AMENDED AND RESTATED CREDIT AGREEMENT
among
QUICKSILVER RESOURCES, INC.,
as Borrower,
NATIONSBANK OF TEXAS, N.A.,
as Agent
and
The Financial Institutions Listed on Schedule 1 Hereto,
as Banks
$100,000,000
dated
April 9, 1998
TABLE OF CONTENTS
ARTICLE I AMENDMENT AND RESTATEMENT. . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II TERMS DEFINED . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.2. ACCOUNTING TERMS AND DETERMINATIONS . . . . . . . . . . . .22
SECTION 2.3. PETROLEUM TERMS . . . . . . . . . . . . . . . . . . . . . .22
SECTION 2.4. MONEY . . . . . . . . . . . . . . . . . . . . . . . . . . .23
ARTICLE III THE CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
SECTION 3.1. COMMITMENTS . . . . . . . . . . . . . . . . . . . . . . . .23
SECTION 3.2. NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . .27
SECTION 3.3. INTEREST RATES; PAYMENTS. . . . . . . . . . . . . . . . .27
SECTION 3.4. MANDATORY PREPAYMENTS RESULTING FROM BORROWING BASE
DEFICIENCY. . . . . . . . . . . . . . . . . . . . . . . . .29
SECTION 3.5. VOLUNTARY PREPAYMENTS.. . . . . . . . . . . . . . . . . . .29
SECTION 3.6. VOLUNTARY REDUCTION OF COMMITMENTS. . . . . . . . . . . . .29
SECTION 3.7. TERMINATION OF COMMITMENTS; FINAL MATURITY. . . . . . . . .29
SECTION 3.8. UNUSED COMMITMENT FEE . . . . . . . . . . . . . . . . . . .29
SECTION 3.9. BORROWING BASE INCREASE FEE . . . . . . . . . . . . . . . .30
SECTION 3.10. AGENCY AND OTHER FEES . . . . . . . . . . . . . . . . . . .30
ARTICLE IV GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . .30
SECTION 4.1. DELIVERY AND ENDORSEMENT OF NOTES . . . . . . . . . . . . .30
SECTION 4.2. GENERAL PROVISIONS AS TO PAYMENTS . . . . . . . . . . . . .30
ARTICLE V CHANGE IN CIRCUMSTANCES. . . . . . . . . . . . . . . . . . . . . . .31
SECTION 5.1. INCREASED COST AND REDUCED RETURN . . . . . . . . . . . . .31
SECTION 5.2. LIMITATION ON EURODOLLAR LOANS. . . . . . . . . . . . . . .33
SECTION 5.3. ILLEGALITY. . . . . . . . . . . . . . . . . . . . . . . . .33
SECTION 5.4. TREATMENT OF AFFECTED LOANS . . . . . . . . . . . . . . . .33
SECTION 5.5. COMPENSATION. . . . . . . . . . . . . . . . . . . . . . . .34
SECTION 5.6. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . .34
SECTION 5.7. DISCRETION OF BANKS AS TO MANNER OF FUNDING . . . . . . . .36
ARTICLE VI BORROWING BASE. . . . . . . . . . . . . . . . . . . . . . . . . . .36
SECTION 6.1. BORROWING BASE AND CONFORMING BORROWING BASE. . . . . . . .36
SECTION 6.2. REDETERMINATION OF BORROWING BASE AND CONFORMING
BORROWING BASE. . . . . . . . . . . . . . . . . . . . . . .36
SECTION 6.3. BANK APPROVAL OF BORROWING BASE . . . . . . . . . . . . . .37
SECTION 6.4. BORROWING BASE DEFICIENCY . . . . . . . . . . . . . . . . .37
ARTICLE VII COLLATERAL AND GUARANTEES. . . . . . . . . . . . . . . . . . . . .37
SECTION 7.1. SECURITY. . . . . . . . . . . . . . . . . . . . . . . . . .37
SECTION 7.2. GUARANTEES. . . . . . . . . . . . . . . . . . . . . . . . .37
SECTION 7.3. RELEASE OF GUARANTEES AND COLLATERAL. . . . . . . . . . . .38
ARTICLE VIII CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . . .38
SECTION 8.1. CONDITIONS TO AMENDMENT AND RESTATEMENT AND INITIAL
BORROWING AND PARTICIPATION IN LETTER OF CREDIT EXPOSURE. .38
SECTION 8.2. CONDITIONS TO EACH BORROWING AND EACH LETTER OF CREDIT. . .42
SECTION 8.3. POST CLOSING DELIVERIES.. . . . . . . . . . . . . . . . . .42
SECTION 8.4. MATERIALITY OF CONDITIONS . . . . . . . . . . . . . . . . .43
ARTICLE IX REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . .43
SECTION 9.1. CORPORATE EXISTENCE AND POWER . . . . . . . . . . . . . . .43
SECTION 9.2. CREDIT PARTY AND GOVERNMENTAL AUTHORIZATION;
CONTRAVENTION. . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 9.3. BINDING EFFECT. . . . . . . . . . . . . . . . . . . . . . .44
SECTION 9.4. FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . .44
SECTION 9.5. LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . .45
SECTION 9.6. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . .45
SECTION 9.7. TAXES AND FILING OF TAX RETURNS . . . . . . . . . . . . . .46
SECTION 9.8. OWNERSHIP OF PROPERTIES GENERALLY . . . . . . . . . . . . .46
SECTION 9.9. MINERAL . . . . . . . . . . . . . . . . . . . . . . . . . .46
SECTION 9.10. LICENSES, PERMITS, ETC. . . . . . . . . . . . . . . . . . .47
SECTION 9.11. COMPLIANCE WITH LAW . . . . . . . . . . . . . . . . . . . .47
SECTION 9.12. FULL DISCLOSURE . . . . . . . . . . . . . . . . . . . . . .47
SECTION 9.13. ORGANIZATIONAL STRUCTURE; NATURE OF BUSINESS. . . . . . . .47
SECTION 9.14. ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . .47
SECTION 9.15. BURDENSOME OBLIGATIONS. . . . . . . . . . . . . . . . . . .48
SECTION 9.16. FISCAL YEAR . . . . . . . . . . . . . . . . . . . . . . . .48
SECTION 9.17. NO DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . .48
SECTION 9.18. GOVERNMENT REGULATION . . . . . . . . . . . . . . . . . . .48
SECTION 9.19. INSIDER . . . . . . . . . . . . . . . . . . . . . . . . . .49
SECTION 9.20. GAS BALANCING AGREEMENTS AND ADVANCE PAYMENT CONTRACTS . .49
SECTION 9.21. CAPITALIZATION DOCUMENTS.. . . . . . . . . . . . . . . . .49
ARTICLE X AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . .49
SECTION 10.1. INFORMATION. . . . . . . . . . . . . . . . . . . . . . . .49
SECTION 10.2. BUSINESS OF BORROWER . . . . . . . . . . . . . . . . . . .51
SECTION 10.3. MAINTENANCE OF EXISTENCE . . . . . . . . . . . . . . . . .51
SECTION 10.4. TITLE DATA . . . . . . . . . . . . . . . . . . . . . . . .52
SECTION 10.5. RIGHT OF INSPECTION. . . . . . . . . . . . . . . . . . . .52
SECTION 10.6. MAINTENANCE OF INSURANCE . . . . . . . . . . . . . . . . .52
SECTION 10.7. PAYMENT OF TAXES AND CLAIMS. . . . . . . . . . . . . . . .52
SECTION 10.8. COMPLIANCE WITH LAWS AND DOCUMENTS . . . . . . . . . . . .53
SECTION 10.9. OPERATION OF PROPERTIES AND EQUIPMENT. . . . . . . . . . .53
SECTION 10.10. ENVIRONMENTAL LAW COMPLIANCE . . . . . . . . . . . . . . .53
SECTION 10.11. ERISA REPORTING REQUIREMENTS . . . . . . . . . . . . . . .53
SECTION 10.12. ADDITIONAL DOCUMENTS . . . . . . . . . . . . . . . . . . .54
SECTION 10.13. ENVIRONMENTAL REVIEW . . . . . . . . . . . . . . . . . . .54
SECTION 10.14. REQUIRED PURCHASE CONTRACTS. . . . . . . . . . . . . . . .54
ARTICLE XI NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . .55
SECTION 11.1. INCURRENCE OF DEBT . . . . . . . . . . . . . . . . . . . .55
SECTION 11.2. RESTRICTED PAYMENTS. . . . . . . . . . . . . . . . . . . .55
SECTION 11.3. NEGATIVE PLEDGE. . . . . . . . . . . . . . . . . . . . . .55
SECTION 11.4. CONSOLIDATIONS AND MERGERS . . . . . . . . . . . . . . . .55
SECTION 11.5. ASSET DISPOSITIONS . . . . . . . . . . . . . . . . . . . .56
SECTION 11.6. AMENDMENTS TO ORGANIZATIONAL DOCUMENTS; OTHER MATERIAL
AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . .56
SECTION 11.7. USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . .56
SECTION 11.8. INVESTMENTS. . . . . . . . . . . . . . . . . . . . . . . .56
SECTION 11.9. TRANSACTIONS WITH AFFILIATES . . . . . . . . . . . . . . .56
SECTION 11.10. ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . .57
SECTION 11.11. HEDGE TRANSACTIONS . . . . . . . . . . . . . . . . . . . .57
SECTION 11.12. FISCAL YEAR. . . . . . . . . . . . . . . . . . . . . . . .57
SECTION 11.13. CHANGE IN BUSINESS . . . . . . . . . . . . . . . . . . . .57
ARTICLE XII FINANCIAL COVENANTS. . . . . . . . . . . . . . . . . . . . . . . .57
ARTICLE XIII DEFAULTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
SECTION 13.1. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . .58
ARTICLE XIV AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60
SECTION 14.1. APPOINTMENT, POWERS, AND IMMUNITIES. . . . . . . . . . . .60
SECTION 14.2. RELIANCE BY AGENT. . . . . . . . . . . . . . . . . . . . .60
SECTION 14.3. DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . .61
SECTION 14.4. RIGHTS AS BANK . . . . . . . . . . . . . . . . . . . . . .61
SECTION 14.5. INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . .61
SECTION 14.6. NON-RELIANCE ON AGENT AND OTHER BANKS. . . . . . . . . . .61
SECTION 14.7. RESIGNATION OF AGENT . . . . . . . . . . . . . . . . . . .62
ARTICLE XV MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . .62
SECTION 15.1. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . .62
SECTION 15.2. NO WAIVERS . . . . . . . . . . . . . . . . . . . . . . . .62
SECTION 15.3. EXPENSES; INDEMNIFICATION. . . . . . . . . . . . . . . . .63
SECTION 15.4. RIGHT OF SET-OFF; ADJUSTMENTS. . . . . . . . . . . . . . .63
SECTION 15.5. AMENDMENTS AND WAIVERS . . . . . . . . . . . . . . . . . .64
SECTION 15.6. SURVIVAL . . . . . . . . . . . . . . . . . . . . . . . . .64
SECTION 15.7. LIMITATION ON INTEREST . . . . . . . . . . . . . . . . . .65
SECTION 15.8. INVALID PROVISIONS . . . . . . . . . . . . . . . . . . . .65
SECTION 15.9. WAIVER OF CONSUMER CREDIT LAWS . . . . . . . . . . . . . .65
SECTION 15.10. ASSIGNMENTS AND PARTICIPATIONS . . . . . . . . . . . . . .65
SECTION 15.11. TEXAS LAW. . . . . . . . . . . . . . . . . . . . . . . . .67
SECTION 15.12. CONSENT TO JURISDICTION; WAIVER OF IMMUNITIES. . . . . . .67
SECTION 15.13. COUNTERPARTS; EFFECTIVENESS. . . . . . . . . . . . . . . .68
SECTION 15.14. NO THIRD PARTY BENEFICIARIES . . . . . . . . . . . . . . .68
SECTION 15.15. COMPLETE AGREEMENT . . . . . . . . . . . . . . . . . . . .68
SECTION 15.16. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . .68
EXHIBITS
EXHIBIT A FORM OF BORROWER PLEDGE AGREEMENT
EXHIBIT B FORM OF NOTE
EXHIBIT C FORM OF GUARANTY
EXHIBIT D FORM OF REQUEST FOR BORROWING
EXHIBIT E FORM OF REQUEST FOR LETTER OF CREDIT
EXHIBIT F FORM OF NOTICE OF CONTINUATION OR CONVERSION
EXHIBIT G FORM OF CERTIFICATE OF OWNERSHIP INTERESTS
EXHIBIT H FORM OF CERTIFICATE OF FINANCIAL OFFICER
EXHIBIT I FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
SCHEDULES
SCHEDULE 1 FINANCIAL INSTITUTIONS
SCHEDULE 2 CAPITALIZATION DOCUMENTS
SCHEDULE 3 INVESTMENTS
SCHEDULE 4 LITIGATION
SCHEDULE 5 CAPITALIZATION
SCHEDULE 6 ENVIRONMENTAL DISCLOSURE
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT (this "AGREEMENT") is entered
into as of the 9th day of April, 1998, among QUICKSILVER RESOURCES, INC., a
Delaware corporation ("BORROWER"), NATIONSBANK OF TEXAS, N.A., as Agent
("AGENT"), and the financial institutions listed on SCHEDULE 1 hereto as
Banks (individually a "BANK" and collectively "BANKS").
W I T N E S S E T H:
WHEREAS, Mercury Exploration Company, a Texas corporation ("MERCURY"),
NationsBank of Texas, N.A., as Agent, and NationsBank of Texas, N.A., as the
sole Bank, are parties to that certain Credit Agreement dated as of January
31, 1997 pursuant to which NationsBank of Texas, N.A. provided certain loans
and other extensions of credit to Mercury (the "MERCURY/NATIONSBANK CREDIT
AGREEMENT"); and
WHEREAS, Quicksilver Energy, L.C., a Michigan limited liability company
("QELC"), NationsBank of Texas, N.A., as Agent, and NationsBank of Texas,
N.A., as the sole Bank, are parties to that certain Credit Agreement dated as
of November 14, 1996, pursuant to which NationsBank of Texas, N.A. provided
certain loans to QELC (the "QELC/NATIONSBANK CREDIT AGREEMENT"); and
WHEREAS, pursuant to an Assumption Agreement of even date herewith by
and among NationsBank of Texas, N.A. (as Agent and a Bank), Borrower, Mercury
and QELC, Borrower assumed and agreed to perform, as primary obligor, all
obligations of (a) Mercury under the Mercury/NationsBank Credit Agreement and
all related Loan Papers (as defined in the Mercury/NationsBank Credit
Agreement), and (b) QELC under the QELC/NationsBank Credit Agreement and all
related Loan Papers (as defined in the QELC/NationsBank Credit Agreement); and
WHEREAS, pursuant to an Assumption Agreement of even date herewith
between Borrower and QELC, Borrower assumed and agreed to perform as primary
obligor, all obligations of QELC under that certain Credit Agreement dated
November 14, 1996 among QELC, Trust Company of the West and TCW Asset
Management Company (the "QELC/TCW CREDIT AGREEMENT"); and
WHEREAS, Borrower desires to consolidate, amend and restate the
Mercury/NationsBank Credit Agreement and the QELC/NationsBank Credit
Agreement in the form of this Agreement and desires to obtain Borrowings (as
herein defined) (a) to refinance the indebtedness assumed by Borrower under
the QELC/TCW Credit Agreement, and (b) for other purposes permitted herein;
and
WHEREAS, subject to and upon the terms and conditions herein contained,
Agent and Banks are in agreement with Borrower's requests; and
1
WHEREAS, in connection with the refinancing of the indebtedness
outstanding under the QELC/TCW Credit Agreement, TCW (as herein defined) has
executed and delivered to Agent hereunder (a) that certain Assignment of
Notes, Liens and Security Interests dated of even date herewith pursuant to
which all indebtedness outstanding thereunder and all liens securing payment
thereof have been assigned to Agent hereunder.
NOW, THEREFORE, in consideration of the premises, the representations,
warranties, covenants and agreements contained herein, and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Borrower, Agent and Banks agree as follows:
ARTICLE I
AMENDMENT AND RESTATEMENT
Subject to the satisfaction of each condition precedent contained in
SECTION 8.1 hereof, the Mercury/NationsBank Credit Agreement shall be amended
and restated in the form of this Agreement.
ARTICLE II
TERMS DEFINED
SECTION 2.1. DEFINITIONS. The following terms, as used herein, have
the following meanings:
"Adjusted Eurodollar Rate" means, for any Eurodollar Loan for any
Interest Period therefor, the rate per annum (rounded upwards, if necessary,
to the nearest 1/100 of 1%) determined by the Agent to be equal to the
quotient obtained by dividing (a) the Eurodollar Rate for such Eurodollar
Loan for such Interest Period by (b) 1 minus the Reserve Requirement for such
Eurodollar Loan for such Interest Period.
"Advance Payment Contract" means any contract whereby any Credit Party
either (a) receives or becomes entitled to receive (either directly or
indirectly) any payment (an "ADVANCE PAYMENT") to be applied toward payment
of the purchase price of Hydrocarbons produced or to be produced from Mineral
Interests owned by any Credit Party and which Advance Payment is paid or to
be paid in advance of actual delivery of such production to or for the
account of the purchaser regardless of such production, or (b) grants an
option or right of refusal to the purchaser to take delivery of such
production in lieu of payment, and, in either of the foregoing instances, the
Advance Payment is, or is to be, applied as payment in full for such
production when sold and delivered or is, or is to be, applied as payment for
a portion only of the purchase price thereof or of a percentage or share of
such production; PROVIDED THAT inclusion of the standard "take or pay"
provision in any
2
gas sales or purchase contract or any other similar contract shall not, in
and of itself, constitute such contract as an Advance Payment Contract for
the purposes hereof.
"Affiliate" means, as to any Person, any Subsidiary of such Person, or
any other Person which, directly or indirectly, controls, is controlled by,
or is under common control with, such Person and, with respect to any Credit
Party, means, any director or executive officer of such Credit Party and any
Person who holds five percent (5%) or more of the voting stock of such Credit
Party. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of
voting securities or partnership interests, or by contract or otherwise.
"Agent" means NationsBank of Texas, N.A. in its capacity as agent for
Banks hereunder or any successor thereto.
"Agreement" means this Amended and Restated Credit Agreement as the same
may hereafter be modified, amended or supplemented from time to time.
"Applicable Environmental Law" means any federal, state or local law,
common law, ordinance, regulation or policy, as well as order, decree,
permit, judgment or injunction issued, promulgated, approved, or entered
thereunder, relating to the environment, health and safety, or Hazardous
Substances (including, without limitation, the use, handling, transportation,
production, disposal, discharge or storage thereof) or to industrial hygiene
or the environmental conditions on, under, or about any real property owned,
leased or operated at any time by any Credit Party or any real property
owned, leased or operated by any other party including, without limitation,
soil, groundwater, and indoor and ambient air conditions.
"Applicable Lending Office" means, for each Bank and for each Type of
Loan, the "Lending Office" of such Bank (or of an affiliate of such Bank)
designated for such Type of Loan on the signature pages hereof or such other
office of such Bank (or an affiliate of such Bank) as such Bank may from time
to time specify to the Agent and the Borrower by written notice in accordance
with the terms hereof as the office by which Loans of such Type are to be
made and maintained.
"Applicable Margin" means, on any date, with respect to each Eurodollar
Loan, an amount determined by reference to the ratio of Outstanding Credit to
the Conforming Borrowing Base on such date in accordance with the table below:
3
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------------------------------------------------------------------------------------------
Ratio of Outstanding Applicable Margin for
Credit to Conforming Borrowing Base Eurodollar Tranches
------------------------------------------------------------------------------------------
LESS THAN OR EQUAL TO .50 to 1 1.000%
------------------------------------------------------------------------------------------
GREATER THAN.50 to 1 LESS THAN OR EQUAL TO .75 to 1 1.250%
------------------------------------------------------------------------------------------
GREATER THAN .75 to LESS THAN OR EQUAL TO 1.0 to 1 1.500%
------------------------------------------------------------------------------------------
GREATER THAN 1.0 to 1 1.750%
------------------------------------------------------------------------------------------
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; provided, that the Applicable Margin otherwise in effect pursuant to the
foregoing table will increase by .125% from and after July 31, 1998.
"Approved Petroleum Engineer" means Netherland Xxxxxx and Associates,
Inc. or any other reputable firm of independent petroleum engineers as shall
be selected by Borrower and approved by Required Banks, such approval not to
be unreasonably withheld.
"Assignment and Acceptance Agreement" has the meaning given such term in
SECTION 15.10(a).
"Assignment and Amendment to Mortgages" means an Assignment of Notes,
Liens and Secuirty Interests to Mortgages to be entered into among Borrower,
Agent and TCW, in form and substance acceptable to Agent, pursuant to which
all indebtedness outstanding under the QELC/TCW Credit Agreement and all
Liens securing payment thereof shall be assigned to Agent for the ratable
benefit of each Bank to secure the Obligations.
"Authorized Officer" means, as to any Person, its Chief Executive
Officer, its President, its Chief Financial Officer, any of its Vice
Presidents, its Treasurer or its corporate Secretary.
"Availability" means, as of any date, the remainder of (a) the Borrowing
Base in effect on such date, minus (b) the Outstanding Credit on such date.
"Bank" means any financial institution reflected on SCHEDULE 1 hereto as
having a Commitment and its successors and permitted Assignees, and "Banks"
shall mean all Banks.
"Base Rate" means, for any day, the rate per annum equal to the higher
of (a) the Federal Funds Rate for such day plus one-half of one percent (.5%)
and (b) the Prime Rate for such day.
"Base Rate Loan" means the portion of the principal of the Revolving
Loan bearing interest with reference to the Base Rate.
"Borrower" means Quicksilver Resources, Inc., a Delaware corporation.
4
"Borrower Pledge Agreement" means a Pledge Agreement in the form of
EXHIBIT A hereto to be executed by Borrower pursuant to which Borrower shall
pledge all issued and outstanding capital stock of each Subsidiary of
Borrower of every class to Agent to secure the Obligations.
"Borrowing" means any disbursement to Borrower under, or to satisfy the
obligations of any Credit Party under, any of the Loan Papers. Any Borrowing
which will constitute a part of the Base Rate Loan is referred to herein as
an "BASE RATE BORROWING," and any Borrowing which will constitute a
Eurodollar Loan is referred to herein as a "EURODOLLAR BORROWING."
"Borrowing Base" means the loan value attributable to certain of
Borrower's Mineral Interests as determined in accordance with ARTICLE VI
hereof.
"Borrowing Base Deficiency" means, as of any date, the amount, if any,
by which the Outstanding Credit on such date exceeds the Borrowing Base in
effect on such date; provided, that, for purposes of determining the
existence and amount of any Borrowing Base Deficiency, Letter of Credit
Exposure will not be deemed to be outstanding to the extent it is secured by
cash in the manner contemplated by SECTION 3.2(b).
"Borrowing Base Properties" means all Mineral Interests evaluated by
Banks for purposes of establishing the Borrowing Base. The Borrowing Base
Properties on the date hereof are described in the Property Description and
constitute all of the Mineral Interests described in the Initial Reserve
Reports.
"Borrowing Date" means the Eurodollar Business Day or the Domestic
Business Day, as the case may be, upon which the proceeds of any Borrowing
are made available to Borrower or to satisfy any obligation of any Credit
Party.
"Capitalization Documents" means the documents, instruments and
agreements described in SCHEDULE 2 hereto.
"Capitalization Transactions" means the following transactions to be
effected on the Closing Date pursuant to the Capitalization Documents: (a)
the contribution by Mercury of all of its Mineral Interests which constitute
Borrowing Base Properties to Borrower in exchange for common equity of
Borrower and the assumption by Borrower of the debt of Mercury to NationsBank
of Texas, N.A. outstanding under the Mercury/NationsBank Credit Agreement,
(b) the contribution by QELC of all of its Mineral Interests to Borrower in
exchange for common equity of Borrower and the assumption by Borrower of (i)
all debt of QELC to NationsBank of Texas, N.A. outstanding under the
QELC/NationsBank Credit Agreement; and (ii) $17,075,000 (plus $6,750 per day
for each day from and after March 31, 1998, to and including the Closing
Date) of Debt of QELC to TCW outstanding under the QELC/TCW Credit Agreement,
(c) the conversion of all debt of QELC to TCW outstanding under the QELC/TCW
Credit Agreement which is not assumed by Borrower to common equity of
Borrower, and (d) the merger of MGP into Borrower pursuant to which certain
of MGP's outstanding partnership interests will be canceled and others will
be converted into the right to receive common equity of Borrower, all
pursuant to the Capitalization Documents.
5
"Change of Control" means that, for any reason, the Xxxxxx Family
Members fail to own and control, directly or indirectly, more than fifty
percent (50%) of the outstanding voting power of the issued and outstanding
capital stock of every class of the Borrower.
"Closing Date" means April 9, 1998.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Assignment" means, collectively, that certain (i) Amended
and Restated Collateral Assignment of Promissory Notes and Contract Rights
dated of even date herewith executed by Borrower in favor of Agent, and (ii)
Collateral Assignment of Promissory Notes and Contract Rights dated of even
date herewith executed by Borrower in favor of Agent, pursuant to which
Borrower assigns to Agent and grants Agent a security interest in certain of
the Section 29 Documents.
"Commitment" means, with respect to any Bank, the commitment of such
Bank to lend its Commitment Percentage of the Total Commitment to Borrower
pursuant to SECTION 3.1 hereof, as such Commitment may be terminated and
reduced from time to time in accordance with the provisions hereof. On the
Closing Date the amount of each Bank's Commitment is the amount set forth
opposite such Bank's name on SCHEDULE 1 hereto; provided, that, after giving
effect to any Assignment and Acceptance Agreement, the Commitment of each
Bank shall be the amount set forth in the Register maintained by Agent
pursuant to SECTION 15.10(b).
"Commitment Percentage" means, with respect to each Bank, the Commitment
Percentage for such Bank set forth on SCHEDULE 1 hereto; provided, that,
after giving effect to any Assignment and Acceptance Agreement, the
Commitment of each Bank shall be the amount set forth in the Register
maintained by Agent pursuant to SECTION 15.10(b).
"Conforming Borrowing Base" has the meaning set forth in SECTION 6.1
hereof.
"Consolidated Current Assets" means, for any Person at any time, the
current assets of such Person and its Consolidated Subsidiaries at such time.
"Consolidated Current Liabilities" means, for any Person at any time,
the current liabilities of such Person and its Consolidated Subsidiaries at
such time, but, in the case of Borrower, excluding current maturities of Long
Term Debt of Borrower and its Consolidated Subsidiaries outstanding at such
time.
"Consolidated Subsidiary" or "Consolidated Subsidiaries" means, for any
Person, any Subsidiary or other entity the accounts of which would be
consolidated with those of such Person in its consolidated financial
statements.
"Consumers Power" means Consumers Power Company, a Michigan corporation.
6
"Consumers Power Contract" means that certain Gas Purchase Agreement
dated October 1, 1994, by and between Mercury, as seller, and Consumers
Power, as buyer, pursuant to which Consumers Power has agreed to purchase
certain gas owned or controlled by Mercury.
"Continue", "Continuation", and "Continued" shall refer to the
continuation pursuant to SECTION 3.5 hereof of a Eurodollar Loan from one
Interest Period to the next Interest Period.
"Convert", "Conversion", and "Converted" shall refer to a conversion
pursuant to SECTION 3.5 of all or a portion of one Type of Loan into another
Type of Loan.
"Corporate Credit Party" means Mercury, Mercury Production, QELC,
Borrower and each Subsidiary of Borrower.
"Credit Parties" means, collectively, Borrower, each Subsidiary of
Borrower, Mercury, Mercury Production, QELC, each member of the Xxxxxx Family
Group, and "Credit Party" means any one of the foregoing.
"Xxxxxx Family Group" means, collectively, Xxxxx Xxxxxx, Xxxx Xxxxxx
Self, Xxxxx Xxxxxx and Xxxxxx Xxxxxx and their respective heirs and estates.
"Xxxxxx Family Pledge Agreements" means Pledge Agreements in form and
substance acceptable to Agent to be executed by each member of the Xxxxxx
Family Group pursuant to which such member pledges to Agent for the ratable
benefit of the Banks all issued and outstanding capital stock and other
equity interests owned by such member in (a) the Borrower, and (b) MSR.
"Debt" means, for any Person at any time, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments,
(c) all other indebtedness (including capitalized lease obligations, other
than usual and customary oil and gas leases) of such Person on which interest
charges are customarily paid or accrued, (d) all Guarantees by such Person,
(e) the unfunded or unreimbursed portion of all letters of credit issued for
the account of such Person, (f) any amount owed by such Person representing
the deferred purchase price of property or services other than accounts
payable incurred in the ordinary course of business and in accordance with
customary trade terms and which have not been outstanding for more than
ninety (90) days past the invoice date, (g) all obligations of such Person
secured by a Lien on any property or asset owned or held by that Person
regardless of whether the indebtedness secured thereby shall have been
assumed by that Person or is non-recourse to the credit of that Person, and
(h) all liability of such Person as a general partner of a partnership for
obligations of such partnership of the nature described in (a) through (g)
preceding.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice, lapse of time or both would,
unless cured or waived, become an Event of Default.
7
"Distribution" by any Person, means (a) with respect to any stock issued
by such Person or any partnership, joint venture, limited liability company,
membership or other interest of such Person, the retirement, redemption,
purchase, or other acquisition for value of any such stock or partnership,
joint venture, limited liability company, membership or other interest, (b)
the declaration or payment of any dividend or other distribution on or with
respect to any stock, partnership, joint venture, limited liability company,
membership or other interest of any Person, and (c) any other payment by such
Person with respect to such stock, partnership, joint venture, limited
liability company, membership or other interest of such Person.
"Domestic Business Day" means any day except a Saturday, Sunday or other
day on which national banks in Dallas, Texas, are authorized by Law to close.
"Domestic Lending Office" means, as to each Bank, its office located at
its address identified (a) on SCHEDULE 1 hereto as its Domestic Lending
Office, (b) on the Register (as defined in Section 15.10(b)) as its Domestic
Lending Office, or (c) such other office as such Bank may hereafter designate
as its Domestic Lending Office by notice to Borrower and Agent.
"Eligible Assignee" means (i) a Bank, (ii) an Affiliate of a Bank, and
(iii) any other Person approved by Agent and, unless an Event of Default has
occurred and is continuing at the time any assignment is effected in
accordance with SECTION 15.10, Borrower, such approval not to be unreasonably
withheld or delayed by Borrower and such approval to be deemed given by
Borrower if no objection is received by the assigning Bank and Agent from
Borrower within two (2) Domestic Business Days after notice of such proposed
assignment has been provided by the assigning Bank to Borrower; PROVIDED,
HOWEVER, that neither Borrower nor an Affiliate of Borrower shall qualify as
an Eligible Assignee.
"Environmental Complaint" means any complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, proceeding,
judgment, letter or other communication from any federal, state or municipal
authority or any other party against any Credit Party involving (a) a
Hazardous Discharge from, onto or about any real property owned, leased or
operated at any time by any Credit Party, (b) a Hazardous Discharge caused,
in whole or in part, by any Credit Party or by any Person acting on behalf of
or at the instruction of any Credit Party, or (c) any violation of any
Applicable Environmental Law by any Credit Party.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any corporation or trade or business under
common control with any Credit Party as determined under section 4001(a)(14)
of ERISA.
"Eurodollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in the applicable eurodollar interbank market.
8
"Eurodollar Lending Office" means, as to each Bank, its office, branch
or affiliate located at its address identified (a) on SCHEDULE 1 hereto as
its Eurodollar Lending Office, (b) on the Register (as defined in SECTION
15.10(b)) as its Eurodollar Lending Office, or (c) such other office, branch
or affiliate of such Bank as it may hereafter designate as its Eurodollar
Lending Office by notice to Borrower and Agent.
"Eurodollar Loans" means Loans that bear interest at rates based upon
the Adjusted Eurodollar Rate.
"Eurodollar Rate" means, for any Loan which is the subject of a
Eurodollar Tranche for any Interest Period therefor, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on
Telerate Page 3750 (or any successor page) as the London interbank offered
rate for deposits in Dollars at approximately 11:00 a.m. (London time) two
(2) Eurodollar Business Days prior to the first day of such Interest Period
for a term comparable to such Interest Period. If for any reason such rate is
not available, the term "Eurodollar Rate" shall mean, for the principal
amount of the Revolving Loan which is the subject of a Eurodollar Tranche for
any Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page
as the London interbank offered rate for deposits in Dollars at approximately
11:00 a.m. (London time) two (2) Eurodollar Business Days prior to the first
day of such Interest Period for a term comparable to such Interest Period;
PROVIDED, HOWEVER, if more than one rate is specified on Reuters Screen LIBO
Page, the applicable rate shall be the arithmetic mean of all such rates
(rounded upwards, if necessary, to the nearest 1/100 of 1%).
"Events of Default" has the meaning set forth in SECTION 13.1.
"Exhibit" refers to an exhibit attached to this Agreement and
incorporated herein by reference, unless specifically provided otherwise.
"Existing Credit Agreements" means the Mercury/NationsBank Credit
Agreement, the QELC/NationsBank Credit Agreement and the QELC/TCW Credit
Agreement.
"Facility Guarantees" means (a) Guarantees in form and substance
acceptable to Agent to be executed by Mercury, Mercury Production and QELC in
favor of the Banks pursuant to which Mercury, Mercury Production and QELC
shall guaranty payment and performance of the Obligations, and (b) any
Subsidiary Guaranty which may now or hereafter be executed pursuant to this
Agreement.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted
average of the rates on overnight federal funds transactions with members of
the Federal Reserve System arranged by federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business
Day next succeeding such day, provided that (a) if the day for which such
rate is to be determined is not a Domestic Business Day, the Federal Funds
Rate for such day shall be such rate on such transactions on the next
preceding Domestic Business Day as so published on the next succeeding
Domestic
9
Business Day, and (b) if such rate is not so published on such next
succeeding Domestic Business Day, the Federal Funds Rate for any day shall be
the average rate charged to Agent on such day on such transactions as
determined by Agent.
"Financial Officer" of any Person means its Chief Financial Officer;
provided, that if no Person serves in such capacity, "Financial Officer"
shall mean the highest ranking executive officer of such Person with
responsibility for accounting, financial reporting, cash management and
similar functions.
"Fiscal Quarter" means the three (3) month periods ending on March 31,
June 30, September 30 and December 31 of each Fiscal Year.
"Fiscal Year" means a twelve (12) month period ending December 31.
"GAAP" means those generally accepted accounting principles and
practices which are recognized as such by the American Institute of Certified
Public Accountants acting through its Accounting Principles Board or by the
Financial Accounting Standards Board or through other appropriate boards or
committees thereof and which are consistently applied for all periods after
the date hereof so as to properly reflect the financial condition, and the
results of operations and changes in financial position, of a Person and its
Consolidated Subsidiaries, except that any accounting principle or practice
required to be changed by the said Accounting Principles Board or Financial
Accounting Standards Board (or other appropriate board or committee of the
said Boards) in order to continue as a generally accepted accounting
principle or practice may be so changed.
"Gas Balancing Agreement" means any agreement or arrangement whereby any
Credit Party, or any other party having an interest in any Hydrocarbons to be
produced from Mineral Interests in which any Credit Party owns an interest,
has a right to take more than its proportionate share of production therefrom.
"Governmental Authority" means any court or governmental department,
commission, board, bureau, agency, or instrumentality of any nation or of any
province, state, commonwealth, nation, territory, possession, county, parish,
or municipality, whether now or hereafter constituted or existing.
"Guarantee" by any Person means any obligation, contingent or otherwise,
of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of
such Person (a) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt or other obligation (whether arising by
virtue of partnership arrangements, by agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay, or to maintain
financial statement conditions, by "comfort letter" or other similar
undertaking of support or otherwise) or (b) entered into for the purpose of
assuring in any other manner the obligee of such Debt or other obligation of
the payment thereof or to protect such obligee against loss in respect
thereof (in whole
10
or in part), provided that the term Guarantee shall not include endorsements
for collection or deposit in the ordinary course of business.
"Hazardous Discharge" means any releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
disposing or dumping of any Hazardous Substance from or onto any real property
owned, leased or operated at any time by any Credit Party or any real property
owned, leased or operated by any other party.
"Hazardous Substance" means any pollutant, toxic substance, hazardous
waste, compound, element or chemical that is defined as hazardous, toxic,
noxious, dangerous or infectious pursuant to any Applicable Environmental Law or
which is otherwise regulated by any Applicable Environmental Law or is required
to be investigated and/or remediated by or pursuant to any Applicable
Environmental Law.
"Hedge Transaction" means any commodity, interest rate, currency or other
swap, option, collar, futures contract or other contract pursuant to which a
Person xxxxxx risks related to commodity prices, interest rates, currency
exchange rates, securities prices or financial market conditions. Hedge
Transactions expressly includes Oil and Gas Hedge Transactions.
"Hydrocarbons" means oil, gas, casinghead gas, drip gasolines, natural
gasoline, condensate, distillate, and all other liquid and gaseous
hydrocarbons produced or to be produced in conjunction therewith, and all
products, by-products and all other substances derived therefrom or the
processing thereof, and all other minerals and substances, including, but not
limited to, sulphur, lignite, coal, uranium, thorium, iron, geothermal steam,
water, carbon dioxide, helium, and any and all other minerals, ores, or
substances of value, and the products and proceeds therefrom, including,
without limitation, all gas resulting from the in-situ combustion of coal or
lignite.
"Initial Reserve Reports" means the following reserve reports which contain
an evaluation of the Borrowing Base Properties: (a) reserve report dated as of
January 1, 1998 prepared by XxXxxxx Petroleum Consultants, Ltd., (b) reserve
report dated August 1, 1997 prepared by Xxxxxxxx & Associates, Inc., (c) reserve
report dated as of January 1, 1998 prepared by X.X. Xxxxxxxx and Associates,
Inc. (with respect to certain Mineral Interests owned by QELC prior to the
Closing Date), and (d) reserve report dated as of January 1, 1998 prepared by
X.X. Xxxxxxxx and Associates, Inc. (with respect to certain Mineral Interests
owned by MGP prior to the Closing Date).
"Interest Period" means, with respect to each Eurodollar Borrowing and each
Continuation of Eurodollar Loans and each Conversion of all or part of the Base
Rate Loan to Eurodollar Loans, the period commencing on the date of such
Borrowing, Continuation or Conversion and ending one (1), two (2), or three (3)
months thereafter, as Borrower may elect in the applicable Request for Borrowing
or Notice of Continuation or Conversion; provided that:
(a) any Interest Period which would otherwise end on a day which is
not a Eurodollar Business Day shall be extended to the next succeeding
Eurodollar Business Day unless such Eurodollar Business Day falls in
another calendar month,
11
in which case such Interest Period shall end on the next preceding
Eurodollar Business Day;
(b) any Interest Period which begins on the last Eurodollar Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall, subject to clause (c) below, end on the last Eurodollar
Business Day of a calendar month;
(c) if any Interest Period includes a date on which any payment of
principal of the Eurodollar Loans which are the subject of such
Borrowing, Continuation or Conversion is required to be made
hereunder, but does not end on such date, then (i) the principal
amount of such Eurodollar Loans required to be repaid on such date
shall have an Interest Period ending on such date, and (ii) the
remainder of each such Eurodollar Loans shall have an Interest Period
determined as set forth above; and
(d) no Interest Period shall extend past the Termination Date.
"Investment" means, with respect to any Person, any loan, advance,
extension of credit, capital contribution to, investment in or purchase of the
stock or other securities of, or interests in, any other Person; provided, that
"Investment" shall not include current customer and trade accounts which are
payable in accordance with customary trade terms.
"Laws" means all applicable statutes, laws, ordinances, regulations,
orders, writs, injunctions, or decrees of any state, commonwealth, nation,
territory, possession, county, township, parish, municipality or Governmental
Authority.
"Lending Office" means as to any Bank its Domestic Lending Office or its
Eurodollar Lending Office, as the context may require.
"Letters of Credit" means letters of credit issued for the account of
Borrower pursuant to SECTION 3.2(b).
"Letter of Credit Exposure" of any Bank means such Bank's aggregate
participation in the unfunded portion and the funded but unreimbursed portion of
Letters of Credit outstanding at any time.
"Letter of Credit Fee" means, with respect to any Letter of Credit issued
hereunder, a fee in an amount equal to a percentage of the stated amount of such
Letter of Credit (c)alculated on a per annum basis based on the stated term of
such Letter of Credit) determined by reference to the ratio of the Outstanding
Credit to the Conforming Borrowing Base in effect on the date such Letter of
Credit is issued in accordance with the table below:
12
-------------------------------------------------------------------------------
Ratio of Outstanding Per Annum Letter of
Credit to Conforming Borrowing Base Credit Fee
-------------------------------------------------------------------------------
LESS THAN OR EQUAL TO .50 to 1 1.000%
-------------------------------------------------------------------------------
> .50 to 1 LESS THAN OR EQUAL TO .75 to 1 1.250%
-------------------------------------------------------------------------------
> .75 to 1 LESS THAN OR EQUAL TO 1.0 to 1 1.500%
-------------------------------------------------------------------------------
> 1.0 to 1 1.750%
-------------------------------------------------------------------------------
; provided, that, the Letter of Credit Fee otherwise in effect pursuant to the
foregoing table will increase by .125% from and after July 31, 1998.
"Letter of Credit Fronting Fee" means, with respect to any Letter of Credit
issued hereunder, a fee equal to one hundred twenty five one thousandths of one
percent (.125%) of the stated amount of such Letter of Credit.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, Borrower and its Subsidiaries shall be
deemed to own subject to a Lien any asset which is acquired or held subject to
the interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset.
"Loan Papers" means this Agreement, the Assumption Agreements referenced in
the recitals hereto, the Notes, the Facility Guarantees, the Xxxxxx Family
Pledge Agreements, the Mercury Pledge Agreement, all Mortgages now or at any
time hereafter delivered pursuant to SECTION 7.1, the Collateral Assignments,
any Borrower Pledge Agreement (which may hereafter be executed), the Assignment
and Amendment to Mortgages, and all other certificates, documents or instruments
delivered in connection with this Agreement, as the foregoing may be amended
from time to time.
"Long Term Debt" means Debt which matures more than one year from the date
it is incurred, or which can be extended at the option of the obligor(s) to a
date more than one year from the date it is incurred.
"Management Agreement" means a Management Agreement in form and substance
acceptable to Agent to be entered into between Mercury and Borrower pursuant to
which Mercury shall operate all of Borrower's Mineral Interests and provide all
general and administrative services necessary for the operation of Borrower's
business and properties.
"Margin Regulations" means Regulations G, T, U and X of the Board of
Governors of the Federal Reserve System, as in effect from time to time.
"Margin Stock" means "margin stock" as defined in Regulation U.
13
"Material Adverse Change" means any circumstance or event that has had or
would reasonably be expected to have (a) a material and adverse effect on the
financial condition, business operations, prospects, properties or assets of any
Credit Party, (b) an adverse effect on (i) the validity and enforceability of
any Loan Paper, or (ii) the perfection or priority of any Lien purported to be
created thereby, or (c) a material adverse effect on the right or ability of any
Credit Party to fully, completely and timely pay and perform its obligations
under the Loan Papers.
"Material Agreement" means any material written or oral agreement,
contract, commitment, or understanding to which a Person is a party, by which
such Person is directly or indirectly bound, or to which any assets of such
Person may be subject, which is not cancelable by such Person upon notice of
thirty (30) days or less without liability for further payment other than
nominal penalty.
"Material Gas Imbalance" means, with respect to all Gas Balancing
Agreements to which any Credit Party is a party or by which any Mineral Interest
owned by any Credit Party is bound, a net negative gas imbalance to any Credit
Party in excess of $250,000.
"Maximum Lawful Rate" means, for each Bank, the maximum rate (or, if the
context so permits or requires, an amount calculated at such rate) of interest
which, at the time in question would not cause the interest charged on the
portion of the Revolving Loan owed to such Bank at such time to exceed the
maximum amount which such Bank would be allowed to contract for, charge, take,
reserve, or receive under applicable Laws after taking into account, to the
extent required by applicable Laws, any and all relevant payments or charges
under the Loan Papers. To the extent the Laws of the State of Texas are
applicable for purposes of determining the "Maximum Lawful Rate," such term
shall mean the "indicated rate ceiling" from time to time in effect under
Chapter 1D of the Texas Credit Title, Revised Civil Statutes of Texas, 1925, as
amended, substituted for or restated, or, if permitted by applicable Law and
effective upon the giving of the notices required by such Chapter 1D (or
effective upon any other date otherwise specified by applicable Law), the
"quarterly ceiling" or "annualized ceiling" from time to time in effect under
such Chapter 1D, whichever Agent (with the approval of the Required Banks) shall
elect to substitute for the "indicated rate ceiling," and VICE VERSA, each such
substitution to have the effect provided in such Chapter 1D, and Agent (with the
approval of the Required Banks) shall be entitled to make such election from
time to time and one or more times and, without notice to Borrower, to leave any
such substitute rate in effect for subsequent periods in accordance with
subsection (h)(1) of such Chapter 1D.
"Mercury" means Mercury Exploration Company, a Texas corporation.
"Mercury Pledge Agreement" means a Pledge Agreement form and substance
acceptable to Agent to be executed by Mercury in favor of Agent pursuant to
which Mercury will pledge all of the issued and outstanding capital stock of
every class of MSR and Borrower owned by Mercury to Agent to secure the
Obligations.
"Mercury Production" means Mercury Production Company, a Texas corporation.
14
"MGP" means Michigan Gas Partners, Limited Partnership, a Texas limited
partnership.
"Mineral Interests" means rights, estates, titles, and interests in and to
oil and gas leases and any oil and gas interests, royalty and overriding royalty
interest, production payment, net profits interests, oil and gas fee interests,
and other rights therein, including, without limitation, any reversionary or
carried interests relating to the foregoing, together with rights, titles, and
interests created by or arising under the terms of any unitization,
communization, and pooling agreements or arrangements, and all properties,
rights and interests covered thereby, whether arising by contract, by order, or
by operation of Laws, which now or hereafter include all or any part of the
foregoing without limiting the foregoing, in the case of Borrower, "Mineral
Interests" also includes all rights of Borrower under the Section 29 Documents.
"Monthly Date" means the fifteenth day of each calendar month.
"Mortgages" means all mortgages, deeds of trusts, security agreements,
pledge agreements, collateral mortgages, collateral chattel mortgages,
collateral assignments, financing statements and other documents, instruments
and agreements evidencing, creating, perfecting or otherwise establishing the
Liens required by SECTION 7.1 hereof. All Mortgages shall be in form and
substance satisfactory to Agent in its sole discretion.
"MSR" means MSR Exploration Ltd.
"MSR Merger" means the proposed (as of the Closing Date) merger of Borrower
with MSR.
"Non-Recourse Debt" means indebtedness (a) secured solely by the assets
acquired with the proceeds of such indebtedness, (b) with respect to which no
Credit Party shall have any liability for repayment beyond the assets pledged,
and (c) with respect to which Borrower has delivered to Banks an opinion in a
form satisfactory to Required Banks of counsel acceptable to Agent stating that
such indebtedness meets the criteria set forth in (a) and (b) preceding.
"Note" means a promissory note of Borrower payable to the order of a Bank,
in substantially the form of EXHIBIT B hereto, in the amount of such Bank's
Commitment, evidencing the obligation of Borrower to repay to such Bank its
Commitment Percentage of the Revolving Loan, together with all modifications,
extensions, renewals, and rearrangements thereof and "Notes" means all of such
Notes collectively.
"Notice of Continuation or Conversion" has the meaning set forth in SECTION
3.3(c).
"Obligations" means all present and future indebtedness, obligations and
liabilities, and all renewals and extensions thereof, or any part thereof, of
each Credit Party to Agent or to any Bank or any Affiliate of any Bank arising
pursuant to the Loan Papers or pursuant to any Hedge Transaction entered into
with any Bank or any Affiliate of any Bank, and all interest accrued thereon and
costs, expenses, and attorneys' fees incurred in the enforcement or collection
thereof, regardless
15
of whether such indebtedness, obligations and liabilities are direct,
indirect, fixed, contingent, liquidated, unliquidated, joint, several or
joint and several.
"Oil & Gas Hedge Transaction" means a Hedge Transaction pursuant to which
any Person xxxxxx the price to be received by it for future production of
Hydrocarbons.
"Outstanding Credit" means, on any date, the sum of (a) the aggregate
outstanding Letter of Credit Exposure on such date, including the Letter of
Credit Exposure attributable to Letters of Credit to be issued on such date,
plus (b) the aggregate outstanding principal balance of the Revolving Loan on
such date, including the amount of any Borrowing to be made on such date.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Encumbrances" means with respect to any asset:
(a) Liens (if any) securing the Notes in favor of Banks;
(b) Minor defects in title which do not secure the payment of money
and otherwise have no material adverse effect on the value or the operation of
the subject property, and for the purposes of this Agreement, a minor defect in
title shall include, but not be limited to, easements, rights-of-way,
servitudes, permits, surface leases and other similar rights in respect of
surface operations, and easements for pipelines, streets, alleys, highways,
telephone lines, power lines, railways and other easements and rights-of-way,
on, over or in respect of any of the properties of any Credit Party that are
customarily granted in the oil and gas industry;
(c) Inchoate statutory or operators' liens securing obligations for
labor, services, materials and supplies furnished to Mineral Interests which are
not delinquent (except to the extent permitted by SECTION 10.7);
(d) Mechanic's, materialmen's, warehouseman's, journeyman's and
carrier's liens and other similar liens arising by operation of Law in the
ordinary course of business which are not delinquent (except to the extent
permitted by SECTION 10.7);
(e) Liens for Taxes or assessments not yet due or not yet delinquent,
or, if delinquent, that are being contested in good faith in the normal course
of business by appropriate action, as permitted by SECTION 10.7;
(f) Lease burdens payable to third parties which are deducted in the
calculation of discounted present value in the Reserve Report including, without
limitation, any royalty, overriding royalty, net profits interest, production
payment, carried interest or reversionary working interest;
16
(g) the Section 29 Mortgages; provided that such mortgages are
subordinated to all Liens securing the Obligations; and
(h) the TCW Royalty Documents.
"Permitted Investments" means (a) readily marketable direct obligations of
the United States of America (or investments in mutual funds or similar funds
which invest solely in such obligations), (b) fully insured time deposits and
certificates of deposit with maturities of one year or less of any commercial
bank operating in the United States having capital and surplus in excess of
$500,000,000, (c) commercial paper of a domestic issuer if at the time of
purchase such paper is rated in one of the two highest ratings categories of
Standard and Poor's Corporation or Xxxxx'x Investors Service, (d) Investments
described on SCHEDULE 3 hereto, and (e) other Investments; provided that, the
aggregate amount of all other Investments made pursuant to this clause (e)
outstanding at any time shall not exceed $500,000 (measured on a cost basis).
"Person" means an individual, a corporation, a partnership, an association,
a trust or any other entity or organization, including a Government Authority.
"Plan" means an employee benefit plan within the meaning of section 3(3) of
ERISA, and any other similar plan, policy or arrangement, including an
employment contract, whether formal or informal and whether legally binding or
not, under which any Credit Party or an ERISA Affiliate of a Credit Party has
any current or future obligation or liability or under which any present or
former employee of any Credit Party or an ERISA Affiliate of a Credit Party, or
such present or former employee's dependents or beneficiaries, has any current
or future right to benefits resulting from the present or former employee's
employment relationship with any Credit Party or an ERISA Affiliate of a Credit
Party.
"Prime Rate" means the per annum rate of interest established from time to
time by Agent as its prime rate, which rate may not be the lowest rate of
interest charged by Agent to its customers.
"Property Description" means the legal description of Mineral Interests
attached to the Certificate of Ownership Interest.
"Proved Mineral Interests" means, collectively, Proved Producing Mineral
Interests, Proved Nonproducing Mineral Interests, and Proved Undeveloped Mineral
Interests.
"Proved Nonproducing Mineral Interests" means all Mineral Interests which
constitute proved developed nonproducing reserves.
"Proved Producing Mineral Interests" means all Mineral Interests which
constitute proved developed producing reserves.
"Proved Undeveloped Mineral Interests" means all Mineral Interests which
constitute proved undeveloped reserves.
1
"Quarterly Date" means the last day of each March, June, September and
December.
"QELC" means Quicksilver Energy, L.C., a Michigan limited liability
company.
"QELC/NationsBank Credit Agreement" has the meaning assigned to such term
in the recitals hereto.
"QELC Pledge Agreement" means a Pledge Agreement in form and substance
acceptable to Agent to be executed by QELC in favor of Agent pursuant to which
QELC will pledge all of the issued and outstanding capital stock of every class
of Borrower owned by QELC to Agent to secured the Obligations.
"QELC/TCW Credit Agreement" has the meaning assigned to such term in the
recitals hereto.
"Recognized Value" means, with respect to oil and gas properties, the
pre-tax value of such properties determined in accordance with Financial
Accounting Standards Board Statement 69, generally known as the "standardized
measure of discounted cash flow".
"Redetermination" means any redetermination of the Borrowing Base pursuant
to SECTION 6.2.
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System, 12 C.F.R. Part 221, as in effect from time to time.
"Request for Borrowing" has the meaning set forth in SECTION 3.2(d).
"Request for Letter of Credit" has the meaning set forth in SECTION 3.2(e).
"Required Banks" means Banks holding at least sixty-six and two-thirds
percent (66 2/3%) of the Total Commitment.
"Reserve Report" means an unsuperseded engineering analysis of the Mineral
Interests owned by Borrower in form and substance reasonably acceptable to the
Required Banks, prepared by the Approved Petroleum Engineer in accordance with
customary and prudent practices in the petroleum engineering industry and
Financial Accounting Standards Board Statement 69. Until superseded, Reserve
Report means the Initial Reserve Reports, collectively.
"Reserve Requirement" means, at any time, the maximum rate at which
reserves (including, without limitation, any marginal, special, supplemental, or
emergency reserves) are required to be maintained under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor) by member banks of the Federal Reserve System against in the case of
Eurodollar Loans, "Eurocurrency liabilities" (as such term is used in Regulation
D). Without limiting the effect of the foregoing, the Reserve Requirement shall
reflect any other reserves required
18
to be maintained by such member banks with respect to (i) any category of
liabilities which includes deposits by reference to which the Adjusted
Eurodollar Rate is to be determined, or (ii) any category of extensions of
credit or other assets which include Eurodollar Loans. The Adjusted
Eurodollar Rate shall be adjusted automatically on and as of the effective
date of any change in the Reserve Requirement.
"Restricted Payment" means, with respect to any Person, (a) any
Distribution by such Person, or (b) the retirement, redemption or prepayment
prior to scheduled maturity by such Person or any Affiliate of such Person of
any Debt of such Person.
"Revolving Loan" means the revolving credit loan in an amount outstanding
at any time not to exceed the amount of the Total Commitment then in effect less
the amount of the Letter of Credit Exposure then outstanding to be made by Banks
to Borrower in accordance with SECTION 3.1 hereof. The Revolving Loan may be
comprised of the Base Rate Loan and one or more Eurodollar Loans as Borrower may
select in a Request for Borrowing or a Notice of Continuation and Conversion.
"Schedule" means a "schedule" attached to this Agreement and incorporated
herein by reference, unless specifically indicated otherwise.
"Section" refers to a "section" or "subsection" of this Agreement unless
specifically indicated otherwise.
"Section 29 Documents" means each of the following documents, instruments
and agreements:
(a) Assignment, dated as of December 1, 1997, by and between Mercury,
as assignor, and MA Gas, LLC ("MAG"), as assignee, and recorded in the
county records of (i) Antrim County, Michigan, December 23, 1997, under
Liber 477, Page 1232, (ii) Xxxxxxxx County, Michigan, December 23, 1997,
under Liber 444, Page 01, (iii) Montmorency County, Michigan, December 22,
1997, under Liber 405, Page 01, and (iv) Otsego County, Michigan, December
22, 1997, under Liber 662, Page 579;
(b) Conveyance of Production Payment, dated as of December 1, 1997,
by and between MAG, as assignor, and Mercury, as assignee, and recorded in
the county records of (i) Antrim County, Michigan, December 23, 1997, under
Liber 477, Page 1273, (ii) Xxxxxxxx County, Michigan, December 23, 1997,
under Liber 444, Page 42, (iii) Montmorency County, Michigan, December 22,
1997, under Liber 405, Page 42, and (iv) Otsego County, Michigan, December
22, 1997, under Liber 662, Page 620;
(c) Mortgage, dated as of December 1, 1997, by and between MAG, as
mortgagor, and Mercury, as mortgagee, and recorded in the county records of
(i) Antrim County, Michigan, December 23, 1997, under Liber 477, Page 1413,
(ii) Xxxxxxxx County, Michigan, December 23, 1997, under Liber 444, Page
182, (iii) Montmorency County,
19
Michigan, December 22, 1997, under Liber 134, Page 528, and (iv) Otsego
County, Michigan, December 22, 1997, under Liber 662, Page 760;
(d) Assignment, dated as of December 1, 1997 by and between MGP, as
assignor, and MGP Gas, L.L.C. ("MGPG"), as assignee, and recorded in the
county records of (i) Antrim County, Michigan, December 23, 1997, under
Liber 478, Page 1, and (ii) Otsego County, Michigan, December 22, 1997,
under Liber 662, Page 802;
(e) Conveyance of Production Payment, dated as of December 1, 1997,
by and between MGPG, as assignor, and MGP, as assignee, and recorded in the
county records of (i) Antrim County, Michigan, December 23, 1997, under
Liber 478, Page 9, and (ii) Otsego County, Michigan, December 22, 1997,
under Liber 662, Page 810;
(f) Mortgage, dated as of December 1, 1997, by and between MGPG, as
mortgagor, and MGP, as mortgagee, and recorded in the county records of (i)
Antrim County, Michigan, December 23, 1997, under Liber 478, Page 37, and
(ii) Otsego County, Michigan, December 22, 1997, under Liber 662, Page 838;
(g) Purchase and Sale Agreement, dated as of December 1, 1997, by and
between Mercury, as Seller, and MAG, as buyer;
(h) Credit Payment Note, dated December 1, 1997, executed by MAG, as
maker, payable to the order of Mercury, as payee;
(i) Fixed Payment Note, dated December 1, 1997, executed by MAG, as
maker, payable to the order of Mercury, as payee, in the original principal
amount of $5,092,721;
(j) Assignment of Enforcement Rights, dated effective December 1,
1997, by and between MAG and Mercury, and acknowledged and consented to by
State Street and Antrim;
(k) Management Agreement, dated as of December 1, 1997, by and
between MAG and Mercury, as manager;
(l) Purchase and Sale Agreement, dated as of December 1, 1997, by and
between MGP, as seller, and MGPG, as buyer;
(m) Credit Payment Note, dated December 1, 1997, executed by MGPG, as
maker, payable to the order of MGP, as payee;
(n) Fixed Payment Note, dated December 1, 1997, executed by MGPG, as
maker, payable to the order of MGP, as payee, in the original principal
amount of $2,017,373;
20
(o) Assignment of Enforcement Rights, dated effective December 1,
1997, by and between MGPG and MGP, and acknowledged and consented to by
State Street and Antrim; and
(p) Management Agreement, dated as of December 1, 1997, by and
between MGPG and MGP, as manager.
"Section 29 Mortgages" means each of the following documents, instruments
and agreements:
(a) Mortgage, dated as of December 1, 1997, by and between Mercury,
as mortgagor, and MAG, as mortgagee, and recorded in the county records of
(i) Antrim County, Michigan, December 23, 1997, under Liber 477, Page 1370,
(ii) Xxxxxxxx County, Michigan, December 23, 1997, under Liber 444, Page
139; (iii) of Montmorency County, Michigan, December 22, 1997, under Liber
134, Page 485; and (iv) Otsego County, Michigan, December 22, 1997, under
Liber 662, Page 717; and
(b) Mortgage, dated as of December 1, 1997, by and between MGPG, as
mortgagor, and MGP, as mortgagee, and recorded in the county records of (i)
Antrim County, Michigan, December 23, 1997, under Liber 478, Page 37; and
(ii) Otsego County, Michigan, December 22, 1997, under Liber 662, Page 838.
"Subsidiary" means, for any Person, any corporation or other entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions (including that of a general partner) are at the time directly or
indirectly owned, collectively, by such Person and any Subsidiaries of such
Person. The term Subsidiary shall include Subsidiaries of Subsidiaries (and so
on).
"Subsidiary Guaranty" means a Guaranty substantially in the form of EXHIBIT
C hereto to be executed by each existing and future Subsidiary of Borrower in
favor of the Banks pursuant to which each Subsidiary of Borrower guaranties
payment and performance in full of the Obligations.
"Taxes" means all taxes, assessments, filing or other fees, levies,
imposts, duties, deductions, withholdings, stamp taxes, capital transaction
taxes, foreign exchange taxes or other charges, or other charges of any nature
whatsoever, from time to time or at any time imposed by Law or any Governmental
Authority. "Tax" means any one of the foregoing.
"TCW" means, collectively, (a) Trust Company of the West, acting in its
capacity as SubCustodian for Mellon Bank for the benefit of Account No. CPFF
869-3062, and (b) TCW Asset Management Company, as Agent and Collateral Agent.
"TCW Royalty Documents" means, collectively, (a) the Royalty Agreement
dated November 14, 1996 by and among Borrower and TCW Portfolio No. 1555 DR V
Sub-Custody Partnership, L.P., as amended by a First Amendment to Royalty
Agreement dated as of Xxxxx 0, 0000, (x) the
21
Conveyance of Adjustable Overriding Royalty Interest dated November 14, 1996
granted by Borrower to TCW Portfolio No. 1555 DR V Sub-Custody Partnership,
L.P., as amended by an Amendment to Conveyance of Overriding Royalty Interest
dated as of April 9, 1998.
"TCW Put" means the right of TCW pursuant to that certain Put/Call
Agreement dated April 9, 1998 by and between TCW and Mercury to require Mercury
to repurchase certain shares of common stock of Borrower held by TCW.
"Termination Date" means the earlier of (a) January 31, 1999, or (b) the
consummation of the MSR Merger.
"Total Commitment" means the Commitments of all Banks in an initial
aggregate amount of $100,000,000 as such amount shall be reduced from time to
time pursuant to SECTION 3.7.
"Type" means with reference to a Loan, the characterization of such Loan as
an Adjusted Base Rate Loan or a Eurodollar Loan based on the method by which the
accrual of interest on such Tranche is calculated.
"Unused Commitment Fee Percentage" means, for any day, the percentage
determined pursuant to the table below based on the ratio of the Outstanding
Credit on such date to the Conforming Borrowing Base in effect on such date:
-------------------------------------------------------------------------------
Ratio of Outstanding Unused Commitment
Credit to Conforming Borrowing Base Fee Percentage
-------------------------------------------------------------------------------
LESS THAN OR EQUAL TO 1.0 to 1 .375%
-------------------------------------------------------------------------------
> 1.0 to 1 .45%
-------------------------------------------------------------------------------
SECTION 2.2. ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with GAAP,
applied on a basis consistent with the most recent audited consolidated
financial statements of Borrower and its Consolidated Subsidiaries delivered to
Banks prior to the date hereof except for changes concurred in by Borrower's
independent certified public accountants and which are disclosed to Agent on the
next date on which financial statements are required to be delivered to Banks
pursuant to SECTION 10.1.
SECTION 2.3. PETROLEUM TERMS. As used herein, the terms "proved
reserves," "proved developed reserves," "proved developed producing reserves,"
"proved developed nonproducing reserves," and "proved undeveloped reserves" have
the meaning given such terms from time to time and at the time in question by
the Society of Petroleum Engineers of the American Institute of Mining
Engineers.
22
SECTION 2.4. MONEY. Unless expressly stipulated otherwise, all references
herein to "dollars," "money," "funds," "payments," "prepayments" or other
similar financial or monetary terms, are references to currency of the United
States of America.
ARTICLE III
THE CREDIT
SECTION 3.1. COMMITMENTS. (a) Each Bank severally agrees, subject to
SECTIONS 3.1(c), 8.1 and 8.2 and the other terms and conditions set forth in
this Agreement, to lend to Borrower from time to time prior to the Termination
Date amounts not to exceed in the aggregate at any one time outstanding, the
amount of such Bank's Commitment reduced by an amount equal to such Bank's
Letter of Credit Exposure. Each Borrowing shall be in an aggregate principal
amount of $1,000,000 or any larger integral multiple of $100,000 (except that
any Base Rate Borrowing may be in an amount equal to the Availability at such
time), and (ii) shall be made from the Banks ratably in accordance with their
respective Commitment Percentages. Subject to the foregoing limitations and the
other provisions of this Agreement, prior to the Termination Date Borrower may
borrow under this SECTION 3.1(a), repay amounts borrowed and request new
Borrowings to be made under this SECTION 3.1.
(b) Agent will, from time to time prior to the Termination Date, upon
request by Borrower, issue Letters of Credit for the account of Borrower, so
long as (i) the sum of (a) the total Letter of Credit Exposure then existing,
and (b) the amount of the requested Letter of Credit does not exceed ten percent
(10%) of the Borrowing Base, and (ii) Borrower would be entitled to a Borrowing
under SECTIONS 3.1(a) and 3.1(c) in the amount of the requested Letter of
Credit. Not less than three (3) Domestic Business Days prior to the requested
date of issuance of any such Letter of Credit, Borrower shall execute and
deliver to Agent, Agent's customary letter of credit application. Each Letter
of Credit shall be in the minimum amount of $10,000 and shall be in form and
substance acceptable to Agent. No Letter of Credit shall have an expiration
date later than the Termination Date. Upon the date of issuance of a Letter of
Credit, Agent shall be deemed to have sold to each other Bank, and each other
Bank shall be deemed to have unconditionally and irrevocably purchased from
Agent, a non recourse participation in the related Letter of Credit and Letter
of Credit Exposure equal to such Bank's Commitment Percentage of such Letter of
Credit and Letter of Credit Exposure. Upon request of any Bank, but not less
often than quarterly, Agent shall provide notice to each Bank by telephone,
teletransmission or telex setting forth each Letter of Credit issued and
outstanding pursuant to the terms hereof and specifying the Agent, beneficiary
and expiration date of each such Letter of Credit, each Bank's percentage of
each such Letter of Credit and the actual dollar amount of each Bank's
participation held by the Agent(s) thereof for such Bank's account and risk. At
the time of issuance of each Letter of Credit, Borrower shall pay to Agent in
respect of such Letter of Credit (a) the applicable Letter of Credit Fee, and
(b) the applicable Letter of Credit Fronting Fee. Agent shall distribute the
Letter of Credit Fee payable upon the issuance of each Letter of Credit to Banks
in accordance with their respective Commitment Percentages, and Agent shall
distribute the Letter of Credit Fronting Fee to the Agent of such Letter of
Credit for its own account.
23
Immediately upon the occurrence of an Event of Default Borrower shall
deposit with Agent cash in such amounts as Agent may request, up to a maximum
amount equal to the aggregate existing Letter of Credit Exposure of all Banks.
Any amounts so deposited shall be held by Agent for the ratable benefit of all
Banks as security for the outstanding Letter of Credit Exposure and the other
Obligations, and Borrower will, in connection therewith, execute and deliver
such security agreements in form and substance satisfactory to Agent which it
may, in its discretion, require. As drafts or demands for payment are presented
under any Letter of Credit, Agent shall apply such cash to satisfy such drafts
or demands. When all Letters of Credit have expired and the Obligations have
been repaid in full (and no Bank has any obligation to lend or issue Letters of
Credit hereunder) or such Event of Default has been cured to the satisfaction of
Required Banks, Agent shall release to Borrower any remaining cash deposited
under this SECTION 3.1(b). Whenever Borrower is required to make deposits under
this SECTION 3.1(b) and fails to do so on the day such deposit is due, Agent or
any Bank may, without notice to Borrower, make such deposit (whether by
application of proceeds of any collateral for the Obligation, by transfers from
other accounts maintained with any Bank or otherwise) using any funds then
available to any Bank of any Credit Party or any other party liable for
repayment of the Obligations.
Notwithstanding anything to the contrary contained herein, Borrower hereby
agrees to reimburse Agent immediately upon demand by Agent, and in immediately
available funds, for any payment or disbursement made by Agent under any Letter
of Credit issued by it. Payment shall be made by Borrower with interest on the
amount so paid or disbursed by Agent from and including the date payment is made
under any Letter of Credit to and including the date of payment, at the lesser
of (i) the Maximum Lawful Rate, or (ii) the sum of (a) three percent (3%), plus
(b) the Base Rate in effect from day to day. The obligations of Borrower under
this paragraph will continue until all Letters of Credit have expired and all
reimbursement obligations with respect thereto have been paid in full by
Borrower and until all other Obligations shall have been paid in full.
Borrower shall be obligated to reimburse Agent upon demand for all amounts
paid under Letters of Credit as set forth in the immediately preceding paragraph
hereof; provided, however, if Borrower for any reason fails to reimburse Agent
in full upon demand, Banks shall reimburse Agent in accordance with each Banks'
Commitment Percentage for amounts due and unpaid from Borrower as set forth
hereinbelow; provided, however, that no such reimbursement made by Banks shall
discharge Borrower's obligations to reimburse Agent. All reimbursement amounts
payable by any Bank under this SECTION 3.1(b) shall include interest thereon at
the Federal Funds Rate, from the date of the payment of such amounts by Agent to
the date of reimbursement by such Bank. No Bank shall be liable for the
performance or nonperformance of the obligations of any other Bank under this
paragraph. The reimbursement obligations of Banks under this paragraph shall
continue after the Termination Date and shall survive termination of this
Agreement and the other Loan Papers.
Borrower shall indemnify and hold Agent and each Bank, and their respective
officers, directors, representatives and employees harmless from loss for any
claim, demand or liability which may be asserted against any or such indemnified
party in connection with actions taken under Letters of Credit or in connection
therewith (including losses resulting from the negligence of any or such
indemnified party), and shall pay each indemnified party for reasonable fees of
attorneys and legal
24
costs paid or incurred by each indemnified party in connection with any
matter related to Letters of Credit, except for losses and liabilities
incurred as a direct result of the gross negligence or wilful misconduct of
such indemnified party, IT BEING THE EXPRESS INTENTION OF THE PARTIES THAT
EACH INDEMNIFIED PARTY SHALL BE INDEMNIFIED FOR THE CONSEQUENCES OF ITS OWN
ORDINARY NEGLIGENCE. If Borrower for any reason fails to indemnify or pay
such indemnified party as set forth herein in full, Banks shall indemnify and
pay such indemnified party upon demand, in accordance with each Bank's
Commitment Percentage of such amounts due and unpaid from Borrower. The
provisions of this paragraph shall survive the termination of this Agreement.
Agent does not make any representation or warranty, and does not assume any
responsibility with respect to the validity, legality, sufficiency or
enforceability of any letter of credit application executed and delivered in
connection with any Letter of Credit issued hereunder or any document relative
thereto or to the collectibility thereunder. Agent does not assume any
responsibility for the financial condition of Borrower or for the performance of
any obligation of Borrower. Agent may use its discretion with respect to
exercising or refraining from exercising any rights, or taking or refraining
from taking any action which may be vested in it or which it may be entitled to
take or assert with respect to any Letter of Credit or any Letter of Credit
application. FURTHERMORE, EXCEPT AS SET FORTH HEREIN, AGENT SHALL BE UNDER NO
LIABILITY TO ANY BANK, WITH RESPECT TO ANYTHING AGENT MAY DO OR REFRAIN FROM
DOING IN THE EXERCISE OF ITS JUDGMENT, THE SOLE LIABILITY AND RESPONSIBILITY OF
AGENT BEING TO HANDLE EACH BANK'S SHARE ON AS FAVORABLE A BASIS AS AGENT
HANDLES ITS OWN SHARE. AGENT SHALL NOT HAVE ANY DUTIES OR RESPONSIBILITIES
EXCEPT THOSE EXPRESSLY SET FORTH HEREIN AND THOSE DUTIES AND LIABILITIES SHALL
BE SUBJECT TO THE LIMITATIONS AND QUALIFICATIONS SET FORTH HEREIN. FURTHERMORE,
NEITHER AGENT, NOR ANY OF ITS DIRECTORS, OFFICERS, OR EMPLOYEES SHALL BE LIABLE
FOR ANY ACTION TAKEN OR OMITTED (WHETHER OR NOT SUCH ACTION TAKEN OR OMITTED IS
EXPRESSLY SET FORTH HEREIN) UNDER OR IN CONNECTION HEREWITH OR UNDER ANY OTHER
INSTRUMENT OR DOCUMENT IN CONNECTION HEREWITH, EXCEPT FOR GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT. Agent shall not incur any liability to any Bank, Borrower,
or any Affiliate of any Bank, or Borrower, in acting upon any notice, document,
order, consent, certificate, warrant or other instrument reasonably believed by
Agent to be genuine or authentic and to be signed by the proper party.
(c) No Bank will be obligated to lend to Borrower hereunder or incur
Letter of Credit Exposure, and Borrower shall not be entitled to borrow
hereunder or obtain Letters of Credit hereunder in an amount which would cause
the Outstanding Credit to exceed the Borrowing Base then in effect. No Bank
shall be obligated to fund Borrowings hereunder and Borrower shall not be
entitled to Borrowings hereunder during the existence of a Borrowing Base
Deficiency.
25
(d) In order to request any Borrowing under this SECTION 3.1,
Borrower shall hand deliver, telex or telecopy to Agent a duly completed
Request for Borrowing (herein so called) prior to 12:00 noon (Dallas, Texas
time), (i) at least one (1) Domestic Business Day before the Borrowing Date
specified for a proposed Base Rate Borrowing, and (ii) at least three (3)
Eurodollar Business Days before the Borrowing Date of a proposed Eurodollar
Borrowing. Each such Request for Borrowing shall be substantially in the
form of EXHIBIT D hereto, and shall specify:
(i) the Borrowing Date of such Borrowing, which shall be
a Domestic Business Day in the case of a Base Rate
Borrowing or a Eurodollar Business Day in the case of a
Eurodollar Borrowing;
(ii) the aggregate amount of such Borrowing;
(iii) whether such Borrowing is to be a Base Rate Borrowing
or a Eurodollar Borrowing; and
(iv) in the case of a Eurodollar Borrowing, the duration
of the Interest Period applicable thereto, subject to the
provisions of the definition of Interest Period.
Upon receipt of a Request for Borrowing, Agent shall promptly notify each
Bank of the contents thereof and the amount of the Borrowing to be loaned by
such Bank pursuant thereto, and such Request for Borrowing shall not
thereafter be revocable by Borrower. Not later than 12:00 noon (Dallas,
Texas time) on the date of each Borrowing, each Bank shall make available its
Commitment Percentage of such Borrowing, in Federal or other funds
immediately available in Dallas, Texas to Agent at its address set forth on
SCHEDULE 1 hereto. Notwithstanding the foregoing, if Borrower delivers to
Agent a Request for Borrowing prior to 10:00 a.m. (Dallas, Texas time) on a
Domestic Business Day requesting a Base Rate Borrowing on such day, each Bank
shall use its best efforts to make available to Agent its Commitment
Percentage of such Borrowing by 1:00 p.m. (Dallas, Texas time) on the same
day. Unless Agent determines that any applicable condition specified in
SECTION 8.2 has not been satisfied, Agent will make the funds so received
from Banks available to Borrower at Agent's aforesaid address.
(e) In order to request any Letter of Credit hereunder, Borrower
shall hand deliver, telex or telecopy to Agent a duly completed Request for
Letter of Credit (herein so called) prior to 12:00 noon (Dallas, Texas time)
at least three (3) Domestic Business Days before the date specified for
issuance of such Letter of Credit. Each Request for Letter of Credit shall
be substantially in the form of EXHIBIT E hereto, shall be accompanied by the
Agent's duly completed and executed letter of credit application and
agreement and shall specify:
(i) the requested date for issuance of such Letter of Credit;
26
(ii) the terms of such requested Letter of Credit,
including the name and address of the beneficiary, the
stated amount, the expiration date and the conditions
under which drafts under such Letter of Credit are to be
available; and
(iii) the purpose of such Letter of Credit.
Upon receipt of a Request for Letter of Credit, Agent shall promptly notify
each Bank of the contents thereof, including the amount of the requested
Letter of Credit, and such Request for Letter of Credit shall not thereafter
be revocable by Borrower. No later than 12:00 noon (Dallas, Texas time) on
the date each Letter of Credit is requested, unless Agent determines that any
applicable condition precedent set forth in SECTION 8.2 hereof has not been
satisfied, the Agent will issue and deliver such Letter of Credit pursuant to
the instructions of Borrower.
SECTION 3.2. NOTES. Each Bank's Commitment Percentage of the Revolving
Loan shall be evidenced by a single Note payable to the order of such Bank in
an amount equal to such Bank's Commitment.
SECTION 3.3. INTEREST RATES; PAYMENTS. (a) The principal amount of
the Base Rate Loan shall bear interest at a rate per annum equal to the Base
Rate in effect from day to day; PROVIDED THAT in no event shall the rate
charged hereunder or under the Notes exceed the Maximum Lawful Rate.
Interest on the Base Rate Loan shall be payable as it accrues on each
Quarterly Date, and on the Termination Date.
(b) The principal amount of each Eurodollar Loan shall bear interest
for the Interest Period applicable thereto at a rate per annum equal to the
sum of the Applicable Margin plus the applicable Adjusted Eurodollar Rate;
PROVIDED THAT in no event shall the rate charged hereunder or under the Notes
exceed the Maximum Lawful Rate. Interest on any Eurodollar Loan shall be
payable on the last day of the Interest Period applicable thereto.
(c) So long as no Default or Event of Default shall be continuing,
subject to the provisions of this SECTION 3.3, Borrower shall have the option
of having all or any portion of the principal outstanding under the Revolving
Loan be a Base Rate Loan or one (1) or more Eurodollar Loans, which shall
bear interest at rates determined by reference to the Base Rate and the
Adjusted Eurodollar Rate, respectively; provided, that each Eurodollar Loan
shall be in a minimum amount of $2,000,000 and shall be in an amount which is
an integral multiple of $500,000. Prior to the termination of each Interest
Period with respect to each Eurodollar Loan, Borrower shall give written
notice (a "NOTICE OF CONTINUATION OR CONVERSION") in the form of EXHIBIT F
attached hereto to Agent of the Type of Loan which shall be applicable to the
principal of such Eurodollar Loan upon the expiration of such Interest
Period. Such Notice of Continuation or Conversion shall be given to Agent at
least one (1) Domestic Business Day, in the case of a Base Rate Loan
selection and three (3) Eurodollar Business Days, in the case of a Eurodollar
Loan selection, prior to the termination of the Interest Period then
expiring. If Borrower shall specify a Eurodollar Loan, such Notice of
Continuation or Conversion shall also specify the length of the succeeding
Interest Period (subject to the definition of such term) selected by
Borrower. Each Notice of Continuation or Conversion
27
shall be irrevocable and effective upon notification thereof to Agent. If
the required Notice of Continuation or Conversion shall not have been timely
received by Agent, Borrower shall be deemed to have elected that the
principal of the Eurodollar Loan subject to the Interest Period then expiring
be a part of the Base Rate Loan upon the expiration of such Interest Period
and Borrower will be deemed to have given Agent notice of such election.
Subject to the limitations set forth in this SECTION 3.3(c) on the amount and
number of Eurodollar Loans, Borrower shall have the right to convert (a
"CONVERSION") all or any part of the Base Rate Loan to a Eurodollar Loan by
giving Agent a Notice of Continuation or Conversion of such election at
least three (3) Eurodollar Business Days prior to the date on which Borrower
elects to make such conversion (a "CONVERSION DATE"). The Conversion Date
selected by Borrower shall be a Eurodollar Business Day. Notwithstanding
anything in this SECTION 3.3 to the contrary, no portion of the principal of
the Base Rate Loan may be Converted to a Eurodollar Loan and no Eurodollar
Loan may be Continued as such when any Default or Event of Default has
occurred and is continuing, but each such Eurodollar Loan shall be
automatically Converted to the Base Rate Loan on the last day of each
applicable Interest Period. Borrower shall not be permitted to have more
than five (5) Eurodollar Loans in effect at any time.
(d) Notwithstanding anything to the contrary set forth in SECTION
3.3(a) OR (b) above, all overdue principal of and, to the extent permitted by
law, overdue interest, shall bear interest from the date due, payable on
demand, for each day until paid at a rate per annum equal to the lesser of
(a) the sum of (i) three percent (3%), plus (ii) the Base Rate in effect from
day to day, and (b) the Maximum Lawful Rate.
(e) Agent shall determine each interest rate applicable to the
Revolving Loan in accordance with the terms hereof. Agent shall promptly
notify Borrower and Banks by telex, telecopy or cable of each rate of
interest so determined, and its determination thereof shall be conclusive in
the absence of manifest error.
(f) Notwithstanding the foregoing, if at any time the rate of interest
calculated with reference to the Base Rate or the Eurodollar Rate hereunder
(the "contract rate") is limited to the Maximum Lawful Rate, any subsequent
reductions in the contract rate shall not reduce the rate of interest on the
Revolving Loan below the Maximum Lawful Rate until the total amount of
interest accrued equals the amount of interest which would have accrued if
the contract rate had at all times been in effect. In the event that at
maturity (stated or by acceleration), or at final payment of any Note, the
total amount of interest paid or accrued on such Note is less than the amount
of interest which would have accrued if the contract rate had at all times
been in effect with respect thereto, then at such time, to the extent
permitted by law, Borrower shall pay to the holder of such Note an amount
equal to the difference between (i) the lesser of the amount of interest
which would have accrued if the contract rate had at all times been in effect
and the amount of interest which would have accrued if the Maximum Lawful
Rate had at all times been in effect, and (ii) the amount of interest
actually paid on such Note.
(g) Interest payable hereunder on each Eurodollar Loan shall be
computed based on the number of actual days elapsed assuming that each
calendar year consisted of 360 days. Interest
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payable hereunder on the Base Rate Loan shall be computed based on the actual
number of days elapsed assuming that each calendar year consisted of 365 days.
SECTION 3.4. MANDATORY PREPAYMENTS RESULTING FROM BORROWING BASE
DEFICIENCY. In the event a Borrowing Base Deficiency exists after giving
effect to any Redetermination, Borrower shall eliminate such Borrowing Base
Deficiency by making a single mandatory prepayment of principal on the
Revolving Loan in an amount equal to the entire amount of such Borrowing Base
Deficiency on the first Domestic Business Day following the date on which
such Borrowing Base Deficiency is determined to exist. If a Borrowing Base
Deficiency cannot be eliminated pursuant to this SECTION 3.4 by prepayment of
the Revolving Loan in full (as a result of outstanding Letter of Credit
Exposure), Borrower shall also on such Domestic Business Day deposit cash
with Agent, to be held by Agent to secure outstanding Letter of Credit
Exposure in the manner contemplated by SECTION 3.1(b), in an amount at least
equal to the balance of such Borrowing Base Deficiency (the difference
between the Borrowing Base Deficiency and the remaining outstanding principal
under the Revolving Loan on the date such Borrowing Base Deficiency is first
determined to occur).
SECTION 3.5. VOLUNTARY PREPAYMENTS. Borrower may, subject to SECTION
5.5 and the other provisions of this Agreement, upon three (3) Domestic
Business Days advance notice to Agent, prepay the principal of the Revolving
Loan in whole or in part. Any partial prepayment shall be in a minimum
amount of $1,000,000 and shall be in an integral multiple of $100,000.
SECTION 3.6. VOLUNTARY REDUCTION OF COMMITMENTS. Borrower may, by
notice to Agent five (5) Domestic Business Days prior to the effective date
of any such reduction, reduce the Total Commitment (and thereby reduce the
Commitment of each Bank ratably) in amounts not less than $5,000,000 and in
an amount which is an integral multiple of $1,000,000. On the effective date
of any such reduction, Borrower shall, to the extent required as a result of
such reduction, make a principal payment on the Revolving Loan in an amount
sufficient to cause the principal balance of the Revolving Loan then
outstanding to be equal to or less than the Total Commitment as thereby
reduced. Notwithstanding the foregoing, Borrower shall not be permitted to
voluntarily reduce the Total Commitment to an amount less than the aggregate
Letter of Credit Exposure of all Banks.
SECTION 3.7. TERMINATION OF COMMITMENTS; FINAL MATURITY OF REVOLVING
LOAN. The Total Commitment (and the Commitment of each Bank) shall terminate,
and the entire outstanding principal balance of the Revolving Loan, all
interest accrued thereon, all accrued but unpaid fees hereunder and all other
outstanding Obligations shall be due and payable in full on the Termination
Date.
SECTION 3.8. UNUSED COMMITMENT FEE. On the Termination Date, on each
Quarterly Date prior to the Termination Date, and, in the event the
Commitments are terminated in their entirety prior to the Termination Date,
on the date of such termination, Borrower shall pay to Agent, for the ratable
benefit of each Bank based on each Bank's Commitment Percentage, a commitment
fee equal to the Unused Commitment Fee Percentage in effect from day to day
(applied on a per annum basis and computed on the basis of actual days
elapsed and as if each calendar year consisted of 365 days)
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of the average daily Availability for the Fiscal Quarter (or portion thereof)
ending on the date such payment is due.
SECTION 3.9. BORROWING BASE INCREASE FEE. Simultaneously with each
increase in the Borrowing Base which results in a Borrowing Base greater than
$85,000,000, Borrower shall pay to Agent for the ratable benefit of each
Bank, a borrowing base increase fee in an amount equal to one fourth of one
percent (.25%) of the amount of such increase (above $85,000,000).
SECTION 3.10. AGENCY AND OTHER FEES. Borrower shall pay to Agent and
its Affiliates such other fees and amounts as Borrower shall be required to
pay to Agent and its Affiliates from time to time pursuant to any separate
agreement between Borrower and Agent or such Affiliates. Such fees and other
amounts shall be retained by Agent and its Affiliates, and no Bank (other
than Agent) shall have any interest therein.
ARTICLE IV
GENERAL PROVISIONS
SECTION 4.1. DELIVERY AND ENDORSEMENT OF NOTES. Simultaneously with
the execution of this Agreement, Agent shall deliver to each Bank the Notes
payable to such Bank. Each Bank may endorse (and prior to any transfer of
its Notes shall endorse) on the schedules attached and forming a part thereof
appropriate notations to evidence the date and amount of its Commitment
Percentage of each Borrowing, the Interest Period applicable thereto, and the
date and amount of each payment of principal made by Borrower with respect
thereto; PROVIDED that the failure by any Bank to so endorse its Notes shall
not affect the liability of Borrower for the repayment of all amounts
outstanding under such Notes together with interest thereon. Each Bank is
hereby irrevocably authorized by Borrower to endorse its Notes and to attach
to and make a part of any Notes a continuation of any such schedule as
required.
SECTION 4.2. GENERAL PROVISIONS AS TO PAYMENTS. (a) Borrower shall
make each payment of principal of, and interest on, the Revolving Loan and
all fees payable hereunder shall be paid not later than 12:00 noon (Dallas,
Texas time) on the date when due, in Federal or other funds immediately
available in Dallas, Texas, to Agent at its address set forth on SCHEDULE 1
hereto. Agent will promptly (and if such payment is received by Agent by
10:00 a.m., and otherwise if reasonably possible, on the same Domestic
Business Day) distribute to each Bank its Commitment Percentage of each such
payment received by Agent for the account of Banks. Whenever any payment of
principal of, or interest on, portion of the Revolving Loan subject to a Base
Rate Tranche or of fees shall be due on a day which is not a Domestic
Business Day, the date for payment thereof shall be extended to the next
succeeding Domestic Business Day (subject to the definition of Interest
Period). Whenever any payment of principal of, or interest on, any portion
of the Revolving Loan subject to a Eurodollar Tranche shall be due on a day
which is not a Eurodollar Business Day, the date for payment thereof shall be
extended to the next succeeding Eurodollar Business Day (subject to the
definition of Interest Period). If the date for any payment of principal is
extended by operation of
30
Law or otherwise, interest thereon shall be payable for such extended time.
Borrower hereby authorizes Agent to charge from time to time against
Borrower's accounts with Agent any amount then due.
(b) Prior to the occurrence of an Event of Default, all principal
payments received by Banks with respect to the Revolving Loan shall be
applied first to Eurodollar Tranches outstanding with Interest Periods ending
on the date of such payment, then to Base Rate Tranches, and then to
Eurodollar Tranches next maturing until such principal payment is fully
applied.
(c) After the occurrence of an Event of Default, all amounts
collected or received by Agent or any Bank shall be applied first to the
payment of all proper costs incurred by Agent in connection with the
collection thereof (including reasonable expenses and disbursements of
Agent), second to the payment of all proper costs incurred by Banks in
connection with the collection thereof (including reasonable expenses and
disbursements of Banks), third to the reimbursement of any advances made by
Banks to effect performance of any unperformed covenants of any Credit Party
under any of the Loan Papers, fourth to the payment of any unpaid fees
required pursuant to SECTION 3.10, fifth to the payment of any unpaid fees
required pursuant to SECTIONS 3.2(b), 3.8 and 3.9, sixth, to payment to each
Bank of its Commitment Percentage of the outstanding principal of the
Revolving Loan and accrued but unpaid interest thereon, and seventh to
establish the deposits required in SECTION 3.2(b). All payments received by
a Bank after the occurrence of an Event of Default for application to the
principal of the Revolving Loan shall be applied by such Bank in the manner
provided in SECTION 4.2(b).
ARTICLE V
CHANGE IN CIRCUMSTANCES
SECTION 5.1. INCREASED COST AND REDUCED RETURN.
(a) If, after the date hereof, the adoption of any applicable law,
rule, or regulation, or any change in any applicable law, rule, or
regulation, 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 any Bank (or
its Applicable Lending Office) with any request or directive (whether or not
having the force of law) of any such governmental authority, central bank, or
comparable agency:
(i) shall subject such Bank (or its Applicable Lending
Office) to any tax, duty, or other charge with respect to
any Eurodollar Loans, its Note, or its obligation to make
Eurodollar Loans, or change the basis of taxation of any
amounts payable to such Bank (or its Applicable Lending
Office) under this Agreement or its Note in respect of
any Eurodollar Loans (other than taxes imposed on the
overall net income of such Bank by the jurisdiction in
which such Bank has its principal office or such
Applicable Lending Office);
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(ii) shall impose, modify, or deem applicable any
reserve, special deposit, assessment, compulsory loan, or
similar requirement (other than the Reserve Requirement
utilized in the determination of the Adjusted Eurodollar
Rate) relating to any extensions of credit or other
assets of, or any deposits with or other liabilities or
commitments of, such Bank (or its Applicable Lending
Office), including the Commitment of such Bank hereunder;
or
(iii) shall impose on such Bank (or its Applicable
Lending Office) or on the London interbank market any
other condition affecting this Agreement or its Note or
any of such extensions of credit or liabilities or
commitments;
and the result of any of the foregoing is to increase the cost to such Bank
(or its Applicable Lending Office) of making, Converting into, Continuing, or
maintaining any Eurodollar Loans or to reduce any sum received or receivable
by such Bank (or its Applicable Lending Office) under this Agreement or its
Note with respect to any Eurodollar Loans, then the Borrower shall pay to
such Bank on demand such amount or amounts as will compensate such Bank for
such increased cost or reduction. If any Bank requests compensation by the
Borrower under this SECTION 5.1(a), the Borrower may, by notice to such Bank
(with a copy to the Agent), suspend the obligation of such Bank to make or
Continue Eurodollar Loans or to Convert all or part of the Base Rate Loan
owing to such Bank into Eurodollar Loans, until the event or condition giving
rise to such request ceases to be in effect (in which case the provisions of
SECTION 5.4 shall be applicable); PROVIDED that such suspension shall not
affect the right of such Bank to receive the compensation so requested.
(b) If, after the date hereof, any Bank shall have determined that the
adoption of any applicable law, rule, or regulation regarding capital
adequacy or any change therein or in the interpretation or administration
thereof by any governmental authority, central bank, or comparable agency
charged with the interpretation or administration thereof, or any request or
directive regarding capital adequacy (whether or not having the force of law)
of any such governmental authority, central bank, or comparable agency, has
or would have the effect of reducing the rate of return on the capital of
such Bank or any corporation controlling such Bank as a consequence of such
Bank's obligations hereunder to a level below that which such Bank or such
corporation could have achieved but for such adoption, change, request, or
directive (taking into consideration its policies with respect to capital
adequacy), then from time to time upon demand the Borrower shall pay to such
Bank such additional amount or amounts as will compensate such Bank for such
reduction.
(c) Each Bank shall promptly notify the Borrower and the Agent of any
event of which it has knowledge, occurring after the date hereof, which will
entitle such Bank to compensation pursuant to this Section and will designate
a different Applicable Lending Office if such designation will avoid the need
for, or reduce the amount of, such compensation and will not, in the judgment
of such Bank, be otherwise disadvantageous to it. Any Bank claiming
compensation under this Section shall furnish to the Borrower and the Agent a
statement setting forth the additional amount or amounts to be paid to it
hereunder which shall be conclusive in the absence of manifest error. In
determining such amount, such Bank may use any reasonable averaging and
attribution methods.
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SECTION 5.2. LIMITATION ON EURODOLLAR LOANS. If on or prior to the
first day of any Interest Period for any Eurodollar Loan:
(a) the Agent determines (which determination shall be
conclusive) that by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the Eurodollar
Rate for such Interest Period; or
(b) the Required Banks determine (which determination shall
be conclusive) and notify the Agent that the Adjusted Eurodollar Rate will
not adequately and fairly reflect the cost to the Banks of funding Eurodollar
Loans for such Interest Period;
then the Agent shall give the Borrower prompt notice thereof and the relevant
amounts or periods, and so long as such condition remains in effect, the
Banks shall be under no obligation to make additional Eurodollar Loans,
Continue Eurodollar Loans, or to Convert all or any part of the Base Rate
Loan and the Borrower shall, on the last day(s) of the then current Interest
Period(s) for the outstanding Eurodollar Loans, either prepay such Eurodollar
Loans or Convert such Eurodollar Loans into the Base Rate Loan in accordance
with the terms of this Agreement.
SECTION 5.3. ILLEGALITY. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Bank or its
Applicable Lending Office to make, maintain, or fund Eurodollar Loans
hereunder, then such Bank shall promptly notify the Borrower thereof and such
Bank's obligation to make or Continue Eurodollar Loans and to Convert all or
any part of the Base Rate Loan into Eurodollar Loans shall be suspended until
such time as such Bank may again make, maintain, and fund Eurodollar Loans
(in which case the provisions of SECTION 5.4 shall be applicable).
SECTION 5.4. TREATMENT OF AFFECTED LOANS. If the obligation of any
Bank to make particular Eurodollar Loans or to Continue Eurodollar Loans, or
to Convert all or any part of the Base Rate Loan into Eurodollar Loans shall
be suspended pursuant to SECTION 5.1 or 5.3 hereof, such Bank's Eurodollar
Loans shall be automatically Converted into the Base Rate Loan on the last
day(s) of the then current Interest Period(s) for Eurodollar Loans (or, in
the case of a Conversion required by SECTION 5.3 hereof, on such earlier date
as such Bank may specify to the Borrower with a copy to the Agent) and,
unless and until such Bank gives notice as provided below that the
circumstances specified in SECTION 5.1 or 5.3 hereof that gave rise to such
Conversion no longer exist:
(a) to the extent that such Bank's Eurodollar Loans have been
so Converted, all payments and prepayments of principal that would otherwise
be applied to such Bank's Eurodollar Loans shall be applied instead to the
Base Rate Loan; and
(b) all Loans that would otherwise be made or Continued by such
Bank as Eurodollar Loans of shall be made or Continued instead as part of the
Base Rate Loan, and all or any party of the Base Rate Loan that would
otherwise be Converted into Eurodollar Loans shall remain as part of the Base
Rate Loan.
33
If such Bank gives notice to the Borrower (with a copy to the Agent) that the
circumstances specified in SECTION 5.1 or 5.3 hereof that gave rise to the
Conversion of such Bank's Eurodollar Loans pursuant to this SECTION 5.4 no
longer exist (which such Bank agrees to do promptly upon such circumstances
ceasing to exist) at a time when Eurodollar Loans made by other Banks are
outstanding, such Bank's portion of the Base Rate Loan shall be automatically
Converted, on the first day(s) of the next succeeding Interest Period(s) for
such outstanding Eurodollar Loans, to the extent necessary so that, after
giving effect thereto, all Loans held by the Banks holding Eurodollar Loans
are held pro rata (as to principal amounts, and Interest Periods) in
accordance with their respective Commitments.
SECTION 5.5. COMPENSATION. Upon the request of any Bank, the Borrower
shall pay to such Bank such amount or amounts as shall be sufficient (in the
reasonable opinion of such Bank) to compensate it for any loss, cost, or
expense (including loss of anticipated profits) incurred by it as a result of:
(a) any payment, prepayment, or Conversion of a Eurodollar
Loan for any reason (including, without limitation, the acceleration of the
Revolving Loan) on a date other than the last day of the Interest Period for
such Loan; or
(b) any failure by the Borrower for any reason (including,
without limitation, the failure of any condition precedent specified in
ARTICLE VIII to be satisfied) to borrow, Convert, Continue, or prepay a
Eurodollar Loan on the date for such borrowing, Conversion, Continuation, or
prepayment specified in the relevant notice of borrowing, prepayment,
Continuation, or Conversion under this Agreement.
SECTION 5.6. TAXES. (a) Any and all payments by the Borrower to or
for the account of any Bank or any Agent hereunder or under any other Loan
Paper shall be made free and clear of and without deduction for any and all
present or future taxes, duties, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, EXCLUDING, in the
case of each Bank and each Agent, taxes imposed on its income, and franchise
taxes imposed on it, by the jurisdiction under the laws of which such Bank
(or its Applicable Lending Office) or such Agent (as the case may be) is
organized or any political subdivision thereof (all such non-excluded taxes,
duties, 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 under this
Agreement or any other Loan Paper to any Bank or any Agent, (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this SECTION 5.6) such Bank or such Agent receives an amount equal to the sum
it would have received had no such deductions been made, (ii) the Borrower
shall make such deductions, (iii) the Borrower shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance
with applicable law, and (iv) the Borrower shall furnish to the Agent, at its
address referred to in SECTION 15.1, the original or a certified copy of a
receipt evidencing payment thereof.
34
(b) In addition, the Borrower agrees to pay any and all present or
future stamp or documentary taxes and any other excise or property taxes or
charges or similar levies which arise from any payment made under this
Agreement or any other Loan Paper or from the execution or delivery of, or
otherwise with respect to, this Agreement or any other Loan Paper
(hereinafter referred to as "OTHER TAXES").
(c) The Borrower agrees to indemnify each Bank and each Agent for the
full amount of Taxes and Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts
payable under this SECTION 5.6) paid by such Bank or such Agent (as the case
may be) and any liability (including penalties, interest, and expenses)
arising therefrom or with respect thereto.
(d) Each Bank organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Bank listed on the signature pages hereof and
on or prior to the date on which it becomes a Bank in the case of each other
Bank, and from time to time thereafter if requested in writing by the
Borrower or the Agent (but only so long as such Bank remains lawfully able to
do so), shall provide the Borrower and the Agent with (i) Internal Revenue
Service Form 1001 or 4224, as appropriate, or any successor form prescribed
by the Internal Revenue Service, certifying that such Bank is entitled to
benefits under an income tax treaty to which the United States is a party
which reduces the rate of withholding tax on payments of interest or
certifying that the income receivable pursuant to this Agreement is
effectively connected with the conduct of a trade or business in the United
States, (ii) Internal Revenue Service Form W-8 or W-9, as appropriate, or any
successor form prescribed by the Internal Revenue Service, and (iii) any
other form or certificate required by any taxing authority (including any
certificate required by Sections 871(h) and 881(c) of the Internal Revenue
Code), certifying that such Bank is entitled to an exemption from or a
reduced rate of tax on payments pursuant to this Agreement or any of the
other Loan Papers.
(e) For any period with respect to which a Bank has failed to provide
the Borrower and the Agent with the appropriate form pursuant to SECTION
5.6(d) (unless such failure is due to a change in treaty, law, or regulation
occurring subsequent to the date on which a form originally was required to
be provided), such Bank shall not be entitled to indemnification under
SECTION 5.6(a) or 5.6(b) with respect to Taxes imposed by the United States;
PROVIDED, HOWEVER, that should a Bank, which is otherwise exempt from or
subject to a reduced rate of withholding tax, become subject to Taxes because
of its failure to deliver a form required hereunder, the Borrower shall take
such steps as such Bank shall reasonably request to assist such Bank to
recover such Taxes.
(f) If the Borrower is required to pay additional amounts to or for the
account of any Bank pursuant to this SECTION 5.6, then such Bank will agree
to use reasonable efforts to change the jurisdiction of its Applicable
Lending Office so as to eliminate or reduce any such additional payment which
may thereafter accrue if such change, in the judgment of such Bank, is not
otherwise disadvantageous to such Bank.
35
(g) Within thirty (30) days after the date of any payment of Taxes, the
Borrower shall furnish to the Agent the original or a certified copy of a
receipt evidencing such payment.
(h) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this SECTION 5.6 shall survive the termination of the Commitments and the
payment in full of the Notes.
SECTION 5.7. DISCRETION OF BANKS AS TO MANNER OF FUNDING. Notwithstanding
any provisions of this Agreement to the contrary, each Bank shall be entitled to
fund and maintain its funding of all or any part of its Commitment in any manner
it sees fit, it being understood, however, that for the purposes of this
Agreement all determinations hereunder shall be made as if such Bank had
actually funded and maintained each Eurodollar Loan during the Interest Period
for such Eurodollar Loan through the purchase of deposits having a maturity
corresponding to the last day of such Interest Period and bearing an interest
rate equal to the Adjusted Eurodollar Rate for such Interest Period.
ARTICLE VI
BORROWING BASE
SECTION 6.1. BORROWING BASE AND CONFORMING BORROWING BASE. The aggregate
amount of credit available to Borrower under this Credit Agreement shall be
limited by a Borrowing Base (herein so called) which shall be $75,000,000 unless
and until a Redetermination is made pursuant to SECTION 6.2 below. Borrower
acknowledges that such Borrowing Base is higher than the Borrowing Base would be
if the Banks determined the Borrowing Base based on each Bank's application of
the credit standards and other criteria customarily applied by such Bank in the
determination of credit limitations for companies similar to Borrower
("CONFORMING CREDIT CRITERIA"). If Conforming Credit Criteria were applied by
the Banks, the Borrowing Base that would result would be $60,000,000, and such
amount is the "CONFORMING BORROWING BASE" for purposes of this Agreement unless
and until a Redetermination is made pursuant to SECTION 6.2 below.
SECTION 6.2. REDETERMINATION OF BORROWING BASE AND CONFORMING BORROWING
BASE. Required Banks and Borrower shall each have the right to cause the
Borrowing Base and the Conforming Borrowing Base to be redetermined (a
"REDETERMINATION") once during the term of this Agreement. Any request for a
Redetermination shall be made by written notice to the other parties to this
Agreement. If such request is made by Borrower, such request shall be
accompanied by a Reserve Report prepared with respect to all Borrowing Base
Properties as of a date not more than thirty (30) days prior to the date of such
request. The amount of the Borrowing Base established in connection with any
Redetermination shall be determined by the Banks in their sole discretion, and
in determining such amount, no Bank is required to apply Conforming Credit
Criteria, and each Bank (a) may make such assumptions regarding appropriate
existing and projected pricing for Hydrocarbons as it deems appropriate in its
sole discretion, (b) may make such assumptions regarding projected rates and
quantities of future production of Hydrocarbons from the Borrowing
36
Base Properties as it deems appropriate in its sole discretion, (c) may
consider the projected cash requirements of the Credit Parties, (d) is not
required to consider any asset other than Proved Mineral Interests with
respect to which Borrower has good and valid title subject to no Liens other
than Permitted Encumbrances, (e) will not consider any Mineral Interest not
subject to a first and prior Lien in favor of Agent to secure the
Obligations, and (f) may make such other assumptions, considerations and
exclusions and consider such other credit criteria as such Bank deems
appropriate. The Conforming Borrowing Base shall also be determined by the
Banks in their sole discretion, and in determining the amount of the
Conforming Borrowing Base, each Bank may make the assumptions and consider
the factors and criteria set forth in clauses (a) through (f) above;
provided, that each Bank shall apply Conforming Credit Criteria. As soon as
the amount of the Borrowing Base and Conforming Borrowing Base have been
redetermined, Agent shall notify Borrower of such amounts, and such amounts
shall be the Borrowing Base and Conforming Borrowing Base from and after the
effective date specified in such notice.
SECTION 6.3. BANK APPROVAL OF BORROWING BASE. The Borrowing Base and
Conforming Borrowing Base which become effective upon any Redetermination shall
be approved by (a) the unanimous consent of all Banks to the extent such
Borrowing Base or Conforming Borrowing Base represents an increase in the
Borrowing Base or Conforming Borrowing Base, respectively, in effect prior to
such Redetermination, and (b) shall be approved by Required Banks to the extent
such Borrowing Base or Conforming Borrowing Base represents a reaffirmation of,
or a decrease in, the Borrowing Base or Conforming Borrowing Base, respectively,
in effect prior to such Redetermination.
SECTION 6.4. BORROWING BASE DEFICIENCY. To the extent a Borrowing Base
Deficiency exists after giving effect to any Redetermination, Borrower shall be
obligated to eliminate such Borrowing Base Deficiency by making the mandatory
prepayments required by SECTION 3.5.
ARTICLE VII
COLLATERAL AND GUARANTEES
SECTION 7.1. SECURITY. The Obligations shall be secured by first and
prior Liens (subject only to Permitted Encumbrances) covering and encumbering
(a) one hundred percent (100%) of all Borrowing Base Properties, (b) one
hundred percent (100%) of the issued and outstanding capital stock of every
class and all other equity interests of each Subsidiary of Borrower, (c) all
capital stock of MSR and Borrower of every class owned by Mercury, QELC or any
member of the Xxxxxx Family Group, and (d) all right, title and interest of
Borrower under the Management Agreement.
SECTION 7.2. GUARANTEES. Payment and performance of the Obligations shall
be fully guaranteed by Mercury, Mercury Production, QELC and each existing and
future Subsidiary of Borrower pursuant to Facility Guarantees.
37
SECTION 7.3. RELEASE OF GUARANTEES AND COLLATERAL. All of the Facility
Guarantees (other than those executed by Subsidiaries of the Borrower) and all
Liens required by this ARTICLE VII will be released, at Borrower's cost and
expense, upon the payment and performance in full of the Obligations, except, in
the case of Liens encumbering the Borrowing Base Properties, to the extent that
such Liens are carried forward to secure any credit facility which may be
provided by, through or under Agent or any Bank which is used to refinance the
Obligations. Borrower acknowledges that neither Agent, nor any Bank nor any of
their Affiliates has provided any commitment for any such financing and that any
election by Agent, any Bank or any of their Affiliates to provide any such
financing shall be made in their sole and absolute discretion. Provided that no
Default or Event of Default has occurred which is continuing, all of the
Facility Guarantees (other than those executed by Subsidiaries of the Borrower)
and all pledges of the issued and outstanding capital stock of Borrower and MSR
shall be canceled and released upon the satisfaction of each of the following
conditions: (a) a reduction in the Outstanding Credit to an amount equal or
below the amount of the Conforming Borrowing Base, and (b) the execution and
delivery by Borrower, Agent and each Bank of a letter agreement in form and
substance acceptable to Agent and each Bank pursuant to which the Borrowing Base
is reduced to the amount of the Conforming Borrowing Base then in effect.
ARTICLE VIII
CONDITIONS PRECEDENT
SECTION 8.1. CONDITIONS TO AMENDMENT AND RESTATEMENT AND INITIAL
BORROWING AND PARTICIPATION IN LETTER OF CREDIT EXPOSURE. The obligation of
each Bank to amend and restate the Mercury/NationsBank Credit Agreement and
the QELC/NationsBank Credit Agreement in the form of this Agreement and the
obligation of each Bank to loan its Commitment Percentage of the initial
Borrowing made hereunder, and the obligation of Agent to issue (or cause
another Bank to issue) the initial Letter of Credit issued hereunder is
subject to the satisfaction of each of the following conditions:
(a) CLOSING DELIVERIES. Agent shall have received each of the
following documents, instruments and agreements, each of which shall be in form
and substance and executed in such counterparts as shall be acceptable to Agent
and each Bank and each of which shall, unless otherwise indicated, be dated the
Closing Date:
(i) a Note payable to the order of each Bank, each in the amount
of such Bank's Commitment duly executed by Borrower;
(ii) Mortgages duly executed and delivered by Borrower creating
first and prior Liens in all Borrowing Base Properties;
(iii) the Assignment and Amendment to Mortgages duly executed and
delivered by TCW and Borrower;
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(iv) the Mercury Pledge Agreement duly executed and delivered by
Mercury (together with certificates evidencing all shares of capital
stock of MSR and Borrower owned by Mercury, which certificates shall
be endorsed in blank or accompanied by stock transfer powers which
have been executed in blank);
(v) the QELC Pledge Agreement duly executed and delivered by QELC
(together with certificates evidencing all shares of capital stock of
Borrower owned by Mercury, which certificates shall be endorsed in
blank or accompanied by stock transfer powers which have been executed
in blank);
(vi) the Xxxxxx Family Pledge Agreements duly executed and
delivered by each member of the Xxxxxx Family Group (together with
certificates evidencing all shares of capital stock of MSR and
Borrower owned by members of the Xxxxxx Family Group, which
certificates shall be endorsed in blank or accompanied by stock
transfer powers which have been duly executed in blank);
(vii) the Collateral Assignments duly executed by Borrower;
(viii) such financing statements in form and substance acceptable to
Agent and executed by each Credit Party as Agent shall specify to
fully evidence and perfect all Liens contemplated by the Loan Papers,
all of which shall be filed of record in such jurisdictions as Agent
shall require in its sole direction;
(vix) Facility Guarantees duly executed and delivered by each of
Mercury and Mercury Production and QELC;
(x) a copy of the Articles or Certificate of Incorporation or
comparable charter documents, and all amendments thereto, of each
Corporate Credit Party accompanied by a certificate that such copy is
true, correct and complete, and dated within ten (10) days of the
Closing Date, issued by the appropriate Governmental Authority of the
jurisdiction of incorporation or organization of each Corporate Credit
Party, and accompanied by a certificate of the Secretary or comparable
Authorized Officer of each Corporate Credit Party that such copy is
true, correct and complete on the Closing Date;
(xi) a copy of the Bylaws or comparable charter documents, and all
amendments thereto, of each Corporate Credit Party accompanied by a
certificate of the Secretary or comparable Authorized Officer of each
Corporate Credit Party that such copy is true, correct and complete as
of the date hereof;
(xii) certain certificates and other documents issued by the
appropriate Governmental Authorities of such jurisdictions as Agent
has requested relating to the existence of each Corporate Credit
Party and to the effect that each Corporate Credit
39
Party is in good standing with respect to the payment of franchise
and similar Taxes and is duly qualified to transact business in such
jurisdictions;
(xiii) a certificate of incumbency of all officers of each Corporate
Credit Party who will be authorized to execute or attest to any Loan
Paper, dated the date hereof, executed by the Secretary or comparable
Authorized Officer of each Corporate Credit Party;
(xiv) copies of resolutions or comparable authorizations approving
the Loan Papers and authorizing the transactions contemplated by this
Agreement and the other Loan Papers, duly adopted by the Board of
Directors or comparable authority of each Corporate Credit Party
accompanied by certificates of the Secretary or comparable officer of
each Corporate Credit Party that such copies are true and correct
copies of resolutions duly adopted at a meeting of or (if permitted by
applicable Law and, if required by such Law, by the Bylaws or other
charter documents of such Credit Party) by the unanimous written
consent of the Board of Directors of each Credit Party, and that such
resolutions constitute all the resolutions adopted with respect to
such transactions, have not been amended, modified, or revoked in any
respect, and are in full force and effect as of the date hereof;
(xv) an opinion of Xxxxxx & Hanger, L.L.P., special counsel for
Borrower dated the date hereof, favorably opining as to the
enforceability of each of the Loan Papers and otherwise in form and
substance satisfactory to Agent;
(xvi) an opinion of Loomis, Ewert, Parsley, Xxxxx & Gotting, special
Michigan counsel for Agent, dated the date hereof, favorably opinion
as to the enforceability of the Mortgages in Michigan and otherwise in
form and substance satisfactory to Agent;
(xvii) an opinion of Herschler, Freudenthal, Salzburg, Bonds & Xxxxx,
P.C., special Wyoming counsel for Agent, dated the date hereof,
favorably opining as to the enforceability of the Mortgages in Wyoming
and otherwise in form and substance satisfactory to Agent;
(xviii) an opinion of Xxxxxxx, Haughey, Hanson, Toole & Xxxxxxxx,
special Montana counsel for Agent, dated the date hereof, favorably
opining as to the enforceability of the Mortgages in Montana and
otherwise in form and substance satisfactory to Agent;
(xix) a certificate signed by an Authorized Officer of Borrower
stating that (a) the representations and warranties contained in this
Agreement and the other Loan Papers are true and correct in all
respects, and (b) no Default or Event of Default has occurred and is
continuing, and (c) all conditions set forth in this SECTION 8.1 and
SECTION 8.2 have been satisfied;
40
(xx) a Certificate of Ownership Interests signed by an Authorized
Officer of Borrower in the form of EXHIBIT G attached hereto;
(xxi) Certificates from Borrower's insurance broker setting forth
the insurance maintained by Borrower, stating that such insurance is
in full force and effect, that all premiums due have been paid and
stating that such insurance is adequate and complies with the
requirements of SECTION 9.4;
(xxii) a copy of each of the Capitalization Documents accompanied by
a Certificate executed by an Authorized Officer of Borrower certifying
that (a) such copies are accurate and complete and represent the
complete understanding and agreement of the parties thereto, (b) no
material right or obligation of any party thereto has been modified,
amended or waived, and (c) subject only to funding the initial
Borrowing to be made hereunder, the Capitalization Transactions have
been consummated on the terms set forth in such Capitalization
Documents; and
(xxiii) a consent in form and substance acceptable to Agent, executed
by MGPG in connection with the Liens granted to Agent with respect to
the Section 29 Documents.
(b) COMPLETION OF CAPITALIZATION TRANSACTION. Borrower shall have
completed (or simultaneously with the funding of the initial Borrowing
hereunder, Borrower shall complete) the Capitalization Transactions
substantially in accordance with the Capitalization Documents, and as a result
thereof Borrower shall have acquired, or simultaneously with the funding of such
Borrowing Borrower shall acquire, good and defensible title to all Borrowing
Base Properties, free and clear of all Liens except Permitted Encumbrances.
(c) TITLE REVIEW. Agent or its counsel shall have completed a review
of title (including opinions of title) to the Borrowing Base Properties having a
Recognized Value not less than eighty percent (80%) of the Recognized Value of
all Borrowing Base Properties on the Closing Date (as determined by Agent), and
such review shall not have revealed any condition or circumstance which would
reflect that the representations and warranties contained in SECTION 9.9 hereof
are inaccurate in any respect.
(d) NO MATERIAL ADVERSE CHANGE. In the sole discretion of each Bank,
no Material Adverse Change shall have occurred.
(e) NO LEGAL PROHIBITION. The transactions contemplated by this
Agreement shall be permitted by applicable Law and regulation and shall not
subject Agent, any Bank, or any Credit Party to any Material Adverse Change.
(f) NO LITIGATION. No litigation, arbitration or similar proceeding
shall be pending or threatened which calls into question the validity or
enforceability of this Agreement, the other Loan Papers or the transactions
contemplated hereby or thereby.
41
(g) CLOSING FEES. Borrower shall have paid to Agent for the ratable
benefit of each Bank, and shall have paid to Agent, the fees to be paid on the
Closing Date pursuant to SECTION 3.10.
(h) OTHER MATTERS. All matters related to this Agreement, the other
Loan Papers, the Capitalization Documents, the Capitalization Transactions and
the Credit Parties shall be acceptable to each Bank in its sole discretion, and
each Credit Party shall have delivered to Agent and each Bank such evidence as
they shall request to substantiate any matters related to this Agreement and the
other Loan Papers, as Agent or any Bank shall request.
SECTION 8.2. CONDITIONS TO EACH BORROWING AND EACH LETTER OF CREDIT. The
obligation of each Bank to loan its Commitment Percentage of each Borrowing and
the obligation of the Agent to issue a Letter of Credit on the date such Letter
of Credit is to be issued is subject to the further satisfaction of the
following conditions:
(a) timely receipt by Agent of a Request for Borrowing or a Request
for Letter of Credit (as applicable);
(b) immediately before and after giving effect to such Borrowing or
issuance of such Letter of Credit, no Default or Event of Default shall have
occurred and be continuing and the funding of such Borrowing or the issuance of
the requested Letter of Credit (as applicable) shall not cause a Default or
Event of Default;
(c) the representations and warranties of each Credit Party contained
in this Agreement and the other Loan Papers shall be true and correct on and as
of the date of such Borrowing or issuance of such Letter of Credit (as
applicable);
(d) the amount of the requested Borrowing or the amount of the
requested Letter of Credit (as applicable) shall not exceed the Availability;
(e) no Material Adverse Change shall have occurred; and
(f) the funding of such Borrowing or the issuance of such Letter of
Credit (as applicable) shall be permitted by applicable Law.
The funding of each Borrowing and the issuance of each Letter of Credit
hereunder shall be deemed to be a representation and warranty by Borrower on the
date of such Borrowing and the date of issuance of each Letter of Credit as to
the facts specified in SECTIONS 8.2(b) THROUGH (e).
SECTION 8.3. POST CLOSING DELIVERIES. Borrower shall deliver, or cause to
be delivered, to Agent each document, instrument or agreement, and take each
action, or cause to be taken, each action specified in each subsection of this
SECTION 8.3 below, in each case on or before April 24, 1998:
42
(a) each stock certificate evidencing shares of MSR capital stock owned by
Mercury or any member of the Xxxxxx Family Group;
(b) stock transfer powers executed in blank with respect to each
certificate evidencing shares of capital stock of Borrower or MSR which are
pledged to secure the Obligations; and
(c) each original promissory note executed by MGPG as maker included in
the Section 29 Documents endorsed to Agent.
SECTION 8.4. MATERIALITY OF CONDITIONS. Each condition precedent herein
is material to the transactions contemplated herein, and time is of the essence
in respect of each thereof.
ARTICLE IX
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Agent and each Bank that each of the
following statements is true and correct on the date hereof after giving effect
to the Capitalization Transactions, and will be true and correct on the occasion
of each Borrowing and the issuance of each Letter of Credit:
SECTION 9.1. CORPORATE EXISTENCE AND POWER. Each Corporate Credit Party
(a) is a corporation duly incorporated (or, in the case of QELC, duly
organized), validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, (b) has all corporate power and
all material governmental licenses, authorizations, consents and approvals
required to carry on its businesses as now conducted and as proposed to be
conducted, and (c) is duly qualified to transact business as a foreign
corporation (or, in the case of QELC, a foreign limited liability company) in
each jurisdiction where a failure to be so qualified could result in a Material
Adverse Change.
SECTION 9.2. CREDIT PARTY AND GOVERNMENTAL AUTHORIZATION;
CONTRAVENTION. The execution, delivery and performance of this Agreement and
the other Loan Papers by each Corporate Credit Party (to the extent each
Corporate Credit Party is a party to this Agreement and such Loan Papers) are
within such Credit Party's corporate (or, in the case of QELC, a limited
liability company) powers, when executed will be duly authorized by all
necessary corporate (or, in the case of QELC, a limited liability company)
action, require no action by or in respect of, or filing with, any Governmental
Authority and do not contravene, or constitute a default under, any provision of
applicable Law (including, without limitation, the Margin Regulations) or of the
Articles or Certificate of Incorporation, Bylaws, Regulations or comparable
charter documents of any Corporate Credit Party or of any agreement, judgment,
injunction, order, decree or other instrument binding upon any Credit Party or
result in the creation or imposition of any Lien on any asset of any Credit
Party other than the Liens securing the Obligations.
43
SECTION 9.3. BINDING EFFECT. This Agreement constitutes a valid and
binding agreement of Borrower; the other Loan Papers when executed and delivered
in accordance with this Agreement, will constitute valid and binding obligations
of each Credit Party executing the same; and each Loan Paper is, or when
executed and delivered, will be, enforceable against each Credit Party which
executes the same in accordance with its terms except as (i) the enforceability
thereof may be limited by bankruptcy, insolvency or similar laws affecting
creditors rights generally, and (ii) the availability of equitable remedies may
be limited by equitable principles of general applicability.
SECTION 9.4. FINANCIAL INFORMATION. (a) The audited consolidated balance
sheet of MGP for the Fiscal Year ended December 31, 1997 and the related
consolidated statements of operations and cash flows for the Fiscal Year then
ended, copies of which have been delivered to each Bank, fairly present, in
conformity with GAAP, the consolidated financial position of MGP as of the end
of such Fiscal Year and its consolidated results of operations and cash flows
for such Fiscal Year.
(b) The audited consolidated balance sheets of QELC and Mercury for
each such Person's fiscal year ended September 30, 1997 and the related audited
consolidated statements of operations and cash flows for such fiscal year,
fairly present, in conformity with GAAP, each such Person's consolidated
financial position as of the end of such fiscal year and its consolidated
results of operations and cash flows for such fiscal year.
(c) The unaudited consolidated balance sheets of QELC and Mercury for
the Fiscal Quarter ended December 31, 1997 and the related unaudited
consolidated statements of operations and cash flows for the portion of each
such Person's Fiscal Year, then ended, fairly present, in conformity with GAAP
applied on a basis consistent with the financial statements referred to in
SECTION 9.4(b) the consolidated financial position of each such Person's Fiscal
Year as of such date and its consolidated results of operations and cash flows
for such portion of each such Person's Fiscal Year.
(d) The most recent annual audited consolidated balance sheet of
Borrower and the related consolidated statements of operations and cash flows
for the Fiscal Year then ended, copies of which have been delivered to each
Bank, fairly present, in conformity with GAAP, the consolidated financial
position of Borrower as of the end of such Fiscal Year and its consolidated
results of operations and cash flows for such Fiscal Year (this representation
and warranty will not be applicable until the first annual audited statement of
Borrower is delivered pursuant to SECTION 10.1(a)).
(e) The most recent quarterly unaudited consolidated balance sheet of
Borrower delivered to Banks, and the related unaudited consolidated statements
of operations and cash flows for the portion of Borrower's Fiscal Year then
ended, fairly present, in conformity with GAAP applied on a basis consistent
with the financial statements referred to in SECTION 9.4(c), the consolidated
financial position of Borrower as of such date and its consolidated results of
operations and cash flows for such portion of Borrower's Fiscal Year (this
representation and warranty will not be applicable until the first annual
audited statement of Borrower is delivered pursuant to SECTION 10.1(b)).
44
(f) Except as disclosed in writing to Banks prior to the execution
and delivery of this Agreement, since the date of Mercury, MGP's and QELC's
annual audited consolidated balance sheet and consolidated statements of
operations and cash flow referenced in SECTIONS 9.1(a) and 9.1(b), no Material
Adverse Change has occurred.
(g) After giving effect to the transactions contemplated by this
Agreement (including the Capitalization Transactions), (i) the fair value of the
property of each Credit Party is greater than the total amount of liabilities,
including, without limitation, contingent liabilities, of such Credit Party,
(ii) the present fair saleable value of the assets of each Credit Party is not
less than the amount that will be required to pay the liability of each Credit
Party on its debts as they become absolute and matured, (iii) each Credit Party
is able to realize upon its assets and pay its debts and other liabilities,
contingent obligations and other commitments as they mature in the normal course
of business, (iv) no Credit Party intends to, and no Credit Party believes that
it will, incur debts or liabilities beyond its ability to pay as such debts and
liabilities mature, and (v) no Credit Party is engaged in a business or
transaction, and no Credit Party is about to engage in business or a transaction
for which such Credit Party's property would constitute unreasonably small
capital after giving due consideration to the prevailing practice in the
industry in which such Credit Party is engaged.
SECTION 9.5. LITIGATION. Except for matters disclosed on SCHEDULE 4
attached hereto, there is no action, suit or proceeding pending against, or to
the knowledge of any Credit Party, threatened against or affecting any Credit
Party before any Governmental Authority in which there is a reasonable
possibility of an adverse decision which could result in a Material Adverse
Change or which could in any manner draw into question the validity of the Loan
Papers.
SECTION 9.6. ERISA. No Credit Party nor any ERISA Affiliate of any
Credit Party maintains or has ever maintained or been obligated to contribute
to any Plan covered by Title IV of ERISA or subject to the funding
requirements of Section 412 of the Code or Section 302 of ERISA. Each Plan
maintained by any Credit Party or any ERISA Affiliate of any Credit Party is
in compliance in all material respects with all applicable Laws. Except in
such instances where an omission or failure would not have a Material Adverse
Effect on the business, financial condition or prospects of any Credit Party,
(a) all returns, reports and notices required to be filed with any regulatory
agency with respect to any Plan have been filed timely, and (b) no Credit
Party nor any ERISA Affiliate of any Credit Party has failed to make any
contribution or pay any amount due or owing as required by the terms of any
Plan. There are not pending or, to the best of Borrower's knowledge,
threatened claims, lawsuits, investigations or actions (other than routine
claims for benefits in the ordinary course) asserted or instituted against,
and no Credit Party nor any ERISA Affiliate of any Credit Party has knowledge
of any threatened litigation or claims against, the assets of any Plan or its
related trust or against any fiduciary of a Plan with respect to the
operation of such Plan that are likely to result in liability of any Credit
Party having a Material Adverse Effect. Except in such instances where an
omission or failure would not have a Material Adverse Effect, each Plan that
is intended to be "qualified" within the meaning of section 401(a) of the
Code is, and has been during the period from its adoption to date, so
qualified, both as to form and operation and all necessary governmental
approvals, including a favorable determination as to the qualification under
45
the Code of such Plan and each amendment thereto, have been or will be timely
obtained. No Credit Party nor any ERISA Affiliate of any Credit Party has
engaged in any prohibited transactions, within the meaning of section 406 of
ERISA or section 4975 of the Code, in connection with any Plan which would
result in liability of any Credit Party having a Material Adverse Effect. No
Credit Party nor any ERISA Affiliate of any Credit Party maintains or
contributes to any Plan that provides a post-employment health benefit, other
than a benefit required under Section 601 of ERISA, or maintains or
contributes to a Plan that provides health benefits that is not fully funded
except where the failure to fully fund such Plan would not have a Material
Adverse Effect. No Credit Party nor any ERISA Affiliate of any Credit Party
maintains, has established or has ever participated in a multiple employer
welfare benefit arrangement within the meaning of section 3(40)(a) of ERISA.
SECTION 9.7. TAXES AND FILING OF TAX RETURNS. Each Credit Party has filed
all tax returns required to have been filed and has paid all Taxes shown to be
due and payable on such returns, including interest and penalties, and all other
Taxes which are payable by such party, to the extent the same have become due
and payable. No Credit Party knows of any proposed material Tax assessment
against it and all Tax liabilities of each Credit Party are adequately provided
for. Except as disclosed in writing to Banks prior to the date hereof, no
income tax liability of any Credit Party has been asserted by the Internal
Revenue Service or other Governmental Authority for Taxes in excess of those
already paid.
SECTION 9.8. OWNERSHIP OF PROPERTIES GENERALLY. Each Credit Party has
good and valid fee simple or leasehold title to all material properties and
assets purported to be owned by it, including, without limitation, in the case
of MGP, QELC and Mercury, all assets reflected in the balance sheets referred to
in SECTION 9.4 (a) and (b) and all assets which are used by the Credit Parties
in the operation of their respective businesses (except to the extent such
assets are contributed to Borrower pursuant to the Capitalization Transactions),
and none of such properties or assets is subject to any Lien other than
Permitted Encumbrances.
SECTION 9.9. MINERAL INTERESTS. The Property Description is an accurate
and complete description of all Borrowing Base Properties on the date hereof.
Subject only to Immaterial Title Deficiencies (as herein defined), after giving
effect to the Capitalization Transactions, Borrower will have good and
defensible title to all Mineral Interests described in the Reserve Report,
including, without limitation, all Borrowing Base Properties, free and clear of
all Liens except for Permitted Encumbrances. Subject only to immaterial Title
Deficiencies, all Mineral Interests described in the Reserve Report are valid,
subsisting, and in full force and effect, and all rentals, royalties, and other
amounts due and payable in respect thereof have been duly paid. Without regard
to any consent or non-consent provisions of any joint operating agreement
covering any of Borrower's Proved Mineral Interests, after giving effect to the
Capitalization Transactions, but subject to Immaterial Title Deficiencies,
Borrower's share of (a) the costs for each Proved Mineral Interest described in
the Reserve Report is not greater than the decimal fraction set forth in the
Reserve Report, before and after payout, as the case may be, and described
therein by the respective designations "working interests", "WI", "gross working
interest", "GWI", or similar terms, and (b) production from, allocated to, or
attributed to each such Proved Mineral Interest is not less than the decimal
fraction set forth in the Reserve Report, before and after payout, as the case
may be, and described therein
46
by the designations net revenue interest, NRI, or similar terms. As used
herein, "Immaterial Title Deficiencies" means minor defects or deficiencies
in title which do not effect, in the aggregate, more than two percent (2%)
(by value) of all Borrowing Base Properties. Each well drilled in respect of
each Proved Producing Mineral Interest described in the Reserve Report (y) is
capable of, and is presently, producing Hydrocarbons in commercially
profitable quantities, and after giving effect to the Capitalization
Transactions, Borrower will receive payments on a current basis for its share
of production, with no funds in respect of any thereof held in suspense,
other than any such funds held in suspense pending delivery of appropriate
division orders, and (z) has been drilled, bottomed, completed, and operated
in compliance with all applicable Laws and no such well which is currently
producing Hydrocarbons is subject to any penalty in production by reason of
such well having produced in excess of its allowable production.
SECTION 9.10. LICENSES, PERMITS, ETC. Each Credit Party possesses such
valid franchises, certificates of convenience and necessity, operating rights,
licenses, permits, consents, authorizations, exemptions and orders of
Governmental Authorities, as are necessary to carry on its business as now
conducted and as proposed to be conducted, except to the extent a failure to
obtain any such item would not have a Material Adverse Effect.
SECTION 9.11. COMPLIANCE WITH LAW. The business and operations of the
Credit Parties have been and are being conducted in accordance with all
applicable Laws other than violations of Laws which do not (either individually
or collectively) have a Material Adverse Effect.
SECTION 9.12. FULL DISCLOSURE. All information heretofore furnished by
each Credit Party to Agent or any Bank for purposes of or in connection with
this Agreement, any Loan Paper or any transaction contemplated hereby or thereby
is, and all such information hereafter furnished by or on behalf of any Credit
Party to Agent or any Bank will be, true, complete and accurate in every
material respect. The Credit Parties have disclosed or have caused to be
disclosed to Banks in writing any and all facts (other than facts of general
public knowledge) which might reasonably be expected to result in a Material
Adverse Change.
SECTION 9.13. ORGANIZATIONAL STRUCTURE; NATURE OF BUSINESS. The Credit
Parties are engaged only in the business of acquiring, exploring, developing and
operating Mineral Interests and the production, marketing, processing and
transporting of Hydrocarbons therefrom. SCHEDULE 5 hereto accurately reflects
(i) the jurisdiction of incorporation or organization of each Credit Party and
MSR, (ii) each jurisdiction in which each Credit Party and MSR are qualified to
transact business as a foreign corporation or foreign limited liability company,
(iii) the authorized, issued and outstanding stock or limited liability
interests of each Credit Party and MSR (and the legal and beneficial owners of
such capital stock; provided, that, in the case of MSR, such Schedule is only
required to reflect the beneficial owners which are Credit Parties or their
Affiliates), and (iv) all outstanding warrants, options, subscription rights,
convertible securities or other rights to purchase capital stock or limited
liability interests of each Credit Party and MSR.
SECTION 9.14. ENVIRONMENTAL MATTERS. Except for matters disclosed on
SCHEDULE 6 hereto, no operation conducted by any Credit Party and no real or
personal property now or previously
47
owned or leased by any Credit Party (including, without limitation, Mineral
Interests) and no operations conducted thereon, and to any Credit Parties'
knowledge, no operations of any prior owner, lessee or operator of any such
properties, is or has been in violation of any Applicable Environmental Law
other than violations which neither individually nor in the aggregate could
result in a Material Adverse Change. Except for matters disclosed on
SCHEDULE 6 hereto, no Credit Party, nor any such property nor operation is
the subject of any existing, pending or, to any Credit Parties' knowledge,
threatened Environmental Complaint which could, individually or in the
aggregate, result in a Material Adverse Change. All notices, permits,
licenses, and similar authorizations, required to be obtained or filed in
connection with the ownership of each tract of real property or operations of
any Credit Party thereon and each item of personal property owned, leased or
operated by any Credit Party, including, without limitation, notices,
licenses, permits and authorizations required in connection with any past or
present treatment, storage, disposal, or release of Hazardous Substances into
the environment, have been duly obtained or filed except to the extent the
failure to obtain or file such notices, licenses, permits and authorizations
would not result in a Material Adverse Change. All Hazardous Substances,
generated at each tract of real property and by each item of personal
property owned, leased or operated by any Credit Party have been transported,
treated, and disposed of only by carriers or facilities maintaining valid
permits under RCRA and all other Applicable Environmental Laws for the
conduct of such activities except in such cases where the failure to obtain
such permits could not, individually or in the aggregate, result in a
Material Adverse Change. Except for matters disclosed on SCHEDULE 6 hereto,
there have been no Hazardous Discharges which were not in compliance with
Applicable Environmental Laws other than Hazardous Discharges which would
not, individually or in the aggregate, result in a Material Adverse Change.
Except for matters disclosed on SCHEDULE 6 hereto, no Credit Party nor any
Subsidiary of any Credit Party has any contingent liability in connection
with any Hazardous Discharge which could reasonably be expected to result in
a Material Adverse Change.
SECTION 9.15. BURDENSOME OBLIGATIONS. No Credit Party, nor any of the
properties of any Credit Party is subject to any Law or any pending or
threatened change of Law or subject to any restriction under its articles (or
certificate) of incorporation, bylaws, regulations, partnership agreement or
comparable charter documents or under any agreement or instrument to which any
Credit Party or by which any Credit Party or any of their properties may be
subject or bound, which is so unusual or burdensome as to be likely in the
foreseeable future to result in a Material Adverse Change. Without limiting the
foregoing, no Credit Party is a party to or bound by any agreement or subject to
any order of any Governmental Authority which prohibits or restricts in any way
the right of such Credit Party to make Distributions.
SECTION 9.16. FISCAL YEAR. Borrower's Fiscal Year is January 1 through
December 31.
SECTION 9.17. NO DEFAULT. Neither a Default nor an Event of Default has
occurred or will exist after giving effect to the transactions contemplated by
this Agreement or the other Loan Papers.
SECTION 9.18. GOVERNMENT REGULATION. No Credit Party is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act (as any of the preceding acts have been
amended), the Investment Company Act of 1940 or any other
48
law which regulates the incurring by such Credit Party of Debt, including,
but not limited to laws relating to common contract carriers or the sale of
electricity, gas, stream, water or other public utility services.
SECTION 9.19. INSIDER. No Credit Party is, and no Person having "control"
(as that term is defined in 12 U.S.C. Section 375(b) or regulations promulgated
thereunder) of any Credit Party is an "executive officer", "director" or
"shareholder" of any Bank or any bank holding company of which any Bank is a
Subsidiary or of any Subsidiary of such bank holding company.
SECTION 9.20. GAS BALANCING AGREEMENTS AND ADVANCE PAYMENT CONTRACTS. On
the date of this Agreement, (a) there is no Material Gas Imbalance, and (b) the
aggregate amount of all Advance Payments received by any Credit Party under
Advance Payment Contracts which have not been satisfied by delivery of
production does not exceed $250,000.
SECTION 9.21. CAPITALIZATION DOCUMENTS. Borrower has provided each Bank
with a true and correct copy of each of the Capitalization Documents including
all amendments and modifications thereto. No material rights or obligations of
any party to any of such Capitalization Documents have been waived and no Credit
Party, nor to the best knowledge of Borrower, any other party to any of such
Capitalization Documents, is in default of its obligations thereunder. Each of
the Capitalization Documents is a valid, binding and enforceable obligation of
the parties thereto in accordance with its terms and is in full force and
effect. Each representation and warranty made by each Credit Party, and to the
best knowledge of Borrower, by each other party to the Capitalization Documents,
in the Capitalization Documents (a) was true and correct when made, and (b) will
be true and correct on the Closing Date.
ARTICLE X
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, so long as any Bank has any commitment
to lend or participate in Letter of Credit Exposure hereunder or any amount
payable under any Note remains unpaid or any Letter of Credit remains
outstanding:
SECTION 10.1. INFORMATION. Borrower will deliver, or cause to be
delivered, to each Bank:
(a) as soon as available and in any event within ninety (90) days
after the end of each Fiscal Year, a consolidated and consolidating balance
sheet of Borrower and each other Corporate Credit Party as of the end of such
Fiscal Year and the related consolidated and consolidating statements of income
and statements of cash flow for such Fiscal Year, setting forth in each case in
comparative form the figures for the previous Fiscal Year, all reported by such
Corporate Credit Party in accordance with GAAP and audited by a firm of
independent public accountants of nationally recognized standing and acceptable
to Agent;
49
(b) (i) as soon as available and in any event within forty-five (45)
days after the end of each of the first three (3) Fiscal Quarters of each Fiscal
Year, consolidated and consolidating balance sheets of Borrower and each other
Corporate Credit Party as of the end of such Fiscal Quarter and the related
consolidated and consolidating statements of income and statements of cash flow
for such quarter and for the portion of such Corporate Credit Party's Fiscal
Year ended at the end of such Fiscal Quarter, setting forth in each case in
comparative form the figures for the corresponding quarter and the corresponding
portion of such Corporate Credit Party's previous Fiscal Year;
(c) simultaneously with the delivery of each set of financial
statements referred to in SECTIONS 10.1(a) and (b), a certificate of a Financial
Officer of each Corporate Credit Party in the form of EXHIBIT H attached hereto,
(i) setting forth, in the case of Borrower, in reasonable detail the
calculations required to establish whether Borrower was in compliance with the
requirements of ARTICLE XI on the date of such financial statements,
(ii) stating, in the case of Borrower, whether there exists on the date of
such certificate any Default and, if any Default then exists, setting forth
the details thereof and the action which Borrower is taking or proposes to
take with respect thereto, (iii) stating whether or not such financial
statements fairly reflect in all material respects the results of operations
and financial condition of each Corporate Credit Party as of the date of the
delivery of such financial statements and for the period covered thereby,
(iv) setting forth (a) whether as of such date there is a Material Gas
Imbalance and, if so, setting forth the amount of net gas imbalances under
Gas Balancing Agreements to which any Credit Party is a party or by which any
Mineral Interests owned by Borrower is bound, and (b) the aggregate amount of
all Advance Payments received under Advance Payment Contracts to which any
Credit Party is a party or by which any Mineral Interests owned by Borrower
is bound which have not been satisfied by delivery of production, if any, and
(v) a summary of the Hedge Transactions to which each Credit Party is a party
on such date;
(d) promptly upon the mailing thereof to the stockholders of any
Corporate Credit Party generally, copies of all financial statements, reports
and proxy statements so mailed;
(e) promptly upon the filing thereof, copies of all final
registration statements post effective amendments thereto and annual, quarterly
or special reports which any Credit Party shall have filed with the Securities
and Exchange Commission; PROVIDED, THAT Borrower must deliver, or cause to be
delivered, any annual reports which any Credit Party shall have filed with the
Securities and Exchange Commission, within ninety (90) days after the end of
each Fiscal Year of such Credit Party, and any quarterly reports which any
Credit Party shall have filed with the Securities and Exchange Commission,
within forty-five (45) days after the end of each of the first three (3) Fiscal
Quarters of each Fiscal Year of such Credit Party;
(f) promptly upon receipt of same, any notice or other information
received by any Credit Party indicating any potential, actual or alleged
(i) non-compliance with or violation of the requirements of any Applicable
Environmental Law which could result in liability to any Credit Party for
fines, clean up or any other remediation obligations or any other liability
in excess of $100,000 in the aggregate; (ii) threatened Hazardous Discharge
which Hazardous Discharge would
50
impose on any Credit Party a duty to report to a Governmental Authority or to
pay cleanup costs or to take remedial action under any Applicable
Environmental Law which could result in liability to any Credit Party for
fines, clean up and other remediation obligations or any other liability in
excess of $100,000 in the aggregate; or (iii) the existence of any Lien
arising under any Applicable Environmental Law securing any obligation to pay
fines, clean up or other remediation costs or any other liability in excess
of $100,000 in the aggregate. Without limiting the foregoing, each Credit
Party shall provide to Banks promptly upon receipt of same by any Credit
Party copies of all environmental consultants or engineers reports received
by any Credit Party which would render the representation and warranty
contained in SECTION 9.14 untrue or inaccurate in any respect;
(g) In the event any notification is provided to any Bank or Agent
pursuant to SECTION 10.1(f) hereof or Agent or any Bank otherwise learns of any
event or condition under which any such notice would be required, then, upon
request of Required Banks, Borrower shall within thirty (30) days of such
request, cause to be furnished to Agent and each Bank a report by an
environmental consulting firm acceptable to Agent and Required Banks, stating
that a review of such event, condition or circumstance has been undertaken (the
scope of which shall be acceptable to Agent and Required Banks) and detailing
the findings, conclusions and recommendations of such consultant; Borrower shall
bear all expenses and costs associated with such review and updates thereof;
(h) immediately upon any Authorized Officer becoming aware of the
occurrence of any Default, a certificate of an Authorized Officer setting forth
the details thereof and the action which Borrower is taking or proposes to take
with respect thereto;
(i) no later than March 31, and September 30 of each year, reports of
production volumes, revenue, expenses and product prices for all Mineral
Interests owned by Borrower for the periods of six (6) months ending the
preceding December 31, and June 30, respectively. Such reports shall be
prepared on an accrual basis and shall be reported on a field by field basis;
(j) promptly notify Banks of any Material Adverse Change affecting
any Credit Party; and
(k) from time to time such additional information regarding the
financial position or business of any Credit Party as Agent, at the request of
any Bank, may reasonably request.
SECTION 10.2. BUSINESS OF BORROWER. The sole business of Borrower shall
be the acquisition, exploration, development and operation of Mineral Interests
and the production, marketing, processing and transportation of Hydrocarbons
therefrom.
SECTION 10.3. MAINTENANCE OF EXISTENCE. Borrower shall, and shall cause
each other Corporate Credit Party to, at all times (a) maintain its corporate,
partnership or limited liability company existence in its state of incorporation
or organization, and (b) maintain its good standing and qualification to
transact business in all jurisdictions where the failure to maintain good
standing or qualification to transact business could result in a Material
Adverse Change.
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SECTION 10.4. TITLE DATA. Borrower shall, upon the request of Required
Banks, cause to be delivered to Agent such title opinions and other information
regarding title to Mineral Interests owned by Borrower and the perfection and
priority of Agent's Liens therein as are appropriate to determine the status
thereof.
SECTION 10.5. RIGHT OF INSPECTION. Borrower will permit, and will cause
each other Credit Party to permit, any officer, employee or agent of Agent or of
any Bank to visit and inspect any of the assets of any Corporate Credit Party,
examine each Corporate Credit Party's books of record and accounts, take copies
and extracts therefrom, and discuss the affairs, finances and accounts of each
Corporate Credit Party with such Corporate Credit Party's officers, accountants
and auditors, all at such reasonable times and as often as Agent or any Bank may
desire, all at the expense of Borrower.
SECTION 10.6. MAINTENANCE OF INSURANCE. Borrower will, and will cause
each other Corporate Credit Party to, at all times maintain or cause to be
maintained insurance covering such risks as are customarily carried by
businesses similarly situated, including, without limitation, the following: (a)
workmen's compensation insurance; (b) employer's liability insurance;
(c) comprehensive general public liability and property damage insurance; (d)
insurance against losses customarily insured against as a result of damage by
fire, lightning, hail, tornado, explosion and other similar risk; and (e)
comprehensive automobile liability insurance. All loss payable clauses or
provisions in all policies of insurance maintained by Borrower pursuant to this
SECTION 10.6 shall be endorsed in favor of and made payable to Agent for the
ratable benefit of Banks, as their interests may appear. Agent shall have the
right, for the ratable benefit of the Banks, to collect, and Borrower hereby
assigns to Agent for the ratable benefit of Banks, any and all monies that may
become payable under any such policies of insurance by reason of damage, loss or
destruction of any of property which stands as security for the Obligations or
any part thereof, and Agent may, at its election, either apply for the ratable
benefit of Banks all or any part of the sums so collected toward payment of the
Obligations, whether or not such Obligations are then due and payable, in such
manner as Agent may elect or release same to the applicable Credit Party.
SECTION 10.7. PAYMENT OF TAXES AND CLAIMS. Borrower will, and will cause
each other Credit Party to, pay (a) all Taxes imposed upon it or any of its
assets or with respect to any of its franchises, business, income or profits
before any material penalty or interest accrues thereon and (b) all material
claims (including, without limitation, claims for labor, services, materials and
supplies) for sums which have become due and payable and which by law have or
might become a Lien (other than a Permitted Encumbrance) on any of its assets;
provided, however, no payment of Taxes or claims shall be required if (i) the
amount, applicability or validity thereof is currently being contested in good
faith by appropriate action promptly initiated and diligently conducted in
accordance with good business practices and no material part of the property or
assets of any Credit Party is subject to any pending levy or execution, (ii) the
Credit Parties, as and to the extent required in accordance with GAAP, shall
have set aside on their books reserves (segregated to the extent required by
GAAP) deemed by them to be adequate with respect thereto, and (iii) the Credit
Parties have notified Agent of such circumstances, in detail satisfactory to
Agent.
52
SECTION 10.8. COMPLIANCE WITH LAWS AND DOCUMENTS. Borrower will, and will
cause each other Credit Party to, comply with all Laws, their respective
certificates (or articles) of incorporation, bylaws, regulations and similar
organizational documents and all Material Agreements to which any Credit Party
is a party, if a violation, alone or when combined with all other such
violations, could result in a Material Adverse Change.
SECTION 10.9. OPERATION OF PROPERTIES AND EQUIPMENT. (a) Borrower will,
and will cause each of its Subsidiaries to, maintain, develop and operate (or
cause the operator to maintain and operate to the extent borrower is not the
operator) its Mineral Interests in a good and workmanlike manner, and observe
and comply with all of the terms and provisions, express or implied, of all oil
and gas leases relating to such Mineral Interests so long as such Mineral
Interests are capable of producing Hydrocarbons and accompanying elements in
paying quantities.
(b) Borrower will, and will cause each of its Subsidiaries to, comply
in all respects with all contracts and agreements applicable to or relating to
its Mineral Interest or the production and sale of Hydrocarbons and accompanying
elements therefrom.
(c) Borrower will, and will cause each of its Subsidiaries to, at all
times maintain, preserve and keep all operating equipment used with respect to
its Mineral Interests in proper repair, working order and condition, and make
all necessary or appropriate repairs, renewals, replacements, additions and
improvements thereto so that the efficiency of such operating equipment shall at
all times be properly preserved and maintained; provided further that no item of
operating equipment need be so repaired, renewed, replaced, added to or
improved, if Borrower shall in good faith determine that such action is not
necessary or desirable for the continued efficient and profitable operation of
the business of such Credit Party.
SECTION 10.10. ENVIRONMENTAL LAW COMPLIANCE. Borrower will, and will
cause each other Credit Party to, comply with all Applicable Environmental Laws,
including, without limitation, (a) all licensing, permitting, notification and
similar requirements of Applicable Environmental Laws, and (b) all provisions of
all Applicable Environmental Laws regarding storage, discharge, release,
transportation, treatment and disposal of Hazardous Substances. Borrower will,
and will cause each other Corporate Credit Party to, promptly pay and discharge
when due all legal debts, claims, liabilities and obligations with respect to
any clean-up or remediation measures necessary to comply with Applicable
Environmental Laws.
SECTION 10.11. ERISA REPORTING REQUIREMENTS. Borrower shall furnish, or
cause to be furnished, to Agent:
(a) Promptly and in any event (i) within thirty (30) days after Borrower
or any ERISA Affiliate receives notice from any regulatory agency of the
commencement of an audit, investigation or similar proceeding with respect to a
Plan, and (ii) within ten (10) days after Borrower or any ERISA Affiliate
contacts the Internal Revenue Service for the purpose of participation in a
closing agreement or any voluntary resolution program with respect to a Plan or
knows or has reason to know that any event with respect to any Plan of Borrower
or any ERISA Affiliate has occurred, a
53
written notice describing such event and describing what action is being taken
or is proposed to be taken with respect thereto, together with a copy of any
notice of event that is given to the PBGC;
(b) Promptly and in any event within thirty (30) days after the receipt by
Borrower of a request therefor by a Bank, copies of any annual and other report
(including Schedule B thereto) with respect to a Plan filed by Borrower or any
ERISA Affiliate with the United States Department of Labor, the Internal Revenue
Service or the PBGC;
(c) Notification within thirty (30) days of the effective date thereof of
any material increases in the benefits, or material change in the funding
method, of any existing Plan which is not a multiemployer plan (as defined in
section 4001(a)(3) of ERISA), or the establishment of any material new Plans, or
the commencement of contributions to any Plan to which Borrower or any ERISA
Affiliate was not previously contributing; and
(d) Promptly after receipt of written notice of commencement thereof,
notice of all (i) claims made by participants or beneficiaries with respect to
any Plan and (ii) actions, suits and proceedings before any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, affecting Borrower or any ERISA Affiliate with respect to
any Plan, except those which, in the aggregate, if adversely determined could
not result in a Material Adverse Change.
SECTION 10.12. ADDITIONAL DOCUMENTS. Borrower will, and will cause each
other Credit Party (to the extent each is party thereto) to, cure promptly any
defects in the creation and issuance of each Note, and the execution and
delivery of this Agreement and the other Loan Papers and, at Borrower's expense,
Borrower shall promptly and duly execute and deliver to each Bank, and cause
each other Credit Party to promptly and duly execute and deliver to each Bank,
upon reasonable request, all such other and further documents, agreements and
instruments in compliance with or accomplishment of the covenants and agreements
of the Credit Parties in this Agreement and the other Loan Papers as may be
reasonably necessary or appropriate in connection therewith.
SECTION 10.13. ENVIRONMENTAL REVIEW. Not later than thirty (30) days
prior to the date of any acquisition by any Credit Party of Mineral Interests or
related assets, other than an acquisition of additional interests in Mineral
Interests in which a Credit Party previously held an interest, Borrower shall
deliver to Agent a report in form, scope and detail acceptable to Agent from
environmental engineering firms acceptable to Agent, which report or reports
shall set forth the results of a Phase I environmental review of such Mineral
Interests and related assets.
SECTION 10.14. REQUIRED PURCHASE CONTRACTS. Borrower will at all times
during the period commencing on and including the Closing Date and continuing
through and including the Termination Date, maintain contracts for the sale of
at least ninety-five percent (95%) of its gas production to Consumers Power (or
other parties of equal or greater creditworthiness approved by Agent and
Required Banks) which provide for fixed prices on all gas production sold that,
when averaged in each calendar year, equal or exceed $2.40 per thousand cubic
feet. Such average shall be calculated for each calendar year by dividing (i)
all revenues under such fixed price contracts for
54
such gas production, by (ii) the total amount of such gas production,
measured in thousand cubic feet. For the purpose of determining compliance
with the foregoing, if Borrower enters into floating rate contracts for the
sale of its gas production to Consumers Power (or other parties of equal or
greater creditworthiness approved by Agent and Required Banks) and at the
same time puts into place Hedging Transactions in equivalent notional amounts
with counterparties approved by Agent and Required Banks which, when netted
against such floating rate contracts, provide Borrower with a net price in
excess of $2.40 per thousand cubic feet, such net price shall be deemed to be
the fixed price to be used in making the foregoing calculation.
ARTICLE XI
NEGATIVE COVENANTS
Borrower agrees that, so long as any Bank has any commitment to lend or
participate in Letter of Credit Exposure hereunder or any amount payable under
any Note remains unpaid or any Letter of Credit remains outstanding:
SECTION 11.1. INCURRENCE OF DEBT. Borrower will not, nor will Borrower
permit any Corporate Credit Party to, incur, become or remain liable for any
Debt other than the Obligations; PROVIDED, THAT, at any time when the
Outstanding Credit is less than the Conforming Borrowing Base and no Default or
Event of Default has occurred which is continuing, (a) Borrower may incur and
remain liable for Non-Recourse Debt to the extent such Non- Recourse Debt has
been specifically approved in writing by Required Banks, and (b) Borrower and
its Subsidiaries may incur and remain liable for other Debt in an aggregate
amount outstanding at any time not to exceed $1,000,000.
SECTION 11.2. RESTRICTED PAYMENTS. Borrower will not, nor will Borrower
permit any Corporate Credit Party to, directly or indirectly, declare or pay, or
incur any liability to declare or pay, any Restricted Payment; provided, that,
so long as no Default or Event of Default has occurred which is then continuing
Mercury shall be permitted to honor the TCW Put.
SECTION 11.3. NEGATIVE PLEDGE. Borrower will not, nor will Borrower
permit any Corporate Credit Party to, create, assume or suffer to exist any Lien
on any of their respective assets other than Permitted Encumbrances. Borrower
will not, nor will Borrower permit any of its Subsidiaries to, enter into or
become bound by any agreement (other than this Agreement) that prohibits or
otherwise restricts the right of Borrower or any of its Subsidiaries to create,
assume or suffer to exist any Lien on any of their respective assets in favor of
Agent for the ratable benefit of Banks.
SECTION 11.4. CONSOLIDATIONS AND MERGERS. Borrower will not, nor will
Borrower permit any Corporate Credit Party to, consolidate or merge with or into
any other Person.
55
SECTION 11.5. ASSET DISPOSITIONS. Borrower will not, nor will Borrower
permit any Corporate Credit Party to, sell, lease, transfer, abandon or
otherwise dispose of any asset other than the sale in the ordinary course of
business of Hydrocarbons produced from Borrower's and its Subsidiaries'
Mineral Interests (and not pursuant to Advance Payment Contracts); provided,
that, so long as no Default or Event of Default has occurred which is
continuing, Borrower shall be permitted to sell or dispose of (a) machinery
and equipment which is not obsolete or otherwise not necessary or useful in
the operation of Borrower's business, and (b) Mineral Interests with an
aggregate Recognized Value (measured at the time of such sale or disposition)
not to exceed $200,000 during the term of this Agreement. Borrower will not
sell, transfer or dispose of, or permit any Subsidiary of Borrower to sell,
transfer or dispose of any capital stock or other equity interest, in any
Subsidiary of Borrower.
SECTION 11.6. AMENDMENTS TO ORGANIZATIONAL DOCUMENTS; OTHER MATERIAL
AGREEMENTS. Borrower will not, nor will Borrower permit any other Credit
Party to, enter into or permit any modification or amendment of, or waive any
material right or obligation of any Person under, (a) its certificate or
articles of incorporation, bylaws, partnership agreement, regulations or
other organizational documents other than amendments, modifications and
waivers which could not, individually or in the aggregate, result in a
Material Adverse Change, (b) the Capitalization Documents, or (c) the Section
29 Documents.
SECTION 11.7. USE OF PROCEEDS. The proceeds of Borrowings will not be
used for any purpose other than (a) working capital, (b) to finance the
acquisition, exploration and development of Mineral Interests and related
capital assets, and (c) to refinance the obligations outstanding under the
Existing Credit Agreements. None of such proceeds (including, without
limitation, proceeds of Letters of Credit issued hereunder) will be used,
directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of purchasing or carrying any Margin Stock, and none of such
proceeds will be used in violation of applicable Law (including, without
limitation, the Margin Regulations). Letters of Credit will be issued
hereunder only for the purpose of securing bids, tenders, bonds, contracts
and other obligations entered into in the ordinary course of Borrower's
business. Without limiting the foregoing, no Letters of Credit will be
issued hereunder for the purpose of providing credit enhancement with respect
to any Debt or equity security of any Credit Party or to secure any Credit
Party's obligations with respect to Hedge Transactions other than Hedge
Transactions with a Bank.
SECTION 11.8. INVESTMENTS. Borrower will not, nor will Borrower permit
any other Corporate Credit Party to, directly or indirectly, make or have
outstanding any Investment other than Permitted Investments.
SECTION 11.9. TRANSACTIONS WITH AFFILIATES. Borrower will not, nor
will Borrower permit any other Credit Party to, engage in any transaction
with an Affiliate unless such transaction is as favorable to such party as
could be obtained in an arm's length transaction with an unaffiliated Person
in accordance with prevailing industry customs and practices.
56
SECTION 11.10. ERISA. Except in such instances where an omission or
failure would not result in a Material Adverse Change, Borrower will not, nor
will Borrower permit any of its Subsidiaries to (a) take any action or fail
to take any action which would result in a violation of ERISA, the Code or
other laws applicable to the Plans maintained or contributed to by it or any
ERISA Affiliate, or (b) modify the term of, or the funding obligations or
contribution requirements under any existing Plan, establish a new Plan, or
become obligated or incur any liability under a Plan that is not maintained
or contributed to by a Borrower or any ERISA Affiliate as of the Closing Date.
SECTION 11.11. HEDGE TRANSACTIONS. With the exception of Oil and Gas
Hedge Transactions entered into pursuant to SECTION 9.14 Borrower will not,
nor will Borrower permit any other Corporate Credit Party to, enter into Oil
and Gas Hedge Transactions which would cause the volume of Hydrocarbons with
respect to which a settlement payment is calculated under such Oil and Gas
Hedge Transactions to exceed seventy-five percent (75%) of Borrower's
anticipated production from Proved Producing Mineral Interests during the
period from the immediately preceding settlement date (or the commencement of
such Hedge Transaction if there is no prior settlement date) to such
settlement date. Borrower shall not enter into or consent to any amendment,
modification, cancellation or termination of the Consumers Power Contract and
will at all times perform all of its obligations thereunder and take all
other actions necessary to cause such contract to be maintained.
SECTION 11.12. FISCAL YEAR. Borrower will not, and Borrower will not
permit any Corporate Credit Party to, change its Fiscal Year.
SECTION 11.13. CHANGE IN BUSINESS. Borrower will not, nor will
Borrower permit any of its Subsidiaries to, engage in any business other than
the businesses engaged in by such parties on the date hereof as described in
SECTION 9.13 hereof.
ARTICLE XII
FINANCIAL COVENANTS
Borrower agrees that so long as any Bank has any commitment to lend or
participate in Letter of Credit Exposure hereunder or any amount payable
under any Note remains unpaid or any Letter of Credit remains outstanding,
Borrower will not permit its ratio of Consolidated Current Assets to its
Consolidated Current Liabilities to be less than 1.0 to 1.0 at any time.
57
ARTICLE XIII
DEFAULTS
SECTION 13.1. EVENTS OF DEFAULT. If one or more of the following
events (c)ollectively "EVENTS OF DEFAULT" and individually an "EVENT OF
DEFAULT") shall have occurred and be continuing:
(a) Borrower shall fail to pay when due any principal on any Note;
(b) Borrower shall fail to pay when due accrued interest on any
Note or any fees or any other amount payable hereunder and such failure shall
continue for a period of three (3) days following the due date;
(c) Borrower shall fail to observe or perform any covenant or
agreement contained in ARTICLE XI or ARTICLE XII of this Agreement;
(d) any Credit Party shall fail to observe or perform any covenant
or agreement contained in this Agreement or any other Loan Papers (other than
those referenced in SECTIONS 13.1(a), (b) and (c) and such failure continues
for a period of twenty (20) days after the earlier of (i) the date any
Authorized Officer of any Credit Party acquires knowledge of such failure, or
(ii) written notice of such failure has been given to any Credit Party by
Agent or any Bank;
(e) any representation, warranty, certification or statement made
or deemed to have been made by any Credit Party in any certificate, financial
statement or other document delivered pursuant to this Agreement shall prove
to have been incorrect in any material respect when made;
(f) any Credit Party shall fail to make any payment when due on
any Debt of such Person in a principal amount equal to or greater than
$250,000 or any other event or condition shall occur which (i) results in the
acceleration of the maturity of any such Debt, or (ii) entitles the holder of
such Debt to accelerate the maturity thereof;
(g) any Credit Party shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect
to itself or its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part
of its property, or shall consent to any such relief or to the appointment of
or taking possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for the
benefit of creditors, or shall fail generally to pay its debts as they become
due, or shall take any corporate action to authorize any of the foregoing;
(h) an involuntary case or other proceeding shall be commenced
against any Credit Party seeking liquidation, reorganization or other relief
with respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the
58
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, and such involuntary
case or other proceeding shall remain undismissed and unstayed for a period
of sixty (60) days; or an order for relief shall be entered against any
Credit Party under the federal bankruptcy Laws as now or hereafter in effect;
(i) one (1) or more final judgments or orders for the payment of
money aggregating in excess of $250,000 shall be rendered against any Credit
Party and such judgment or order shall continue unsatisfied and unstayed for
thirty (30) days;
(j) any event occurs with respect to any Plan or Plans pursuant to
which any Credit Party and/or any ERISA Affiliate incur a liability due and
owing at the time of such event, without existing funding therefor, for
benefit payments under such Plan or Plans in excess of $250,000; or (ii) any
Credit Party, any ERISA Affiliate, or any other "party-in-interest" or
"disqualified person", as such terms are defined in section 3(14) of ERISA
and section 4975(e)(2) of the Code, shall engage in transactions which in the
aggregate would reasonably result in a direct or indirect liability to any
Credit Party or any ERISA Affiliate in excess of $250,000 under section 409
or 502 of ERISA or section 4975 of the Code;
(k) this Agreement or any other Loan Paper shall cease to be in
full force and effect or shall be declared null and void or the validity or
enforceability thereof shall be contested or challenged by any Credit Party,
or any Credit Party shall deny that it has any further liability or
obligation under any of the Loan Papers to which it is a party, or any Lien
created by the Loan Papers shall for any reason (other than the release
thereof in accordance with the Loan Papers) cease to be a valid, first
priority, perfected Lien upon any of the Proved Mineral Interests purported
to be covered thereby;
(l) a Material Adverse Change shall occur with respect to any
Credit Party; or
(m) a Change of Control shall occur.
then, and in every such event, Agent shall without presentment, notice or
demand (unless expressly provided for herein) of any kind (including, without
limitation, notice of intention to accelerate and acceleration), all of which
are hereby waived, (a) if requested by the Required Banks, terminate the
Commitments and they shall thereupon terminate, and (b) if requested by the
Required Banks, take such other actions as may be permitted by the Loan
Papers including, declaring the Notes (together with accrued interest
thereon) to be, and the Notes shall thereupon become, immediately due and
payable; PROVIDED THAT (c) in the case of any of the Events of Default
specified in SECTIONS 13.1(g) or (h), without any notice to any Credit Party
or any other act by Agent or Banks, the Commitments shall thereupon terminate
and the Notes (together with accrued interest thereon) shall become
immediately due and payable.
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ARTICLE XIV
AGENT
SECTION 14.1. APPOINTMENT, POWERS, AND IMMUNITIES. Each Bank hereby
irrevocably appoints and authorizes Agent to act as its agent under this
Agreement and the other Loan Papers with such powers and discretion as are
specifically delegated to Agent by the terms of this Agreement and the other
Loan Papers, together with such other powers as are reasonably incidental
thereto. Agent (which term as used in this sentence and in SECTION 14.5 and
the first sentence of SECTION 14.6 hereof shall include its Affiliates and
its own and its Affiliates' officers, directors, employees, and agents): (a)
shall not have any duties or responsibilities except those expressly set
forth in this Agreement and shall not be a trustee or fiduciary for any Bank;
(b) shall not be responsible to Banks for any recital, statement,
representation, or warranty (whether written or oral) made in or in
connection with any Loan Paper or any certificate or other document referred
to or provided for in, or received by any of them under, any Loan Paper, or
for the value, validity, effectiveness, genuineness, enforceability, or
sufficiency of any Loan Paper, or any other document referred to or provided
for therein or for any failure by Borrower, any Subsidiary of Borrower or any
other Person to perform any of its obligations thereunder; (c) shall not be
responsible for or have any duty to ascertain, inquire into, or verify the
performance or observance of any covenants or agreements by Borrower or any
of its Subsidiaries or the satisfaction of any condition or to inspect the
property (including the books and records) of Borrower, any of its
Subsidiaries or Affiliates; (d) shall not be required to initiate or conduct
any litigation or collection proceedings under any Loan Paper; and (e) shall
not be responsible for any action taken or omitted to be taken by it under or
in connection with any Loan Paper, except for its own gross negligence or
willful misconduct. Agent may employ agents and attorneys-in-fact and shall
not be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care.
SECTION 14.2. RELIANCE BY AGENT. Agent shall be entitled to rely upon
any certification, notice, instrument, writing, or other communication
(including, without limitation, any thereof by telephone or telecopy)
believed by it to be genuine and correct and to have been signed, sent or
made by or on behalf of the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel for Borrower), independent
accountants, and other experts selected by Agent. Agent may deem and treat
the payee of any Note as the holder thereof for all purposes hereof unless
and until Agent receives and accepts an Assignment and Acceptance Agreement
executed in accordance with SECTION 15.10 hereof. As to any matters not
expressly provided for by this Agreement, Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or
to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of Required Banks, and such
instructions shall be binding on Banks; PROVIDED, HOWEVER, that Agent shall
not be required to take any action that exposes Agent to personal liability
or that is contrary to any Loan Paper or applicable Law or unless it shall
first be indemnified to its satisfaction by Banks against any and all
liability and expense which may be incurred by it by reason of taking any
such action.
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SECTION 14.3. DEFAULTS. Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default or Event of Default unless Agent has
received written notice from a Bank or Borrower specifying such Default or
Event of Default and stating that such notice is a "Notice of Default". In
the event that Agent receives such a notice of the occurrence of a Default or
Event of Default, Agent shall give prompt notice thereof to Banks. Agent
shall (subject to SECTION 14.2 hereof) take such action with respect to such
Default or Event of Default as shall reasonably be directed by Required
Banks; PROVIDED THAT, unless and until Agent shall have received such
directions, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interest of Banks.
SECTION 14.4. RIGHTS AS BANK. With respect to its Commitment and the
Loans made by it, NationsBank (and any successor acting as Agent) in its
capacity as a Bank hereunder shall have the same rights and powers hereunder
as any other Bank and may exercise the same as though it were not acting as
Agent, and the term "Bank" or "Banks" shall, unless the context otherwise
indicates, include Agent in its individual capacity. NationsBank (and any
successor acting as Agent) and its Affiliates may (without having to account
therefor to any Bank) accept deposits from, lend money to, make investments
in, provide services to, and generally engage in any kind of lending, trust,
or other business with Borrower or any of its Subsidiaries or Affiliates as
if it were not acting as Agent, and NationsBank (and any successor acting as
Agent) and its Affiliates may accept fees and other consideration from
Borrower or any of its Subsidiaries or Affiliates for services in connection
with this Agreement or otherwise without having to account for the same to
Banks.
SECTION 14.5. INDEMNIFICATION. Banks agree to indemnify Agent (to the
extent not reimbursed by Borrower or any Subsidiary of Borrower hereof, but
without limiting the obligations of Borrower or any Subsidiary of Borrower to
so reimburse) ratably in accordance with their respective Commitments, for
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses (including attorneys' fees), or
disbursements of any kind and nature whatsoever that may be imposed on,
incurred by or asserted against Agent (including by any Bank) in any way
relating to or arising out of any Loan Paper or the transactions contemplated
thereby or any action taken or omitted by Agent under any Loan Paper
(INCLUDING ANY OF THE FOREGOING ARISING FROM THE NEGLIGENCE OF AGENT);
PROVIDED that no Bank shall be liable for any of the foregoing to the extent
they arise from the gross negligence or willful misconduct of the Person to
be indemnified. Without limitation of the foregoing, each Bank agrees to
reimburse Agent promptly upon demand for its ratable share of any costs or
expenses payable by Borrower hereunder, to the extent that Agent is not
promptly reimbursed for such costs and expenses by Borrower. The agreements
contained in this SECTION 14.5 shall survive payment and performance in full
of the Obligations and all other amounts payable under this Agreement.
SECTION 14.6. NON-RELIANCE ON AGENT AND OTHER BANKS. Each Bank agrees
that it has, independently and without reliance on Agent or any other Bank,
and based on such documents and information as it has deemed appropriate,
made its own credit analysis of Borrower and its Subsidiaries and decision to
enter into this Agreement and that it will, independently and without
reliance upon Agent or any other Bank, and based on such documents and
information as it shall
61
deem appropriate at the time, continue to make its own analysis and decisions
in taking or not taking action under the Loan Papers. Except for notices,
reports, and other documents and information expressly required to be
furnished to Banks by Agent hereunder, Agent shall not have any duty or
responsibility to provide any Bank with any credit or other information
concerning the affairs, financial condition, or business of Borrower or any
of its Subsidiaries or Affiliates that may come into the possession of Agent
or any of its Affiliates.
SECTION 14.7. RESIGNATION OF AGENT. Agent may resign at any time by
giving notice thereof to Banks and Borrower. Upon any such resignation, the
Required Banks shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by the Required Banks and shall
have accepted such appointment within thirty (30) days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on
behalf of Banks, appoint a successor Agent which shall be a commercial bank
organized under the Laws of the United States of America having combined
capital and surplus of at least $100,000,000. Upon the acceptance of any
appointment as Agent hereunder by a successor, such successor shall thereupon
succeed to and become vested with all the rights, powers, discretion,
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 hereunder as Agent, the provisions of this ARTICLE XIV
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 Agent.
ARTICLE XV
MISCELLANEOUS
SECTION 15.1. NOTICES. All notices, requests and other communications
to any party hereunder shall be in writing (including bank wire, telecopy or
similar writing) and shall be given, if to Agent or any Bank, at its address
or telecopier number set forth on SCHEDULE 1 hereto, and if given to
Borrower, at its address or telecopy number set forth on the signature pages
hereof (or in either case, at such other address or telecopy number as such
party may hereafter specify for the purpose by notice to the other parties
hereto). Each such notice, request or other communication shall be effective
(a) if given by telecopy, when such telecopy is transmitted to the telecopy
number specified in this SECTION 15.1 and the appropriate answerback is
received or receipt is otherwise confirmed, (b) if given by mail, three (3)
Domestic Business Days after deposit in the mails with first class postage
prepaid, addressed as aforesaid or (c) if given by any other means, when
delivered at the address specified in this SECTION 15.1; PROVIDED THAT
notices to Agent under ARTICLE II or III shall not be effective until
received.
SECTION 15.2. NO WAIVERS. No failure or delay by Agent or any Bank in
exercising any right, power or privilege hereunder or under any Note or other
Loan Paper shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or
remedies provided by Law or in any of the other Loan Papers.
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SECTION 15.3. EXPENSES; INDEMNIFICATION. (a) Borrower agrees to pay on
demand all reasonable costs and expenses of Agent in connection with the
syndication, preparation, execution, delivery, modification, and amendment of
this Agreement, the other Loan Papers, and the other documents to be
delivered hereunder, including, without limitation, the reasonable fees and
expenses of counsel for Agent (including the cost of internal counsel) with
respect thereto and with respect to advising Agent as to its rights and
responsibilities under the Loan Papers. Borrower further agrees to pay on
demand all reasonable costs and expenses of Agent and Banks, if any
(including, without limitation, reasonable attorneys' fees and expenses and
the cost of internal counsel), in connection with the enforcement (whether
through negotiations, legal proceedings, or otherwise) of the Loan Papers and
the other documents to be delivered hereunder.
(b) Borrower agrees to indemnify and hold harmless Agent and each Bank
and each of their Affiliates and their respective officers, directors,
employees, agents, and advisors (each, an "INDEMNIFIED PARTY") from and
against any and all claims, damages, losses, liabilities, costs, and expenses
(including, without limitation, reasonable attorneys' fees) that may be
incurred by or asserted or awarded against any Indemnified Party, in each
case arising out of or in connection with or by reason of (including, without
limitation, in connection with any investigation, litigation, or proceeding
or preparation of defense in connection therewith) the Loan Papers, any of
the transactions contemplated herein or the actual or proposed use of the
proceeds of the Revolving Loan (INCLUDING ANY OF THE FOREGOING ARISING FROM
THE NEGLIGENCE OF THE INDEMNIFIED PARTY), except to the extent such claim,
damage, loss, liability, cost, or expense is found in a final, non-appealable
judgment by a court of competent jurisdiction to have resulted from such
Indemnified Party's gross negligence or willful misconduct. In the case of
an investigation, litigation or other proceeding to which the indemnity in
this SECTION 15.3 applies, such indemnity shall be effective whether or not
such investigation, litigation or proceeding is brought by Borrower, its
directors, shareholders or creditors or an Indemnified Party or any other
Person or any Indemnified Party is otherwise a party thereto and whether or
not the transactions contemplated hereby are consummated. Borrower agrees
not to assert any claim against Agent, any Bank, any of their Affiliates, or
any of their respective directors, officers, employees, attorneys, agents,
and advisers, on any theory of liability, for special, indirect,
consequential, or punitive damages arising out of or otherwise relating to
the Loan Papers, any of the transactions contemplated herein or the actual or
proposed use of the proceeds of the Revolving Loan.
(c) Without prejudice to the survival of any other agreement of
Borrower hereunder, the agreements and obligations of Borrower contained in
this SECTION 15.3 shall survive the payment in full of the Loans and all
other amounts payable under this Agreement.
SECTION 15.4. RIGHT OF SET-OFF; ADJUSTMENTS. (a) Upon the occurrence
and during the continuance of any Event of Default, each Bank (and each of
its Affiliates) is hereby authorized at any time and from time to time, to
the fullest extent permitted by Law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any
time held and other indebtedness at any time owing by such Bank (or any of
its Affiliates) to or for the credit or the account of Borrower against any
and all of the Obligations, irrespective of whether such Bank shall have made
any demand under this Agreement or Note held by such and although such
obligations
63
may be unmatured. Each Bank agrees promptly to notify Borrower after any
such set-off and application made by such Bank; PROVIDED, HOWEVER, that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of each Bank under this SECTION 15.4 are in addition
to other rights and remedies (including, without limitation, other rights of
set-off) that such Bank may have.
(b) If any Bank (a "BENEFITTED BANK") shall at any time receive any
payment of all or part of the Loans owing to it, or interest thereon, or
receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, or otherwise), in a greater proportion than any
such payment to or collateral received by any other Bank, if any, in respect
of such other Bank's Loans owing to it, or interest thereon, such benefitted
Bank shall purchase for cash from the other Banks a participating interest in
such portion of each such other Bank's Loans owing to it, or shall provide
such other Banks with the benefits of any such collateral, or the proceeds
thereof, as shall be necessary to cause such benefitted Bank to share the
excess payment or benefits of such collateral or proceeds ratably with each
Banks; PROVIDED, HOWEVER, that if all or any portion of such excess payment
or benefits is thereafter recovered from such benefitted Bank, such purchase
shall be rescinded, and the purchase price and benefits returned, to the
extent of such recovery, but without interest. Borrower agrees that any Bank
so purchasing a participation from a Bank pursuant to this SECTION 15.4 may,
to the fullest extent permitted by Law, exercise all of its rights of payment
(including the right of set-off) with respect to such participation as fully
as if such Person were the direct creditor of Borrower in the amount of such
participation.
SECTION 15.5. AMENDMENTS AND WAIVERS. Any provision of this Agreement
or any other Loan Paper may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by Borrower and the Required
Banks (and, if ARTICLE XIV or the rights or duties of Agent are affected
thereby, by Agent); PROVIDED that no such amendment or waiver shall, unless
signed by each Bank directly affected thereby, (i) increase the Commitments
of Banks, (ii) reduce the principal of or rate of interest on any Loan or any
fees or other amounts payable hereunder, (iii) postpone any date fixed for
the payment of any scheduled installment of principal of or interest on any
Loan or any fees or other amounts payable hereunder or for termination of any
Commitment, (iv) change the percentage of the Commitments or of the unpaid
principal amount of the Notes, or the number of Banks, which shall be
required for Banks or any of them to take any action under this SECTION 15.5
or any other provision of this Agreement, or (v) release any guarantor of the
Obligations or all or substantially all of the collateral securing the
Obligations.
SECTION 15.6. SURVIVAL. All representations, warranties and covenants
made by any Credit Party herein or in any certificate or other instrument
delivered by it or in its behalf under the Loan Papers shall be considered to
have been relied upon by Banks and shall survive the delivery to Banks of
such Loan Papers or the extension of the Revolving Loan (or any part
thereof), regardless of any investigation made by or on behalf of Banks. The
indemnity provided in SECTION 15.3(b) herein shall survive the repayment of
all credit advances hereunder and/or the discharge or release of any Lien
granted hereunder or in any other Loan Paper, contract or agreement between
Borrower or any other Credit Party and Agent or any Bank.
64
SECTION 15.7. LIMITATION ON INTEREST. Regardless of any provision
contained in the Loan Papers, Banks shall never be entitled to receive,
collect, or apply, as interest on the Revolving Loan, any amount in excess of
the Maximum Lawful Rate, and in the event any Bank ever receives, collects or
applies as interest any such excess, such amount which would be deemed
excessive interest shall be deemed a partial prepayment of principal and
treated hereunder as such; and if the Revolving Loan is paid in full, any
remaining excess shall promptly be paid to Borrower. In determining whether
or not the interest paid or payable under any specific contingency exceeds
the Maximum Lawful Rate, Borrower and Banks shall, to the extent permitted
under applicable Law, (a) characterize any nonprincipal payment as an
expense, fee or premium rather than as interest, (b) exclude voluntary
prepayments and the effects thereof and (c) amortize, prorate, allocate and
spread, in equal parts, the total amount of the interest throughout the
entire contemplated term of the Notes, so that the interest rate is the
Maximum Lawful Rate throughout the entire term of the Notes; PROVIDED,
HOWEVER, that if the unpaid principal balance thereof is paid and performed
in full prior to the end of the full contemplated term thereof, and if the
interest received for the actual period of existence thereof exceeds the
Maximum Lawful Rate, Banks shall refund to Borrower the amount of such excess
and, in such event, Banks shall not be subject to any penalties provided by
any laws for contracting for, charging, taking, reserving or receiving
interest in excess of the Maximum Lawful Rate.
SECTION 15.8. INVALID PROVISIONS. If any provision of the Loan Papers
is held to be illegal, invalid, or unenforceable under present or future Laws
effective during the term thereof, such provision shall be fully severable,
the Loan Papers shall be construed and enforced as if such illegal, invalid,
or unenforceable provision had never comprised a part thereof, and the
remaining provisions thereof shall remain in full force and effect and shall
not be affected by the illegal, invalid, or unenforceable provision or by its
severance therefrom. Furthermore, in lieu of such illegal, invalid, or
unenforceable provision there shall be added automatically as a part of the
Loan Papers a provision as similar in terms to such illegal, invalid, or
unenforceable provision as may be possible and be legal, valid and
enforceable.
SECTION 15.9. WAIVER OF CONSUMER CREDIT LAWS. Pursuant to Article
15.10(b) of Chapter 15, Subtitle 79, Revised Civil Statutes of Texas, 1925,
as amended, Borrower agrees that such Chapter 15 shall not govern or in any
manner apply to the Revolving Loan.
SECTION 15.10. ASSIGNMENTS AND PARTICIPATIONS. (a) Each Bank may
assign to one or more Eligible Assignees all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its interest in the Revolving Loan, its Notes, and its
Commitment); PROVIDED, HOWEVER, that
(i) each such assignment shall be to an Eligible Assignee;
(ii) except in the case of an assignment to another Bank or an
assignment of all of a Bank's rights and obligations under this Agreement,
any such partial assignment shall be in an amount at least equal to
$5,000,000 or an integral multiple of $100,000 in excess thereof;
65
(iii) each such assignment by a Bank shall be of a constant, and
not varying, percentage of all of its rights and obligations under this
Agreement and its Notes; and
(iv) the parties to such assignment shall execute and deliver to
Agent for its acceptance an Assignment and Acceptance Agreement (herein so
called) in the form of EXHIBIT I hereto, together with any Notes subject to
such assignment and a processing fee of $3,500.
Upon execution, delivery, and acceptance of such Assignment and Acceptance
Agreement, the assignee thereunder shall be a party hereto and, to the extent
of such assignment, have the obligations, rights, and benefits of a Bank
hereunder and the assigning Bank shall, to the extent of such assignment,
relinquish its rights and be released from its obligations under this
Agreement. Upon the consummation of any assignment pursuant to this SECTION
15.10(a), the assignor, Agent and Borrower shall make appropriate
arrangements so that, if required, new Notes are issued to the assignor and
the assignee. If the assignee is not incorporated under the Laws of the
United States of America or a state thereof, it shall deliver to Borrower and
Agent certification as to exemption from deduction or withholding of Taxes in
accordance with SECTION 5.6.
(b) Agent shall maintain at its address set forth on SCHEDULE 1 hereto,
a copy of each Assignment and Acceptance Agreement delivered to and accepted
by it and a register for the recordation of the names and addresses of Banks
and the Commitment of, and principal amount of the Revolving Loan owing to,
each Bank and the Commitment Percentage of each Bank from time to time (the
"REGISTER"). The entries in the Register shall be conclusive and binding for
all purposes, absent manifest error, and Borrower, Agent and Banks may treat
each Person whose name is recorded in the Register as a Bank hereunder for
all purposes of this Agreement. The Register shall be available for
inspection by Borrower or any Bank at any reasonable time and from time to
time upon reasonable prior notice.
(c) Upon its receipt of an Assignment and Acceptance Agreement
executed by the parties thereto, together with any Notes subject to such
assignment and payment of the processing fee, Agent shall, if such Assignment
and Acceptance Agreement has been completed and is in substantially the form
of EXHIBIT I hereto, (i) accept such Assignment and Acceptance Agreement,
(ii) record the information contained therein in the Register, and (iii) give
prompt notice thereof to the parties thereto.
(d) Each Bank may sell participations to one or more Persons in all or
a portion of its rights and obligations under this Agreement (including all
or a portion of its Commitment and its interest in the Revolving Loan);
PROVIDED, HOWEVER, that (i) such Bank's obligations under this Agreement
shall remain unchanged, (ii) such Bank shall remain solely responsible to
the other parties hereto for the performance of such obligations, (iii) the
participant shall be entitled to the benefit of the yield protection
provisions contained in ARTICLE V and the right of set-off contained in
SECTION 15.4, and (iv) Borrower shall continue to deal solely and directly
with such Bank in connection with such Bank's rights and obligations under
this Agreement, and such Bank shall retain the sole right to enforce the
obligations of Borrower relating to its interest in the Revolving Loan and
66
its Notes and to approve any amendment, modification, or waiver of any
provision of this Agreement (other than amendments, modifications, or waivers
decreasing the amount of principal of or the rate at which interest is
payable on the Revolving Loan or Notes, extending any scheduled principal
payment date or date fixed for the payment of interest on the Revolving Loan
or Notes, or extending its Commitment).
(e) Notwithstanding any other provision set forth in this Agreement,
any Bank may at any time assign and pledge all or any portion of its interest
in the Revolving Loan and its Notes to any Federal Reserve Bank as collateral
security pursuant to Regulation A and any Operating Circular issued by such
Federal Reserve Bank. No such assignment shall release the assigning Bank
from its obligations hereunder.
(f) Any Bank may furnish any information concerning Borrower or any of
its Subsidiaries in the possession of such Bank from time to time to
assignees and participants (including prospective assignees and participants).
(g) Borrower shall not assign or transfer any rights or obligations
under any Loan Paper or permit any Credit Party to assign a transfer of
rights or obligations under any Loan Paper without first obtaining all Banks'
consent, and any purported assignment or transfer without all Banks' consent
is void.
SECTION 15.11. TEXAS LAW. THIS AGREEMENT, EACH NOTE AND THE OTHER LOAN
PAPERS HAVE BEEN EXECUTED AND DELIVERED IN THE STATE OF TEXAS AND SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS
AND THE LAWS OF THE UNITED STATES OF AMERICA, EXCEPT TO THE EXTENT THAT THE
LAWS OF ANY STATE IN WHICH ANY PROPERTY INTENDED AS SECURITY FOR THE
OBLIGATIONS IS LOCATED NECESSARILY GOVERN (a) THE PERFECTION AND PRIORITY OF
THE LIENS IN FAVOR OF AGENT AND BANKS WITH RESPECT TO SUCH PROPERTY, AND (b)
THE EXERCISE OF ANY REMEDIES (INCLUDING FORECLOSURE) WITH RESPECT TO SUCH
PROPERTY.
SECTION 15.12. CONSENT TO JURISDICTION; WAIVER OF IMMUNITIES. (a)
Borrower hereby irrevocably submits to the jurisdiction of any Texas State or
Federal court sitting in the Northern District of Texas over any action or
proceeding arising out of or relating to this Agreement or any other Loan
Papers, and Borrower hereby irrevocably agrees that all claims in respect of
such action or proceeding may be heard and determined in such Texas State or
Federal court. As an alternative, Borrower irrevocably consents to the
service of any and all process in any such action or proceeding by the
mailing of copies of such process to such Person at its address specified in
SECTION 15.1. Borrower agrees that a final judgment on any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.
67
(b) Nothing in this SECTION 15.12 shall affect any right of Banks
to serve legal process in any other manner permitted by law or affect the
right of any Bank to bring any action or proceeding against any Credit Party
or their properties in the courts of any other jurisdictions.
(c) To the extent that Borrower has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property,
such Person hereby irrevocably waives such immunity in respect of its
obligations under this Agreement and the other Loan Papers.
SECTION 15.13. COUNTERPARTS; EFFECTIVENESS. This Agreement may be
signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the
same instrument. This Agreement shall become effective when Agent shall have
received counterparts hereof signed by all of the parties hereto or, in the
case of any Bank as to which an executed counterpart shall not have been
received, Agent shall have received telegraphic or other written confirmation
from such Bank of execution of a counterpart hereof by such Bank.
SECTION 15.14. NO THIRD PARTY BENEFICIARIES. It is expressly intended
that there shall be no third party beneficiaries of the covenants,
agreements, representations or warranties herein contained other than third
party beneficiaries permitted pursuant to SECTION 14.10.
SECTION 15.15. COMPLETE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN
PAPERS COLLECTIVELY REPRESENT THE FINAL AGREEMENT BY AND AMONG BANKS, AGENT
AND THE CREDIT PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF BANKS, AGENT AND THE CREDIT
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG BANKS, AGENT AND THE
CREDIT PARTIES.
SECTION 15.16. WAIVER OF JURY TRIAL. BORROWER, AGENT AND BANKS HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN PAPERS AND FOR
ANY COUNTERCLAIM THEREIN.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective Authorized Officers on the day and year
first above written.
BORROWER:
QUICKSILVER RESOURCES, INC.,
a Delaware corporation
By: /s/ Xxxxx Xxxxxx
---------------------------------
Xxxxx Xxxxxx,
Vice President
Address for Notice:
0000 Xxxxxxxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxx 00000
Attn: Xxxxx Xxxxxx
Fax No. (000) 000-0000
BANKS:
NATIONSBANK OF TEXAS, N.A.
By: /s/ J. Xxxxx Xxxxxx
---------------------------------
J. Xxxxx Xxxxxx, Vice President
AGENT:
NATIONSBANK OF TEXAS, N.A.
By: /s/ J. Xxxxx Xxxxxx
---------------------------------
J. Xxxxx Xxxxxx, Vice President
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EXHIBIT A
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "AGREEMENT") is made as of __________, _____ by
Quicksilver Resources, Inc., a Delaware corporation (herein called
"BORROWER"), in favor of NationsBank of Texas, N.A., as Agent for the ratable
benefit of Banks (as defined below) (herein called "AGENT").
W I T N E S S E T H:
WHEREAS, Borrower, Agent and Banks are parties to an Amended and
Restated Credit Agreement dated as of _________, 1998, pursuant to which
Banks have agreed to make a revolving credit loan and a term loan to Borrower
and issue and participate in letters of credit issued on behalf of Borrower
(herein called the "CREDIT AGREEMENT"); and
WHEREAS, it is a condition to the agreement of Banks to make the
revolving loan and the term loan and issue and participate in Letters of
Credit under the Credit Agreement that Borrower execute and deliver this
Agreement in favor of Agent for the benefit of Banks.
NOW, THEREFORE, in consideration of the premises and in order to induce
Banks to extend credit under the Credit Agreement, Borrower hereby agrees
with Agent as follows:
ARTICLE I
DEFINITIONS AND REFERENCES
Section 1.1. GENERAL DEFINITIONS. As used herein, the terms
"AGREEMENT," "CREDIT AGREEMENT," "AGENT," and "BORROWER," shall have the
meanings indicated above, and the following terms shall have the following
meanings:
"BANK" means any financial institution reflected on Schedule 1 to the
Credit Agreement and its successors and assigns, and "BANKS" shall mean all
Banks.
"CODE" means the Uniform Commercial Code in effect in the State of Texas
on the date hereof.
"COLLATERAL" means all property of whatever type, in which Agent at any
time has a security interest pursuant to SECTION 2.1.
"COMMITMENT" means the agreement or commitment by Banks to make loans or
otherwise extend credit to Borrower under the Credit Agreement, and any other
agreement, commitment, statement of terms or other document contemplating the
making of loans or advances or other
extension of credit by Banks to or for the account of Borrower which is now
or at any time hereafter intended to be secured by the Collateral under this
Agreement.
"OBLIGATION DOCUMENTS" means the Credit Agreement, the Notes, the other
Loan Papers, and all other documents and instruments under, by reason of
which, or pursuant to which, any or all of the Obligations are evidenced,
governed, secured, or otherwise dealt with, and all other agreements,
certificates, and other documents, instruments and writings heretofore or
hereafter delivered in connection herewith or therewith.
"OBLIGATIONS" means all present and future indebtedness, obligations and
liabilities of whatever type which are or shall be secured pursuant to
SECTION 2.2.
"OTHER LIABLE PARTY" means any Person, other than Borrower, who may now
or may at any time hereafter be primarily or secondarily liable for any of
the Obligations or who may now or may at any time hereafter have granted to
Agent or Banks a Lien upon any property as security for the Obligations.
"PLEDGED SHARES" has the meaning given it in SECTION 2.1.
Section 1.2. OTHER DEFINITIONS. Reference is hereby made to the
Credit Agreement for a statement of the terms thereof. All capitalized terms
used in this Agreement which are defined in the Credit Agreement and not
otherwise defined herein shall have the same meanings herein as set forth
therein. All terms used in this Agreement which are defined in the Code and
not otherwise defined herein or in the Credit Agreement shall have the same
meanings herein as set forth therein, except where the context otherwise
requires.
Section 1.3. EXHIBITS. All exhibits attached to this Agreement are a
part hereof for all purposes.
Section 1.4. AMENDMENT OF DEFINED INSTRUMENTS. Unless the context
otherwise requires or unless otherwise provided herein, references in this
Agreement to a particular agreement, instrument or document also refer to and
include all renewals, extensions, amendments, modifications, supplements or
restatements of any such agreement, instrument or document, provided that
nothing contained in this SECTION 1.4 shall be construed to authorize any
Person to execute or enter into any such renewal, extension, amendment,
modification, supplement or restatement.
Section 1.5. REFERENCES AND TITLES. All references in this Agreement
to Exhibits, Articles, Sections, subsections, and other subdivisions refer to
the Exhibits, Articles, Sections, subsections and other subdivisions of this
Agreement unless expressly provided otherwise. Titles appearing at the
beginning of any subdivision are for convenience only and do not constitute
any part of any such subdivision and shall be disregarded in construing the
language contained in this Agreement. The words "this Agreement," "herein,"
"hereof," "hereby," "hereunder" and words of similar import refer to this
Agreement as a whole and not to any particular subdivision unless expressly
so limited. The
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phrases "this Section" and "this subsection" and similar phrases refer only
to the Sections or subsections hereof in which the phrase occurs. The word
"or" is not exclusive, and the word "including" (in all of its forms) means
"including without limitation". Pronouns in masculine, feminine and neuter
gender shall be construed to include any other gender, and words in the
singular form shall be construed to include the plural and vice versa unless
the context otherwise requires.
ARTICLE II
SECURITY INTEREST
Section 2.1. GRANT OF SECURITY INTEREST. As collateral security for
all of the Obligations, Borrower hereby pledges and assigns to Agent and
grants to Agent a continuing first priority security interest for the benefit
of Banks in and to all of the following rights, interests and property:
(a) all of the issued and outstanding shares of capital stock of
[each Subsidiary of Borrower] now owned or hereafter acquired by Borrower
including, without limitation, the shares of [each Subsidiary of Borrower]
owned by Borrower on the date hereof (all of the foregoing being herein
sometimes called the "PLEDGED SHARES");
(b) any and all proceeds or other sums arising from or by virtue of,
and all dividends and distributions (c)ash or otherwise) payable and/or
distributable with respect to, all or any of the Pledged Shares described in
clause (a) preceding; and
(c) all cash, securities, dividends and other property at any time and
from time to time receivable or otherwise distributed in respect of or in
exchange for any or all of the Pledged Shares described in clause (a) hereof
and any other property substituted or exchanged therefor.
Section 2.2. OBLIGATIONS SECURED. The security interest created
hereby in the Collateral constitutes continuing collateral security for all
of the following obligations, indebtedness and liabilities, whether now
existing or hereafter incurred:
(a) CREDIT AGREEMENT INDEBTEDNESS. The payment by Borrower, as and
when due and payable, of all amounts from time to time owing by Borrower
under or in respect of the Credit Agreement, the Notes or any of the other
Obligation Documents.
(b) RENEWALS. All renewals, extensions, amendments, modifications,
supplements, or restatements of, or substitutions for, any of the foregoing.
(c) PERFORMANCE. The due performance and observance by Borrower of all
of its other obligations from time to time existing under or in respect of
any of the Obligation Documents.
(d) HEDGE TRANSACTIONS. The payment and performance of any and all
present or future obligations of Borrower according to the terms of any
present or future Hedge Transaction, including, without limitation, any
present or future swap agreements, cap, floor, collar, exchange,
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transaction, forward agreement or other exchange or protection agreements
relating to crude oil, natural gas or other Hydrocarbons, or any option with
respect to any such transaction now existing or hereafter entered into
between and/or among Borrower, Agent, any Bank or any affiliate of any of the
foregoing.
ARTICLE III
REPRESENTATIONS WARRANTIES AND COVENANTS
Section 3.1. REPRESENTATIONS AND WARRANTIES. Borrower represents and
warrants as follows:
(a) OWNERSHIP AND LIENS. Borrower has good and marketable title to the
Collateral free and clear of all Liens, encumbrances or adverse claims,
except for the security interest created by this Agreement. No effective
financing statement or other instrument similar in effect covering all or any
part of the Collateral is on file in any recording office except such as have
been filed in favor of Agent relating to this Agreement.
(b) NO CONFLICTS OR CONSENTS. Neither the ownership or the intended
use of the Collateral by Borrower, nor the grant of the security interest by
Borrower to Agent herein, nor the exercise by Agent of its rights or remedies
hereunder, will (i) conflict with any provision of (a) any domestic or
foreign law, statute, rule or regulation, (b) the articles of incorporation,
charter or bylaws of Borrower, or (c) any agreement, judgment, license, order
or permit applicable to or binding upon Borrower, or (ii) result in or
require the creation of any Lien, charge or encumbrance upon any assets or
properties of Borrower except as expressly contemplated in the Obligation
Documents. Except as expressly contemplated in the Obligation Documents, no
consent, approval, authorization or order of, and no notice to or filing
with, any court, Governmental Authority or third party is required in
connection with the grant by Borrower of the security interest herein, or the
exercise by Agent of its rights and remedies hereunder.
(c) SECURITY INTEREST. Borrower has and will have at all times full
right, power and authority to grant a security interest in the Collateral to
Agent in the manner provided herein, free and clear of any Lien, adverse
claim, or encumbrance. This Agreement creates a valid and binding security
interest in favor of Agent in the Collateral securing the Obligations. The
taking possession by Agent (for the ratable benefit of Banks) of all
certificates, instruments and cash constituting Collateral from time to time
and the filing of the financing statements delivered concurrently herewith by
Borrower to Agent will perfect, and establish the first priority of, Agent's
security interest hereunder in the Collateral securing the Obligations. No
further or subsequent filing, recording, registration, other public notice or
other action is necessary or desirable to perfect or otherwise continue,
preserve or protect such security interest except for continuation statements
or filings as contemplated in SECTION 3.3(b).
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(d) PLEDGED SHARES. (i) Borrower is the legal and beneficial owner of
the Pledged Shares issued by [each Subsidiary of Borrower], (ii) the Pledged
Shares are duly authorized and issued, fully paid and non-assessable, and all
documentary, stamp or other Taxes or fees owing in connection with the
issuance, transfer and/or pledge thereof hereunder have been paid, (iii) no
dispute, right of setoff, counterclaim or defense exists with respect to all
or any part of the Pledged Shares, (iv) the Pledged Shares are free and clear
of all Liens, options, warrants, puts, calls or other rights of third
Persons, and restrictions, other than (a) those Liens arising under this
Agreement or any other of the Loan Papers and Liens for Taxes not yet due and
payable, and (b) restrictions on transferability imposed by applicable state
and federal securities Laws, (v) Borrower has full right and authority to
pledge the Pledged Shares for the purposes and upon the terms set out herein,
(vi) certificates representing the Pledged Shares have been delivered to
Agent, together with a duly executed blank stock power with signatures
guaranteed, for each certificate, (vii) the Pledged Shares constitute all of
the issued and outstanding capital stock of [each Subsidiary of Borrower] of
every class, and (viii) [no Subsidiary of Borrower] has issued, and there are
not outstanding, any options, warrants or other rights to acquire capital
stock of [any Subsidiary of Borrower].
Section 3.2. AFFIRMATIVE COVENANTS. Unless Agent shall otherwise
consent in writing, Borrower will at all times comply with the covenants
contained in this SECTION 3.2 from the date hereof and so long as any part of
the Obligations or Commitments is outstanding.
(a) OWNERSHIP AND LIENS. Borrower will maintain good and marketable
title to all Collateral free and clear of all Liens encumbrances or adverse
claims, except for the security interest created by this Agreement and the
security interests and other encumbrances expressly permitted by the Credit
Agreement. Borrower will cause to be terminated any financing statement or
other registration with respect to the Collateral, except such as may exist
or as may have been filed in favor of Agent. Borrower will defend Agent's
right, title and special property and security interest in and to the
Collateral against the claims of any Person.
(b) FURTHER ASSURANCES. Borrower will, at its expense and at any time
and from time to time, promptly execute and deliver all further instruments
and documents and take all further action that may be necessary or desirable
or that Agent may request in order (i) to perfect and protect the security
interest created or purported to be created hereby and the first priority of
such security interest; (ii) to enable Agent to exercise and enforce its
rights and remedies hereunder in respect of the Collateral; or (iii) to
otherwise effect the purposes of this Agreement, including, without
limitation: (a) executing and filing such financing or continuation
statements, or amendments thereto, as may be necessary or desirable or that
Agent may request in order to perfect and preserve the security interest
created or purported to be created hereby; and (b) furnishing to Agent from
time to time statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as Agent
may reasonably request, all in reasonable detail.
(c) DELIVERY OF PLEDGED SHARES. All certificates, instruments and
writings evidencing the Pledged Shares shall be delivered to Agent on or
prior to the execution and delivery of this Agreement. All other
certificates, instruments and writings hereafter evidencing or constituting
Pledged Shares shall be delivered to Agent promptly upon the receipt thereof
by or on behalf of
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Borrower. All such Pledged Shares shall be held by or on behalf of Agent
pursuant hereto and shall be delivered in the same manner and with the same
effect as described in SECTION 2.1 and SECTION 3.1 hereof. Upon delivery,
such shares shall thereupon constitute "Pledged Shares" and shall be subject
to the Liens herein created, for the purposes and upon the terms and
conditions set forth in this Agreement and the other Loan Papers.
(d) PROCEEDS OF PLEDGED SHARES. If Borrower shall receive, by virtue
of its being or having been an owner of any Pledged Shares, any (i) shares of
capital stock (including any certificate representing any shares of capital
stock or distribution in connection with any increase or reduction of
capital, reorganization, reclassification, merger, consolidation, sale of
assets, or spinoff or split-off), promissory note or other instrument or
writing; (ii) option or right, whether as an addition to, substitution for,
or in exchange for, any Pledged Shares or otherwise; (iii) dividends payable
in cash (except such dividends permitted to be retained by Borrower pursuant
to SECTION 4.7 hereof) or in securities or other property; or (iv) dividends
or other distributions in connection with a partial or total liquidation or
dissolution or in connection with a reduction of capital, capital surplus or
paid-in surplus, Borrower shall receive the same in trust for the benefit of
Agent, shall segregate it from Borrower's other property, and shall promptly
deliver it to Agent in the exact form received, with any necessary
endorsement or appropriate stock powers duly executed in blank, to be held by
Agent as Collateral.
(e) STATUS OF PLEDGED SHARES. The certificates evidencing the Pledged
Shares shall at all times be valid and genuine and shall not be altered. The
Pledged Shares at all times shall be duly authorized, validly issued, fully
paid, and non-assessable, shall not be issued in violation of the pre-emptive
rights of any Person or of any agreement by which Borrower or
[any of its Subsidiaries] is bound, and, except for the bylaws of Borrower,
shall not be subject to any restrictions or conditions with respect to the
transfer, voting or capital of any Pledged Shares.
Section 3.3. NEGATIVE COVENANTS. Unless Agent shall otherwise consent
in writing, Borrower will at all times comply with the covenants contained in
this SECTION 3.3 from the date hereof and so long as any part of the
Obligations or the Commitments is outstanding.
(a) TRANSFER OR ENCUMBRANCE. Borrower will not sell, assign (by
operation of law or otherwise), transfer, exchange, lease or otherwise
dispose of any of the Collateral, nor will Borrower xxxxx x Xxxx upon or
execute, file or record any financing statement or other registration with
respect to the Collateral, nor will Borrower allow any such Lien, financing
statement, or other registration to exist or deliver actual or constructive
possession of the Collateral to any other Person other than Liens in favor of
Agent.
(b) FINANCING STATEMENT FILINGS. Borrower recognizes that financing
statements pertaining to the Collateral have been or may be filed where
Borrower maintains any Collateral, has its records concerning any Collateral
or has its chief executive office or chief place of business. Without
limitation of any other covenant herein, Borrower will not cause or permit
any change to be made in its name, identity or corporate structure, or any
change to be made to a jurisdiction other than as represented in SECTION 3.1
hereof in (i) the location of any records concerning any Collateral,
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or (ii) in the location of its chief executive office or chief place of
business, unless Borrower shall have notified Agent of such change at least
thirty (30) days prior to the effective date of such change, and shall have
first taken all action required by Agent for the purpose of further
perfecting or protecting the security interest in favor of Agent in the
Collateral. In any notice furnished pursuant to this subsection, Borrower
will expressly state that the notice is required by this Agreement and
contains facts that may require additional filings of financing statements or
other notices for the purposes of continuing perfection of Agent's security
interest in the Collateral.
(c) IMPAIRMENT OF SECURITY INTEREST. Borrower will not take or fail to
take any action which would in any manner impair the enforceability of Agent's
security interest in any Collateral.
(d) DILUTION OF PLEDGED SHARES. Borrower will not permit the issuance of
(i) any additional shares of capital stock of any class of [any of its
Subsidiaries] (unless immediately upon issuance the same are pledged and
delivered to Agent pursuant to the terms hereof), (ii) any securities
convertible voluntarily by the holder thereof or automatically upon the
occurrence or non-occurrence of any event or condition into, or exchangeable
for, any such capital stock, or (iii) any warrants, options, contracts or other
commitments entitling any Person to purchase or otherwise acquire any such
capital stock of [any Subsidiary of Borrower].
(e) RESTRICTIONS ON PLEDGED SHARES. Except for the bylaws of [each
Subsidiary of Borrower], Borrower will not enter into any agreement creating, or
otherwise permit to exist, any restriction or condition upon the transfer,
voting or control of any Pledged Shares.
ARTICLE IV.
REMEDIES, POWERS AND AUTHORIZATIONS
Section 4.1. PROVISIONS CONCERNING THE COLLATERAL.
(a) ADDITIONAL FINANCING STATEMENT FILINGS. Borrower hereby authorizes
Agent to file, without the signature of Borrower where permitted by law, one (1)
or more financing or continuation statements, and amendments thereto, relating
to the Collateral. Borrower further agrees that a carbon, photographic or other
reproduction of this Agreement or any financing statement describing any
Collateral is sufficient as a financing statement and may be filed in any
jurisdiction Agent may deem appropriate.
(b) POWER OF ATTORNEY. Borrower hereby irrevocably appoints Agent as
Borrower's attorney-in-fact and proxy, with full authority in the place and
stead of Borrower and in the name of Borrower or otherwise, from time to time in
Agent's discretion, to take any action (except for the exercise of any voting
rights pertaining to the Pledged Shares or any part thereof) and to execute any
instrument, certificate or notice which Agent may deem necessary or advisable to
accomplish the purposes of this Agreement including, without limitation: (i) to
request or instruct Borrower (and each registrar, transfer agent, or similar
Person acting on behalf of Borrower) to register the pledge or transfer of the
Collateral to Agent; (ii) to otherwise give notification to Borrower, registrar,
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transfer agent, financial intermediary, or other Person of Agent's security
interests hereunder; (iii) to ask, demand, collect, xxx for, recover, compound,
receive and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral; (iv) to receive, indorse and collect any
drafts or other instruments, documents and chattel paper; and (v) to file any
claims or take any action or institute any proceedings which Agent may deem
necessary or desirable for the collection of any of the Collateral or otherwise
to enforce the rights of Agent with respect to any of the Collateral.
(c) PERFORMANCE BY AGENT. If Borrower fails to perform any agreement or
obligation contained herein, Agent may itself perform, or cause performance of,
such agreement or obligation, and the expenses of Agent incurred in connection
therewith shall be payable by Borrower (but not Borrower) under SECTION 4.4.
(d) COLLECTION RIGHTS. Agent shall have the right at any time, upon the
occurrence and during the continuance of a Default or an Event of Default, to
notify any or all obligors (including without limitation Borrower) under any
accounts or general intangibles included among the Collateral of the assignment
thereof to Agent and to direct such obligors to make payment of all amounts due
or to become due to Borrower thereunder directly to Agent and, upon such
notification and at the expense of Borrower (but not Borrower) and to the extent
permitted by law, to enforce collection thereof and to adjust, settle or
compromise the amount or payment thereof, in the same manner and to the same
extent as Borrower could have done. After Borrower receives notice that Agent
has given any notice referred to above in this subsection, (i) all amounts and
proceeds (including instruments and writings) received by Borrower in respect of
such accounts or general intangibles shall be received in trust for the benefit
of Agent hereunder, shall be segregated from other funds of Borrower and shall
be forthwith paid over to Agent in the same form as so received (with any
necessary indorsement) to be held as cash collateral and (a) released to
Borrower upon the remedy of all Defaults or Events of Default, or (b) if any
Event of Default shall have occurred and be continuing, applied as specified in
SECTION 4.3, and (ii) Borrower will not adjust, settle or compromise the amount
or payment of any such account or general intangible or release wholly or partly
any account debtor or obligor thereof (including without limitation Borrower) or
allow any credit or discount thereon.
Section 4.2. EVENT OF DEFAULT REMEDIES. If an Event of Default shall
have occurred and be continuing, Agent may from time to time in its discretion,
without limitation and without notice except as expressly provided below:
(a) exercise in respect of the Collateral, in addition to other rights and
remedies provided for herein, under the other Obligation Documents or otherwise
available to it, all the rights and remedies of a secured party on default under
the Code (whether or not the Code applies to the affected Collateral);
(b) require Borrower to, and Borrower hereby agrees that it will at its
expense and upon request of Agent forthwith, assemble all or part of the
Collateral as directed by Agent and make it
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available to Agent at a place to be designated by Agent which is reasonably
convenient to both parties;
(c) reduce its claim to judgment against Borrower or foreclose or
otherwise enforce, in whole or in part, the security interest created hereby by
any available judicial procedure;
(d) dispose of, at its office, on the premises of Borrower or elsewhere,
all or any part of the Collateral, as a unit or in parcels, by public or private
proceedings, and by way of one or more contracts (it being agreed that the sale
of any part of the Collateral shall not exhaust Agent's power of sale, but sales
may be made from time to time, and at any time, until all of the Collateral has
been sold or until the Obligations have been paid and performed in full), and at
any such sale it shall not be necessary to exhibit any of the Collateral;
(e) buy (or allow any Bank to buy) the Collateral, or any part thereof, at
any public sale;
(f) buy (or allow any Bank to buy) the Collateral, or any part thereof, at
any private sale if the Collateral is of a type customarily sold in a recognized
market or is of a type which is the subject of widely distributed standard price
quotations;
(g) apply by appropriate judicial proceedings for appointment of a
receiver for the Collateral, or any part thereof, and Borrower hereby consents
to any such appointment; and
(h) at its discretion, retain the Collateral in satisfaction of the
Obligations whenever the circumstances are such that Agent is entitled to do so
under the Code or otherwise (provided that Agent shall in no circumstances be
deemed to have retained the Collateral in satisfaction of the Obligations in the
absence of an express notice by Agent to Borrower that Agent has either done so
or intends to do so).
Borrower agrees that, to the extent notice of sale shall be required by law, at
least five (5) days' notice to Borrower of the time and place of any public sale
or the time after which any private sale is to be made shall constitute
reasonable notification. Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. Agent may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned.
Section 4.3. APPLICATION OF PROCEEDS. If any Event of Default shall have
occurred and be continuing, Agent may in its discretion apply any cash held by
Agent as Collateral, and any cash proceeds received by Agent in respect of any
sale of, collection from, or other realization upon all or any part of the
Collateral, to any or all of the following in such order as Agent may elect:
(a) To the repayment of the reasonable costs and expenses, including
reasonable attorneys' fees and legal expenses, incurred by Agent in connection
with (i) the administration of this Agreement, (ii) the custody, preservation,
use or operation of, or the sale of, collection from, or other
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realization upon, any Collateral, (iii) the exercise or enforcement of any of
the rights of Agent hereunder, or (iv) the failure of Borrower to perform or
observe any of the provisions hereof;
(b) To the payment or other satisfaction of any Liens, encumbrances, or
adverse claims upon or against any of the Collateral;
(c) To the reimbursement of Agent for the amount of any obligations of
Borrower or any Other Liable Party paid or discharged by Agent pursuant to the
provisions of this Agreement or the other Obligation Documents, and of any
expenses of Agent payable by Borrower hereunder or under the other Obligation
Documents;
(d) To the satisfaction of any other Obligations or any other indebtedness
of Borrower to Banks or Agent;
(e) By holding the same as Collateral;
(f) To the payment of any other amounts required by applicable law
(including, without limitation, Section 9.504(a)(3) of the Code or any successor
or similar, applicable statutory provision); and
(g) By delivery to Borrower or to whomsoever shall be lawfully entitled to
receive the same or as a court of competent jurisdiction shall direct.
Section 4.4. RELEASE AND EXPENSES. In addition to, and not in
qualification of, any similar obligations under other Obligation Documents:
(a) Borrower agrees to release and forever discharge Agent and each Bank
from and against any and all claims, losses and liabilities growing out of or
resulting from this Agreement (including, without limitation, enforcement of
this Agreement). The foregoing release and discharge shall apply whether or not
such claims, losses and liabilities are in any way or to any extent owed, in
whole or in part, under any claim or theory of strict liability or are, to any
extent caused, in whole or in part, by any negligent act or omission of any kind
by Agent or any Bank.
(b) Borrower will upon demand pay to Agent the amount of any and all costs
and expenses, including the fees and disbursements of Agent's counsel and of any
experts and agents, which Agent may incur in connection with (i) the
transactions which give rise to this Agreement; (ii) the preparation of this
Agreement and the perfection and preservation of the security interest created
under this Agreement; (iii) the administration of this Agreement; (iv) the
custody, preservation, use or operation of, or the sale of, collection from, or
other realization upon, any Collateral; (v) the exercise or enforcement of any
of the rights of Agent hereunder; or (vi) the failure by Borrower to perform or
observe any of the provisions hereof, except expenses resulting from Agent's
gross negligence or willful misconduct.
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Section 4.5. NON-JUDICIAL REMEDIES. In granting to Agent the power to
enforce its rights hereunder without prior judicial process or judicial hearing,
Borrower expressly waives, renounces and knowingly relinquishes any legal right
which might otherwise require Agent to enforce its rights by judicial process.
In so providing for non-judicial remedies, Borrower recognizes and concedes that
such remedies are consistent with the usage of trade, are responsive to
commercial necessity, and are the result of a bargain at arm's length. Nothing
herein is intended to prevent Agent or Borrower from resorting to judicial
process at either party's option.
Section 4.6. OTHER RECOURSE. Borrower waives any right to require Agent
or Banks to proceed against any other Person, exhaust any Collateral or other
security for the Obligations, or to have any Other Liable Party joined with
Borrower in any suit arising out of the Obligations or this Agreement, or pursue
any other remedy in Agent's power. Borrower further waives any and all notice
of acceptance of this Agreement and of the creation, modification,
rearrangement, renewal or extension for any period of any of the Obligations of
any Other Liable Party from time to time. Borrower further waives any defense
arising by reason of any disability or other defense of any Other Liable Party
or by reason of the cessation from any cause whatsoever of the liability of any
Other Liable Party. Until all of the Obligations shall have been paid in full,
Borrower shall have no right to subrogation and Borrower waives the right to
enforce any remedy which Agent or any Bank has or may hereafter have against any
Other Liable Party, and waives any benefit of and any right to participate in
any other security whatsoever now or hereafter held by Agent. Borrower
authorizes Agent and each Bank, without notice or demand and without any
reservation of rights against Borrower and without affecting Borrower's
liability hereunder or on the Obligations, from time to time to (a) take or hold
any other property of any type from any other Person as security for the
Obligations, and exchange, enforce, waive and release any or all of such other
property, (b) apply the Collateral or such other property and direct the order
or manner of sale thereof as Agent may in its discretion determine, (c) renew,
extend for any period, accelerate, modify, compromise, settle or release any of
the obligations of any Other Liable Party in respect to any or all of the
Obligations or other security for the Obligations, (d) waive, enforce, modify,
amend or supplement any of the provisions of any Obligation Document with any
Person other than Borrower, and (e) release or substitute any Other Liable
Party.
Section 4.7. VOTING RIGHTS, DIVIDENDS ETC. IN RESPECT OF PLEDGED SHARES.
(a) So long as no Default or Event of Default shall have occurred and be
continuing Borrower may receive and retain any and all dividends or interest
paid in respect of the Pledged Shares; PROVIDED, HOWEVER, that any and all
(i) dividends and interest paid or payable other than in cash in
respect of, and instruments and other property received, receivable or
otherwise distributed in respect of or in exchange for, any Pledged Shares,
(ii) dividends and other distributions paid or payable in cash in
respect of any Pledged Shares in connection with a partial or total
liquidation or dissolution or in connection with a reduction of capital,
capital surplus or paid-in surplus, and
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(iii) cash paid, payable or otherwise distributed in redemption of,
or in exchange for, any Pledged Shares,
shall be, and shall forthwith be delivered to Agent to hold as, Pledged Shares
and shall, if received by Borrower, be received in trust for the benefit of
Agent, be segregated from the other property or funds of Borrower, and be
forthwith delivered to Agent in the exact form received with any necessary
indorsement or appropriate stock powers duly executed in blank, to be held by
Agent as Collateral.
(b) Upon the occurrence and during the continuance of a Default or an
Event of Default:
(i) all rights of Borrower to receive and retain the dividends and
interest payments which Borrower would otherwise be authorized to receive
and retain pursuant to subsection (a) of this section shall automatically
cease, and all such rights shall thereupon become vested in Agent which
shall thereupon have the right to receive and hold as Pledged Shares such
dividends and interest payments;
(ii) without limiting the generality of the foregoing, Agent may at
its option exercise any and all rights of conversion, exchange,
subscription or any other rights, privileges or options pertaining to any
of the Pledged Shares (except voting rights) as if it were the absolute
owner thereof, including, without limitation, the right to exchange, in its
discretion, any and all of the Pledged Shares upon the merger,
consolidation, reorganization, recapitalization or other adjustment of
Borrower or [any of its Subsidiaries], or upon the exercise by Borrower or
[any of its Subsidiaries] of any right, privilege or option pertaining to
any Pledged Shares, and, in connection therewith, to deposit and deliver
any and all of the Pledged Shares with any committee, depository, transfer,
agent, registrar or other designated agent upon such terms and conditions
as it may determine; and
(iii) all dividends and interest payments which are received by
Borrower contrary to the provisions of subsection (b) (i) of this section
shall be received in trust for the benefit of Agent, shall be segregated
from other funds of Borrower, and shall be forthwith paid over to Agent as
Pledged Shares in the exact form received, to be held by Agent as
Collateral.
Anything herein to the contrary notwithstanding, Agent may not exercise any
voting rights pertaining to the Pledged Shares and Borrower may at all times
exercise any and all voting rights pertaining to the Pledged Shares or any part
thereof for any purpose not inconsistent with the terms of this Agreement or any
other Obligation Document; provided, however, upon the occurrence and during the
continuance of a Default or an Event of Default, Borrower will not exercise or
refrain from exercising any such right, as the case may be, if Agent gives
notice that, in Agent's judgment, such action would result in a Material Adverse
Change with respect to the value of the Pledged Shares or the benefits to Agent
of its security interest hereunder.
Section 4.8. PRIVATE SALE OF PLEDGED SHARES. Borrower recognizes that
Agent may deem it impracticable to effect a public sale of all or any part of
the Pledged Shares and that Agent may,
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therefore, determine to make one or more private sales of any such securities
to a restricted group of purchasers who will be obligated to agree, among
other things, to acquire such securities for their own account, for
investment and not with a view to the distribution or resale thereof.
Borrower acknowledges that any such private sale may be at prices and on
terms less favorable to the seller than the prices and other terms which
might have been obtained at a public sale and, notwithstanding the foregoing,
agrees that such private sales shall be deemed to have been made in a
commercially reasonable manner and that Agent shall have no obligation to
delay the sale of any such securities for the period of time necessary to
permit Borrower to register such securities (with no obligation of Borrower
to accomplish such registration) for public sale under the Securities Act of
1933, as amended. Borrower further acknowledges and agrees that any offer to
sell such securities which has been (a) publicly advertised on a BONA FIDE
basis in a newspaper or other publication of general circulation in the
financial community of Dallas, Texas (to the extent that such an offer may be
so advertised without prior registration under the Securities Act), or (b)
made privately in the manner described above to not less than fifteen (15)
BONA FIDE offerees shall be deemed to involve a "public sale" for the
purposes of Section 9.504(c) of the Code (or any successor or similar,
applicable statutory provision) as then in effect in the State of Texas,
notwithstanding that such sale may not constitute a "public offering" under
the Securities Act of 1933, as amended, and that Agent may, in such event,
bid for the purchase of such securities.
ARTICLE V
MISCELLANEOUS
Section 5.1. NOTICES. Any notice or communication required or permitted
hereunder shall be given in writing, sent by personal delivery, by telecopy, by
delivery service with proof of delivery, or by registered or certified United
States mail, postage prepaid, addressed to the appropriate party as follows:
TO BORROWER: Quicksilver Resources, Inc.
0000 Xxxxxxxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
TO AGENT: NationsBank of Texas, N.A., as Agent for Banks
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Fax No. (000) 000-0000
or to such other address or to the attention of such other individual as
hereafter shall be designated in writing by the applicable party sent in
accordance herewith. Any such notice or communication shall be deemed to have
been given (a) in the case of personal delivery or delivery service, as of the
date of first attempted delivery at the address or in the manner provided
herein, (b) in the case of
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telecopy, upon receipt, or (c) in the case of registered or certified United
States mail, three (3) days after deposit in the mail.
Section 5.2. AMENDMENTS. No amendment of any provision of this Agreement
shall be effective unless it is in writing and signed by Borrower, Agent and
Banks, and no waiver of any provision of this Agreement, and no consent to any
departure by Borrower therefrom, shall be effective unless it is in writing and
signed by Agent and Banks, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given and
to the extent specified in such writing.
Section 5.3. PRESERVATION OF RIGHTS. No failure on the part of Agent or
any Bank to exercise, and no delay in exercising, any right hereunder or under
any other Obligation Document shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. Neither the execution nor
the delivery of this Agreement shall in any manner impair or affect any other
security for the Obligations. The rights and remedies of Agent and Banks
provided herein and in the other Obligation Documents are cumulative of and are
in addition to, and not exclusive of, any rights or remedies provided by law.
The rights of Agent and Banks under any Obligation Document against any party
thereto are not conditional or contingent on any attempt by Agent or Banks to
exercise any of its rights under any other Obligation Document against such
party or against any other Person.
Section 5.4. UNENFORCEABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or invalidity without
invalidating the remaining portions hereof or thereof or affecting the validity
or enforceability of such provision in any other jurisdiction.
Section 5.5. SURVIVAL OF AGREEMENTS. All representations and warranties
of Borrower herein, and all covenants and agreements herein shall survive the
execution and delivery of this Agreement, the execution and delivery of any
other Obligation Documents and the creation of the Obligations.
Section 5.6. OTHER LIABLE PARTY. Neither this Agreement nor the exercise
by Agent or any Bank or the failure of Agent or any Bank to exercise any right,
power or remedy conferred herein or by law shall be construed as relieving any
Other Liable Party from liability on the Obligations or any deficiency thereon.
This Agreement shall continue irrespective of the fact that the liability of any
Other Liable Party may have ceased or irrespective of the validity or
enforceability of any other Obligation Document to which Borrower or any Other
Liable Party may be a party, and notwithstanding the reorganization, death,
incapacity or bankruptcy of any Other Liable Party, and notwithstanding the
reorganization or bankruptcy or other event or proceeding affecting any Other
Liable Party.
Section 5.7. BINDING EFFECT AND ASSIGNMENT. This Agreement creates a
continuing security interest in the Collateral and (a) shall be binding on
Borrower and its successors and permitted assigns, and (b) shall inure, together
with all rights and remedies of Agent hereunder, to the benefit
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of Agent and Banks and their respective successors, transferees and assigns.
Without limiting the generality of the foregoing, Agent and Banks may pledge,
assign or otherwise transfer any or all of their respective rights under any
or all of the Obligation Documents to any other Person, and such other Person
shall thereupon become vested with all of the benefits in respect thereof
granted herein or otherwise. None of the rights or duties of Borrower
hereunder may be assigned or otherwise transferred without the prior written
consent of Agent and Banks.
Section 5.8. TERMINATION. It is contemplated by the parties hereto that
there may be times when no Obligations are outstanding, but notwithstanding such
occurrences, this Agreement shall remain valid and shall be in full force and
effect as to subsequent outstanding Obligations. Upon the satisfaction in full
of the Obligations, upon the termination or expiration of the Credit Agreement
and any other Commitment of Banks to extend credit to Borrower, and upon written
request for the termination hereof delivered by Borrower to Agent and Banks,
this Agreement and the security interest created hereby shall terminate and all
rights to the Collateral shall revert to Borrower. Agent will, upon Borrower's
request and at Borrower's expense, (a) return to Borrower such of the Collateral
as shall not have been sold or otherwise disposed of or applied pursuant to the
terms hereof, and (b) execute and deliver to Borrower such documents as Borrower
shall reasonably request to evidence such termination.
SECTION 5.9. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND THE LAWS OF
THE UNITED STATES OF AMERICA.
Section 5.10. COUNTERPARTS. This Agreement may be separately executed in
any number of counterparts, all of which when so executed shall be deemed to
constitute one and the same Agreement.
Section 5.11. LOAN PAPER. This Agreement is a "Loan Paper", as defined in
the Credit Agreement, and, except as expressly provided herein to the contrary,
this Agreement is subject to all provisions of the Credit Agreement governing
such Loan Paper.
IN WITNESS WHEREOF, Borrower has caused this Agreement to be executed and
delivered by its officer thereunto duly authorized, as of the date first above
written.
QUICKSILVER RESOURCES, INC.,
a Delaware corporation
By:
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Name:
----------------------------------
Title:
---------------------------------
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EXHIBIT B
NOTE
$100,000,000 Dallas, Texas ________, 1998
FOR VALUE RECEIVED, the undersigned, Quicksilver Resources, Inc., a
Delaware corporation ("MAKER"), promises to pay to the order of NationsBank of
Texas, N.A. ("PAYEE"), at the offices of NationsBank of Texas, N.A., as Agent
(herein so called), at 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxxxxx, Xxxxx 00000, for
Payee, the principal sum of One Hundred Million and No/100 Dollars
($100,000,000), or so much thereof as may be advanced and outstanding, together
with interest, as hereinafter described.
This Note has been executed and delivered pursuant to, and is subject to
and governed by, the terms of that certain Amended and Restated Credit Agreement
dated as of ___________, 1998 (as hereafter renewed, extended, amended, or
supplemented, the "AGREEMENT") among Maker, Payee, Agent, and the other Banks
named therein, and is one of the "NOTES" referred to therein. Unless otherwise
defined herein or unless the context hereof otherwise requires, each term used
herein with its initial letter capitalized has the meaning given to such term in
the Agreement.
Maker also promises to pay interest on the unpaid principal amount hereof
in like money at the offices of Agent above referenced from the date hereof at
the rates applicable to amounts outstanding under the Revolving Loan provided in
the Agreement and on the dates specified in the Agreement.
The principal balance of this Note shall be paid at the times and in the
amounts required by the Agreement. The entire outstanding principal balance
hereof and all accrued but unpaid interest thereon shall be due and payable in
full on the Termination Date.
Upon and subject to the terms and conditions of the Agreement, Maker shall
be entitled to prepay the principal of or interest on this Note from time to
time and at any time, in whole or in part.
Upon the occurrence and continuance of an Event of Default, and upon the
conditions stated in the Agreement, Agent may, at its option, and shall, to the
extent required in accordance with the terms of the Agreement, declare the
entire unpaid principal of and accrued interest on this Note immediately due and
payable (provided that, upon the occurrence of certain Events of Default, and
upon the conditions stated in the Agreement, such acceleration shall be
automatic), without notice (except as otherwise required by the Agreement),
demand, or presentment, all of which are hereby waived, and the holder hereof
shall have the right to offset against this Note any sum or sums owed by the
holder hereof to Maker. All past-due principal of and, to the extent permitted
by law, accrued interest on this Note shall, at the option of the holder hereof,
bear interest at the lesser of (a) the Maximum Lawful Rate or (b) the Base Rate
plus 3% until paid from the due date.
Notwithstanding the foregoing, if at any time, any rate of interest
calculated under Section 3.3 of the Agreement (the "CONTRACT RATE") exceeds the
Maximum Lawful Rate, the rate of interest hereunder shall be limited to the
Maximum Lawful Rate, but any subsequent reductions in the Contract Rate shall
not reduce the rate of interest on this Note below the Maximum Lawful Rate until
the total amount of interest accrued equals the amount of interest which would
have accrued (including the amount of interest which would have accrued prior to
the payment or prepayment of any portion of this Note) if the Contract Rate had
at all times been in effect. In the event that at maturity (stated or by
acceleration), or at final payment of this Note, the total amount of interest
paid or accrued on this Note is less than the amount of interest which would
have accrued if the Contract Rate had at all times been in effect with respect
thereto, then at such time the Maker shall pay to the holder of this Note an
amount equal to the difference between (a) the lesser of the amount of interest
which would have accrued if the Contract Rate had at all times been in effect
and the amount of interest which would have accrued if the Maximum Lawful Rate
had at all times been in effect, and (b) the amount of interest actually paid or
accrued on this Note.
QUICKSILVER RESOURCES, INC.,
a Delaware corporation
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
2
ADVANCES, MATURITIES, AND
PAYMENTS OF PRINCIPAL AND INTEREST
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Payee's
Commitment Expiration Rate of Interest Unpaid
Borrowing Percentage of Interest Applicable to Amount of Amount of Principal Notation
Date of Borrowing Period Tranche Principal Paid Interest Paid Balance Made By
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EXHIBIT C
GUARANTY
THIS GUARANTY (this "GUARANTY") is dated as of the ____ day of __________,
1998, by [SUBSIDIARY OF BORROWER], a _____ corporation ("GUARANTOR"), in favor
of NATIONSBANK OF TEXAS, N.A. and each of the other financial institutions
listed on Schedule 1 to the Credit Agreement (as hereinafter defined) as Banks,
and each of their successors and assigns as permitted pursuant to the Credit
Agreement (NationsBank of Texas, N.A. acting as a Bank but not as Agent, each of
the other Banks listed on Schedule 1 of the Credit Agreement, and each of their
successors and assigns are collectively referred to herein as "NOTEHOLDERS").
W I T N E S S E T H:
WHEREAS, Quicksilver Resources, Inc., a Delaware corporation ("BORROWER"),
Noteholders, and NationsBank of Texas, N.A., as Agent ("AGENT") are parties to
that certain Amended and Restated Credit Agreement (herein so called) dated as
of __________, 1998, pursuant to which Noteholders have agreed to make a
revolving credit loan and a term loan to Borrower and issue and participate in
letters of credit issued on behalf of Borrower (unless otherwise defined herein,
all terms used herein with their initial letter capitalized shall have the
meaning given such terms in the Credit Agreement); and
WHEREAS, Noteholders have required, as a condition to extending credit
under the Credit Agreement, that Guarantor execute and deliver this Guaranty;
and
WHEREAS, Guarantor has determined that valuable benefits will be derived by
it as a result of the Credit Agreement and the extension of credit to be made by
Noteholders thereunder; and
WHEREAS, Guarantor has further determined that the benefits accruing to it
from the Credit Agreement exceed Guarantor's anticipated liability under this
Guaranty.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged and confessed, Guarantor hereby covenants and
agrees as follows:
1. Guarantor hereby absolutely and unconditionally guarantees the prompt,
complete and full payment when due, no matter how such shall become due, of the
Obligations, and further guarantees that Borrower will properly and timely
perform the Obligations. Notwithstanding any contrary provision in this
Guaranty, however, Guarantor's maximum liability under this Guaranty is limited,
to the extent, if any, required so that its liability is not subject to
avoidance under applicable Debtor Relief Laws (as such term is defined in
PARAGRAPH 8 hereof).
2. If Guarantor is or becomes liable for any indebtedness owing by
Borrower to any Noteholder by endorsement or otherwise than under this Guaranty,
such liability shall not be in any manner impaired or affected hereby, and the
rights of Noteholders hereunder shall be cumulative of
4
any and all other rights that Noteholders may ever have against Guarantor.
The exercise by any Noteholder of any right or remedy hereunder or under any
other instrument, at law or in equity, shall not preclude the concurrent or
subsequent exercise of any other right or remedy.
3. In the event of default by Borrower in payment of the Obligations, or
any part thereof, when such Obligations become due, either by their terms or as
the result of the exercise of any power to accelerate, Guarantor shall, on
demand, and without further notice of dishonor and without any notice having
been given to Guarantor previous to such demand of the acceptance by Noteholders
of this Guaranty, and without any notice having been given to such Guarantor
previous to such demand of the creating or incurring of such Obligations, pay
the amount due thereon to Noteholders at Agent's office as set forth in the
Credit Agreement, and it shall not be necessary for any Noteholder, in order to
enforce such payment by Guarantor, first, to institute suit or exhaust its
remedies against Borrower or others liable on such Obligations, to have Borrower
joined with Guarantor in any suit brought under this Guaranty or to enforce
their rights against any security which shall ever have been given to secure
such indebtedness; provided, however, that in the event any Noteholder elects to
enforce and/or exercise any remedies they may possess with respect to any
security for the Obligations prior to demanding payment from Guarantor,
Guarantor shall nevertheless be obligated hereunder for any and all sums still
owing to Noteholders on the Obligations and not repaid or recovered incident to
the exercise of such remedies.
4. Notice to Guarantor of the acceptance of this Guaranty and of the
making, renewing or assignment of the Obligations and each item thereof, are
hereby expressly waived by Guarantor.
5. Each payment on the Obligations shall be deemed to have been made by
Borrower unless express written notice is given to Noteholders at the time of
such payment that such payment is made by Guarantor as specified in such notice.
6. If all or any part of the Obligations at any time are secured,
Guarantor agrees that Agent and/or Noteholders may at any time and from time to
time, at their discretion and with or without valuable consideration, allow
substitution or withdrawal of collateral or other security and release
collateral or other security or compromise or settle any amount due or owing
under the Credit Agreement or amend or modify in whole or in part the Credit
Agreement or any Loan Paper executed in connection with same without impairing
or diminishing the obligations of Guarantor hereunder. Guarantor further agrees
that if Borrower executes in favor of any Noteholder any collateral agreement,
mortgage or other security instrument, the exercise by any Noteholder of any
right or remedy thereby conferred on such Noteholder shall be wholly
discretionary with such Noteholder, and that the exercise or failure to exercise
any such right or remedy shall in no way impair or diminish the obligation of
Guarantor hereunder. Guarantor further agrees that Noteholders and Agent shall
not be liable for their failure to use diligence in the collection of the
Obligations or in preserving the liability of any person liable for the
Obligations, and Guarantor hereby waives presentment for payment, notice of
nonpayment, protest and notice thereof (including, notice of acceleration), and
diligence in bringing suits against any Person liable on the Obligations, or any
part thereof.
5
7. Guarantor agrees that Noteholders, in their discretion, may (i) bring
suit against all guarantors (including, without limitation, Guarantor hereunder)
of the Obligations jointly and severally or against any one or more of them,
(ii) compound or settle with any one or more of such guarantors for such
consideration as Noteholders may deem proper, and (iii) release one or more of
such guarantors from liability hereunder, and that no such action shall impair
the rights of Noteholders to collect the Obligations (or the unpaid balance
thereof) from other such guarantors of the Obligations, or any of them, not so
sued, settled with or released. Guarantor agrees, however, that nothing
contained in this paragraph, and no action by Noteholders permitted under this
paragraph, shall in any way affect or impair the rights or obligations of such
guarantors among themselves.
8. Guarantor represents and warrants to each Noteholder that (i)
Guarantor is a corporation duly organized and validly existing under the laws of
the jurisdiction of its incorporation or formation; and (ii) Guarantor possesses
all requisite authority and power to authorize, execute, deliver and comply with
the terms of this Guaranty; this Guaranty has been duly authorized and approved
by all necessary action on the part of Guarantor and constitutes a valid and
binding obligation of Guarantor enforceable in accordance with its terms, except
as the enforcement thereof may be limited by applicable Debtor Relief Laws; and
no approval or consent of any court or governmental entity is required for the
authorization, execution, delivery or compliance with this Guaranty which has
not been obtained (and copies thereof delivered to Noteholders). As used in
this PARAGRAPH 8, "DEBTOR RELIEF LAWS" means the Bankruptcy Code of the United
States of America and all other applicable liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization,
suspension of payments or similar debtor relief laws from time to time in effect
affecting the rights of creditors generally.
9. Guarantor covenants and agrees that until the Obligations are paid and
performed in full, except as otherwise provided in the Credit Agreement or
unless Noteholders give their prior written consent to any deviation therefrom,
it will (i) at all times maintain its existence and authority to transact
business in any State or jurisdiction where Guarantor has assets and operations,
(ii) promptly deliver to Noteholders and to Agent such information respecting
its business affairs, assets and liabilities as Noteholders may reasonably
request, and (iii) duly and punctually observe and perform all covenants
applicable to Guarantor under the Credit Agreement and the other Loan Papers.
The failure of Guarantor to comply with the terms of this paragraph shall be an
Event of Default under the Credit Agreement.
10. This Guaranty is for the benefit of Noteholders, their successors and
assigns, and in the event of an assignment by Noteholders (or their successors
or assigns) of the Obligations, or any part thereof, the rights and benefits
hereunder, to the extent applicable to the Obligations so assigned, may be
transferred with such Obligations. This Guaranty is binding upon Guarantor and
its successors and assigns.
11. No modification, consent, amendment or waiver of any provision of this
Guaranty, nor consent to any departure by Guarantor therefrom, shall be
effective unless the same shall be in writing and signed by each Noteholder, and
then shall be effective only in the specific instance and
6
for the purpose for which given. No notice to or demand on Guarantor in any
case shall, of itself, entitle Guarantor to any other or further notice or
demand in similar or other circumstances. No delay or omission by
Noteholders in exercising any power or right hereunder shall impair any such
right or power or be construed as a waiver thereof or any acquiescence
therein, nor shall any single or partial exercise of any such power preclude
other or further exercise thereof, or the exercise of any other right or
power hereunder. All rights and remedies of Noteholders hereunder are
cumulative of each other and of every other right or remedy which Noteholders
may otherwise have at law or in equity or under any other contract or
document, and the exercise of one or more rights or remedies shall not
prejudice or impair the concurrent or subsequent exercise of other rights or
remedies.
12. No provision herein or in any promissory note, instrument or any
other Loan Paper executed by Borrower or Guarantor evidencing the Obligations
shall require the payment or permit the collection of interest in excess of
the Maximum Lawful Rate. If any excess of interest in such respect is
provided for herein or in any such promissory note, instrument, or any other
Loan Paper, the provisions of this paragraph shall govern, and neither
Borrower nor Guarantor shall be obligated to pay the amount of such interest
to the extent that it is in excess of the amount permitted by law. The
intention of the parties being to conform strictly to any applicable federal
or state usury laws now in force, all promissory notes, instruments and other
Loan Papers executed by Borrower or Guarantor evidencing the Obligations
shall be held subject to reduction to the amount allowed under said usury
laws as now or hereafter construed by the courts having jurisdiction.
13. If Guarantor should breach or fail to perform any provision of this
Guaranty, Guarantor agrees to pay Noteholders all costs and expenses
(including court costs and reasonable attorneys fees) incurred by Noteholders
in the enforcement hereof.
14. (a) The liability of Guarantor under this Guaranty shall in no
manner be impaired, affected or released by the insolvency, bankruptcy,
making of an assignment for the benefit of creditors, arrangement,
compensation, composition or readjustment of Borrower, or any proceedings
affecting the status, existence or assets of Borrower or other similar
proceedings instituted by or against Borrower and affecting the assets of
Borrower.
(b) Guarantor acknowledges and agrees that any interest on any
portion of the Obligations which accrues after the commencement of any
proceeding referred to in clause (a) above (or, if interest on any portion of
the Obligations ceases to accrue by operation of law by reason of the
commencement of said proceeding, such interest as would have accrued on such
portion of the Obligations if said proceedings had not been commenced) shall
be included in the Obligations because it is the intention of Guarantor,
Agent and Noteholders that the Obligations which are guaranteed by Guarantor
pursuant to this Guaranty should be determined without regard to any rule of
law or order which may relieve Borrower of any portion of such Obligations.
Guarantor will permit any trustee in bankruptcy, receiver, debtor in
possession, assignee for the benefit of creditors or similar person to pay
Noteholders or Agent, or allow the claim of Noteholders or Agent in respect
of, any such interest accruing after the date on which such proceeding is
commenced.
7
(c) In the event that all or any portion of the Obligations are
paid by Borrower, the obligations of Guarantor hereunder shall continue and
remain in full force and effect or be reinstated, as the case may be, in the
event that all or any part of such payment(s) are rescinded or recovered
directly or indirectly from Agent or any Noteholder as a preference,
fraudulent transfer or otherwise, and any such payments which are so
rescinded or recovered shall constitute Obligations for all purposes under
this Guaranty.
15. Guarantor understands and agrees that any amounts of Guarantor on
account with any Noteholder may be offset to satisfy the obligations of
Guarantor hereunder.
16. Guarantor hereby subordinates and makes inferior any and all
indebtedness now or at any time hereafter owed by Borrower to Guarantor to
the Obligations evidenced by the Credit Agreement and agrees after the
occurrence of a Default under the Credit Agreement, or any event which with
notice, lapse of time, or both, would constitute a Default under the Credit
Agreement, not to permit Borrower to repay, or to accept payment from
Borrower of, such indebtedness or any part thereof without the prior written
consent of Noteholders.
17. During the period that Banks have any commitment to lend or
participate in Letter of Credit Exposure under the Loan Papers, or any amount
payable under any Note remains unpaid or any Letter of Credit remains
outstanding, and throughout any additional preferential period subsequent
thereto, Guarantor hereby waives any and all rights of subrogation to which
Guarantor may otherwise be entitled against Borrower, or any other guarantor
of the Obligations, as a result of any payment made by Guarantor pursuant to
this Guaranty.
18. As of the date hereof, the fair saleable value of the property of
Guarantor is greater than the total amount of liabilities (including
contingent and unliquidated liabilities) of Guarantor, and Guarantor is able
to pay all of its liabilities as such liabilities mature and Guarantor does
not have unreasonably small capital within the meaning of Xxxxxxx 000, Xxxxx
00, Xxxxxx Xxxxxx Code, as amended. In computing the amount of contingent or
liquidated liabilities, such liabilities have been computed at the amount
which, in light of all the facts and circumstances existing as of the date
hereof, represents the amount that can reasonably be expected to become an
actual or matured liability.
19. If any provision of this Guaranty is held to be illegal, invalid,
or unenforceable, such provision shall be fully severable; this Guaranty
shall be construed and enforced as if such illegal, invalid, or unenforceable
provision had never comprised a part hereof; and the remaining provisions
hereof shall remain in full force and effect and shall not be affected by the
illegal, invalid, or unenforceable provision or by its severance herefrom.
Furthermore, in lieu of such illegal, invalid, or unenforceable provision
there shall be added automatically as a part of this Guaranty a provision as
similar in terms to such illegal, invalid, or unenforceable provision as may
be possible and be legal, valid and enforceable.
20. (a) Except to the extent required for the exercise of the remedies
provided in the other security instruments, Guarantor hereby irrevocably
submits to the nonexclusive jurisdiction
8
of any Texas state or federal court over any action or proceeding arising out
of or relating to this Guaranty or any other Loan Paper, and Guarantor hereby
irrevocably agrees that all claims in respect of such action or proceeding
may be heard and determined in such Texas state or federal court. Guarantor
hereby irrevocably waives, to the fullest extent permitted by Law, any
objection which it may now or hereafter have to the laying of venue of any
Litigation arising out of or in connection with this Guaranty or any of the
Loan Papers brought in district courts of Dallas County, Texas, or in the
United States District Court for the Northern District of Texas, Dallas
Division. Guarantor hereby irrevocably waives any claim that any Litigation
brought in any such court has been brought in an inconvenient forum.
Guarantor hereby irrevocably consents to the service of process out of any of
the aforementioned courts in any such Litigation by the mailing of copies
thereof by certified mail, return receipt requested, postage prepaid, to
Guarantor's office at _____________________ _______________________.
Guarantor irrevocably agrees that any legal proceeding against Noteholders
shall be brought in the district courts of Dallas County, Texas, or in the
United States District Court for the Northern District of Texas, Dallas
Division. Nothing herein shall affect the right of Noteholder to commence
legal proceedings or otherwise proceed against Guarantor in any jurisdiction
or to serve process in any manner permitted by applicable law. As used
herein, the term "LITIGATION" means any proceeding, claim, lawsuit or
investigation (i) conducted or threatened by or before any court or
governmental department, commission, board, bureau, agency or instrumentality
of the United States or of any state, commonwealth, nation, territory,
possession, county, parish, or municipality, whether now or hereafter
constituted or existing, or (ii) pending before any public or private
arbitration board or panel.
(b) Nothing in this PARAGRAPH 20 shall affect any right of any
Noteholder to serve legal process in any other manner permitted by law or
affect the right of any Noteholder to bring any action or proceeding against
Guarantor in the courts of any other jurisdictions.
(c) To the extent that Guarantor has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property,
Guarantor hereby irrevocably waives such immunity in respect of its
obligations under this Guaranty and the other Loan Papers.
21. THIS GUARANTY AND THE OTHER LOAN PAPERS COLLECTIVELY REPRESENT THE
FINAL AGREEMENT BY AND AMONG NOTEHOLDERS, AGENT AND GUARANTOR AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF NOTEHOLDERS, AGENT AND GUARANTOR. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG NOTEHOLDERS, AGENT AND GUARANTOR.
22. GUARANTOR, FOR ITSELF, ITS SUCCESSORS AND ASSIGNS, HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ITS RIGHT TO A
JURY TRIAL, IN ANY LITIGATION ARISING OUT OF OR IN CONNECTION WITH THIS
GUARANTY OR ANY OF THE OTHER LOAN PAPERS.
9
23. THIS GUARANTY AND THE OTHER LOAN PAPERS SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS.
EXECUTED and effective as of the date first above written.
GUARANTOR:
[SUBSIDIARY OF BORROWER]
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
10
EXHIBIT D
REQUEST FOR BORROWING
Reference is made to that certain Amended and Restated Credit Agreement
dated as of ___________, 1998 (as from time to time amended, the "AGREEMENT")
by and among Quicksilver Resources, Inc. ("BORROWER"), NationsBank of Texas,
N.A., as Agent, and certain Banks as named and defined therein. Terms which
are defined in the Agreement and which are used but not defined herein are
used herein with the meanings given them in the Agreement. Pursuant to the
terms of the Agreement, Borrower hereby requests a Borrowing in the amount of
$_____________ to be advanced on , .
Borrower requests that the Borrowing to be made hereunder shall be
[A BASE RATE BORROWING] [A EURODOLLAR BORROWING] in the aggregate amount set
forth below:
TYPE OF BORROWING AGGREGATE AMOUNT
--------------------------- ----------------------------
--------------------------- ----------------------------
--------------------------- ----------------------------
Borrower and the Authorized Officer of Borrower signing this instrument
hereby certify that:
(a) Such officer is the duly elected, qualified and acting officer of
Borrower as indicated below such officers signature hereto.
(b) The representations and warranties of Borrower and each other
Credit Party set forth in the Agreement and the Loan Papers delivered to
Agent and Banks are true and correct on and as of the date hereof, with the
same effect as though such representations and warranties had been made on
and as of the date hereof or, if such representations and warranties are
expressly limited to particular dates, as of such particular dates. No
Material Adverse Change has occurred with respect to any Credit Party since
the date of the last financial reports delivered to Banks pursuant to
SECTION 10.1 of the Agreement.
(c) There does not exist on the date hereof, any condition or event
which constitutes a Default or Event of Default, nor will any such Default
or Event of Default exist upon Borrower's receipt and application of the
proceeds requested hereby. Borrower will use the proceeds hereby requested
in compliance with the applicable provisions of the Agreement.
1
(d) After giving effect to the Borrowing requested hereby, the
Outstanding Credit will not be in excess of the Borrowing Base.
IN WITNESS WHEREOF, this instrument is executed as of ____________, ____.
QUICKSILVER RESOURCES, INC.,
a Delaware corporation
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
2
EXHIBIT E
REQUEST FOR LETTER OF CREDIT
Reference is made to that certain Amended and Restated Credit Agreement
dated as of ____________, 1998 (as from time to time amended, the
"AGREEMENT"), by and among Quicksilver Resources, Inc. ("BORROWER"),
NationsBank of Texas, N.A., as Agent, and certain Banks as named and defined
therein. Terms which are defined in the Agreement and which are used but not
defined herein are used herein with the meanings given them in the Agreement.
Pursuant to the terms of the Agreement, Borrower hereby requests
NationsBank of Texas, N.A., as Agent ("ISSUER") to issue a Letter of Credit
for the account of Borrower, as follows:
TYPE OF COMMITMENT:
Requested Amount $
------------------
Requested Date of Issuance
------------------
Requested Expiration Date
------------------
Summary of Terms
------------------
(provide a brief description
of conditions under which the
drafts under such Letter of
Credit are to be available)
------------------
Beneficiary (Name/Address)
------------------
------------------
------------------
------------------
------------------
Such Letter of Credit is more particularly described in the Letter of
Credit Application and Agreement of Issuer which is attached hereto.
Borrower and the Authorized Officer of Borrower signing this instrument
hereby certify that:
(a) Such officer is the duly elected, qualified and acting officer of
Borrower as indicated below such officer's signature hereto.
(b) The representations and warranties of Borrower and each Credit
Party set forth in the Agreement and the other Loan Papers delivered to
Agent and Banks are true and correct on and as of the date hereof, with the
same effect as though such representations and warranties had been made on
and as of the date hereof, or if such representations and warranties are
expressly limited to particular dates, as of such particular dates. No
Material Adverse Change has occurred with respect to a Credit Party since
the date of the last financial reports delivered to Banks pursuant to
SECTION 10.1 of the Agreement.
1
(c) There does not exist on the date hereof any condition or event
which constitutes a Default or Event of Default, nor will any such Default
or Event of Default exist upon the issuance of the Letter of Credit
requested hereby. Borrower will use the Letter of Credit solely for
purposes permitted by the Agreement.
(d) After the issuance of the Letter of Credit requested hereby, the
Outstanding Credit will not be in excess of the Borrowing Base.
IN WITNESS WHEREOF, this instrument is executed as of _____________, ___.
QUICKSILVER RESOURCES, INC.,
a Delaware corporation
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
2
EXHIBIT F
NOTICE OF CONTINUATION OR CONVERSION
Reference is made to that certain Amended and Restated Credit Agreement
dated as of ____________, 1998 (as from time to time amended, the
"AGREEMENT"), by and among Quicksilver Resources, Inc. ("BORROWER"),
NationsBank of Texas, N.A., as Agent, and certain Banks as named and defined
therein. Terms which are defined in the Agreement and which are used but not
defined herein are used herein with the meanings given them in the Agreement.
/ / Reference is hereby made to the existing Eurodollar Loan outstanding
under the Agreement in the amount of $________ which is subject to an
Interest Period expiring on _________________, ____. Borrower hereby
requests that on the expiration of such Interest Period the portion of
the principal of such Eurodollar Loan which is subject to such
Interest Period be made the subject of / / a Base Rate Loan or / / a
Eurodollar Loan having an Interest Period of ____________ (___)
months.
/ / Borrower hereby requests that on _______________, ____, a portion of
the principal of the Base Rate Loan in the amount of $_________ be
made the subject of a Eurodollar Loan having an Interest Period of
____________ (___) months.
Borrower and the Authorized Officer of Borrower signing this instrument
hereby certify that:
(a) Such officer is the duly elected, qualified and acting officer of
Borrower as indicated below such officer's signature hereto;
(b) There does not exist on the date hereof any condition or event
which constitutes a Default or Event of Default; and
(c) The representations and warranties of Borrower and each Credit
Party set forth in the Agreement and the Loan Papers delivered to Agent and
each Bank are true and correct on and as of the date hereof, with the same
effect as though such representations and warranties had been made on and
as of the date hereof or, if such representations and warranties are
expressly limited to particular dates, as of such particular dates.
IN WITNESS WHEREOF, this instrument is executed as of ___________, ____.
QUICKSILVER RESOURCES, INC.,
a Delaware corporation
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
1
EXHIBIT G
CERTIFICATE OF OWNERSHIP INTERESTS
This Certificate of Ownership Interest (this "CERTIFICATE") is executed
and delivered pursuant to that certain Amended and Restated Credit Agreement
dated as of ____________, 1998 (as amended from time to time, the
"AGREEMENT"), by and between Quicksilver Resources, Inc. ("BORROWER"),
NationsBank of Texas, N.A., as Agent, and certain Banks as named and defined
therein. Unless otherwise defined herein, all capitalized terms shall have
the meanings given such terms in the Agreement.
In order to induce Banks to extend credit to Borrower under the
Agreement, Borrower hereby represents and warrants to Agent and each Bank
that (a) EXHIBIT A attached hereto (the "PROPERTY DESCRIPTION") is a complete
and accurate description of all Mineral Interests described in the Initial
Reserve Reports (the "INITIAL BORROWING BASE PROPERTIES"), (b) Borrower holds
good and defensible title, subject only to Permitted Encumbrances, to the
Initial Borrowing Base Properties described in the Property Description, (c)
Borrower's share of (i) the costs for each of the Initial Borrowing Base
Properties is not greater than the decimal fraction set forth in the Initial
Reserve Reports, before and after payout, as the case may be, and described
therein by the respective designations "working interests," "WI," "gross
working interest," "GWI," or similar terms (except in such cases where there
is a corresponding increase in the net revenue interest), and (ii) production
from, allocated to, or attributed to each of such Initial Borrowing Base
Properties is not less than the decimal fraction set forth in the Initial
Reserve Reports, before and after payout, as the case may be, and described
therein by the designations net revenue interest, NRI, or similar terms, and
(d) each well drilled in respect of each of the Initial Borrowing Base
Properties described in the Initial Reserve Reports (a) is capable of, and is
presently, producing Hydrocarbons in commercially profitable quantities,
Borrower is receiving payments for its share of production, with no funds in
respect of any thereof being presently held in suspense, other than any such
funds being held in suspense pending delivery of appropriate division orders,
and (b) has been drilled, bottomed, completed and operated in compliance with
all applicable Laws and no such well which is currently producing
Hydrocarbons is subject to any penalty in production by reason of such well
having produced in excess of its allowable production.
Borrower acknowledges and agrees that each Bank is relying on this
Certificate and the representations and warranties herein contained in
extending credit under the Agreement, and but for Borrower's execution and
delivery of this Certificate, Banks would not extend credit under the
Agreement.
1
Executed as of the ____ day of _________, 1998.
QUICKSILVER RESOURCES, INC.,
a Delaware corporation
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
2
EXHIBIT A
Initial Borrowing Base Properties
(to be attached)
3
EXHIBIT H
OFFICER'S CERTIFICATE
The undersigned, the ____________ of [CORPORATE CREDIT PARTY] ("CREDIT
PARTY"), hereby (a) delivers this Certificate pursuant to SECTION 10.1(c) of
that certain Amended and Restated Credit Agreement ("CREDIT AGREEMENT") dated as
of ___________, 1998, by and among [CREDIT PARTY] [QUICKSILVER RESOURCES, INC.,
A TEXAS CORPORATION ("BORROWER")] NationsBank of Texas, N.A., as Agent
("AGENT"), and the financial institutions listed on Schedule 1 thereto, as Banks
("BANKS"), and (b) certifies to Banks, with the knowledge and intent that Banks
may, without any independent investigation, rely fully on the matters herein in
connection with the Credit Agreement, as follows:
1. [FOR BORROWER ONLY] Attached hereto as SCHEDULE I are the financial
statements of Borrower as of and for the Fiscal / /Year / /Quarter (c)heck one)
ended ____________, ____.
2. [FOR BORROWER ONLY] Such financial statements are true and correct,
have been prepared on a consistent basis in accordance with GAAP (except as
otherwise noted therein) and fairly present the financial condition of Borrower
as of the date indicated therein and the results of operations for the
respective periods indicated therein.
3. [FOR BORROWER ONLY] Attached hereto as SCHEDULE II are detailed
calculations used by Borrower to establish that Borrower was in compliance with
the requirements of Article XII of the Credit Agreement on the date of the
financial statements attached as SCHEDULE I hereto.
4. [FOR BORROWER ONLY] Unless otherwise disclosed on SCHEDULE III
attached hereto and incorporated herein by reference for all purposes, neither a
Default nor an Event of Default has occurred which is in existence on the date
hereof; provided, that, for any Default or Event of Default disclosed on
SCHEDULE III attached hereto, Borrower is taking or proposes to take the action
to cure such Default or Event of Default set forth on SCHEDULE III.
5. On the date hereof (a) (c)heck one) / / there is no Material Gas
Imbalance or / / the amount of the net gas imbalances under Gas Balancing
Agreements to which Credit Party is a party or by which any Mineral Interests
owned by Borrower or any of its Subsidiaries is bound is ____________________,
and (b) the aggregate amount of all Advance Payments received under Advance
Payment Contracts to which Credit Party is a party or by which any Mineral
Interests owned by Borrower or any of its Subsidiaries is bound which have not
been satisfied by delivery of production, if any, is
_______________________________.
6. Attached hereto as SCHEDULE [IV] [I] is a summary of the Hedge
Transactions to which Credit Party is a party on the date hereof.
7. Unless otherwise described on SCHEDULE [V] [II] attached hereto and
incorporated herein by reference for all purposes, the representations and
warranties of each Credit Party set forth in the Credit Agreement and the other
Loan Papers are true and correct on and as of the date hereof,
4
with the same effect as though such representations and warranties had been
made on and as of the date hereof, or if such representations and warranties
are expressly limited to particular dates, as of such particular dates.
Unless otherwise defined herein, all capitalized terms used herein shall
have the meaning given such terms in the Credit Agreement.
IN WITNESS WHEREOF, the undersigned has duly executed this Officer's
Certificate as of ___________, ____.
[CREDIT PARTY]
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
5
SCHEDULE I
Financial Statements
(to be attached)
6
SCHEDULE II
Compliance Calculations
(to be attached)
7
SCHEDULE III
Defaults/Remedial Action
(to be attached)
8
SCHEDULE IV
Summary of Hedge Transactions
(to be attached)
9
SCHEDULE V
Qualifications to Representations and Warranties
(to be attached)
10
EXHIBIT I
ASSIGNMENT AND ACCEPTANCE
Reference is made to that certain Amended and Restated Credit Agreement
dated as of _____________, 1998 (the "CREDIT AGREEMENT") among Quicksilver
Resources, Inc., ("BORROWER"), NationsBank of Texas, N.A., as Agent ("AGENT")
and the financial institutions listed on Schedule 1 thereto, as Banks ("BANKS").
Terms defined in the Credit Agreement are used herein with the same meaning.
The "Assignor" and the "Assignee" referred to on Schedule 1 agree as follows:
1. Assignor hereby sells and assigns to Assignee, without recourse and without
representation or warranty except as expressly set forth herein, and Assignee
hereby purchases and assumes from Assignor, an interest in and to Assignor's
rights and obligations under the Credit Agreement and the other Loan Papers as
of the date hereof equal to the percentage interest specified on SCHEDULE 1 of
all outstanding rights and obligations under the Credit Agreement and the other
Loan Papers. After giving effect to such sale and assignment, Assignee's
Commitment, Assignee's Commitment Percentage and the principal amount of the
Revolving Loan owing to Assignee will be as set forth on SCHEDULE 1.
2. Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Loan Papers
or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Loan Papers or any other instrument or document
furnished pursuant thereto; (iii) makes no representation or warranty and
assumes no responsibility with respect to the financial condition of Borrower
or the performance or observance by Borrower of any of its obligations under
the Loan Papers or any other instrument or document furnished pursuant
thereto; and (iv) attaches the Note held by Assignor and requests that Agent
exchange such Note for new Notes payable to the order of Assignee in an
amount equal to the Commitment assumed by Assignee pursuant hereto and to
Assignor in an amount equal to the Commitment retained by Assignor, if any,
as specified on SCHEDULE 1.
3. Assignee (i) confirms that it has received a copy of the Credit Agreement,
together with copies of the financial statements referred to in Section 10.1
thereof and such other documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into this Assignment and
Acceptance; (ii) agrees that it will, independently and without reliance upon
Agent, Assignor or any other Bank and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under the Credit Agreement; (iii) confirms that
it is an Eligible Assignee; (iv) appoints and authorizes Agent to take such
action as agent on its behalf and to exercise such powers and discretion under
the Credit Agreement as are delegated to the Agent by the terms thereof,
together with such
1
powers and discretion as are reasonably incidental thereto; (v) agrees that
it will perform in accordance with their terms all of the obligations that by
the terms of the Credit Agreement are required to be performed by it as a
Bank; and (vi) attaches any U.S. Internal Revenue Service or other forms
required under Section 5.6.
4. Following the execution of this Assignment and Acceptance, it will be
delivered to Agent for acceptance and recording by Agent. The effective date
for this Assignment and Acceptance (the "EFFECTIVE DATE") shall be the date of
acceptance hereof by Agent, unless otherwise specified on SCHEDULE 1.
5. Upon such acceptance and recording by Agent, as of the Effective Date, (i)
Assignee shall be a party to the Credit Agreement and, to the extent provided in
this Assignment and Acceptance, have the rights and obligations of a Bank
thereunder, and (ii) Assignor shall, to the extent provided in this Assignment
and Acceptance, relinquish its rights and be released from its obligations under
the Credit Agreement.
6. Upon such acceptance and recording by Agent, from and after the
Effective Date, Agent shall make all payments under the Credit Agreement and
the Notes in respect of the interest assigned hereby (including, without
limitation, all payments of principal, interest and commitment fees with
respect thereto) to Assignee. Assignor and Assignee shall make all
appropriate adjustments in payments under the Credit Agreement and the Notes
for periods prior to the Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed by, and construed in
accordance with, the laws of the State of Texas.
8. This Assignment and Acceptance may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of SCHEDULE 1 to this Assignment and Acceptance by telecopier shall
be effective as delivery of a manually executed counterpart of this Assignment
and Acceptance.
IN WITNESS WHEREOF, Assignor and Assignee have caused SCHEDULE 1 to this
Assignment and Acceptance to be executed by their officers thereunto duly
authorized as of the date specified thereon.
2
SCHEDULE 1
to
ASSIGNMENT AND ACCEPTANCE
Percentage interest assigned: %
--------
Assignee's Commitment: $
--------
Assignee's Commitment Percentage: %
--------
Aggregate outstanding principal amount
of Revolving Loan assigned: $
--------
Principal amount of Note payable to Assignee: $
--------
Principal amount of Note payable to Assignor: $
--------
Effective Date (if other than date
of acceptance by Agent): * , 19
------- --
[NAME OF ASSIGNOR], as Assignor
By:
------------------------
Title:
----------------
Dated: , 19
-------------- --
[NAME OF ASSIGNEE], as Assignee
By:
------------------------
Title:
----------------
Domestic Lending Office:
Eurodollar Lending Office:
3
* This date should be no earlier than five Domestic Business Days after
the delivery of this Assignment and Acceptance to the Agent.
Accepted and Approved
this ___ day of ___________, 19 _
NATIONSBANK OF TEXAS, N.A., as Agent
By:
---------------------------
Name:
-------------------------
Title:
------------------------
Approved this ____ day
of ____________, 19__
QUICKSILVER RESOURCES, INC.
By:
---------------------------
Name:
-------------------------
Title:
------------------------
4
SCHEDULE 1
FINANCIAL INSTITUTIONS
----------------------------------------------------------------------
COMMITMENT COMMITMENT
BANK AMOUNT PERCENTAGE
----------------------------------------------------------------------
NationsBank of Texas, $100,000,000 100%
N.A.
----------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
DOMESTIC LENDING EURODOLLAR LENDING
OFFICE OFFICE ADDRESS FOR NOTICE AGENT - ADDRESS
--------------------------------------------------------------------------------------------------
000 Xxxx Xxxxxx, 000 Xxxx Xxxxxx, 000 Xxxx Xxxxxx, 000 Xxxx Xxxxxx,
00xx Floor 00xx Xxxxx 00xx Xxxxx 00xx Xxxxx
Xxxxxx, Xxxxx 00000 Xxxxxx, Xxxxx 00000 Xxxxxx, Xxxxx 00000 Xxxxxx, Xxxxx 00000
Fax No. (000) 000-0000 Fax No. (000) 000-0000 Fax No. (000) 000-0000 Fax No. (000) 000-0000
--------------------------------------------------------------------------------------------------
1
SCHEDULE 2
CAPITALIZATION DOCUMENTS
1. Agreement and Plan of Reorganization and Merger (the "Merger Agreement")
dated as of March 31, 1998, by and among Borrower, QESC, MGP, Mercury, TCW
and Joint Energy Development Limited Partnership ("JEDI").
2. Stockholders Agreement dated as of April 9, 1998 by and among Borrower,
QESC, Mercury, TCW, JEDI and the members of the Xxxxxx Family Group.
3. Registration Rights Agreement dated as of April 9, 1998 by and among TCW,
JEDI and Borrower.
4. Stock Transfer Agreement dated as of April 9, 1998, by and between JEDI and
Mercury.
5. Management Agreement dated as of April 9, 1998 by and between Mercury and
Borrower.
6. Agreement Regarding Financing Transactions dated as of April 9, 1998, by
and among Borrower, JEDI, TCW and NationsBank.
7. Assignment and Acceptance Documents referenced in Section 5.1(k) of the
Merger Agreement.
8. Put/Call Agreement dated as of April 9, 1998 by and between Mercury and
TCW.
9. The amendments described in and included within the definition of "TCW
Royalty Documents" herein contained.
1
SCHEDULE 3
INVESTMENTS
None
1
SCHEDULE 4
LITIGATION
None
2
SCHEDULE 5
CAPITALIZATION
MERCURY PRODUCTION COMPANY - incorporated in Texas
Authorized Shares: 1,000,000 $.10 par value of which 500,000 are voting
and 500,000 are non-voting.
Issued and Outstanding*:
VOTING COMMON
SHAREHOLDER NO. OF SHARES
Xxxxx Xxxxxx 46,500
Xxxxxx X. Xxxxxx 14,500
Xxxxx X. Xxxxxx 14,500
Xxxx Xxxxxx Self 14,500
NON-VOTING COMMON
SHAREHOLDER NO. OF SHARES
Xxxxx Xxxxxx 2,766
Xxxxxx X. Xxxxxx 29,078
Xxxxx X. Xxxxxx 29,078
Xxxx Xxxxxx Self 29,078
Xxxxxx X. Xxxxxxx, III 10
Xxx Xxxxxxx Xxxxxxx 10
MERCURY EXPLORATION COMPANY - incorporated in Texas
Authorized Shares: 1,000,000 no par
Issued and Outstanding*:
Mercury Production Company 250,000 shares
Xxxxx Xxxxxx 410 shares
Xxxxxx Xxxxxx 180 shares
Xxxxx Xxxxxx 180 shares
Xxxx Xxxxxx Self 180 shares
1
QELC - organized in Michigan
Membership Interests*:
Mercury: 52%
Xxxxx Xxxxxx: 12%
Xxxxxx Xxxxxx: 12%
Xxxxx Xxxxxx: 12%
Xxxx Xxxxxx Self: 12%
* no outstanding warrants, options, subscription rights, convertible securities
or other rights to purchase capital stock or limited liability interests.
CREDIT PARTY OWNERSHIP OF MSR SHARES AND WARRANTS
MSR SHARES
Mercury: 6,480,000
Xxxxx Xxxxxx: 1,040,000
Xxxxxx Xxxxxx: 1,160,000
Xxxxx Xxxxxx: 1,140,000
Xxxx Xxxxxx Self: 1,140,000
WARRANTS @ 1.25 PER SHARE STRIKE PRICE
Mercury: 2,970,000
Xxxxx Xxxxxx: 550,000
Xxxxxx Xxxxxx: 550,000
Xxxxx Xxxxxx: 550,000
Xxxx Xxxxxx Self: 550,000
WARRANTS @ 2.00 PER SHARE STRIKE PRICE
Mercury: 2,970,000
Xxxxx Xxxxxx: 550,000
Xxxxxx Xxxxxx: 550,000
Xxxxx Xxxxxx: 550,000
Xxxx Xxxxxx Self: 550,000
2
SCHEDULE 6
ENVIRONMENTAL DISCLOSURE
None
1
