
pursuant to this Article, and/or (d) the adjustment, if any, on account of
the Alleged Adverse Condition. If any such difference of opinion regarding
an Alleged Adverse Condition raised by Buyer is not resolved by mutual
agreement of Buyer and Seller, either party shall have the right, exercisable
within three hundred sixty five (365) Days after Closing, to initiate binding
arbitration in accordance with Article 18.1. Notwithstanding anything
contained in this Agreement to the contrary (including Article 18.1), if
Seller disagrees with the decision of the arbitration panel, Seller shall
have the right (but not the obligation) to: (i) remediate, at Seller's sole
cost, the Property at issue to a point where it is in compliance with the
Laws, or (ii) require the reassignment of the Property at issue from Buyer to
Seller. If Seller elects to require the reassignment of the Property at
issue, Buyer and Seller will take all necessary action (including without
limitation, execution of documentation and conducting an accounting) required
to place the parties back into a position with respect to the Property at
issue just prior to Closing.
5.3 Waiver. All adverse conditions (including without limitation
Alleged Adverse Condition(s)) not raised or referred to binding arbitration,
as applicable, by Buyer within the time period provided in Article 5.2 shall
be waived by Buyer for all purposes, and Buyer shall have no right to seek an
adjustment to the Purchase Price, make a claim (in accordance with Article
18.1 or otherwise) against Seller associated with the same, and Buyer (on
behalf of itself, its officers, agents, employees, Affiliates, successors and
assigns) irrevocably waives such claims.
ARTICLE 6. ACCOUNTING
6.1 Revenues, Expenses and Capital Expenditures. All merchantable oil,
liquid hydrocarbon and non-hydrocarbon substances stored in tanks and vessels
on the Properties (including any and all line fill owned by Seller or its
Affiliates downstream of the custody transfer point) will be gauged to the
bottom of the flange by Seller or the operator of the Properties, as
applicable, as of the Effective Time, and Seller shall be entitled to the
proceeds associated with such oil, liquid hydrocarbon and non-hydrocarbon
substances so gauged when sold. Oil, liquid hydrocarbon and non-hydrocarbon
substances in treating equipment and separation equipment below pipeline
connections as of the Effective Time shall not be considered to be
merchantable and shall become the property of Buyer. Seller shall be entitled
to all operating revenues and related accounts receivable arising in the
ordinary course of business attributable to the Properties and shall be
responsible for all operating expenses and related accounts payable (except
as provided below) arising in the ordinary course of business attributable to
the Properties, in each case to the extent they relate to the period of time
prior to the Effective Time. Buyer shall be entitled to all operating
revenues and related accounts receivable arising in the ordinary course of
business attributable to the Properties and responsible for the payment of
all operating expenses and related accounts payable arising in the ordinary
course of business attributable to the Properties, in each case to the extent
they relate to the period of time after the Effective Time. Notwithstanding
anything contained in this Agreement to the contrary, Seller shall transfer
to Buyer and Buyer shall assume and be solely responsible for: (a) any and
all suspense funds associated with the Properties, and (b) any and all gas
imbalances associated with the Properties. The actual amounts or values
associated with the above shall be accounted for in the Final Accounting
Settlement.
6.2 Taxes. All taxes and assessments, including without limitation,
excise taxes, ad valorem taxes and any other federal, state, local or tribal
taxes or assessments attributable to the ownership or operation of the
Properties prior to the Effective Time shall remain Seller's responsibility
(no matter when due or payable), and all deductions, credits or refunds
pertaining to the aforementioned taxes and assessments, no matter when
received, shall belong to Seller. All taxes and assessments, including
without limitation, excise taxes, ad valorem taxes and any other federal,
state, local or tribal taxes and assessments attributable to the ownership or
operation of the Properties after the Effective Time (excluding Seller's
income taxes from the Effective Time through Closing and any associated
capital gains taxes which shall remain Seller's obligation) shall be Buyer's
responsibility, and all deductions, credits or refunds pertaining to the
aforementioned taxes and assessments, no matter when received, shall belong
to Buyer. The actual amounts or values associated with the above, shall be
accounted for in the Final Accounting Settlement. Buyer shall additionally
be solely responsible for all transfer, sales, use or similar taxes resulting
from or associated with the transaction contemplated under this Agreement.
6.3 Obligations and Credits. All prepaid insurance premiums, utility
charges, taxes, rentals, deposits and any other prepaids applicable to the
period of time after the Effective Time, if any, and attributable to the
Properties shall be reimbursed to Seller by Buyer, and all accrued payables
applicable to the period of time prior to the Effective Time, if any, and
attributable to the Properties shall be the responsibility of Seller. The
actual amounts or values associated with the above shall be accounted for in
the Final Accounting Settlement.
6.4 Miscellaneous Accounting. In addition to the items set forth in
Articles 6.1 through 6.3, any other amounts due between Buyer and Seller
related to the ownership or operation of the Properties from the Effective
Time through Closing shall be accounted for in the Final Accounting
Settlement.
6.5 Final Accounting Settlement. As soon as reasonably practicable, but
in no event later than one hundred and eighty (180) Days after Closing,
Seller shall deliver to Buyer a post-Closing statement setting forth a
detailed calculation of all post-Closing adjustments applicable to the period
of time between the Effective Time and Closing ("Final Accounting
Settlement"). As soon as reasonably practicable, but in no event later than
forty-five (45) Days after Buyer receives the post-Closing statement, Buyer
shall deliver to Seller a written report containing any changes which Buyer
proposes to be made to such post-Closing statement. If Buyer fails to timely
deliver the written report to Seller containing changes Buyer proposes to be
made to the post-Closing statement, the post-Closing statement delivered by
Seller shall be deemed to be true and correct and the same shall be final and
binding on the parties and not subject to arbitration hereunder. As soon as
reasonably practicable, but in no event later than fifteen (15) Days after
Seller receives Buyer's written report, the parties shall meet and undertake
to agree on the final post-Closing adjustments. If the parties fail to agree
on the final post-Closing adjustments within such fifteen (15) Day period,
the disputed items shall be resolved by submitting the same to Ernst and
Young (the "Accounting Referee"). The Accounting Referee shall resolve the
dispute(s) regarding the post-Closing adjustments within thirty (30) Days
after having the relevant materials submitted for review. The decision of
the Accounting Referee shall be binding on and non-appealable by the
parties. The fees and expenses associated with the Accounting Referee shall
be borne equally by Buyer and Seller. The date upon which all amounts
associated with the Final Accounting Settlement are agreed to by the parties,
whether by decision of the Accounting Referee or otherwise, shall be herein
called the "Final Settlement Date". Any amounts owed by either party to the
other as a result of such post-Closing adjustments shall be paid within five
(5) Business Days after the Final Settlement Date.
6.6 Post-Final Accounting Settlement. Any revenues received or costs
and expenses paid by Buyer after the Final Accounting Settlement which are
attributable to the ownership or operation of the Properties prior to the
Effective Time, and not assigned to Buyer, shall be billed or reimbursed, as
appropriate, to Seller within thirty (30) Days after receipt by Buyer. Any
revenues received or costs and expenses paid by Seller after the Final
Accounting Settlement which are attributable to the ownership or operation of
the Properties after the Effective Time, and not reserved by Seller, shall be
billed or reimbursed, as appropriate, to Buyer within thirty (30) Days after
receipt by Seller.
ARTICLE 7. LOSS, CASUALTY AND CONDEMNATION
7.1 Notice of Loss. From the date hereof until Closing, Seller shall
promptly notify Buyer of any loss or damage to the Properties, or any part
thereof, known to Seller exceeding One Hundred Thousand and No/100 United
States Dollars (US $100,000) net to Seller's interest.
7.2 Casualty and Condemnation. If, prior to Closing, a substantial part
of the Properties shall: (a) be destroyed by a Casualty Loss, or (b) be
taken in condemnation or if proceedings for such purposes shall be pending;
then Seller and Buyer shall attempt to mutually agree on a reduction in the
Purchase Price reflecting the reduction in the value of the Properties
affected by the Casualty Loss or taking. If Seller and Buyer are unable to
mutually agree on such reduction, either party shall have the right,
exercisable within ninety (90) Days after Closing, to initiate binding
arbitration in accordance with Article 18.1. Seller shall retain any and
all sums paid to Seller from Third Parties, unpaid awards, insurance proceeds
or other payments associated with or attributable to such Casualty Loss or
taking.
ARTICLE 8. ALLOCATION OF RESPONSIBILITIES AND INDEMNITIES
8.1 Opportunity for Review. Each party represents that it has had an
adequate opportunity to review the following indemnity and release
provisions, including the opportunity to submit the same to legal counsel for
review and comment. Based upon the foregoing representation, the parties
agree to the provisions set forth below.
8.2 Seller's Non-Environmental Indemnity Obligation. Seller shall,
subject to the limitations set forth below, release Buyer from and shall
fully protect, indemnify and defend Buyer, its officers, agents, employees
and Affiliates (collectively "Buyer Group") and hold them harmless from and
against any and all Non-Environmental Claims, and any and all occurrences and
conditions which would otherwise constitute Non-Environmental Claims but
which are asserted by Seller, its officers, agents, employees and Affiliates
(collectively "Seller Group"), relating to, arising out of, or connected
with, directly or indirectly, the ownership or operation of the Properties,
or any part thereof, during the period of time prior to Closing, including
without limitation, Non-Environmental Claims relating to: (a) injury or death
of any person or persons whomsoever, (b) damages to or loss of any property
or resources, (c) common law causes of action such as negligence, gross
negligence, strict liability, nuisance or trespass, and/or (d) fault imposed
by statute, rule, regulation or otherwise. The indemnity obligation and
release provided herein shall apply regardless of cause or of any negligent
acts or omissions (excluding gross negligence and willful misconduct) of
Buyer Group. Notwithstanding anything contained in this Agreement to the
contrary, Seller shall have no obligation under this Agreement or otherwise
to protect, indemnify, defend and hold harmless Buyer Group from and against
any one or more of the following: (i) Non-Environmental Claims for which
Buyer has not provided Seller with written notice of such Non-Environmental
Claim in accordance with Article 8.9 within eighteen (18) months after
Closing (it being acknowledged and agreed that Buyer shall be solely
responsible for any and all Non-Environmental Claims not raised within such
eighteen month period), or (ii) Non-Environmental Claims in aggregate up to
three percent (3%) of the unadjusted Purchase Price (it being acknowledged
and agreed that Buyer shall be solely responsible for any and all
Non-Environmental Claims up to three percent (3%) of the unadjusted Purchase
Price).
8.3 Seller's Environmental Indemnity Obligation. Seller shall, subject
to the limitations set forth below, release Buyer from and shall fully
protect, indemnify and defend Buyer Group and hold them harmless from and
against any and all Environmental Claims, and any and all occurrences and
conditions which would otherwise constitute Environmental Claims but which
are asserted by Seller Group, relating to, arising out of, or connected with,
directly or indirectly, the ownership or operation of the Properties, or any
part thereof, during the period of time prior to Closing, including without
limitation, Environmental Claims relating to: (a) injury or death of any
person or persons whomsoever, (b) damages to or loss of any property or
resources, (c) pollution, environmental damage or violation of Environmental
Laws, (d) common law causes of action such as negligence, gross negligence,
strict liability, nuisance or trespass, and/or (e) fault imposed by statute,
rule, regulation or otherwise. The indemnity obligation and release provided
herein shall apply regardless of cause or of any negligent acts or omissions
(excluding gross negligence and willful misconduct) of Buyer Group.
Notwithstanding anything contained in this Agreement to the contrary, Seller
shall have no obligation under this Agreement or otherwise to protect,
indemnify, defend and hold harmless Buyer Group from and against any one or
more of the following: (i) Environmental Claims for which Buyer has not
provided Seller with written notice of said Environmental Claim in accordance
with Article 8.9 within twelve (12) months after Closing (it being
acknowledged and agreed that Buyer shall be solely responsible for any and
all Environmental Claims not raised within such twelve month period), (ii)
Environmental Claims in aggregate up to three percent (3%) of the unadjusted
Purchase Price (it being acknowledged and agreed that Buyer shall be solely
responsible for any and all Environmental Claims up to three percent (3%) of
the unadjusted Purchase Price), or (iii) Environmental Claims greater than
fifty percent (50%) of the unadjusted Purchase Price (it being acknowledged
and agreed that Buyer shall be solely responsible for any and all
Environmental Claims greater than fifty (50%) percent of the unadjusted
Purchase Price).
8.4 Buyer's Non-Environmental Indemnity Obligation. Buyer shall release
Seller from and shall fully protect, indemnify and defend Seller Group and
hold them harmless from and against any and all Non-Environmental Claims, and
any and all occurrences and conditions which would otherwise constitute
Non-Environmental Claims but which are asserted by Buyer Group, relating to,
arising out of, or connected with, directly or indirectly, the ownership or
operation of the Properties, or any part thereof, during the period of time
prior to Closing, no matter when asserted, for which Seller's indemnity
obligation has ceased, terminated (in accordance with Article 8.2 or
otherwise) or did not exist, and from and against any and all
Non-Environmental Claims relating to, arising out of, or connected with,
directly or indirectly, the ownership or operation of the Properties, or any
part thereof, during the period of time at and after Closing, no matter when
asserted; including without limitation, Non-Environmental Claims relating to:
(a) injury or death of any person or persons whomsoever, (b) damages to or
loss of any property or resources, (c) common law causes of action such as
negligence, gross negligence, strict liability, nuisance or trespass, and/or
(d) fault imposed by statute, rule, regulation or otherwise. The indemnity
obligation and release provided herein shall apply regardless of cause or of
any negligent acts or omissions (excluding gross negligence and willful
misconduct) of Seller Group.
8.5 Buyer's Environmental Indemnity Obligation. Buyer shall release
Seller from and shall fully protect, indemnify and defend Seller Group and
hold them harmless from and against any and all Environmental Claims, and any
and all occurrences and conditions which would otherwise constitute
Environmental Claims but which are asserted by Buyer Group, relating to,
arising out of, or connected with, directly or indirectly, the ownership or
operation of the Properties, or any part thereof, during the period of time
prior to Closing, no matter when asserted, for which Seller's indemnity
obligation has ceased, terminated (in accordance with Article 8.3 or
otherwise) or did not exist, and from and against any and all Environmental
Claims relating to, arising out of, or connected with, directly or
indirectly, the ownership or operation of the Properties, or any part
thereof, during the period of time at and after Closing, no matter when
asserted; including without limitation, Environmental Claims relating to:
(a) injury or death of any person or persons whomsoever, (b) damage to or
loss of any property or resource, (c) pollution, environmental damage or
violation of Environmental Laws, (d) common law causes of action such as
negligence, gross negligence, strict liability, nuisance or trespass, and/or
(e) fault imposed by statute, rule, regulation or otherwise. The indemnity
obligation and release provided herein shall apply regardless of cause or of
any negligent acts or omissions (excluding gross negligence and willful
misconduct) of Seller Group.
8.6 Asbestos and NORM. Buyer acknowledges that the Properties may
currently or have in the past contained asbestos or NORM and that special
procedures may be required for the assessment, remediation, removal,
transportation or disposal of such asbestos and NORM. Notwithstanding
anything contained in this Agreement to the contrary (including without
limitation Articles 5.2, 8.2 or 8.3), Buyer agrees to accept full
responsibility for and shall pay all costs and expenses associated with the
assessment, remediation, removal, transportation and disposal of the asbestos
or NORM associated with the Properties, and shall not be entitled to claim
the fact the assessment, remediation, removal, transportation or disposal of
the asbestos or NORM is not complete or that additional cost will be required
to complete the assessment, remediation, removal, transportation or disposal
of the asbestos or NORM as an Alleged Title Defect, Alleged Adverse
Condition, breach of Seller's representations and warranties or breach of
Seller's indemnity obligation under this Agreement, and Buyer (on behalf of
itself, its officers, agents, employees, Affiliates, successors and assigns)
irrevocably waives such claims. In conducting the duties and obligations
contained in this Article, Buyer shall comply with the applicable Laws.
8.7 Buyer's Assumption of Obligations. Buyer agrees to assume and shall
timely perform and discharge all duties and obligations of Seller associated
with the Properties (including without limitation any contractual
obligations) relating to the period of time at and after Closing, and Seller
shall incur no liability for Buyer's failure to properly perform or discharge
any such duties and obligations. Notwithstanding anything contained in this
Agreement to the contrary (including without limitation Articles 5.2, 8.2 or
8.3), Buyer agrees to accept full responsibility for and shall pay all costs
and expenses associated with the plugging and abandonment of the wells and
facilities included in the Properties, and shall not be entitled to claim the
fact that plugging and abandonment operations are not complete or that
additional cost will be required to complete the plugging and abandonment
operations as an Alleged Title Defect, Alleged Adverse Condition, breach of
Seller's representations and warranties or breach of Seller's indemnity
obligation under this Agreement, and Buyer (on behalf of itself, its
officers, agents, employees, Affiliates, successors and assigns) irrevocably
waives such claims. In conducting the duties and obligations contained in
this Article, Buyer shall comply with the applicable Laws.
8.8 Process Safety Management. Buyer acknowledges that Process Safety
Management of Highly Hazardous Chemicals; Explosives and Blasting Agents
(i.e., 29 CFR 1910) (collectively "Process Safety Management") associated
with the Properties is an ongoing process. Notwithstanding anything
contained in this Agreement to the contrary (including without limitation
Articles 5.2, 8.2 or 8.3), Buyer agrees to accept full responsibility for and
shall pay all costs and expenses associated with the Process Safety
Management process (including without limitation the identification,
evaluation and remediation), and shall not be entitled to claim the fact that
Process Safety Management is not complete or that additional cost will be
required to comply with or complete the Process Safety Management process as
an Alleged Title Defect, Alleged Adverse Condition, breach of Seller's
representations and warranties or breach of Seller's indemnity obligation
under this Agreement, and Buyer (on behalf of itself, its officers, agents,
employees, Affiliates, successors and assigns) irrevocably waives such
claims. In conducting the duties and obligations contained in this Article,
Buyer shall comply with the applicable Laws.
8.9 Notice of Claims. If a Claim is asserted against a party for which
the other party may have an obligation of indemnity, it shall be a condition
precedent to the indemnifying party's obligations under this Article 8 that
the indemnified party give the indemnifying party written notice of such
Claim setting forth the particulars associated with the Claim (including a
copy of the written Claim, if any) as then known by the indemnified party.
The indemnified party shall make a good faith effort to notify the
indemnifying party within one (1) month of receipt of a Claim and shall in
all events effect notice within such time as will allow the indemnifying
party a reasonable period of time in which to evaluate and timely respond to
said Claim. The notice of Claim provided hereunder is referred to as a
"Claim Notice."
8.10 Defense of Claims. Upon receipt of a Claim Notice, the
indemnifying party may assume the defense of said Claim with counsel selected
by the indemnifying party and reasonably satisfactory to the indemnified
party. The indemnified party shall cooperate in all reasonable respects in
such defense. If any Claim involves a fact pattern wherein Buyer may have an
obligation to indemnify Seller and Seller may have an obligation to indemnify
Buyer, each party shall have the right to assume the defense of and hire
counsel for that portion of the Claim for which it may have an obligation of
indemnity. In all instances, the indemnified party shall have the right to
employ separate counsel and to participate in the defense of any Claim;
provided however, the fees and expenses of counsel employed by the
indemnified party shall be borne solely by the indemnified party. If the
indemnifying party does not notify the indemnified party within the earlier
to occur of: (a) five (5) Days before the time a response is due in any
litigation matter, or (b) sixty (60) Days after receipt of the Claim Notice,
that the indemnifying party elects to undertake the defense of a Claim, the
indemnified party shall have the right to defend, at the expense of the
indemnifying party, the Claim with counsel of the indemnified party's
choosing, subject to the right of the indemnifying party to assume the
defense of the Claim at any time prior to settlement or final determination
thereof. In such event, the indemnified party shall promptly send a written
notice to the indemnifying party of any proposed settlement of a Claim, which
settlement the indemnifying party may accept or reject, in its reasonable
judgment, within thirty (30) days of receipt of such notice, unless the
settlement offer is limited to a shorter period of time in which case the
indemnifying party shall have such shorter period of time in which to accept
or reject the proposed settlement. Failure of the indemnifying party to
accept or reject such settlement within the applicable period of time shall
be deemed to be its rejection of such settlement. Notwithstanding the
foregoing, the indemnified party may settle any matter over the objection of
the indemnifying party, but in so doing the indemnified party shall be deemed
to have waived any right to indemnity therefor as to (and only as to)
liabilities with respect to which the indemnifying party has acknowledged in
writing its indemnity obligation.
8.11 Waiver of Certain Damages. Each of the parties hereby waives and
agrees not to seek indirect, consequential, punitive or exemplary damages of
any kind with respect to any Claim or dispute arising out of or relating to
this Agreement or breach hereof. This provision shall not diminish or affect
in any way the parties' rights and obligations under any indemnities provided
for in this Agreement.
8.12 Limitation on Indemnities. In no event shall an indemnifying party
have any obligation of indemnification to the indemnified party, if the Claim
for which indemnity is sought was caused by a criminal act, fraudulent act,
gross negligence or willful misconduct of the indemnified party or its
officers, directors, employees, agents, Affiliates, successors and assigns,
nor shall any indemnity provisions in this Agreement apply to or be deemed to
apply to matters affecting properties (real, personal or mixed) and
appurtenant rights (contractual or otherwise) other than those which are
covered by this Agreement.
ARTICLE 9. SPECIAL WARRANTY AND DISCLAIMERS
9.1 Special Warranty of Title. Seller shall warrant title to and
forever defend title to the Properties conveyed to Buyer against every person
whomsoever lawfully claiming title to the Properties, or any part thereof
by, through or under Seller, but not otherwise.
9.2 Disclaimer - Representations and Warranties. Buyer acknowledges and
agrees that the Properties are being transferred, assigned and conveyed from
Seller to Buyer "AS-IS, WHERE-IS", and with all faults in their present
condition and state of repair, without recourse. Except as expressly set
forth in this Article 10, Seller hereby expressly disclaims any and all
representations and warranties concerning the Properties, express, statutory,
implied or otherwise, including without limitation: (a) any warranty of title
(except for the special warranty of title set forth in Article 9.1), (b) the
existence of any and all prospects, (c) the geographic, geologic or
geophysical characteristics associated with any and all prospects, (d) the
existence, quality, quantity or recoverability of hydrocarbon reserves
associated with the Properties, (e) the costs, expenses, revenues or receipts
associated with the Properties, (f) the contractual, economic or financial
data associated with the Properties, (g) the continued financial viability or
productivity of the Properties, (h) the environmental or physical condition
of the Properties, (i) the federal, state, local or tribal income or other
tax consequences associated with the Properties, or the agreements to which
the Properties are subject, (j) the absence of patent or latent defects, (k)
safety, (l) state of repair, (m) merchantability, and (n) fitness for a
particular purpose; and Buyer (on behalf of itself, its officers, agents,
employees, Affiliates, successors and assigns) irrevocably waives such claims.
9.3 Disclaimer - Statements and Information. Seller expressly disclaims
any and all liability and responsibility for and associated with the
quality, accuracy, completeness or materiality of the data, information and
materials furnished (electronically, orally, by video, in writing or any
other medium) at any time to Buyer, its officers, agents, employees or
Affiliates in connection with the transaction contemplated herein, including
without limitation: (a) the existence of any and all prospects, (b) the
geographic, geologic or geophysical characteristics associated with any and
all prospects, (c) the existence, quality, quantity or recoverability of
hydrocarbon reserves associated with the Properties, (d) the costs, expenses,
revenues or receipts associated with the Properties, (e) the contractual,
economic or financial data associated with the Properties, (f) the continued
financial viability or productivity of the Properties, (g) the environmental
or physical condition of the Properties, and (h) the federal, state, local or
tribal income or other tax consequences associated with the Properties, or
the agreements to which the Properties are subject; and Buyer (on behalf of
itself, its officers, agents, employees, Affiliates, successors and assigns)
irrevocably waives such claims.
ARTICLE 10. SELLER'S REPRESENTATIONS AND WARRANTIES
Seller represents and warrants to Buyer that on the date hereof and as of
Closing:
10.1 Organization and Good Standing. Seller is a corporation duly
organized, validly existing and in good standing under the Laws of the State
of Delaware, and has all requisite corporate power and authority to own and
lease the Properties. Seller is duly licensed or qualified to do business as
a foreign corporation and is in good standing in all jurisdictions in which
the Properties are located.
10.2 Corporate Authority; Authorization of Agreement. Seller has all
requisite corporate power and authority to execute and deliver this
Agreement, to consummate the transactions contemplated herein and to perform
all of the terms and conditions to be performed by it as provided for in this
Agreement. The execution and delivery of this Agreement by Seller, the
performance by Seller of all of the terms and conditions to be performed by
it and the consummation of the transactions contemplated herein have been
duly authorized and approved by all necessary corporate action. This
Agreement has been duly executed and delivered by Seller and constitutes the
valid and binding obligation of Seller, enforceable against it in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency or other Laws relating to or affecting the enforcement of
creditors' rights and general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
10.3 No Violations. Assuming expiration or termination of the applicable
waiting period under the HSR Act, if applicable, the execution and delivery
of this Agreement by Seller does not, and the fulfillment and compliance with
the terms and conditions hereof and the consummation of the transactions
contemplated herein, will not:
10.3.1 Conflict with or require the consent of any person or entity
under any of the terms, conditions or provisions of the certificate of
incorporation or bylaws of Seller;
10.3.2 Violate any provision of, or require any filing, consent or
approval under any Law applicable to or binding upon Seller (assuming
receipt of all consents and approvals of governmental entities or tribal
authorities customarily obtained subsequent to the transfers of title);
10.3.3 Conflict with, result in a breach of, constitute a default
under or constitute an event that with notice or lapse of time, or both,
would constitute a default under, accelerate or permit the acceleration
of the performance required by, or require any consent, authorization or
approval under: (i) any mortgage, indenture, loan, credit agreement or
other agreement, evidencing indebtedness for borrowed money to which
Seller is a party or by which Seller is bound, or (ii) any order,
judgment or decree of any governmental entity or tribal authority; or
10.3.4 Result in the creation or imposition of any lien or
encumbrance upon the Properties.
10.4 Absence of Certain Changes. Between the date of execution of this
Agreement and Closing, there has not been without Buyer's prior written
consent:
10.4.1 A waiver of any right of material value relating to the
Properties, other than in the ordinary course of business;
10.4.2 A sale, lease or other disposition of the Properties, other
than in the ordinary course of business;
10.4.3 A mortgage, pledge or grant of a lien or security interest in
any of the Properties;
10.4.4 A contract for the sale of products, other than in the
ordinary course of business (provided however, Buyer acknowledges and
agrees that Seller may enter into short term marketing arrangements that
are consistent with Seller's past marketing practices);
10.4.5 A contract between Seller and any of its Affiliates, other
than in the ordinary course of business (provided however, Buyer
acknowledges and agrees that Seller may enter into short term marketing
arrangements that are consistent with Seller's past marketing practices);
or
10.4.6 A contract or commitment to do any of the foregoing.
10.5 Operating Costs. All costs incurred in connection with the
operation of the Properties have been fully paid and discharged by Seller,
except normal expenses incurred in operating the Properties within the
previous sixty (60) Days or as to which Seller has not yet been billed.
10.6 Litigation. Except as set forth in Exhibit "G" or disclosed prior
to Closing, there is no action, suit or proceeding pending or threatened
against Seller which would have a material adverse effect on the value or
operation of the Properties or that would prevent the consummation of the
transaction contemplated by this Agreement. Amoco shall retain
responsibility for the matters referenced in Exhibit "G" to the extent the
underlying Claims relate to the period of time prior to Closing.
10.7 Bankruptcy. There are no bankruptcy, reorganization or receivership
proceedings pending, being contemplated by or threatened against Seller.
ARTICLE 11. BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer represents and warrants to Seller that on the date hereof and as of
Closing:
11.1 Organization and Good Standing. Buyer is a corporation duly
organized, validly existing and in good standing under the Laws of the State
of Delaware and has all requisite corporate power and authority to own and
lease the Properties. Buyer is duly licensed or qualified to do business as
a foreign corporation and is in good standing in all jurisdictions in which
the Properties are located.
11.2 Corporate Authority; Authorization of Agreement. Buyer has all
requisite corporate power and authority to execute and deliver this
Agreement, to consummate the transactions contemplated herein and to perform
all the terms and conditions to be performed by it as provided for in this
Agreement. The execution and delivery of this Agreement by Buyer, the
performance by Buyer of all the terms and conditions to be performed by it
and the consummation of the transactions contemplated herein have been duly
authorized and approved by all necessary corporate action. This Agreement
has been duly executed and delivered by Buyer and constitutes the valid and
binding obligation of Buyer, enforceable against it in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency
or other Laws relating to or affecting the enforcement of creditors' rights
and general principles of equity (regardless of whether such enforceability
is considered in a proceeding at law or in equity).
11.3 No Violations. Assuming expiration or termination of the applicable
waiting period under the HSR Act, if applicable, the execution and delivery
of this Agreement by Buyer does not, and the fulfillment and compliance with
the terms and conditions hereof and the consummation of the transactions
contemplated herein, will not:
11.3.1 Conflict with or require the consent of any person or entity
under any of the terms, conditions or provisions of the certificate of
incorporation or bylaws of Buyer;
11.3.2 Violate any provision of, or require any filing, consent or
approval under any Law applicable to or binding upon Buyer; or
11.3.3 Conflict with, result in a breach of, constitute a default
under or constitute an event that with notice or lapse of time, or both,
would constitute a default under, accelerate or permit the acceleration
of the performance required by, or require any consent, authorization or
approval under: (i) any mortgage, indenture, loan, credit agreement or
other agreement evidencing indebtedness for borrowed money to which
Buyer is a party or by which Buyer is bound, or (ii) any order, judgment
or decree of any governmental entity or tribal authority.
11.4 SEC Disclosure. Buyer is acquiring the Properties for its own
account for use in its trade or business, and not with a view toward or for
sale in connection with any distribution thereof, nor with any present
intention of making a distribution thereof within the meaning of the
Securities Act of 1933, as amended.
11.5 Independent Evaluation. Buyer represents that it is sophisticated
in the evaluation, purchase, ownership and operation of oil and gas
properties and related facilities. In making its decision to enter into this
Agreement and to consummate the transaction contemplated herein, Buyer
represents that: (a) it has relied solely on its own independent
investigation and evaluation of the Properties, and (b) it has satisfied
itself as to the physical and environmental condition of the Properties.
11.6 Buyer's Reliance. Buyer acknowledges and agrees that it is entitled
to rely only on the express representations and warranties set forth in this
Agreement.
ARTICLE 12. ADDITIONAL COVENANTS AND CONSIDERATIONS
12.1 Subsequent Operations. Seller makes no representations or
warranties to Buyer as to the transferability or assignability of
operatorship of the Properties. Buyer acknowledges that the rights and
obligations associated with operatorship of the Properties are governed by
the applicable agreement(s) and that operatorship of the Properties will be
decided in accordance with the terms of said agreement(s). Seller agrees to
cooperate with Howell Petroleum Corporation with respect to operatorship
issues. Within ten (10) Days after Closing, Seller shall send out notices,
where applicable, advising working interest owners of the Properties it
operates that it has transferred its interests in the Properties to Buyer.
Within fifteen (15) Days after Closing, Buyer shall send out ballots, where
applicable, associated with the selection of a successor operator of the
Properties. Seller shall have no obligation under this Agreement or
otherwise to send out ballots for the selection of a successor operator.
12.2 Financial Assurances. Buyer shall provide a corporate guaranty
from an Affiliate of Buyer (acceptable to Seller) guarantying the full and
faithful performance by Buyer of the terms and conditions contained in this
Agreement in the form attached hereto as Exhibit "R".
12.3 Transition Agreement. At Closing, Buyer and Seller shall execute
the Transition Agreement.
12.4 License Agreement(s). At Closing, Buyer and Seller shall execute
the License Agreement - SAMS, covering certain proprietary technology of
Seller, including the "SAMS" automation system. If requested by Seller,
Buyer shall execute and deliver to Seller a License Agreement - Seismic in a
mutually agreed form, granting to Seller, at no cost to Seller, a right and
license to use the seismic data, or any portion thereof, conveyed to Buyer
under the terms of this Agreement.
12.5 Sublease Novation Agreement. At Closing, Buyer and Seller shall
execute the Sublease Novation Agreement covering the inlet compressor at the
Beaver Creek Gas Processing Plant which is subject to an existing sublease
from Amoco Equipment Leasing Company to Seller.
12.6 Crude Call.
12.6.1 Seller reserves (excluding the Beaver Creek Field which is
addressed in Article 12.6.8 below) the continuing right and option (but shall
not have the obligation) to purchase on the terms set forth herein (including
the terms set forth on Exhibit "S" attached hereto and incorporated herein by
reference) all or part of the oil and/or other liquid hydrocarbons, including
but not limited to, condensate, distillate and other liquids recovered from
the well stream by normal lease separation methods (the "Oil") produced and
saved from any one or more of the Fields listed on Exhibit "S" (excluding Oil
used for ordinary leasehold operations thereon).
12.6.2 Seller herein elects to purchase the Oil from the Fields listed
on Exhibit "S" to be effective the 1st day of March, 1998. Seller's
obligation to purchase the Oil under the above election shall continue for a
period of sixty (60) Days, and unless terminated by Seller by giving Buyer at
least sixty (60) Days prior written notice of Seller's intent to discontinue
such purchases, shall continue on a month to month basis thereafter.
12.6.3 If Seller notifies Buyer that Seller elects to discontinue
purchases of the Oil in accordance with Article 12.6.2, at the end of the
sixty (60) Day notice period, Buyer shall be free for a period not to exceed
six (6) months to market the Oil to Third Parties; provided however, at the
end of the six (6) month period Seller shall have the right to recommence
purchasing the Oil by providing Buyer at least sixty (60) Days prior written
notice of Seller's intent to recommence purchasing the Oil. In the event
Seller elects not to recommence purchasing the Oil, then Buyer shall be free
to market the Oil to Third Parties for an additional six (6) month period.
Sellers right to elect to purchase and/or discontinue purchase of the Oil
shall be an ongoing and reoccurring right during the duration of the crude
call (as determined in accordance with Exhibit "S"). During the period of
time Seller is not purchasing the Oil under the terms of this Article 12,
Seller shall have no obligation to purchase or furnish a market for all or
any part of the Oil associated with the Properties.
12.6.4 During the period of time Seller elects to purchase the Oil
(from all fields except the Beaver Creek Field which shall be handled in
accordance with Article 12.6.8 below) under the terms of this Article 12,
subject to the Ceiling and Floor Pricing Limitations set forth on Exhibit
"S", Seller shall pay Buyer the "average monthly calculated price per barrel
of Oil" which shall be the average of the three (3) approved postings
selected by Buyer adjusted for gravity, plus the price differential as set
forth on Exhibit "S". In determining the "average monthly calculated price
per barrel of Oil" under this Article 12.6.5, the parties shall use three (3)
out of the five (5) approved postings referred to in Exhibit "S". On or
before December 1 of each year, Buyer shall select the three (3) approved
postings per crude catagory (i.e. Wyoming Asphaltic Sour and Wyoming Salt
Creek Sweet) whose postings shall be used in determining the "average monthly
calculated price per barrel of Oil" for the succeeding year.
12.6.5 In the event one of the indexes referenced on Exhibit "S" is
discontinued, the parties shall meet and attempt to mutually agree on a
replacement index which is similar to the discontinued index. If the parties
are unable to agree on the replacement index, the same shall be submitted to
binding arbitration in accordance with Article 18.
12.6.6 Seller's rights under this Article 12 shall terminate as to the
individual Field listed on Exhibit "S" in accordance with the time periods
set forth on Exhibit "S".
12.6.7 Notwithstanding anything contained in this Agreement to the
contrary, Seller reserves the right to assign the rights and obligations
arising under this Article 12 to an Affiliate of Seller. If Seller elects to
assign the rights and obligations under this Article 12 to an Affiliate of
Seller, then Seller shall provide Buyer with a mutually agreeable corporate
guarantee wherein Seller guarantees the performance of Seller's Affiliate
under the terms of this Article 12.
12.6.8 Buyer shall solicit semi-annual (i.e. March 1 and September 1)
bids for the succeeding six (6) month period from Third Parties for the
purchase of the Oil produced from the Beaver Creek Field. Seller reserves
(in accordance with the terms set forth on Exhibit "S" with respect to volume
and duration) the continuing right and option (but shall not have the
obligation) to match the highest written offer received in accordance with
the bid documents established by the Buyer for the Oil produced and saved
from the Beaver Creek Field (excluding Oil used for ordinary leasehold
operations thereon). Buyer will solicit bids under the terms of this Article
12.6.8 at least forty-five (45) Days prior to March 1 and September 1,
respectively.
12.7 NGL Call. Seller reserves the continuing right and option (but
shall not have the obligation) to purchase at the tailgate of the applicable
plant the natural gas liquids, including without limitation, ethane,
propane, butanes, normal butane, isobutane and DNG (collectively "NGL's")
associated with or attributed to the Properties ("Purchase Right"). In the
event Seller desires to exercise its Purchase Right, it will notify Buyer
of such election at least thirty (30) Days in advance of the point in time
it will commence purchasing said NGL's, and such election will continue
from month to month thereafter until Seller revokes such election with
thirty (30) Days advance written notice to Buyer. If Seller exercises its
Purchase Right, the price to be paid by Seller to Buyer for the NGL's shall
be ninety-seven percent (97%) of the weighted average selling price
received by Seller for said NGL's (on a product basis) during the month of
delivery from the applicable plant. The NGL Call contained in this Article
12.7 shall have a term through March 31, 1998, or the life of the pending
marking contract if the same terminates prior to March 31, 1998. Any and
all notification to Seller associated with this NGL Call provision shall be
directed to Amoco Oil Company, NGL Supply and Logistics, Attn. NGL Supply,
P.O. Box 3092, Houston, Texas 77253-3092.
12.8 Rights-Of-Way and Surface Leases. Buyer herein grants to Seller
(and its Affiliates) non-exclusive cost-free right(s)-of-way and surface
lease(s) on, over and through the Properties (including but not limited to,
pipeline, utility and road usage rights-of-way, facility surface leases and
all necessary rights of ingress and egress), necessary to allow Seller (and
its Affiliates) to continue to conduct operations on or across the Properties
in connection with properties and assets not being conveyed herein, which
were being conducted by Seller (and its Affiliates) prior to Closing. Buyer
agrees to execute any and all instruments deemed necessary by Seller (or its
Affiliate) to further delineate the rights granted herein.
12.9 APL\Salt Creek Electrical Service. Buyer agrees to continue to
provide Amoco Pipeline Company, and its successors and assigns, with
electrical service necessary to operate all Amoco Pipeline Company facilities
located in the vicinity of the Salt Creek Unit, Natrona County, Wyoming.
Buyer shall bill Amoco Pipeline Company on a semi-annual basis (i.e. June 1
and December 1) for any and all power actually consumed to operate the Amoco
Pipeline Company facilities. The fee to be paid by Amoco Pipeline Company
for the power shall be based on the actual electrical rates charged to Buyer
for electrical service at the Salt Creek Unit and the power usage shall be
based upon the reading taken from the deduct meters located on the secondary
side of the Salt Creek electrical substation which serve as delivery points
on the Salt Creek Unit electrical distribution system. Amoco Pipeline
Company shall own, operate and maintain the deduct meters and provide Buyer
with any and all power usage information necessary for Buyer to bill Amoco
Pipeline Company for the power used at the aforementioned facilities.
ARTICLE 13. PERSONNEL MATTERS
13.1 Employee Lists. Prior to Closing, Seller will make available to Buyer a
list of employees who are directly engaged (the "Directly Engaged Employees")
in the operation, maintenance, administration, measurement, automation and
similar functions for the Properties subject to this Agreement, who are
available for immediate employment by Buyer commencing on the date of the
termination of the Transition Agreement ("Transition Date"). In addition,
prior to Closing, Seller will make available to Buyer a separate list of
employees who are engaged in management, analysis, engineering, supervision,
accounting and similar functions who are available for immediate employment
by Buyer commencing on the Transition Date. For the purpose of this
Agreement, the above referenced employees of Seller (whether Directly Engaged
Employees or the employees on the separate list shall collectively be
referred to as Personnel). Buyer shall not solicit employment of any
employees of Seller other than those described above without obtaining the
advance written permission of Seller, except that Buyer may solicit employees
of Seller who did not work in Seller's business groups associated with the
Properties. This restriction shall remain in effect for twenty four (24)
months after Closing.
13.2 Offers of Employment. Buyer reasonably expects to need the
services of all of the Directly Engaged Employees, and to that end, Buyer
will make offers of employment to at least ninety percent (90%) of the
Directly Engaged Employees effective on the Transition Date, provided
however, that Howell Petroleum Corporation shall not be obligated to make an
offer of employment to any Directly Engaged Employees assigned to Properties
where preferential rights have been exercised and/or Buyer does not become
the operator of those Properties. Buyer may also make offers of employment
to other employees on the lists provided who are not Directly Engaged
Employees. Any offers of employment made by Buyer to employees of Seller
shall be at substantially similar salaries or wages, with similar duties and
responsibilities at the same location that such employee had immediately
prior to the Transition Date. Buyer shall also provide to these employees
the same employee benefit plans and policies as provided by Buyer to its
employees performing similar work. To the extent any Directly Engaged
Employee is on military, family, or medical leave, Buyer shall give each such
Directly Engaged Employee consideration for employment in the same manner as
it does for other employees; provided however, Buyer may condition such offer
upon the employee's return from leave within one (1) year of the Transition
Date and, in the case of medical leave, that such return to work is approved
by Buyer's physician.
13.3 Pension Plans. (a) Buyer agrees that, effective as of Transition
Date, Buyer will include in its simplified employee pension plan (" Buyer SEP
Plan") those employees who commence employment with Buyer and who participated
in the Employee Retirement Plan of Amoco and Participating Companies
("Amoco Retirement Plan") prior to the Transition Date.Buyer agrees to take any
action necessary so that: (i) such employees will be eligible to participate
in the Buyer SEP Plan as of the Transition Date, and (ii) such employees will
be given service credit equal to the number of years of participation service
and vesting service such employees have under the Amoco Retirement Plan for the
purposes of both vesting service and eligibility service in the Buyer SEP Plan.
Article 13.3 shall not apply in the event that Buyer terminates or discontinues
its Buyer SEP Plan prior to the Transition Date.
(b) Seller agrees to furnish on a timely basis a list of
employee's vesting service recognized under the Amoco Retirement Plan.
13.4 Thrift Plan and Stock Purchase Plans. Buyer shall allow employees
hired pursuant to Article 13.2 to immediately participate in Buyer's thrift
plan, stock purchase plan, and other similar plans ("Buyer Thrift and Stock
Purchase Plans"). Buyer shall credit employee's prior service with Amoco
and its Affiliates as determined under Article 13.3(a) for all purposes under
Buyer Thrift and Stock Purchase Plans, including but not limited to, any
vesting or matching schedules. Article 13.4 shall not apply in the event that
Buyer terminates or discontinues its Buyer Thrift and Stock Purchase Plans
prior to the Transition Date, as applicable.
13.5 Other Employee Benefits. Buyer shall recognize the prior service
with Seller and its Affiliates of employees for all purposes, including,
without limitation, eligibility, vesting, and benefit determination and
accrual, in connection with other employee benefits and policies such as
vacations, bonuses, sickness and disability leave and all other employee
benefits and policies. Except as otherwise provided in this Agreement,
employees and their eligible dependents who are enrolled in medical, dental,
life insurance and long-term disability plans available to such employees as
a result of their employment by Seller immediately prior to the Transition
Date shall be eligible to enroll in any plan or plans established by Buyer
which provide similar benefits to its employees as of the Transition Date.
If employees enroll in such plans, no physical examination or other proof of
insurability shall be required. Also, all coverage exclusions and
limitations relating to waiting periods or pre-existing conditions with
respect to such personnel or their dependents shall be waived. Buyer shall
be responsible for perpetuating the group health plan continuation coverage
pursuant to Section 4980B of the Internal Revenue Code of 1986, as amended,
and Sections 601 through 609 of ERISA for all employees and their eligible
dependents and shall cover such employees under Buyer's own group health plan
to accommodate this requirement. Buyer shall indemnify and hold Seller and
its Affiliates harmless from and against any and all liability Seller or its
Affiliates incur after the Transition Date under the provisions of Section
4980B or the Code or Sections 601 through 609 of ERISA with respect to any
Personnel, or dependent or spouse of such employees, who had or has a
"qualifying event" (within the meaning of Section 4980B(f)(3) of the Code) on
or after the Transition Date.
13.6 Accrued and Unused Vacation. Between the Transition Date and the
end of the calendar year in which the Transition Date occurs, Buyer shall
permit all former employees of Seller to take, as unpaid leave, a number of
days equal to the number of days of vacation as such employees would have
been eligible to take immediately prior to the Transition Date under the
vacation policy of Seller, based upon the original hire date of such
Personnel by Seller or its Affiliates. Seller shall timely provide to Buyer
a list of employee's remaining vacation balances for 1998. Effective January
1, 1999 former employees of Seller employed by Buyer shall be entitled to
participate in Buyer's vacation policy then in effect.
13.7 Severance.Buyer acknowledges that Seller's former employees would
have been eligible to receive the severance benefits described in the current
1997 Amoco Corporation and Participating Affiliates Severance Benefits Plan
(the "Amoco Severance Plan"), had they not been offered comparable positions
with Buyer. Therefore, Buyer agrees to provide a severance payment to
employees who it terminates within one year of the Transition Date as
provided in the severance schedule in the Amoco Severance Plan, and pursuant
to the same terms and conditions of employee eligibility as described in the
Amoco Severance Plan. For purposes of calculating the severance allowance
described in the Amoco Severance Plan, "credited service" shall include
service with Seller and/or its Affiliates in addition to service with Buyer
and/or its Affiliates for employees. Buyer also agrees to include Seller and
its Affiliates as third party beneficiaries in any release executed by
employees in order to receive these severance benefits.
13.8 Post Transition Date Benefits. The obligations of Article 13.5
shall apply to any benefit plans or policies established by Buyer after the
Closing. In addition, Buyer shall establish a savings plan pursuant to
Section 401(k) of the Internal Revenue Code within forty-five (45) Days after
the Transition Date. Buyer shall take all reasonable action both in
establishing and administering that savings plan to allow employees to elect
to transfer their Amoco Savings Plan ("Amoco Savings Plan") accounts and
loans to Buyer's savings plan pursuant to a trust to trust transfer within
ninety (90) Days after the Transition Date. Buyer shall also provide that
employees are eligible for immediate participation in the saving plan and
shall grant employees credit for prior service with Amoco and its Affiliates
for all purposes including, but not limited to, any vesting or matching
schedules.
13.9 WARN Act. Buyer represents and warrants that there will be no major
employment losses as a consequence of the transactions contemplated by this
Agreement that might trigger obligations under the Worker Adjustment and
Retraining Notification Act, 29 U.S.C. Section 2101 et seq., or under any
similar provision of any federal, state, regional, foreign, or local law,
rule, or regulation (referred to collectively as "WARN Obligations").
Moreover, to the extent that any WARN Obligations might arise as a
consequence of the transactions contemplated by this Agreement, it is agreed
that Seller shall be responsible for any WARN Obligations arising as a result
of any employment losses occurring prior to Closing, and Buyer shall be
responsible for any WARN Obligations arising as a result of any employment
losses occurring upon or after Closing. Furthermore, for the first ninety
(90) Days following Closing, Buyer shall not engage in any mass layoff, plant
closing, or other action that might trigger obligations of Seller under the
WARN Act or under any similar provision of any federal, state, regional,
foreign, or local law, rule, or regulation.
ARTICLE 14. HSR FILINGS
14.1 HSR Filings. If compliance with the HSR Act is required in
connection with the transaction contemplated under this Agreement, as
promptly as practicable and in any event not more than fifteen (15) Business
Days following the date on which the parties have executed this Agreement,
both parties will file with the Federal Trade Commission and the Department
of Justice, as applicable, the notification and report forms required for the
transactions contemplated herein and will as promptly as practicable furnish
any supplemental information which may be reasonably requested in connection
therewith. Each party shall request expedited treatment of such filing. If
failure by either party to obtain timely authorization from the Federal Trade
Commission or the Department of Justice results in the inability of the
parties to Close on the Closing Date, the time for Closing shall
automatically be extended until such date as Closing can occur in compliance
with the HSR Act.
ARTICLE 15. CONDITIONS PRECEDENT TO CLOSING
15.1 Conditions Precedent to Seller's Obligation to Close. Seller shall
be obligated to consummate the sale of the Properties as contemplated by this
Agreement on the Closing Date, provided the following conditions precedent
have been satisfied or have been waived by Seller:
15.1.1 All representations and warranties of Buyer contained in
this Agreement shall be true and correct in all material respects at and
as of Closing as though such representations and warranties were made at
and as of such time; and
15.1.2 Buyer shall have complied in all material respects with all
obligations and conditions contained in this Agreement to be performed
or complied with by Buyer on or prior to Closing.
15.2 Conditions Precedent to Buyer's Obligation to Close. Buyer shall
be obligated to consummate the purchase of the Properties as contemplated by
this Agreement on the Closing Date, provided the following conditions
precedent have been satisfied or have been waived by Buyer:
15.2.1 All representations and warranties of Seller contained in
this Agreement shall be true and correct in all material respects at and
as of Closing as though such representations and warranties were made at
and as of such time; and
15.2.2 Seller shall have complied in all material respects with
all obligations and conditions contained in this Agreement to be
performed or complied with by Seller on or prior to Closing.
15.3 Conditions Precedent to Obligation of Each Party to Close. The
parties shall be obligated to consummate the sale and purchase of the
Properties as contemplated in this Agreement on the Closing Date, provided
the following conditions precedent have been satisfied or have been waived by
the applicable party:
15.3.1 No suit, action or other proceedings shall be pending
before any court or governmental entity in which it is sought by a
person or entity other than the parties hereto or any of their
Affiliates, officers, directors or employees to restrain, enjoin or
otherwise prohibit the consummation of the transactions contemplated by
this Agreement, or to obtain substantial damages in connection with the
transaction contemplated herein, nor shall there be any investigation by
a governmental entity pending which might result in any such suit,
action or other proceedings seeking to restrain, enjoin or otherwise
prohibit the consummation of the transaction contemplated by this
Agreement;
15.3.2 If applicable, consummation of the transaction contemplated
herein shall not have been prevented from occurring by (and the required
waiting period, if any, shall have expired under) the HSR Act and the
rules and regulations of the Federal Trade Commission or the Department
of Justice;
15.3.3 All consents and approvals, if any, whether required
contractually or by applicable federal, state, local or tribal Law, or
otherwise necessary for the execution, delivery and performance of this
Agreement (except for consents and approvals of governmental entities or
tribal authorities customarily obtained subsequent to the transfer of
title) shall have been obtained and delivered to Buyer or Seller, as
applicable, by Closing and shall not have been withdrawn or revoked; and
15.3.4 With respect to Properties which have not been excluded
from this Agreement because of exercise of a preferential purchase
right, if any, the preferential purchase rights applicable to such
Properties shall have been waived, or the time to elect under such
preferential purchase rights shall have elapsed, prior to Closing.
ARTICLE 16. THE CLOSING
16.1 Closing. Three (3) Business Days prior to the Closing Date, Seller
shall provide Buyer with a Closing statement setting forth the Purchase Price
adjusted in accordance with the terms of this Agreement. Seller shall
additionally provide Buyer with wiring instructions designating the account
or accounts to which the Closing funds are to be delivered in accordance with
Article 16.3.5. Closing shall be held in Seller's office at the 4th Floor,
550 WestLake Park Boulevard, Houston, Texas 77079, or such other location as
mutually agreed in writing by Seller and Buyer.
16.2 Obligations of Seller at Closing. At Closing, Seller shall deliver
to Buyer, unless waived by Buyer, the following:
16.2.1 A document conveying all of Seller's right, title and
interests in and to the Properties substantially in the form of the
Assignment and Bill of Sale attached hereto as Exhibit "I". The
Assignment and Bill of Sale shall be executed and acknowledged in four
(4) multiple originals or such greater number as agreed between the
parties;
16.2.2 A document conveying all of Seller's right, title and
interests in and to surface interests which are included in the
Properties substantially in the form of the Surface Deed attached hereto
as Exhibit "J". The Surface Deed shall be executed and acknowledged in
four (4) multiple originals or such greater number as agreed between the
parties;
16.2.3 A document conveying all of Seller's right, title and
interests in and to the mineral interests which are included in the
Properties substantially in the form of the Mineral Deed attached hereto
as Exhibit "K". The Mineral Deed shall be executed and acknowledged in
four (4) multiple originals or such greater number as agreed between the
parties;
16.2.4 Executed and acknowledged assignments of all of Seller's
right, title and interest in and to federal, state or tribal interests
included in the Properties on approved forms for such purpose;
16.2.5 A Certificate executed by an Attorney-in-Fact of Seller
certifying as to the matters specified in Articles 15.2.1 and 15.2.2
above substantially in the form of Exhibit "L";
16.2.6 Letters-in-Lieu of division orders or transfer orders
executed by an Attorney-in-Fact of Seller substantially in the form of
Exhibit "M";
16.2.7 An Opinion of Counsel executed by an attorney for Seller
substantially in the form of Exhibit "N";
16.2.8 A Non-Foreign Affidavit executed by an Attorney-in-Fact of
Seller substantially in the form of Exhibit "O";
16.2.9 A Transition Agreement executed by an Attorney-in-Fact of
Seller substantially in the form of Exhibit "P";
16.2.10 A License Agreement - SAMS substantially in the form of
Exhibit "Q", and a License Agreement - Seismic in a mutually agreed
form, as provided for in Article 12.4, executed by an Attorney-in-Fact
of Seller.
16.2.11 A Sublease Novation Agreement executed by an
Attorney-in-Fact of Seller substantially in the form of Exhibit "R";
16.2.12 Evidence that all consents and approvals prerequisite for
the sale and conveyance of the Properties (except for consents and
approvals of governmental entities or tribal authorities customarily
obtained subsequent to the transfer of title) have been obtained, as
well as evidence of waiver or lapse of any unexercised preferential
purchase rights applicable to the Properties; and
16.2.13 Such other instruments as necessary to carry out Seller's
obligations under this Agreement.
16.3 Obligations of Buyer at Closing. At Closing, Buyer shall deliver
to Seller, unless waived by Seller, the following:
16.3.1 The adjusted Purchase Price (plus Computed Interest on the
Purchase Price from the Effective Time through Closing, if due), less
Deposit (plus Computed Interest on the Deposit from the date of receipt
by Seller until Closing), by wire transfer in accordance with Article 3.
16.3.2 The Assignment and Bill of Sale, executed and properly
acknowledged, referred to in Article 16.2.1;
16.3.3 The Surface Deed, executed and properly acknowledged,
referred to in Article 16.2.2;
16.3.4 The Mineral Deed, executed and properly acknowledged,
referred to in Article 16.2.3;
16.3.5 The federal, state and tribal assignments, executed and
properly acknowledged, referred to in Article 16.2.4;
16.3.6 A Certificate executed by an authorized officer or
Attorney-in-Fact of Buyer certifying as to the matters specified in
Articles 15.1.1 and 15.1.2 substantially in the form of Exhibit "L";
16.3.7 Letters-in-Lieu of division orders or transfer orders
executed by an authorized officer or Attorney-in-Fact of Buyer
substantially in the form of Exhibit "M";
16.3.8 An Opinion of Counsel executed by an attorney for Buyer
substantially in the form of Exhibit "N";
16.3.9 A Transition Agreement executed by an authorized officer or
Attorney-in-Fact of Buyer substantially in the form of Exhibit "P";
16.3.10 A License Agreement - SAMS substantially in the form of
Exhibit "Q", and a License Agreement - Seismic in a mutually agreed
form, as provided for in Article 12.4, executed by an authorized officer
or Attorney-in-Fact of Buyer;
16.3.11 A Sublease Novation Agreement executed by an authorized
officer or Attorney-in-Fact of Buyer substantially in the form of
Exhibit "R";
16.3.12 The corporate guaranty referenced in Article 12.2;
16.3.13 Within thirty (30) Days after Closing, evidence of
compliance with all governmental and tribal requirements, if any, for
the posting of plugging or other applicable bonds relating to the
ownership or operation of the Properties; and
16.3.14 Such other instruments as necessary to carry out Buyer's
obligations under this Agreement.
ARTICLE 17. TERMINATION
17.1 Grounds for Termination. This Agreement may be terminated at any
time prior to Closing:
17.1.1 By the mutual written agreement of Seller and Buyer;
17.1.2 By either Seller or Buyer if the consummation of the
transactions contemplated herein would violate any nonappealable final
order, decree or judgment of any court or governmental entity having
appropriate jurisdiction enjoining or awarding substantial damages in
connection with the consummation of the transactions contemplated herein;
17.1.3 Notwithstanding anything contained in this Agreement to the
contrary, Seller shall have the right (to the extent Closing is not
delayed as a result of Seller's conduct) to terminate this Agreement if
Closing shall not have occurred by December 31, 1997.
17.2 Effect of Termination. If this Agreement is terminated in
accordance with Article 17.1, such termination shall be without liability to
any party, except return of the Deposit (plus Computed Interest on the
Deposit from the date of receipt by Seller until termination of this
Agreement) and performance of the obligations provided in Articles 17.3,
17.4, 17.5, 18.1, 19.3, 19.10, 19.12, 19.14, 19.15 and 19.17 (which
provisions shall survive termination of this Agreement). If this Agreement
is terminated as a result of Buyer's failure or refusal to perform an
obligation hereunder (including without limitation Closing on the Closing
Date), Seller shall be entitled to retain the Deposit as liquidated damages
(and not as a penalty) to reimburse Seller for its out-of-pocket fees and
expenses incurred in connection with the transactions contemplated by this
Agreement. The liquidated damages referenced above shall be in addition to
and not exclusive of other remedies which may be available at law or in
equity.
17.3 Dispute over Right to Terminate. If there is a dispute between the
parties over either party's right to terminate this Agreement under Article
17.1 or otherwise, Closing shall not occur, as scheduled. The party which
disputes the other party's right to terminate the Agreement may initiate
binding arbitration proceedings in accordance with Article 18.1 within thirty
(30) Days of the date on which Closing was scheduled to occur and, if
arbitration is so initiated, the dispute will be resolved through such
binding arbitration proceeding. If the party which disputes the termination
right does not initiate arbitration to resolve the dispute within the time
period specified hereinabove, such party shall be deemed to have waived for
all purposes its right to object to or dispute such termination.
17.4 Return of Documents. If this Agreement is terminated prior to
Closing, Buyer shall return to Seller all books, records, maps, files, papers
and other property of Seller in Buyer's possession relating to the
transaction contemplated by this Agreement.
17.5 Confidentiality. Notwithstanding the termination of this Agreement
or any other provision of this Agreement to the contrary, the terms of the
Confidentiality Agreement dated the 9th day of July, 1997, by and between
Seller and Buyer ("Confidentiality Agreement"), shall remain in full force
and effect. If Closing of the transaction contemplated herein occurs, the
Confidentiality Agreement shall terminate (which termination shall be
effective as of the Closing).
ARTICLE 18. ARBITRATION
18.1 Arbitration. Unless expressly provided otherwise in this
Agreement, any and all disputes arising under the terms of this Agreement
("Arbitrable Dispute") shall be referred to and resolved through the use of
binding arbitration using three (3) arbitrators, in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, and the
Federal Arbitration Act (Title 9 of the United States Code). If there is any
inconsistency between this Article and any statute or rules, the terms of
this Article shall control the rights and obligations of the parties.
Arbitration shall be initiated within the applicable time limits set forth in
this Agreement and not thereafter or if no time limit is given, within the
time period allowed by the applicable statute of limitations. Arbitration
shall be initiated by one (1) party ("Claimant") serving written notice on
the other party ("Respondent") that the Claimant elects to refer the
Arbitrable Dispute to binding arbitration, and that the Claimant has
appointed an arbitrator, who shall be identified in such notice. The
Respondent shall respond to the Claimant within thirty (30) Days after
receipt of Claimant's notice, identifying the arbitrator Respondent has
appointed. The two (2) arbitrators so chosen shall select a third arbitrator
(who must have not less than ten (10) years experience as an oil and gas
lawyer) within thirty (30) Days after the second arbitrator has been
appointed. Seller shall pay the compensation and expenses of the arbitrator
named by or for it, and Buyer shall pay the compensation and expenses of the
arbitrator named by or for it. Seller and Buyer shall each pay one-half of
the compensation and expenses of the third arbitrator. Unless expressly
provided otherwise in this Agreement, all arbitrators must be neutral parties
who have never been officers, directors or employees of the parties or any of
their Affiliates. Additionally, unless expressly provided otherwise in this
Agreement, the two (2) arbitrators named by the parties must have not less
than ten (10) years experience in the oil and gas industry, and must have a
formal education in the area of dispute (i.e., accounting for an accounting
dispute, etc.). The hearing shall be commenced within thirty (30) Days after
the selection of the third arbitrator. The parties and the arbitrators shall
proceed diligently and in good faith in order that the award shall be made as
promptly as possible. The decision of the arbitrators shall be binding on
and non-appealable by the parties. The arbitrators shall not have the
authority to grant or award indirect, consequential, punitive or exemplary
damages.
ARTICLE 19. MISCELLANEOUS
19.1 Notices. All notices and other communications required, permitted
or desired to be given hereunder must be in writing and sent by: (a) U.S.
mail, properly addressed as shown below, and with all postage and other
charges fully prepaid, (b) hand delivery, or (c) facsimile transmission.
Date of service by mail and hand delivery is the date on which such notice is
received by the addressee and by facsimile is the date sent (as evidenced by
fax machine confirmation of receipt), or if such date is not on a Business
Day, then on the next date which is a Business Day. Each party may change
its address by notifying the other party in writing.
If to Seller Amoco Production Company
by mail: P.O. Box 3092
Houston, Texas 77253-3092
Attn: General Manager of Business Development
AEGNA Acquisitions and Divestments
If to Seller Amoco Production Company
by hand delivery: 550 WestLake Park
Boulevard, 4th floor
Houston, Texas 77079
Attn: General Manager of Business Development
AEGNA Acquisitions and Divestments
If to Seller Amoco Production Company
by facsimile: Number: 281-366-7544
Attn: General Manager of Business Development
AEGNA Acquisitions and Divestments
If to Buyer Howell Petroleum Corporation
by mail: 1111 Fannin, Suite 1500
Houston, Texas 77002-6923
Attn: President
If to Buyer Howell Petroleum Corporation
by hand delivery: 1111 Fannin, Suite 1500
Houston, Texas 77002-6923
Attn: President
If to Buyer Howell Petroleum Corporation
by facsimile: Number: 713-658-4007
Attn: President
19.2 Conveyance Costs. Buyer shall be solely responsible for filing and
recording documents related to the transfer of the Properties from Seller to
Buyer and for all costs and fees associated therewith, including, without
limitation, filing the assignment of the Properties with appropriate federal,
state, local and tribal authorities as required by applicable Law. As soon
as practicable after recording or filing, Buyer shall furnish Seller with all
recording data and evidence of all required filings.
19.3 Brokers' Fees. Buyer has not retained any brokers, agents or
finders and none are affiliated with Buyer or authorized to act on behalf of
Buyer in this matter. Buyer agrees to release, protect, indemnify, defend
and hold Seller Group harmless from and against any and all Claims with
respect to any commissions, finders' fees or other remuneration due to any
broker, agent or finder claiming by, through or under Buyer. Seller agrees to
release, protect, indemnify, defend and hold Buyer Group harmless from and
against any and all Claims with respect to any commissions, finders' fees or
other remuneration due to any broker, agent or finder claiming by, through or
under Seller.
19.4 Records. Upon execution of this Agreement, Seller shall grant
Buyer reasonable access to the Records. Within sixty (60) Days after
termination of the Transition Agreement (except as provided below), Seller
shall furnish to Buyer all Records which are maintained by Seller; provided
however, Seller shall be entitled to retain: (a) copies of any or all such
Records, (b) originals of any Records required in connection with litigation
or other proceedings pending or threatened against Seller and associated with
the Properties, (c) originals of any Records required in connection with
title or environmental due diligence, (d) originals of any Records required
in connection with the Final Accounting Settlement, (e) originals of any
Records required in connection with any transition activities, and/or (f)
originals of any Records associated with any retained properties or
interests. Any and all original Records retained by Seller shall be
furnished to Buyer within thirty (30) Days after Seller's reasonable need for
said Records ceases. Where Seller retains originals of the Records, Buyer
shall have the right to copy any and all original Records so retained. Buyer
agrees to maintain the Records received from Seller in accordance herewith
for a period of seven (7) years after the Closing and shall afford Seller
full access to the Records as reasonably requested by Seller. If Buyer
desires to destroy the Records, or any portion thereof, it shall notify
Seller prior to such destruction, and provide Seller the opportunity to take
possession of the same.
19.5 Further Assurances. From and after Closing, at the request of
Seller but without further consideration, Buyer will execute and deliver or
use reasonable efforts to cause to be executed and delivered such other
instruments of conveyance and take such other actions as Seller reasonably
may request to more effectively put Seller in possession of any property
which was not intended by the parties or should not have been conveyed by
Seller (including without limitation, reassignment from Buyer to Seller of
any Properties which were conveyed in violation of a valid preferential right
to purchase or consent to assignment). From and after Closing, at the
request of Buyer but without further consideration, Seller shall execute and
deliver or use reasonable efforts to cause to be executed and delivered such
other instruments of conveyance and take such other actions as Buyer
reasonably may request to more effectively put Buyer in possession of the
Properties. If any of the Properties are incorrectly described, the
description shall be corrected upon proof of the proper description. From
and after Closing, Buyer and Seller shall each execute, acknowledge and
deliver to the other such further instruments and take such further action as
may be reasonably requested in order to more effectively assure to the other
the full beneficial use and enjoyment of the Properties and otherwise to
accomplish the purposes of the transaction contemplated by this Agreement.
19.6 Survival of Representations and Warranties. The representations
and warranties contained in Article 10 of this Agreement shall terminate one
(1) year after Closing. All other representations, warranties, indemnities,
covenants and agreements contained in this Agreement shall survive the
Closing indefinitely. The parties have made no representations or
warranties, except those expressly set forth in this Agreement.
19.7 Amendments and Severability. No amendments or other changes to
this Agreement shall be effective or binding on either of the parties unless
the same shall be in writing and signed by both Seller and Buyer. The
invalidity of any one or more provisions of this Agreement shall not affect
the validity of this Agreement as a whole, and in case of any such
invalidity, this Agreement shall be construed as if the invalid provision had
not been included herein.
19.8 Successors and Assigns. This Agreement shall not be assigned,
either in whole or in part, without the express written consent of the
non-assigning party; provided however, Buyer shall upon obtaining the prior
written consent of Seller (which consent shall not be unreasonably withheld)
have the right to assign this Agreement to an Affiliate. The terms,
covenants and conditions contained in this Agreement shall be binding upon
and shall inure to the benefit of Seller and Buyer and their respective
successors and assigns, and such terms, covenants and conditions shall be
covenants running with the land and with each subsequent transfer or
assignment of the Properties.
19.9 Headings. The titles and headings set forth in this Agreement have
been included solely for ease of reference and shall not be considered in the
interpretation or construction of this Agreement.
19.10 Governing Law. This Agreement (including administration of the
binding arbitration provision set forth in Article 18.1) shall be governed by
and construed under the Laws of the State of Wyoming, excluding any choice of
law rules which may direct the application of the Laws of another
jurisdiction.
19.11 No Partnership Created. It is not the purpose or intention of this
Agreement to create (and it shall not be construed as creating) a joint
venture, partnership or any type of association, and the parties are not
authorized to act as agent or principal for each other with respect to any
matter related hereto.
19.12 Public Announcements. Neither Seller nor Buyer (including any of
their Affiliates in either case) shall issue a public statement or press
release with respect to the transaction contemplated herein (including the
price and other terms) without the prior written consent of the other party,
except as required by Law or listing agreement with a national security
exchange and then only after prior consultation with the other party.
19.13 No Third Party Beneficiaries. Nothing contained in this Agreement
shall entitle anyone other than Seller or Buyer or their authorized
successors and assigns to any claim, cause of action, remedy or right of any
kind whatsoever.
19.14 Waiver of Consumer Rights. As partial consideration for the
parties agreeing to enter into this Agreement, the parties each can and do
expressly waive the provisions of the Texas Deceptive Trade Practices
Consumer Protection Act, Article 17.41 et seq., Texas Business and Commerce
Code, a law that gives consumers special rights and protection, and all other
consumer protection Laws of the State of Texas, or any other state, applicable
to this transaction that may be waived by the parties. It is not the intent of
the parties to waive and the parties shall not waive any applicable Law or
provision thereof which is prohibited by Law from being waived. The parties
hereto represent that they have had an adequate opportunity to review
the preceding waiver provision, including the opportunity to submit the
same to legal counsel for review and comment and after consultation with an
attorney of their own selection voluntarily consent to this waiver, and
understand the rights being waived herein.
19.15 Not to be Construed Against Drafter. The parties acknowledge that
they have had an adequate opportunity to review each and every provision
contained in this Agreement and to submit the same to legal counsel for
review and comment, including without limitation the waivers and indemnities
in Articles 4.3, 5.3, 8, 9, 19.3, 19.6 and 19.14. Based on said review and
consultation, the parties agree with each and every term contained in this
Agreement. Based on the foregoing, the parties agree that the rule of
construction that a contract be construed against the drafter, if any, shall
not be applied in the interpretation and construction of this Agreement.
19.16 Tax Deferred Exchange Election. Either party may elect to
structure the conveyance of the Properties as part of an exchange under
Article 1031 of the Internal Revenue Code of 1986, as amended. The parties
agree to execute all documents, conveyances or other instruments necessary to
effectuate an Article 1031 exchange.
19.17 Conspicuousness of Provisions. The parties acknowledge that the
provisions contained in this Agreement that are set out in "bold" satisfy the
requirement of the express negligence rule and any other requirement at law
or in equity that provisions contained in a contract be conspicuously marked
or highlighted.
19.18 Execution in Counterparts. This Agreement may be executed in
counterparts, which shall when taken together constitute one (1) valid and
binding agreement.
19.19 Entire Agreement. his Agreement and the Confidentiality Agreement
supersede all prior and contemporaneous negotiations, understandings, letters
of intent and agreements (whether oral or written) between the parties
relating to the Properties and constitute the entire understanding and
agreement between the parties with respect to the sale and purchase of the
Properties.
The parties have executed this Agreement on the day and year first set
forth above.
AMOCO PRODUCTION COMPANY
By: ______________________
Name: Lon O. Buehner
Title: Attorney-in-Fact
HOWELL PETROLEUM CORPORATION
By:________________________________
Name: Robert T. Moffett
Title: Vice President
Howell Petroleum Corporation
ATTEST
By:__________________________
Name: John E. Brewster, Jr.
Title: Assistant Secretary
Howell Petroleum Corporation
EXHIBIT "A"
To Purchase and Sale Agreement
by and between
Amoco Production Company, Seller
and
Howell Petroleum Corporation, Buyer
WORKING INTERESTS AND NET REVENUE INTERESTS
SEE ATTACHED DOCUMENT
SIXTY TWO (62) PAGES
EXHIBIT "B"
To Purchase and Sale Agreement
by and between
Amoco Production Company, Seller
and
Howell Petroleum Corporation, Buyer
PREFERENTIAL PURCHASE AND DEFECT ALLOCATION
Properties
Allocated Value
- - ----------------------------------------------------------------
Beaver Creek Area Properties
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
Beaver Creek Unit as more particularly $ 187,068,000
described in that certain Co-operative
Development Contract Beaver Creek
Structure dated March 29, 1937, and that
certain Operating Agreement to Accompany
Cooperative Development Contract dated
August 12, 1947 (excluding the Beaver
Creek Gas Processing Plant interests
described below)
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
Beaver Creek Gas Processing Plant as $ 5,400,000
more particularly described in that
certain Construction and Operating
Agreement dated March 11, 1959
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
Other Interests $ 780,000
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
Elk Basin Unit Area Properties
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
Elk Basin Unit as more particularly $ 20,634,000
described in that certain Unit Agreement
and Unit Operating Agreement dated April
19, 1946, and that certain Unit Agreement
and Unit Operating Agreement (Frontier)
dated August 20, 1954 (excluding surface
and royalty interest associated with the
Amoco Lease Nos. 900182-A, 900183-A,
900184-A and 900185-A
described below)
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
Amoco Lease Nos. 900182-A, 900183-A, $ 4,100,000
900184-A and 900185-A
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
Other Interests $ 1,000,000
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
Salt Creek Unit Area Properties
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
Salt Creek Unit as more particularly $ 45,582,000
described in that certain Unit Agreement
dated January 10, 1939 and Unit Operating
Agreement dated August 18, 1939
(excluding Leasehold Interest located in
Section 6: SE1/4SE1/4, T39N-R78W
described below)
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
Leasehold Interest located in Section $ 400,000
6: SE1/4SE1/4, T39N-R78W
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
Other Interests $ 100,000
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
Grass Creek Unit Area Properties
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
Grass Creek Unit as more particularly $ 8,301,000
described in that certain Unit Agreement
and Unit Operating Agreement (Phosphoria
Tensleep) dated April 1, 1974
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
Other Interests $ 100,000
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
Pitchfork Unit Area Properties
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
Pitchfork Unit as more particularly $ 6,619,000
described in that certain Unit Operating
Agreement dated December 23, 1970
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
Four Bear Pipeline located in Park $ 348,000
County, Wyoming
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
Medicine Pole Hills Unit Area Properties
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
Medicine Pole Hills Unit as more $ 3,846,000
particularly described in that certain
Unit Agreement and Unit Operating
Agreement dated August 1, 1985
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
Other Interests $ 100,000
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
Red Wing Creek Unit Area Properties
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
Red Wing Creek Unit as more particularly $ 946,000
described in that certain Plan of
Unitization Agreement dated June 10, 1981
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
BIG SAND DRAW UNIT AREA PROPERTIES
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
Big Sand Draw Unit as more particularly
described in that certain Cooperative or $ 16,057,000
Unit Plan of Development dated December
7, 1931
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
Other Interests $ 100,000
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
MISCELLANEOUS PROPERTIES
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
Miscellaneous Gas Properties $ 986,000
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
Miscellaneous Oil Properties $ 18,000
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
- - ----------------------------------------------------------------
Total Allocated Value $ 302,485,000
- - ----------------------------------------------------------------
EXHIBIT "C"
To Purchase and Sale Agreement
by and between
Amoco Production Company, Seller
and
Howell Petroleum Corporation, Buyer
MATERIAL CONTRACTS
SEE ATTACHED DOCUMENT
TWELVE PAGES
MATERIAL CONTRACTS
- - ---------------------------------------------------------------------------
AREA DOCUMENT* Cont.
No.
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
1 Elk Agreement for Processing Gas Produced from Madison 12,100
Basin Participating Area in Elk Basin Plant, Park County,
Wyoming and Carbon County, Montana, dated 3-26-51
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
2 Elk Gas Processing Agreement between APC as Producer and 122,303
Basin APC as Plant Operator, Elk Basin Gasoline Plant, Park
County, Wyoming, dated 9-1-88
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
3 Elk Gas Sales & Purchase Contract (South Elk Basin) 90,971
Basin between Continental Oil Company, as Operator, and
APC, as Buyer, dated 11-3-75
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
4 Elk Gas Sales & Purchase Contract between Texaco, as 108,299
Basin Seller, and APC, as Operator of the Elk Basin
Unit-Embar Tensleep Area, dated 4-29-82
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
5 Elk Contract for Operations between Colorado Interstate 146,766
Basin Gas Company and APC, as operator of the Elk Basin Gas
Plant, dated 8-1-91
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
6 Elk Processing Agreement between Jim Capshaw and APC, 159,379
Basin dated 1-30-97
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
7 Elk Purchase Agreement between Jim Capshaw and APC for 159,380
Basin Finished Products, dated 1-30-97
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
8 Elk Assignment between Stanolind Oil and Gas Company and 17,221
Basin Billings Gas Company, dated 12-21-49; Agreement
between Montana-Dakota Utilities Company, Stanolind
Oil and Gas Company and The Ohio Oil Company, dated
7-9-51; Modification Agreement between Amoco,
Wiliston Basin Interestate Pipeline Company and
Conoco, effective 1-1-96
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
9 Salt Salt Creek Unit Area Agreement and Unit Operating 5,972-B
Creek Agreement, Natrona County, Wyoming, dated 1-10-39
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
10 Salt Border Agreement between Midwest, as Operator, and 5792-B
Creek Trigood, dated 4-1-62
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
11 Salt Contract for Operation of Unit Area between Midwest 5792-B
Creek Oil Corporation, as Operator, and Pan American
Petroleum, dated 8-31-65
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
12 Salt Cooperative Injection Agreement between Midwest and 5792-B
Creek CRA Inc., dated 7-1-69
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
13 Salt Gas Purchase Contract between AETC and Northern Gas NA
Creek Company, dated 3-7-94
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
14 Salt Gas Marketing Agreement between Amoco and Exxon, 159,293
Creek dated 3-17-97
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
15 Beaver Agreement for Construction and Operation of Beaver 44,201
Creek Creek Processing Plant between Pan American,
Kerr-McGee and Phillips Petroleum, dated 3-11-59
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
16 Beaver Cooperative Development Contract, Beaver Creek 5,792
Creek Structure, Fremont County, Wyoming, dated 3-29-37
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
17 Beaver Agreement between Phillips and Kerr-McGee regarding 5,792
Creek Beaver Creek Structure, Stanolind as Operator, dated
2-6-57
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
18 Beaver Operating Agreement to Accompany Cooperative 5,792
Creek Development Contract, dated 8-12-47
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
19 Red Plan of Unitization, Red Wing Creek Unit, McKenzie 81,644
Wing County, North Dakota, dated 6-10-81
Creek
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
20 Medicine Unit Agreement, Medicine Pole Hills, Red River Unit 114,451
Pole Area, Bowman County, North Dakota, dated 4-22-85
Hills
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
21 Medicine Unit Operating Agreement, Medicine Pole Hills, Red 114,451
Pole River Unit Area, Bowman County, North Dakota, dated
Hills 8-1-85
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
22 Grass Unit Agreement, Grass Creek Field Phosphoria-Tensleep 269,124
Creek Unit Area, Hot Springs County, Wyoming, dated 4-1-74 269,126
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
23 Grass Unit Operating Agreement, Grass Creek Field 90,102
Creek Phosphoria-Tensleep Unit Area, Hot Springs County,
Wyoming, dated 4-1-74
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
24 Grass Unit Agreement for the Development and Operating of 34,150
Creek the Frontier Formation, Hot Springs County, Wyoming,
dated 3-12-56
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
25 Grass Unit Operating Agreement for the Development and 34,150
Creek Operation of the Frontier Formation, Hot Springs
County, Wyoming, dated 3-29-56
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
26 Grass Unit Agreement for Development and Operating of the 38,638
Creek Grass Creek Pre-Tensleep Unit Area, Hot Springs
County, Wyoming, dated 8-22-57
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
27 Grass Unit Operating Agreement under Grass Creek 38,638
Creek Pre-Tensleep Unit Agreement, Hot Springs County,
Wyoming, dated 8-22-57
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
28 Grass Unit Agreement for Development and Operation of Grass 44,530
Creek Creek Curtis Unit Area, Hot Springs County, WY, dated
11-20-58
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
29 Grass Unit Operating Agreement for Development and 44,530
Creek Operation of Grass Creek Curtis Unit Area, Hot
Springs County, Wyoming, dated 11-20-58
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
30 Pitchfork Unit Development Contract between California 49,492
Exploration and Producers & Refiners Corporation,
dated 1-1-32
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
31 Big Cooperative Development Contract, Beaver Creek 5,792
Sand Structure,
Draw dated 3-29-37
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
32 Big Unit Agreement, dated 12-7-31 89,705
Sand 615,450
Draw
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
33 Elk Elk Basin Unit Agreement, Park County, Wyoming and 102,803
Basin Carbon County, Montana, dated 4-19-46
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
34 Elk Operating Contract under Elk Basin Unit Agreement, 12,100
Basin Park County, Wyoming and Carbon County, Montana,
dated 4-19-46
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
35 Elk Unit Agreement, Elk Basin (Frontier) Unit, dated 22,775
Basin 8-20-54
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
36 Elk Unit Operating Agreement, Elk Basin (Frontier) Unit, 22,775
Basin dated 8-20-54
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
37 Elk Contract for Partial Requirements Electric Service NA
Basin between Pacific Power & Light and APC, dated 1-17-94
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
38 Beaver Casinghead Gas Supply Contract between Pan American, 44,202
Creek Kerr-McGee and Phillips, dated 3-11-59
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
39 Beaver Natural Gas Supply Contract between Pan American, Kerr 57,546
Creek McGee and Phillips, dated 6-1-64
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
40 Beaver Gas Purchase Agreement between K N Marketing and AETC, 157,934
Creek dated 5-1-96
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
41 Beaver Natural Gas Supply Contract between Kerr-McGee, Pan 44,203
Creek American and Phillips, dated 3-11-59
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
42 Beaver Sulfur Sale Agreement between Amoco and Tessenderlo NA
Creek Kerley, dated 12-1-96
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
43 Elk Sulfur Loading Agreement between Amoco and Tessenderlo 87,706
Basin Kerley, dated 12-1-96
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
44 Salt Office Space Lease between Amoco and Petrolite NA
Creek Corporation, dated 6-1-93
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
45 Pitch Construction and Operating Agreement Fourbear NA
Fork Pipeline, Park County, Wyoming, dated 6-15-59
- - ---------------------------------------------------------------------------
* All references to contracts include any and all applicable amendments.
EXHIBIT "D"
To Purchase and Sale Agreement
by and between
Amoco Production Company, Seller
and
Howell Petroleum Corporation, Buyer
GAS IMBALANCES
SEE ATTACHED DOCUMENT
THREE PAGES
EXHIBIT "E"
To Purchase and Sale Agreement
by and between
Amoco Production Company, Seller
and
Howell Petroleum Corporation, Buyer
PARTNERSHIPS
1. Tax Partnership included in that certain Joint Operating Agreement dated
the 27th day of August, 1985 covering the NW/4 of Section 15, Township 30
North, Range 45 East, Valley County, Montana.
EXHIBIT "F"
To Purchase and Sale Agreement
by and between
Amoco Production Company, Seller
and
Howell Petroleum Corporation, Buyer
EXCLUDED PROPERTIES - AFFILIATES
Amoco Pipeline Company Station Sites:
1. Elk Basin Station (Sec. 8, T58N, R100W, Park County, Wyoming)
- The Elk Basin Station is an unmanned station on the Elk Basin leg
of the Lost Cabin Crude Gathering System that is owned and operated
by Amoco Pipeline Company ("APL"). It receives crude oil from
APL's 12-inch line from Billings and delivers crude via an 8-inch
line to the Silver Tip Station. Its primary receipt of oil comes
from APL's facilities located at Oregon Station via APL's 12-inch
mainline and Marathon Pipeline at Elk Basin. Elk Basin Station's
primary function is to deliver "Y" crude to the Silver Tip Station,
an APL metering facility, then to Exxon Pipeline's tank farm.
- Elk Basin Station Equipment. The Elk Basin Station includes
pipelines, tanks, meters, measurement facilities, pumps, valves,
scraper traps, fittings, connections and other appurtenances,
including without limitation, the following:
a. Pumping Unit. There is one pumping unit. Unit #1 is a Gaso
2652 positive displacement pump with a 250 HP Allis Chalmers
electric motor.
b. Booster Pump. There is one booster pump. Booster #1 is a
Johnson 4-stage vertical centrifugal pump with a 30 HP
Continental electric motor.
c. Control Valve. There is an ANSI 600 4-inch Fisher valve and
actuator that is in the pump bypass for startup and closes
when the pump gets onstream.
d. Back Pressure Control Valve. There is an ANSI 600 4-inch
Fisher valve and actuator that is used to control the hill
pressure and line fill from the Oregon Station.
e. Relief Valve. There is an ANSI 600 relief valve in the
incoming trap from the Oregon Station to protect the line from
the Oregon Station to Elk Basin, and is set to relieve into
tankage at 640 psi.
f. Tankage. There are two 54,000 bbl tanks (Nos. 6727 and 6728).
g. LACT. Elk Basin LACT located on the Elk Basin Station grounds.
2. Edgerton Station (Sec. 10, T40N, R78W Natrona County, Wyoming)
- The Edgerton Station is an unmanned origin station on the Edgerton
leg of the Salt Creek Crude Gathering System that is owned and
operated by APL. It receives "U" or "Sweet" crude from Belle
Fourche Pipeline Company ("Belle Fourche") through their tank and
Automatic Custody Transfer ("ACT") unit.
- Edgerton Station Equipment. The Egderton Station includes
pipelines, tanks, meters, measurement facilities, pumps, valves,
scraper traps, fittings, connections and other appurtenances,
including without limitation, the following:
a. Pumping Units. There are two pumping units. Unit #1 is a
Byron Jackson nine-stage VLT vertical centrifugal pump with a
50 HP Siemens electric motor.
b. Manually Operated Block Valves. There are five manually
operated block valves; one on either side of the two units,
and one in a bypass between the two units. All valves are
ANSI 300 6-inch valves, except for the valve upstream of Unit
#2 which is an ANSI 150 6-inch valve.
c. Check Valve. There are two ANSI 300 6-inch check valves. The
check valve for Unit #1 is upstream of the control valve and
the check valve for Unit #2 is upstream of the block valve for
the unit. These valves are placed to eliminate any backflow
when the station is down and the block valves are not closed.
d. Control Valve. There is an ANSI 300 4-inch Fisher control
valve downstream of Unit #1 to automatically control the
station's flow and suction and discharge pressures.
e. Crude Line. There is a 4.97 mile 6-inch crude line from the
Edgerton Station to Salt Creek.
f. Belle Fourche Facilities. Belle Fourche owns and operates a
tank and ACT with a meter, BS&W monitor, pump, valves and
piping to deliver "U" crude to APL's pump.
3. Salt Creek Station (Sec. 24, T40N, R79W, Natrona County, Wyoming)
- The Salt Creek Station is a manned origin station on the mainline
to Casper of the Salt Creek Crude Gathering System that is owned
and operated by APL. It receives "BW" or "Sweet" crude from Reno,
Sussex; "TSP" or "Tensleep" crude from Reno, Sussex and the local
East Salt Creek lines; "U" or light "Sweet" crude from the Edgerton
line; "BW" crude from local Salt Creek lines; and "Y" or heavy
"Sour" crude on a local Salt Creek line, and batches it to the
Casper tank farm.
- Salt Creek Station Equipment. The Salt Creek Station includes
pipelines, tanks, meters, measurement facilities, pumps, valves,
scraper traps, fittings, connections and other appurtenances,
including without limitation, the following:
a. Pumping Units. There are three pumping units. Units #1 and
#2 are Byron Jackson 5-stage centrifugal pumps with Electric
Motive 500 HP electric motors. Unit #3 is a Bingham 3-stage
centrifugal pump with a Louis Allis 2,000 HP electric motor.
b. Booster Pump. There is one booster pump. Booster #1 is a
Johnson 5-stage (de-staged to 2) vertical deep-well
centrifugal pump with a 150 HP General Electric motor.
c. Control Valves. There are two ANSI 600 8-inch Fisher control
valves. One is downstream of Units #1 and #2 and the other is
downstream of Unit #3 to control the station's suction and
discharge pressures. Unit #3 does not operate with Units #1
and #2 and has a separate discharge line.
d. Motor-Operated Block Valves. There are seven ANSI 150 12-inch
and two ANSI 150 8-inch motor-operated valves (Units #1 and
#2), six of which are in the suction line from the tanks used
to supply crude to the mainline units. Three are in the
suction lines to the pumps and adjacent to them.
e. Manually Operated Block Valves. There are three key manually
operated block valves. Two are ANSI 150 8-inch valves that
isolate Units #1, #2 or #3 from the incoming crude line when
one or the other is running. The other is an ANSI 600 12-inch
valve in the mainline downstream of the units to isolate the
station from the line.
f. Check Valve. There is an ANSI 600 16-inch check valve
upstream of the mainline valve to eliminate backflow when the
station is down and the block value is not closed.
g. Relief Valves. There are two relief valves on the incoming
gathering lines from Reno and North Fork at the Salt Creek
scraper trap. The valves relieve into Tank No. 47840.
h. Meters. There are two ANSI 150 positive displacement meters
for measuring the flow from the Salt Creek Station to Casper.
One meter is 8-inch and the other is 10-inch.
i. Gravitometers. There are three gravitometers at the Salt
Creek Station to measure the gravity of the incoming crude
from Reno and the outgoing batches to Casper. Gravity is used
in the Programmable Logic Controller to switch the "B" and "T"
crudes to the appropriate tanks via the Salt Creek manifold.
The third gravitometer is on the East Salt Creek Line and
switches automatically from "P" to TSP crudes.
j. Two-Way Valves. There are two ANSI 300 8-inch two-way valves
on the incoming lines from Reno and East Salt Creek to direct
the different crudes to the proper tanks.
k. Programmable Logic Controller. A GE 6000 Programmable Logic
Controller is used to sequence the units onstream and shut
them down, divert "B" and "T" crude from Reno and East Salt
Creek to the appropriate tanks, and act as the communication
device instead of the AMOCAMS 300 and generally monitor the
station.
l. Tankage. Salt Creek Station has six tanks (Nos. 6635, 6636,
47840, 48213, 42617 and 6682).
m. ACT. Salt Creek Truck ACT, includes tank Nos. 7072 and 7065
located on the Salt Creek Station grounds.
n. Gathering Pipelines. Gathering pipelines associated with the
Salt Creek Station site include:
- From LACT 5 (Sec. 14, T40N R78W)
- From LACT 10 (Sec. 30, T40N R78W)
- From LACT 20 (Sec. 26 ,T40N R78W)
- From LACT 4 (Sec. 11, T40N R79W)
- From LACT 11 (Sec. 35, T40N R79W)
- South Gravity Line (Sec. 24, 25, 36, T40N R79W)
- South Gravity Line (Sec. 13, 12, 1, T39N R78W)
Line Segments
APL owned and operated Salt Creek Crude Gathering System which includes
pipelines, tanks, meters, measurement facilities, pumps, valves, scraper
traps, fittings, connections and other appurtenances, including without
limitation, the following:
1. Salt Creek/Casper Mainline
- 23.13 mi of 16-inch pipe and 17.82 mi of 12-inch pipe that
originates at the Salt Creek Station and runs south parallel to
I-25/US Highway 87 to the Casper Station.
2. Reno/Salt Creek Gathering Line
- 31.87 mi of 10-inch pipe originating at the Reno Station and runs
to the Salt Creek Station and parallels I-25/US Highway 87 (5-10 mi
East).
3. North Fork/Salt Creek Gathering Line
- 29.59 mi of 12-inch pipe originating at North Fork Station and runs
SE parallel and close to I-25/US Highway 87.
4. Edgerton/Salt Creek Gathering Line
- 4.97 mi of 6-inch pipe originating at Edgerton Station and runs SW
parallel to State Hwy 387 to the Salt Creek Station.
5. Billings to Casper Trunk Line
- Originating in Billings, through Elk Basin to Casper.
6. Elk Basin to Silvertip
- 7.23 mi of 8-inch pipe originating at Elk Basin and runs north
through Elk Basin field along Silvertip Creek.
Downstream Facilities
Any and all assets downstream of the LACTS, including without limitation,
pipelines, tanks, meters, measurement facilities, pumps, valves, scraper
traps, fittings, connections and other appurtenances.
EXHIBIT "F-1"
To Purchase and Sale Agreement
by and between
Amoco Production Company, Seller
and
Howell Petroleum Corporation, Buyer
EXCLUDED PROPERTIES - OTHER
SEE ATTACHED DOCUMENT
TWO PAGES
EXHIBIT "G"
To Purchase and Sale Agreement
by and between
Amoco Production Company, Seller
and
Howell Petroleum Corporation, Buyer
CLAIMS, DISPUTES AND LITIGATION
The following is a summary of the currently identified pending claims,
disputes and litigation associated with the Properties:
1. Robert A. James and Sharon V. James vs. Oil Field Safety, Inc., and
Amoco Production Company, in the 9th District Court, Freemont County,
Wyoming, Case No. CV28909. The Plaintiff alleges he is suffering
health problems due to H2S exposure at the Beaver Creek 116 Well.
2. Donald Swanton and Lori Swanton vs. V-1 Oil Company, et. al., in
the United States District Court for the District of Montana, Great
Falls Division, Case No. CV-95-105-GF-PGH. The Plaintiff alleges he was
injured as a result of inadequate odorant contained in liquid products
he purchased.
3. Wilford M. Burton, et. al., vs. Amoco Production Company, et. al.,
in the Third Judicial District Court, Salt Lake County, Utah, Case No.
96-09017-95CV. This is an oil royalties dispute. The Plaintiffs seek
certification of a nationwide class.
4. M. Lovelace Jr., et. al., vs. Amerada Hess Corporation, et. al., in
the Circuit Court of Estambia County, Alabama, Case No. CV-96-297. The
Plaintiffs allege violation of anti-trust laws of the various producing
states by conspiring to artificially depress the "posted price" on which
royalties are paid. The Plaintiffs seek certification of a nationwide
class.
5. The McMahon Foundation, et. al., vs. Amerada Hess Corporation, et.
al., in the United States District Court, Southern District of Texas,
Houston Division, Case No. H-96-1155. The Plaintiffs allege violation
of federal anti-trust laws by conspiring to artificially depress the
"posted price" on which royalties are paid. The Plaintiffs seek
certification of a nationwide class.
6. MMS Issues. Amoco and the MMS are involved in ongoing discussions
concerning the alleged underpayment of royalties on a nationwide basis.
See Schedule 1 (Summary of Outstanding MMS Issues) attached hereto.
7. Cameron Parish School Board, et al. v. Texaco, Inc., et al., in the
United States District Court, Western District of Louisiana, Lake
Charles Division, Civil Action No. CV 96-1222. The Plaintiffs allege
defendants have violated federal anti-trust laws by conspiring to
artificially depress the "posted price" on which royalties are paid,
fraudulently concealing price-fixing activities and in turn underpaying
plaintiffs for crude oil. The Plaintiffs seek certification of a
nationwide class with respect to the anti-trust claims.
8. James Donald Stanley, et al. v. Gulf Oil Corporation, et al., in
the United States District Court for the Southern District of
Mississippi, Hattiesburg, Division, Civil Action No. 2:97CV279PG.
Plaintiffs allege that defendants have violated federal antitrust laws,
have set their posted prices at levels consistently below a fair market
price and that their royalty payments have been too low as a result.
Plaintiffs sue to recover this underpayment and seek certification of a
nationwide class.
9. Randolph Energy, Inc. v. Amerada Hess Corp. et al., in the United
States District Court, for the Southern District of Mississippi,
Hattiesburg Division, Civil Action No. 2:97CV273PG. Plaintiffs allege
conspiracy among the Defendant oil companies to fix, depress, stabilize
and maintain at artificially low levels the prices paid for the first
purchase of crude oil sold from leases in which Plaintiffs own interests
by using posted prices in a sham manner in order to keep them in a range
below competitive market prices. The Plaintiffs seek certification of a
nationwide class.
10. Department of Justice Investigation The Department of Justice and
the Office of the Inspector General of the Department of the Interior
are conducting an investigation of whether Amoco and other oil and gas
producers have violated the False Claims Act, 31 U.S.C. Section 3729 et.
seq., in connection with alleged underpayment of royalties for
extraction of oil or gas on federal or indian lands.
Seller is currently conducting a review to determine if additional claims,
disputes and litigation are pending. If Seller determines prior to Closing
that additional matters are pending, the above information will be
supplemented. Additional information in Seller's possession associated with
the above referenced matters will prior to Closing be provided upon request.
EXHIBIT "H"
To Purchase and Sale Agreement
by and between
Amoco Production Company, Seller
and
Howell Petroleum Corporation, Buyer
ASSIGNMENT AND BILL OF SALE
STATE OF [Insert State] Section
COUNTY OF [Insert County] Section
This ASSIGNMENT AND BILL OF SALE ("Assignment") dated the [Insert Day]
day of [Insert Month], 1997, but effective as of the 1st day of December,
1997 ("Effective Time"), is from Amoco Production Company, a Delaware
corporation, with an office at 501 WestLake Park Boulevard, Houston, Texas
77079 (hereinafter referred to as "Assignor") to [Insert Company Name], a
[Insert State of Incorporation] corporation, with an office at [Insert
Address] (hereinafter referred to as "Assignee").
FOR Ten Dollars and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Assignor hereby GRANTS,
CONVEYS, SELLS and ASSIGNS to Assignee the following properties (real,
personal or mixed) and rights (contractual or otherwise):
[DEFINITION OF PROPERTIES AND EXCLUDED ASSETS - TO BE INSERTED FROM
ARTICLE 1.44]
All of the properties (real, personal and mixed) and rights (contractual or
otherwise) described are referred to as "Properties".
TO HAVE AND TO HOLD the Properties subject to the following terms and
conditions:
1. Special Warranty Of Title. Seller shall warrant title to and
forever defend title to the Properties conveyed to Buyer against every person
whomsoever lawfully claiming title to the Properties, or any part thereof
by, through or under Seller, but not otherwise.
2. Agreements. This Assignment is made subject to and shall be
burdened by the terms, covenants and conditions contained in any contracts,
agreements and instruments affecting the Properties; and at and after the
Effective Time, Assignee expressly agrees to be bound by, assume the
obligations arising under, and shall perform all of the terms, covenants and
conditions contained therein.
3. Compliance With Laws: This Assignment is made subject to all
applicable laws, statutes, ordinances, permits, decrees, orders, judgments,
rules and regulations which are promulgated, issued or enacted by a
governmental entity or tribal authority having appropriate jurisdiction, and
Assignee shall comply with the same at and after the Effective Time.
4. Successors and Assigns. The terms, covenants and conditions
contained in this Assignment shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns, and such
terms, covenants and conditions shall be covenants running with the land and
with each subsequent transfer or assignment of the Properties, or any part
thereof.
5. Purchase and Sale Agreement. This Assignment (a copy of which can
be obtained from Assignee at the above referenced address) is made in
accordance with and is subject to the terms, covenants and conditions
contained in that certain PURCHASE AND SALE AGREEMENT dated the [Insert Day]
day of [Insert Month], 1997, by and between Amoco Production Company and
[Insert Company Name] ("Purchase and Sale Agreement"), and the terms,
covenants and conditions contained in the Purchase and Sale Agreement are
incorporated herein by reference as though said terms, covenants and
conditions were fully set forth verbatim herein. If there is a conflict
between the provisions of the Purchase and Sale Agreement and this
Assignment, the provisions of the Purchase and Sale Agreement shall control
the rights and obligations of the parties, and their authorized successors
and assigns.
EXECUTED on the day and year first referenced above, but effective as of
the Effective Time.
Assignor
AMOCO PRODUCTION COMPANY
By: __________________________
Name: __________________________
Title:Attorney-in-Fact
Assignee
[Insert Company Name]
By: __________________________
Name: __________________________
Title:Attorney-in-Fact
STATE OF TEXAS Section
COUNTY OF HARRIS Section
The foregoing instrument was acknowledged before me this _______ day of
___________________, 199__, by ________________________, Attorney-in-Fact on
behalf of __________________________ a _______________ corporation.
My commission expires:
_________________________________
Signature
_________________________________
Name (Printed, Typed of Stamped)
Notary Public in and for the
State of Texas
STATE OF TEXAS Section
COUNTY OF HARRIS Section
The foregoing instrument was acknowledged before me this _______ day of
_______________, 199__, by ________________________, ________ on behalf of
__________________________ a _______________ corporation.
My commission expires:
_________________________________
Signature
_________________________________
Name (Printed, Typed of Stamped)
Notary Public in and for the
State of Texas
EXHIBIT "I"
To Purchase and Sale Agreement
by and between
Amoco Production Company, Seller
and
Howell Petroleum Corporation, Buyer
SURFACE DEED
STATE OF [Insert State] Section
COUNTY OF [Insert County] Section
AMOCO PRODUCTION COMPANY, a Delaware corporation, with an address at 501
WestLake Park Boulevard, Houston, Texas 77079 ("Grantor"), for ten dollars
($10.00) and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, does hereby grant, sell and
convey with special warranty of title unto [Insert Company Name], with an
office at [Insert Address] ("Grantee"), the SURFACE ESTATE ONLY of those
certain tracts of land situated in [Insert County] County, [Insert State],
being more specifically described in Exhibit "A", attached hereto and
incorporated herein by reference (collectively referred to herein as "the
Property").
TO HAVE AND TO HOLD the Property together with all rights and privileges
thereto appertaining, unto Grantee, its successors and assigns.
Grantor shall warrant title to and forever defend title to the Properties
conveyed to Grantee against every person whomsoever lawfully claiming title
to the Properties, or any part thereof by, through or under Grantor, but not
otherwise.
The terms, covenants and conditions contained in this Deed shall be
binding upon and inure to the benefit of the parties and their respective
successors and assigns, and such terms, covenants and conditions shall be
covenants running with the land and with each subsequent transfer or
assignment of the Property, or any part thereof.
This Deed is made in accordance with and subject to any and all oil, gas
and mineral leases; and all restrictions, reservations, covenants,
conditions, agreements, rights-of-way and easements of record in [Insert
County] County, [Insert State], and/or disclosed to Grantee, affecting the
Property, or any part thereof, and the terms, covenants and conditions
contained in that certain Purchase and Sale Agreement (a copy of which can be
obtained from Grantee at the above referenced address) dated the [Insert Day]
day of [Insert Month], 1997, by and between Grantor and Grantee ("Purchase
and Sale Agreement"). The terms, covenants and conditions contained in the
Purchase and Sale Agreement are incorporated herein by reference as though
said terms, covenants and conditions were fully set forth herein. If there
is a conflict between the provisions of the Purchase and Sale Agreement and
this Deed, the provisions of the Purchase and Sale Agreement shall control
the rights and obligations of the parties.
EXECUTED this [Insert Day] day of [Insert Month], 1997, but effective
the 1st day of December, 1997.
AMOCO PRODUCTION COMPANY [Insert Company Name]
By: By:
Name: Name:
Title: Attorney-in-Fact Title: Attorney-in-Fact
STATE OF TEXAS Section
COUNTY OF HARRIS Section
The foregoing instrument was acknowledged before me this _______ day of
___________________, 1997, by ________________________, Attorney-in-Fact on
behalf of __________________________________, a ____________ corporation.
My commission expires:
_________________________________
Signature
_________________________________
Name (Printed, Typed of Stamped)
Notary Public in and for the
State of Texas
STATE OF TEXAS Section
COUNTY OF HARRIS Section
The foregoing instrument was acknowledged before me this _______ day of
_______________, 1997, by ________________________, ___________ on behalf of
__________________________________, a ____________ corporation.
My commission expires:
_________________________________
Signature
_________________________________
Name (Printed, Typed of Stamped)
Notary Public in and for the
State of _______________
EXHIBIT "J"
To Purchase and Sale Agreement
by and between
Amoco Production Company, Seller
and
Howell Petroleum Corporation, Buyer
MINERAL DEED
STATE OF [Insert State] Section
COUNTY OF [Insert County] Section
AMOCO PRODUCTION COMPANY, a Delaware corporation, with an address at 501
WestLake Park Boulevard, Houston, Texas 77079 ("Grantor"), for ten dollars
($10.00) and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, does hereby grant, sell and
convey with special warranty of title unto [Insert Company Name], with an
office at [Insert Address] ("Grantee"), the MINERAL ESTATE ONLY associated
with those certain tracts of land situated in [Insert County], County,
[Insert State], being more specifically described in Exhibit "A", attached
hereto and incorporated herein by reference (collectively referred to herein
as "the Mineral Interest").
TO HAVE AND TO HOLD the Mineral Interest together with all rights and
privileges thereto appertaining, unto Grantee, its successors and assigns.
Grantor shall warrant title to and forever defend title to the Properties
conveyed to Grantee against every person whomsoever lawfully claiming title
to the Properties, or any part thereof by, through or under Grantor, but not
otherwise.
The terms, covenants and conditions contained in this Mineral Deed shall
be binding upon and inure to the benefit of the parties and their respective
successors and assigns, and such terms, covenants and conditions shall be
covenants running with the land and with each subsequent transfer or
assignment of the Mineral Interest, or any part thereof.
This Mineral Deed is made in accordance with and subject to any and all
oil, gas and mineral leases; and all restrictions, reservations, covenants,
conditions, agreements, rights-of-way and easements of record in [Insert
County] County, [Insert State], and/or disclosed to Grantee, affecting the
Mineral Interest, or any part thereof, and the terms, covenants and
conditions contained in that certain Purchase and Sale Agreement (a copy of
which can be obtained from Grantee at the above referenced address) dated
the [Insert Day] day of [Insert Month], 1997, by and between Grantor and
Grantee ("Purchase and Sale Agreement"). The terms, covenants and conditions
contained in the Purchase and Sale Agreement are incorporated herein by
reference as though said terms, covenants and conditions were fully set forth
herein. If there is a conflict between the provisions of the Purchase and
Sale Agreement and this Mineral Deed, the provisions of the Purchase and Sale
Agreement shall control the rights and obligations of the parties.
EXECUTED this [Insert Day], day of [Insert Month], 1997, but effective
the 1st day of December, 1997.
AMOCO PRODUCTION COMPANY [Insert Company Name]
By: By:
Name: Name:
Title: Attorney-in-Fact Title: Attorney-in-Fact
STATE OF TEXAS Section
COUNTY OF HARRIS Section
The foregoing instrument was acknowledged before me this _______ day of
___________________, 1997, by ________________________, Attorney-in-Fact on
behalf of __________________________________, a ____________ corporation.
My commission expires:
_________________________________
Signature
_________________________________
Name (Printed, Typed of Stamped)
Notary Public in and for the
State of Texas
STATE OF TEXAS Section
COUNTY OF HARRIS Section
The foregoing instrument was acknowledged before me this _______ day of
_______________, 1997, by ________________________, ___________ on behalf of
__________________________________, a ____________ corporation.
My commission expires:
_________________________________
Signature
_________________________________
Name (Printed, Typed of Stamped)
Notary Public in and for the
State of _______________
EXHIBIT "K"
To Purchase and Sale Agreement
by and between
Amoco Production Company, Seller
and
Howell Petroleum Corporation, Buyer
CERTIFICATE
I, [Insert Name], [Insert Title] of [Insert Seller/Buyer], a [Insert
State of Incorporation] corporation ("[Insert Seller/Buyer]"), do hereby
certify pursuant to Article of the Purchase and Sale Agreement by
and between Amoco Production Company and [Insert Company Name], dated the
[Insert Day] day of [Insert Month], 1997 (the "Agreement"), that the
representations and warranties contained in the Agreement are true and
correct on and as of the date hereof, except for inaccuracies which in the
aggregate are not material when considering the transaction as a whole.
[Insert Seller/Buyer]
By:
Name:
Title:
Date:
EXHIBIT "L"
To Purchase and Sale Agreement
by and between
Amoco Production Company, Seller
and
Howell Petroleum Corporation, Buyer
LETTERS-IN-LIEU
[Insert Date]
[Insert Product Purchaser's Name]
[Insert Product Purchaser's Address]
Gentlemen:
Enclosed is a copy of an unrecorded Assignment and Bill of Sale dated
the [Insert Day] day of [Insert Month], 1997, from Amoco Production Company
("Seller") to [Insert Company Name] ("Buyer") conveying all of Seller's right,
title and interests in and to the properties described in Exhibit "A"
attached hereto ("Properties").
You are currently disbursing proceeds from the oil or gas produced from
the Properties pursuant to certain division orders, transfer orders or other
agreements. This letter is provided by Seller and Buyer as an agreement in
lieu of having separate division orders or transfer orders prepared and
executed for the Properties.
PAYMENT INSTRUCTIONS - Effective as of the next distribution date, and
until further notice, Seller and Buyer hereby authorize and instruct you to
pay to Buyer all amounts which become due to the interests formerly owned by
Seller for any products produced or sold from the Properties. Payments
should be made to Buyer at the following address:
[Insert Company's Name]
[Insert Company's Address]
[Insert Company's Telephone Number]
It is the intent of Seller and Buyer that there be no suspension of or
interruption in payments made by you with respect to the Properties.
INDEMNITY - Buyer hereby agrees to indemnify you against any and all
claims, demands, suits, causes of action, losses, damages and costs
(including attorneys' fees and costs of litigation) occurring as a result of
your making payments or remittances in the manner specified herein.
FURTHER INFORMATION - Upon request, Buyer will furnish you a copy of the
recorded Assignment and Bill of Sale, when available. If you have any
questions regarding the Properties or other matters set forth herein, or if
for any reason you are unable to comply with the request set forth in this
letter, you are requested to contact Buyer at the above-referenced address.
In order that Buyer may have a record evidencing your acceptance of this
letter, we request that you sign two (2) copies of this letter in the space
provided below and return one (1) fully executed copy to Buyer at the
above-referenced address.
BUYER SELLER
[Insert Company Name] AMOCO PRODUCTION COMPANY
By: By:
Name: Name:
Title: Attorney-in-Fact Title: Attorney-in-Fact
RECEIPT IS ACKNOWLEDGED THIS [Insert Day] DAY OF [Insert Month], 1997.
[Insert Product Purchaser's Name]
By: ______________________
Name: ______________________
Title:______________________
EXHIBIT "M"
To Purchase and Sale Agreement
by and between
Amoco Production Company, Seller
and
Howell Petroleum Corporation, Buyer
OPINION OF COUNSEL
[Insert Date]
To: [Insert Seller/Buyer]
Gentlemen:
This opinion is delivered to you pursuant to that certain Purchase and Sale
Agreement by and between Amoco Production Company, a Delaware corporation
("Seller") and [Insert Company Name], a [Insert State of Incorporation]
corporation ("Buyer") dated the [Insert Day] day of [Insert Month], 1997 (the
"Agreement"). Capitalized terms not otherwise defined have the same
meanings as set forth in the Agreement.
As counsel for [Insert Seller/Buyer], I have made such legal and factual
examinations as I have deemed necessary and proper in rendering the opinions
herein expressed, and I have examined such documents as the materials listed
below:
(a) The Certificate of Incorporation and Bylaws of [Insert Seller/Buyer], as
amended;
(b) Confirmation from the applicable Secretary of State as to the good
standing of [Insert Seller/Buyer], in the State of [Insert State of
Incorporation];
(c) Certified copies of resolutions adopted by the Board of Directors of
[Insert Seller/Buyer] in connection with the Agreement and certain related
matters; and
(d) An executed copy of the Agreement.
Based upon the foregoing and having regard to the legal considerations which
I deem relevant, it is my opinion that:
1. [Insert Seller/Buyer] is a corporation duly organized, validly existing
and in good standing under the Laws of the State of [Insert State of
Incorporation], having all requisite corporate power and authority to own
and lease the Properties. [Insert Seller/Buyer] is duly licensed or
qualified to do business as a foreign corporation and is in good standing
in all jurisdictions in which the Properties are located;
2. [Insert Seller/Buyer] has all requisite corporate power and authority to
execute and deliver the Agreement, to consummate the transactions
contemplated therein and to perform all of the terms and conditions to be
performed by it as provided for in the Agreement. The execution and
delivery of the Agreement by [Insert Seller/Buyer], the performance by
[Insert Seller/Buyer] of all of the terms and conditions to be performed by
it and the consummation of the transactions contemplated therein have been
duly authorized and approved by all necessary corporate action. The
Agreement has been duly executed and delivered by [Insert Seller/Buyer] and
constitutes the valid and binding obligation of [Insert Seller/Buyer],
enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency or other Laws
relating to or affecting the enforcement of creditors' rights and general
principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity); and
3. The execution and delivery of the Agreement and the consummation of the
transaction contemplated therein will not conflict with or require the
consent of any person or entity under any of the terms, conditions or
provisions of the Certificate of Incorporation or Bylaws of [Insert
Seller/Buyer].
In rendering this opinion, I have assumed the genuineness of all signatures
and the authenticity of all documents submitted to me as originals and the
conformity with the originals of all documents submitted as certified,
photostatic or otherwise identified as copies. I also have obtained and
relied upon such certificates as to factual matters and other assurances from
public officials and officers of [Insert Seller/Buyer] as I considered
necessary for the purpose of rendering this opinion. With respect to the
good standing of [Insert Seller/Buyer], I have relied solely on the advice of
the Secretary of State of [Insert State of Incorporation].
The foregoing opinion is limited to the laws of the State of [Insert
Attorney's State of License] and the federal laws of the United States of
America, and I express no opinion as to the applicability or the effect of
the laws of any other jurisdiction.
This opinion is rendered solely for the benefit of the entity to which this
opinion is addressed in connection with the Agreement and the transactions
contemplated thereby, and may not be relied upon for any other purpose, nor
may it be furnished to, used, circulated, quoted or referred to by any other
person or entity without my prior written consent.
Sincerely,
Name:
Counsel For:
Date:
EXHIBIT "N"
To Purchase and Sale Agreement
by and between
Amoco Production Company, Seller
and
Howell Petroleum Corporation, Buyer
NON-FOREIGN AFFIDAVIT
Exemption from Withholding of Tax For
Dispositions of U.S. Real Property Interests
Article 1445 of the Internal Revenue Code provides that a transferee of a
U.S. real property interest must withhold tax if the transferor is a foreign
person. To inform [Insert Company Name] ("Buyer") that withholding of tax is
not required upon the disposition of a U.S. real property interest by Amoco
Production Company, the undersigned hereby certifies the following:
1. Amoco Production Company is not a nonresident alien, foreign
corporation, foreign partnership, foreign trust, or foreign estate for
purposes of U.S. income taxation;
2. Amoco Production Company's taxpayer identifying number is
73-0466080; and
3. Amoco Production Company's home address is 200 East Randolph Drive,
Chicago, Illinois 60601.
Amoco Production Company understands that this certification may be
disclosed to the Internal Revenue Service by Buyer and that any false
statement contained herein could be punished by fine, imprisonment, or both.
Under penalties of perjury, I declare that I have examined this
certification and, to the best of my knowledge and belief, it is true,
correct, and complete, and I further declare I have authority to sign this
document.
AMOCO PRODUCTION COMPANY
By: __________________________
Name: ___________________________
Title: Attorney-in-Fact
STATE OF TEXAS Section
COUNTY OF HARRIS Section
The foregoing instrument was acknowledged before me this _______ day of
___________________, 199__, by ________________________ as Attorney-in-Fact,
on behalf of Amoco Production Company, a Delaware corporation.
My commission expires:
_________________________________
Signature
_________________________________
Name (Printed, Typed of Stamped)
Notary Public in and for the
State of Texas
EXHIBIT "O"
To Purchase and Sale Agreement
by and between
Amoco Production Company, Seller
and
Howell Petroleum Corporation, Buyer
TRANSITION AGREEMENT
THIS TRANSITION AGREEMENT ("Agreement") is entered into this [Insert
Day] day of [Insert Month], 1997, by and between [Insert Buyer], with a
mailing address of [Insert Address] ("Buyer") and AMOCO PRODUCTION COMPANY,
with a mailing address of 501 WestLake Boulevard, Houston, Texas 77079
("Amoco").
WHEREAS, on the [Insert Day] day of [Insert Month], 1997, Amoco and
Buyer entered into a Purchase and Sale Agreement wherein Amoco agreed to sell
and Buyer agreed to purchase certain oil and gas properties and related
interests (the "Purchase and Sale Agreement").
WHEREAS, Amoco currently operates various Properties (as defined in the
Purchase and Sale Agreement) and accounts for all of the Properties.
WHEREAS, Buyer desires that Amoco continue to operate the Properties
which it currently operates and account for all of the Properties for a
limited period of time in accordance with the terms of this Agreement.
NOW, THEREFORE, based upon the mutual covenants and considerations
contained herein, the parties agree as follows:
1. SCOPE OF SERVICES: Effective as of the Closing (as defined in the
Purchase and Sale Agreement), Amoco shall continue the physical operation of
the Properties which it currently operates and account for all of the
Properties in conformity with general practices in the oil and gas industry
and in accordance with the various agreements. The services to be performed
by Amoco under the terms of this Agreement shall be limited to the following:
(a) Employ such personnel as may be reasonably necessary to perform the
services provided under this Agreement;
(b) Administer the books, records and accounts associated with the
ownership and operation of the Properties;
(c) Purchase supplies, materials, tools, facilities and equipment
associated with the ownership and operation of the Properties; provided
however, Amoco shall not, without the prior written consent of Buyer,
purchase any of the above if such purchase would result in a change,
obligation or liability in excess of One Hundred Thousand and No/100
Dollars ($100,000) for any single item, except in cases reasonably
believed by Amoco to constitute an emergency;
(d) Contract for services associated with the ownership and operation
of the Properties; provided however, Amoco shall not, without the prior
written consent of Buyer, enter into a service contract which would
result in a charge, obligation or liability in excess of One Hundred
Thousand and No/100 Dollars ($100,000), except in cases reasonably
believed by Amoco to constitute an emergency;
(e) Pay all lease rentals, shut-in royalties, minimum royalties,
payments in lieu of production, royalties, overriding royalties,
production payments, net profit payments and similar burdens, and pay
all operating costs, vendor invoices and contractor invoices which are
required to be paid under the terms and provisions of the applicable
agreements and which are associated with the ownership and operation of
the Properties;
(f) Pay all lease settlements and other liquidated monetary obligations
which are associated with the ownership and operation of the Properties;
(g) Provide marketing, gas control and other similar services necessary
to sell the products produced from or associated with the Properties in
a manner consistent with Amoco's past practices;
(h) Execute routine contracts or documents necessary for carrying on
business related to the Properties; provided however, Amoco shall not,
without the prior written consent of Buyer, enter into any single
contractual arrangement which would result in a charge, obligation or
liability in excess of Fifty Thousand and No/100 Dollars ($50,000),
except in cases reasonably believed by Amoco to constitute an emergency;
(i) Submit reports to state, federal or tribal authorities, as
appropriate; and
(j) Provide assistance, as reasonably requested by Buyer, in
familiarizing Buyer's personnel (including contract personnel) with the
operation of the Properties.
2. LIMITATION ON SERVICES; COOPERATION: Notwithstanding anything contained
in Section 1 to the contrary, Amoco shall not have the obligation to provide
services under the terms of this Agreement (including without limitation
providing Buyer with records, information and data) which Amoco did not
perform for its own account immediately prior to Closing. Amoco and Buyer
agree to cooperate with each other in order to facilitate Buyer's reasonable
workover, recompletion, drilling, deepening, sidetracking, treating and
stimulating operations.
3. TERMINATION AND TURNOVER DATE: This Agreement shall commence on the
date first referenced above and shall terminate when the services have been
performed with respect to February, 1998 production.
4. REIMBURSEMENT: Buyer shall reimburse Amoco for any and all costs,
expenses and COPAS overhead charges (billed by third parties) incurred by
Seller and associated with operating the Properties during the term of this
Agreement.
5. FEES: Buyer shall pay to Amoco a fee of Four Hundred Fifty Thousand and
No/100 United States Dollars (US $450,000) commencing as of the Effective
Time (as defined in the Purchase and Sale Agreement) and each calendar month
thereafter to compensate Amoco for the service performed hereunder.
6. MONTHLY STATEMENT: Within thirty (30) days after each calendar month,
Amoco shall submit to Buyer a statement substantially in the form attached
hereto as Exhibit "1" ("Estimated Monthly Statement"). The Estimated Monthly
Statement shall include the following information to the extent the
information is attributable to Amoco's interest in the Properties immediately
prior to Closing:
(a) Amoco's estimate of sales volumes and value;
(b) All direct costs, expenses and COPAS overhead charges billed by
third parties to Amoco, including without limitation settlement to
leases and other liquidated monetary obligations;
(c) Estimated capital expenditures recorded by Amoco;
(d) Amoco's fee; and
(e) Net estimated cash available for transfer.
If the cash available for transfer shown on Exhibit "1" is positive, Amoco
shall remit such amount to Buyer within thirty (30) days of delivery of the
Estimated Monthly Statement. If the cash available for transfer shown on
Exhibit "1" is negative, Buyer shall remit such amount to Amoco within thirty
(30) days of Buyer's receipt of the Estimated Monthly Statement.
7. FINAL TRANSITION SETTLEMENT: As soon as reasonably practicable, but in
no event more than ninety (90) days after termination of this Agreement,
Amoco shall prepare and deliver to Buyer a final transaction statement in a
form similar to Exhibit "1" setting forth actual revenues, direct costs,
expenses, COPAS charges, revenues returned to leases and capitalized
expenditures for the Properties during the term of this Agreement ("Final
Transition Statement"). Within forty-five (45) days after receipt of the
Final Transition Settlement, Buyer shall deliver to Amoco a written report
containing any changes that Buyer proposes be made to the Final Transition
Settlement. If Buyer fails to timely deliver the written report to Amoco
containing Buyer proposals to be made to the Final Transition Statement, the
Final Transition Statement delivered by Amoco shall be deemed to be true and
correct and the same shall be binding on and non-appealable by the parties.
The parties shall undertake to agree with respect to the amounts due no later
than thirty (30) days after Amoco's receipt of Buyer's report. If the
parties fail to agree within such thirty (30) day period, the disputed items
shall be resolved by submitting the same to a firm of independent nationally
recognized accountants mutually acceptable to the parties (the "Accounting
Referee"). The Accounting Referee shall resolve the dispute within thirty
(30) days after having the relevant materials submitted for review. The
decision of the Accounting Referee shall be binding on the parties and
non-appealable. The fees and expenses associated with the Accounting Referee
shall be borne equally by Amoco and Buyer. The date upon which all amounts
are agreed to by the parties, whether by decision of the Accounting Referee
or otherwise, shall be herein called the "Final Settlement Date." Any
amounts owed by either party to the other as a result of such adjustments
shall be paid within five (5) days after the Final Settlement Date.
8. INDEMNIFICATION: Amoco, its officers, agents, employees and Affiliates
(collectively "Amoco Group") shall not be liable for any claims, demands,
suits, causes of action, losses, damages, liabilities and costs (including
attorneys' fees and costs of litigation) ("Claims") arising out of or
resulting from the services provided by the Amoco Group under the terms of
this Agreement, except for matters caused by or resulting solely from a
criminal act, fraudulent act, gross negligence or willful misconduct of the
Amoco Group. Buyer shall release the Amoco Group from and shall fully
protect, indemnify and defend the Amoco Group and hold each of them harmless
from and against any and all Claims arising out of or resulting from the
services provided by the Amoco Group under the terms of this Agreement,
regardless of cause or of any negligent acts or omissions of any of the Amoco
Group, other than matters caused by or resulting solely from a criminal act,
fraudulent act, gross negligence or willful misconduct of the Amoco Group.
9. ASSIGNABILITY: The rights, duties and privileges under this Agreement
shall not be assigned by the parties hereto without the prior written consent
of the non-assigning party; provided however, Amoco shall be entitled to
engage contract personnel to perform services contemplated under this
Agreement.
10. GOVERNING LAW: This Agreement shall be governed by and construed under
the laws of the State of Wyoming, excluding any conflict of law rules which
may require the application of laws of another jurisdiction.
11. NOTICES: All notices, requests and other communications shall be
provided in accordance with the terms of the Purchase and Sale Agreement.
12. OTHER AGREEMENTS: If there is a conflict between the terms of the
Purchase and Sale Agreement and the terms of this Agreement, the terms of
this Agreement shall control the rights and obligations of the parties, but
only to the extent necessary to resolve the conflict. All capitalized terms
not defined in this Agreement, shall have the meaning contained in the
Purchase and Sale Agreement.
IN WITNESS WHEREOF, the parties agree to the foregoing on the day and
year first set forth above.
AMOCO PRODUCTION COMPANY
By:
Name:
Title: Attorney-in-Fact
[Insert Company Name]
By:
Name:
Title:
EXHIBIT "1"
TO TRANSITION AGREEMENT
ESTIMATED MONTHLY STATEMENT
FOR THE PERIOD (MONTHLY DURING TRANSITION PERIOD)
(In Thousands)
CASH FLOWS PROVIDED BY (UTILIZED IN)
OPERATING AND INVESTING ACTIVITIES:
Revenue $XXX
Less:
Direct costs, expenses and COPAS charges XXX
Revenues returned to leases XXX
Capital expenditures XXX
Amoco's fee XXX
CASH AVAILABLE FOR TRANSFER $XXX
EXHIBIT "P"
To Purchase and Sale Agreement
by and between
Amoco Production Company, Seller
and
Howell Petroleum Corporation, Buyer
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (this "Agreement") is dated the [Insert Day] day
of [Insert Month], 1997, by and between AMOCO PRODUCTION COMPANY, a Delaware
corporation, with an office at 501 WestLake Park Boulevard, Houston, Texas
77079 (hereinafter referred to as "Amoco") and [Insert Company Name] a
[Insert State of Incorporation] corporation, with an office at [Insert
Address] (hereinafter referred to as "Licensee"), and is based on the
following premises:
WHEREAS, Amoco and Licensee entered into a Purchase and Sale Agreement
dated the [Insert Day] day of [Insert Month], 1997 wherein Amoco agreed to
sell and Licensee agreed to purchase Amoco's interest in the certain oil and
gas properties and related interest ("Purchase and Sale Agreement");
WHEREAS, Amoco has developed or acquired certain Automation Technology
(as hereinafter defined) relating to field automation systems for producing
oil and gas; and
WHEREAS, Amoco and Licensee have reached agreement with respect to the
terms of the above.
NOW, THEREFORE, for valuable consideration and the mutual covenants and
agreements herein contained, Amoco and Licensee agree as follows:
1. Definitions. As used in this Agreement, the following terms shall
have the respective meanings ascribed to them below:
1.1 "Automation Technology" means:
(a) all trade secrets and know-how (including, but not limited to,
technical information, reports, data, operating information, processes,
methods of control, software, written processes and reservoir
descriptions, and engineering drawings) relating to the automation of
oil and gas wells, including:
(i) electronic flow measurement and well control;
(ii) equipment useful for automating compressor stations and
gas plants;
(iii) Standard Automation Modular System software known as
"SAMS"; and
(iv) firmware known as "AMOCAMS" developed by Amoco for use
in connection with Automation Technology equipment which is owned
and controlled by Amoco or affiliates of Amoco and for which Amoco
has the right to make the grants provided herein; and
(b) patents and other intellectual property rights of Amoco to the
extent and only to the extent that such patents and other intellectual
property rights directly pertain to 1.1(a) above.
1.2 "Proprietary Automation System" means field well automation
systems, equipment, and facilities embodying Automation Technology.
2. Grant of Rights Under Automation Technology.
(a) Amoco hereby grants to Licensee, subject to all the terms and
conditions of this Agreement, a nonexclusive, nontransferable,
royalty-free right and license to use Automation Technology and a
nonexclusive, nontransferable, royalty-free immunity from suit under the
claims of any U.S. patents existing as of the date hereof, owned or
controlled by Amoco or any affiliate of Amoco which may be infringed
through the use of Automation Technology, to use such Automation
Technology solely and expressly for the purpose of operating the wells
referenced on Exhibit "A" of the Purchase and Sale Agreement.
(b) Nothing contained in this Agreement shall be construed to
grant Licensee any implied rights or licenses with respect to Automation
Technology, and except as expressly set forth in this Agreement,
Licensee agrees not to use, or allow the use of, Automation Technology
for the benefit of any party other than Licensee or for any purpose
other than as set forth in 2(a) above, without the prior written consent
of Amoco.
3. Third-Party Licenses. It is understood that certain third-party
licenses are required before Licensee can utilize the Automation Technology
licensed hereunder, as listed in Exhibit "A" to this Agreement. Amoco will
use reasonable efforts in assisting Licensee in obtaining at a limited costs
(but at Licensee's sole cost) third-party software license(s) needed to
continue automation of the wells referenced on Exhibit "A" of the Purchase
and Sale Agreement as currently existing. Licensee shall be solely
responsible for all transfer fees and maintenance fees incurred which are
associated with such third-party licenses.
4. Format. Amoco will provide Licensee with one (1) copy of object
code and source code useful for operating the Proprietary Automation System,
and one (1) copy of any and all user instruction manuals or program
documentation therefor.
5. Modifications. Licensee acknowledges Amoco's proprietary rights
and title to Automation Technology and the Proprietary Automation System and
agrees to make available to Amoco promptly and at no charge for use in
Amoco's normal business operations, all modifications and enhancements, if
any, which Licensee or its contractors hereafter may make to Automation
Technology or the Proprietary Automation System.
6. Maintenance. Licensee agrees and acknowledges that Amoco shall not
be required to perform any maintenance whatsoever of Automation Technology or
the Proprietary Automation System, including without limitation, the
performance of modifications and/or enhancements to the Proprietary
Automation System.
7. Warranties. Licensee acknowledges and agrees that Automation
Technology is being provided by Amoco to Licensee "As-Is, Where-Is", and with
all faults in its present condition and state of repair, without recourse.
Amoco hereby disclaims any and all representations and/or warranties
concerning the Automation Technology, express, statutory, implied or
otherwise, including without limitation, condition, quality, compliance with
applicable laws, absence of defects (latent or patent), safety, state of
repair, merchantability, fitness for a particular purpose or ability of the
Automation Technology or Proprietary Automation Systems to comply with,
address or adapt to the year 2000 which is approaching, and Licensee
expressly releases Amoco from the same.
8. Release. Licensee agrees that Amoco shall not be responsible or
liable for any loss, destruction of property, loss of profits or other
damages whatsoever, including without limitation, any direct, indirect,
incidental or consequential damages of any nature which may be caused by the
Proprietary Automation System or by Licensee's use of Automation Technology,
and Licensee hereby releases Amoco from all such responsibility and liability.
9. Indemnity. Licensee shall release Amoco from and shall fully
protect, indemnify and defend Amoco, its officers, agents, employees and
affiliates (collectively "Amoco Group") and hold each of them harmless from
and against any and all claims, demands, suits, causes of action, losses,
damages, liabilities and costs (including attorneys' fees and costs of
litigation) ("Claims") relating to, arising out of, or connected, directly or
indirectly, with the use of Automation Technology under the terms of this
Agreement, no matter when asserted, including without limitation, Claims
relating to: (a) injury or death of any person or persons whomsoever, (b)
damages to or loss of any property or resources, (c) common law causes of
action such as negligence, gross negligence, strict liability, nuisance or
trespass and/or (d) fault imposed by statute, rule, regulation or otherwise.
The indemnity obligation and release provided herein shall apply regardless
of cause or of any negligent acts or omissions (excluding gross negligence
and willful misconduct) of any of the Amoco Group.
10. Confidentiality.
(a) Licensee shall maintain in confidence and not disclose
Automation Technology to any third parties, except contractors of
Licensee performing maintenance or providing enhancements to the
Proprietary Automation System for use as permitted under paragraph 2
hereinabove. Licensee shall be responsible for any disclosure or other
breach of this provision by its contractors. Licensee agrees and
acknowledges that Automation Technology is the confidential information
of and is proprietary to Amoco. All applicable copyright, trade secret,
patent and other intellectual property rights in Automation Technology
and in the Proprietary Automation System are and shall remain in Amoco.
To the extent that such materials are not already so marked, Licensee
shall mark and maintain all documentation received from Amoco and
relating to the Proprietary Automation System as follows:
COPYRIGHT 1997 AMOCO CORPORATION
CONFIDENTIAL AND PROPRIETARY
ALL RIGHTS RESERVED
(b) The parties acknowledge that the rights reserved to the
parties under this Agreement are necessarily of a special, unique, and
extraordinary nature and that the loss arising from breach or threatened
breach thereof, cannot reasonably or adequately be compensated by money
damages and will cause the parties to suffer irreparable harm and that a
remedy at law for any breach thereof will be inadequate. Accordingly,
the parties agree that each shall be entitled to injunctive or other
extraordinary relief in case of any such breach or attempted or
threatened breach of covenants set forth in this paragraph 10,
prohibiting such breach or attempted or threatened breach and commanding
compliance with such paragraph 10, merely by proving the existence of
such breach or threatened or attempted breach, and without the necessity
of proving irreparable harm or inadequacy of legal remedies. However,
this provision shall in no way limit any other rights or remedies,
including the recovery of damages, which the parties may have under the
terms of this Agreement or at law or in equity.
11. Amoco Name. Licensee shall make no oral or written statement or
perform any act indicating that Amoco or any of Amoco's affiliates endorse or
approve, or has endorsed or approved, any version of the Automation
Technology or Proprietary Automation System made or used by Licensee.
Licensee shall not associate or in any way connect any name or trademark of
Amoco or any of Amoco's affiliates with Licensee's work products without
Amoco's prior written consent.
12. Export Control Regulations. Licensee agrees to abide by the export
control regulations of the United States with respect to Automation
Technology and the Proprietary Automation System.
13. Term. This Agreement shall commence on the Closing (as defined in
the Purchase and Sale Agreement) and with respect to each well referenced on
Exhibit "A" of the Purchase and Sale Agreement ("Well") shall have a term of
one (1) year and as long thereafter as Licensee owns an interest in and
operates such Well, unless sooner terminated as provided herein below:
(a) This Agreement will terminate automatically as to any Well if
and when Licensee no longer owns a working interest in such Well and
operates such Well, and this Agreement will terminate automatically in
whole if and when Licensee no longer owns an interest in and operates
any of the Wells;
(b) This Agreement will terminate automatically if Licensee
attempts to transfer all or any of its rights under this Agreement in
whole or in part without the prior written consent of Amoco;
(c) This Agreement may be terminated at Amoco's option if Licensee
breaches any material provision of this Agreement and fails to remedy
said breach within ten (10) days after receipt of written notice from
Amoco thereof; and
(d) This Agreement may be terminated by Licensee (except for
Sections 7, 8, 9 and 10 which shall survive termination) at any time
effective upon Amoco's receipt of all documentation and software
relating to Automation Technology and the Proprietary Automation System
and a certification from Licensee warranting that Licensee is no longer
using and shall not in the future use the Automation Technology or
Proprietary Automation System.
Termination of this Agreement shall not relieve either party of its
obligations hereunder which shall have arisen prior to termination. Upon
termination of this Agreement, Licensee shall return to Amoco promptly the
originals and all of Licensee's copies or reproductions of documentation and
software relating to Automation Technology or the Proprietary Automation
System.
14. Audit Rights. Amoco shall have the right to perform audits or
require Licensee to perform periodic self-audits to verify compliance with
the terms and conditions of this Agreement, including those relating to the
use of Automation Technology. Periodic audits shall extend to such records,
documentation, and other information insofar as reasonably deemed appropriate
by Amoco for its review in order to support an opinion with respect to
compliance with the terms of this Agreement. A written report of the audit
findings shall be submitted to Amoco. The frequency and scope of the audits
shall be at the sole reasonable discretion and cost of Amoco.
15. Miscellaneous.
(a) Successors and Assigns. This Agreement is personal in nature
and is for the sole benefit of the parties. The rights and obligations
shall not be assigned by Licensee, either in whole or in part, without
the express written consent of Amoco, and any such assignment that is
made without such consent shall be void and of no force and effect. The
terms, covenants and conditions contained in this Agreement shall be
binding upon and shall inure to the benefit of Amoco and Licensee and
their respective successors and assigns.
(b) Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Wyoming, excluding any conflict
of law rules which may require the application of laws of another
jurisdiction.
(c) Notices. All notices, requests and other communications shall
be provided in accordance with the terms of the Purchase and Sale
Agreement.
(d) Amendments and Severability. No amendments or other changes
to this Agreement shall be effective or binding on either of the parties
unless the same shall be in writing and signed by both Amoco and
Licensee. The invalidity of any one or more provisions of this
Agreement shall not affect the validity of this Agreement as a whole,
and in case of any such invalidity, this Agreement shall be construed as
if the invalid provision had not been included herein.
(e) No Third Party Beneficiaries. Nothing contained in this
Agreement shall entitle anyone other than Amoco or Licensee or their
authorized successors and assigns to any claim, cause of action, remedy
or right of any kind whatsoever.
(f) Headings. The titles and headings set forth in this Agreement
have been included solely for ease of reference and shall not be
considered in the interpretation or construction of this Agreement.
(g) No Partnership Created. It is not the purpose or intention of
this Agreement to create (and it shall not be construed as creating) a
joint venture, partnership or any type of association, and the parties
are not authorized to act as agent or principal for each other with
respect to any matter related hereto.
(h) Entire Agreement. This Agreement supersedes all prior and
contemporaneous negotiations, understandings, letters of intent and
agreements (whether oral or written) between the parties relating to the
Proprietary Automation System and constitutes the entire understanding
and agreement between the parties with respect to the license of the
Proprietary Automation System.
The parties have executed this Agreement on the day and year first set
forth above.
AMOCO PRODUCTION COMPANY
By:
Name:
Title: Attorney-in-Fact
[Insert Company Name]
By:
Name:
Title:
EXHIBIT "A"
To License Agreement
between Amoco Production Company
and [Insert Company Name]
Third-Party Products necessary for use of Amoco SAMS Software:
====================================================================
PRODUCT VENDOR
====================================================================
SunSoft Interactive UNIX SunSoft, Inc.
Graphical Solution Multi-User 6601 Central Drive West, Suite
700
Los Angeles, CA 90099-5865
SunSoft Interactive SunSoft, Inc.
Software Development System 6601 Central Drive West, Suite
700
Los Angeles, CA 90099-5865
Unify Accel Unify Corporation
l IDS 15770 North Dallas Pkwy., Suite
Development Version 600
Dallas, TX 75248
Attn: Richard Templin
Vermont Views for UNIX Vermont Creative Software
Non-Commented Source Pinnacle Meadows
Richmond, VT 05476
Attn: Peter Drake
Third-Party Products Necessary for use of Amoco RTU Software:
======================================================================
PRODUCT VENDOR
======================================================================
C-Exec for 8086/88 JMI Software Consultants
Runtime Version 904 Sheble Lane
Spring House, PA 19477
EXHIBIT "Q"
To Purchase and Sale Agreement
by and between
Amoco Production Company, Seller
and
Howell Petroleum Corporation, Buyer
SUBLEASE NOVATION AGREEMENT
THIS SUBLEASE NOVATION AGREEMENT (this "Agreement") is dated this
[Insert Day] day of [Insert Month], 1997, by and between AMOCO EQUIPMENT
LEASING COMPANY, a Delaware corporation, with an office at 200 East Randolph
Drive, Chicago, Illinois 60601 (hereinafter referred to as "Lessor"), AMOCO
PRODUCTION COMPANY, a Delaware corporation, with an office at 501 WestLake
Park Boulevard, Houston, Texas 77079 (hereinafter referred to as "Lessee")
and [Insert Company Name], a [Insert State of Incorporation] corporation,
with an office at [Insert Address] (hereinafter referred to as "Sublessee"),
and is based on the following premises:
Whereas, Lessor and Lessee entered into an Equipment Sublease dated the
19th day of December, 1991 ("Prior Sublease"), covering a compression
facility leased from CLC Leasing Company A for use at the Beaver Creek Gas
Processing Plant ("Compression Facility"). A copy of the Prior Sublease is
attached hereto as Exhibit "1" and incorporated herein by reference;
Whereas, Lessee transferred to Sublessee all of Lessee's right, title
and interests in and to the facilities of which the Compression Facility is a
part; and
Whereas, Sublessee desires to assume all of Lessee's rights and
obligations under the terms of the Prior Sublease.
NOW, THEREFORE, in consideration of the rentals to be paid and other
good and valuable consideration, the parties agree as follows:
1. Lessor hereby authorized Lessee to assign the Prior Sublease to
Sublessee upon the terms and conditions set forth herein.
2. As of the date first referenced above, Sublessee agree to assume any
and all rights and obligations under the terms of the Prior Sublease, and
Lessee shall have no continuing obligation with respect to the same.
Sublessee shall release Lessee from and shall fully protect, indemnify and
defend Lessee, its officers agents, employees and affilitates ("Lessee
Group") and hold them harmless from and against any and all claims, demands,
suits, causes of action, losses, damages, liabilities and costs (including
attorneys' fees and costs of litigation) ("Claims), relating to, arising out
of, or connected, directly or indirectly, with the Prior Sublease pertaining
to the period of time at and after the date first referenced above, no matter
when asserted, including without limitation, Claims relating to: (a) injury
or death of any person or persons whomsoever, (b) damages to or loss of any
property or resources, (c) common law causes of action such as negligence,
gross negligence, strict liability, nuisance or trespass, and/or (d) fault
imposed by statute, rule, regulation or otherwise. The indemnity obligation
and release provided herein shall apply regardless of cause or of any
negligent acts or omissions (excluding gross negligence and willful
misconduct) of Lessee Group.
IN WITNESS WHEREOF, the parties agree to the foregoing on the day and
year first set forth above.
LESSOR: AMOCO EQUIPMENT LEASING COMPANY
By: ______________________
Name: D. B. Pinkert
Title: Vice President
LESSEE: AMOCO PRODUCTION COMPANY
By: ______________________
Name: Lon O. Buehner
Title: Attorney-in-Fact
SUBLESSEE: [INSERT COMPANY NAME]
By: _______________________
Name: [INSERT NAME]
Title: [INSERT TITLE]
EXHIBIT 1
PRIOR SUBLEASE AGREEMENT
THIRTY-ONE PAGES
EXHIBIT "R"
To Purchase and Sale Agreement
by and between
Amoco Production Company, Seller
and
Howell Petroleum Corporation, Buyer
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT ("Guarantee") is made and given the ______ day
of _________, 1997, by ________________, a _______ corporation, with an
office in Houston, Texas ("Guarantor") in favor of AMOCO PRODUCTION COMPANY,
a Delaware corporation, with an office in Houston, Texas ("Amoco").
WHEREAS, on the ___ day of November, 1997, Amoco, as seller, and
______________ ("Buyer"), as buyer, entered into a Purchase and Sale
Agreement (the "Agreement") wherein Amoco agreed to sell and Buyer agreed to
purchase certain properties as further defined in the Agreement.
WHEREAS, a condition to Closing contained in the Agreement is that
Guarantor provide a guaranty of the prompt, faithful and full performance of
the Agreement.
WHEREAS, Guarantor acknowledges the benefits to it of the Agreement and
desires to provide said guaranty.
NOW THEREFORE, based on the mutual covenants and agreements contained
herein, Amoco and Guarantor agree as follows:
1. Guarantor hereby unconditionally guarantees to Amoco the prompt,
faithful and full performance of all of the obligations of Buyer under the
Agreement. Any amounts due under this Guarantee will accrue simple interest
from the date due under the Agreement at a rate equal to the published prime
rate lending rate of Chase Manhattan Bank, New York, New York, but not to
exceed the maximum rate permitted by law. Guarantor further promises to pay
all reasonable attorneys' fees and other damages, costs and expenses incurred
by Amoco as a result of Buyer's failure to fully and faithfully perform its
obligations under the Agreement in connection with the Agreement covered by
this Guarantee, or Guarantor's failure to fulfill its obligations under the
Guarantee. In addition, Guarantor agrees to reimburse Amoco for all sums
paid to Amoco by Buyer, which sums Amoco is subsequently required to return
or repay by reason of Buyer's bankruptcy, insolvency or a requirement of any
legislative enactment, proclamation or judicial proceeding providing for the
postponement of the payment of debts or affecting the exercise of creditors'
rights.
2. This Guarantee shall be a continuing guaranty of payment and not of
collection. It shall remain in full force and effect pending full
performance of the Agreement and the undertakings stated in this Guarantee.
3. Amoco hereby agrees to use reasonable efforts to inform Guarantor
in writing of any dishonor or default by Buyer at least five (5) days prior
to making demand on Guarantor for payment under this Guarantee; provided
however, Amoco shall not be required to so inform Guarantor as a prerequisite
to making demand on Guarantor for payment under this Guarantee, or enforcing
any other of Amoco's rights and Guarantor's obligations under this Guarantee.
4. Guarantor shall pay or repay Amoco, free of any deductions or
withholdings, all monies due to Amoco pursuant to this Guaranty within ten
(10) days after receiving written demand for payment from Amoco. Guarantor
shall make payment of such amount in U.S. dollars by wire transfer in
immediately available funds to the account or accounts designated by Amoco in
its notice.
5. Guarantor hereby waives the giving of any notice, including but not
limited to, the following:
(a) Notice that Buyer has entered into, and incurred liabilities and
obligations in connection with the Agreement and related agreements
with Amoco;
(b) Notice of the modification or amendment of the Agreement or related
agreements between Buyer and Amoco;
(c) Notice of any extension of time or other modification of the terms
for payment of any sums due and payable by Buyer to Amoco in
connection with the Agreement;
(d) Notice of presentment, demand for payment, default, dishonor,
protest or notice of protest with respect to this Guarantee; and
(e) Notice of any defaults by or disputes with Buyer with respect to
payment or performance in connection with the Agreement.
6. Guarantor acknowledges that the modification of the Agreement and
related agreements between Buyer and Amoco shall not discharge or otherwise
affect the liability of the Guarantor with respect thereto under this
Guarantee. Guarantor further agrees that its obligations under this
Guarantee shall be unconditional, irrespective of any circumstance other than
payment or satisfaction which might otherwise constitute a legal or equitable
discharge of a surety or guarantor.
7. Guarantor's obligations under this Guarantee are independent of all
obligations of Buyer to Amoco. Amoco shall not be required to proceed first
against Buyer or any other person, firm or corporation before resorting to
Guarantor for payment under this Guarantee.
8. Demands on Guarantor for payment under this Guarantee shall be in
writing and delivered by mail or telecommunication to the following address:
Buyer
__________________________
__________________________
__________________________
All demands for payment shall be effective when received by Guarantor.
Guarantor may change the address to which demands for payment are to be sent
upon written notice to Amoco.
9. Notices to Amoco under this Guarantee shall be in writing and
delivered by mail or telecommunication to the following address:
Amoco Production Company
P. O. Box 3092
Houston, Texas 77253-3092
Attention: General Manager, Acquisition and Divestments
Fax: (713) 366-7544
All notices given to Amoco shall be effective when received by the persons
designated herein or substitute persons designated by Amoco. Amoco may
change the persons and addresses to which notices are to be sent upon written
notice to Guarantor.
10. This Guarantee and each of its provisions may be waived, modified,
varied, released, terminated or surrendered, in whole or in part, only by a
duly authorized written instrument signed by Amoco and Guarantor. No waiver
by Amoco of performance by Guarantor under any of the provisions of this
Guarantee shall be construed as a waiver of any subsequent performance by
Guarantor under the same or any other provisions of this Guarantee.
11. This Guarantee is personal in nature and shall not be assignable by
the parties hereto.
12. THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF WYOMING AS TO INTERPRETATION AND PERFORMANCE,
WITHOUT REFERENCE TO CONFLICTS OF LAW PRINCIPLES.
13. Unless stated otherwise, the capitalized terms contained in this
Guarantee shall have the meanings set forth in the Agreement.
14. Guarantor represents and warrants that, at the time of the
execution and delivery of this Guarantee, no event exists which is reasonably
expected to materially impair in any way the obligations and liabilities of
Guarantor to Amoco under this Guarantee. Guarantor further represents and
warrants that the person signing this Guarantee on its behalf has been
properly authorized by corporate action to do so.
15. This writing is the complete and exclusive statement of the terms
of this Guarantee and supersedes all prior oral or written representations,
understandings, and agreements between Amoco and Guarantor. Amoco and
Guarantor agree that there are no conditions to the full effectiveness of
this Guarantee.
IN WITNESS WHEREOF, the parties have duly executed this Guarantee as of
the date set forth above.
AMOCO PRODUCTION COMPANY
By:
Name: _______________________
Title: Attorney-in-Fact
BUYER
By:__________________________
Name: _______________________
Title:_________________________
STATE OF TEXAS Section
COUNTY OF HARRIS Section
The foregoing instrument was acknowledged before me this ____ day of
________, 1997, by ____________________ as _______________________for and on
behalf of ______________, a Delaware corporation.
My Commission Expires:
_________________________________
Signature
_________________________________
Name (Printed, Typed or Stamped)
Notary Public in and for the
State of T E X A S
STATE OF TEXAS Section
COUNTY OF HARRIS Section
The foregoing instrument was acknowledged before me this _____day of
________, 1997, by ______________________ as Attorney-in-Fact for and on
behalf of AMOCO PRODUCTION COMPANY, a Delaware corporation.
My Commission Expires:
________________________________
Signature
_________________________________
Name (Printed, Typed or Stamped)
Notary Public in and for the
State of T E X A S
Exhibit 99.1
CREDIT AGREEMENT
Dated as of December 17, 1997
Among
HOWELL PETROLEUM CORPORATION
as Borrower,
BANK OF MONTREAL,
as Agent,
and
THE LENDERS SIGNATORY HERETO
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
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......................... 16
ARTICLE II Commitments
Section 2.01 Loans and Letters of Credit................................. 16
Section 2.02 Borrowings, Continuations and Conversions,Letters of Credit 17
Section 2.03 Changes of Commitments...................................... 19
Section 2.04 Fees ...................................................... 19
Section 2.05 Several Obligations......................................... 20
Section 2.06 Notes ...................................................... 21
Section 2.07 Prepayments................................................. 21
Section 2.08 Borrowing Base.............................................. 22
Section 2.09 Assumption of Risks......................................... 23
Section 2.10 Obligation to Reimburse and to Prepay....................... 24
Section 2.11 Lending Offices............................................. 26
ARTICLE III Payments of Principal and Interest
Section 3.01 Repayment of Loans.......................................... 26
Section 3.02 Interest.................................................... 26
ARTICLE IV Payments; Pro Rata Treatment; Computations; Etc.
Section 4.01 Payments.................................................... 27
Section 4.02 Pro Rata Treatment.......................................... 28
Section 4.03 Computations................................................ 28
Section 4.04 Non-receipt of Funds by the Agent........................... 28
Section 4.05 Set-off, Sharing of Payments, Etc........................... 29
Section 4.06 Taxes ...................................................... 29
ARTICLE V Capital Adequacy
Section 5.01 Additional Costs............................................ 32
Section 5.02 Limitation on Eurodollar Loans.............................. 34
Section 5.03 Illegality.................................................. 35
Section 5.04 Base Rate Loans Pursuant to Sections 5.01, 5.02 and 5.03.... 35
Section 5.05 Compensation................................................ 35
Section 5.06 Replacement Lenders......................................... 35
ARTICLE VI Conditions Precedent
Section 6.01 Initial Funding............................................. 37
Section 6.02 Initial and Subsequent Loans and Letters of Credit.......... 38
Section 6.03 Conditions Precedent for the Benefit of Lenders............. 39
Section 6.04 No Waiver................................................... 39
ARTICLE VII Representations and Warranties
Section 7.01 Corporate Existence......................................... 39
Section 7.02 Financial Condition......................................... 39
Section 7.03 Litigation.................................................. 40
Section 7.04 No Breach................................................... 40
Section 7.05 Authority................................................... 40
Section 7.06 Approvals................................................... 40
Section 7.07 Use of Loans................................................ 41
Section 7.08 ERISA ...................................................... 41
Section 7.09 Taxes ...................................................... 42
Section 7.10 Titles, etc................................................. 42
Section 7.11 No Material Misstatements................................... 43
Section 7.12 Investment Company Act...................................... 43
Section 7.13 Public Utility Holding Company Act.......................... 43
Section 7.14 Subsidiaries................................................ 43
Section 7.15 Location of Business and Offices............................ 43
Section 7.16 Defaults.................................................... 43
Section 7.17 Environmental Matters....................................... 44
Section 7.18 Compliance with the Law..................................... 45
Section 7.19 Insurance................................................... 45
Section 7.20 Hedging Agreements.......................................... 46
Section 7.21 Restriction on Liens........................................ 46
Section 7.22 Material Agreements......................................... 46
ARTICLE VIII Affirmative Covenants
Section 8.01 Reporting Requirements...................................... 46
Section 8.02 Litigation.................................................. 48
Section 8.03 Maintenance, Etc............................................ 48
Section 8.04 Environmental Matters....................................... 49
Section 8.05 Further Assurances.......................................... 49
Section 8.06 Performance of Obligations.................................. 50
Section 8.07 Reserve Reports.............................................. 50
Section 8.08 Title and Mortgage Information.............................. 51
Section 8.09 Mortgages.................................................. 52
Section 8.10 ERISA Information and Compliance............................ 52
Section 8.11 Minimum Capital. .......................................... 53
ARTICLE IX Negative Covenants
Section 9.01 Debt ...................................................... 53
Section 9.02 Liens ...................................................... 54
Section 9.03 Investments, Loans and Advances............................. 55
Section 9.04 Dividends, Distributions and Redemptions.................... 56
Section 9.05 Sales and Leasebacks........................................ 56
Section 9.06 Nature of Business.......................................... 56
Section 9.07 Limitation on Leases........................................ 56
Section 9.08 Mergers, Etc................................................ 56
Section 9.09 Proceeds of Notes; Letters of Credit........................ 56
Section 9.10 ERISA Compliance............................................ 57
Section 9.11 Sale or Discount of Receivables............................. 58
Section 9.12 Current Ratio............................................... 58
Section 9.13 [Intentionally Omitted]..................................... 58
Section 9.14 Interest Coverage Ratio..................................... 58
Section 9.15 Sale of Oil and Gas Properties.............................. 58
Section 9.16 Environmental Matters....................................... 59
Section 9.17 Transactions with Affiliates................................ 59
Section 9.18 Subsidiaries................................................ 59
Section 9.19 Negative Pledge Agreements and Subsidiary Dividends......... 59
Section 9.20 Payments on Certain Debt to Howell Corporation.............. 59
ARTICLE X Events of Default; Remedies
Section 10.01 Events of Default.......................................... 60
Section 10.02 Remedies................................................... 62
ARTICLE XI The Agent
Section 11.01 Appointment, Powers and Immunities......................... 62
Section 11.02 Reliance by Agent.......................................... 63
Section 11.03 Defaults................................................... 63
Section 11.04 Rights as a Lender......................................... 63
Section 11.05 Indemnification............................................ 64
Section 11.06 Non-Reliance on Agent and other Lenders.................... 64
Section 11.07 Action by Agent............................................ 65
Section 11.08 Resignation or Removal of Agent............................ 65
ARTICLE XII Miscellaneous
Section 12.01 Waiver..................................................... 65
Section 12.02 Notices.................................................... 66
Section 12.03 Payment of Expenses, Indemnities, etc...................... 66
Section 12.04 Amendments, Etc............................................ 68
Section 12.05 Successors and Assigns..................................... 69
Section 12.06 Assignments and Participations............................. 69
Section 12.07 Invalidity................................................. 70
Section 12.08 Counterparts............................................... 70
Section 12.09 References................................................. 70
Section 12.10 Survival................................................... 71
Section 12.11 Captions................................................... 71
Section 12.12 No Oral Agreements......................................... 71
Section 12.13 Governing Law; Submission to Jurisdiction.................. 71
Section 12.14 Interest................................................... 72
Section 12.15 Confidentiality............................................ 73
Section 12.16 Effectiveness.............................................. 74
Section 12.17 Exculpation Provisions..................................... 74
</TABLE>
ANNEXES, EXHIBITS AND SCHEDULES
Annex I - List of Facility A Maximum Credit Amounts and Facility B Loans
Exhibit A-1 - Form of Facility A Note
Exhibit A-2 - Form of Facility B Note
Exhibit B - Form of Borrowing, Continuation and Conversion Request
Exhibit C - Form of Compliance Certificate
Exhibit D - List of Loan Documents
Exhibit E - Form of Assignment Agreement
Exhibit F - Form of Letter of Credit Agreement
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 7.22 - Material Agreements
Schedule 9.01 - Debt
Schedule 9.02 - Liens
Schedule 9.03 - Investments, Loans and Advances
THIS CREDIT AGREEMENT dated as of December 17 1997 is among:
HOWELL PETROLEUM CORPORATION, a corporation formed under the laws of the
State of Delaware (the "Borrower"); 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 BANK OF MONTREAL, a Canadian bank (in its
individual capacity, "BMO"), 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," "BMO," "Borrower," "Lender" and "Lenders" 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 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. For
purposes of this definition, 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" (including,
with its correlative meanings, "controlled by" and "under common control
with") 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 sum of the Aggregate
Facility A Commitments and the Aggregate Facility B Commitments.
"Aggregate Facility A Commitments" at any time shall equal the amount
calculated in accordance with Section 2.03.
"Aggregate Facility A Maximum Credit Amounts" at any time shall equal
the sum of the Facility A Maximum Credit Amounts of the Lenders (not to
exceed $215,000,000), as the same may be reduced pursuant to Section 2.03(b).
"Aggregate Facility B Commitments" at any time shall equal the sum of
the Facility B Commitments of the Lenders (not to exceed $105,000,000).
"Amoco Acquisition" shall mean the acquisition of the Amoco Properties
pursuant to the Amoco Purchase and Sale Agreement.
"Amoco Properties" shall mean the Oil and Gas Properties covered by the
appraisal report of DeGolyer and McNaughton, dated December 1, 1997, intended
to be acquired by the Borrower pursuant to the Amoco Purchase and Sale
Agreement.
"Amoco Purchase and Sale Agreement"shall mean that certain Purchase and
Sale Agreement dated November 20, 1997, between Amoco Production Company, as
seller and the Borrower, as buyer.
"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 (i) after Borrower completes the Beaver
Creek Acquisition, if either Facility B is outstanding or the Minimum Capital
has not been raised, for the first six (6) months after the Borrower has
completed the Beaver Creek Acquisition, 0% per annum with respect to Base
Rate Loans and one and one-half percent (1 1/2%) per annum with respect to
Eurodollar Loans, with the Applicable Margin thereafter increasing by
one-half of one percent (1/2%) for Base Rate Loans and Eurodollar Loans at each
of six and nine months after closing Beaver Creek Acquisition and (ii) prior
to Borrower's completion of the Beaver Creek Acquisition and after Borrower
has completed the Beaver Creek Acquisition, if the Minimum Capital has been
raised and Facility B has been repaid, the applicable per annum percentage
set forth at the appropriate intersection in the table shown below, based on
the Borrowing Base Utilization Percentage as in effect from time to time:
Borrowing Base Utilization Percentage Eurodollar Rate Base Rate
_____________________________________ _______________ _________
Less than or equal to 25% 0.500% 0.000%
Greater than 25%,
but less than or equal to 50% 0.625% 0.000%
Greater than 50%,
but less than or equal to 75% 0.875% 0.000%
Greater than 75%
but less than or equal to 100% 1.125% 0.000%
Greater than 100% 1.375% 0.000%
Each change in the Applicable Margin resulting from a change in the Borrowing
Base Utilization Percentage shall take effect at the time of such change in
the Borrowing Base Utilization Percentage.
"Assignment" shall have the meaning assigned such term in
Section 12.06(b).
"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.
"Beaver Creek Acquisition" shall mean Borrower's acquisition pursuant to
the Amoco Purchase and Sale Agreement of the portion of the Amoco Properties
identified as the Beaver Creek Unit.
"Beaver Creek Conversion Termination Date" shall mean December 16, 1998.
"Borrowing Base" shall mean at any time an amount equal to the amount
determined in accordance with Section 2.08.
"Borrower Base Letter" shall mean that certain letter agreement of even
date herewith between the Borrower and the Agent.
"Borrowing Base Utilization Percentage" shall mean, as of any day, the
fraction expressed as a percentage, the numerator of which is the balance of
all Loans and the LC Exposure outstanding on such day, and the denominator of
which is the Borrowing Base in effect on such day.
"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 [December 15,] 1997.
"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 Facility A Commitment and/or
its Facility B Commitment, as applicable.
"Consolidated Net Income" shall mean with respect to the Borrower and
its Consolidated Subsidiaries, for any period, the aggregate of the net
income (or loss) of the Borrower and its Consolidated Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP; provided
that there shall be excluded from the calculation of such net income (to the
extent otherwise included therein) the following: (i) the net income of any
Person in which the Borrower 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 Borrower 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 Borrower or to a Consolidated Subsidiary, as the case may be; (ii) the
net income (but not loss) of any Consolidated Subsidiary 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 write downs of assets.
"Consolidated Subsidiaries" shall mean each Subsidiary of the Borrower
(or for purposes of the definition of Tangible Net Worth, 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, as appropriate, the Guarantor) in
accordance with GAAP.
"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 Debt (as described in the other clauses of
this definition) and other obligations of others secured by a Lien (other
than a Lien permitted by Section 9.02) on any asset of such Person, whether
or not such Debt is assumed by such Person; (vi) all Debt (as described in
the other clauses of this definition) and other obligations of others
guaranteed by such Person or in which such Person otherwise assures a
creditor against loss of the Debt or obligations of others; (vii) 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; (viii) obligations to deliver goods or services
including Hydrocarbons in consideration of advance payments, except as
permitted by Section 9.20 and disclosed by Section 8.07(c); (ix) obligations
to pay for goods or services whether or not such goods or services are
actually received or utilized by such Person; (x) any capital stock of such
Person in which such Person has a mandatory obligation to redeem such stock;
and (xi) any Debt of a Special Entity for which such Person is liable either
by agreement or because of a Governmental Requirement; (xii) the undischarged
balance of any production payment created by such Person or for the creation
of which such Person directly or indirectly received payment; and (xiii) all
obligations of such Person under Hedging Agreements.
"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.
"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
in determining Consolidated Net Income in such period: interest, taxes,
depreciation, depletion, amortization and other non-cash charges.
"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 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 "Eurodollar
Rate".
"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.
"Event of Default" shall have the meaning assigned such term in Section
10.01.
"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 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', 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 120 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 Borrower 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), encroachments, easements,
restrictions, servitudes, permits, conditions, covenants, exceptions or
reservations (collectively called "Encumbrances") in any rights of way or
other Property of the Borrower 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 Encumbrances, defects, irregularities, zoning
restrictions and other title exceptions 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 Borrower 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
(including, without limitation, deposits of royalty payments in Wyoming banks
as provided by Wyoming statutory law) incurred in the ordinary course of
business; and (vii) Liens permitted by the Loan Documents.
"Facility A" shall mean the facility pursuant to Sections 2.01(a) and (c).
"Facility A Commitment" shall mean, for any Lender, its obligation to (i)
make Loans up to the lesser of such Lender's Facility A Maximum Credit Amount or
the Lender's Percentage Share of the then effective Borrowing Base and (ii)
participate in the issuance of Letters of Credit as provided in Section 2.01(b).
"Facility A Loans" shall mean Loans made pursuant to Section 2.01(a).
"Facility B Maturity Date" shall mean December 15, 1998.
"Facility A Maximum Credit Amount" shall mean, as to each Lender, the
amount set forth opposite such Lender's name on Annex I under the caption
"Facility A Maximum Credit Amounts" (as the same may be reduced pursuant to
Section 2.03(b) 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).
"Facility A Notes" shall mean the promissory note or notes (whether one
or more) of the Borrower described in Section 2.06 and being in the form of
Exhibit A-1.
"Facility A Termination Date" shall mean the earlier to occur of (i)
December 15, 2002 or (ii) the date that the Commitments are sooner terminated
pursuant to Sections 2.03(b) or 10.02.
"Facility B" shall mean the facility pursuant to Section 2.01(b).
"Facility B Commitment" shall mean, as to each Lender, its obligation to
make a Facility B Loan in the amount set forth opposite such Lender's name under
"Facility B Loans" on Annex I, as the same may be modified from time to time to
reflect any assignment permitted by Section 12.06(b).
"Facility B Loans" shall mean the term loans made pursuant to Section
2.01(b).
"Facility B Notes" shall mean the promissory note or notes (whether one
or more) of the Borrower described in Section 2.06 and being in the form of
Exhibit A-2.
"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 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 Borrower and its Consolidated Subsidiaries described or referred to in
Section 7.02.
"GAAP" shall mean generally accepted accounting principles in the United
States of America in effect from time to time, except that, in the case of
the Borrower and its Subsidiaries, the effects of income taxes shall be
excluded.
"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,
bureau or instrumentality of any of them including monetary authorities which
exercise 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 Borrower, 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.
"Guarantor" shall mean Howell Corporation, a Delaware corporation.
"Guaranty Agreement" shall mean an agreement executed by the Guarantor
in form and substance satisfactory to the Agent guarantying, unconditionally,
payment of the Indebtedness, as the same may be amended, modified or
supplemented from time to time.
"Hedging Agreements" shall mean any commodity, interest rate or currency
swap, cap, floor, collar, forward agreement or other similar exchange or
protection agreements or any option with respect to any such transaction.
"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.
"Howell Corporation" shall mean Howell Corporation, a Delaware
corporation, and owner of 100% of all of the Borrower's capital stock.
"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, the Issuing Bank and/or the 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
permitted by the terms of this Agreement and all renewals, extensions and/or
rearrangements of any of the foregoing.
"Indemnified Parties" shall have the meaning assigned such term in
Section 12.03(a)(ii).
"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 of such Person seeking indemnification.
"Initial Funding" shall mean the funding of the initial Loans or
issuance of the initial Letters of Credit upon satisfaction of the conditions
set forth in Sections 6.01 and 6.02.
"Initial Reserve Reports" shall mean (i) the appraisal report of
DeGolyer and McNaughton, dated December 1, 1997 with respect to the Oil and
Gas Properties intended to be purchased by the Borrower pursuant to the Amoco
Purchase and Sale Agreement, and (ii) the audit report of H. J. Gruy and
Associates dated as of January 1, 1997, copies of each of which have 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 other period as may be requested by the Borrower and agreed to by the
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 with respect to
Facility A Loans may end after the Facility A Termination Date and no
Interest Period with respect to Facility B Loans may end after the Facility B
Maturity 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 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 (unless otherwise agreed to by the Lenders)
and, if the Interest Period for any Eurodollar Loans would otherwise be for a
shorter period, such Loans shall not be available hereunder.
"Issuing Bank" shall mean BMO or any other Lender agreed to among the
Borrower and the Agent to issue Letters of Credit.
"LC Commitment" at any time shall mean $5,000,000.
"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 the
Issuing Bank, as issuing lender for any Letter of Credit, executed in
connection with the issuance by the Issuing Bank of the Letters of Credit,
such agreements to be on the Issuing Bank's customary form attached hereto as
Exhibit F or as otherwise agreed to by the Borrower and the Issuing Bank.
"Letters of Credit" shall mean the letters of credit issued pursuant to
Section 2.01(c) 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.
"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, the Letters of
Credit, the Letter of Credit Agreements, the Fee Letter, the agreements or
instruments described or referred to in Exhibit D, and any and all other
agreements or instruments now or hereafter executed and delivered by the
Borrower or any other Person (other than assignments, 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, or this
Agreement, or reimbursement obligations under the Letters of Credit, as such
agreements may be amended, supplemented or restated from time to time.
"Loans" shall mean the loans as provided for by Sections 2.01(a) and
(b). "Loans" shall include the Facility A Loans and the Facility B Loans.
"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 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 under Section
12.06(c)).
"Material Adverse Effect" shall mean any material and adverse effect on
(i) the assets, liabilities, financial condition, business or operations of
the Borrower and its Subsidiaries taken as a whole or the Guarantor and its
Subsidiaries taken as a whole different from those reflected in the Financial
Statements or from the facts represented or warranted in any Loan Document,
or (ii) the ability of the Borrower and its Subsidiaries taken as a whole or
the Guarantor and its Subsidiaries taken as a whole to carry out their
business in the normal course or meet their obligations under the Loan
Documents on a timely basis.
"Minimum Capital" shall mean the Subordinated Debt and/or equity
required by Section 8.11.
"Mortgages" shall have the meaning assigned such term in Section 8.09.
"Mortgaged Property" shall mean the Property owned by the Borrower and
which is subject to the Liens existing and to exist under the terms of the
Loan Documents.
"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. The "Notes" shall include the
Facility A Notes and the Facility B Notes.
"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 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
4.06(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
Annex I hereto, as modified from time to time to reflect any assignments
permitted by Section 12.06(b).
"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 other
Loan Document , a rate per annum during the period commencing on the date of
occurrence of an Event of Default until such amount is paid in full or all
Events of Default are 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 however, for a
Eurodollar Loan, the "Post-Default Rate" for such principal shall be, for the
period commencing on the date of occurrence of an Event of Default and ending
on the earlier to occur of the last day of the Interest Period therefor or
the date all Events of Default are cured or waived, 2% per annum above the
interest rate for such Loan as provided in Section 3.02(a)(ii), 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 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 115 South LaSalle Street, Chicago, Illinois 60603.
"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 December 31, 1997;
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).
"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 Lenders" shall mean, at any time while no Loans are
outstanding, Lenders (one of which must be the Agent) having at least
seventy-five percent (75%) of the Aggregate Commitments and, at any time
while Loans are outstanding, Lenders (one of which must be the Agent) holding
at least seventy-five percent (75%) of the outstanding aggregate principal
amount of the Loans (without regard to any sale by a Lender of a
participation in any Loan under Section 12.06(c)).
"Required Payment" shall have the meaning assigned such term in Section
4.04.
"Reserve Report" shall mean a report, in form and substance satisfactory to
the Agent, setting forth, as of each January 1 (or such other date in the event
of an unscheduled redetermination): the oil and gas reserves attributable to
substantially all of the Borrower's proved Oil and Gas Properties 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. Each Reserve Report shall be accompanied by such other information
relating thereto as the Agent may reasonably request. The term "Reserve Report"
shall also include the Initial Reserve Reports and the Reserve Report to be
provided by the Borrower by September 1 of each year pursuant to Section
8.07(a).
"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 Responsible Officer herein shall mean a Responsible Officer of the
Borrower.
"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.
"Special Entity" shall mean any joint venture, limited liability company
or partnership, general or limited partnership or any other type of
partnership or company other than a corporation in which a Person or one or
more of its other Subsidiaries is a member, owner, partner or joint venturer
and owns, directly or indirectly, at least a majority of the equity of such
entity or controls such entity, but excluding any tax partnerships that are
not classified as partnerships under state law. For purposes of this
definition, any Person which owns directly or indirectly an equity investment
in another Person which allows the first Person to manage or elect managers
who manage the normal activities of such second Person will be deemed to
"control" such second Person (e.g. a sole general partner controls a limited
partnership). Unless otherwise indicated herein, each reference to the term
Special Entity shall mean a Special Entity of the Borrower.
"Subordinated Debt" shall mean any Debt of the Borrower expressly
subordinated to the Indebtedness pursuant to agreements in form and substance
satisfactory to the Lenders.
"Subsidiary" shall mean (i) 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 by a Person or one or more of its Subsidiaries or by a
Person and one or more of its Subsidiaries and (ii) any Special Entity.
Unless otherwise indicated herein, each reference to the term "Subsidiary"
shall mean a Subsidiary of the Borrower.
"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 preferred stock and common stock at par plus the
amount of surplus of the Guarantor, plus
(ii) the retained earnings (or, in the case of 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 in accordance with GAAP (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 September 30, 1997; but excluding any item classified as "oil and gas
properties" utilizing the full cost method of accounting as shown on the
Guarantor's balance sheet.
"Taxes" shall have the meaning assigned such term in Section 4.06(a).
"Type" shall mean, with respect to any Loan, a Base Rate Loan or a
Eurodollar Loan.
"Wholly-Owned Subsidiary" shall mean, as to the Borrower, any Subsidiary
of which all of the outstanding shares of capital stock or other equity
interests, on a fully-diluted basis, are owned 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 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 Borrower referred to
in Section 7.02 (except for changes concurred with by the Borrower's
independent public accountants).
ARTICLE II
Commitments
Section 2.01 Loans and Letters of Credit.
(a) Facility A Loans. Each Lender severally agrees, on the terms
and conditions 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 Facility A
Termination Date in an aggregate principal amount at any one time
outstanding up to, but not exceeding, the amount of such Lender's
Facility A 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 Facility A Commitments. Subject to the terms of this
Agreement, during the period from the Closing Date to and up to, but
excluding, the Facility A Termination Date, the Borrower may borrow,
repay and reborrow the amount described in this Section 2.01(a).
(b) Facility B Loans. Each Lender severally agrees, subject to
the terms and conditions of this Agreement, to make a term loan to the
Borrower not to exceed its Facility B Commitment. Such Facility B Loan
shall be made by way of up to two (2) advances as follows: (i) on the
Initial Funding date an aggregate Facility B Loan advance of up to
$20,000,000; and (ii) when and if the Borrower makes the Beaver Creek
Acquisition, provided such event occurs on or prior to the Beaver Creek
Conversion Termination Date, an additional aggregate Facility B Loan
advance of up to $85,000,000, less the amount of long term subordinated
debt (to the extent the issuance of subordinated debt did not result in
a reduction to the Borrowing Base pursuant to a redetermination as
provided in Section 2.08(d)) or equity capital raised by the Borrower
pursuant to Section 8.11; provided, however, such reduction shall not be
made to the extent that the proceeds of such subordinated debt or equity
is used to pay the Facility B Loan.
Any portion of each Lender's Facility B Commitment not utilized by
such borrowings on such dates shall be permanently canceled. Any
repayments of the Facility B Loans are not available to be redrawn.
(c) Letters of Credit. During the period from and including the
Closing Date to, but excluding, the Facility A Termination Date, the
Issuing Bank, as issuing bank for the Lenders, agrees to extend credit
for the account of the Borrower 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 Facility A
Commitments, as then in effect, minus the aggregate principal amount of
all Facility A Loans then outstanding. The Lenders shall participate in
such Letters of Credit according to their respective Percentage Shares.
Each of the Letters of Credit shall (i) be issued by the Issuing Bank,
(ii) contain such terms and provisions as are reasonably required by the
Issuing Bank, (iii) be for the account of the Borrower and (iv) expire
not later than the earlier of (x) fourteen (14) months from the date of
issuance and (y) the Facility A Termination Date.
(d) 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 eight (8)
Eurodollar Loans may be outstanding at any time.
Section 2.02 Borrowings, Continuations and Conversions, Letters of
Credit.
(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 (i) the aggregate amount
of such borrowing, (ii) the Type and (iii) the date (which shall be a
Business Day) of the Loans to be borrowed, and (iv) (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 $500,000 or the remaining balance of the Aggregate
Facility A Commitments, if less, or any whole multiple of $500,000 in
excess thereof, and all Eurodollar Loans shall be in amounts of at least
$1,000,000 or any whole multiple of $1,000,000 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 (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 at least one Business Day prior to
the date of each Base Rate Loan borrowing and three Business Days prior
to the date of each Eurodollar Loan borrowing, continuation or
conversion ; provided, however, for Base Rate Loans Borrower may request
a same day advance of up to $10,000,000 if the request is received by
the Agent not later than 9:00 a.m. on such day. Without in any way
limiting the Borrower's obligation to confirm in writing any telephonic
notice for a borrowing, continuation or conversion, 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 $1,000,000 or any whole multiple of $1,000,000 in excess thereof
and (ii) no Event of Default shall have occurred and be continuing. If
an Event of 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.
(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 $1,000,000 or any whole multiple
of $1,000,000 in excess thereof and (ii) no Event of Default shall have
occurred and be continuing. If an Event of 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 Issuing Bank
(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 Issuing Bank 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 three (3) Business Days prior to the date of the
renewal or extension, of a Letter of Credit hereunder which request
shall specify (i) the amount of such Letter of Credit, (ii) the date
(which shall be a Business Day) such Letter of Credit is to be issued,
renewed or extended, (iii) the duration thereof, (iv) the name and
address of the beneficiary thereof, (v) the form and type of the Letter
of Credit and (vi) such other information as the Issuing Bank may
reasonably request, all of which shall be reasonably satisfactory to the
Issuing Bank. Subject to the terms and conditions of this Agreement, on
the date specified for the issuance, renewal or extension of a Letter of
Credit, the Issuing Bank shall issue, renew or extend such Letter of
Credit to the beneficiary thereof.
In conjunction with the issuance of each Letter of Credit, the
Borrower 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 Issuing Bank, the Agent and the
Lenders hereby agree that the provisions of this Agreement shall govern.
The Issuing Bank 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 Facility A Commitments shall at all times be
equal to the lesser of (i) the Aggregate Facility A Maximum Credit
Amounts after adjustments resulting from reductions pursuant to
Section 2.03(b) or (ii) the Borrowing Base as determined from time to
time.
(b) The Borrower shall have the right to terminate or to reduce
the amount of the Aggregate Facility A 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.
(c) The Aggregate Facility A Maximum Credit Amounts once
terminated or reduced may not be reinstated.
Section 2.04 Fees.
(a) Commitment Fee. 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 Facility A Commitments for the period from and
including the Closing Date up to but excluding the earlier of the date
the Aggregate Facility A Commitments are terminated or the Facility A
Termination Date at a rate per annum set forth at the appropriate
intersection in the table shown below based upon the Borrowing Base
Utilization Percentage as in effect from time to time:
Borrowing Base Utilization Percentage Commitment Fee
_____________________________________ ______________
Less than or equal to 50% .25%
Greater than 50% .30%
Accrued commitment fees shall be payable quarterly in arrears on each
Quarterly Date and on the earlier of the date the Aggregate Facility A
Commitments are terminated or the Facility A Termination Date.
(b) Letter of Credit Fees.
(i) The Borrower agrees to pay the Agent, for the account of
the Lenders, commissions for issuing the Letters of Credit on the
daily average outstanding of the maximum liability of the Issuing
Bank existing from time to time under such Letter of Credit
(calculated separately for each Letter of Credit) at the rate per
annum equal to the Applicable Margin then in effect for Eurodollar
Loans, provided that each Letter of Credit shall bear a minimum
commission of $500. Each Letter of Credit shall be deemed to be
outstanding up to the full face amount of the Letter of Credit
until the Issuing Bank has received the canceled 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 Issuing Bank, or for any reductions in the amount
of the Letter of Credit (other than from a drawing), written
notification from the beneficiary of such Letter of Credit. Such
commissions are payable quarterly in arrears on each Quarterly Date
and upon cancellation or expiration of each such Letter of Credit.
(ii) The Borrower agrees to pay the Issuing Bank, for its own
account, an issuing fee for issuing Letters of Credit on the daily
average outstanding of the maximum liability of the Issuing Bank
existing from time to time under such Letter of Credit (calculated
separately for each Letter of Credit) at the rate of .10% per
annum, payable quarterly in arrears on each Quarterly Date and upon
cancellation or expiration of each such Letter of Credit.
(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.
Section 2.06 Notes. The Facility A Loans made by each Lender
shall be evidenced by a single promissory note of the Borrower in
substantially the form of Exhibit A-1, 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 Facility A Maximum
Credit Amount as originally in effect and otherwise duly completed and such
substitute Notes as required by Section 12.06(b). The Facility B Loans made
by each Lender shall be evidenced by a single promissory note of the Borrower
in substantially the form of Exhibit A-2, dated as of (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 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 Notes, and, prior to any
transfer may be endorsed by such Lender on the schedule attached to such
Notes or any continuation thereof or on any separate record maintained by
such Lender. Failure to make any such notation or to attach a schedule shall
not affect any Lender's or the Borrower's rights or obligations in respect of
such Loans or affect the validity of such transfer by any Lender of its Note.
Section 2.07 Prepayments.
(a) Voluntary Prepayments. The Borrower may prepay the Base Rate
Loans upon not less than one (1) Business Day's 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 by the Agent,
provided that interest on the principal prepaid, accrued to the
prepayment date, shall be paid on the prepayment date. The Borrower may
prepay Eurodollar Loans on the same conditions as for Base Rate Loans
(except that prior notice to the Agent shall be not less than three (3)
Business Days for Eurodollar Loans) and 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) Mandatory Prepayments.
(i) If, after giving effect to any termination or reduction
of the Aggregate Facility A Maximum Credit Amounts pursuant to
Section 2.03(b), the outstanding aggregate principal amount of the
Facility A Loans plus the LC Exposure exceeds the Aggregate Facility A
Maximum Credit Amounts, the Borrower shall (i) prepay the Facility A
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 Facility A Loans because
of LC Exposure, pay to the Agent on behalf of the Lenders an amount
equal to the excess to be held as cash collateral as provided in Section
2.10(b) hereof.
(ii) 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 aggregate outstanding principal amount of the Facility
A Loans plus the LC Exposure, then the Borrower shall within thirty (30)
days of receipt of written notice thereof: (i) prepay the Facility A
Loans in an aggregate principal amount equal to such excess, together
with interest on the principal amount paid accrued to the date of such
prepayment and (ii) if a Borrowing Base deficiency remains after
prepaying all of the Facility A 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 to be held as cash collateral as
provided in Section 2.10(b).
(iii)Upon receipt by the Borrower of any adjustment payment
from Amoco Production Company ("Amoco") pursuant to Section 4.2 or 5.2
of the Amoco Purchase and Sale Agreement, Borrower will give written
notice thereof to the Agent and the Facility A Borrowing Base will be
automatically reduced by the amount of such adjustment.
(c) Generally. 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. Any prepayments
on the Facility A Loans may be reborrowed subject to the then effective
Aggregate Facility A Commitments. Any prepayments on the Facility B
Loans may not be reborrowed and shall be applied to installments on the
Facility B Notes in the inverse order of maturity.
Section 2.08 Borrowing Base.
(a) During the period from and after the Closing Date until the
first redetermination pursuant to Section 2.08(d) or adjustment pursuant
to Section 8.08(d), the amount of the Borrowing Base shall be as defined
in Borrowing Base Letter. The Borrowing Base shall be redetermined in
accordance with Section 2.08(b) by the Agent with the concurrence of the
Required 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, except as provided in the Borrowing Base Letter
with respect to the Beaver Creek Acquisition. "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 Facility A 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. 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, 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 oil and
gas reserves and related assets shall include proved developed producing
reserves, proved developed non-producing reserves, proved undeveloped
reserves and related processing and gathering assets. The Agent shall
propose to the Lenders a new Borrowing Base no less than 20 days before
the Scheduled Redetermination Date. After having received notice of
such proposal by the Agent, the Required Lenders shall have 10 Business
Days to agree or disagree with such proposal. If at the end of the 10
Business Days, any Lender has not communicated its approval or
disapproval, such silence shall be deemed to be an approval. If the
Required Lenders have not approved within 10 Business Days, the Required
Lenders shall, within a reasonable period of time, agree on a new
Borrowing Base.
(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 title information is not reasonably
satisfactory, such Property is not assignable, or such Property is not
Mortgaged Property (if required pursuant to Section 8.09). Although the
Agent may exclude any Property from the Borrowing Base to the extent
title thereto is not reasonably satisfactory, it is understood that the
Borrower is only required to furnish title information with respect to
80% of the value of its Oil and Gas Properties covered by the subject
Reserve Report(s).
(d) So long as any of the Commitments are in effect and until
payment in full of all Facility A Loans hereunder and termination of all
outstanding Letters of Credit, on or around the first Business Day of
each May 1 and November 1, commencing May 1, 1998 (each being a
"Scheduled Redetermination Date"), the Lenders shall redetermine the
amount of the Borrowing Base in accordance with Section 2.08(b). In
addition, each of the Required Lenders and the Borrower may initiate one
additional redetermination of the Borrowing Base by specifying in
writing the date on which such redetermination is to occur while
Facility B is outstanding. Upon the repayment of Facility B, one such
unscheduled redetermination may occur during any consecutive twelve (12)
month period thereafter. In addition, upon issuance of Subordinated
Debt permitted pursuant to Section 9.01(g) hereof the Borrowing Base
shall be redetermined to give weight to the interest carry on such
Subordinated Debt as provided in the Borrowing Base Letter.
(e) The Agent shall promptly notify in writing the Borrower and
the Lenders of the new Borrowing Base. Any redetermination of the
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. Neither
the Issuing Bank (except in the case of gross negligence or willful
misconduct on the part of the Issuing Bank 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; the failure of any beneficiary
or any transferee of any Letter of Credit to comply fully with conditions
required in order to draw upon any Letter of Credit; or for any other
consequences arising from causes beyond the Issuing Bank's control or the
control of the Issuing Bank's correspondents. In addition, neither the
Issuing Bank, the Agent nor any Lender shall be responsible for any error,
neglect, or default of any of the Issuing Bank's correspondents; and none of
the above shall affect, impair or prevent the vesting of any of the Issuing
Bank's, the Agent's or any Lender's rights or powers hereunder or under the
Letter of Credit Agreements, all of which rights shall be cumulative. The
Issuing Bank 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 the Issuing Bank or by any correspondent for
the Issuing Bank 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 shall not put the Issuing Bank or its correspondents
under any resulting liability to the Borrower.
Section 2.10 Obligation to Reimburse and to Prepay.
(a) If a disbursement by the Issuing Bank 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 the Issuing Bank 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
Loan Documents; (ii) any amendment or waiver of (including any default),
or any consent to departure from this Agreement (except to the extent
permitted by any amendment or waiver), any Letter of Credit or any of
the Loan Documents; (iii) 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 Issuing Bank, the Agent, any Lender or
any other Person, whether in connection with this Agreement, any Letter
of Credit, the Loan Documents, the transactions contemplated hereby or
any unrelated transaction; (iv) 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; (v) payment by the Issuing Bank 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; and (vi) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing.
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 Issuing Bank, except (i)
where the Borrower or any Subsidiary actually recovers the proceeds for
itself or the Issuing Bank of any payment made by the Issuing Bank in
connection with such gross negligence or willful misconduct or (ii) in
cases where the Agent makes payment to the named beneficiary of a Letter
of Credit in accordance with the terms thereof.
(b) In the event the principal amount then outstanding on and the
accrued interest on the Loans has been accelerated pursuant to Section
10.02 or in the event of a payment or prepayment pursuant to Section
2.07(b), an amount equal to the LC Exposure (or the excess in the case
of Section 2.07(b)), shall be deemed to be forthwith due and owing by
the Borrower to the Issuing Bank, 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 Issuing Bank, the Agent, the Lenders
or any other Person for any reason whatsoever. Such payments shall be
held by the Issuing Bank on behalf of the Lenders as cash collateral
securing the LC Exposure in an 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 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, the Agent agrees, if no Event of Default has
occurred and is continuing or if no other amounts are outstanding under
this Agreement, the Notes or the Loan Documents, to remit to the
Borrower amounts for which the contingent obligations evidenced by the
Letters of Credit have ceased.
(c) Each Lender severally and unconditionally agrees that it shall
promptly reimburse the Issuing Bank an amount equal to such Lender's
Percentage Share of any disbursement made by the Issuing Bank under any
Letter of Credit that is not reimbursed according to this Section 2.10.
(d) Notwithstanding anything to the contrary contained herein, if no
Event of Default has occurred and is continuing and subject to
availability under Section 2.01(a), to the extent the Borrower has not
reimbursed the Issuing Bank for any drawn upon Letter of Credit within
one (1) Business Days after notice of such disbursement has been
received by the Borrower, the amount of such Letter of Credit
reimbursement obligation shall automatically be funded by the Lenders as
a Facility A Loan hereunder and used by the Lenders to pay such Letter of
Credit reimbursement obligation. If an Event of Default has occurred and
is continuing, or if the funding of such Letter of Credit reimbursement
obligation as a Facility A Loan would cause the aggregate amount of all
Facility A Loans outstanding to exceed the Aggregate Facility A
Commitments (after reduction for LC Exposure), such Letter of Credit
reimbursement obligation shall not be funded as a Facility A Loan, but
instead shall accrue interest as provided in Section 2.10(a).
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.
(a) Facility A Loans. In addition to any Mandatory Prepayments
required by Section 2.07, on the Facility A Termination Date the Borrower
shall repay the outstanding aggregate principal and accrued and unpaid
interest under the Facility A Notes.
(b) Facility B Loans. On the Facility B Maturity Date the Borrower
shall repay the outstanding aggregate principal and accrued and unpaid
interest under the Facility B Notes.
(c) Generally. The Borrower will pay to the Agent, for the account of
each Lender, the principal payments required by this Section 3.01.
Section 3.02 Interest.
(a) Interest Rates. The Borrower will pay to the Agent, for the
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 Eurodollar Rate for such Loan
plus the Applicable Margin (as in effect from time to time), but in
no event to exceed the Highest Lawful Rate.
(b) Post-Default 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 Loan Document or
under any Note held by such Lender to or for account of such Lender, for
the period commencing on the date of an Event of Default until the same
is paid in full or all Events of Default are cured or waived.
(c) Due Dates. Accrued interest on Base Rate Loans shall be
payable on each Quarterly Date 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).
(d) Determination of Rates. 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.
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). Such payments shall be made without (to the fullest extent
permitted by applicable law) defense, set-off or counterclaim. 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.
Except as otherwise provided in the definition of "Interest Period", 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 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 and each continuation and conversion under Section 2.02
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) and
Section 2.04(b) shall 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 Facility A Maximum Credit Amounts under
Section 2.03(b) 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 Issuing Bank 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.
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 Non-receipt of Funds by the Agent. Unless the Agent
shall have been notified by a Lender or the Borrower prior to the date on
which such notifying party is scheduled to make payment to the Agent (in the
case of a Lender) of the proceeds of a Loan or a payment under a Letter of
Credit to be made by it hereunder or (in the case of the Borrower) a payment
to the Agent for account of one or more of the Lenders hereunder (such
payment being herein called the "Required Payment"), which notice shall be
effective upon receipt, that it does not intend to make the Required Payment
to the Agent, the Agent may assume that the Required Payment has been made
and may, in reliance upon such assumption (but shall not be required to),
make the amount thereof available to the intended recipient(s) on such date
and, if such Lender or the Borrower (as the case may be) has not in fact made
the Required Payment to the Agent, the recipient(s) of such payment shall, on
demand, repay to the Agent the amount so made available together with
interest thereon in respect of each day during the period commencing on the
date such amount was so made available by the Agent until, but excluding, the
date the Agent recovers such amount at a rate per annum which, for any Lender
as recipient, will be equal to the Federal Funds Rate, and for the Borrower
as recipient, will be equal to the Base Rate plus the Applicable Margin.
Section 4.05 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 (or
reimbursement as to any Letter of Credit) 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 (or
reimbursement) 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 (or participations in
Letters of Credit) 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 (or
reimbursements of Letters of Credit). 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, counterclaim or similar
rights with respect to such participation as fully as if such Lender
were a direct holder of Loans (or Letters of Credit) 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 4.05 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 4.05 to share the benefits of any recovery on such secured claim.
Section 4.06 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,
the Issuing Bank 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, the Issuing Bank 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, the Issuing Bank
or such Lender is organized, or (iii) any jurisdiction (or political
subdivision thereof) in which such Lender, the Issuing Bank 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, the Issuing Bank 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 4.06) such Lender, the Issuing Bank 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 Loan Documents (hereinafter referred to as "Other
Taxes").
(c) Indemnification. To the fullest extent permitted by
applicable law, the Borrower will indemnify each Lender and the Issuing
Bank 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 4.06) paid
by such Lender, the Issuing Bank 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, the Issuing Bank 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, Issuing Bank 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, the Issuing Bank 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 (1) a banking
association or corporation organized under the laws of the United
States of America or any state thereof or (2) 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 banking
association or 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 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 4.06, 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 the Borrower or Agent, as
applicable, 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
4.06 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 4.06.
(ii) For any period with respect to which a Lender has failed
to provide the Borrower with the form required pursuant to this
Section 4.06, 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 indemnification under Section 4.06
with 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 if 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 4.06 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.
(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 relating to any extensions of credit or other
assets of, or any deposits with or other liabilities of such Lender, or
the Commitment or Loans 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 or Loans. 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 at any time (by reason
of any Regulatory Change arising after the Closing Date affecting
(A) any Lender, (B) the Eurodollar interbank market or (C) such Lender's
position in such market), the Eurodollar Rate, as determined in good
faith by such Lender, will not adequately and fairly reflect the cost to
such Lender of funding its Eurodollar Loans, then, if such Lender so
elects, by notice to the Borrower and the Agent, 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 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 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 Regulatory Change. 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 provided such
compensation procedure is on a basis similar to the basis upon which
such Lender is charging other similarly situated borrowers. 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). No Lender shall be entitled
to recover costs under this Section 5.01 incurred or accrued more than
180 days prior to the notice described in this Section 5.01(d).
Section 5.02 Limitation on Eurodollar Loans. Anything herein to
the contrary notwithstanding, if, on or prior to the determination of any
Eurodollar Rate for any Interest Period:
(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
"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 Majority Lenders determine (which determination shall
be conclusive, absent manifest error) that the relevant rates of
interest referred to in the definition of "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 (excluding loss of anticipated
profits), cost, expense or liability which such Lender determines are
attributable to:
(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).
Section 5.06 Replacement Lenders.
(a) If any Lender has notified the Borrower and the Agent of its
incurring additional costs under Section 5.01 or has required the
Borrower to make payments for Taxes under Section 4.06, then the
Borrower may, unless such Lender has notified the Borrower and the Agent
that the circumstances giving rise to such notice no longer apply,
terminate, in whole but not in part, the Commitment of any Lender (other
than the Agent) (the "Terminated Lender") at any time upon five (5)
Business Days' prior written notice to the Terminated Lender and the
Agent (such notice referred to herein as a "Notice of Termination").
(b) In order to effect the termination of the Commitment of the
Terminated Lender, the Borrower shall: (i) obtain an agreement with one
or more Lenders to increase their Commitment or Commitments and/or (ii)
request any one or more other banking institutions to become parties to
this Agreement in place and instead of such Terminated Lender and agree
to accept a Commitment or Commitments; provided, however, that such one
or more other banking institutions are reasonably acceptable to the
Agent and become parties by executing an Assignment (the Lenders or
other banking institutions that agree to accept in whole or in part the
Commitment of the Terminated Lender being referred to herein as the
"Replacement Lenders"), such that the aggregate increased and/or
accepted Commitments of the Replacement Lenders under clauses (i) and
(ii) above equal the Commitment of the Terminated Lender.
(c) The Notice of Termination shall include the name of the
Terminated Lender, the date the termination will occur (the "Lender
Termination Date"), and the Replacement Lender or Replacement Lenders to
which the Terminated Lender will assign its Commitment and, if there
will be more than one Replacement Lender, the portion of the Terminated
Lender's Commitment to be assigned to each Replacement Lender.
(d) On the Lender Termination Date, (i) the Terminated Lender
shall by execution and delivery of an Assignment assign its Commitment
to the Replacement Lender or Replacement Lenders (pro rata, if there is
more than one Replacement Lender, in proportion to the portion of the
Terminated Lender's Commitment to be assigned to each Replacement
Lender) indicated in the Notice of Termination and shall assign to the
Replacement Lender or Replacement Lenders each of its Loans (if any)
then outstanding and participation interests in Letters of Credit (if
any) then outstanding pro rata as aforesaid), (ii) the Terminated Lender
shall endorse its Notes, payable without recourse, representation or
warranty to the order of the Replacement Lender or Replacement Lenders
(pro rata as aforesaid), (iii) the Replacement Lender or Replacement
Lenders shall purchase the Notes held by the Terminated Lender (pro rata
as aforesaid) at a price equal to the unpaid principal amount thereof
plus interest and facility and other fees accrued and unpaid to the
Lender Termination Date, and (iv) the Replacement Lender or Replacement
Lenders will thereupon (pro rata as aforesaid) succeed to and be
substituted in all respects for the Terminated Lender with like effect
as if becoming a Lender pursuant to the terms of Section 12.06(b), and
the Terminated Lender will have the rights and benefits of an assignor
under Section 12.06(b). To the extent not in conflict, the terms of
Section 12.06(b) shall supplement the provisions of this Section
5.06(d). For each assignment made under this Section 5.06, the
Replacement Lender shall pay to the Agent the processing fee provided
for in Section 12.06(b). The Borrower will be responsible for the
payment of any breakage costs associated with termination and
Replacement Lenders, as set forth in Section 5.05.
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 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 certificates 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 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 Closing Date.
(e) The Notes, duly completed and executed.
(f) The other Loan Documents, including those described on Exhibit
D, duly completed and executed in sufficient number of counterparts for
recording, if necessary.
(g) Opinions of (i) Bracewell & Patterson, L.L.P., counsel to the
Borrower and Guarantor and (ii) Borrower's and the Guarantor's General
Counsel, in form and substance satisfactory to the Agent, as to such
matters incident to the transactions herein contemplated as the Agent
may reasonably request.
(h) A certificate of insurance coverage of the Borrower evidencing
that the Borrower is carrying insurance in accordance with Section 7.19.
(i) Concurrent with the Initial Funding, the Borrower shall have
acquired from Amoco Production Company the Amoco Properties other than
the Beaver Creek Unit (except for the Beaver Creek gas plant).
(j) Such other documents as the Agent or any Lender or special
counsel to the Agent may reasonably request.
(k) All indebtedness and other obligations of the Borrower and its
Subsidiaries under that certain Credit Agreement among the Borrower,
Bank One, Texas, N.A., Bank of Montreal, Compass Bank-Houston and
DenNorske Bank AS, dated as of March 31, 1995, shall have been paid and
satisfied in full.
Section 6.02 Initial and Subsequent Loans and Letters of Credit.
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 (including the Initial Funding) is
subject to the further conditions precedent that, as of the date of such
Loans and after giving effect thereto:
(a) no Default shall have occurred and be continuing;
(b) no Material Adverse Effect shall have occurred and be continuing; and
(c) the representations and warranties made by the Borrower in Article
VII and in the Loan Documents shall be true in all material respects 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 Majority Lenders may expressly consent in writing to the contrary.
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 Section 6.02(c)
(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 addition to the foregoing for any advances or issuances of Letters of
Credit following the time for performance of Borrower's covenants under
Section 8.08(a) and Section 8.12, the Lenders must be satisfied with the
Borrower's title to and the environmental condition of the Amoco Properties
acquired by the Borrower.
Section 6.03 Conditions Precedent for the Benefit of Lenders. All
conditions precedent to the obligations of the Lenders to make any Loan are
imposed hereby solely for the benefit of the Lenders, and no other Person may
require satisfaction of any such condition precedent or be entitled to assume
that the Lenders will refuse to make any Loan in the absence of strict
compliance with such conditions precedent.
Section 6.04 No Waiver. No waiver of any condition precedent
shall preclude the Agent or the Lenders from requiring such condition to be
met prior to making any subsequent Loan or preclude the Lenders from
thereafter declaring that the failure of the Borrower to satisfy such
condition precedent constitutes a Default.
ARTICLE VII
Representations and Warranties
The Borrower represents and warrants 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 each
Subsidiary: (i) is a corporation duly organized, legally existing and in
good standing under the laws of the jurisdiction of its incorporation if, in
the case of Subsidiaries, the failure to be so organized, existing and in
good standing would have a Material Adverse Effect; (ii) has all requisite
corporate power, and has all material governmental licenses, authorizations,
consents and approvals necessary in all material respects 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 unaudited consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries as at
December 31, 1996 and the related consolidated statement of income, of the
Borrower and its Consolidated Subsidiaries for the fiscal year ended on said
date and the unaudited consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as at September 30, 1997 and the related
consolidated statement of income, of the Borrower and its Consolidated
Subsidiaries for the nine month period ended on such date heretofore
furnished to the Agent, are complete and correct and fairly present the
consolidated financial condition of the Borrower and its Consolidated
Subsidiaries as at said dates and the results of its operations for the
fiscal year and the nine month period on said dates, all in accordance with
GAAP (except that the financial statements of the Borrower need not contain
footnotes or provisions for income taxes), as applied on a consistent basis
(subject, in the case of the interim financial statements, to normal year-end
adjustments). Neither the Borrower nor any Subsidiary has on the Closing
Date any material Debt, material contingent liabilities, material liabilities
for taxes, material unusual forward or long-term commitments or material
unrealized or anticipated losses from any unfavorable commitments, except as
referred to or reflected or provided for in the Financial Statements or in
Schedule 7.02. Since December 31, 1996, 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 Borrower or any
material 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.
Section 7.03 Litigation. Except as disclosed to the Lenders in
Schedule 7.03 hereto, at the Closing Date there is no material litigation,
legal, administrative or arbitral proceeding, investigation or other action
of any nature pending or, to the knowledge of the Borrower threatened against
the Borrower or any Subsidiary which involves the reasonable possibility of
any judgment or liability against the Borrower or any Subsidiary not fully
covered by insurance (except for normal deductibles).
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 Borrower or any Subsidiary, or any Governmental Requirement or any
agreement or instrument to which the Borrower 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
Borrower 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 Borrower has 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 Borrower of the Loan Documents to which it is a party, has
been duly authorized by all necessary corporate action on its part; and the
Loan Documents constitute the legal, valid and binding obligations of the
Borrower, enforceable in accordance with their terms, except as limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws of
general application relating to or affecting creditor's rights and general
principals of equity.
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 Borrower of the
Loan Documents or for the validity or enforceability thereof, except for the
recording and filing of the Loan Documents as required by this Agreement and
except in the case of performance (i) those matters customarily done after
execution and (ii) those matters required in raising the Minimum Capital.
Section 7.07 Use of Loans. The proceeds of the Loans shall be
used to finance the Amoco Acquisition, refinance existing bank debt and for
working capital and general corporate purposes. The Borrower is not 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, T, 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.
Section 7.08 ERISA.
(a) No act, omission or transaction has occurred with respect to
any Plan which would have a Material Adverse Effect.
(b) 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 Borrower, any Subsidiary or any
ERISA Affiliate has been or is expected by the Borrower, any Subsidiary
or any ERISA Affiliate to be incurred with respect to any Plan. No
ERISA Event with respect to any Plan has occurred that would have a
Material Adverse Effect.
(c) Full payment when due has been made of all amounts which the
Borrower, 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.
(d) 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 Borrower'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. The term "actuarial present value of the benefit
liabilities" shall have the meaning specified in section 4041 of ERISA.
(e) None of the Borrower, 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 Borrower, a Subsidiary or
any ERISA Affiliate in its sole discretion at any time without any
material liability.
(f) None of the Borrower, 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.
(g) None of the Borrower, 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 Borrower and its Subsidiaries has filed all United States Federal income
tax returns and all other material 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 Borrower or any Subsidiary. The
charges, accruals and reserves on the books of the Borrower and its
Subsidiaries in respect of taxes and other governmental charges are, in the
opinion of the Borrower, adequate. No material tax lien (other than any
Excepted Lien) has been filed and, to the knowledge of the Borrower, no
material 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 material 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 (i) owns the net interests in production attributable to the
Hydrocarbon Interests reflected in the most recently delivered Reserve
Report (except, until the Beaver Creek Acquisition, the Properties to be
acquired thereby) 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 and (ii) subject
to determination of any Alleged Title Defects within the 90 day period
provided in Section 4.2 of the Amoco Purchase and Sale Agreement, the
Borrower owns the net interests in production in the Amoco Properties
set forth in the Initial Reserve Reports (except, until the Beaver Creek
Acquisition, the Properties to be acquired thereby) and 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 reflected in the Initial Reserve Reports. All
information contained in the Initial Reserve Reports and the most
recently delivered Reserve Report is true and correct in all material
respects as of the date thereof.
(b) All material leases and material 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 easements and rights of way, include all rights,
Properties and other assets necessary to permit the Borrower and its
Subsidiaries to conduct their business with respect to the Amoco
Properties acquired by the Borrower 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
material Subsidiaries which are reasonably necessary for the operation
of its business are in good working condition in all material respects
and are maintained in all material respects 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 Borrower 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
Borrower and its Subsidiaries taken as a whole. It is understood that any
financial or other future projections included in any such information are
based upon Borrower's best available information and reasonable opinion and
no warranty is hereby given with respect to such projections. There is no
fact peculiar to the Borrower or any Subsidiary which has a Material Adverse
Effect or in the future is reasonably likely to have (so far as the Borrower
can reasonably foresee as of the date hereof) 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
Borrower 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 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
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. Except as set forth on Schedule 7.14,
the Borrower has no Subsidiaries.
Section 7.15 Location of Business and Offices. The Borrower's
principal place of business and chief executive offices are located at the
address stated on the signature page 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.
Section 7.16 Defaults. Neither the Borrower 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 Borrower or any Subsidiary is a party or by which the Borrower 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 Borrower 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
Borrower 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 Borrower 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 Borrower 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 Borrower 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;
(e) The Borrower 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 Borrower 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 Borrower 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 Borrower 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 Borrower's Oil and Gas Properties (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 the Borrower's Oil and Gas
Properties; specifically in this connection, (i) after the Closing Date, no
Oil and Gas Property of the Borrower is subject to having allowable
production materially 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 the Borrower's 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, the Borrower's Oil and Gas Properties (or in the
case of wells located on properties unitized therewith, such unitized
properties).
Section 7.19 Insurance. Schedule 7.19 attached hereto contains an
accurate and complete description of all material policies of fire,
liability, workmen'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 that are due with respect thereto covering all periods
up to and including the Closing Date have been paid, and no notice of
cancellation or termination has been received with respect to any such
policy. Such policies are sufficient, in all material respects, for
compliance with all requirements of law and of all 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 those which are not yet due; and will not in any way be
affected by, or terminate or lapse by reason of, the transactions
contemplated by this Agreement. Schedule 7.19 identifies all material risks,
if any, which the Borrower and its Subsidiaries and their respective Board of
Directors or officers have designated as being self insured. 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 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 counter party to
each such agreement.
Section 7.21 Restriction on Liens. Neither the Borrower nor any
of its Subsidiaries is a party to any agreement or arrangement (other than
this Agreement and the other Loan Documents), or subject to any order,
judgment, writ or decree, which either restricts or purports to restrict its
ability to grant Liens to other Persons on or in respect of their respective
assets or Properties other than those permitted by Section 9.19 hereof.
Section 7.22 Material Agreements. Set forth on Schedule 7.22
hereto is a complete and correct list of all material agreements, leases,
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 as defined in
clauses (i), (ii), (iv), (v), (vi), (vii) and (xii) of the definition thereof
of the Borrower or any of its Subsidiaries, and all obligations in effect on
the Closing Date of the Borrower or any of its Subsidiaries to issuers of
surety or appeal bonds issued for account of the Borrower or any such
Subsidiary, and such list correctly sets forth the names of the debtor or
lessee and creditor or lessor with respect to the Debt or lease obligations
outstanding or to be outstanding and the Property subject to any Lien
securing such Debt or lease obligation.
ARTICLE VIII
Affirmative Covenants
The Borrower covenants and agrees that, so long as any of the
Commitments are in effect and until payment in full of all Loans and LC
Exposure hereunder and all interest thereon:
Section 8.01 Reporting Requirements. The Borrower shall deliver,
or shall cause to be delivered, to the Agent with sufficient copies of each
for the Lenders:
(a) Annual Financial Statements. As soon as available and in any
event within 95 days after the end of each fiscal year of the Borrower,
the audited consolidated and unaudited consolidating statements of
income, stockholders' equity, changes in financial position and cash
flow 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 and consolidating 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) Quarterly Financial Statements. As soon as available and in
any event within 60 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 income, stockholders' equity, changes in
financial position and cash flow 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,
which certificate shall state that said financial statements fairly
present the consolidated and consolidating financial condition and
results of operations of the Guarantor and its Consolidated Subsidiaries
in accordance with GAAP, as at the end of, and for, such period (subject
to normal year-end audit adjustments).
(c) Notice of Default, Etc. Promptly after the Borrower knows
that any Default (other than with respect to Section 8.01) 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.
(d) Other Accounting Reports. Promptly upon receipt thereof, a
copy of each interim or special audit made by Guarantor's or the
Borrower's independent accountants of the books of the Guarantor,
Borrower and their Subsidiaries.
(e) SEC Filings, Etc. Promptly upon its becoming available, each
financial statement, report, notice or proxy statement sent by Howell
Corporation to stockholders generally and each regular or periodic
report and any final registration statement, prospectus or written
communication (other than transmittal letters) in respect thereof filed
by Howell Corporation with or received by the Guarantor in connection
therewith from any securities exchange or the SEC or any successor
agency.
(f) Notices Under Other Loan Agreements. Promptly after the
furnishing thereof, copies of any statement, report or notice furnished
to 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.
(g) Other Matters. From time to time such other information
regarding the business, affairs or financial condition of the Howell
Corporation, the Borrower or any Subsidiary (including, without
limitation, any Plan or Multiemployer Plan) as any Lender or the Agent
may reasonably request.
The Borrower will furnish to the Agent, at the time it furnishes each set of
financial statements pursuant to paragraph (a) or (b) above, a certificate
substantially in the form of Exhibit C executed by a Responsible Officer (i)
certifying as to the matters set forth therein and stating that no Default
has occurred and is continuing (or, if any Default has occurred and is
continuing, describing the same in reasonable detail), and (ii) setting forth
in reasonable detail the computations necessary to determine whether the
Borrower is in compliance with Sections 9.12, 9.13 and 9.14 as of the end of
the respective fiscal quarter or fiscal year.
Section 8.02 Litigation. The Borrower shall promptly give to the
Agent notice of: (i) all legal or arbitral proceedings, and of all
proceedings before any Governmental Authority involving the Borrower or any
Subsidiary, except proceedings which, if adversely determined, would not have
a Material Adverse Effect, and (ii) of any material litigation or material
proceeding against the Borrower or any Subsidiary in which the amount
involved is not covered in full by insurance (subject to normal and customary
deductibles), or in which injunctive or similar relief is sought. The
Borrower will, and will cause each of its Subsidiaries to, promptly notify
the Agent and each of the Lenders of any claim, judgment, Lien or other
encumbrance affecting any Property of the Borrower or any Subsidiary if the
value of the claim, judgment, Lien, or other encumbrance affecting such
Property shall exceed $2,000,000.
Section 8.03 Maintenance, Etc.
(a) Generally. The Borrower shall preserve and maintain its
corporate existence and all of its material rights, privileges and
franchises; keep books of record and account in which full, true and
correct entries will be made in accordance with GAAP of all dealings or
transactions in relation to its business and activities; comply with all
Governmental Requirements if failure to comply with such requirements
will have a Material Adverse Effect; pay and discharge all material
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 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) Proof of Insurance. Contemporaneously with the delivery of
the financial statements required by Section 8.01(a) to be delivered for
each year, the Borrower will furnish or cause to be furnished to the
Agent and the Lenders a certificate of insurance coverage from the
insurer in form and substance satisfactory to the Agent and, if
requested, will furnish the Agent and the Lenders copies of the
applicable policies.
(c) Operation of Properties. The Borrower will and will cause
each Subsidiary to operate, in all material respects, its Properties or
cause such Properties to be operated, in all material respects, in a
careful and efficient manner in accordance with the practices of the
industry and in compliance, in all material respects, with all
applicable contracts and agreements and in compliance in all material
respects with all Governmental Requirements.
(d) Oil and Gas Properties. The Borrower will and will cause each
Subsidiary to, at its own expense, maintain, preserve, protect and keep
all its material Oil and Gas Properties in good repair, working order
and condition in all material respects, and make necessary and proper
repairs, renewals and replacements so that its business carried on in
connection therewith may be properly conducted at all times in all
material respects, all in accordance with approved practices of prudent
operators and standards prevailing in the oil and gas industry and
within limits imposed by joint operating agreements.
Section 8.04 Environmental Matters.
(a) Establishment of Procedures. The Borrower will and 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 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 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, 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) Notice of Action. The Borrower will promptly notify the Agent
and the Lenders in writing of any material threatened action,
investigation or inquiry by any Governmental Authority of which the
Borrower has knowledge in connection with any Environmental Laws,
excluding routine testing and corrective action.
Section 8.05 Further Assurances. The Borrower will and will cause
each Subsidiary to cure promptly any defects in the creation and issuance of
the Notes and the execution and delivery of the other Loan Documents. The
Borrower at its expense will and will cause 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 Borrower or any Subsidiary, as the case may be, in the Loan
Documents, or to further evidence and more fully describe the collateral
intended as security for the Notes, or to correct any omissions in the Loan
Documents, or to state more fully the security obligations set out herein or
in any of the Loan Documents, or to perfect, protect or preserve any Liens
created pursuant to any of the Loan Documents, or to make any recordings, to
file any notices or obtain any consents, all as may be necessary or
appropriate in connection therewith.
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 Loan Documents, at the time or times and in the manner specified.
Section 8.07 Reserve Reports.
(a) Not less than 60 days prior to each Scheduled Redetermination
Date, commencing with the Scheduled Redetermination Date to occur on May
1, 1998 the Borrower shall furnish to the Agent and the Lenders a
Reserve Report. The March 1 Reserve Report of each year, other than the
Report as of January 1, 1998, shall be as of January 1 of such year and
prepared by H. J. Gruy and Associates or other certified independent
petroleum engineers acceptable to the Agent. The January 1, 1998
Reserve Report shall be audited by H. J. Gruy or Ryder Scott. The
September 1 Reserve Report of each year shall be as of July 1 of such
year and prepared by or under the supervision of the chief engineer of
the Borrower who shall certify such Reserve Report to be true and
accurate (in accordance with customary prudent industry standards) and
to have been prepared, in all material respects, in accordance with the
procedures used in the immediately proceeding March 1 Reserve Report.
(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, in all material respects, in accordance with the procedures
used in the immediately preceding Reserve Report. For any unscheduled
redetermination requested by the Required Lenders or the Borrower
pursuant to Section 2.08(d), the Borrower shall provide such Reserve
Report with an "as of" date as required by the Required Lenders as soon
as possible, but in any event no later than 30 days following the
receipt of the request by the Agent.
(c) With the delivery of each Reserve Report, the Borrower shall
provide to the Agent and the Lenders, 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
and any other information delivered in connection therewith is true and
correct in all material respects, (ii) the Borrower owns good and
defensible title to the Oil and Gas Properties evaluated in such Reserve
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 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 its Oil and Gas
Properties sold and in such detail as reasonably required by the
Majority Lenders, (v) attached to the certificate is a list of its Oil
and Gas Properties added to and deleted from the immediately prior
Reserve Report and a list showing any change in working interest or net
revenue interest in its Oil and Gas Properties occurring and the reason
for such change, (vi) attached to the certificate is a list of all
Persons disbursing proceeds to the Borrower from its Oil and Gas
Properties and (vii) following delivery of the Mortgages called for in
Section 8.09 below, 80% of all of the Oil and Gas Properties evaluated
by such Reserve Report will be Mortgaged Property unless such Mortgages
are not required pursuant to Section 8.09.
Section 8.08 Title and Mortgage Information.
(a) Title Re Amoco Properties. As soon as reasonably practicable,
but in no event later than the end of the 90 day period provided in
Section 4.2 of the Amoco Purchase and Sale Agreement, the Borrower will
conduct reasonable title review of the Amoco Properties acquired by the
Borrower to determine any "Alleged Title Defects" as provided in Section
4.2 of the Amoco Purchase and Sale Agreement and shall make such demands
for price adjustment as it may be entitled pursuant to the Amoco
Purchase and Sale Agreement.
(b) Delivery. On or before the delivery to the Agent and the
Lenders of each Reserve Report required by Section 8.07(a), the Borrower
will deliver title information and, unless mortgages are not required
pursuant to Section 8.09, mortgages, deeds of trust, security agreements
and financing statements, as appropriate, in form and substance
acceptable to the Agent covering enough of the Oil and Gas Properties
evaluated by such Reserve Report that were not included in the
immediately preceding Reserve Report, so that the Agent shall have
received together with title information and Liens previously delivered
to the Agent, satisfactory title information and, if required, Liens on
at least eighty percent (80%) of the value of the Oil and Gas Properties
evaluated by such Reserve Report.
(c) Cure of Title Defects. The Borrower shall cure any title
defects or exceptions which are not Excepted Liens raised by the
information required by Section 8.08(b) above, or, if mortgages are
required pursuant to Section 8.09, substitute acceptable Mortgaged
Properties with no title defects or exceptions except for Excepted Liens
covering Mortgaged Properties of an equivalent value, within 45 days
after a request by the Agent or the Lenders to cure such defects or
exceptions.
(d) Failure to Cure Title Defects. If the Borrower is unable to
cure any title defect requested by the Agent or the Lenders to be cured
or the Borrower does not comply with the requirement to provide
acceptable title information covering eighty percent (80%) of the value
of the Oil and Gas Properties evaluated in the most recent Reserve
Report, such default shall not be a Default or an Event of Default, but
instead the Agent and the Lenders shall have the right to exercise the
following remedy in their sole discretion from time to time, and any
failure to so exercise this remedy at any time shall not be a waiver as
to future exercise of the remedy by the Agent or the Lenders. To the
extent that the Agent or the Lenders are not satisfied with title to any
Oil and Gas Property after the time period in Section 8.08(c) has
elapsed, such unacceptable Oil and Gas Property shall not count towards
the eighty percent (80%) requirement, and the Agent may send a notice to
the Borrower and the Lenders that the then outstanding Borrowing Base
shall be reduced by an amount as determined by all of the Lenders to
cause the Borrower to be in compliance with the requirement to provide
acceptable title information on eighty percent (80%) of the value of the
Oil and Gas Properties. This new Borrowing Base shall become effective
immediately after receipt of such notice.
Section 8.09 Mortgages. Within fifty six (56) days after the
Borrower's completion of the Beaver Creek Acquisition, the Borrower will
grant to the Agent as security for the Indebtedness a first-priority Lien
interest (subject only to Excepted Liens) on the Borrower's interest on at
least eighty percent (80%) of the value of the Oil and Gas Properties
evaluated by the Initial Reserve Reports, which Liens will be created by and
in accordance with the provisions of mortgages, deeds of trust, security
agreements and financing statements, or other Loan Documents (the
"Mortgages"), all in form and substance satisfactory to the Agent in its sole
discretion and in sufficient executed (and acknowledged where necessary or
appropriate) counterparts for recording purposes. The Mortgages will not be
filed by the Lenders until the first to occur of (1) the occurrence of a
Default and (2) six (6) months after the Borrower has completed the Beaver
Creek Acquisition. If Facility B has been repaid and the Minimum Capital has
been raised within six (6) months after the Borrower has completed the Beaver
Creek Acquisition and no Default has occurred and is then continuing, the
Mortgages will not be recorded and will be returned to the Borrower. In
connection with the delivery of Mortgages, as aforesaid, the Borrower will
furnish (i) title information to the Agent which establishes to the Agent's
satisfaction that Borrower has good and defensible title to the Oil and Gas
Properties covered by the Mortgage and the Mortgage is first and prior and
(ii) opinions of counsel satisfactory to the Agent with respect to the
enforceability of the Mortgage and such other matters in connection therewith
as the Agent may reasonably request.
Section 8.10 ERISA Information and Compliance. The Borrower 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)
immediately upon becoming aware of the occurrence of any ERISA Event or
breach or violation of or default by the Borrower or any Subsidiary under any
Plan which, individually or in the aggregate, would have a Material Adverse
Effect, a written notice signed by a Responsible Officer specifying the
nature thereof, what action the Borrower, 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 (ii) immediately
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 Borrower 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.
Section 8.11 Minimum Capital. Within twelve (12) months of the
Closing Date, the Borrower shall raise (i) unless the Borrower completes the
Beaver Creek Acquisition, Subordinated Debt or equity in a principal amount
of not less than $50,000,000; (ii) if the Beaver Creek Acquisition has been
completed a minimum of $175,000,000 additional new long term Subordinated
Debt or equity capital including at least $75,000,000 of equity.
Section 8.12 Environmental. As soon as reasonably practicable,
but in no event later than the end of the two hundred seventy (270) day
period provided in Section 5.2 of the Amoco Purchase and Sale Agreement, the
Borrower will conduct reasonable environmental due diligence with respect to
the Amoco Properties acquired by it to determine any "Alleged Adverse
Conditions" as provided for in Section 5.2 of the Amoco Purchase and Sale
Agreement and make such demands for price adjustment as it may be entitled
pursuant to said Amoco Purchase and Sale Agreement.
ARTICLE IX
Negative Covenants
The Borrower covenants and agrees that, so long as any of the
Commitments are in effect and until payment in full of Loans and LC Exposure
hereunder and all interest thereon without the prior written consent of the
Majority Lenders:
Section 9.01 Debt. Neither the Borrower nor any Subsidiary will
incur, create, assume or permit to exist any Debt, except the following
(including the interest, fees and charges in connection therewith):
(a) the Notes or other Indebtedness or any guaranty of or
suretyship arrangement for the Notes or other Indebtedness;
(b) Debt of the Borrower 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;
(c) 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 120 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;
(d) Debt under capital leases (as required to be reported on the
financial statements of the Borrower pursuant to GAAP) not to exceed
$5,000,000;
(e) Debt associated with bonds or surety obligations required by
Governmental Requirements in connection with the operation of Oil and
Gas Properties;
(f) Debt of the Borrower under Hedging Agreements the notional
amounts on which do not exceed 95% of Borrower's anticipated oil and/or
gas production to be produced during the term of such Hedging Agreements
and which are 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 the Borrower's operations;
(g) the Subordinated Debt not to exceed $150,000,000 of principal
outstanding at any time;
(h) to the extent Subordinated Debt permitted by (g) above is
evidenced by Borrower's guarantee of indebtedness of Howell Corporation,
intercompany Subordinated Debt of the Borrower to Howell Corporation
pursuant to which the proceeds of such Howell Corporation indebtedness
have been advanced to the Borrower;
(i) Debt permitted by Section 9.03(g);
(j) Debt evidenced by interest rate Hedging Agreements entered
into by the Borrower in the normal course of business and not for
speculative purposes; and
(k) intercompany Subordinated Debt evidenced by advances from
Howell Corporation to the Borrower from time to time in the normal
course of business; and
(l) Debt not included within clauses (a) through (k) above not to
exceed $5,000,000 at any time outstanding.
Section 9.02 Liens. Neither the Borrower 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 securing leases allowed under Section 9.01(d), but only
on the Property under lease;
(d) Liens arising under leases permitted under Section 9.07.
(e) Liens disclosed on Schedule 9.02;
(f) Liens on cash or securities of the Borrower securing the Debt
described in Section 9.01(e); and
(g) Liens not included within clauses (a) through (f) above
securing Debt permitted under Section 9.01 not to exceed $2,500,000.
Section 9.03 Investments, Loans and Advances. Neither the
Borrower 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 acquisition thereof;
(d) commercial paper maturing within one year from the date of
creation thereof rated in investment grade by Standard & Poor's
Corporation or Moody's Investors Service, Inc.;
(e) 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 & Poor's Corporation or Moody's Investors Service,
Inc., respectively;
(f) deposits in money market funds investing exclusively in
investments described in Section 9.03(c), 9.03(d) or 9.03(e);
(g) investments, loans or advances made by the Borrower in or to
the Guarantor or any of its Subsidiaries, not to exceed at any one time
outstanding $1,000,000 in the aggregate;
(h) other investments, loans or advances not to exceed $1,000,000
in the aggregate at any time;
(i) sums required in the normal course of business to be placed in
escrow for the payment of royalties on Borrowers or Subsidiaries oil and
gas production; and
(j) loans to Howell Corporation in lieu of and for the same
purposes as dividends and other distributions to the extent permitted by
Section 9.04 below.
Section 9.04 Dividends, Distributions and Redemptions. The
Borrower 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 stockholders or make any distribution of its assets to its
stockholders except (so long as no Default has occurred and is continuing) as
follows:
(a) cash dividends to the extent necessary (i) to permit Howell
Corporation to pay regular installments of interest from time to time
owing on Subordinated Debt not to exceed $150,000,000 in principal
amount to the extent the net proceeds thereof have been advanced to the
Borrower and (ii) to cover Howell Corporation's reasonable on-going
operating expenses as a holding company; and
(b) cash dividends (to the extent necessary for Howell Corporation
to continue to pay regular dividends on its preferred and common stock
at historical levels.
Section 9.05 Sales and Leasebacks. Neither 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
Borrower or any Subsidiary shall then or thereafter rent or lease as lessee
such Property or any part thereof or other Property which the Borrower or any
Subsidiary intends to use for substantially the same purpose or purposes as
the Property sold or transferred.
Section 9.06 Nature of Business. Neither 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.
Section 9.07 Limitation on Leases. Neither the Borrower nor any
Subsidiary will create, incur, assume or permit to exist any obligation for
the payment of rent or hire of Property of any kind whatsoever (real or
personal including capital leases, but excluding leases of Hydrocarbon
Interests), under leases or lease agreements which would cause the aggregate
amount of all payments made by the Borrower and its Subsidiaries pursuant to
all such leases or lease agreements to exceed [$2,000,000] in any period of
twelve consecutive calendar months during the life of such leases.
Section 9.08 Mergers, Etc. Neither the Borrower nor any Subsidiary
will merge into or with or consolidate with any other Person, 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, provided, however, any Subsidiary of the Borrower may merge into the
Borrower provided the Borrower is the surviving entity and no Default exists
or will be created thereby.
Section 9.09 Proceeds of Notes; Letters of Credit. The Borrower
will not permit the proceeds of the Notes or Letters of Credit to be used for
any purpose other than those permitted by Section 7.07. Neither the Borrower
nor any Person acting on behalf of the Borrower has taken or will take any
action which might cause any of the Loan Documents to violate Regulation G,
T, 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 Borrower 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 Borrower, 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 which individually
or in the aggregate could reasonably have a Material Adverse Effect;
(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 Borrower, any
Subsidiary or any ERISA Affiliate to the PBGC which individually or in
the aggregate could reasonably have a Material Adverse Effect;
(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, agreement relating thereto or applicable law,
the Borrower, 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 which individually or in the aggregate
could reasonably have a Material Adverse Effect;
(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 Borrower, 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 by an
amount which could reasonably have a Material Adverse Effect. 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 Borrower, 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 which individually or in the aggregate could
reasonably have a Material Adverse Effect;
(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
Borrower, any Subsidiary or any 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
Borrower nor any Subsidiary will discount or sell (with or without recourse)
any of its notes receivable or accounts receivable.
Section 9.12 Current Ratio. The Borrower will not permit its
ratio of (i) consolidated current assets plus availability under Facility A
to (ii) consolidated current liabilities (excluding current maturities of the
Notes) to be less than 1.0 to 1.0 at any time.
Section 9.13 [Intentionally Omitted].
Section 9.14 Interest Coverage Ratio. The Borrower will not
permit its Interest Coverage Ratio as of the end of any calendar quarter
(calculated quarterly at the end of each calendar quarter) to be less than
2.0 to 1.00 for each calendar quarter in calendar year 1998 and 2.5 to 1.00
for the earlier of (a) each calendar quarter thereafter, or (b) such earlier
calendar quarter during which the Borrower has raised the Minimum Capital
required by Section 8.11(ii). For the purposes of this Section 9.14,
"Interest Coverage Ratio" shall mean the ratio of (i) EBITDA for the four
fiscal quarters ending on such date to (ii) cash interest payments made for
such four fiscal quarters of the Borrower and its Consolidated Subsidiaries.
Section 9.15 Sale of Oil and Gas Properties. The Borrower 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 (including undeveloped
horizons) 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) between any two Scheduled Redeterminations,
sales in the ordinary course of business of Oil and Gas Properties which
shall not exceed $15,000,000 in the aggregate, provided that so long as (1)
the Facility B Loans are outstanding, or (2) a Default exists and is
continuing, (a) the net cash proceeds received in such sale pursuant to this
clause (iv) are applied as a prepayment on the Facility A Notes and (b) the
Borrowing Base is automatically reduced by the amount of the value of such
Property as reflected in the most current Reserve Report.
Section 9.16 Environmental Matters. Neither 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.
Section 9.17 Transactions with Affiliates. Neither 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 not prohibited 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 9.18 Subsidiaries. The Borrower shall not, and shall not
permit any Subsidiary to, create any additional Subsidiaries. The Borrower
shall not and shall not permit any Subsidiary to sell or to issue any stock
or ownership interest of a Subsidiary, except to the Borrower or the
Guarantor and except in compliance with Section 9.03.
Section 9.19 Negative Pledge Agreements and Subsidiary Dividends.
Neither the Borrower nor any Subsidiary will create, incur, assume or permit
to exist any contract, agreement or understanding (other than Loan Documents)
which in any way prohibits or restricts the granting, conveying, creation or
imposition of any Lien on any of its Property or otherwise restricts any
Subsidiary from paying dividends to the Borrower, or which requires the
consent of or notice to other Persons in connection therewith. Restrictions
in a partnership, joint venture or other contract prohibiting Liens on a
Person's interest therein and restrictions in contracts (including Liens
permitted under Section 9.02) covering Property of deminimus value are not
prohibited by this Section 9.19.
Section 9.20 Payments on Certain Debt to Howell Corporation. The
Borrower will not make any payments on the $64,296,029 indebtedness payable
to Howell Corporation described in Schedule 9.01 hereof except for payments
thereon which are in lieu of and for the same purposes as dividends and other
distributions to the extent permitted by Section 9.04 above.
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 Loan Documents
and such default, other than a default of a payment or prepayment of
principal (which shall have no cure period), shall continue unremedied
for a period of three (3) Business Days; or
(b) the Borrower or any Subsidiary or Howell Corporation shall
default in the payment when due of any principal of or interest on any
of its other Debt aggregating $5,000,000 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 Loan Documents by the Borrower or any Subsidiary
or the Guarantor, or any certificate furnished to any Lender or the
Agent pursuant to the provisions hereof or any Loan Documents, shall
prove to have been false or misleading as of the time made or furnished
in any material respect; or
(d) the Borrower shall default in the performance of any of its
obligations under Article IX or any other Article of this Agreement
other than all Sections under Article VIII except Sections 8.08(a), 8.09
and 8.12; or the Borrower shall default in the performance of any of its
obligations under Article VIII except Sections 8.08(a), 8.09 and 8.12 or
any Loan Documents (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) the Borrower otherwise becoming aware of such default; or
(e) the Borrower shall admit in writing its inability to, or be
generally unable to, pay its debts as such debts become due; or
(f) the Borrower shall (i) apply for or consent to the 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, liquidation 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, 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 of all or any substantial part of its assets, or (iii)
similar relief in respect of the Borrower 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
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
$5,000,000 in the aggregate shall be rendered by a court against the
Borrower 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 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 Loan Documents after delivery thereof shall for any
reason, except to the extent permitted by the terms thereof, cease to be
in full force and effect and valid, binding and enforceable in
accordance with their terms, or cease to create a valid and perfected
Lien of the priority required thereby on any of the collateral purported
to be covered thereby, except to the extent permitted by the terms of
this Agreement, or the Borrower shall so state in writing; or
(j) the Borrower discontinues its usual business or suffers to
exist any material change in its ownership, control or management; or
(k) Guarantor takes, suffers or permits to exist any of the events
or conditions referred to in paragraphs (e), (f), (g) or (h) or if any
provision of the Guaranty Agreement shall for any reason cease to be
valid and binding on Guarantor or if Guarantor shall so state in writing
or if the Guarantor defaults in any covenant or term of the Guaranty
Agreement; or
(l) any Subsidiary takes, suffers or permits to exist any of the
events or conditions referred to in paragraphs (e), (f), (g) or (h); or
(m) the Guarantor's Tangible Net Worth shall at any time be less
than $76,408,000, plus 75% of the proceeds received by the Guarantor from
equity capital offerings after the Closing Date, plus 75% of the
Guarantor's consolidated net income for each fiscal year for which net
income is positive beginning with the fiscal year ending December 31,
1997. Such test shall be measured at the end of each fiscal quarter and
at fiscal year end.
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 clauses (k) or (l) to
the extent they relate to clauses (e), (f) or (g), the Agent, 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)) 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 clauses (k) or (l)
to the extent they relate to clauses (e), (f) or (g), the Commitments
shall be automatically canceled 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)) 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 other
Loan Documents; 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 other Loan Documents with such powers as are
specifically delegated to the Agent by the terms of the Loan Documents,
together with such other powers as are reasonably incidental thereto. The
Agent (which term as used in this sentence and in Section 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 the Loan Documents, and shall not by reason of
the Loan Documents 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. The Agent is authorized to release any
collateral that is permitted to be sold or released pursuant to the terms of
the Loan Documents.
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.
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, BMO (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. BMO (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 (and any of its
Affiliates) as if it were not acting as the Agent, and BMO 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 and the Issuing Bank 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
or the Issuing Bank in any way relating to or arising out of: (i) this
Agreement, the other Loan Documents 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 other Loan
Documents 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 or the Issuing Bank, 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 other Loan Documents 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 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. In this regard, each
Lender acknowledges that Vinson & Elkins L.L.P. is acting in this transaction
as special counsel to the Agent only, except to the extent otherwise
expressly stated in any legal opinion or any Loan Document. Each Lender will
consult with its own legal counsel to the extent that it deems necessary in
connection with the Loan Documents and the matters contemplated therein.
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 (or all of the Lenders
as expressly required by Section 12.04) 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
(or all of the Lenders as expressly required by Section 12.04) 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 (or all of the Lenders as required by Section 12.04) 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 other Loan
Documents 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 subject to the
approval of the Borrower, which approval may not be unreasonably withheld.
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.
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 other Loan Documents (including, without
limitation, any modifications of, or waivers or consents under, this
Agreement or the other Loan Documents) shall be given or made by telex,
telecopy, courier or U.S. Mail or in writing and telexed, telecopied, mailed
or delivered to the intended recipient at the "Address for Notices" specified
below its name on the signature pages hereof or in the Loan Documents 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 other Loan Documents, all such communications shall be deemed to
have been duly given when transmitted, if transmitted before 1:00 p.m. local
time on a Business Day (otherwise on the next succeeding Business Day) by
telex or telecopier and evidence or confirmation of receipt is obtained, 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.
(a) The Borrower agrees:
(i) whether or not the transactions hereby contemplated are
consummated, to 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 reasonable fees
and disbursements of counsel and other outside consultants for the Agent
and, in the case of enforcement, the reasonable fees and disbursements
of counsel for the Agent and any of the Lenders); and promptly reimburse
the Agent for all amounts expended, advanced or incurred by the Agent or
the Lenders to satisfy any obligation of the Borrower under this
Agreement or any other Loan Documents, including without limitation, all
costs and expenses of foreclosure;
(ii) 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 or
Letters of Credit, (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 or any Subsidiary to
comply with the terms of any Loan Documents or this Agreement, or with
any Governmental Requirement, (v) any inaccuracy of any representation
or any breach of any warranty of the Borrower [or any 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, (vii) the payment of a drawing under any Letter of Credit
notwithstanding the non-compliance, non-delivery or other improper
presentation of the manually executed draft(s) and certification(s),
(viii) any assertion that the Lenders were not entitled to receive the
proceeds received pursuant to the Loan Documents or (ix) any other
aspect of the Loan Documents, 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 to the extent arising 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
(iii) to indemnify and hold harmless from time to time the
Indemnified Parties 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 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(a)(iii) 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).
(b) 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.
(c) 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.
(d) 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 has occurred by reason of events other than the gross
negligence or willful misconduct of the Indemnified Party.
(e) 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.
(f) 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 other Loan Documents 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 final maturity of the
Loans, increases the Aggregate Facility A Maximum Credit Amounts, modifies
the Borrowing Base, forgives the principal amount of any Indebtedness
outstanding under this Agreement, releases any guarantor of the Indebtedness
or releases all or substantially all of the collateral, 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
Facility A Maximum Credit Amount or the Facility B Commitment 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) Any Lender may, upon the written consent of the Agent and, if
no Event of Default has occurred and is continuing, the Borrower (which
consent will not be unreasonably withheld), assign to one or more
assignees 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 and (ii) the assignee or
assignor shall pay to the Agent a processing and recordation fee of
$3,500 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 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
other Loan Documents. 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 4.06, 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 Annex I 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) forgive any principal
owing on any Indebtedness or extend the final maturity of the Loans,
(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 any guarantor of the Indebtedness or release all
or substantially all of the collateral (except as provided in the Loan
Documents) 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 Loan Documents (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, provided that such
participant shall be entitled to receive additional amounts under
Article V on the same basis as if it were a Lender and be indemnified
under Section 12.03 as if it were a Lender. 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) The Lenders may furnish any information concerning the
Borrower in the possession of the Lenders 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.
(e) Notwithstanding anything in this Section 12.06 to the
contrary, any Lender may assign and pledge all or any of its Notes to
any Federal Reserve Bank 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 or the Letters of
Credit, 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 other Loan Documents.
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 4.06, 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 other Loan Document shall continue in full force and
effect. In such event, each Loan Document shall be automatically reinstated
and the Borrower shall take such action as may be reasonably requested by the
Agent and the Lenders to effect such reinstatement.
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) Any legal action or proceeding with respect to the Loan
Documents shall be brought in the courts of the State of Texas or of the
United States of America for the Southern District of Texas, and, by
execution and delivery of this Agreement, the Borrower hereby accepts
for itself and (to the extent permitted by law) in respect of its
Property, generally and unconditionally, the jurisdiction of the
aforesaid courts. The Borrower hereby irrevocably waives any objection,
including, without limitation, any objection to the laying of venue or
based on the grounds of forum non conveniens, which it may now or
hereafter have to the bringing of any such action or proceeding in such
respective jurisdictions. this submission to jurisdiction is
non-exclusive and does not preclude the Agent or any Lender from
obtaining jurisdiction over the Borrower in any court otherwise having
jurisdiction.
(c) Nothing herein shall affect the right of the Agent or any
Lender or any holder of a Note to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise proceed
against the Borrower in any other jurisdiction.
(d) The Borrower 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
Loan Documents 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
Loan Documents 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 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
canceled 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 canceled 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 permitted 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. 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.
Section 12.15 Confidentiality. In the event that the Borrower
provides to the Agent or the Lenders written confidential information
belonging to the Borrower or Howell Corporation or any Subsidiary thereof
(hereinafter called the "Subject Entities"), 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 any Subject Entity, (iii) are
previously known by the Agent or the Lenders from some source other than any
Subject Entity, (iv) are hereafter developed by the Agent or the Lenders
without using the Subject Entities' 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 Subject Entities with respect to such
information or through any other means other than through disclosure by the
Subject Entities, (vi) are disclosed with the Borrower'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 in connection with its duties and rights under the Loan Documents
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 other Loan Document, 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 the Lenders shall receive a
confidentiality agreement from the Person to whom such information is
disclosed such that said Person shall have the same obligation to maintain
the confidentiality of such information as is imposed upon the Agent or the
Lenders hereunder. Notwithstanding anything to the contrary provided herein,
this obligation of confidence shall cease three (3) years from the date the
information was furnished, unless the Borrower requests in writing at least
thirty (30) days prior to the expiration of such three year period, to
maintain the confidentiality of such information for an additional three year
period.
Section 12.16 Effectiveness. This Agreement shall be effective on
the Closing Date (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 other
Loan Documents and agrees that it is charged with notice and knowledge of the
terms of this Agreement and the other Loan Documents; 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 other Loan
Documents; and has received the advice of its attorney in entering into this
Agreement and the other Loan Documents; and that it recognizes that certain
of the terms of this Agreement and the other Loan Documents 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 of this Agreement or the other
Loan Documents 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: HOWELL PETROLEUM CORPORATION
By:_____________________________
Name:
Title:
Address for Notices:
1500 Howell Building
1111 Fannin
Houston, Texas 77002-6923
Telecopier No.: (713) 658-4007
Telephone No.: (713) 658-4008
Attention:__________________
LENDER AND AGENT: BANK OF MONTREAL
By:_____________________________
Name: Robert L. Roberts
Title: Director, U.S. Corporate Banking
Lending Office for Base Rate Loans and
LIBOR Loans:
115 South LaSalle
Chicago, Illinois 60603
Address for Notices:
115 South LaSalle
Chicago, Illinois 60603
Telecopier No.: 312/750-6061
Telephone No.: 312/750-4326
Attention: Farid Ali
With copy to:
Robert L. Roberts
Director, U.S. Corporate Banking
Bank of Montreal
700 Louisiana, Suite 4400
Houston, Texas 77002
Telecopier: (713) 546-4007
Telephone: (713) 546-9754
ANNEX 1
LIST OF FACILITY A MAXIMUM CREDIT AMOUNTS
Facility A
Name of Lender Percentage Share Maximum Credit Amount
A. Prior to Beaver Creek Acquisition
Bank of Montreal 100% $130,000,000
------------
Aggregate Facility A Maximum Credit Amounts $130,000,000
until the Beaver Creek Acquisition closes ============
B. Available for Beaver Creek Acquisition
Bank of Montreal 100% $ 85,000,000
------------
Aggregate Facility A Maximum Credit Amounts $215,000,000
upon closing of the Beaver Creek Acquisition ============
LIST OF FACILITY B COMMITMENTS
Facility B
Name of Lender Percentage Share Commitments
A. Prior to Beaver Creek Acquisition
Bank of Montreal 100% $ 20,000,000
-------------
Aggregate Facility B Commitments until $ 20,000,000
the Beaver Creek Acquisition closes =============
B. Available for Beaver Creek Acquisition
Bank of Montreal 100% $ 85,000,000
------------
Aggregate Facility B Commitments upon $105,000,000
the closing of the Beaver Creek Acquisition ============
A-1
EXHIBIT A-1
FORM OF FACILITY A NOTE
$_____________________________ ___________________, 199__
FOR VALUE RECEIVED, HOWELL PETROLEUM CORPORATION, a Delaware corporation
(the "Borrower") hereby promises to pay to the order of
______________________________ (the "Lender"), at the Principal Office of
BANK OF MONTREAL (the "Agent"), at 115 LaSalle Street, Chicago, Illinois
60603, the principal sum of _____________ Dollars ($____________) (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 Facility A Note, shall be endorsed
by the Lender on the schedules attached hereto or any continuation thereof or
on any separate record maintained by the Lender.
This Facility A Note is one of the Notes referred to in the Credit
Agreement dated as of December 17, 1997 among the Borrower, 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 Facility A Note have the
respective meanings assigned to them in the Credit Agreement.
This Facility A Note is issued pursuant to the Credit Agreement and is
entitled to the benefits provided for in the Credit Agreement and the other
Loan Documents. The Credit Agreement provides for the acceleration of the
maturity of this Facility A Note upon the occurrence of certain events, for
prepayments of Loans upon the terms and conditions specified therein and
other provisions relevant to this Facility A Note.
THIS FACILITY A NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF TEXAS.
HOWELL PETROLEUM CORPORATION
By:
Name:
Title:
EXHIBIT A-2
FORM OF FACILITY B NOTE
$_____________________________ ___________________, 199__
FOR VALUE RECEIVED, HOWELL PETROLEUM CORPORATION, a Delaware corporation
(the "Borrower") hereby promises to pay to the order of
__________________________ (the "Lender"), at the Principal Office of BANK OF
MONTREAL (the "Agent"), at 115 LaSalle Street, Chicago, Illinois 60603, the
principal sum of _____________ Dollars ($____________) (or such lesser amount
as shall equal the aggregate unpaid principal amount of the Facility B 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 Facility B Note, shall be endorsed
by the Lender on the schedules attached hereto or any continuation thereof or
on any separate record maintained by the Lender.
This Facility B Note is one of the Notes referred to in the Credit
Agreement dated as of December 17, 1997 among the Borrower, the Lenders which
are or become parties thereto (including the Lender) and the Agent, and
evidences Facility B 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 Facility B Note have the
respective meanings assigned to them in the Credit Agreement.
This Facility B Note is issued pursuant to the Credit Agreement and is
entitled to the benefits provided for in the Credit Agreement and the other
Loan Documents. The Credit Agreement provides for the acceleration of the
maturity of this Facility B Note upon the occurrence of certain events, for
prepayments of Loans upon the terms and conditions specified therein and
other provisions relevant to this Facility B Note.
THIS FACILITY B NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF TEXAS.
HOWELL PETROLEUM CORPORATION
By:
Name:____________________________
Title:___________________________
A-2
EXHIBIT B
FORM OF BORROWING, CONTINUATION AND CONVERSION REQUEST
_____________________, 199__
HOWELL PETROLEUM CORPORATION, a ___________ corporation (the "Borrower"),
pursuant to the Credit Agreement dated as of December 17, 1997 (together with
all amendments or supplements thereto, the "Credit Agreement") among the
Borrower, BANK OF MONTREAL, 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):
/__/ 1. Facility A Loans:
(a) Aggregate amount of new Facility A 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:
_________________________.
/__/ 2. Facility B Loans:
(a) Aggregate amount of new Facility B 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:
_________________________.
/__/ 3. Eurodollar Loan Continuation for Eurodollar Loans maturing on
_____________________:
(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
________________________.
/__/ 4. 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
______________________.
/__/ 5. 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.
HOWELL PETROLEUM CORPORATION
By:_________________________________
Name:
Title:
B-2
EXHIBIT C
FORM OF COMPLIANCE CERTIFICATE
The undersigned hereby certifies that he is the ________________ of
HOWELL PETROLEUM CORPORATION, a ____________ 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 December 17,
1997 (together with all amendments or supplements thereto being the
"Agreement") among the Borrower, BANK OF MONTREAL, 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) Except as expressly stated in Schedule 1 hereto, the
representations and warranties of the Borrower contained in Article
VII of the Agreement and in the other Loan Documents and otherwise
made in writing by or on behalf of the Borrower pursuant to the
Agreement and the Loan Documents were true and correct in all
material respects when made, and are repeated at and as of the time
of delivery hereof and are true and correct in all material respects
at and as of the time of delivery hereof, except to the extent such
representations and warranties are expressly limited to an earlier
date or the Majority Lenders have expressly consented in writing to
the contrary.
(b) The Borrower has performed and complied with all
agreements and conditions contained in the Agreement and in the
other Loan Documents required to be performed or complied with by it
prior to or at the time of delivery hereof.
(c) Since __________________, 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.
(d) Except as expressly stated in Schedule 1 hereto, there
exists, and, after giving effect to the loan or loans with respect
to which this certificate is being delivered, will exist, no Default
under the Agreement or any event or circumstance which constitutes,
or with notice or lapse of time (or both) would constitute, an event
of default under any material loan or credit agreement, indenture,
deed of trust, security agreement or other agreement or instrument
evidencing or pertaining to any Debt of the Borrower or any
Subsidiary, or under any other material agreement or instrument to
which the Borrower or any Subsidiary is a party or by which the
Borrower or any Subsidiary is bound.
(e) Attached hereto are the detailed computations necessary
to determine whether the Borrower is in compliance with Sections
9.12, 9.13 and 9.14 as of the end of the [fiscal quarter][fiscal
year] ending .
EXECUTED AND DELIVERED this ____ day of ______________.
HOWELL PETROLEUM CORPORATION
By:
Name:
Title:
D-1
EXHIBIT D
LIST OF LOAN DOCUMENTS
1. Guaranty Agreement executed by Howell Corporation.
E-1
EXHIBIT E
FORM OF
ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT ("Agreement") dated as of ________________,
199___ is between: _________________________________ (the "Assignor") and
__________________________ (the "Assignee").
RECITALS
A. The Assignor is a party to the Credit Agreement dated as of
December 17, 1997 (as amended and supplemented and in effect from time to
time, the "Credit Agreement") among HOWELL PETROLEUM CORPORATION, a
corporation (the "Borrower"), 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 BANK OF MONTREAL, in its individual capacity, ("BMO") 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 Facility A Credit Amount and Facility B
Commitment, 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 1.0 1Definitions. 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 (i) under the Credit Agreement and
the other Loan Documents in respect of the Maximum Facility A Credit
Amount of the Assignor in the principal amount equal to
$____________________, including, without limitation, any obligation to
participate pro rata in any LC Exposure, and Facility B Commitment of
the Assignor in the principal amount equal to $________________ and (ii)
to make Loans under the Maximum Facility A Credit Amount and Facility B
Commitment and any right to receive payments for the Loans outstanding
under the Maximum Facility A Credit Amount and Facility B Commitment
assigned hereby of the following amounts:
Loans Amount
Facility A $__________________
Facility B $__________________
(the "Loan Balance"), 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.
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 Loan Documents in respect of the Assigned Interest.
Section 2.03 Consent by Agent. By executing this Agreement as provided
below, in accordance with Section 12.06(b) of the Credit Agreement, 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 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 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 Notes 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 Facility A Credit Amounts and
Facility B Commitments 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
(c) the acknowledgment and consent by 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 or for the existence,
value, perfection or priority of any collateral security or the financial or
other condition of the Borrower or the Subsidiaries [or any other obligor or
guarantor], or any other matter relating to the Credit Agreement or any other
Loan Documents 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 Loan Documents 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 4.06(d)(i)(1) of the Credit Agreement are true and
accurate as to Assignee. If Section 4.06(d)(i)(2) is applicable to the
Assignee, Assignee shall promptly deliver to the Agent and the Borrower
such certifications as are required thereby to avoid the withholding
taxes referred to in Section 4.06; 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) shall be given or 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 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.
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
ASSIGNEE
___________________________________
By: _______________________________
Name:
Title:
Address for Notices:
___________________________________
___________________________________
___________________________________
Telecopier No.: __________________
Telephone No.: __________________
Attention: __________________
ACKNOWLEDGED AND CONSENTED TO:
______________________________________,
as Agent
By: _______________________________
Name:
Title:
F-4
EXHIBIT F
APPLICATION AND REIMBURSEMENT AGREEMENT
FOR IRREVOCABLE STANDBY LETTER OF CREDIT
Bank of Montreal Date: _________________
Letter of Credit Processing Center SLDC 3896/_____________
311 West Monroe Street
Chicago, Illinois 60606
Gentlemen:
We request you to open and transmit by cable/airmail/courier your Irrevocable
Letter of Credit in favor of:
available by their drafts, drawn at sight on: Bank of Montreal, _______________
or not exceeding a total of: ______________________________
accompanied by the following document(s):
Drafts drawn under this Letter of Credit must be drawn and presented together
with accompanying documentation at your principal office in Chicago, Illinois
not later than:
In consideration of your issuing at our request your Irrevocable Letter of
Credit (hereinafter called "Credit") on the terms mentioned above:
1. We hereby agree to pay you in immediately available and freely
transferable funds the amount of each draft or acceptance drawn under, or
purporting to be drawn under, the Credit, such payment to be made at the
maturity of each respective draft or acceptance or, if so demanded by you, on
demand in advance of any drawing or maturity.
2. Payment shall be made by us at your office in Chicago, Illinois in
lawful money of the United States, provided that, if a draft or other request
for payment under the Credit is drawn in a currency other than United States
currency, we shall pay the equivalent in United States currency, at the rate
of exchange then current in Chicago for cable transfers to the place of
payment in the currency in which such drawing was made, as determined by you
and notified to us, or, if you so request of us at your option, we shall pay
you the amount of such drawing in the currency in which the drawing was made
in a place, form and manner acceptable to you.
3. We also agree to pay you, on demand, a commission at the rate of:
of the Credit or such other rate as you and we may agree, and all charges and
expenses legal and/or otherwise (including court costs and attorneys' fees),
paid or incurred by you in connection therewith or in your endeavoring to
collect any liability of us or any one or more of us hereunder, including all
costs and expenses arising out of any reserve requirements for, or any
assessment of deposit insurance premiums on, the Credit and including all
expenses, legal or otherwise (including without limitation court costs and
attorneys' fees and expenses) paid or incurred by you or any of your
correspondents in connection with endeavoring to collect any liability of
ours hereunder or in connection with any other legal proceeding brought or
threatened in connection with the Credit, including any attempt by us or
anyone to enjoin payment under the Credit. In addition, if you shall
determine that any law, rule or regulation regarding capital adequacy, or any
change therein, or any change in the interpretation or administration thereof
by any governmental authority, central bank or comparable agency charged with
the interpretation or administration thereof, or compliance by you (or any of
your branches) with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank
or comparable agency, has or would have the effect of requiring you to
maintain additional capital to support your obligations hereunder or under
the Credit, then from time to time, within 15 days after demand by you, we
shall pay to you such additional amount or amounts reasonably determined by
you as will compensate you for such requirement.
4. Any amounts not paid when due hereunder shall bear interest (computed
on the basis of a 360 day year and actual days elapsed) from the due date
thereof until paid in full at a rate per annum determined by adding 2 1/2% to
the rate from time to time announced by you as your prime commercial rate,
with any change in such interest rate resulting from a change in such prime
commercial rate to be and become effective as of and on the day of the
relevant change in such prime commercial rate, payable on demand. You are
hereby authorized to charge any depository or other account of ours or any of
us maintained with you for the full amount of any drawing paid by you under
the Credit and for payment of any other amount payable by us hereunder not
paid to you on demand. If by charging such account you create an overdraft in
one of our accounts, we shall pay interest to you on such overdrawn amount at
the rate specified in our agreement with you establishing such account or, if
no such rate is specified, at the rate of interest provided for in the first
sentence of this paragraph.
5. We agree that in the event of any extension of the maturity or time for
presentation of drafts, acceptances or documents, or any other modification
of the terms of the Credit, at the request of any of us, with or without
notification to the others, or in the event of any increase in the amount of
the Credit at our request, this agreement shall be binding upon us with
regard to the credit extended, increased or otherwise modified, to drafts,
documents and property covered thereby, and to any action taken by you or any
of your correspondents, in accordance with such extension, increase or other
modification.
6. The users of the Credit shall be deemed our agents and we assume all
risks of their acts, omissions, or misrepresentations. Neither you nor your
correspondents shall be responsible for the validity, sufficiency,
truthfulness, or genuineness of any documents even if such documents should
in fact prove to be in any or all respects invalid, insufficient, fraudulent
or forged; for failure of any draft to bear any reference or adequate
reference to the Credit, or failure of any person to note the amount of any
draft on the reverse of the Credit, or to surrender or to take up the Credit
as required by the terms of the Credit; each of which provisions, if
contained in the Credit itself, it is agreed may be waived by you, or for
errors, omissions, interruptions or delays in transmission or delivery of any
message, by mail, cable, telegraph, wireless, or otherwise, whether or not
they be in cipher; nor shall you be responsible for any error, neglect or
default of any of your correspondents; and none of the above shall affect,
impair or prevent the vesting of any of your rights or powers hereunder. In
furtherance and extension and not in limitation of the specific provisions
hereinbefore set forth, we agree that any action taken by you or by any
correspondent of yours under or in connection with the Credit or the relative
drafts, documents or property, if taken in good faith, shall be binding on us
and shall not put you or your correspondent under any resulting liability to
us; and we make like agreement as to any inaction or omission, unless in
breach of good faith.
7. We agree, to the extent required by the Credit Agreement dated as of
December 17, 1997 among us, other lenders signatory thereto and the Bank of
Montreal, as Agent (the "Credit Agreement") at any time and from time to
time, on demand, to deliver, convey, transfer or assign to you, as security
for any and all obligations and liabilities of us or any one or more of us
hereunder, and also for any and all other obligations and liabilities,
absolute or contingent due or to become due, which are now or may at any time
hereafter be owing by us or any one or more of us to you, additional security
of a value and character satisfactory to you, or to make such payment as you
may require.
8. You shall not be deemed to have waived any of your rights hereunder,
unless you or your authorized agent shall have signed such waiver in writing.
No such waiver, unless expressly as stated therein, shall be effective as to
any transaction which occurs subsequent to the date of such waiver, or as to
any continuance of a breach after such waiver.
9. The word "property", as used in this agreement, includes goods,
merchandise, securities, funds, choses in action, and any and all other forms
of property, whether real, personal or mixed, and any right or interest
therein.
10. Without limiting the foregoing and in addition to the provisions of
paragraph numbered 6 hereof, you are hereby expressly authorized and directed
to honor any request for payment which is made under and in compliance with
the terms of said Credit without regard to, and without any duty on your part
to inquire into, the existence of any disputes or controversies between any
of the undersigned, the beneficiary of the Credit or any other person, firm
or corporation, or the respective rights, duties or liabilities of any of
them or whether any facts or occurrences represented in any of the documents
presented under the Credit are true or correct. Furthermore, we fully
understand and agree that your sole obligation to us shall be limited to
honoring requests for payment made under and in compliance with the terms of
the Credit and this application and your obligation remains so limited even
if you may have assisted us in the preparation of the wording of the Credit
or any documents required to be presented thereunder or you may otherwise be
aware of the underlying transaction giving rise to the Credit and this
application. In addition, and without limiting any of the other provisions
hereof, you and your correspondents may (a) act in reliance upon any oral,
telephonic, telegraphic, electronic or written request or notice believed by
you or your relevant correspondent in good faith to have been authorized by
us or any one of us, whether or not given or signed by an authorized person,
and (b) receive, accept or pay as complying with the terms of the Credit any
drafts or other document, otherwise in order, that may be signed by, or
issued to, the administrator or executor of, or the trustee in bankruptcy of,
or the receiver for any of the property of, or any other person or entity
acting as the representative of, in the place of or as the successor in
interest to, the party in whose name the Credit provides that any drafts or
other documents should be drawn or issued.
11. If this agreement is signed by one party, the terms "we," "our," "us,"
shall be read throughout as "I," "my," "me," as the case may be. If this
agreement is signed by two or more parties, it shall constitute the joint and
several agreement of such parties. This agreement shall be deemed to be made
under and shall in all respects be governed by the law of the State of
Illinois. The Credit and, to the extent not inconsistent with the laws of the
State of Illinois, this agreement will be subject to the Uniform Customs and
Practice for Documentary Credits as most recently published by the
International Chamber of Commerce (the "UCP"), except that Article 41 and 43
of the UCP (1993 Revision) published by the International Chamber of Commerce
as Publication No. 500 shall not apply nor shall any equivalent provision in
any future version of the UCP.
Very truly yours,
___________________________________________
(Firm's name, if applicable)
For Bank Use Only By ___________________
_______ _____ Title_____________________
Approved by Date By ________________________
Title______________________________
C60092 N7/94
EXHIBIT 99.2
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT by HOWELL CORPORATION (hereinafter called
"Guarantor"), is in favor of BANK OF MONTREAL, as agent (the "Agent") for the
lenders (the "Lenders") that are or become parties to the Credit Agreement
defined below.
W I T N E S S E T H:
WHEREAS, on even date herewith, HOWELL PETROLEUM CORPORATION, a
Delaware corporation (hereinafter called "Borrower"), the Agent and the
Lenders have 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 for the benefit of the Lenders 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
ARTICLE 1 General Terms
Section 1.1 Terms Defined Above. As used in this Guaranty Agreement,
the terms "Agent", "Borrower", "Credit Agreement", "Guarantor" and "Lenders"
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:
"Guarantor Claims" shall have the meaning indicated in Section
4.1 hereof.
"Guaranty Agreement" shall mean this Guaranty Agreement, as the
same may from time to time be amended or supplemented.
"Liabilities" shall mean (a) any and all indebtedness,
obligations and liabilities of the Borrower 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) payment of and performance of any and all Hedging
Agreements, if any, entered into by the Borrower with a Lender;
(c) all reimbursements and other obligations with respect to
Letters of Credit; and (d) all renewals, rearrangements,
increases, extensions for any period, amendments or supplement in
whole or in part of the Notes or any documents evidencing the
above.
"Loan Documents" shall mean the Credit Agreement, the Notes, the
Letters of Credit and the other Loan Documents.
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
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 Agreement 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 Agreement 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 Agreement
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 any of 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 any
subsequent holder of any of the Liabilities 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 Default or 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 the Lenders' request for this
Guaranty Agreement and delivery of the same to the Agent.
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 this Guaranty Agreement and/or 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.
(a) General. Guarantor waives any right to require any of
the Lenders to (i) proceed against Borrower or any other person liable
on the Liabilities, (ii) enforce any of their rights against any other
guarantor of the Liabilities (iii) proceed or enforce any of their
rights against or exhaust any security given to secure the Liabilities
(iv) have Borrower joined with Guarantor in any suit arising out of
this Guaranty Agreement and/or the Liabilities, or (v) pursue any other
remedy in the Lenders' powers whatsoever. The Lenders 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. 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.
(b) Subrogation. Until the Liabilities have been paid in
full, the Guarantor waives all rights of subrogation or reimbursement
against the Borrower, whether arising by contract or operation of law
(including, without limitation, any such right arising under any
federal or state bankruptcy or insolvency laws) and waives any right to
enforce any remedy which the Lenders now have or may hereafter have
against the Borrower, and waives any benefit or any right to
participate in any security now or hereafter held by the Agent or any
Lender.
Section 2.5 Maturity of Liabilities; Payment. Guarantor agrees that if
the maturity of any 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, 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.
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 obtains advice of
counsel in respect of any of their 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 through
such proceedings, Guarantor agrees to pay to the Agent 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
any of 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 any
of 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 Borrower has valid
defenses, claims or offsets (whether at law, in equity or by
agreement) which render the Liabilities wholly or partially
uncollectible from Borrower, 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 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 Lenders will look to other parties to perform
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 Lenders 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;
(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 Lenders to accept
this Guaranty Agreement, Guarantor represents and warrants to the Lenders
(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) Corporate Existence. Guarantor is a corporation duly
organized, legally existing and in good standing under the laws
of the State of Delaware and is duly qualified all jurisdictions
wherein the failure to be so organized, existing and in good
standing would have a Material Adverse Effect.
(c) Corporate Power and Authorization. Guarantor is duly
authorized and empowered to execute, deliver and perform this
Guaranty Agreement and all corporate action on Guarantor's part
requisite for the due execution, delivery and performance of this
Guaranty Agreement has been duly and effectively taken.
(d) Binding Obligations. This Guaranty Agreement
constitutes valid and binding obligations of Guarantor,
enforceable in accordance with its terms (except that enforcement
may be subject to any applicable bankruptcy, insolvency or
similar laws generally affecting the enforcement of creditors'
rights).
(e) No Legal Bar or Resultant Lien. This Guaranty
Agreement will not violate any provisions of Guarantor's articles
or certificate of incorporation, bylaws, or any contract,
agreement, law, regulation, order, injunction, judgment, decree
or writ to which Guarantor is subject, or result in the creation
or imposition of any Lien upon any Properties of Guarantor.
(f) No Consent. Guarantor's execution, delivery and
performance of this Guaranty Agreement does not require the
consent or approval of any other Person, including without
limitation any regulatory authority or governmental body of the
United States or any state thereof or any political subdivision
of the United States or any state thereof.
(g) 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.
(h) Financial Condition. The audited consolidated balance
sheet of the Guarantor and its Consolidated Subsidiaries as at
December 31,1996 and the related consolidated statement of income,
stockholders' equity and cash flow of the Guarantor and its
Consolidated Subsidiaries for the fiscal year ended on said date,
with the opinion thereon of Deloitte & Touche LLP heretofore
furnished to each of the Lenders and the unaudited consolidated
balance sheet of the Guarantor and its Consolidated Subsidiaries
as at September 30, 1997 and their related consolidated statements
of income, stockholders' equity and cash flow of the Guarantor and
its Consolidated Subsidiaries for the ninth month period ended on
such date heretofore furnished to the Agent, are complete and
correct and fairly present the consolidated 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 ninth
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 of its Subsidiaries has on the Closing Date any material
Debt, material contingent liabilities, material liabilities for
taxes, material unusual forward or long-term commitments or
material unrealized or anticipated losses from any unfavorable
commitments, except as referred to or reflected or provided for in
the Financial Statements or in Schedule 7.02 of the Credit Agreement.
Since December 31, 1996, 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 of
its material Subsidiaries 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.
(i) Litigation. Except as disclosed to the Lenders in Schedule
7.03 of the Credit Agreement, at the Closing Date there is no
material litigation, legal, administrative or arbitral proceeding,
investigation or other action of any nature pending or, to the
knowledge of the Guarantor threatened against or affecting the
Guarantor or any of its Subsidiaries which involves the reasonable
possibility of any judgment or liability against the Guarantor or
any of its Subsidiaries not fully covered by insurance (except for
normal deductibles).
(j) No Breach. Neither the execution and delivery of this
Guaranty Agreement or any other Loan Documents, nor compliance with
the terms and provisions hereof or thereof 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 of its Subsidiaries, or any
Governmental Requirement or any agreement or instrument to which
the Guarantor or any of its Subsidiaries 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 of its Subsidiaries
pursuant to the terms of any such agreement or instrument other than
the Liens created by the Loan Documents.
(k) ERISA.
(1) No act, omission or transaction has occurred with
respect to any Plan which would have a Material Adverse Effect.
(2) 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 of its Subsidiaries or any ERISA Affiliate has
been or is expected by the Guarantor, any of its Subsidiaries or
any ERISA Affiliate to be incurred with respect to any Plan. No
ERISA Event with respect to any Plan has occurred that would have
a Material Adverse Effect.
(3) Full payment when due has been made of all amounts
which the Guarantor, any of its Subsidiaries 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.
(4) 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. The term
"actuarial present value of the benefit liabilities" shall have
the meaning specified in section 4041 of ERISA.
(5) None of the Guarantor, any of its Subsidiaries 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.
(6) None of the Guarantor, any of its Subsidiaries 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.
(7) None of the Guarantor, any of its Subsidiaries 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.
(l) Taxes. Except as set out in Schedule 7.09 of the Credit
Agreement, each of the Guarantor and its Subsidiaries has filed all
United States Federal income tax returns and all other material 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 of its Subsidiaries. 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 Guarantor, adequate. No material tax lien (other
than any Excepted Lien) has been filed and, to the knowledge of the
Guarantor, no material claim is being asserted with respect to any such
tax, fee or other charge.
(m) Title to Capital Stock of Borrower. The Guarantor has good
and unencumbered title to all of the capital stock of the Borrower.
(n) Investment Company Act. Neither the Guarantor nor any of
its Subsidiaries is an "investment company" or a company "controlled"
by an "investment company," within the meaning of the Investment
Company Act of 1940, as amended.
(o) Public Utility Holding Company Act. Neither the Guarantor
nor any of its Subsidiaries is a "holding company," or a "subsidiary
company" of a "holding company," or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company," or a
"public utility" within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
(p) Subsidiaries. Except as set forth on Schedule 1 hereto,
the Guarantor has no Subsidiaries other than the Borrower.
(q) Compliance with the Law. Neither the Guarantor nor any of
its Subsidiaries 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.
Section 3.2 No Representation by LendersSection. Neither the Lenders
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.
ARTICLE 4
Subordination of Indebtedness
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. It is understood
that the Guarantor Claims are expressly made subordinate and junior in right
of payment to the prior payment and performance of the Liabilities and
accordingly no payment or prepayment of any principal, interest or other
amount on account of the Guarantor Claims shall be made, if at the time of
such payment or prepayment or immediately after giving affect thereto (a)
there shall exist a default in the payment or prepayment with respect to any
of the Liabilities or (b) there shall have occurred an Event of Default and
such Event of Default shall not have been cured or waived; and further, until
the Liabilities shall be paid and satisfied in full and no Commitments remain
outstanding under the Credit Agreement, no payment or prepayment of any
principal, interest or other amount on account of that certain indebtedness
the principal amount of $64,296,029.00 owing by the Borrower to Guarantor
shall be received or collected, directly or indirectly except as permitted by
Section 9.20 of the Credit Agreement.
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 Lenders shall have the right
to prove their claim in any proceeding, so as to establish its 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 Lenders. Should the Agent or any Lender 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 Agent or a Lender 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 Lenders 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 the 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, the Agent or the Lenders presently exist or are hereafter created
or attach. Without the prior written consent of the Lenders, 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.
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
Certain Additional Covenants
Section 5.1 Capital Stock of Borrower. The Guarantor will not permit
any of the capital stock of the Borrower to be owned or controlled (other
than through stock ownership of the Guarantor) by any Person other than the
Guarantor.
Section 5.2 LiensSection. The Guarantor will not create, incur, assume
or permit to exist any Lien on any of the capital stock of the Borrower other
than Excepted Liens.
ARTICLE 6
Miscellaneous
Section 6.1 Successors and Assigns. This Guaranty Agreement is and
shall be in every particular available to the successors and assigns of the
Lenders and is and shall always be fully binding upon the legal
representatives, 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 6.2 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 provided to the Agent
in writing.
Section 6.3 Business and Financial Information. The Guarantor will
promptly furnish to the Agent and the Lenders 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 and the Lenders may
reasonably request.
Section 6.4 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.
Section 6.5 Invalidity. In the event that any one or more of the
provisions contained in this Guaranty Agreement 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 this
Guaranty Agreement.
Section 6.6 ENTIRE AGREEMENT. THIS WRITTEN GUARANTY AGREEMENT EMBODIES
THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE LENDERS AND THE GUARANTOR
AND SUPERSEDES ALL OTHER AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH PARTIES
RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF. THIS WRITTEN GUARANTY
AGREEMENT REPRESENTS 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.
WITNESS THE EXECUTION HEREOF, as of this the 17th day of December, 1997.
HOWELL CORPORATION
By:____________________________
Name:
Title:
1500 Howell Building
1111 Fannin
Houston, Texas 77002-6923
Telecopier No.: (713) 658-4007
Telephone No.: (713) 658-4008
Attention:__________________
