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$50,000,000
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Among
RAM ENERGY, INC.
as Borrower,
THE FINANCIAL INSTITUTIONS
NAMED IN THIS CREDIT AGREEMENT
as Banks,
and
UNION BANK OF CALIFORNIA, N. A.
as Agent
February 3, 1998
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
Section 1.01. Certain Defined Terms. . . . . . . . . . . . . . . . . . . 2
Section 1.02. Computation of Time Periods. . . . . . . . . . . . . . . .17
Section 1.03. Accounting Terms; Changes in GAAP. . . . . . . . . . . . .17
Section 1.04. Types of Advances. . . . . . . . . . . . . . . . . . . . .17
Section 1.05. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . .17
ARTICLE II CREDIT FACILITIES
Section 2.01. Commitment for Revolving Advances. . . . . . . . . . . . .18
Section 2.02. Borrowing Base . . . . . . . . . . . . . . . . . . . . . .18
Section 2.03. Method of Borrowing. . . . . . . . . . . . . . . . . . . .20
Section 2.04. Reduction of the Revolving Commitment. . . . . . . . . . .23
Section 2.05. Prepayment of Revolving Advances . . . . . . . . . . . . .23
Section 2.06. Repayment of Revolving Advances. . . . . . . . . . . . . .25
Section 2.07. Letters of Credit. . . . . . . . . . . . . . . . . . . . .25
Section 2.08. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . .29
Section 2.09. Interest . . . . . . . . . . . . . . . . . . . . . . . . .30
Section 2.10. Payments and Computations. . . . . . . . . . . . . . . . .32
Section 2.11. Sharing of Payments, Etc.. . . . . . . . . . . . . . . . .33
Section 2.12. Breakage Costs . . . . . . . . . . . . . . . . . . . . . .33
Section 2.13. Increased Costs. . . . . . . . . . . . . . . . . . . . . .34
Section 2.14. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . .35
ARTICLE III CONDITIONS OF LENDING
Section 3.01. Conditions Precedent to Initial Revolving Advances . . . .37
Section 3.02. Conditions Precedent to All Borrowings . . . . . . . . . .39
ARTICLE IV REPRESENTATIONS AND WARRANTIES
Section 4.01. Corporate Existence; Subsidiaries. . . . . . . . . . . . .40
Section 4.02. Corporate Power. . . . . . . . . . . . . . . . . . . . . .40
Section 4.03. Authorization and Approvals. . . . . . . . . . . . . . . .40
Section 4.04. Enforceable Obligations. . . . . . . . . . . . . . . . . .40
Section 4.05. Financial Statements . . . . . . . . . . . . . . . . . . .41
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Section 4.06. True and Complete Disclosure . . . . . . . . . . . . . . .41
Section 4.07. Litigation . . . . . . . . . . . . . . . . . . . . . . . .42
Section 4.08. Use of Proceeds. . . . . . . . . . . . . . . . . . . . . .42
Section 4.09. Investment Company Act . . . . . . . . . . . . . . . . . .42
Section 4.10. Public Utility Holding Company Act . . . . . . . . . . . .42
Section 4.11. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . .42
Section 4.12. Pension Plans. . . . . . . . . . . . . . . . . . . . . . .43
Section 4.13. Condition of Property; Casualties. . . . . . . . . . . . .44
Section 4.14. No Burdensome Restrictions; No Defaults. . . . . . . . . .44
Section 4.15. Environmental Condition. . . . . . . . . . . . . . . . . .44
Section 4.16. Permits, Licenses, Etc.. . . . . . . . . . . . . . . . . .45
Section 4.17. Gas Contracts. . . . . . . . . . . . . . . . . . . . . . .45
Section 4.18. Liens. . . . . . . . . . . . . . . . . . . . . . . . . . .45
Section 4.19. Solvency.. . . . . . . . . . . . . . . . . . . . . . . . .45
Section 4.20. Capitalization; Ownership. . . . . . . . . . . . . . . . .46
ARTICLE V AFFIRMATIVE COVENANTS
Section 5.01. Compliance with Laws, Etc. . . . . . . . . . . . . . . . .46
Section 5.02. Maintenance of Insurance . . . . . . . . . . . . . . . . .47
Section 5.03. Preservation of Corporate Existence, Etc.. . . . . . . . .47
Section 5.04. Payment of Taxes, Etc. . . . . . . . . . . . . . . . . . .48
Section 5.05. Visitation Rights. . . . . . . . . . . . . . . . . . . . .48
Section 5.06. Reporting Requirements . . . . . . . . . . . . . . . . . .48
Section 5.07. Maintenance of Property. . . . . . . . . . . . . . . . . .51
Section 5.08. Bank Accounts. . . . . . . . . . . . . . . . . . . . . . .51
Section 5.09. Oil and Gas Properties.. . . . . . . . . . . . . . . . . .52
Section 5.10. Interest Hedge Arrangements. . . . . . . . . . . . . . . .52
Section 5.11. Agreement to Pledge. . . . . . . . . . . . . . . . . . . .52
Section 5.12. Additional Subsidiaries. . . . . . . . . . . . . . . . . .52
ARTICLE VI NEGATIVE COVENANTS
Section 6.01. Liens, Etc.. . . . . . . . . . . . . . . . . . . . . . . .53
Section 6.02. Debts, Guaranties, and Other Obligations . . . . . . . . .54
Section 6.03. Agreements Restricting Liens and Distributions . . . . . .55
Section 6.04. Merger or Consolidation; Asset Sales . . . . . . . . . . .55
Section 6.05. Restricted Payments. . . . . . . . . . . . . . . . . . . .55
Section 6.06. Investments. . . . . . . . . . . . . . . . . . . . . . . .55
Section 6.07. Limitation on Speculative Hedging. . . . . . . . . . . . .56
Section 6.08. Affiliate Transactions . . . . . . . . . . . . . . . . . .56
Section 6.09. Compliance with ERISA. . . . . . . . . . . . . . . . . . .56
Section 6.10. Sale-and-Leaseback . . . . . . . . . . . . . . . . . . . .56
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Section 6.11. No Subsidiaries. . . . . . . . . . . . . . . . . . . . . .56
Section 6.12. Change of Business . . . . . . . . . . . . . . . . . . . .56
Section 6.13. Organizational Documents, Name Change. . . . . . . . . . .57
Section 6.14. Rental Expense.. . . . . . . . . . . . . . . . . . . . . .57
Section 6.15. Current Ratio. . . . . . . . . . . . . . . . . . . . . . .57
Section 6.16. Interest Coverage Ratio. . . . . . . . . . . . . . . . . .57
Section 6.17. Senior Notes . . . . . . . . . . . . . . . . . . . . . . .57
ARTICLE VII REMEDIES
Section 7.01. Events of Default. . . . . . . . . . . . . . . . . . . . .58
Section 7.02. Optional Acceleration of Maturity. . . . . . . . . . . . .60
Section 7.03. Automatic Acceleration of Maturity . . . . . . . . . . . .60
Section 7.04. Right of Set-off . . . . . . . . . . . . . . . . . . . . .61
Section 7.05. Actions Under Credit Documents . . . . . . . . . . . . . .61
Section 7.06. Non-exclusivity of Remedies. . . . . . . . . . . . . . . .61
ARTICLE VIII THE AGENT AND THE ISSUING BANK
Section 8.01. Authorization and Action . . . . . . . . . . . . . . . . .61
Section 8.02. Agent's Reliance, Etc. . . . . . . . . . . . . . . . . . .62
Section 8.03. The Agent and Its Affiliates . . . . . . . . . . . . . . .62
Section 8.04. Bank Credit Decision . . . . . . . . . . . . . . . . . . .62
Section 8.05. Indemnification. . . . . . . . . . . . . . . . . . . . . .63
Section 8.06. Successor Agent and Issuing Bank . . . . . . . . . . . . .63
ARTICLE IX MISCELLANEOUS
Section 9.01. Amendments, Etc. . . . . . . . . . . . . . . . . . . . . .64
Section 9.02. Notices, Etc.. . . . . . . . . . . . . . . . . . . . . . .65
Section 9.03. No Waiver; Remedies. . . . . . . . . . . . . . . . . . . .65
Section 9.04. Costs and Expenses . . . . . . . . . . . . . . . . . . . .65
Section 9.05. Binding Effect . . . . . . . . . . . . . . . . . . . . . .65
Section 9.06. Bank Assignments and Participations. . . . . . . . . . . .65
Section 9.07. Indemnification. . . . . . . . . . . . . . . . . . . . . .68
Section 9.08. Execution in Counterparts. . . . . . . . . . . . . . . . .68
Section 9.09. Survival of Representations, Etc . . . . . . . . . . . . .68
Section 9.10. Severability . . . . . . . . . . . . . . . . . . . . . . .68
Section 9.11. Business Loans . . . . . . . . . . . . . . . . . . . . . .68
Section 9.12. Governing Law. . . . . . . . . . . . . . . . . . . . . . .69
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EXHIBITS:
Exhibit A - Form of Assignment and Acceptance
Exhibit B - Form of Compliance Certificate
Exhibit C - Form of Guaranty
Exhibit D - Form of Mortgage
Exhibit E - Form of Notice of Borrowing
Exhibit F - Form of Notice of Conversion or Continuation
Exhibit G - Form of Pledge Agreement
Exhibit H - Form of Note
Exhibit I - Form of Security Agreement
Exhibit J - Form of Transfer Letters
Exhibit K-1 - Form of Borrower's Oklahoma Counsel Opinion
Exhibit K-2 - Form of Agent's Counsel Opinion
SCHEDULES:
Schedule 1 - Borrower, Agent, and Bank Information
Schedule 4.01 - Subsidiaries
Schedule 4.07 - Existing Litigation
Schedule 4.15 - Environmental Issues
Schedule 5.08 - Bank Accounts
Schedule 6.01 - Permitted Existing Liens
Schedule 6.02 - Permitted Existing Debt
Schedule 6.06 - Permitted Investments
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SECOND AMENDED AND RESTATED CREDIT AGREEMENT
This Second Amended and Restated Credit Agreement dated as of February 3,
1998 is among RAM Energy, Inc., a Delaware corporation formerly known as RAMCO
Operating Company, the Banks (as defined below), and Union Bank of California,
N.A., as Agent for the Banks.
The Borrower, the Banks, and the Agent agree as follows:
INTRODUCTION
A. RAM Energy, Inc., a Delaware corporation formerly known as RAMCO
Operating Company (the "Borrower"), the Banks and the Agent are parties to the
Amended and Restated Credit Agreement dated as of December 12, 1997 (the
"Existing Credit Agreement").
B. The Borrower intends to issue up to $125,000,000 of Senior Notes due
2008 (the "Senior Notes") upon the terms and conditions described in the Form
S-1 Registration Statement filed with the Securities and Exchange Commission on
December 18, 1997, as amended ("Registration Statement"), the proceeds of which
will be used to pay all of the existing revolving and term advances outstanding
under the Existing Credit Agreement.
C. Pursuant to the Stock Purchase Agreement dated as of December 16,
1997 (as the same may be amended, modified or supplemented from time to time as
permitted herein, the "Carlton Purchase Agreement") among Xxxx X. Xxxxxxxx and
Xxxxxx X. Xxxxx, Xx., as sellers, and the Borrower, as buyer, the Borrower
shall acquire substantially all of the stock of Carlton (the "Carlton
Acquisition").
D. The Banks have consented to the issuance of the Senior Notes pursuant
to the terms set forth in the Registration Statement and the Carlton
Acquisition on the condition that the parties hereto enter into an amendment to
effect certain amendments to the Existing Credit Agreement.
E. To evidence the credit facility requested hereunder, the Borrower,
the Agent and the Banks have agreed that this Agreement is an amendment and
restatement of the Existing Credit Agreement, not a new or substitute credit
agreement or novation of the Existing Credit Agreement, and each reference to a
"Revolving Advance" or a "Letter of Credit" shall include each Revolving
Advance made and each Letter of Credit issued heretofore under the Existing
Credit Agreement as well as each Revolving Advance made and each Letter of
Credit issued hereafter under this Credit Agreement.
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.01. CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings (unless otherwise indicated,
such meanings to be equally applicable to both the singular and plural forms of
the terms defined):
"ACCEPTABLE SECURITY INTEREST" in any Property means a Lien which
(a) exists in favor of the Agent for the benefit of the Agent and the Banks;
(b) is superior to all Liens or rights of any other Person in the Property
encumbered thereby, except to the extent that the rights of another Person are
permitted hereunder; (c) secures the Obligations; and (d) is perfected and
enforceable.
"ADJUSTED REFERENCE RATE" means, for any day, the fluctuating rate per
annum of interest equal to the greater of (a) the Reference Rate in effect on
such day and (b) the Federal Funds Rate in effect on such day plus 1/2%.
"AFFILIATE" means, as to any Person, any other Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such Person or any Subsidiary of such Person.
The term "control" (including the terms "controlled by" or "under common
control with") means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through ownership of Voting Securities, by contract, or otherwise.
"AGENT" means Union Bank of California, N.A., in its capacity as an agent
pursuant to Article VIII and any successor agent pursuant to Section 8.06.
"AGREEMENT" means this Second Amended and Restated Credit Agreement, as
the same may be amended, supplemented, and otherwise modified from time to
time.
"APPLICABLE LENDING OFFICE" means, with respect to each Bank, such Bank's
Domestic Lending Office in the case of a Reference Rate Advance and such Bank's
Eurodollar Lending Office in the case of a Eurodollar Rate Advance.
"APPLICABLE MARGIN" means the following percentages based upon the ratio
of (i) the aggregate outstanding amount of Revolving Advances PLUS the Letter
of Credit Exposure on such day to (ii) the Borrowing Base as of such day:
Ratio of Outstanding
Revolving Advances PLUS
Letter of Credit Exposure to Applicable Margin Applicable Margin
BORROWING BASE REFERENCE RATE ADVANCES EURODOLLAR RATE ADVANCES
-------------- ----------------------- ------------------------
< .50 0.00% 1.375%
>- .50 and -< .75 0.25% 1.625%
> .75 0.50% 2.00%
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"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered
into by a Bank and an Eligible Assignee, and accepted by the Agent, in
substantially the form of the attached EXHIBIT A.
"BANKS" means the lenders listed on the signature pages of this Agreement
and each Eligible Assignee that shall become a party to this Agreement pursuant
to Section 9.06.
"BORROWER" means RAM Energy, Inc., a Delaware corporation formerly known
as RAMCO Operating Company.
"BORROWING BASE" means at any particular time, the Dollar amount
determined in accordance with Section 2.02 on account of Proven Reserves
attributable to Oil and Gas Properties of the Borrower and the Guarantors
described in the most recent Independent Engineering Report or Internal
Engineering Report, as applicable, delivered to the Agent and the Banks
pursuant to Section 2.02.
"BUSINESS DAY" means a day of the year on which banks are not required or
authorized to close in Dallas, Texas, Xxx Xxxx, Xxx Xxxx, xxx Xxx Xxxxxxx,
Xxxxxxxxxx and, if the applicable Business Day relates to any Eurodollar Rate
Advances, on which dealings are carried on by banks in the London interbank
market.
"CARLTON" means Carlton Resources Corporation, a Delaware corporation.
"CARLTON ACQUISITION DOCUMENTS" means the Carlton Purchase Agreement and
each other material agreement, instrument, or document executed at any time in
connection with the foregoing documents.
"CAPITAL EXPENDITURES" means, for the Borrower and the Guarantors for any
period, the aggregate of all expenditures and costs paid by the Borrower and
the Guarantors during such period that are for items which are capital in
nature, including, without limitation, intangible drilling and development
expenditures.
"CAPITAL LEASES" means, as applied to any Person, any lease of any
Property by such Person as lessee which would, in accordance with GAAP, be
required to be classified and accounted for as a capital lease on the balance
sheet of such Person.
"CASH COLLATERAL ACCOUNT" means a special interest bearing cash collateral
account pledged by the Borrower to the Agent for the ratable benefit of the
Banks containing cash deposited pursuant to Sections 2.05(b), 7.02(b), or
7.03(b) to be maintained at the Agent's office in accordance with
Section 2.07(g) and bear interest or be invested in the Agent's
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reasonable discretion.
"CERCLA" means the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, state and local analogs, and all rules and
regulations and requirements thereunder in each case as now or hereafter in
effect.
"CODE" means the Internal Revenue Code of 1986, as amended, and any
successor statute.
"COLLATERAL" means (a) all Collateral (as defined in each of the
Mortgages, the Security Agreements, and the Pledge Agreement) and (b) all
amounts contained in the Borrower's and the Guarantors' bank accounts.
"COMPLIANCE CERTIFICATE" means a compliance certificate in the form of the
attached EXHIBIT B signed by a Responsible Officer of the Borrower.
"CONTROLLED GROUP" means all members of a controlled group of corporations
and all businesses (whether or not incorporated) under common control which,
together with the Borrower, are treated as a single employer under Section 414
of the Code.
"CONVERT," "CONVERSION," and "CONVERTED" each refers to a conversion of
Revolving Advances of one Type into Revolving Advances of another Type pursuant
to Section 2.03(b).
"CREDIT DOCUMENTS" means this Agreement, the Notes, the Letter of Credit
Documents, the Guaranties, the Security Documents, any Interest Hedge
Agreements with a Bank, any Hydrocarbon Hedge Agreements with a Bank, and each
other agreement, instrument, or document executed at any time in connection
with the foregoing documents.
"DEBT," for any Person, means without duplication:
(a) indebtedness of such Person for borrowed money, including, without
limitation, obligations under letters of credit and agreements relating to the
issuance of letters of credit or acceptance financing;
(b) obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments;
(c) obligations of such Person to pay the deferred purchase price of
property or services;
(d) obligations of such Person as lessee under Capital Leases;
(e) obligations of such person under any Interest Hedge Agreement or
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Hydrocarbon Hedge Agreement;
(f) obligations of such Person under direct or indirect guaranties in
respect of, and obligations (contingent or otherwise) of such Person to
purchase or otherwise acquire, or otherwise to assure a creditor against loss
in respect of, indebtedness or obligations of others of the kinds referred to
in clauses (a) through (e) above;
(g) any obligations in connection with any volumetric or production
prepayments;
(h) indebtedness or obligations of others of the kinds referred to in
clauses (a) through (g) secured by any Lien on or in respect of any Property of
such Person; and
(i) all liabilities of such Person in respect of unfunded vested benefits
under any Plan.
"DEFAULT" means (a) an Event of Default or (b) any event or condition
which with notice or lapse of time or both would, unless cured or waived,
become an Event of Default.
"DOLLAR EQUIVALENT" means for all purposes of this Agreement, the
equivalent in another currency of an amount in Dollars to be determined by
reference to the rate of exchange quoted by Union Bank of California, N.A., at
10:00 a.m. (Los Angeles, California time) on the date of determination, for
the spot purchase in the foreign exchange market of such amount of Dollars with
such other currency.
"DOLLARS" and "$" means lawful money of the United States of America.
"DOMESTIC LENDING OFFICE" means, with respect to any Bank, the office of
such Bank specified as its "Domestic Lending Office" opposite its name on
SCHEDULE 1 or such other office of such Bank as such Bank may from time to time
specify to the Borrower and the Agent.
"EBITDA" means, for the Borrower and the Guarantors for any period,
(a) Net Income for the Borrower and the Guarantors for such period PLUS (b) to
the extent deducted in determining Net Income, Interest Expense, taxes, and
depreciation and amortization for such period.
"EFFECTIVE DATE" means the date on which the conditions set forth in
Section 3.01 are satisfied.
"ELIGIBLE ASSIGNEE" means any commercial bank or other financial
institution approved by the Agent in its sole discretion.
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"ENGINEERING REPORT" means either an Independent Engineering Report or an
Internal Engineering Report.
"ENVIRONMENT" or "ENVIRONMENTAL" shall have the meanings set forth in 43
U.S.C. Section 9601(8) (1988).
"ENVIRONMENTAL CLAIM" means any third party (including governmental
agencies and employees) action, lawsuit, claim, demand, regulatory action or
proceeding, order, decree, consent agreement or notice of potential or actual
responsibility or violation (including claims or proceedings under the
Occupational Safety and Health Acts or similar laws or requirements relating to
health or safety of employees) which seeks to impose liability under any
Environmental Law.
"ENVIRONMENTAL LAW" means all Legal Requirements arising from, relating
to, or in connection with the Environment, health, or safety, including without
limitation CERCLA, relating to (a) pollution, contamination, injury,
destruction, loss, protection, cleanup, reclamation or restoration of the air,
surface water, groundwater, land surface or subsurface strata, or other natural
resources; (b) solid, gaseous or liquid waste generation, treatment,
processing, recycling, reclamation, cleanup, storage, disposal or
transportation; (c) exposure to pollutants, contaminants, hazardous, or toxic
substances, materials or wastes; (d) the safety or health of employees; or
(e) the manufacture, processing, handling, transportation, distribution in
commerce, use, storage or disposal of hazardous, or toxic substances, materials
or wastes.
"ENVIRONMENTAL PERMIT" means any permit, license, order, approval or other
authorization under Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"EUROCURRENCY LIABILITIES" has the meaning assigned to that term in
Regulation D of the Federal Reserve Board (or any successor), as in effect from
time to time.
"EURODOLLAR LENDING OFFICE" means, with respect to any Bank, the office of
such Bank specified as its "Eurodollar Lending Office" opposite its name on
SCHEDULE 1 (or, if no such office is specified, its Domestic Lending Office) or
such other office of such Bank as such Bank may from time to time specify to
the Borrower and the Agent.
"EURODOLLAR RATE" means, for the Interest Period for each Eurodollar
Advance comprising part of the same Revolving Borrowing, an interest rate per
annum (rounded upward to the nearest whole multiple of 1/16 of 1% per annum)
equal to the rate per annum at which deposits in Dollars are offered by the Los
Angeles office of the Agent to prime banks in the London interbank market at
11:00 a.m. (London time) two Business Days before
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the first day of such Interest Period in an amount substantially equal to the
Agent's Eurodollar Rate Advance comprising part of such Revolving Borrowing
and for a period equal to such Interest Period.
"EURODOLLAR RATE ADVANCE" means a Revolving Advance which bears interest
as provided in Section 2.09(b).
"EURODOLLAR RATE RESERVE PERCENTAGE" of any Bank for the Interest Period
for any Eurodollar Rate Advance means the reserve percentage applicable during
such Interest Period (or if more than one such percentage shall be so
applicable, the daily average of such percentages for those days in such
Interest Period during which any such percentage shall be so applicable) under
regulations issued from time to time by the Federal Reserve Board for
determining the maximum reserve requirement (including, without limitation, any
emergency, supplemental, or other marginal reserve requirement) for such Bank
with respect to liabilities or assets consisting of or including Eurocurrency
Liabilities having a term equal to such Interest Period.
"EVENT OF DEFAULT" has the meaning specified in Section 7.01.
"EXPIRATION DATE" means, with respect to any Letter of Credit, the date on
which such Letter of Credit will expire or terminate in accordance with its
terms.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day
(or, if such day is not a Business Day, for the next preceding Business Day) by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for any such day
on such transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"FEDERAL RESERVE BOARD" means the Board of Governors of the Federal
Reserve System or any of its successors.
"FINANCIAL STATEMENTS" means the Partnership's audited balance sheet and
statements of income, retained earnings, and cash flow dated December 31, 1996
and the Partnership, the Borrower, Old RBOC and Gulf States' unaudited combined
balance sheet and statements of income, retained earnings, and cash flow dated
September 30, 1997 referred to in Section 4.05, copies of which have been
delivered to the Agent and the Banks.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time, applied on a basis consistent with the requirements
of Section 1.03.
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"GOVERNMENTAL AUTHORITY" means any foreign governmental authority, the
United States of America, any state of the United States of America and any
subdivision of any of the foregoing, and any agency, department, commission,
board, authority or instrumentality, bureau or court having jurisdiction over
any Bank, the Borrower, or any Guarantor or any of their respective Properties.
"GUARANTORS" means Gulf States, RBOC, Carlton, Magic Circle Energy
Corporation, a Delaware corporation, Xxxxxx Field Limited Partnership, an
Oklahoma limited partnership, Xxxxxx Development Corp., an Oklahoma
corporation, Magic Circle Acquisition Corp., an Oklahoma corporation, and any
other Person who executes and delivers a Guaranty.
"GUARANTIES" means the Guaranties each in substantially the form of the
attached EXHIBIT C and executed by a Guarantor.
"GULF STATES" means RLP Gulf States, L.L.C., an Oklahoma limited liability
company.
"HAZARDOUS SUBSTANCE" means the substances identified as such pursuant to
CERCLA and those regulated under any other Environmental Law, including without
limitation pollutants, contaminants, petroleum, petroleum products,
radionuclides, and radioactive materials.
"HAZARDOUS WASTE" means the substances regulated as such pursuant to any
Environmental Law.
"HYDROCARBON HEDGE AGREEMENT" means a swap, collar, floor, cap, option,
forward sale or purchase or other contract (including sales contracts with
known prices) which is intended to reduce or eliminate the risk of fluctuations
in the price of the Hydrocarbons.
"HYDROCARBONS" means oil, gas, coal seam gas, casinghead gas, drip
gasoline, natural gasoline, condensate, distillate, and all other liquid and
gaseous hydrocarbons produced or to be produced in conjunction therewith from a
well bore and all products, by-products, and other substances derived therefrom
or the processing thereof, and all other minerals and substances produced in
conjunction with such substances, including, but not limited to, sulfur,
geothermal steam, water, carbon dioxide, helium, and any and all minerals,
ores, or substances of value and the products and proceeds therefrom.
"INDENTURE" means the Indenture among the Borrower, the Subsidiaries of
the Borrower party thereto and United States Trust Company of New York, which
indenture governs the terms and provisions of the Senior Notes.
"INDEPENDENT ENGINEER" means Xxxxxxx X. Xxxx and Associates or any other
engineering firm that the Borrower may engage with the Agent's consent, such
consent not
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to be unreasonably withheld.
"INDEPENDENT ENGINEERING REPORT" means a report, in form and substance
satisfactory to the Agent and each of the Banks, prepared by an Independent
Engineer, addressed to the Agent and the Banks with respect to the Oil and Gas
Properties owned by the Borrower and the Guarantors (or to be acquired by the
Borrower and the Guarantors, as applicable) which are or are to be included in
the Borrowing Base, which report shall (a) specify the location, quantity, and
type of the estimated Proven Reserves attributable to such Oil and Gas
Properties, (b) contain a projection of the rate of production of such Oil and
Gas Properties, (c) contain an estimate of the net operating revenues to be
derived from the production and sale of Hydrocarbons from such Proven Reserves
based on product price and cost escalation assumptions specified by the Agent,
and (d) contain such other information as is customarily obtained from and
provided in such reports or is otherwise reasonably requested by the Agent or
any Bank.
"INTEREST EXPENSE" means, for the Borrower and the Guarantors for any
period, total interest, letter of credit fees, and other fees incurred in
connection with any Debt for such period, whether paid or accrued, including,
without limitation, all commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing and net
costs under Interest Hedge Agreements and Hydrocarbon Hedge Agreements, all as
determined in conformity with GAAP.
"INTEREST HEDGE AGREEMENT" means an interest hedge, rate swap, or cap, or
similar arrangement between the Borrower and one or more financial institutions
providing for the exchange of nominal interest obligations between the Borrower
and such financial institution or the cap of the interest rate on any Debt of
the Borrower.
"INTEREST PERIOD" means, for each Eurodollar Rate Advance comprising part
of the same Revolving Borrowing, the period commencing on the date of such
Advance or the date of the Conversion of any Reference Rate Advance into such
an Advance and ending on the last day of the period selected by the Borrower
pursuant to the provisions below or by Section 2.03 and, thereafter, each
subsequent period commencing on the last day of the immediately preceding
Interest Period and ending on the last day of the period selected by the
Borrower pursuant to the provisions below or by Section 2.03. The duration of
each such Interest Period shall be one, two, three, or six months, in each case
as the Borrower may, upon notice received by the Agent not later than
10:00 a.m. (Los Angeles California time) on the third Business Day prior to the
first day of such Interest Period select; PROVIDED, HOWEVER, that:
(a) the Borrower may not select any Interest Period for any Revolving
Advance which ends after the Revolving Maturity Date;
(b) Interest Periods commencing on the same date for Revolving Advances
-9-
comprising part of the same Revolving Borrowing shall be of the same duration;
(c) whenever the last day of any Interest Period would otherwise occur on
a day other than a Business Day, the last day of such Interest Period shall be
extended to occur on the next succeeding Business Day, PROVIDED that if such
extension would cause the last day of such Interest Period to occur in the next
following calendar month, the last day of such Interest Period shall occur on
the next preceding Business Day; and
(d) any Interest Period which begins on the last 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 end on the last
Business Day of the calendar month in which it would have ended if there were a
numerically corresponding day in such calendar month.
"INTERNAL ENGINEERING REPORT" means a report, in form and substance
satisfactory to the Agent and each Bank, prepared by the Borrower and certified
by a Responsible Officer of the Borrower, addressed to the Agent and the Banks
with respect to the Oil and Gas Properties owned by the Borrower and the
Guarantors (or to be acquired by the Borrower and the Guarantors, as
applicable) which are or are to be included in the Borrowing Base, which report
shall (a) specify the location, quantity, and type of the estimated Proven
Reserves attributable to such Oil and Gas Properties, (b) contain a projection
of the rate of production of such Oil and Gas Properties, (c) contain an
estimate of the net operating revenues to be derived from the production and
sale of Hydrocarbons from such Proven Reserves based on product price and cost
escalation assumptions specified by the Bank, and (d) contain such other
information as is customarily obtained from and provided in such reports or is
otherwise reasonably requested by the Agent or any Bank.
"INTERIM FINANCIAL STATEMENTS" means the Partnership's unaudited balance
sheet dated as of September 30, 1997 and the Partnership, the Borrower, Old
RBOC and Gulf States' combined unaudited balance sheet dated as of September
30, 1997 and the related statements of income, retained earnings, and cash flow
of the Partnership, the Borrower, Old RBOC and Gulf States for the nine months
then ended, referred to in Section 4.05.
"ISSUING BANK" means Union Bank of California, N.A. and any successor
issuing bank pursuant to Section 8.06.
"LEASES" means all oil and gas leases, oil, gas and mineral leases, oil,
gas and casinghead leases or any other instruments, agreements, or conveyances
under and pursuant to which the owner thereof has or obtains the right to enter
upon lands and explore for, drill, and develop such lands for the production of
Hydrocarbons.
"LEGAL REQUIREMENT" means any law, statute, ordinance, decree,
requirement, order, judgment, rule, regulation (or official interpretation of
any of the foregoing) of, and the terms
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of any license or permit issued by, any Governmental Authority, including,
but not limited to, Regulations D, G, T, U, and X.
"LETTER OF CREDIT" means, individually, any letter of credit issued by the
Issuing Bank which is subject to this Agreement and "LETTERS OF CREDIT" means
all such letters of credit collectively.
"LETTER OF CREDIT APPLICATION" means the Issuing Bank's standard form
letter of credit application for either a commercial or standby letter of
credit, as the case may be, which has been executed by the Borrower and
accepted by the Issuing Bank in connection with the issuance of a Letter of
Credit.
"LETTER OF CREDIT DOCUMENTS" means all Letters of Credit, Letter of Credit
Applications, and agreements, documents, and instruments entered into in
connection with or relating thereto.
"LETTER OF CREDIT EXPOSURE" means, at any time, the sum of (a) the
aggregate undrawn maximum face amount of each Letter of Credit at such time,
PLUS (b) the aggregate unpaid amount of all Reimbursement Obligations at such
time.
"LETTER OF CREDIT OBLIGATIONS" means any obligations of the Borrower under
this Agreement in connection with the Letters of Credit, including the
Reimbursement Obligations.
"LIEN" means any mortgage, lien, pledge, charge, deed of trust, security
interest, or encumbrance or other type of preferential arrangement to secure or
provide for the payment of any obligation of any Person, whether arising by
contract, operation of law, or otherwise (including, without limitation, the
interest of a vendor or lessor under any conditional sale agreement, Capital
Lease, or other title retention agreement).
"LIQUID INVESTMENTS" means:
(a) direct obligations of, or obligations the principal of and interest
on which are unconditionally guaranteed by, the United States maturing within
180 days from the date of any acquisition thereof;
(b) (i) negotiable or nonnegotiable certificates of deposit, time
deposits, or other similar banking arrangements maturing within 180 days from
the date of acquisition thereof ("bank debt securities"), issued by (A) the
Agent or (B) any other bank or trust company so long as such certificate of
deposit is pledged to secure the Borrower or any Guarantors ordinary course of
business bonding requirements, or any other bank or trust company which has
primary capital of not less than $500,000,000.00, if at the time of deposit or
purchase, such bank debt securities are rated not less than "AA" (or the then
equivalent) by the rating service of Standard & Poor's Corporation or of
Xxxxx'x Investors Service, Inc., and
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(ii) commercial paper issued by (A) the Agent or (B) any other Person if at
the time of purchase such commercial paper is rated not less than "A-1" (or
the then equivalent) by the rating service of Standard & Poor's Corporation
or not less than "P-1" (or the then equivalent) by the rating service of
Xxxxx'x Investors Service, Inc., or upon the discontinuance of both of such
services, such other nationally recognized rating service or services, as the
case may be, as shall be selected by the Borrower with the consent of the
Agent;
(c) repurchase agreements relating to investments described in clauses
(a) and (b) above with a market value at least equal to the consideration paid
in connection therewith, with any Person who regularly engages in the business
of entering into repurchase agreements and has a combined capital surplus and
undivided profit of not less than $500,000,000.00, if at the time of entering
into such agreement the debt securities of such Person are rated not less than
"AA" (or the then equivalent) by the rating service of Standard & Poor's
Corporation or of Xxxxx'x Investors Service, Inc.; and
(d) such other instruments (within the meaning of Article 9 of the Texas
Business and Commerce Code) as the Borrower may request and the Agent may
approve in writing, which approval will not be unreasonably withheld.
"MAJORITY BANKS" means, at any time, Banks holding at least 66-2/3% of the
then aggregate unpaid principal amount of the Notes held by the Banks and the
Letter of Credit Exposure of the Banks at such time; provided that if no such
principal amount or Letter of Credit Exposure is then outstanding, "Majority
Banks" shall mean Banks having at least 66-2/3% of the aggregate amount of the
Revolving Commitments at such time.
"MATERIAL ADVERSE CHANGE" means (a) a material adverse change in the
business, assets (including the Oil and Gas Properties of the Borrower and the
Guarantors), financial condition, or results of operations of the Borrower or
any Guarantor or (b) a material adverse effect on the Borrower's or any
Guarantor's ability to perform its obligations under this Agreement, any Note,
any Guaranty, or any other Credit Document.
"MAXIMUM RATE" means the maximum nonusurious interest rate under
applicable law.
"MORTGAGES" means, collectively, each of the Mortgages, Deeds of Trust,
Security Agreements, Assignments of Production and Financing Statements
executed by any one or more of the Borrower or any of the Guarantors in favor
of the Agent for the ratable benefit of the Agent and the Banks, as the same
may be amended, modified or supplemented from time-to-time, together with any
assumptions or assignments of the obligations thereunder by the Borrower or any
Guarantor, in substantially the form of the attached EXHIBIT D.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in
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Section 4001(a)(3) of ERISA.
"NET INCOME" means, for any Person and for any period of its
determination, the net income of such Person determined in accordance with GAAP
consistently applied, but excluding any gains and losses on sales and
retirements of assets and any noncash write-down of assets.
"NOTE" means a promissory note of the Borrower payable to the order of any
Bank, in substantially the form of the attached EXHIBIT H, evidencing
indebtedness of the Borrower to such Bank resulting from Revolving Advances
owing to such Bank.
"NOTICE OF BORROWING" means a notice of borrowing in the form of the
attached EXHIBIT E signed by a Responsible Officer of the Borrower.
"NOTICE OF CONVERSION OR CONTINUATION" means a notice of conversion or
continuation in the form of the attached EXHIBIT F signed by a Responsible
Officer of the Borrower.
"OBLIGATIONS" means all principal, interest, fees, reimbursements,
indemnifications, and other amounts payable by the Borrower and the Guarantors
to the Agent or the Banks under the Credit Documents.
"OIL AND GAS PROPERTIES" means fee mineral interests, term mineral
interests, Leases, subleases, farm-outs, royalties, overriding royalties, net
profit interests, carried interests, production payments and similar mineral
interests, and all unsevered and unextracted Hydrocarbons in, under, or
attributable to such oil and gas Properties and interests.
"OLD RBOC" means RB Operating Company, an Oklahoma corporation.
"PARTNERSHIP" means RAMCO-NYL 1987 Limited Partnership, a Texas limited
partnership.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"PERMITTED LIENS" means the Liens permitted to exist pursuant to
Section 6.01.
"PERSON" means an individual, partnership, corporation (including a
business trust), joint stock company, limited liability corporation or company,
limited liability partnership, trust, unincorporated association, joint venture
or other entity, or a government or any political subdivision or agency thereof
or any trustee, receiver, custodian or similar official.
"PLAN" means an employee benefit plan (other than a Multiemployer Plan)
maintained for employees of the Borrower or any member of the Controlled Group
and
-13-
covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code.
"PLEDGE AGREEMENT" means the Second Amended and Restated Pledge Agreement
in the form of the attached EXHIBIT G, executed by the Borrower, as the same
may be amended, modified or supplemented from time to time.
"PROPERTY" of any Person means any property or assets (whether real,
personal, or mixed, tangible or intangible) of such Person.
"PRO RATA SHARE" means, with respect to any Bank, either (a) the ratio
(expressed as a percentage) of such Bank's Revolving Commitments at such time
to the aggregate Revolving Commitments at such time or (b) if the Revolving
Commitments have been terminated, the ratio (expressed as a percentage) of such
Bank's aggregate outstanding Revolving Advances and Letter of Credit Exposure
at such time to the aggregate outstanding Revolving Advances and Letter of
Credit Exposure of all the Banks at such time.
"PROVED DEVELOPED PRODUCING RESERVES" means, with respect to any Oil and
Gas Properties, those quantities of Hydrocarbons, estimated with reasonable
certainty, as demonstrated by geological and engineering data, to be
economically recoverable from such Oil and Gas Properties by producing methods
under existing economic conditions using existing equipment and operating
methods from existing completion intervals open for production in existing
xxxxx which shall have had at least 30 days of continuous production.
"PROVEN RESERVES" means, at any particular time, the estimated quantities
of Hydrocarbons which geological and engineering data demonstrate with
reasonable certainty to be recoverable in future years from known reservoirs
attributable to Oil and Gas Properties included or to be included in the
Borrowing Base under then existing economic and operating conditions (i.e.,
prices and costs as of the date the estimate is made). The prices used may
include consideration of changes in existing prices provided only by
contractual arrangements, but not on escalations based upon future conditions.
"RBOC" means RB Operating Company, a Delaware corporation and a
wholly-owned subsidiary of the Borrower, formerly known as RLP Operating
Company.
"REFERENCE RATE" means a fluctuating interest rate per annum as shall be
in effect from time to time equal to the rate of interest publicly announced by
Union Bank of California, N.A., as its reference rate, whether or not the
Borrower has notice thereof.
"REFERENCE RATE ADVANCE" means a Revolving Advance which bears interest as
provided in Section 2.09(a).
"REGISTER" has the meaning set forth in paragraph (c) of Section 9.06.
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"REGULATIONS D, G, T, U, AND X" mean Regulations D, G, T, U, and X of the
Federal Reserve Board, as the same is from time to time in effect, and all
official rulings and interpretations thereunder or thereof.
"REIMBURSEMENT OBLIGATIONS" means all of the obligations of the Borrower
to reimburse the Issuing Bank for amounts paid by the Issuing Bank under
Letters of Credit as established by the Letter of Credit Applications and
Section 2.07(d).
"RELEASE" shall have the meaning set forth in CERCLA or under any other
Environmental Law.
"RENTAL EXPENSE" means, for any period, all amounts payable by the
Borrower and the Guarantors during such period under any lease, sublease, or
other instrument (other than a Capital Lease) pursuant to which the Borrower or
any of the Guarantors is entitled to use any Property of another Person, all as
determined in accordance with GAAP.
"RESPONSE" shall have the meaning set forth in CERCLA or under any other
Environmental Law.
"RESPONSIBLE OFFICER" means, with respect to any Person, such Person's
Chief Executive Officer, President, Chief Financial Officer, or Vice President.
"RESTRICTED PAYMENT" means, with respect to any Person, (a) any dividends
or other distributions (in cash, property, or otherwise) on, or any payment for
the purchase, redemption, or other acquisition of, any shares of any capital
stock or other equity interests (including partnership interests) of such
Person, other than dividends payable in such Person's stock or other equity
interests or (b) principal or interest payments (in cash, property or
otherwise) on or redemptions of subordinated debt of such Person.
"REVOLVING ADVANCE" means any advance by a Bank to the Borrower as part of
a Revolving Borrowing and refers to a Reference Rate Advance or a Eurodollar
Rate Advance.
"REVOLVING BORROWING" means, subject to Sections 2.03(c)(iii) and 2.05(e),
a borrowing consisting of simultaneous Revolving Advances of the same Type made
by each Bank pursuant to Section 2.03(a), continued by each Bank pursuant to
Section 2.03(b), or Converted by each Bank to Revolving Advances of a different
Type pursuant to Section 2.03(b).
"REVOLVING COMMITMENT" means, for any Bank, the amount set opposite such
Bank's name on the signature pages hereof as its Revolving Commitment, or if
such Bank has entered into any Assignment and Acceptance, as set forth for such
Bank as its Revolving Commitment in the Register maintained by the Agent
pursuant to Section 9.06(c), as such amount may be reduced or terminated
pursuant to Section 2.04 or Article VII.
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"REVOLVING MATURITY DATE" means the earlier of (a) February 2, 2003 or
(b) the earlier termination in whole of the Revolving Commitments pursuant to
Section 2.04 or Article VII.
"SECURITY AGREEMENTS" means the Second Amended and Restated Security
Agreements, each in substantially the form of the attached Exhibit I, one
executed by each of the Borrower and each of the Guarantors, as the same may be
amended, modified, or supplemented from time to time.
"SECURITY DOCUMENTS" means, collectively, (a) the Mortgages, (b) the
Transfer Letters, (c) the Pledge Agreement, (d) the Security Agreements and the
bank account letters in the form of Exhibit A to the Security Agreements,
(e) each other agreement, instrument or document executed at any time in
connection with the Pledge Agreement, the Security Agreements, or the
Mortgages, and (e) each other agreement, instrument or document executed at any
time in connection with securing the Obligations.
"SOLVENT" means, with respect to any Person as of the date of any
determination, that on such date (a) the fair value of the Property of such
Person (both at fair valuation and at present fair saleable value) is greater
than the total liabilities, including contingent liabilities, of such Person,
(b) the present fair saleable value of the assets of such Person is not less
than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured, (c) such Person 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, (d) such Person does not intend to, and does not believe
that it will, incur debts or liabilities beyond such Person's ability to pay as
such debts and liabilities mature, and (e) such Person is not engaged in
business or a transaction, and is not about to engage in business or a
transaction, for which such Person's Property would constitute unreasonably
small capital after giving due consideration to current and anticipated future
capital requirements and current and anticipated future business conduct and
the prevailing practice in the industry in which such Person is engaged. In
computing the amount of contingent liabilities at any time, such liabilities
shall be computed at the amount which, in light of the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
"SUBSIDIARY" of a Person means any corporation or other entity of which
more than 50% of the outstanding capital stock or other ownership interests
having ordinary voting power to elect a majority of the board of directors or
similar governing body of such corporation or other entity (irrespective of
whether at such time capital stock or other ownership interests of any other
class or classes of such corporation or other entity shall or might have voting
power upon the occurrence of any contingency) is at the time directly or
indirectly owned by such Person, by such Person and one or more Subsidiaries of
such Person or by one or more Subsidiaries of such Person.
-16-
"TERMINATION EVENT" means (a) a Reportable Event described in Section 4043
of ERISA and the regulations issued thereunder (other than a Reportable Event
not subject to the provision for 30-day notice to the PBGC under such
regulations), (b) the withdrawal of the Borrower or any of its Affiliates from
a Plan during a plan year in which it was a "substantial employer" as defined
in Section 4001(a)(2) of ERISA, (c) the filing of a notice of intent to
terminate a Plan or the treatment of a Plan amendment as a termination under
Section 4041 of ERISA, (d) the institution of proceedings to terminate a Plan
by the PBGC, or (e) any other event or condition which constitutes grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan.
"TRANSFER LETTERS" means, collectively, the letters in lieu of transfer
orders executed by the Borrower and any of the Guarantors executing a Mortgage
in the form of the attached EXHIBIT J, as each of the same may be amended,
modified or supplemented from time-to-time.
"TYPE" has the meaning set forth in Section 1.04.
"VOTING SECURITIES" means with respect to any corporation, capital stock
of the corporation having general voting power under ordinary circumstances to
elect directors of such corporation (irrespective of whether at the time stock
of any other class or classes shall have or might have special voting power or
rights by reason of the happening of any contingency).
Section 1.02. COMPUTATION OF TIME PERIODS. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to but excluding".
Section 1.03. ACCOUNTING TERMS; CHANGES IN GAAP.
(a) All accounting terms not specifically defined in this Agreement shall
be construed in accordance with GAAP applied on a consistent basis with those
applied in the preparation of the Financial Statements.
(b) Unless otherwise indicated, all financial statements of the Borrower,
all calculations for compliance with covenants in this Agreement and all
calculations of any amounts to be calculated under the definitions in
Section 1.01 shall be based upon the consolidated accounts of the Borrower and
the Guarantors in accordance with GAAP (or in compliance with the regulations
promulgated by the United States Securities and Exchange Commission regarding
financial reporting) and consistent with the principles applied in preparing
the Financial Statements.
Section 1.04. TYPES OF ADVANCES. Revolving Advances are distinguished by
"Type." The "Type" of a Revolving Advance refers to the determination whether
such
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Revolving Advance is a Eurodollar Rate Advance or Reference Rate Advance.
Section 1.05. MISCELLANEOUS. Article, Section, Schedule, and Exhibit
references are to Articles and Sections of and Schedules and Exhibits to this
Agreement, unless otherwise specified.
ARTICLE II
CREDIT FACILITIES
Section 2.01. COMMITMENT FOR REVOLVING ADVANCES.
(a) REVOLVING ADVANCES. Each Bank severally agrees, on the terms and
conditions set forth in this Agreement, to make Revolving Advances to the
Borrower from time to time on any Business Day during the period from the
Effective Date until the Revolving Maturity Date in an aggregate outstanding
amount up to but not to exceed an amount equal to the lesser of (i) such Bank's
Revolving Commitment MINUS such Bank's Pro Rata Share of the Letter of Credit
Exposure and (ii) such Bank's Pro Rata Share of the Borrowing Base MINUS such
Bank's Pro Rata Share of the Letter of Credit Exposure. Each Revolving
Borrowing shall, in the case of Revolving Borrowings consisting of Reference
Rate Advances, be in an aggregate amount not less than $1,000,000.00 and in
integral multiples of $500,000.00 in excess thereof, and in the case of
Revolving Borrowings consisting of Eurodollar Rate Advances, be in an aggregate
amount not less than $2,000,000.00 or in integral multiples of $1,000,000.00 in
excess thereof, and in each case shall consist of Revolving Advances of the
same Type made on the same day by the Banks ratably according to their
respective Revolving Commitments. Within the limits of each Bank's Revolving
Commitment, and subject to the terms of this Agreement, the Borrower may from
time to time borrow, prepay, and reborrow Revolving Advances.
(b) NOTES. The indebtedness of the Borrower to each Bank resulting from
the Revolving Advances owing to such Bank shall be evidenced by a Note of the
Borrower payable to the order of such Bank.
Section 2.02. BORROWING BASE.
(a) BORROWING BASE. The Borrowing Base as of the Effective Date has been
set by the Agent and the Banks and acknowledged by the Borrower as
$25,000,000.00.
(b) CALCULATION OF BORROWING BASE.
(i) The Borrower shall deliver to the Agent and each of the Banks on
or before each March 31, beginning March 31, 1999, an Independent
Engineering Report and such other information as may be reasonably
requested by any Bank with
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respect to the Oil and Gas Properties included or to be included in the
Borrowing Base. Within 30 days after the Agent and the Banks' receipt of
such Independent Engineering Report and other information, the Agent shall
deliver to each Bank the Agent's recommendation for the redetermined
Borrowing Base. Within 15 days after the Banks' receipt of the Agent's
recommendation, the Agent and the Banks shall redetermine the Borrowing
Base in accordance with Section 2.02(d) and the Agent shall promptly notify
the Borrower in writing of the amount of the Borrowing Base as so
redetermined.
(ii) The Borrower shall deliver to the Agent and each Bank on or
before each September 30, beginning September 30, 1998, an Internal
Engineering Report and such other information as may be reasonably
requested by the Agent or any Bank with respect to the Oil and Gas
Properties included or to be included in the Borrowing Base. Within 30
days after the Agent and the Banks' receipt of such Internal Engineering
Report and other information, the Agent shall deliver to each Bank the
Agent's recommendation for the redetermined Borrowing Base. Within 15
days after the Banks' receipt of the Agent's recommendation, the Agent and
the Banks shall redetermine the Borrowing Base in accordance with Section
2.02(d) and the Agent shall promptly notify the Borrower in writing of the
amount of the Borrowing Base as so redetermined.
(iii) In the event that the Borrower does not furnish to the Agent and
the Banks the Independent Engineering Report, Internal Engineering Report
or other information specified in clauses (i) and (ii) above by the date
specified therein, the Agent and the Banks may nonetheless redetermine the
Borrowing Base and redesignate the Borrowing Base from time-to-time
thereafter in their sole discretion until the Agent and the Banks receive
the relevant Independent Engineering Report, Internal Engineering Report,
or other information, as applicable, whereupon the Agent and the Banks
shall redetermine the Borrowing Base as otherwise specified in this
Section 2.02.
(iv) Each delivery of an Engineering Report by the Borrower to the
Agent and the Banks shall constitute a representation and warranty by the
Borrower to the Agent and the Banks that (A) the Borrower and the
Guarantors, as applicable owns the Oil and Gas Properties specified
therein free and clear of any Liens (except Permitted Liens), and (B) on
and as of the date of such Engineering Report each Oil and Gas Property
described as "proved developed" therein was developed for oil and gas, and
the xxxxx pertaining to such Oil and Gas Properties that are described
therein as producing xxxxx ("XXXXX"), were each producing oil and gas in
paying quantities, except for Xxxxx that were unitized as water or gas
injection xxxxx or as water disposal xxxxx.
(c) INTERIM REDETERMINATION. In addition to the Borrowing Base
redeterminations
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provided for in Section 2.02(b), the Agent and the Banks may, either in their
sole discretion or at the request of the Borrower and based on such
information as the Agent and the Banks deem relevant (but in accordance with
Section 2.02(d)), make one additional redetermination of the Borrowing Base
during any six-month period. The party requesting the redetermination shall
give the other party at least 10 days' prior written notice that a
redetermination of the Borrowing Base pursuant to this paragraph (c) is to be
performed. In connection with any redetermination of the Borrowing Base
under this Section 2.02(c), the Borrower shall provide the Agent and the
Banks with such information regarding the Borrower and the Guarantors'
business (including, without limitation, its Oil and Gas Properties, the
Proven Reserves, and production relating thereto) as the Agent or any Bank
may request, including, in the case of requests for an increase to the
Borrowing Base of $1,000,000.00 or more, an updated Independent Engineering
Report. The Agent shall promptly notify the Borrower in writing of each
redetermination of the Borrowing Base pursuant to this Section 2.02(c) and
the amount of the Borrowing Base as so redetermined.
(d) STANDARDS FOR REDETERMINATION. Each redetermination of the Borrowing
Base by the Agent and the Banks pursuant to this Section 2.02 shall be made (i)
in the sole discretion of the Agent and the Banks (but in accordance with the
other provisions of this Section 2.02(d)), (ii) in accordance with the Agent
and the Banks' customary internal standards and practices for valuing and
redetermining the value of Oil and Gas Properties in connection with reserve
based oil and gas loan transactions, (iii) in conjunction with the most recent
Independent Engineering Report or Internal Engineering Report, as applicable,
or other information received by the Agent and the Banks relating to the Proven
Reserves of the Borrower and the Guarantors, and (iv) based upon the estimated
value of the Proven Reserves owned by the Borrower and the Guarantors as
determined by the Agent and the Banks. In valuing and redetermining the
Borrowing Base, the Agent and the Banks may also consider the business,
financial condition, and Debt obligations of the Borrower and the Guarantors
and such other factors as the Agent and the Banks customarily deem appropriate.
In that regard, the Borrower acknowledges that the determination of the
Borrowing Base contains an equity cushion (market value in excess of loan
value), which is essential for the adequate protection of the Agent and the
Banks. No Proven Reserves shall be included or considered for inclusion in the
Borrowing Base unless the Agent and the Banks shall have received, at the
Borrower's expense, evidence of title satisfactory in form and substance to the
Agent that the Agent has an Acceptable Security Interest in the Oil and Gas
Properties relating thereto pursuant to the Security Documents. At all times
after the Bank has given the Borrower notification of a redetermination of the
Borrowing Base under this Section 2.02, the Borrowing Base shall be equal to
the redetermined amount or such lesser amount designated by the Borrower and
disclosed in writing to the Agent and the Banks until the Borrowing Base is
subsequently redetermined in accordance with this Section 2.02.
(e) ASSET SALES. The Borrowing Base shall automatically reduce by the
loan value assigned to each Oil and Gas Property in the Borrowing Base (as
determined by the Banks in their sole discretion) and sold by the Borrower or
any of the Guarantors to a Person
-20-
other than the Borrower or any of the Guarantors.
Section 2.03. METHOD OF BORROWING.
(a) NOTICE. Each Revolving Borrowing shall be made pursuant to a Notice
of Borrowing (or by telephone notice promptly confirmed in writing by a Notice
of Borrowing), given not later than 10:00 a.m. (Los Angeles, California, time)
(i) on the third Business Day before the date of the proposed Revolving
Borrowing, in the case of a Eurodollar Rate Borrowing or (ii) on the Business
Day of the proposed Revolving Borrowing, in the case of a Reference Rate
Borrowing, by the Borrower to the Agent, which shall in turn give to each Bank
prompt notice of such proposed Revolving Borrowing by telecopier or telex.
Each Notice of a Borrowing shall be given by telecopier or telex, confirmed
immediately in writing, specifying the information required therein. In the
case of a proposed Revolving Borrowing comprised of Eurodollar Rate Advances,
the Agent shall promptly notify each Bank of the applicable interest rate under
Section 2.09(b). Each Bank shall, before 10:00 a.m. (Los Angeles, California,
time) on the date of such Revolving Borrowing, make available for the account
of its Applicable Lending Office to the Agent at its address referred to in
Section 9.02, or such other location as the Agent may specify by notice to the
Banks, in same day funds, in the case of a Revolving Borrowing, such Bank's Pro
Rata Share of such Revolving Borrowing. After the Agent's receipt of such
funds and upon fulfillment of the applicable conditions set forth in
Article III, the Agent shall make such funds available to the Borrower at its
account with the Agent.
(b) CONVERSIONS AND CONTINUATIONS. The Borrower may elect to Convert or
continue any Revolving Borrowing under this Section 2.03 by delivering an
irrevocable Notice of Conversion or Continuation to the Agent at the Agent's
office no later than 10:00 a.m. (Los Angeles, California, time) (i) on the date
which is at least three Business Days in advance of the proposed Conversion or
continuation date in the case of a Conversion to or a continuation of a
Revolving Borrowing comprised of Eurodollar Rate Advances and (ii) on the
Business Day of the proposed conversion date in the case of a Conversion to a
Revolving Borrowing comprised of Reference Rate Advances. Each such Notice of
Conversion or Continuation shall be in writing or by telex or telecopier
confirmed immediately in writing specifying the information required therein.
Promptly after receipt of a Notice of Conversion or Continuation under this
Section, the Agent shall provide each Bank with a copy thereof and, in the case
of a Conversion to or a Continuation of a Revolving Borrowing comprised of
Eurodollar Rate Advances, notify each Bank of the applicable interest rate
under Section 2.09(b).
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(c) CERTAIN LIMITATIONS. Notwithstanding anything in paragraphs (a) and
(b) above:
(i) at no time shall there be more than three Interest Periods
applicable to outstanding Eurodollar Rate Advances and the Borrower may
not select Eurodollar Advances for any Revolving Borrowing at any time
that a Default has occurred and is continuing;
(ii) if any Bank shall, at least one Business Day before the date of
any requested Revolving Borrowing, Conversion, or continuation, notify the
Agent that the introduction of or any change in or in the interpretation
of any law or regulation makes it unlawful, or that any central bank or
other Governmental Authority asserts that it is unlawful, for such Bank or
its Eurodollar Lending Office to perform its obligations under this
Agreement to make Eurodollar Rate Advances or to fund or maintain
Eurodollar Rate Advances, the right of the Borrower to select Eurodollar
Rate Advances from such Bank shall be suspended until such Bank shall
notify the Agent that the circumstances causing such suspension no longer
exist, and the Revolving Advance made by such Bank in respect of such
Revolving Borrowing, Conversion, or continuation shall be a Reference Rate
Advance;
(iii) if the Agent is unable to determine the Eurodollar Rate for
Eurodollar Rate Advances comprising any requested Revolving Borrowing, the
right of the Borrower to select Eurodollar Rate Advances for such
Revolving Borrowing or for any subsequent Revolving Borrowing shall be
suspended until the Agent shall notify the Borrower and the Banks that the
circumstances causing such suspension no longer exist, and each Revolving
Advance comprising such Revolving Borrowing shall be a Reference Rate
Advance;
(iv) if the Majority Banks shall, at least one Business Day before
the date of any requested Revolving Borrowing, notify the Agent that the
Eurodollar Rate for Eurodollar Rate Advances comprising such Revolving
Borrowing will not adequately reflect the cost to such Banks of making or
funding their respective Eurodollar Rate Advances, as the case may be, for
such Revolving Borrowing, the right of the Borrower to select Eurodollar
Rate Advances for such Revolving Borrowing or for any subsequent Revolving
Borrowing shall be suspended until the Agent shall notify the Borrower and
the Banks that the circumstances causing such suspension no longer exist,
and each Revolving Advance comprising such Revolving Borrowing shall be a
Reference Rate Advance; and
(v) if the Borrower shall fail to select the duration or
continuation of any Interest Period for any Eurodollar Rate Advances in
accordance with the provisions contained in the definition of "Interest
Period" in Section 1.01 and paragraph (b) above, the Agent shall forthwith
so notify the Borrower and the Banks and such
-22-
Revolving Advances shall be made available to the Borrower on the date of
such Revolving Borrowing as Reference Rate Advances or, if an existing
Revolving Advance, Convert into Reference Rate Advances.
(d) NOTICES IRREVOCABLE. Each Notice of Borrowing and Notice of
Conversion or Continuation shall be irrevocable and binding on the Borrower.
In the case of any Revolving Borrowing which the related Notice of Borrowing
specifies is to be comprised of Eurodollar Rate Advances, the Borrower shall
indemnify each Bank against any loss, out-of-pocket cost, or expense incurred
by such Bank as a result of any failure by the Borrower to fulfill on or before
the date specified in such Notice of Borrowing for such Revolving Borrowing the
applicable conditions set forth in Article III including, without limitation,
any loss (including any loss of anticipated profits), cost, or expense incurred
by reason of the liquidation or reemployment of deposits or other funds
acquired by such Bank to fund the Revolving Advance to be made by such Bank as
part of such Revolving Borrowing when such Advance, as a result of such
failure, is not made on such date.
(e) AGENT RELIANCE. Unless the Agent shall have received notice from a
Bank before the date of any Revolving Borrowing that such Bank shall not make
available to the Agent such Bank's Pro Rata Share of a Revolving Borrowing, the
Agent may assume that such Bank has made its Pro Rata Share of such Revolving
Borrowing available to the Agent on the date of such Revolving Borrowing in
accordance with paragraph (a) of this Section 2.03 and the Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Bank shall not have so
made its Pro Rata Share of such Revolving Borrowing available to the Agent,
such Bank and the Borrower severally agree to immediately repay to the Agent on
demand such corresponding amount, together with interest on such amount, for
each day from the date such amount is made available to the Borrower until the
date such amount is repaid to the Agent, at (i) in the case of the Borrower,
the interest rate applicable on such day to Revolving Advances comprising such
Revolving Borrowing and (ii) in the case of such Bank, the Federal Funds Rate
for such day. If such Bank shall repay to the Agent such corresponding amount
and interest as provided above, such corresponding amount so repaid shall
constitute such Bank's Revolving Advance as part of such Revolving Borrowing
for purposes of this Agreement even though not made on the same day as the
other Revolving Advances comprising such Revolving Borrowing.
(f) BANK OBLIGATIONS SEVERAL. The failure of any Bank to make the
Revolving Advance to be made by it as part of any Revolving Borrowing shall not
relieve any other Bank of its obligation, if any, to make its Revolving Advance
on the date of such Revolving Borrowing. No Bank shall be responsible for the
failure of any other Bank to make the Revolving Advance to be made by such
other Bank on the date of any Revolving Borrowing.
-23-
Section 2.04. REDUCTION OF THE REVOLVING COMMITMENT.
(a) The Borrower shall have the right, upon at least three Business Days'
irrevocable notice to the Agent, to terminate in whole or reduce ratably in
part the unused portion of the Revolving Commitments; PROVIDED that each
partial reduction shall be in the aggregate amount of $1,000,000.00 or an
integral multiple of $1,000,000.00.
(b) Any reduction and termination of the Revolving Commitments pursuant
to this Section 2.04 shall be applied ratably to each Bank's Revolving
Commitment and shall be permanent, with no obligation of the Banks to reinstate
such Revolving Commitments.
Section 2.05. PREPAYMENT OF REVOLVING ADVANCES.
(a) OPTIONAL. The Borrower may prepay Revolving Advances, after giving
by 10:00 a.m. (Los Angeles, California, time) (i) in the case of Eurodollar
Rate Advances, at least two Business Days' or (ii) in case of Reference Rate
Advances, same Business Day's, irrevocable prior written notice to the Agent
stating the proposed date and aggregate principal amount of such prepayment.
If any such notice is given, the Borrower shall prepay Revolving Advances in
whole or ratably in part in an aggregate principal amount equal to the amount
specified in such notice, together with accrued interest to the date of such
prepayment on the principal amount prepaid and amounts, if any, required to be
paid pursuant to Section 2.12 as a result of such prepayment being made on such
date; PROVIDED, however, that each partial prepayment with respect to: (a) any
Revolving Advances shall be applied to Revolving Advances comprising part of
the same Revolving Borrowing; (B) any Reference Rate Advances shall be made in
$500,000.00 multiples and with respect to Revolving Advances only, in an
aggregate principal amount such that after giving effect thereto such Revolving
Borrowing shall have a principal amount outstanding of at least $1,000,000.00
and (C) any Revolving Borrowing comprised of Eurodollar Rate Advances shall be
made in $1,000,000.00 multiples and in an aggregate principal amount such that
after giving effect thereto such Revolving Borrowing shall have a principal
amount outstanding of at least $2,000,000.00. Full prepayments of any
Revolving Borrowing are permitted without restriction of amounts.
(b) BORROWING BASE DEFICIENCY. If the aggregate outstanding amount of
Revolving Advances plus the Letter of Credit Exposure ever exceeds the
Borrowing Base, the Borrower shall after receipt of written notice from the
Agent, take one of the following actions to remedy the Borrowing Base
deficiency:
(i) prepay Revolving Advances or, if the Revolving Advances have
been repaid in full, make deposits into the Cash Collateral Account to
provide cash collateral for the Letter of Credit Exposure, such that the
Borrowing Base deficiency is cured within 10 days after the date such
notice is received;
-24-
(ii) pledge as Collateral for the Obligations additional Oil and Gas
Properties acceptable to the Agent and each of Banks such that the
Borrowing Base deficiency is cured within 30 days after the date such
notice is received; or
(iii) repay the Revolving Advances and make deposits into the Cash
Collateral Account to provide cash collateral for the Letters of Credit,
each in six monthly installments equal to one-sixth of such Borrowing Base
deficiency with the first such installment due 30 days after the date such
notice is received and each following installment due 30 days after the
preceding installment.
Each prepayment pursuant to this Section 2.05(b) shall be accompanied by
accrued interest on the amount prepaid to the date of such prepayment and
amounts, if any, required to be paid pursuant to Section 2.12 as a result of
such prepayment being made on such date. Each prepayment under clauses (i) and
(iii) of this Section 2.05(b) shall be applied to the Revolving Advances as
determined by the Agent and agreed to by the Banks in their sole discretion.
(c) REDUCTION OF REVOLVING COMMITMENTS. On the date of each reduction of
the aggregate Revolving Commitments pursuant to Section 2.04, the Borrower
agrees to make a prepayment in respect of the outstanding amount of the
Revolving Advances to the extent, if any, that the aggregate unpaid principal
amount of all Revolving Advances exceeds the Revolving Commitments, as so
reduced. Each prepayment pursuant to this Section 2.05(c) shall be accompanied
by accrued interest on the amount prepaid to the date of such prepayment and
amounts, if any, required to be paid pursuant to Section 2.12 as a result of
such prepayment being made on such date.
(d) ILLEGALITY. If any Bank shall notify the Agent and the Borrower that
the introduction of or any change in or in the interpretation of any law or
regulation makes it unlawful, or that any central bank or other Governmental
Authority asserts that it is unlawful for such Bank or its Eurodollar Lending
Office to perform its obligations under this Agreement to maintain any
Eurodollar Rate Advances of such Bank then outstanding hereunder, (i) the
Borrower shall, no later than 10:00 a.m. (Los Angeles, California, time) (A) if
not prohibited by law, on the last day of the Interest Period for each
outstanding Eurodollar Rate Advance made by such Bank or (B) if required by
such notice, on the second Business Day following its receipt of such notice
prepay all of the Eurodollar Rate Advances of made by such Bank then
outstanding, together with accrued interest on the principal amount prepaid to
the date of such prepayment and amounts, if any, required to be paid pursuant
to Section 2.12 as a result of such prepayment being made on such date,
(ii) such Bank shall simultaneously make a Reference Rate Advance to the
Borrower on such date in an amount equal to the aggregate principal amount of
the Eurodollar Rate Advances prepaid to such Bank, and (iii) the right of the
Borrower to select Eurodollar Rate Advances from such Bank for any subsequent
Revolving Borrowing shall be suspended until such Bank gives notice referred to
above shall notify the Agent that the circumstances causing such
-25-
suspension no longer exist.
(e) NO ADDITIONAL RIGHT; RATABLE PREPAYMENT. The Borrower shall have no
right to prepay any principal amount of any Revolving Advance except as
provided in this Section 2.05, and all notices given pursuant to this Section
2.05 shall be irrevocable and binding upon the Borrower. Each payment of any
Revolving Advance pursuant to this Section 2.05 shall be made in a manner such
that all Revolving Advances comprising part of the same Revolving Borrowing are
paid in whole or ratably in part.
Section 2.06. REPAYMENT OF REVOLVING ADVANCES. The Borrower shall repay
to the Agent for the ratable benefit of the Banks the outstanding principal
amount of each Revolving Advance on the Revolving Maturity Date.
Section 2.07. LETTERS OF CREDIT.
(a) COMMITMENT. From time to time from the Effective Date until the
Revolving Maturity Date, at the request of the Borrower, the Issuing Bank
shall, on the terms and conditions hereinafter set forth, issue, increase, or
extend the expiration date of Letters of Credit for the account of the Borrower
on any Business Day. No Letter of Credit shall be issued, increased, or
extended:
(i) unless such issuance, increase, or extension would not cause the
Letter of Credit Exposure to exceed the lesser of (A) $5,000,000.00 or
(B) the lesser of (1) the aggregate Revolving Commitments LESS the
aggregate outstanding principal amount of all Revolving Advances and (2)
the Borrowing Base LESS the aggregate outstanding principal amount of all
Revolving Advances;
(ii) unless such Letter of Credit has an Expiration Date not later
than the earlier of (A) 12 months after the date of issuance thereof (or,
if extendable beyond such period, unless such Letter of Credit is
cancelable upon at least 30 days' notice given by the Issuing Bank to the
beneficiary of such Letter of Credit) and (B) the Revolving Maturity Date;
(iii) unless such Letter of Credit Documents are in form and substance
acceptable to the Issuing Bank in its sole discretion;
(iv) unless such Letter of Credit is a standby letter of credit not
supporting the repayment of indebtedness for borrowed money of any Person;
and
(v) unless the Borrower has delivered to the Issuing Bank a
completed and executed Letter of Credit Application.
(b) PARTICIPATIONS. Upon the date of the issuance or increase of a
Letter of Credit,
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the Issuing Bank shall be deemed to have sold to each other Bank and each
other Bank shall have been deemed to have purchased from the Issuing Bank a
participation in the related Letter of Credit Obligations equal to such
Bank's Pro Rata Share at such date and such sale and purchase shall otherwise
be in accordance with the terms of this Agreement. The Issuing Bank shall
promptly notify each such participant Bank by telex, telephone, or telecopy
of each Letter of Credit issued, increased, or extended or converted and the
actual dollar amount of such Bank's participation in such Letter of Credit.
(c) ISSUING. Each Letter of Credit shall be issued, increased, or
extended pursuant to a Letter of Credit Application (or by telephone notice
promptly confirmed in writing by a Letter of Credit Application), given not
later than 10:00 a.m. (Los Angeles, California, time) on the fifth Business Day
before the date of the proposed issuance, increase, or extension of the Letter
of Credit, and the Agent shall give to each Bank prompt notice of thereof by
telex, telephone, or telecopy. Each Letter of Credit Application shall be
given by telecopier or telex, confirmed immediately in writing, specifying the
information required therein. After the Agent's receipt of such Letter of
Credit Application and upon fulfillment of the applicable conditions set forth
in Article III, the Agent shall issue, increase, or extend such Letter of
Credit for the account of the Borrower. Each Letter of Credit Application
shall be irrevocable and binding on the Borrower.
(d) REIMBURSEMENT. The Borrower hereby agrees to pay on demand to the
Issuing Bank an amount equal to any amount paid by the Issuing Bank under any
Letter of Credit. In the event the Issuing Bank makes a payment pursuant to a
request for draw presented under a Letter of Credit and such payment is not
promptly reimbursed by the Borrower upon demand, the Issuing Bank shall give
the Agent notice of the Borrower's failure to make such reimbursement and the
Agent shall promptly notify each Bank of the amount necessary to reimburse the
Issuing Bank. Upon such notice from the Agent, each Bank shall promptly
reimburse the Issuing Bank for such Bank's Pro Rata Share of such amount, and
such reimbursement shall be deemed for all purposes of this Agreement to be a
Revolving Advance to the Borrower transferred at the Borrower's request to the
Issuing Bank. If such reimbursement is not made by any Bank to the Issuing
Bank on the same day on which the Agent notifies such Bank to make
reimbursement to the Issuing Bank hereunder, such Bank shall pay interest on
its Pro Rata Share thereof to the Issuing Bank at a rate per annum equal to the
Federal Funds Rate. The Borrower hereby unconditionally and irrevocably
authorizes, empowers, and directs the Agent and the Banks to record and
otherwise treat such reimbursements to the Issuing Bank as Reference Rate
Advances under a Revolving Borrowing requested by the Borrower to reimburse the
Issuing Bank which have been transferred to the Issuing Bank at the Borrower's
request.
(e) OBLIGATIONS UNCONDITIONAL. The obligations of the Borrower under
this Agreement in respect of each Letter of Credit shall be unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances, including, without limitation, the following
circumstances:
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(i) any lack of validity or enforceability of any Letter of Credit
Documents;
(ii) any amendment or waiver of, or any consent to, departure from
any Letter of Credit Documents;
(iii) the existence of any claim, set-off, defense, or other right
which the Borrower may have at any time against any beneficiary or
transferee of such Letter of Credit (or any Persons for whom any such
beneficiary or any such transferee may be acting), the Issuing Bank, or
any other person or entity, whether in connection with this Agreement, the
transactions contemplated in this Agreement or in any Letter of Credit
Documents, or any unrelated transaction;
(iv) any statement or any other document presented under such Letter
of Credit proving to be forged, fraudulent, invalid, or insufficient in
any respect or any statement therein being untrue or inaccurate in any
respect to the extent the Issuing Bank would not be liable therefor
pursuant to the following paragraph (f); or
(v) payment by the Issuing Bank under such Letter of Credit against
presentation of a draft or certificate which does not comply with the
terms of such Letter of Credit;
PROVIDED, HOWEVER, that nothing contained in this paragraph (e) shall be deemed
to constitute a waiver of any remedies of the Borrower in connection with the
Letters of Credit or the Borrower's rights under Section 2.07(f) below.
(f) LIABILITY OF ISSUING BANK. The Borrower assumes all risks of the
acts or omissions of any beneficiary or transferee of any Letter of Credit with
respect to its use of such Letter of Credit. Neither the Issuing Bank nor any
of its officers or directors shall be liable or responsible for:
(i) the use which may be made of any Letter of Credit or any acts or
omissions of any beneficiary or transferee in connection therewith;
(ii) the validity, sufficiency, or genuineness of documents, or of
any endorsement thereon, even if such documents should prove to be in any
or all respects invalid, insufficient, fraudulent, or forged;
(iii) payment by the Issuing Bank against presentation of documents
which do not comply with the terms of a Letter of Credit, including
failure of any documents to bear any reference or adequate reference to
the relevant Letter of Credit; or
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(iv) any other circumstances whatsoever in making or failing to make
payment under any Letter of Credit (INCLUDING THE ISSUING BANK'S OWN
NEGLIGENCE),
EXCEPT that the Borrower shall have a claim against the Issuing Bank, and the
Issuing Bank shall be liable to the Borrower, to the extent of any direct, as
opposed to consequential, damages suffered by the Borrower which the Borrower
proves were caused by (A) the Issuing Bank's willful misconduct or gross
negligence in determining whether documents presented under a Letter of Credit
comply with the terms of such Letter of Credit or (B) the Issuing Bank's
willful failure to make lawful payment under any Letter of Credit after the
presentation to it of a draft and certificate strictly complying with the terms
and conditions of such Letter of Credit. In furtherance and not in limitation
of the foregoing, the Issuing Bank may accept documents that appear on their
face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary.
(g) CASH COLLATERAL ACCOUNT.
(i) If the Borrower is required to deposit funds in the Cash
Collateral Account pursuant to Sections 2.05(b), 7.02(b), or 7.03(b), then
the Borrower and the Agent shall establish the Cash Collateral Account and
the Borrower shall execute any documents and agreements, including the
Agent's standard form assignment of deposit accounts, that the Agent
requests in connection therewith to establish the Cash Collateral Account
and grant the Agent a first priority security interest in such account and
the funds therein. The Borrower hereby pledges to the Agent and grants
the Agent a security interest in the Cash Collateral Account, whenever
established, all funds held in the Cash Collateral Account from time to
time, and all proceeds thereof as security for the payment of the
Obligations.
(ii) So long as no Event of Default Exists, (A) the Agent may apply
the funds held in the Cash Collateral Account only to the reimbursement of
any Letter of Credit Obligations, and (B) the Agent shall release to the
Borrower at the Borrower's written request any funds held in the Cash
Collateral Account in an amount up to but not exceeding the excess, if any
(immediately prior to the release of any such funds), of the total amount
of funds held in the Cash Collateral Account over the Letter of Credit
Exposure. During the existence of any Event of Default, the Agent may
apply any funds held in the Cash Collateral Account to the Obligations in
any order determined by the Agent, regardless of any Letter of Credit
Exposure which may remain outstanding. The Agent may in its sole
discretion at any time release to the Borrower any funds held in the Cash
Collateral Account.
(iii) The Agent shall exercise reasonable care in the custody and
preservation of any funds held in the Cash Collateral Account and shall be
deemed to have exercised such care if such funds are accorded treatment
substantially
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equivalent to that which the Agent accords its own property, it being
understood that the Agent shall not have any responsibility for taking any
necessary steps to preserve rights against any parties with respect to any
such funds.
Section 2.08. FEES.
(a) COMMITMENT FEES.
(i) The Borrower agrees to pay to the Agent for the account of each
Bank a commitment fee on the average daily amount by which (A) such Bank's
Pro Rata Share of the Borrowing Base exceeds (B) the sum of (1) such
Bank's outstanding Revolving Advances and (2) such Bank's Pro Rata Share
of the Letter of Credit Exposure, from the Effective Date until the
Revolving Maturity Date. The commitment fee shall be equal to the
following percentages per annum based upon the ratio of (A) the aggregate
outstanding amount of Revolving Advances PLUS the Letter of Credit
Exposure on such day to (B) the Borrowing Base as of such day:
Ratio of Outstanding
Revolving Advances PLUS
Letter of Credit Exposure to
BORROWING BASE COMMITMENT FEE PERCENTAGE
-------------- -------------------------
< .50 0.25%
>- .50 and < - .75 0.30%
> .75 0.35%
(ii) The commitment fees shall be due and payable quarterly in
arrears on the last day of each March, June, September, and December after
the Effective Date and on the Revolving Maturity Date.
(b) LETTER OF CREDIT FEES. The Borrower agrees to pay (i) to the Agent
for the pro rata benefit of the Banks a fee per annum for each Letter of Credit
issued hereunder equal to the Applicable Margin for Eurodollar Advances on the
face amount of such Letter of Credit, but with a minimum annual fee of $500.00
on each Letter of Credit and (ii) to the Issuing Bank, a fee for each Letter of
Credit of .125% per annum of the face amount of such Letter of Credit. Each
such fee shall be payable annually in advance on the date of the issuance,
increase or extension of the Letter of Credit, but, in the case of an increase
or extension only, on the amount of such increase or for the period of such
extension.
(c) FACILITY FEES. The Company agrees to pay to the Agent for the
account of each Bank a facility fee equal to .20% of the initial Borrowing Base
amount as of Effective Date.
Section 2.09. INTEREST. The Borrower shall pay interest on the unpaid
principal
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amount of each Revolving Advance made by each Bank from the date of such
Revolving Advance until such principal amount shall be paid in full, at the
following rates per annum:
(a) REFERENCE RATE ADVANCES. If such Revolving Advance is a Reference
Rate Advance, a rate per annum equal at all times to the Adjusted Reference
Rate in effect from time to time PLUS the Applicable Margin in effect from time
to time, payable in arrears on the last day of each month and on the date such
Reference Rate Advance shall be paid in full, PROVIDED that any amount of
principal which is not paid when due (whether at stated maturity, by
acceleration, or otherwise) shall bear interest from the date on which such
amount is due until such amount is paid in full, payable on demand, at a rate
per annum equal at all times to the Adjusted Reference Rate in effect from time
to time PLUS the Applicable Margin PLUS 3.00% per annum.
(b) EURODOLLAR RATE ADVANCES. If such Revolving Advance is a Eurodollar
Rate Advance, a rate per annum equal at all times during the Interest Period
for such Revolving Advance to the Eurodollar Rate for such Interest Period PLUS
the Applicable Margin in effect from time to time, payable on the last day of
such Interest Period, and, in the case of six-month Interest Periods, on the
day which occurs during such Interest Period three months from the first day of
such Interest Period, PROVIDED that any amount of principal which is not paid
when due (whether at stated maturity, by acceleration, or otherwise) shall bear
interest from the date on which such amount is due until such amount is paid in
full, payable on demand, at a rate per annum equal at all times to the Adjusted
Reference Rate in effect from time to time PLUS the Applicable Margin PLUS
3.00% per annum.
(c) ADDITIONAL INTEREST ON EURODOLLAR RATE ADVANCES. The Borrower shall
pay to each Bank, so long as any such Bank shall be required under regulations
of the Federal Reserve Board to maintain reserves with respect to liabilities
or assets consisting of or including Eurocurrency Liabilities, additional
interest on the unpaid principal amount of each Eurodollar Rate Advance of such
Bank, from the effective date of such Revolving Advance until such principal
amount is paid in full, at an interest rate per annum equal at all times to the
remainder obtained by subtracting (A) the Eurodollar Rate for the Interest
Period for such Revolving Advance from (B) the rate obtained by dividing such
Eurodollar Rate by a percentage equal to 100% minus the Eurodollar Rate Reserve
Percentage of such Bank for such Interest Period, payable on each date on which
interest is payable on such Revolving Advance. Such additional interest
payable to any Bank shall be determined by such Bank and notified to the
Borrower through the Agent (such notice to include the calculation of such
additional interest, which calculation shall be conclusive in the absence of
manifest error).
(d) USURY RECAPTURE.
(i) If, with respect to any Bank, the effective rate of interest
contracted for under the Credit Documents, including the stated rates of
interest and fees contracted for hereunder and any other amounts
contracted for under the Credit
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Documents which are deemed to be interest, at any time exceeds the Maximum
Rate, then the outstanding principal amount of the loans made by such Bank
hereunder shall bear interest at a rate which would make the effective rate
of interest for such Bank under the Credit Documents equal the Maximum Rate
until the difference between the amounts which would have been due at the
stated rates and the amounts which were due at the Maximum Rate (the "Lost
Interest") has been recaptured by such Bank.
(ii) If, when the loans made hereunder are repaid in full, the Lost
Interest has not been fully recaptured by such Bank pursuant to the
preceding paragraph, then, to the extent permitted by law, for the loans
made hereunder by such Bank the interest rates charged under Section 2.09
hereunder shall be retroactively increased such that the effective rate of
interest under the Credit Documents was at the Maximum Rate since the
effectiveness of this Agreement to the extent necessary to recapture the
Lost Interest not recaptured pursuant to the preceding sentence and, to
the extent allowed by law, the Borrower shall pay to such Bank the amount
of the Lost Interest remaining to be recaptured by such Bank.
(iii) NOTWITHSTANDING the foregoing or any other term in this
Agreement and the Credit Documents to the contrary, it is the intention of
each Bank and the Borrower to conform strictly to any applicable usury
laws. Accordingly, if any Bank contracts for, charges, or receives any
consideration which constitutes interest in excess of the Maximum Rate,
then any such excess shall be canceled automatically and, if previously
paid, shall at such Bank's option be applied to the outstanding amount of
the loans made hereunder by such Bank or be refunded to the Borrower.
Section 2.10. PAYMENTS AND COMPUTATIONS.
(a) PAYMENT PROCEDURES. The Borrower shall make each payment under this
Agreement and under the Notes not later than 10:00 a.m. (Los Angeles,
California, time) on the day when due in Dollars to the Agent at 000 X.
Xxxxxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000 (or such other location as the
Agent shall designate in writing to the Borrower), in same day funds and shall
send notice of such payments to the Agent at 000 X. Xxxxx, Xxxxx 0000, Xxxxxx,
Xxxxx 00000. The Agent shall promptly thereafter cause to be distributed like
funds relating to the payment of principal, interest or fees ratably (other
than amounts payable solely to the Agent, the Issuing Bank, or a specific Bank
pursuant to Section 2.08(c) or (d), 2.09(c), 2.12, 2.13, 2.14, 8.05, or 9.07,
but after taking into account payments effected pursuant to Section 9.04) (i)
before the acceleration of the Revolving Advances pursuant to Section 7.02 or
7.03, in accordance with each Bank's Pro Rata Share and (ii) after the
acceleration of the Revolving Advances pursuant to Section 7.02 or 7.03, in
accordance with each Bank's Pro Rata Share to the Banks for the account of
their respective Applicable Lending Offices, and like funds relating to the
payment of any other amount payable to any
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Bank or the Issuing Bank to such Bank for the account of its Applicable
Lending Office, in each case to be applied in accordance with the terms of
this Agreement.
(b) COMPUTATIONS. All computations of interest based on the Reference
Rate and of fees shall be made by the Agent on the basis of a year of 365 or
366 days, as the case may be, and all computations of interest based on the
Eurodollar Rate and the Federal Funds Rate shall be made by the Agent, on the
basis of a year of 360 days, in each case for the actual number of days
(including the first day, but excluding the last day) occurring in the period
for which such interest or fees are payable. Each determination by the Agent
of an interest rate or fee shall be conclusive and binding for all purposes,
absent manifest error.
(c) NON-BUSINESS DAY PAYMENTS. Whenever any payment shall be stated to
be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or fees, as the case may be;
PROVIDED, however, that if such extension would cause payment of interest on or
principal of Eurodollar Rate Advances to be made in the next following calendar
month, such payment shall be made on the next preceding Business Day.
(d) AGENT RELIANCE. Unless the Agent shall have received written notice
from the Borrower prior to the date on which any payment is due to the Banks
that the Borrower shall not make such payment in full, the Agent may assume
that the Borrower has made such payment in full to the Agent on such date and
the Agent may, in reliance upon such assumption, cause to be distributed to
each Bank on such date an amount equal to the amount then due such Bank. If
and to the extent the Borrower shall not have so made such payment in full to
the Agent, each Bank shall repay to the Agent forthwith on demand such amount
distributed to such Bank, together with interest, for each day from the date
such amount is distributed to such Bank until the date such Bank repays such
amount to the Agent, at the Federal Funds Rate for such day.
Section 2.11. SHARING OF PAYMENTS, ETC. If any Bank shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) on account of the Revolving Advances or Letter of Credit
Obligations made by it in excess of its Pro Rata Share of payments on account
of the Revolving Advances or Letter of Credit Obligations obtained by all the
Banks, such Bank shall notify the Agent and forthwith purchase from the other
Banks such participations in the Revolving Advances made by them or Letter of
Credit Obligations held by them as shall be necessary to cause such purchasing
Bank to share the excess payment ratably with each of them; PROVIDED, however,
that if all or any portion of such excess payment is thereafter recovered from
such purchasing Bank, such purchase from each Bank shall be rescinded and such
Bank shall repay to the purchasing Bank the purchase price to the extent of
such Bank's ratable share (according to the proportion of (a) the amount of the
participation sold by such Bank to the purchasing Bank as a result of such
excess payment to (b) the total amount of such excess payment) of
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such recovery, together with an amount equal to such Bank's ratable share
(according to the proportion of (a) the amount of such Bank's required
repayment to the purchasing Bank to (b) the total amount of all such required
repayments to the purchasing Bank) of any interest or other amount paid or
payable by the purchasing Bank in respect of the total amount so recovered.
The Borrower agrees that any Bank so purchasing a participation from another
Bank pursuant to this Section 2.11 may, to the fullest extent permitted by
law, exercise all its rights of payment (including the right of set-off) with
respect to such participation as fully as if such Bank were the direct
creditor of the Borrower in the amount of such participation.
Section 2.12. BREAKAGE COSTS. If (a) any payment of principal of any
Eurodollar Rate Advance is made other than on the last day of the Interest
Period for such Revolving Advance, whether as a result of any payment pursuant
to Section 2.05, the acceleration of the maturity of the Notes pursuant to
Article VII, or otherwise, or (b) the Borrower fails to make a principal or
interest payment with respect to any Eurodollar Rate Advance on the date such
payment is due and payable, the Borrower shall, within 10 days of any written
demand sent by any Bank to the Borrower through the Agent, pay to the Agent for
the account of such Bank any amounts required to compensate such Bank for any
additional losses, out-of-pocket costs or expenses which it may reasonably
incur as a result of such payment or nonpayment, including, without limitation,
any loss (including loss of anticipated profits), cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired
by any Bank to fund or maintain such Revolving Advance.
Section 2.13. INCREASED COSTS.
(a) EURODOLLAR RATE ADVANCES. If, due to either (i) the introduction of
or any change (other than any change by way of imposition or increase of
reserve requirements included in the Eurodollar Rate Reserve Percentage) in or
in the interpretation of any law or regulation or (ii) the compliance with any
guideline or request from any central bank or other Governmental Authority
(whether or not having the force of law), there shall be any increase in the
cost to any Bank of agreeing to make or making, funding, or maintaining
Eurodollar Rate Advances, then the Borrower shall from time to time, upon
demand by such Bank (with a copy of such demand to the Agent), immediately pay
to the Agent for the account of such Bank additional amounts sufficient to
compensate such Bank for such increased cost. A certificate as to the amount
of such increased cost and detailing the calculation of such cost submitted to
the Borrower and the Agent by such Bank shall be conclusive and binding for all
purposes, absent manifest error.
(b) CAPITAL ADEQUACY. If any Bank or the Issuing Bank determines in good
faith that compliance with any law or regulation or any guideline or request
from any central bank or other governmental authority (whether or not having
the force of law) affects or would affect the amount of capital required or
expected to be maintained by such Bank or the Issuing Bank or any corporation
controlling such Bank or the Issuing Bank and that the amount of such capital
is increased by or based upon the existence of such Bank's
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commitment to lend or the Issuing Bank's commitment to issue the Letters of
Credit and other commitments of this type, then, upon 30 days' prior written
notice by such Bank or the Issuing Bank (with a copy of any such demand to
the Agent), the Borrower shall immediately pay to the Agent for the account
of such Bank or to the Issuing Bank, as the case may be, from time to time as
specified by such Bank or the Issuing Bank, additional amounts sufficient to
compensate such Bank or the Issuing Bank, in light of such circumstances, (i)
with respect to such Bank, to the extent that such Bank reasonably determines
such increase in capital to be allocable to the existence of such Bank's
commitment to lend under this Agreement and (ii) with respect to the Issuing
Bank, to the extent that the Issuing Bank reasonably determines such increase
in capital to be allocable to the issuance or maintenance of the Letters of
Credit. A certificate as to such amounts and detailing the calculation of
such amounts submitted to the Borrower by such Bank or the Issuing Bank shall
be conclusive and binding for all purposes, absent manifest error.
(c) LETTERS OF CREDIT. If any change in any law or regulation or in the
interpretation thereof by any court or administrative or Governmental Authority
charged with the administration thereof shall either (i) impose, modify, or
deem applicable any reserve, special deposit, or similar requirement against
letters of credit issued by, or assets held by, or deposits in or for the
account of, the Issuing Bank or (ii) impose on the Issuing Bank any other
condition regarding the provisions of this Agreement relating to the Letters of
Credit or any Letter of Credit Obligations, and the result of any event
referred to in the preceding clause (i) or (ii) shall be to increase the cost
to the Issuing Bank of issuing or maintaining any Letter of Credit (which
increase in cost shall be determined by the Issuing Bank's reasonable
allocation of the aggregate of such cost increases resulting from such event),
then, upon demand by the Issuing Bank, the Borrower shall pay to the Issuing
Bank, from time to time as specified by the Issuing Bank, additional amounts
which shall be sufficient to compensate the Issuing Bank for such increased
cost. A certificate as to such increased cost incurred by the Issuing Bank, as
a result of any event mentioned in clause (i) or (ii) above, and detailing the
calculation of such increased costs submitted by the Issuing Bank to the
Borrower, shall be conclusive and binding for all purposes, absent manifest
error.
Section 2.14. TAXES.
(a) NO DEDUCTION FOR CERTAIN TAXES. Any and all payments by the
Borrower shall be made, in accordance with Section 2.10, free and clear of
and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding, in the case of each Bank, the Issuing Bank, and
the Agent, taxes imposed on its income, and franchise taxes imposed on it, by
the jurisdiction under the laws of which such Bank, the Issuing Bank, or the
Agent (as the case may be) is organized or any political subdivision of the
jurisdiction (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as
"Taxes") and, in the case of each Bank and the Issuing Bank, Taxes by the
jurisdiction of such Bank's Applicable Lending Office or any political
subdivision of such jurisdiction. If
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the Borrower shall be required by law to deduct any Taxes from or in respect
of any sum payable to any Bank, the Issuing Bank, or the Agent, (i) the sum
payable shall be increased as may be necessary so that, after making all
required deductions (including deductions applicable to additional sums
payable under this Section 2.14), such Bank, the Issuing Bank, or the Agent
(as the case may be) receives an amount equal to the sum it would have
received had no such deductions been made; PROVIDED, however, that if the
Borrower's obligation to deduct or withhold Taxes is caused solely by such
Bank's, the Issuing Bank's, or the Agent's failure to provide the forms
described in paragraph (d) of this Section 2.14 and such Bank, the Issuing
Bank, or the Agent could have provided such forms, no such increase shall be
required; (ii) the Borrower shall make such deductions; and (iii) the
Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.
(b) OTHER TAXES. In addition, the Borrower agrees to pay any present or
future stamp or documentary taxes or any other excise or property taxes,
charges or similar levies which arise from any payment made or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement, the Notes, or the other Credit Documents (hereinafter referred to as
"Other Taxes").
(c) INDEMNIFICATION. THE BORROWER INDEMNIFIES EACH BANK, THE ISSUING
BANK, AND THE AGENT FOR THE FULL AMOUNT OF TAXES OR OTHER TAXES (INCLUDING,
WITHOUT LIMITATION, ANY TAXES OR OTHER TAXES IMPOSED BY ANY JURISDICTION ON
AMOUNTS PAYABLE UNDER THIS SECTION 2.14) PAID BY SUCH BANK, THE ISSUING BANK,
OR THE AGENT (AS THE CASE MAY BE) AND ANY LIABILITY (INCLUDING INTEREST AND
EXPENSES) ARISING THEREFROM OR WITH RESPECT THERETO, WHETHER OR NOT SUCH TAXES
OR OTHER TAXES WERE CORRECTLY OR LEGALLY ASSERTED. EACH PAYMENT REQUIRED TO BE
MADE BY THE BORROWER IN RESPECT OF THIS INDEMNIFICATION SHALL BE MADE TO THE
AGENT FOR THE BENEFIT OF ANY PARTY CLAIMING SUCH INDEMNIFICATION WITHIN 30 DAYS
FROM THE DATE THE BORROWER RECEIVES WRITTEN DEMAND THEREFOR FROM THE AGENT ON
BEHALF OF ITSELF AS AGENT, THE ISSUING BANK, OR ANY SUCH BANK. IF ANY BANK,
THE AGENT, OR THE ISSUING BANK RECEIVES A REFUND IN RESPECT OF ANY TAXES PAID
BY THE BORROWER UNDER THIS PARAGRAPH (C), SUCH BANK, THE AGENT, OR THE ISSUING
BANK, AS THE CASE MAY BE, SHALL PROMPTLY PAY TO THE BORROWER THE BORROWER'S
SHARE OF SUCH REFUND.
(d) FOREIGN BANK WITHHOLDING EXEMPTION. Each Bank and Issuing Bank that
is not incorporated under the laws of the United States of America or a state
thereof agrees that it shall deliver to the Borrower and the Agent (i) two duly
completed copies of United States Internal Revenue Service Form 1001 or 4224 or
successor applicable form, as the case may
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be, certifying in each case that such Bank is entitled to receive payments
under this Agreement and the Notes payable to it, without deduction or
withholding of any United States federal income taxes, (ii) if applicable, an
Internal Revenue Service Form W-8 or W-9 or successor applicable form, as the
case may be, to establish an exemption from United States backup withholding
tax, and (iii) any other governmental forms which are necessary or required
under an applicable tax treaty or otherwise by law to reduce or eliminate any
withholding tax, which have been reasonably requested by the Borrower. Each
Bank which delivers to the Borrower and the Agent a Form 1001 or 4224 and
Form W-8 or W-9 pursuant to the next preceding sentence further undertakes to
deliver to the Borrower and the Agent two further copies of the said letter
and Form 1001 or 4224 and Form W-8 or W-9, or successor applicable forms, or
other manner of certification, as the case may be, on or before the date that
any such letter or form expires or becomes obsolete or after the occurrence
of any event requiring a change in the most recent letter and form previously
delivered by it to the Borrower and the Agent, and such extensions or
renewals thereof as may reasonably be requested by the Borrower and the Agent
certifying in the case of a Form 1001 or 4224 that such Bank is entitled to
receive payments under this Agreement without deduction or withholding of any
United States federal income taxes. If an event (including without
limitation any change in treaty, law or regulation) has occurred prior to the
date on which any delivery required by the preceding sentence would otherwise
be required which renders all such forms inapplicable or which would prevent
any Bank from duly completing and delivering any such letter or form with
respect to it and such Bank advises the Borrower and the Agent that it is not
capable of receiving payments without any deduction or withholding of United
States federal income tax, and in the case of a Form W-8 or W-9, establishing
an exemption from United States backup withholding tax, such Bank shall not
be required to deliver such letter or forms. The Borrower shall withhold tax
at the rate and in the manner required by the laws of the United States with
respect to payments made to a Bank failing to timely provide the requisite
Internal Revenue Service forms.
ARTICLE III
CONDITIONS OF LENDING
Section 3.01. CONDITIONS PRECEDENT TO INITIAL REVOLVING ADVANCES. This
Agreement shall become effective on the date the following conditions precedent
shall have been satisfied:
(a) DOCUMENTATION. The Agent shall have received the following duly
executed by all the parties thereto, in form and substance satisfactory to the
Agent and the Banks, and, where applicable, in sufficient copies for each Bank:
(i) this Agreement, a Note payable to the order of each Bank in the
amount of its Revolving Commitment, the Guaranties, the Pledge Agreement,
the
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Security Agreements, and Mortgages encumbering substantially all of the
Borrower's and the Guarantors' Oil and Gas Properties and all attached
exhibits and schedules;
(ii) a favorable opinion of the Borrower's Oklahoma counsel, dated as
of the Effective Date and substantially in the form of the attached
EXHIBIT K-1 covering the matters discussed in such Exhibit and such other
matters as any Bank through the Agent may reasonably request;
(iii) a favorable opinion of the Agent's counsel dated as of the
Effective Date and substantially in the form of the attached EXHIBIT K-2
covering the matters discussed in such Exhibit;
(iv) a certificate of the secretary or an assistant secretary of the
Borrower certifying its Certificate of Incorporation and Bylaws, the
resolutions of the board of directors of the Borrower authorizing this
Agreement and related transactions, and the incumbency and signatures of
the officers of the Borrower authorized to execute this Agreement and
related documents;
(v) a certificate of the secretary or an assistant secretary of each
Guarantor certifying the existence of such Guarantor, the certificate or
articles of incorporation and bylaws or other equivalent organizational
documents of such Guarantor, the resolutions of the board of directors or
other equivalent managing body of such Guarantor authorizing the Guaranty
of such Guarantor and related transactions, and the incumbency and
signatures of the officers of such Guarantor authorized to execute the
Guaranty of such Guarantor and related documents;
(vi) a certificate dated as of the Effective Date from the president
or chief financial officer of the Borrower stating that (A) all
representations and warranties of the Borrower set forth in this Agreement
are true and correct in all material respects; (B) no Default has occurred
and is continuing; and (C) the conditions in this Section 3.01 have been
met;
(vii) appropriate UCC-1 or UCC-3 Financing Statements covering the
Collateral for filing with the appropriate authorities;
(viii) stock certificates required in connection with the Pledge
Agreement and stock powers executed in blank for each such stock
certificate;
(ix) insurance certificates naming the Agent loss payee or additional
insured evidencing insurance which meets the requirements of this
Agreement and the Security Documents and which is satisfactory to
insurance consultants or brokers satisfactory to the Agent;
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(x) an environmental review by an environmental consultant
acceptable to the Agent, covering the Oil and Gas Properties and other
related Properties of Carlton, in form and substance satisfactory to the
Agent;
(xi) certified copies of each of the Carlton Acquisition Documents,
each certified as of the Effective Date by a Responsible Officer of the
Borrower as being true and correct copies of such documents as of the
Effective Date;
(xii) certified copies of each of the documents pertaining to the
offering of the Senior Notes, including, without limitation, the
Indenture, as being true and correct copies of such documents as of the
Effective Date;
(xiii) such other documents, governmental certificates, agreements, and
lien searches as the Agent or any Bank may reasonably request.
(b) CARLTON ACQUISITION. The Carlton Acquisition shall have been
consummated and all conditions to the Carlton Acquisition shall have been
satisfied in form and substance satisfactory to the Agent.
(c) SENIOR NOTES. The Borrower shall have issued the Senior Notes in an
original principal amount outstanding at least equal to $115,000,000 upon
substantially the same terms and conditions as set forth in the Borrower's
Registration Statement and upon such terms and conditions as are reasonably
acceptable to the Agent.
(d) REDEMPTION. The Borrower shall have fully redeemed its Series A
Preferred Stock and Series B Preferred Stock.
(e) PAYMENT OF FEES. On the date of this Agreement, the Borrower shall
have paid the fees required by Section 2.08(d) and all costs and expenses which
have been invoiced and are payable pursuant to Section 9.04.
(f) TITLE. The Agent shall be satisfied in its sole discretion with the
title to the Oil and Gas Properties included in the Borrowing Base and that
such Oil and Gas Properties constitute a percentage of such Collateral
reasonably satisfactory to the Agent.
(g) AGENT'S LIENS. The Agent shall be satisfied that the Liens granted
to it under the Security Documents, other than with respect to the Oil and Gas
Properties, are Acceptable Security Interests and that all actions or filings
necessary to protect, preserve and validly perfect such Liens have been made,
taken or obtained, as the case may be, and are in full force and effect.
(h) MATERIAL ADVERSE CHANGE. No event or circumstance that could cause a
Material Adverse Change shall have occurred.
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Section 3.02. CONDITIONS PRECEDENT TO ALL BORROWINGS. The obligation of
each Bank to make a Revolving Advance on the occasion of each Revolving
Borrowing and of the Issuing Bank to issue, increase, or extend any Letter of
Credit shall be subject to the further conditions precedent that on the date of
such Revolving Borrowing or the issuance, increase, or extension of such Letter
of Credit:
(a) the following statements shall be true (and each of the giving of the
applicable Notice of Borrowing or Letter of Credit Application and the
acceptance by the Borrower of the proceeds of such Revolving Borrowing or the
issuance, increase, or extension of such Letter of Credit shall constitute a
representation and warranty by the Borrower that on the date of such Revolving
Borrowing, the issuance, increase, or extension of such Letter of Credit, such
statements are true):
(i) the representations and warranties contained in Article IV of
this Agreement, the Security Documents, and the Guaranties are correct in
all material respects on and as of the date of such Revolving Borrowing or
the date of the issuance, increase, or extension of such Letter of Credit,
before and after giving effect to such Revolving Borrowing or to the
issuance, increase, or extension of such Letter of Credit and to the
application of the proceeds from such Borrowing, as though made on and as
of such date; and
(ii) no Default has occurred and is continuing or would result from
such Revolving Borrowing or from the application of the proceeds
therefrom, from the issuance, increase, or extension of such Letter of
Credit; and
(b) the Agent shall have received such other approvals, opinions, or
documents reasonably deemed necessary or desirable by any Bank as a result of
circumstances occurring after the date of this Agreement, as any Bank through
the Agent may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants as follows:
Section 4.01. CORPORATE EXISTENCE; SUBSIDIARIES. The Borrower is a
corporation duly organized and validly existing under the laws of Delaware and
in good standing and qualified to do business in each jurisdiction where its
ownership or lease of Property or conduct of its business requires such
qualification. Each Guarantor is duly organized, validly existing, and in good
standing under the laws of its jurisdiction of formation and in good standing
and qualified to do business in each jurisdiction where its ownership or lease
of property or conduct of its business requires such qualification and where a
failure to be qualified could reasonably be expected to cause a Material
Adverse Change. The Borrower
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and the Guarantors have the Subsidiaries listed on Schedule 4.01.
Section 4.02. CORPORATE POWER. The execution, delivery, and performance
by the Borrower of this Agreement, the Notes, and the other Credit Documents to
which it is a party and by the Guarantors of the Guaranties and the other
Credit Documents to which they are a party and the consummation of the
transactions contemplated hereby and thereby (a) are within the Borrower's and
the Guarantors' corporate powers, (b) have been duly authorized by all
necessary corporate action, (c) do not contravene (i) the Borrower's or any
Guarantor's certificate or articles of incorporation, bylaws or other similar
governance documents or (ii) any law or any contractual restriction binding on
or affecting the Borrower or any Guarantor, and (d) will not result in or
require the creation or imposition of any Lien prohibited by this Agreement.
Section 4.03. AUTHORIZATION AND APPROVALS. No consent, order,
authorization, or approval or other action by, and no notice to or filing with,
any Governmental Authority is required for the due execution, delivery, and
performance by the Borrower of this Agreement, the Notes, or the other Credit
Documents to which the Borrower is a party or by each Guarantor of its Guaranty
or the other Credit Documents to which it is a party or the consummation of the
transactions contemplated thereby. At the time of each Revolving Borrowing, no
authorization or approval or other action by, and no notice to or filing with,
any Governmental Authority will be required for such Revolving Borrowing or the
use of the proceeds of such Revolving Borrowing.
Section 4.04. ENFORCEABLE OBLIGATIONS. This Agreement, the Notes, and
the other Credit Documents to which the Borrower is a party have been duly
executed and delivered by the Borrower and the Guaranties and the other Credit
Documents to which each Guarantor is a party have been duly executed and
delivered by the Guarantors. Each Credit Document is the legal, valid, and
binding obligation of the Borrower and each Guarantor which is a party to it
enforceable against the Borrower and each such Guarantor in accordance with its
terms, except as such enforceability may be limited by any applicable
bankruptcy, insolvency, reorganization, moratorium, or similar law affecting
creditors' rights generally and by general principles of equity.
Section 4.05. FINANCIAL STATEMENTS. The audited balance sheet of the
Partnership and the combined unaudited balance sheet of the Partnership, the
Borrower, and Old RBOC as at December 31, 1996 and the related audited
statements of income, cash flow, and retained earnings of the Partnership and
the related unaudited combined statements of income, cash flow, and retained
earnings of the Partnership, the Borrower, and Old RBOC for the fiscal year
then ended, copies of which have been furnished to each Bank, and the balance
sheet of the Partnership and the combined balance sheet of the Partnership, the
Borrower, Old RBOC and Gulf States as at September 30, 1997, and the related
statements of income, cash flow, and retained earnings of the Partnership and
the related combined statements of income, cash flow, and retained earnings of
the Partnership, the Borrower, Old
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RBOC and Gulf States for the nine months then ended, copies of which have
been furnished to each Bank, fairly present, subject, in the case of the
balance sheets as at September 30, 1997, and said statements of income, cash
flow, and retained earnings for the nine months then ended, to year-end audit
adjustments, the financial condition of the Partnership and the combined
financial condition of the Partnership, the Borrower, Old RBOC and Gulf
States as at such dates and the results of operations of the Partnership and
the combined results of the operations of the Partnership, the Borrower, Old
RBOC and Gulf States for the periods ended on such dates, and such balance
sheets and statements of income, cash flow, and retained earnings were
prepared in accordance with GAAP. Since the date of the Financial
Statements, no event or circumstance that could cause a Material Adverse
Change has occurred.
Section 4.06. TRUE AND COMPLETE DISCLOSURE. All factual information
(excluding estimates) heretofore or contemporaneously furnished by or on behalf
of the Borrower or any of the Guarantors in writing to any Bank or the Agent
for purposes of or in connection with this Agreement, any other Credit Document
or any transaction contemplated hereby or thereby is, and all other such
factual information hereafter furnished by or on behalf of the Borrower and the
Guarantors in writing to the Agent or any of the Banks shall be, true and
accurate in all material respects on the date as of which such information is
dated or certified and does not contain any untrue statement of a material fact
or omit to state any material fact necessary to make the statements contained
therein not misleading at such time. All projections, estimates, and pro forma
financial information furnished by the Borrower were prepared on the basis of
assumptions, data, information, tests, or conditions believed to be reasonable
at the time such projections, estimates, and pro forma financial information
were furnished.
Section 4.07. LITIGATION. Set forth on SCHEDULE 4.07 is an accurate
description of all of the Borrower's and the Guarantors' pending litigation
existing on the Effective Date. There is no pending or, to the best knowledge
of the Borrower, threatened action or proceeding affecting the Borrower or any
of the Guarantors before any court, Governmental Agency or arbitrator, which
could reasonably be expected to cause a Material Adverse Change or which
purports to affect the legality, validity, binding effect, or enforceability of
this Agreement, any Note, or any other Credit Document.
Section 4.08. USE OF PROCEEDS. All Revolving Advances and Letters of
Credit shall be used to finance the acquisition and development of oil and gas
reserves and for general corporate purposes. The Borrower is not engaged in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U). No proceeds of any
Revolving Advance will be used to purchase or carry any margin stock in
violation of Regulation G, T, U or X.
Section 4.09. INVESTMENT COMPANY ACT. Neither the Borrower nor any of
the Guarantors is an "investment company" or a company "controlled" by an
"investment
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company" within the meaning of the Investment Company Act of 1940,
as amended.
Section 4.10. PUBLIC UTILITY HOLDING COMPANY ACT. Neither the Borrower
nor any of the Guarantors is a "holding company," or a "Subsidiary company" of
a "holding company," or an "affiliate" of a "holding company" or of a
"Subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended. Neither the Agent nor any of
the Banks, solely by virtue of the execution, delivery and performance of, and
the consummation of the transactions contemplated by, the Credit Documents
shall not be or become subject to regulation (a) as a "holding company", or an
"affiliate" of a "holding company," within the meaning of the Public Utility
Holding Company Act of 1935, as amended, (b) under the Federal Power Act, as
amended, (c) as a "public utility" or "public service corporation" or the
equivalent under the applicable law of any state, or (d) under the applicable
laws of any state relating to public utilities or public service corporations.
Section 4.11. TAXES.
(a) REPORTS AND PAYMENTS. All Returns required to be filed by or on
behalf of the Borrower, the Guarantors, or any member of the Controlled Group
(hereafter collectively called the "Tax Group") have been duly filed on a
timely basis or appropriate extensions have been obtained and such Returns are
and will be true, complete and correct, except where the failure to so file
would not be reasonably expected to cause a Material Adverse Change; and all
Taxes shown to be payable on the Returns or on subsequent assessments with
respect thereto will have been paid in full on a timely basis, and no other
Taxes will be payable by the Tax Group with respect to items or periods covered
by such Returns, except in each case to the extent of (i) reserves reflected in
the Financial Statements and the Interim Financial Statements, (ii) taxes that
are being contested in good faith, or (iii) such Taxes, the failure to pay
which would not cause a Material Adverse Change. The reserves for accrued
Taxes reflected in the financial statements delivered to the Banks under this
Agreement are adequate in the aggregate for the payment of all unpaid Taxes,
whether or not disputed, for the period ended as of the date thereof and for
any period prior thereto, and for which the Tax Group may be liable in its own
right, as withholding agent or as a transferee of the assets of, or successor
to, any Person, except for such Taxes or reserves therefor, the failure to pay
or provide for which does not and could not cause a Material Adverse Change.
(b) TAXES DEFINITION. "Taxes" in this Section 4.11 shall mean all taxes,
charges, fees, levies, or other assessments imposed by any federal, state,
local, or foreign taxing authority, including without limitation, income, gross
receipts, excise, real or personal property, sales, occupation, use, service,
leasing, environmental, value added, transfer, payroll, and franchise taxes
(and including any interest, penalties, or additions to tax attributable to or
imposed on with respect to any such assessment).
(c) RETURNS DEFINITION. "Returns" in this Section 4.11 shall mean any
federal,
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state, local, or foreign report, estimate, declaration of estimated Tax,
information statement or return relating to, or required to be filed in
connection with, any Taxes, including any information return or report with
respect to backup withholding or other payments of third parties.
Section 4.12. PENSION PLANS. All Plans are in compliance in all material
respects with all applicable provisions of ERISA. No Termination Event has
occurred with respect to any Plan, and each Plan has complied with and been
administered in all material respects with applicable provisions of ERISA and
the Code. No "accumulated funding deficiency" (as defined in Section 302 of
ERISA) has occurred and there has been no excise tax imposed under Section 4971
of the Code. No Reportable Event has occurred with respect to any
Multiemployer Plan, and each Multiemployer Plan has complied with and been
administered in all material respects with applicable provisions of ERISA and
the Code. The present value of all benefits vested under each Plan (based on
the assumptions used to fund such Plan) did not, as of the last annual
valuation date applicable thereto, exceed the value of the assets of such Plan
allocable to such vested benefits. Neither the Borrower nor any member of the
Controlled Group has had a complete or partial withdrawal from any
Multiemployer Plan for which there is any withdrawal liability. As of the most
recent valuation date applicable thereto, neither the Borrower nor any member
of the Controlled Group would become subject to any liability under ERISA if
the Borrower or any member of the Controlled Group has received notice that any
Multiemployer Plan is insolvent or in reorganization. Based upon GAAP existing
as of the Effective Date and current factual circumstances, the Borrower has no
reason to believe that the annual cost during the term of this Agreement to the
Borrower or any member of the Controlled Group for post-retirement benefits to
be provided to the current and former employees of the Borrower or any member
of the Controlled Group under Plans that are welfare benefit plans (as defined
in Section 3(a) of ERISA) could, in the aggregate, reasonably be expected to
cause a Material Adverse Change.
Section 4.13. CONDITION OF PROPERTY; CASUALTIES. The Borrower and each
of the Guarantors has good and indefeasible title to all of its Properties as
is customary in the oil and gas industry in all material respects, free and
clear of all Liens except for Permitted Liens. The material Properties used or
to be used in the continuing operations of the Borrower and each of the
Guarantors are in good repair, working order and condition. Since the date of
the Financial Statements, neither the business nor the material properties of
the Borrower and each of the Guarantors, taken as a whole, has been materially
and adversely affected as a result of any fire, explosion, earthquake, flood,
drought, windstorm, accident, strike or other labor disturbance, embargo,
requisition or taking of property or cancellation of contracts, permits, or
concessions by a Governmental Authority, riot, activities of armed forces, or
acts of God or of any public enemy.
Section 4.14. NO BURDENSOME RESTRICTIONS; NO DEFAULTS.
(a) Neither the Borrower nor any of the Guarantors is a party to any
indenture,
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loan, or credit agreement or any lease or other agreement or instrument or
subject to any charter or corporate restriction or provision of applicable
law or governmental regulation which could reasonably be expected to cause a
Material Adverse Change. The Borrower and the Guarantors are not in default
under or with respect to any contract, agreement, lease, or other instrument
to which the Borrower or any Guarantor is a party and which could reasonably
be expected to cause a Material Adverse Change. Neither the Borrower nor any
Guarantor has received any notice of default under any material contract,
agreement, lease, or other instrument to which the Borrower or such Guarantor
is a party.
(b) No Default has occurred and is continuing.
Section 4.15. ENVIRONMENTAL CONDITION.
(a) PERMITS, ETC. Except as set forth on Schedule 4.15, the Borrower and
the Guarantors (i) have obtained all Environmental Permits necessary for the
ownership and operation of their respective Properties and the conduct of their
respective businesses; (ii) have been and are in material compliance with all
terms and conditions of such Environmental Permits and with all other material
requirements of applicable Environmental Laws; (iii) have not received notice
of any material violation or alleged violation of any Environmental Law or
Environmental Permit; and (iv) are not subject to any actual or contingent
Environmental Claim, which could reasonably be expected to cause a Material
Adverse Change.
(b) CERTAIN LIABILITIES. Except as set forth on Schedule 4.15, to the
Borrower's actual knowledge, none of the present or previously owned or
operated Property of the Borrower or any Guarantor or of any of their former
Subsidiaries, wherever located, (i) has been placed on or proposed to be placed
on the National Priorities List, the Comprehensive Environmental Response
Compensation Liability Information System list, or their state or local
analogs, or have been otherwise investigated, designated, listed, or identified
as a potential site for removal, remediation, cleanup, closure, restoration,
reclamation, or other response activity under any Environmental Laws; (ii) is
subject to a Lien, arising under or in connection with any Environmental Laws,
that attaches to any revenues or to any Property owned or operated by the
Borrower or any of the Guarantors, wherever located, which could reasonably be
expected to cause a Material Adverse Change; or (iii) has been the site of any
Release of Hazardous Substances or Hazardous Wastes from present or past
operations which has caused at the site or at any third-party site any
condition that has resulted in or could reasonably be expected to result in the
need for Response that would cause a Material Adverse Change.
(c) CERTAIN ACTIONS. Except as set forth on Schedule 4.15, without
limiting the foregoing, (i) all necessary notices have been properly filed, and
no further action is required under current Environmental Law as to each
Response or other restoration or remedial project undertaken by the Borrower or
the Guarantors or any of their former Subsidiaries on
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any of their presently or formerly owned or operated Property and (ii) the
present and, to the Borrower's best knowledge, future liability, if any, of
the Borrower and the Guarantors which could reasonably be expected to arise
in connection with requirements under Environmental Laws will not result in a
Material Adverse Change.
Section 4.16. PERMITS, LICENSES, ETC. The Borrower and the Guarantors
possess all authorizations, permits, licenses, patents, patent rights or
licenses, trademarks, trademark rights, trade names rights and copyrights which
are material to the conduct of their business. The Borrower and the Guarantors
manage and operate their business in all material respects in accordance with
all applicable Legal Requirements and good industry practices.
Section 4.17. GAS CONTRACTS. Neither the Borrower nor any of the
Guarantors, as of the date hereof, (a) is obligated in any material respect by
virtue of any prepayment made under any contract containing a "take-or-pay" or
"prepayment" provision or under any similar agreement to deliver hydrocarbons
produced from or allocated to any of the Borrower's and the Guarantors' Oil and
Gas Properties at some future date without receiving full payment therefor at
the time of delivery, or (b) except as has been disclosed to the Agent, has
produced gas, in any material amount, subject to, and none of the Borrower's
and the Guarantors' Oil and Gas Properties is subject to, balancing rights of
third parties or subject to balancing duties under governmental requirements.
Section 4.18. LIENS. On the Effective Date, all governmental actions and
all other filings, recordings, registrations, third party consents and other
actions which are necessary to create and perfect the Liens provided for in the
Security Documents will have been made, obtained and taken in all relevant
jurisdictions.
Section 4.19. SOLVENCY. Before and after giving effect to the making of
the initial Revolving Advances, the Borrower is Solvent.
Section 4.20. CAPITALIZATION; OWNERSHIP.
(a) Except as otherwise permitted by Section 6.14, the authorized capital
stock of the Borrower consists of 15,000,000 shares of common stock, par value
$0.01 per share, of which 2,727,000 shares are issued and outstanding as of the
Effective Date; and 5,000,000 shares of preferred stock, par value $0.01 per
share, of which no shares are issued and outstanding as of the Effective Date.
The authorized capital stock of RBOC consists of 1,000 shares of common stock,
par value $1.00 per share, of which 1,000 shares are issued and outstanding.
The authorized capital stock of Carlton consists of 10,000 shares of common
stock, par value $0.01 per share, of which 1,125 shares are issued and
outstanding as of the Effective Date; and 1,000 shares of preferred stock, par
value $0.01 per share, of which 12 shares are issued and outstanding as of the
Effective Date. All of the issued and outstanding stock of the Borrower, RBOC
and Carlton are duly and validly issued and outstanding and are fully paid and
nonassessable. None of the outstanding shares of capital
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stock of the Borrower, RBOC or Carlton has been issued in violation of any
preemptive rights of the current or past shareholders of such entity.
(b) There are no shares of capital stock or other equity securities of
the Borrower, RBOC or Carlton outstanding other than those indicated in the
foregoing paragraph and there are no outstanding rights against the Borrower,
RBOC, Carlton or their shareholders relating to the capital stock of the
Borrower, RBOC or Carlton. There are no voting trusts, voting agreements,
proxies or any other agreements or understandings with respect to the voting of
any voting securities of the Borrower, RBOC or Carlton.
ARTICLE V
AFFIRMATIVE COVENANTS
So long as any Note or any amount under any Credit Document shall remain
unpaid, any Letter of Credit shall remain outstanding, or any Bank shall have
any Revolving Commitment hereunder, the Borrower agrees, unless the Majority
Banks shall otherwise consent in writing, to comply with the following
covenants.
Section 5.01. COMPLIANCE WITH LAWS, ETC. The Borrower shall comply, and
cause each of the Guarantors to comply, in all material respects with all Legal
Requirements. Without limiting the generality and coverage of the foregoing,
the Borrower shall comply, and shall cause each of the Guarantors to comply, in
all material respects, with all Environmental Laws and all laws, regulations,
or directives with respect to equal employment opportunity and employee safety
in all jurisdictions in which the Borrower, or any of the Guarantors do
business; PROVIDED, however, that this Section 5.01 shall not prevent the
Borrower, and shall cause each of the Guarantors to, or any of the Guarantors
from, in good faith and with reasonable diligence, contesting the validity or
application of any such laws or regulations by appropriate legal proceedings.
Without limitation of the foregoing, the Borrower shall, and shall cause each
of the Guarantors to, (a) maintain and possess all authorizations, permits,
licenses, trademarks, trade names, rights and copyrights which are necessary to
the conduct of its business and (b) obtain, as soon as practicable, all
consents or approvals required from any states of the United States (or other
Governmental Authorities) necessary to grant the Agent an Acceptable Security
Interest in the Borrower's and the Guarantors' Oil and Gas Properties.
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Section 5.02. MAINTENANCE OF INSURANCE.
(a) The Borrower shall, and shall cause each of the Guarantors to,
procure and maintain or shall cause to be procured and maintained continuously
in effect policies of insurance in form and amounts and issued by companies,
associations or organizations reasonably satisfactory to the Agent covering
such casualties, risks, perils, liabilities and other hazards reasonably
required by the Agent.
(b) All certified copies of policies or certificates thereof, and
endorsements and renewals thereof shall be delivered to and retained by the
Agent. All policies of insurance shall either have attached thereto a Lender's
Loss Payable Endorsement for the benefit of the Agent, as loss payee in form
reasonably satisfactory to the Agent or shall name the Agent as an additional
insured, as applicable. The Borrower shall furnish the Agent with a
certificate of insurance or a certified copy of all policies of insurance
required. All policies or certificates of insurance shall set forth the
coverage, the limits of liability, the name of the carrier, the policy number,
and the period of coverage. In addition, all policies of insurance required
under the terms hereof shall contain an endorsement or agreement by the insurer
that any loss shall be payable in accordance with the terms of such policy
notwithstanding any act of negligence of the Borrower, or a Guarantor or any
party holding under the Borrower or a Guarantor which might otherwise result in
a forfeiture of the insurance and the further agreement of the insurer waiving
all rights of setoff, counterclaim or deductions against the Borrower and the
Guarantors. All such policies shall contain a provision that notwithstanding
any contrary agreements between the Borrower, the Guarantors, and the
applicable insurance company, such policies will not be canceled, allowed to
lapse without renewal, surrendered or amended (which provision shall include
any reduction in the scope or limits of coverage) without at least 30 days'
prior written notice to the Agent. In the event that, notwithstanding the
"lender's loss payable endorsement" requirement of this Section 5.02, the
proceeds of any insurance policy described above are paid to the Borrower or a
Guarantor, the Borrower shall deliver such proceeds to the Agent immediately
upon receipt.
Section 5.03. PRESERVATION OF CORPORATE EXISTENCE, ETC. The Borrower
shall preserve and maintain, and cause each of the Guarantors to preserve and
maintain, its corporate existence, rights, franchises, and privileges in the
jurisdiction of its incorporation, and qualify and remain qualified, and cause
each such Guarantor to qualify and remain qualified, as a foreign corporation
in each jurisdiction in which qualification is necessary or desirable in view
of its business and operations or the ownership of its Properties, and, in each
case, where failure to qualify or preserve and maintain its rights and
franchises could reasonably be expected to cause a Material Adverse Change.
Section 5.04. PAYMENT OF TAXES, ETC. The Borrower shall pay and
discharge, and cause each of the Guarantors to pay and discharge, before the
same shall become delinquent, (a) all taxes, assessments, and governmental
charges or levies imposed upon it or upon its income or profits or Property
that are material in amount, prior to the date on which penalties
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attach thereto and (b) all lawful claims that are material in amount which,
if unpaid, might by law become a Lien upon its Property; PROVIDED, HOWEVER,
that neither the Borrower nor any such Guarantor shall be required to pay or
discharge any such tax, assessment, charge, levy, or claim which is being
contested in good faith and by appropriate proceedings, and with respect to
which reserves in conformity with GAAP have been provided.
Section 5.05. VISITATION RIGHTS. At any reasonable time and from time to
time, upon reasonable notice, the Borrower shall, and shall cause the
Guarantors to, permit the Agent and any Bank or any of its agents or
representatives thereof, to (a) examine and make copies of and abstracts from
the records and books of account of, and visit and inspect at its reasonable
discretion the properties of, the Borrower and any such Guarantor, and
(b) discuss the affairs, finances and accounts of the Borrower and any such
Guarantor with any of their respective officers or directors.
Section 5.06. REPORTING REQUIREMENTS. The Borrower shall furnish to the
Agent and each Bank:
(a) ANNUAL FINANCIALS. (i) As soon as available and in any event not
later that 90 days after the end of each fiscal year of the Borrower and the
Guarantors, (A) a copy of the annual audit report for such year for each of the
Borrower, including therein the Borrower's balance sheet as of the end of such
fiscal year and the Borrower's statements of income, cash flows, and retained
earnings, in each case certified by Ernst & Young, L.L.P. or other independent
certified public accountants of national standing and including any management
letters delivered by such accountants to the Borrower or any Guarantor in
connection with such audit, (B) a certificate of such accounting firm to the
Agent and the Banks stating that, in the course of the regular audit of the
business of the Borrower, which audit was conducted by such accounting firm in
accordance with generally accepted auditing standards, such accounting firm has
obtained no knowledge that a Default has occurred and is continuing, or if, in
the opinion of such accounting firm, a Default has occurred and is continuing,
a statement as to the nature thereof, and (C) a Compliance Certificate executed
by the Chief Financial Officer or Chief Accounting Officer of the Borrower and
(ii) a copy of the unaudited annual consolidating financial statements of each
of the Guarantors, including therein such Guarantor's balance sheet and
statements of income, cash flows, and retained earnings for such fiscal year;
(b) QUARTERLY FINANCIALS. As soon as available and in any event not
later than 60 days after the end of each of the first three quarters of each
fiscal year of the Borrower, (i) the Borrower's unaudited balance sheet and the
Borrower's statements of income, cash flows, and retained earnings for the
period commencing at the end of the previous year and ending with the end of
such quarter, all in reasonable detail and duly certified with respect to such
consolidated statements (subject to year-end audit adjustments) by the Chief
Financial Officer or Chief Accounting Officer of the Borrower as having been
prepared in accordance with GAAP and (ii) a Compliance Certificate executed by
the Chief Financial Officer or
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Chief Accounting Officer of the Borrower;
(c) OIL AND GAS RESERVE REPORTS.
(i) As soon as available but in any event on or before March 31 of
each year, an Independent Engineering Report dated as of January 1 for
such year.
(ii) As soon as available but in any event on or before September 30
of each year an Internal Engineering Report dated as of July 1 for such
year.
(iii) The Agent and the Banks acknowledge that the Engineering Reports
contain certain proprietary information including geological and
geophysical data, maps, models, and interpretations necessary for
determining the Borrowing Base and the creditworthiness of the Borrower
and the Guarantors. The Agent and the Banks agree to maintain the
confidentiality of such information except as required by law. The Agent
and the Banks may share such information with potential transferees of
their interests under this Agreement if such transferees agree to maintain
the confidentiality of such information.
(d) QUARTERLY REPORTS. As soon as available and in any event within 60
days after the end of each quarter, a report certified by a Responsible Officer
of the Borrower in form and substance satisfactory to the Bank prepared by the
Borrower (i) for each of the Borrower and the Guarantors' Oil and Gas
Properties detailing production, revenue, and price information and associated
operating expenses and further detailing any changes to any producing
reservoir, production equipment, or producing well which could cause a Material
Adverse Change and (ii) detailing which of the Borrower's and the Guarantors'
Oil and Gas Properties have been sold in the prior quarter;
(e) ANNUAL BUDGET. As soon as available and in any event within 90 days
before the end of each fiscal year, the Borrower's annual operating budget in
form and substance satisfactory to the Agent for the following fiscal year;
(f) DEFAULTS. As soon as possible and in any event within five days
after the occurrence of each Default known to a Responsible Officer of the
Borrower or any of the Guarantors which is continuing on the date of such
statement, a statement of the Chief Financial Officer of the Borrower setting
forth the details of such Default and the actions which the Borrower has taken
and proposes to take with respect thereto;
(g) SECURITIES LAW FILINGS. Promptly and in any event within 15 days
after the sending or filing thereof, copies of all final (as opposed to draft
or preliminary) proxy material, reports and other information which the
Borrower or any of the Guarantors sends to or files with the United States
Securities and Exchange Commission or sends to any equity holder of the
Borrower or a Guarantor;
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(h) TERMINATION EVENTS. As soon as possible and in any event (i) within
30 days after the Borrower or any member of the Controlled Group knows or has
reason to know that any Termination Event described in clause (a) of the
definition of Termination Event with respect to any Plan has occurred, and
(ii) within 10 days after the Borrower or any of its Affiliates knows or has
reason to know that any other Termination Event with respect to any Plan has
occurred, a statement of the Chief Financial Officer of the Borrower describing
such Termination Event and the action, if any, which the Borrower or such
Affiliate proposes to take with respect thereto;
(i) TERMINATION OF PLANS. Promptly and in any event within two Business
Days after receipt thereof by the Borrower or any member of the Controlled
Group from the PBGC, copies of each notice received by the Borrower or any such
member of the Controlled Group of the PBGC's intention to terminate any Plan or
to have a trustee appointed to administer any Plan;
(j) OTHER ERISA NOTICES. Promptly and in any event within five Business
Days after receipt thereof by the Borrower or any member of the Controlled
Group from a Multiemployer Plan sponsor, a copy of each notice received by the
Borrower or any member of the Controlled Group concerning the imposition or
amount of withdrawal liability pursuant to Section 4202 of ERISA;
(k) ENVIRONMENTAL NOTICES. Promptly upon the receipt thereof by the
Borrower or any of the Guarantors, a copy of any form of notice, summons or
citation received from the EPA, or any other Governmental Authority, concerning
(i) violations or alleged violations of Environmental Laws, which seeks to
impose liability therefor and could cause a Material Adverse Change, (ii) any
action or omission on the part of the Borrower or any Guarantor or any of their
former Subsidiaries in connection with Hazardous Waste or Hazardous Substances
which could reasonably result in the imposition of liability therefor that
could cause a Material Adverse Change, including without limitation any notice
of potential responsibility under CERCLA, or (iii) concerning the filing of a
Lien upon, against or in connection with the Borrower or any Guarantor or their
former Subsidiaries, or any of their leased or owned Property, wherever
located;
(l) OTHER GOVERNMENTAL NOTICES. Promptly and in any event within five
Business Days after receipt thereof by the Borrower or any Guarantor, a copy of
any notice, summons, citation, or proceeding seeking to modify in any material
respect, revoke, or suspend any material contract, license, or agreement with
any Governmental Authority;
(m) MATERIAL CHANGES. Prompt written notice of any condition or event of
which the Borrower has knowledge, which condition or event has resulted or may
reasonably be expected to result in (i) a Material Adverse Change or (ii) a
breach of or noncompliance with any material term, condition, or covenant of
any material contract to which the Borrower or
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any of the Guarantors is a party or by which they or their properties may be
bound;
(n) DISPUTES, ETC. Prompt written notice of any claims, proceedings, or
disputes, or to the knowledge of the Borrower threatened, or affecting the
Borrower, or any of the Guarantors which, if adversely determined, could
reasonably be expected to cause a Material Adverse Change, or any material
labor controversy of which the Borrower or any of the Guarantors has knowledge
resulting in or reasonably considered to be likely to result in a strike
against the Borrower or any of the Guarantors; and
(o) OTHER INFORMATION. Such other information respecting the business or
Properties, or the condition or operations, financial or otherwise, of the
Borrower or any of the Guarantors, as any Bank through the Agent may from time
to time reasonably request. The Agent agrees to provide the Banks with copies
of any material notices and information delivered solely to the Agent pursuant
to the terms of this Agreement.
Section 5.07. MAINTENANCE OF PROPERTY. The Borrower shall, and shall
cause each of the Guarantors to, maintain their owned, leased, or operated
Property in good condition and repair; and shall abstain, and cause each of the
Guarantors to abstain from, and not knowingly or willfully permit the
commission of waste or other injury, destruction, or loss of natural resources,
or the occurrence of pollution, contamination, or any other condition in, on or
about the owned or operated property involving the Environment that could
reasonably be expected to result in Response activities and that could
reasonably be expected to cause a Material Adverse Change.
Section 5.08. BANK ACCOUNTS. The Borrower and the Guarantors shall
maintain the bank accounts indicated on the attached SCHEDULE 5.08 for the
purposes indicated on such Schedule; shall cause each depositary institution
maintaining a lock box, collection, revenue or other account in which proceeds
of Collateral are deposited ("Revenue Accounts") to enter into an agreement
with the Agent in substantially the form of Exhibit A to the Security
Agreements; and agrees to deposit therein all proceeds of any sales of
Hydrocarbons attributable to the Borrower's and the Guarantors' Oil and Gas
Properties unless and until the Agent directs it to act otherwise. The
Borrower or the Guarantors, as applicable, may, prior to the occurrence and
continuance of a Default or Event of Default, make withdrawals from the Revenue
Accounts to pay operating costs and expenses or to other bank accounts used to
pay operating costs and expenses. After the occurrence and continuance of a
Default or Event of Default, all amounts deposited in the Revenue Accounts
shall be retained by the Agent as collateral for the Obligations. The Agent
does not waive or relinquish any of its rights or interests arising under the
Credit Documents by permitting the Borrower and the Guarantors to collect and
deposit the proceeds of sales of Hydrocarbons attributable to Borrower's Oil
and Gas Properties. The Borrower shall have no other bank accounts other than
the accounts listed on SCHEDULE 5.08 and accounts for which the Agent has
consented.
Section 5.09. OIL AND GAS PROPERTIES. Not later than March 31, 1998, the
Agent
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shall be satisfied that (a) the Liens granted to it under the Security
Documents are Acceptable Security Interests and that all actions or filings
necessary to protect, preserve and validly perfect such Liens have been
made, taken or obtained, as the case may be, and are in full force and
effect, (b) the Security Documents encumber substantially all of the Oil and
Gas Properties of the Borrower and the Guarantors, and (c) with respect to
the Oil and Gas Properties included in the Collateral, the Agent shall have
received supplemental or new title opinions addressed to it issued by counsel
to the Borrower that is experienced in the examination of title to Oil and
Gas Properties (which title opinions shall be in form and substance
acceptable to the Agent in its sole discretion and shall include opinions
regarding the before payout and after payout ownership interests held by the
Borrower and the Guarantors for all xxxxx located on the Oil and Gas
Properties covered thereby) as to the ownership of Oil and Gas Properties of
the Borrower and the Guarantors included in the Borrowing Base, and
reflecting that the Agent has an Acceptable Security Interest in such Oil and
Gas Properties of the Borrower and the Guarantors, constituting a percentage
of such Collateral reasonably satisfactory to the Agent. If the Agent shall
determine that, as of the date of any Borrowing Base determination, the
Borrower shall have failed to comply with clause (c) of the preceding
sentence, the Agent may notify the Borrower in writing of such failure and,
within 30 days from and after receipt of such written notice by the Borrower,
the Borrower shall execute and deliver to the Agent satisfactory title
evidence (including supplemental or new title opinions meeting the foregoing
requirements) in form and substance acceptable to the Agent in its reasonable
business judgment as to the Borrower's and the Guarantor's ownership of such
Oil and Gas Properties and the Agent's Lien and security interest therein as
are required to maintain compliance with this Section 5.09.
Section 5.10. INTEREST HEDGE ARRANGEMENTS. The Borrower shall have
entered into hedging transactions as reasonably agreed upon by the Agent and
the Borrower to fix, cap or collar the interest rate on the Revolving Advances
at an interest rates to be agreed to by the Agent and the Borrower.
Section 5.11. AGREEMENT TO PLEDGE. The Borrower shall, and shall cause
each Guarantor to, grant to the Agent an Acceptable Security Interest in any
Property of the Borrower or any Guarantor now owned or hereafter acquired
promptly after receipt of a written request from the Agent.
Section 5.12. ADDITIONAL SUBSIDIARIES. No later than ten days after any
Person becomes a Subsidiary of the Borrower, at the Agent's request the
Borrower will cause such Person to execute and deliver to the Agent a Guaranty
in substantially the form of Exhibit C, a Security Agreement in substantially
the form of Exhibit I, and such other documents, governmental certificates,
agreement as the Agent may reasonably request, together with such evidence of
corporate authority to enter into such Credit Documents as the Agent may
reasonably request, including without limitation, opinions of legal counsel
regarding such corporate authority and the enforceability of such Credit
Documents.
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ARTICLE VI
NEGATIVE COVENANTS
So long as any Note or any amount under any Credit Document shall remain
unpaid, any Letter of Credit shall remain outstanding, or any Bank shall have
any Revolving Commitment, the Borrower agrees, unless the Majority Banks
otherwise consent in writing, to comply with the following covenants.
Section 6.01. LIENS, ETC. The Borrower shall not create, assume, incur,
or suffer to exist, or permit any of the Guarantors to create, assume, incur,
or suffer to exist, any Lien on or in respect of any of its Property whether
now owned or hereafter acquired, or assign any right to receive income, except
that the Borrower and the Guarantors may create, incur, assume, or suffer to
exist:
(a) Liens securing the Obligations;
(b) Liens specified in the attached SCHEDULE 6.01 on the Property owned
by the Borrower and the Guarantors which is specified therein securing only the
Debt disclosed to be secured by such Liens therein;
(c) Liens securing purchase money Debt or Capital Leases to the extent
such Debt is permitted under Section 6.02(f); PROVIDED that (i) each such Lien
only encumbers the property acquired in connection with the creation of such
Debt or Capital Lease and all proceeds therefrom and (ii) the fair market value
of the collateral securing any such Debt may exceed the outstanding principal
amount of such Debt only to the extent such excess is within customary
commercial bank lending and collateralization requirements;
(d) Liens for taxes, assessments, or other governmental charges or levies
not yet due or that (provided foreclosure, sale, or other similar proceedings
shall not have been initiated) are being contested in good faith by appropriate
proceedings, and such reserve as may be required by GAAP shall have been made
therefor;
(e) Liens in favor of vendors, carriers, warehousemen, repairmen,
mechanics, workmen, materialmen, construction, or similar Liens arising by
operation of law in the ordinary course of business in respect of obligations
that are not yet due or that are being contested in good faith by appropriate
proceedings, provided such reserve as may be required by GAAP shall have been
made therefor;
(f) Liens to operators and non-operators under joint operating agreements
arising in the ordinary course of the business of the Borrower or the relevant
Guarantor to secure amounts owing, which amounts are not yet due or are being
contested in good faith by
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appropriate proceedings, if such reserve as may be required by GAAP shall
have been made therefor;
(g) easements, rights-of-way, restrictions, and other similar
encumbrances, and minor defects in the chain of title that are customarily
accepted in the oil and gas financing industry, none of which interfere with
the ordinary conduct of the business of Borrower or any Guarantor or materially
detract from the value or use of the Property to which they apply; and
(h) Liens of record under terms and provisions of the leases, unit
agreements, assignments, and other transfer of title documents in the chain of
title under which the Borrower or the relevant Guarantor acquired the Property,
which have been disclosed to the Agent.
Section 6.02. DEBTS, GUARANTIES, AND OTHER OBLIGATIONS. The Borrower
shall not, and shall not permit any of the Guarantors to, create, assume,
suffer to exist, or in any manner become or be liable in respect of, any Debt
except:
(a) Debt of the Borrower and the Guarantors under the Credit Documents;
(b) Debt of any Guarantor owing to the Borrower or any other Guarantor;
PROVIDED that such Debt is incurred in the ordinary course of business and is
subordinated to the Obligations in a manner satisfactory to the Agent;
(c) Debt in the form of obligations for the deferred purchase price of
property or services incurred in the ordinary course of business which are not
yet due and payable or are being contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP have been
established;
(d) Debt existing under Interest Hedge Agreements and Hydrocarbon Hedge
Agreements;
(e) the Senior Notes;
(f) Debt resulting from the conversion of Carlton's outstanding
redeemable preferred stock upon the terms and conditions of Carlton's
Certificate of Incorporation as in effect on the Effective Date, not to exceed
$600,000 plus any interest accrued prior to payment; and
(g) Debt not otherwise permitted under this Section 6.02 in an aggregate
principal amount outstanding at any time not to exceed $500,000.00.
Section 6.03. AGREEMENTS RESTRICTING LIENS AND DISTRIBUTIONS. The
Borrower shall
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not, nor shall it permit any of the Guarantors to, enter into any agreement
(other than a Credit Document or the Indenture) which except with respect to
specific Property encumbered to secure payment of Debt related to such
Property, imposes restrictions upon the creation or assumption of any Lien
upon its Properties, revenues or assets, whether now owned or hereafter
acquired.
Section 6.04. MERGER OR CONSOLIDATION; ASSET SALES. The Borrower shall
not, and shall not permit any of the Guarantors to:
(a) merge or consolidate with or into any other Person; or
(b) sell, lease, transfer, or otherwise dispose of any of its Property
outside of the ordinary course of business or any of its Oil and Gas
Properties, except (i) sales of Hydrocarbons in the ordinary course of
business, (ii) sales of assets outside the ordinary course of business in an
aggregate amount for any six-month period not to exceed $500,000.00; and (iii)
sales of equipment no longer used or useful in the Borrower or the Guarantors'
business or equipment salvaged in connection with any plugging or abandonment
of any well.
Section 6.05. RESTRICTED PAYMENTS. The Borrower shall not, and shall not
permit any of the Guarantors to, make or pay any Restricted Payment, other than
the payment of dividends on shares of the Borrower's preferred stock issued in
connection with future acquisitions provided that at the time of the payment of
such dividends (i) the aggregate amount of such dividend payments does not
exceed $500,000 during any fiscal year; (ii) no Default or Event of Default has
occurred and is continuing; and (iii) no Borrowing Base deficiency exist.
Section 6.06. INVESTMENTS. The Borrower shall not, and shall not permit
any of the Guarantors to, make or permit to exist any loans, advances, or
capital contributions to, or make any investment in, or purchase or commit to
purchase any stock or other securities or evidences of indebtedness of or
interests in any Person, except:
(a) Liquid Investments;
(b) trade and customer accounts receivable which are for goods furnished
or services rendered in the ordinary course of business and are payable in
accordance with customary trade terms;
(c) oil and gas farm-ins, oil and gas development joint ventures and
limited partnerships, and similar transactions, in each case in the ordinary
course of business; and
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(d) loans, advances, or capital contributions to, or investment in, or
purchases or commitments to purchase any stock or other securities or evidences
of indebtedness of or interests in any Person, specified in the attached
SCHEDULE 6.06.
Section 6.07. LIMITATION ON SPECULATIVE HEDGING. The Borrower shall not,
and shall not permit any of the Guarantors to, purchase, assume, or hold a
speculative position in any commodities market or futures market in excess of
75% of Proven Reserves.
Section 6.08. AFFILIATE TRANSACTIONS. Except as expressly permitted
elsewhere in this Agreement or otherwise approved in writing by the Agent, the
Borrower shall not, and shall not permit any of the Guarantors to, make,
directly or indirectly: (i) any investment in any Affiliate; (ii) any
transfer, sale, lease, assignment, or other disposal of any assets to any such
Affiliate or any purchase or acquisition of assets from any such Affiliate; or
(iii) any arrangement or other transaction directly or indirectly with or for
the benefit of an such Affiliate (including without limitation, guaranties and
assumptions of obligations of an Affiliate); PROVIDED that the Borrower and the
Guarantors may enter into any arrangement or other transaction with any such
Affiliate providing for the leasing of property, the rendering or receipt of
services or the purchase or sale of inventory and other assets in the ordinary
course of business if the monetary or business consideration arising therefrom
would be substantially as advantageous to the Borrower and the Guarantors as
the monetary or business consideration which it would obtain in a comparable
arm's length transaction with a Person not such an Affiliate.
Section 6.09. COMPLIANCE WITH ERISA. The Borrower shall not, and shall
not permit any of the Guarantors to, (a) terminate, or permit any Affiliate to
terminate, any Plan so as to result in any material (in the opinion of the
Majority Banks) liability of the Borrower or any of its Affiliates to the PBGC
or (b) permit to exist any occurrence of any Reportable Event (as defined in
Title IV of ERISA), or any other event or condition, which presents a material
(in the opinion of the Majority Banks) risk of such a termination by the PBGC
of any Plan.
Section 6.10. SALE-AND-LEASEBACK. The Borrower shall not, nor shall it
permit any of the Guarantors to, sell or transfer to a Person any property,
whether now owned or hereafter acquired, if at the time or thereafter the
Borrower or a Guarantor shall lease as lessee such property or any part thereof
or other property which the Borrower or a Guarantor intends to use for
substantially the same purpose as the property sold or transferred.
Section 6.11. NO SUBSIDIARIES. The Borrower shall not, and shall not
permit any Guarantor to, have any Subsidiaries, except those Subsidiaries of
which prior written notice is given to the Agent.
Section 6.12. CHANGE OF BUSINESS. The Borrower shall not, nor shall it
permit any of the Guarantors to, materially change the character of their
business as presently and
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normally conducted or engage in any type of business not related to their
business as presently and normally conducted.
Section 6.13. ORGANIZATIONAL DOCUMENTS, NAME CHANGE. The Borrower shall
not, nor shall it permit any of the Guarantors to, amend, supplement, modify or
restate their articles or certificate of incorporation and bylaws or other
equivalent organizational documents without prior written notice to and prior
or subsequent consent of the Agent, which consent shall not be unreasonably
withheld provided that such amendments, supplements, modifications or
restatements are in form and substance reasonably satisfactory to the Agent.
The Borrower shall not, nor shall it permit any of the Guarantors to, change
their name without giving the Agent reasonable notice thereof. The Borrower
agrees that at any time, at the Borrower's expense, the Borrower will, or will
cause any of the Guarantors to, promptly execute and deliver all further
instruments and documents, and take all further action, that may be reasonably
necessary or that the Agent or any Bank may reasonably request, in order to
perfect and protect any security interest granted or purported to be granted
hereby or to enable the Agent to exercise and enforce its rights and remedies
hereunder with respect to any Collateral.
Section 6.14. RENTAL EXPENSE. The Borrower shall not permit the
consolidated Rental Expense of the Borrower and the Guarantors to exceed
$1,000,000.00 in any fiscal year of the Borrower.
Section 6.15. CURRENT RATIO. The Borrower shall not permit as of the
last day of any fiscal quarter the ratio of the consolidated current assets of
the Borrower and the Guarantors to the consolidated current liabilities of the
Borrower and the Guarantors to be less than 1.00 to 1.00 at any time.
Section 6.16. INTEREST COVERAGE RATIO. The Borrower shall not permit as
of the last day of any fiscal quarter the ratio of (a) consolidated EBITDA for
the Borrower and the Guarantors for the four fiscal quarters ending on such
date to (b) Interest Expense for such period to be less than (i) 1.25 to 1.00
from the Effective Date through March 31, 1999 and (ii) 1.50 to 1.00
thereafter.
Section 6.17. SENIOR NOTES. The Borrower shall not prepay, repay or
redeem the Senior Notes except for prepayments or redemptions permitted or
required pursuant to the terms of the Indenture, other than the mandatory
redemption of the Senior Notes required by Section 4.17 of the Indenture. The
Borrower shall not amend, supplement or modify the Indenture as in effect on
the Effective Date in any manner materially adverse to the interests of the
Banks, without the prior written consent of the Banks.
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ARTICLE VII
REMEDIES
Section 7.01. EVENTS OF DEFAULT. The occurrence of any of the following
events shall constitute an "Event of Default" under any Credit Document:
(a) PAYMENT. The Borrower shall fail to pay when due any principal,
interest, fees, reimbursements, indemnifications, or other amounts payable
hereunder, under the Notes, or under any other Credit Document;
(b) REPRESENTATION AND WARRANTIES. Any representation or warranty made
or deemed to be made (i) by the Borrower in this Agreement or in any other
Credit Document, (ii) by the Borrower (or any of its officers) in connection
with this Agreement or any other Credit Document, or (iii) by any Guarantor in
any Credit Document shall prove to have been incorrect in any material respect
when made or deemed to be made;
(c) COVENANT BREACHES. (i) The Borrower shall (A) fail to perform or
observe any covenant contained in Section 5.02(a), 5.05, or 5.08 or Article VI
of this Agreement or (B) fail to perform or observe any other term or covenant
set forth in this Agreement or in any other Credit Document which is not
covered by clause (i)(A) above or any other provision of this Section 7.01 if
such failure shall remain unremedied for 30 days after written notice of such
default shall have been given to such Person by the Agent or any Bank or for 10
days after such Person had actual knowledge of such default PROVIDED that such
Person did not give written notice thereof to the Agent within such 10 days or
(ii) any Guarantor shall fail to perform or observe any covenant contained in
its Guaranty;
(d) CROSS-DEFAULTS. (i) The Borrower or any Guarantor shall fail to pay
any principal of or premium or interest on its Debt which is outstanding in a
principal amount of at least $100,000.00 individually or when aggregated with
all such Debt of the Borrower or the Guarantors so in default (but excluding
Debt evidenced by the Notes) when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise),
and such failure shall continue after the applicable grace period, if any,
specified in the agreement or instrument relating to such Debt; (ii) any other
event shall occur or condition shall exist under any agreement or instrument
relating to Debt which is outstanding in a principal amount of at least
$100,000.00 individually or when aggregated with all such Debt of the Borrower
and the Guarantors so in default, and shall continue after the applicable grace
period, if any, specified in such agreement or instrument, if the effect of
such event or condition is to accelerate, or to permit the acceleration of, the
maturity of such Debt; or (iii) any such Debt shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled
required prepayment), prior to the stated maturity thereof;
(e) INSOLVENCY. The Borrower or any of the Guarantors shall generally
not pay its debts as such debts become due, or shall admit in writing its
inability to pay its debts
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generally, or shall make a general assignment for the benefit of creditors;
or any proceeding shall be instituted by or against the Borrower or any of
the Guarantors seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee or
other similar official for it or for any substantial part of its property
and, in the case of any such proceeding instituted against the Borrower or
any such Guarantor, either such proceeding shall remain undismissed for a
period of 30 days or any of the actions sought in such proceeding shall
occur; or the Borrower or any of the Guarantors shall take any corporate
action to authorize any of the actions set forth above in this paragraph (e);
(f) JUDGMENTS. Any judgment or order for the payment of money in excess
of $100,000.00 shall be rendered against the Borrower or any of the Guarantors
and either (i) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order or (ii) there shall be any period of 30
consecutive days during which a stay of enforcement of such judgment or order,
by reason of a pending appeal or otherwise, shall not be in effect;
(g) TERMINATION EVENTS. Any Termination Event with respect to a Plan
shall have occurred, and, 30 days after notice thereof shall have been given to
the Borrower by the Agent, (i) such Termination Event shall not have been
corrected and (ii) the then present value of such Plan's vested benefits
exceeds the then current value of assets accumulated in such Plan by more than
the amount of $100,000.00 (or in the case of a Termination Event involving the
withdrawal of a "substantial employer" (as defined in Section 4001(a)(2) of
ERISA), the withdrawing employer's proportionate share of such excess shall
exceed such amount);
(h) PLAN WITHDRAWALS. The Borrower or any member of the Controlled Group
as employer under a Multiemployer Plan shall have made a complete or partial
withdrawal from such Multiemployer Plan and the plan sponsor of such
Multiemployer Plan shall have notified such withdrawing employer that such
employer has incurred a withdrawal liability in an annual amount exceeding
$100,000.00;
(i) BORROWING BASE. Any failure to cure any Borrowing Base deficiency in
accordance with Section 2.05;
(j) GUARANTIES. Any provision of any Guaranty shall for any reason cease
to be valid and binding on the applicable Guarantor or the applicable Guarantor
shall so state in writing;
(k) SECURITY DOCUMENTS. Any Security Document shall at any time and for
any reason cease to create the Lien on the property purported to be subject to
such agreement in
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accordance with the terms of such agreement, or cease to be in full force and
effect, or shall be contested by the Borrower or any Guarantor;
Section 7.02. OPTIONAL ACCELERATION OF MATURITY. If any Event of Default
(other than an Event of Default pursuant to paragraph (e) of Section 7.01)
shall have occurred and be continuing, then, and in any such event,
(a) the Agent (i) shall at the request, or may with the consent, of the
Majority Banks, by notice to the Borrower, declare the obligation of each Bank
and the Issuing Bank to make extensions of credit hereunder, including making
Revolving Advances and issuing Letters of Credit, to be terminated, whereupon
the same shall forthwith terminate, and (ii) shall at the request, or may with
the consent, of the Majority Banks, by notice to the Borrower, declare all
principal, interest, fees, reimbursements, indemnifications, and all other
amounts payable under this Agreement, the Notes, and the other Credit Documents
to be forthwith due and payable, whereupon all such amounts shall become and be
forthwith due and payable in full, without notice of intent to demand, demand,
presentment for payment, notice of nonpayment, protest, notice of protest,
grace, notice of dishonor, notice of intent to accelerate, notice of
acceleration, and all other notices, all of which are hereby expressly waived
by the Borrower;
(b) the Borrower shall, on demand of the Agent at the request or with the
consent of the Majority Banks, deposit with the Agent into the Cash Collateral
Account an amount of cash equal to the Letter of Credit Exposure as security
for the Obligations; and
(c) the Agent shall at the request of, or may with the consent of, the
Majority Banks proceed to enforce its rights and remedies under the Security
Documents, the Guaranties, and any other Credit Document for the ratable
benefit of the Banks by appropriate proceedings.
Section 7.03. AUTOMATIC ACCELERATION OF MATURITY. If any Event of
Default pursuant to paragraph (e) of Section 7.01 shall occur,
(a) (i) the obligation of each Bank and the Issuing Bank to make
extensions of credit hereunder, including making Revolving Advances and issuing
Letters of Credit, shall terminate, and (ii) all principal, interest, fees,
reimbursements, indemnifications, and all other amounts payable under this
Agreement, the Notes, and the other Credit Documents shall become and be
forthwith due and payable in full, without notice of intent to demand, demand,
presentment for payment, notice of nonpayment, protest, notice of protest,
grace, notice of dishonor, notice of intent to accelerate, notice of
acceleration, and all other notices, all of which are hereby expressly waived
by the Borrower;
(b) the Borrower shall deposit with the Agent into the Cash Collateral
Account an amount of cash equal to the outstanding Letter of Credit Exposure as
security for the
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Obligations; and
(c) the Agent shall at the request of, or may with the consent of, the
Majority Banks proceed to enforce its rights and remedies under the Security
Documents, the Guaranties, and any other Credit Document for the ratable
benefit of the Banks by appropriate proceedings.
Section 7.04. RIGHT OF SET-OFF. Upon the occurrence and during the
continuance of any Event of Default, the Agent and each Bank 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 the Agent or such Bank to or for the credit or the account of the
Borrower against any and all of the obligations of the Borrower now or
hereafter existing under this Agreement, the Notes held by the Agent or such
Bank, and the other Credit Documents, irrespective of whether or not the Agent
or such Bank shall have made any demand under this Agreement, such Notes, or
such other Credit Documents, and although such obligations may be unmatured.
The Agent and each Bank agrees to promptly notify the Borrower after any such
set-off and application made by the Agent or such Bank, provided that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of the Agent and each Bank under this Section 7.04 are
in addition to any other rights and remedies (including, without limitation,
other rights of set-off) which the Agent or such Bank may have.
Section 7.05. ACTIONS UNDER CREDIT DOCUMENTS. Following an Event of
Default, the Agent shall at the request, or may with the consent, of the
Majority Banks, take any and all actions permitted under the other Credit
Documents, including enforcing it rights under the Security Documents and the
Guaranty for the ratable benefit of the Banks.
Section 7.06. NON-EXCLUSIVITY OF REMEDIES. No remedy conferred upon the
Agent is intended to be exclusive of any other remedy, and each remedy shall be
cumulative of all other remedies existing by contract, at law, in equity, by
statute or otherwise.
ARTICLE VIII
THE AGENT AND THE ISSUING BANK
Section 8.01. AUTHORIZATION AND ACTION. Each Bank hereby appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
hereof and of the other Credit Documents, together with such powers as are
reasonably incidental thereto. As to any matters not expressly provided for by
this Agreement or any other Credit Document (including, without limitation,
enforcement or collection of the Notes), the Agent shall not
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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 the Majority
Banks, and such instructions shall be binding upon all Banks and all holders
of Notes; PROVIDED, however, that the Agent shall not be required to take any
action which exposes the Agent to personal liability or which is contrary to
this Agreement, any other Credit Document, or applicable law.
Section 8.02. AGENT'S RELIANCE, ETC. Neither the Agent nor any of its
directors, officers, agents, or employees shall be liable for any action taken
or omitted to be taken (INCLUDING THE AGENT'S OWN NEGLIGENCE) by it or them
under or in connection with this Agreement or the other Credit Documents,
except for its or their own gross negligence or willful misconduct. Without
limitation of the generality of the foregoing, the Agent: (a) may treat the
payee of any Note as the holder thereof until the Agent receives written notice
of the assignment or transfer thereof signed by such payee and in form
satisfactory to the Agent; (b) may consult with legal counsel (including
counsel for the Borrower), independent public accountants, and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants, or experts; (c) makes no warranty or representation to any Bank
and shall not be responsible to any Bank for any statements, warranties, or
representations made in or in connection with this Agreement or the other
Credit Documents; (d) shall not have any duty to ascertain or to inquire as to
the performance or observance of any of the terms, covenants or conditions of
this Agreement or any other Credit Document on the part of the Borrower or the
Guarantors or to inspect the property (including the books and records) of the
Borrower or the Guarantors; (e) shall not be responsible to any Bank for the
due execution, legality, validity, enforceability, genuineness, sufficiency, or
value of this Agreement or any other Credit Document; and (f) shall incur no
liability under or in respect of this Agreement or any other Credit Document by
acting upon any notice, consent, certificate, or other instrument or writing
(which may be by telecopier or telex) believed by it to be genuine and signed
or sent by the proper party or parties.
Section 8.03. THE AGENT AND ITS AFFILIATES. With respect to its
Commitments, the Revolving Advances made by it and the Notes issued to it, the
Agent shall have the same rights and powers under this Agreement as any other
Bank and may exercise the same as though it were not the Agent. The term
"Bank" or "Banks" shall, unless otherwise expressly indicated, include the
Agent in its individual capacity. The Agent and its Affiliates may accept
deposits from, lend money to, act as trustee under indentures of, and generally
engage in any kind of business with, the Borrower or any of the Guarantors, and
any Person who may do business with or own securities of the Borrower or any
such Guarantor, all as if the Agent were not an agent hereunder and without any
duty to account therefor to the Banks.
Section 8.04. BANK CREDIT DECISION. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank and based
on the Financial Statements and the Interim Financial Statements and such other
documents and
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information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Bank also acknowledges that it
shall, independently and without reliance upon the Agent 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 this Agreement.
Section 8.05. INDEMNIFICATION. THE BANKS SEVERALLY AGREE TO INDEMNIFY
THE AGENT AND THE ISSUING BANK AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE
DIRECTORS, OFFICERS, EMPLOYEES, AND AGENTS (TO THE EXTENT NOT REIMBURSED BY THE
BORROWER), ACCORDING TO THEIR RESPECTIVE PRO RATA SHARES FROM AND AGAINST ANY
AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, COSTS, EXPENSES, OR DISBURSEMENTS OF ANY KIND OR NATURE
WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST THE AGENT
AND THE ISSUING BANK IN ANY WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT OR
ANY ACTION TAKEN OR OMITTED BY THE AGENT OR THE ISSUING BANK UNDER THIS
AGREEMENT OR ANY OTHER CREDIT DOCUMENT (INCLUDING THE AGENT'S AND THE ISSUING
BANK'S OWN NEGLIGENCE), PROVIDED THAT NO BANK SHALL BE LIABLE FOR ANY PORTION
OF SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, COSTS, EXPENSES, OR DISBURSEMENTS RESULTING FROM THE AGENT'S
AND THE ISSUING BANK'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. WITHOUT
LIMITATION OF THE FOREGOING, EACH BANK AGREES TO REIMBURSE THE AGENT PROMPTLY
UPON DEMAND FOR ITS RATABLE SHARE OF ANY OUT-OF-POCKET EXPENSES (INCLUDING
COUNSEL FEES) INCURRED BY THE AGENT IN CONNECTION WITH THE PREPARATION,
EXECUTION, DELIVERY, ADMINISTRATION, MODIFICATION, AMENDMENT, OR ENFORCEMENT
(WHETHER THROUGH NEGOTIATIONS, LEGAL PROCEEDINGS, OR OTHERWISE) OF, OR LEGAL
ADVICE IN RESPECT OF RIGHTS OR RESPONSIBILITIES UNDER, THIS AGREEMENT OR ANY
OTHER CREDIT DOCUMENT, TO THE EXTENT THAT THE AGENT IS NOT REIMBURSED FOR SUCH
BY THE BORROWER.
Section 8.06. SUCCESSOR AGENT AND ISSUING BANK. The Agent or the Issuing
Bank may resign at any time by giving written notice thereof to the Banks and
the Borrower and may be removed at any time with or without cause by the
Majority Banks upon receipt of written notice from the Majority Banks to such
effect. Upon receipt of notice of any such resignation or removal, the
Majority Banks shall have the right to appoint a successor Agent or Issuing
Bank only with the consent of the Borrower, which consent shall not be
unreasonably withheld. If no successor Agent or Issuing Bank shall have been
so appointed by the Majority Banks with the consent of the Borrower, and shall
have accepted such
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appointment, within 30 days after the retiring Agent's or Issuing Bank's
giving of notice of resignation or the Majority Banks' removal of the
retiring Agent or Issuing Bank, then the retiring Agent or Issuing Bank may,
on behalf of the Banks and the Borrower, appoint a successor Agent or Issuing
Bank, which shall be, in the case of a successor agent, a commercial bank
organized under the laws of the United States of America or of any State
thereof and having a combined capital and surplus of at least $500,000,000.00
and, in the case of the Issuing Bank, a Bank. Upon the acceptance of any
appointment as Agent or Issuing Bank by a successor Agent or Issuing Bank,
such successor Agent or Issuing Bank shall thereupon succeed to and become
vested with all the rights, powers, privileges, and duties of the retiring
Agent or Issuing Bank, and the retiring Agent or Issuing Bank shall be
discharged from its duties and obligations under this Agreement and the other
Credit Documents, except that the retiring Issuing Bank shall remain the
Issuing Bank with respect to any Letters of Credit outstanding on the
effective date of its resignation or removal and the provisions affecting the
Issuing Bank with respect to such Letters of Credit shall inure to the
benefit of the retiring Issuing Bank until the termination of all such
Letters of Credit. After any retiring Agent's or Issuing Bank's resignation
or removal hereunder as Agent or Issuing Bank, the provisions of this Article
VIII shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent or Issuing Bank under this Agreement and the
other Credit Documents.
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ARTICLE IX
MISCELLANEOUS
Section 9.01. AMENDMENTS, ETC. No amendment or waiver of any provision
of this Agreement, the Notes, or any other Credit Document, nor consent to any
departure by the Borrower or any Guarantor therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Majority Banks
and the Borrower, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given; PROVIDED,
however, that no amendment, waiver, or consent shall, unless in writing and
signed by all the Banks, do any of the following: (a) waive any of the
conditions specified in Section 3.01 or 3.02, (b) increase the Revolving
Commitment of the Banks, (c) reduce the principal of, or interest on, the Notes
or any fees or other amounts payable hereunder or under any other Credit
Document, (d) postpone any date fixed for any payment of principal of, or
interest on, the Notes or any fees or other amounts payable hereunder or extend
the Revolving Maturity Date, (e) change the percentage of Banks which shall be
required for the Banks or any of them to take any action hereunder or under any
other Credit Document, (f) amend Section 2.11 or this Section 9.01, (g) amend
the definition of "Majority Banks," (h) release any Guarantor from its
obligations under any Guaranty, or (i) release any collateral securing the
Obligations, except for releases of Collateral sold as permitted by this
Agreement; and PROVIDED, further, that no amendment, waiver or consent shall,
unless in writing and signed by the Agent or the Issuing Bank in addition to
the Banks required above to take such action, affect the rights or duties of
the Agent or the Issuing Bank, as the case may be, under this Agreement or any
other Credit Document.
Section 9.02. NOTICES, ETC. All notices and other communications shall
be in writing (including, without limitation, telecopy or telex) and mailed by
certified mail, return receipt requested, telecopied, telexed, hand delivered,
or delivered by a nationally recognized overnight courier, at the address for
the appropriate party specified in SCHEDULE 1 or at such other address as shall
be designated by such party in a written notice to the other parties. All such
notices and communications shall, when so mailed, telecopied, telexed, or hand
delivered or delivered by a nationally recognized overnight courier, be
effective when received if mailed, when telecopy transmission is completed,
when confirmed by telex answer-back, or when delivered by such messenger or
courier, respectively, except that notices and communications to the Agent
pursuant to Article II or VIII shall not be effective until received by the
Agent.
Section 9.03. NO WAIVER; REMEDIES. No failure on the part of any Bank,
the Agent, or the Issuing Bank to exercise, and no delay in exercising, any
right hereunder or under any Note 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. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
Section 9.04. COSTS AND EXPENSES. The Borrower agrees to pay on demand
(a) all reasonable out-of-pocket costs and expenses of the Agent in connection
with the preparation, execution, delivery, administration, modification, and
amendment of this Agreement, the Notes, the Guaranties, and the other Credit
Documents including, without limitation, the
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reasonable fees and out-of-pocket expenses of counsel for the Agent with
respect to advising the Agent as to its rights and responsibilities under
this Agreement, and (b) all out-of-pocket costs and expenses, if any, of the
Agent, the Issuing Bank, and each Bank (including, without limitation,
reasonable counsel fees and expenses of the Agent, the Issuing Bank, and each
Bank) in connection with the enforcement (whether through negotiations, legal
proceedings, or otherwise) of this Agreement, the Notes, the Guaranties, and
the other Credit Documents.
Section 9.05. BINDING EFFECT. This Agreement shall become effective when
it shall have been executed by the Borrower and the Agent, and when the Agent
shall have, as to each Bank, either received a counterpart hereof executed by
such Bank or been notified by such Bank that such Bank has executed it and
thereafter shall be binding upon and inure to the benefit of the Borrower, the
Agent, the Issuing Bank, and each Bank and their respective successors and
assigns, except that the Borrower shall not have the right to assign its rights
or delegate its duties under this Agreement or any interest in this Agreement
without the prior written consent of each Bank.
Section 9.06. BANK ASSIGNMENTS AND PARTICIPATIONS.
(a) ASSIGNMENTS. Any Bank may assign to one or more banks or other
entities all or any portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitments, the
Revolving Advances owing to it, the Notes held by it, and the participation
interest in the Letter of Credit Obligations held by it); PROVIDED, HOWEVER,
that (i) each such assignment shall be of a constant, and not a varying,
percentage of such Bank's rights and obligations assigned under this Agreement,
(ii) the amount of the Commitments and Revolving Advances of such Bank being
assigned pursuant to each such assignment (determined as of the date of the
Assignment and Acceptance with respect to such assignment) shall be, if to an
entity other than a Bank, not less than $5,000,000.00 and shall be an integral
multiple of $1,000,000.00, (iii) each such assignment shall be to an Eligible
Assignee, (iv) the parties to each such assignment shall execute and deliver to
the Agent, for its acceptance and recording in the Register, an Assignment and
Acceptance, together with the Notes subject to such assignment, and (v) each
Eligible Assignee (other than the Eligible Assignee of the Agent) shall pay to
the Agent a $2,500 administrative fee. Upon such execution, delivery,
acceptance and recording, from and after the effective date specified in each
Assignment and Acceptance, which effective date shall be at least three
Business Days after the execution thereof, (a) the assignee thereunder shall be
a party hereto for all purposes and, to the extent that rights and obligations
hereunder have been assigned to it pursuant to such Assignment and Acceptance,
have the rights and obligations of a Bank hereunder and (B) such Bank
thereunder shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all or the remaining portion of
such Bank's rights and obligations under this Agreement, such Bank shall cease
to be a party hereto).
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(b) TERM OF ASSIGNMENTS. By executing and delivering an Assignment and
Acceptance, the Bank thereunder and the assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (i) other than
as provided in such Assignment and Acceptance, such Bank makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency of value of this Agreement or any other instrument or document
furnished pursuant hereto; (ii) such Bank makes no representation or warranty
and assumes no responsibility with respect to the financial condition of the
Borrower or the Guarantors or the performance or observance by the Borrower or
the Guarantors of any of their obligations under this Agreement or any other
instrument or document furnished pursuant hereto; (iii) such assignee confirms
that it has received a copy of this Agreement, together with copies of the
financial statements referred to in Section 4.05 and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon the Agent, such Bank 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 this Agreement; (v) such assignee appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise such powers under this
Agreement as are delegated to the Agent by the terms hereof, together with such
powers as are reasonably incidental thereto; and (vi) such assignee agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of this Agreement are required to be performed by it as a Bank.
(c) THE REGISTER. The Agent shall maintain at its address referred to in
Section 9.02 a copy of each Assignment and Acceptance delivered to and accepted
by it and a register for the recordation of the names and addresses of the
Banks and the Commitments of, and principal amount of the Revolving Advances
owing to, 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 the Borrower, the Agent, the Issuing Bank, and the 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
the Borrower or any Bank at any reasonable time and from time to time upon
reasonable prior notice.
(d) PROCEDURES. Upon its receipt of an Assignment and Acceptance
executed by a Bank and an Eligible Assignee, together with the Notes subject to
such assignment, the Agent shall, if such Assignment and Acceptance has been
completed and is in substantially the form of the attached Exhibit A,
(i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register, and (iii) give prompt notice thereof to the
Borrower. Within five Business Days after its receipt of such notice, the
Borrower shall execute and deliver to the Agent in exchange for the surrendered
Notes (A) if such Eligible Assignee has acquired a Revolving Commitment, a new
Note to the order of such Eligible
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Assignee in an amount equal to the Revolving Commitment assumed by it
pursuant to such Assignment and Acceptance and (B) if such Bank has retained
any Revolving Commitment hereunder, a new Note to the order of such Bank in
an amount equal to the Revolving Commitment retained by it hereunder. Such
new Notes shall be dated the effective date of such Assignment and Acceptance
and shall otherwise be in substantially the form of the attached Exhibit H.
(e) PARTICIPATIONS. Each Bank may sell participations to one or more
banks or other entities in or to all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Commitments, the Revolving Advances owing to it, its participation interest in
the Letter of Credit Obligations, and the Notes held by it); PROVIDED, HOWEVER,
that (i) such Bank's obligations under this Agreement (including, without
limitation, its Commitments to the Borrower hereunder) shall remain unchanged,
(ii) such Bank shall remain solely responsible to the other parties hereto for
the performance of such obligations, (iii) such Bank shall remain the holder of
any such Notes for all purposes of this Agreement, (iv) the Borrower, the
Agent, and the Issuing Bank and the other Banks shall continue to deal solely
and directly with such Bank in connection with such Bank's rights and
obligations under this Agreement, and (v) such Bank shall not require the
participant's consent to any matter under this Agreement, except for change in
the principal amount of the Notes, reductions in fees or interest, releasing
all or substantially all of any collateral, or extending the Revolving Maturity
Date. The Borrower hereby agrees that participants shall have the same rights
under Sections 2.12, 2.13, 2.14(c), and 9.07 as a Bank to the extent of their
respective participations.
Section 9.07. INDEMNIFICATION. THE BORROWER SHALL INDEMNIFY THE AGENT,
THE BANKS, THE ISSUING BANK, AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE
DIRECTORS, OFFICERS, EMPLOYEES, AND AGENTS FROM, AND DISCHARGE, RELEASE, AND
HOLD EACH OF THEM HARMLESS AGAINST, ANY AND ALL LOSSES, LIABILITIES, CLAIMS, OR
DAMAGES WHICH MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST THEM IN ANY
WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY ACTION TAKEN OR OMITTED
BY THEM UNDER THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT (INCLUDING ANY SUCH
LOSSES, LIABILITIES, CLAIMS, DAMAGES, OR EXPENSE INCURRED BY REASON OF THE
PERSON BEING INDEMNIFIED'S OWN NEGLIGENCE), BUT EXCLUDING ANY SUCH LOSSES,
LIABILITIES, CLAIMS, DAMAGES, OR EXPENSES INCURRED BY REASON OF THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF THE PERSON TO BE INDEMNIFIED.
Section 9.08. EXECUTION IN COUNTERPARTS. This Agreement 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.
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Section 9.09. SURVIVAL OF REPRESENTATIONS, ETC. All representations and
warranties contained in this Agreement or made in writing by or on behalf of
the Borrower in connection herewith shall survive the execution and delivery of
this Agreement and the Credit Documents, the making of the Revolving Advances
and any investigation made by or on behalf of the Banks, none of which
investigations shall diminish any Bank's right to rely on such representations
and warranties. All obligations of the Borrower provided for in Sections 2.12,
2.13, 2.14(c), 9.04, and 9.07 and all of the obligations of the Banks in
Section 8.05 shall survive any termination of this Agreement and repayment in
full of the Obligations.
Section 9.10. SEVERABILITY. In case one or more provisions of this
Agreement or the other Credit Documents shall be invalid, illegal or
unenforceable in any respect under any applicable law, the validity, legality,
and enforceability of the remaining provisions contained herein or therein
shall not be affected or impaired thereby.
Section 9.11. BUSINESS LOANS. The Borrower warrants and represents that
the Loans evidenced by the Notes are and shall be for business, commercial,
investment, or other similar purposes and not primarily for personal, family,
household, or agricultural use, as such terms are used in Chapter One ("Chapter
One") of the Texas Credit Code. At all such times, if any, as Chapter One
shall establish a Maximum Rate, the Maximum Rate shall be the "indicated rate
ceiling" (as such term is defined in Chapter One) from time to time in effect.
Section 9.12. GOVERNING LAW. This Agreement, the Notes and the other
Credit Documents shall be governed by, and construed and enforced in accordance
with, the laws of the State of Texas. Without limiting the intent of the
parties set forth above, (a) Chapter 15, Subtitle 3, Title 79, of the Revised
Civil Statutes of Texas, 1925, as amended (relating to revolving loans and
revolving tri-party accounts), shall not apply to this Agreement, the Notes, or
the transactions contemplated hereby and (b) to the extent that any Bank may be
subject to Texas law limiting the amount of interest payable for its account,
such Bank shall utilize the indicated (weekly) rate ceiling from time to time
in effect as provided in Article 5069-1.04 of the Revised Civil Statutes of
Texas, as amended. Each Letter of Credit shall be governed by the Uniform
Customs and Practice for Documentary Credits, International Chamber of Commerce
Publication No. 500 (1993 version).
THE BORROWER, THE BANKS, THE ISSUING BANK AND THE AGENT HEREBY IRREVOCABLY
WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN RESPECT OF ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER CREDIT DOCUMENT, OR ANY
OF THE TRANSACTIONS CONTEMPLATED HEREBY, AND IRREVOCABLY SUBMIT TO THE
NONEXCLUSIVE JURISDICTION OF THE COURTS OF XXXXXX COUNTY, TEXAS, AND THE
SOUTHERN DISTRICT OF TEXAS FOR THE
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RESOLUTION OF ANY DISPUTES UNDER THIS AGREEMENT AND THE CREDIT DOCUMENTS, AND
HEREBY IRREVOCABLY WAIVE ANY CLAIM THAT SUCH JURISDICTION IS IMPRACTICAL OR
INCONVENIENT.
THIS WRITTEN AGREEMENT AND THE CREDIT DOCUMENTS, AS DEFINED IN THIS
AGREEMENT, REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
EXECUTED as of the date first above written.
BORROWER:
RAM ENERGY, INC.
By: /s/ Xxxxx X. Xxx
-----------------------------------
Xxxxx X. Xxx
President
AGENT:
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Xxxx X. Xxxxx
-----------------------------------
Xxxx X. Xxxxx
Senior Vice President and Manager
By: /s/ Xxxx Xxxxxxxx
-----------------------------------
Xxxx Xxxxxxxx
Vice President
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BANKS:
REVOLVING COMMITMENT UNION BANK OF CALIFORNIA, N.A.
$50,000,000
By: /s/ Xxxx X. Xxxxx
-----------------------------------
Xxxx X. Xxxxx
Senior Vice President and Manager
By: /s/ Xxxx Xxxxxxxx
-----------------------------------
Xxxx Xxxxxxxx
Vice President
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EXHIBIT H
FORM OF SECOND AMENDED AND RESTATED REVOLVING NOTE
$____________ __________________
For value received, the undersigned RAM Energy, Inc., a Delaware
corporation formerly known as RAMCO Operating Company ("Borrower"), hereby
promises to pay to the order of ________________________ ("Bank") the
principal amount of ____________________ Dollars ($______________) or, if
less, the aggregate outstanding principal amount of the Revolving Advances
(as defined in the Credit Agreement referred to below) made by the Bank to
the Borrower, together with interest on the unpaid principal amount of the
Revolving Advances from the date of such Revolving Advances until such
principal amount is paid in full, at such interest rates, and at such times,
as are specified in the Credit Agreement.
This Note is one of the Second Amended and Restated Revolving Notes
referred to in, and is entitled to the benefits of, and is subject to the
terms of, the Second Amended and Restated Credit Agreement dated as of
February 3, 1998 (as the same may be amended or modified from time to time,
the "Credit Agreement"), among the Borrower, the banks party thereto (the
"Banks") and Union Bank of California, N.A., as agent for the Banks (the
"Agent"). Capitalized terms used in this Note that are defined in the Credit
Agreement and not otherwise defined in this Note have the meanings assigned
to such terms in the Credit Agreement. The Credit Agreement, among other
things, (a) provides for the making of the Revolving Advances by the Bank to
the Borrower in an aggregate amount not to exceed at anytime outstanding the
Dollar amount first above mentioned, the indebtedness of the Borrower
resulting from each such Revolving Advance being evidenced by this Note and
(b) contains provisions for acceleration of the maturity of this Note upon the
happening of certain events stated in the Credit Agreement and for
prepayments of principal prior to the maturity of this Note upon the terms
and conditions specified in the Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to the Agent at the location or address specified by the
Agent to the Borrower in same day funds. The Bank shall record payments of
principal made under this Note, but no failure of the Bank to make such
recordings shall affect the Borrower's repayment obligations under this Note.
This Note is secured by the Security Documents and guaranteed under the
Guaranties.
Except as specifically provided in the Credit Agreement, the Borrower
hereby waives presentment, demand, protest, notice of intent to accelerate,
notice of acceleration, and any other notice of any kind. No failure to
exercise, and no delay in exercising, any rights hereunder on the part of the
holder of this Note shall operate as a waiver of such rights.
This Note shall be governed by, and construed and enforced in accordance
with, the laws of the state of Texas (except that Tex. Rev. Civ. Stat. Xxx.
Art, 0000, Xx. 15, which regulates certain revolving credit loan accounts
shall not apply to this Note).
RAM ENERGY, INC.
By: _____________________________
Name: ___________________________
Title: __________________________
